ACCA Paper P5 (INT) Advanced Performance management - Pocket notes - Kaplan - 2010
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111
Performance management
in not-for-profit
organisations
In this chapter
Objectives.•
Performance appraisal.•
Politics and public sector performance •
management.
Decision making.•
chapter
9
Performance management in not-for-profit organisations
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Performance management in not-for-profit organisations Chapter 9
You need to be able to discuss the issues
which affect not-for-profit organisations
and the implications of this for performance
management.
Value for money
Exam focus
Performance management in not-for-profit organisationsPerformance management in not-for-profit organisations Chapter 9
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protisnotthe
mainobjective.
performance
considersboth
nancialandnon-
nancialissues.
Financialmatters
areconstraints
ratherthan
objectives.
Objectivesmaybe
imposedbygovern-
ment.
Therearelikelyto
bemultiple
conicting
objectives.
Theconsumersofthe
servicearenotnecessarily
theonespayingforit.
powermaybe
sharedbetweena
numberofstakeholders.
NOT FOR
PROFIT
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Performance management in not-for-profit organisations Chapter 9
Value for money approach
Systems resources approach
Focusonhowwellorganisation
hasobtainedinputs
Internal processes
approach
Focusonefcientuse
ofresources
Goal approach
Focuson
objectivesand
outputmeasures
Approaches to
performance
assessment
3 Es approach
Effectiveness•
Efficiency•
Economy•
Performance management in not-for-profit organisations
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Value for money (VFM).
VFM measures whether the organisation has
met stakeholders’ expectation of best value
for the limited funds available.
Economy•
Efficiency•
Effectiveness•
Assessing value for money can be achieved by:
benchmarking•
using performance indicators•
conducting VFM studies•
comparing recognised good practice•
internal audit work•
examining the results or outcomes of an •
activity.
Politics and public sector
performance management
Funding in the public sector is not linked to
profitability and is often a political decision.
Funding tends to come direct from the •
government.
Obtaining funds can be complex.•
A failure to achieve objectives sometimes •
leads to higher levels of funding.
Services may have to be provided to all •
customers irrespective of efficiency or
economy.
Public sector units compete against each •
other for limited funds.
Levels of local provision are often •
determined centrally.
The impact of politics may be undesirable
outcomes.
Organisations focus on meeting •
government targets rather than providing
value for money.
Definition
Performance management in not-for-profit organisations
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Long-term objectives are sacrificed for •
short-term political gain.
Organisations suffer political interference.•
Notes:
117
Non-financial performance
indicators
In this chapter
Performance evaluation models.•
Non-financial performance indicators.•
Qualitative issues.•
Predicting corporate failure.•
chapter
10
Non-financial performance indicators
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Non-financial performance indicators Chapter 10
This chapter focuses on the use of
non-financial measures for performance
evaluation. The identification of non-financial
measures appropriate to a particular situation
frequently forms a part of exam questions.
Performance evaluation
models
A number of models have been developed
to facilitate a broader approach to measuring
performance and the identification of a
comprehensive range of measures. These
look at different perspectives of performance
and both financial and non-financial issues.
The balanced scorecard
Translates an organisation’s vision and •
strategy into objectives and measures.
Depends on the identification of strategic •
factors which determine the long-term
future of the business.
Based on four perspectives of •
performance.
Was developed in 1992 by • Kaplan and
Norton.
Exam focus
Non-financial performance indicators
Non-financial performance indicators Chapter 10
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Implementing the balanced scorecard
4 key steps
Financial perspective
‘Tosucceednancially
howshouldweappear
toourshareholders?’
Customer perspective
‘Toachieveourvision
howshouldweappearto
ourcustomers?’
Learning and growth
‘Toachieveourvision,how
willwesustainourability
tochangeandimprove?’
Internal business process
‘Tosatisfyourshareholders
andcustomerswhatbusiness
processesmustweexcelat?’
Vision and
strategy
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Non-financial performance indicators Chapter 10
Make the strategy explicit
strategyformsthebasisofthescorecard.•
Mayinvolvestrategymapping.•
Choose the measures
alignmeasureswithstrategy.•
Relationshipsbetweenmeasuresmustbeclearly•
understood.
Dene and rene
putperformancemeasuresintoplace.•
scorecardbecomesthelanguageofthecompany.•
Deal with people
peopleandchangemustbeproperlymanaged.•