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Hi, Tutor,
In Kaplan, this statement is assumed to be incorrect: “Output does not usually have a market value, and it is therefore more difficult to measure EFFECTIVENESS.”The correct answer per Kaplan is “Output does not usually have a market value, and it is therefore more difficult to measure EFFICIENCY.”
Do you agree with their answer (i.e. “efficiency”)?
Thanks for your time,
GigaAlthough the wording for both statements is strange wording to use, I do agree with their answer.
For example, if we were measuring the performance of a hospital then we might choose to measure the effectiveness by looking at the % of patients who were cured. The fact that there is not a market value for a cured patients does not mean that we cannot measure the success are curing patients.
However, effectiveness is measured by looking at how well we are using the resources. We want a cheaper cost per patient and therefore if there was a market value per cured patient a higher profit per patient. Since there is not a market value of a cured patient, it makes it more difficult to measure (although there are other things we could look at).
Have you watched my free lectures on performance measurement for not-for-profit organisations?
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