Financial performance measure alone as opposed to an approach which encompasses both financial and nonfinancial measures

Fatima F.

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Financial performance measure alone as opposed to an approach which encompasses both financial and nonfinancial measures

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Financial performance measure, nonfinancial measures, management strategy, shareholders, stakeholders, profitability, performance, monetary control, liquidity, solvency, creation of value, contingency theories

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Bacidore et al (2019) state that "An appropriate performance measure gauges how management strategy affects shareholder value". Shareholders, as well as stakeholders, plays an essential role in the management of an organization. The evaluation of a potential strategy to apply with the outcomes of those already implemented is necessary for the good development of the organization. To do so, we use performance measures. They can be financial or nonfinancial. Combining both types of measurements can, therefore, allow us to have more diverse and complete information. This evaluation should take into account the type of organization and environment in which we apply it. We will be considering these factors and discussing the challenges that may happen throughout this process. Financial measures often refer to the traditional way to measure performance. As Baker (1995) said, as long as we can remember, the monetary control has been the general measurement concerning organization profitability and performance.

Profitability and performance evaluation
Contingency theories

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[...] Financial performance measure alone as opposed to an approach which encompasses both financial and nonfinancial measures Discuss the arguments for and against using financial performance measure alone as opposed to an approach which encompasses both financial and non-financial measures (such as the balanced scorecard). Your essay should also include the importance of context (as espoused by contingency theory) in regard to the relevance and adoption of using such measurement frameworks. Bacidore et al. (2019) state that "an appropriate performance measure gauges how management strategy affects shareholder value." Shareholders, as well as stakeholders, plays an essential role in the management of an organization. [...]

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[...] All the stakeholders should contribute to the gathering of all the information as Skrinjar et al. (2008) exposed from previous findings "It is also important to involve qualitative indicators, such as customer service and satisfaction, product quality, learning and innovation" as they are the key asset to the improvement of our strategy. The numerical figures will only be a proof in order to push and confirmed our reasoning. They are essential if followed by an explanation that the non-financial measure is able to provide. [...]

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