Let’s Get Measuring!
Welcome, number-crunchers and business enthusiasts! We’re here to take a joyous romp through the thickets of Performance Measurement. Before you roll your eyes, hang tight! This stuff is actually super important and, dare I say, a bit fun?
Picture this: You’re the captain of a ship. To avoid steering into an iceberg (or a financial disaster), you need to keep a keen eye on certain measures and indicators. These are your performance measures. They help you assess progress and make sure you’re on track to hit your goals—no Titanic endings here!
Types of Performance Measures
Financial Measures: The Money Talks 💸
- Return on Capital Employed (ROCE): Like a trusty compass, it tells you how efficiently your ship is using its financial resources.
- Residual Income: Better than finding buried treasure, it figures out what’s leftover after costs, helping you grasp true profitability.
- Economic Value Added: Imagine a gold-plated anchor; it tells you if the company is creating value over and above the capital costs.
Non-Financial Measures: The Hidden Gems 🌟
- Delivery Time: Can we get those coconuts to the island faster? Speed matters!
- Customer Retention: Are your passengers enjoying the ride and coming back for more trips?
- Employee Absenteeism: Are your sailors jumping ship? Keep ’em onboard, happy and healthy!
- Staff Turnover: How often are you getting new sailors? A high turnover could be a sign of stormy waters ahead.
Why It Matters: Money & Morale
Management accountants (the real MVPs) want to know how these measures shape behavior. For instance, depending too much on ROCE might make managers hoard resources, improving short-term performance but causing long-term pain. Translate this situation to delivery times: Managers might rush deliveries to meet targets but inadvertently push up costs. We call that—a classic pirate blunder!
Here’s a little treasure map for linking the islands of non-financial and financial measures: the Balanced Scorecard. It connects all performance indicators to your company’s overall strategies, turning a chaotic ride into a well-navigated voyage.
Mermaid Diagrams for Navigational Genius
Ever dreamt of charts that speak? Here’s a basic structure of a Performance Measurement chart, Mermaid-style. Yo-ho-ho, and a bottle of data!
graph TD
Subgoal1-->Financial[
