fearties sept 18 q1

All profit-seeking companies ultimately aim at the financial perspective: that’s their purpose. The balanced score card says that to achieve satisfactory financial performance companies also have to give attention to customer, internal business and innovation and learning perspectives. Part (i) of the requirements expanded on that and the CEO asked for:

“… reasoned recommendations for two indicators within each of the remaining three perspectives (customer, internal business process and innovation and learning).”

The answer to (iii) includes:

“In the non-accounting style, budgetary information plays a less important part of staff’s performance evaluation. It suits an emphasis on quality and on operational factors. It would fit with many of the new non-financial indicators being proposed from the balanced scorecard. However, it may not be strategically suitable for Fearties due to the importance to the family of the financial returns from the business”

I does not say that the non-accounting style suits this company. It says that the non-accounting style suits an emphasis on quality and operational matters. However, the answer concludes that in this case:

“Overall, a profit-conscious approach is recommended but one which uses both financial and non-financial indicators from the balanced scorecard to support the long-term financial goals of the company.”