Non-financial Performance Measures: What Works and What Doesn’t

Choosing performance measures is a challenge. Performance measurement systems play a key role in developing strategy evaluating the achievement of organizational objectives and compensating managers. Yet many managers feel traditional financially oriented systems no longer work adequately. A recent survey of U.S. financial services companies found most were not satisfied with their measurement systems. In an article on Oct. 16 2000 in the Financial Times’ Mastering Management series Wharton accounting professors Christopher Ittner and David Larcker suggest that financial data have limitations as a measure of company performance. The two note that other measures such as quality may be better at forecasting but can be difficult to implement.

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