CIMA P3 Syllabus B. Strategic risk - Non-Financial Performance Indicators - Notes ^{1 / 13}

Non-Financial Indicators

In recent years, the trend in performance measurement has been towards a broader view of performance, covering both financial and non-financial indicators. 

The most well-known of these approaches is the balanced scorecard proposed by Kaplan and Norton, which we will be describing later.

Areas to measure should relate to an organisation's critical success factors. Critical success factors (CSFs) are performance requirements which are fundamental to an organisation's success (for example innovation in a consumer electronics company) and can usually be identified from an organisation's mission statement, objectives and strategy. 

Key performance indicators (KPIs) are measurements of achievement of the chosen critical success factors. Key performance indicators should be:

• specific (i.e. measure profitability rather than 'financial performance', a term which could mean different things to different people)

• measurable (i.e. be capable of having a measure placed upon it, for example, a number of customer complaints rather than the 'level of customer satisfaction')

• relevant, in that they measure achievement of a critical success factor.

The following table demonstrates critical success factors and key performance indicators of a college training students: