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Coming Up Short on Nonfinancial Performance Measurement (Spanish version)
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Reference: HBS-R0311F
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Year: 2002
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Number of pages: 8
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Geographic Setting: New Jersey
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Publication Date: Nov 1, 2003
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Fecha de edición: Mar 18, 2003
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Source: HBSP (USA)
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Type of Document: Article
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Industry Setting: Fast food;Manufacturing;Professional, scientific & technical services
Description
They set the wrong performance targets because they focus too much on short-term financial results, and they use metrics that lack strong statistical validity and reliability. As a result, the companies can't demonstrate that improvements in nonfinancial measures actually affect their financial results. The authors lay out a series of steps that allow companies to realize the genuine promise of nonfinancial performance measures. First, develop a model that proposes a causal relationship between the chosen nonfinancial drivers of strategic success and specific outcomes. Next, take careful inventory of all the data within your company. Then use established statistical methods for validating the assumed relationships and continue to test the model as market conditions evolve. Finally, base action plans on analysis of your findings, and determine whether those plans and their investments actually produce the desired results.