The importance of non-financial performance measures
Profit based measures have the following problems:
the subjectivity of profit
the scope for manipulation of profit
the problem of short-termism
A non financial performance indicator measures the performance of organisations not using money/profit measures and can provide managers with incentives to improve long-term financial performance.
For example, if customer satisfaction is low, this could imply that sales demand will fall in the future and this will have a negative effect on profits.
Examples of non financial indicators include defects/month and productivity/hour