THE ROLE OF NON FINANCIAL FACTORS IN MEASURING ORGANIZATIONAL PERFORMANCE

Abstract

Measuring of organizational performance is an important factor for the organization itself and the stakeholders of the organization. It is not always an easy job to do. Measurement of organizational performance is always linked with organizational missions, goals and objectives. Choosing performance measure is a challenge. Performance measurement systems play a key role in developing strategy, evaluating the achievement of organizational objectives and compensating managers. Yet many managers feel that traditional financially oriented systems no longer work adequately. A recent survey of U.S. financial services companies found that most were not satisfied with their measurement systems. They believed there were too much emphasis on financial measures such as earnings and accounting returns and little emphasis on drivers of value such as customer and employee satisfaction, innovation and quality. This paper deals with the measurement of organizational performance (MOP) and tries to highlight Non financial factor of measuring organizational performance to bring long term financial capability. In this paper an endeavor has been made to present the problems associated with the financial indicators of performance and how Non-Financial Indicators (NFI) help in decision making. To this end both importance of NFIs in Bangladeshi context and consequences of ignoring NFIs have been discussed. Finally, this paper suggests that using the NFIs linked to factors such as corporate strategy, value drivers, and organizational objectives can drive the competitive elements of the organization.


Key Words: Measurement of Organizational Performance; Non Financial Indicators; Organizational
Performance.

For full paper: fmscresearch@sjp.ac.lk