Non-Financial Measures

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来自 University of Illinois at Urbana-Champaign 的课程

Managerial Accounting: Tools for Facilitating and Guiding Business Decisions

208 个评分

University of Illinois at Urbana-Champaign

Managerial Accounting: Tools for Facilitating and Guiding Business Decisions

208 个评分

课程 2（共 7 门，Specialization Value Chain Management）

In this course, you will explore how to use accounting to allocate resources and incentivize manager and employee behaviors in using these resources. You will also learn how financial and non-financial accounting information facilitates strategic performance measurement and how to integrate this information to continuously improve strategy. Upon successful completion of this course, you will be able to: • Understand the role of managerial accounting information in common business decisions • Differentiate relevant and irrelevant information • Avoid common pitfalls in business decisions • Prepare a master budget and its key components • Describe the iterative and interrelated nature of budgeting • Evaluate capital investments via a variety of measures • Understand how upper management uses variance analysis • Calculate, interpret, and investigate variances • Understand decentralization and its advantages and disadvantages • Compute and interpret financial performance measures • Communicate the role of non-financial measures and strategic performance measurement systems • Identify issues associated with performance measurement and incentives • Understand the nature and role of subjective performance evaluation This course is part of the iMBA offered by the University of Illinois, a flexible, fully-accredited online MBA at an incredibly competitive price. For more information, please see the Resource page in this course and onlinemba.illinois.edu.

从本节课中

Performance Measurement and Evaluation

Accountants help implement, communicate, and evolve organizational strategy via the information they provide to owners, managers, and employees. Specifically, they help plan, monitor, and control decisions via the performance measurement, evaluation, and compensation system. In this module, you will explore many aspects of this important system, including decentralization, financial and non-financial performance measurement, strategic performance measurement systems, and subjective performance evaluation.

Non-Financial Measures4:23

Strategic Performance Measurement Systems8:52

Performance Measurement Issues7:25

Subjective Performance Evaluation4:43

What We've Learned in Lesson 4.31:01

Module 4 Review0:49

与讲师见面

Gary Hecht, Ph.D.
Associate Professor of Accountancy
Department of Accountancy, College of Business

>> Now let's turn to lesson 4-3,

which has the following objectives.

We're trying to understand the limitations

of financial performance measures.

We'll talk about the purpose of non-finance measures

and how financial

and non-financial measures are organized

into the organization's strategic measurement system.

We'll talk about the balance score card as a primary example

of a strategic performance measurement system, as well.

So let's talk about some disadvantages

of financial performance measures.

First off, they're generally incomplete.

Their focused on a single dimension of the firm,

and activities and other procedures that are difficult

to quantify in financial terms are left out of these measures.

Second, they're outcome based.

They're very backward looking and specific

to a given accounting period,

and past accounting periods are not always indicative

of the organization's future, and finally,

financial performance measures potentially indues

myopic behavior.

Managers and employees focused

on financial measures forego all the things that are not included

in that, and sometimes, those strategic

and qualitative considerations are just

as important as financial goals.

So we can turn our attention to alternative measures.

Specifically, non-financial performance measures flow

from the firm's strategy.

Really, in essence, two steps here.

First, the firm needs to identify a strategy, and second,

they need to design objectives and measures

to ultimately achieve that strategy.

Those objectives and measures inform the type non-financial

information that is useful to managers and employees.

Some advantages of non-financial measures include

that they're more forward looking.

They can provide explanations for financial outcomes.

They're more predictive, as opposed to reactive,

like financial measures are, and they allow

for more proactive behavior by managers and employees.

These point are very important, in the sense

that if a manager incorporates or implements an action

and waits for the story to be told via financial measures,

sometimes, it's ultimately too late to learn

that they implemented something poorly or ineffectively.

It's often the case

that financial performance is lagged well behind the type

of actions that are being implemented,

especially at the strategic level.

Non-financial measures are more up-to-date; they're more timely.

They can show that a manager has incorporated something poorly

or ineffectively, and the manager can respond to that

in a more timely fashion.

There are, of course, disadvantages

of non-financial measures, as well.

Specifically, this is very burdensome.

Not everything is quantified and in the same scale.

It's quite varied.

Plus, when we open up the door to non-financial measures,

there are many options available to managers and employees.

They're oftentimes context specific, which allows

for less comparability between the different divisions.

The non-financial measures that are applicable

in one division may not be the same that are applicable

to other divisions inside the firm.

So comparability and consistency are sometimes an issue,

and they're oftentimes very noisy and subjective.

Non-financial measures oftentimes involve some sort

of judgment or less reliable measurement

that finance measures.

So this noise can be incorporated and lead

to poor decisions if they're based on non-financial measures.

And finally, non-financial measures are

potentially irrelevant.

Not all non-financial performance leads

to financial performance.

There's not always a link between the two,

and so you can collect a lot of non-financial information,

but ultimately, it proves to be irrelevant in relation

to the firm's overall organizational goals.

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