lOMoARcPSD|6536636
CPA Australia - SMA - M5 Summary
Strategic Management Accounting (Macquarie University)
,
, lOMoARcPSD|6536636
Module 5 PERFORMANCE MANAGEMENT
Part A: The role of performance management
What is 8performance9 and 8performance management9?
Performance
Performance can a discrete event (like achieve a certain level of
profit); can be quantitatively (i.e. a numeric value, achieve $10
million profit); can be qualitatively (more subjectively, quality of a
service). There can be trade off between them, like profitability
VS reputation or short-term VS longer-term performance.
Performance has different meaning at different org levels and by
different stakeholders: organization level VS business unit,
customer VS employee.
Performance can be seen as a process to create value and is usually
interpreted relative to a target, a trend over time or by comparison
to a benchmark. Figure 5.2, performance should be seen from
various dimensions:
Figure 5.2: Performance dimensions
financial Combination of financial measures (e.g. profit before
tax, return on investment)
Financial financial and non-financial quantitative terms (e.g.
and dollar sales per square metre of floor space,
nonfinancial earnings per share (EPS)
1
, lOMoARcPSD|6536636
% Non-financial quantitative (e.g. market share (%), Net
Promoter Score (NPS), quality pass rate)
People Subjective judgments and opinions (e.g. employee
satisfaction, reputation or environmental
awareness)
Aspects of performance:
• Performance monitoring: surveillance of performance.
• Performance reporting: dissemination and interpretation
performance.
• Performance measurement (see below)
• Performance management (see below)
Performance measurement
Performance measurement: a scientific technique involving
comparison to a specific scale, therefore it is quite specific.
Financial performance can be readily measured: it is specific,
clearly defined using clear rules.
Performance indicator: less specific, indicates a direction or trend.
Like, customer satisfaction, which has different meanings and can
be judged in various ways. When comparing with targets,
performance indicators are like8traffic lights9: green for acceptable,
red for unacceptable and amber for borderline performance.
2
CPA Australia - SMA - M5 Summary
Strategic Management Accounting (Macquarie University)
,
, lOMoARcPSD|6536636
Module 5 PERFORMANCE MANAGEMENT
Part A: The role of performance management
What is 8performance9 and 8performance management9?
Performance
Performance can a discrete event (like achieve a certain level of
profit); can be quantitatively (i.e. a numeric value, achieve $10
million profit); can be qualitatively (more subjectively, quality of a
service). There can be trade off between them, like profitability
VS reputation or short-term VS longer-term performance.
Performance has different meaning at different org levels and by
different stakeholders: organization level VS business unit,
customer VS employee.
Performance can be seen as a process to create value and is usually
interpreted relative to a target, a trend over time or by comparison
to a benchmark. Figure 5.2, performance should be seen from
various dimensions:
Figure 5.2: Performance dimensions
financial Combination of financial measures (e.g. profit before
tax, return on investment)
Financial financial and non-financial quantitative terms (e.g.
and dollar sales per square metre of floor space,
nonfinancial earnings per share (EPS)
1
, lOMoARcPSD|6536636
% Non-financial quantitative (e.g. market share (%), Net
Promoter Score (NPS), quality pass rate)
People Subjective judgments and opinions (e.g. employee
satisfaction, reputation or environmental
awareness)
Aspects of performance:
• Performance monitoring: surveillance of performance.
• Performance reporting: dissemination and interpretation
performance.
• Performance measurement (see below)
• Performance management (see below)
Performance measurement
Performance measurement: a scientific technique involving
comparison to a specific scale, therefore it is quite specific.
Financial performance can be readily measured: it is specific,
clearly defined using clear rules.
Performance indicator: less specific, indicates a direction or trend.
Like, customer satisfaction, which has different meanings and can
be judged in various ways. When comparing with targets,
performance indicators are like8traffic lights9: green for acceptable,
red for unacceptable and amber for borderline performance.
2
