Question

Research on performance measurement in service businesses, reported in Management Accounting, found that ‘performance measurement often focuses on easily quantifiable aspects such as cost and productivity whilst neglecting other dimensions which are important to competitive success’.

 

You are required:
(a) To explain what ‘other dimensions’ you think are important measures of performance;
(b) To describe what changes would be required to traditional information systems to deal with these ‘other dimensions’

Answer 1

(a) 

See a description of the customer, internal business and learning and growth perspectives within the balancedscorecard in Chapter 21and also ‘Performance measurement in service organizations’ in Learning Note 21.1 on the open access website for the answer to this question.

(b) 

The answer should incorporate some of the content relating to ‘The future role of standard costing’ in Learning Note 18.5 on the open access website, ‘Addressing the dysfunctional consequences of short-term financial performance measures’ in Chapter 19, ‘Dealing with  the  distorting  effects  of uncontrollable factors’ in Chapter 16 and issues relating to the balanced scorecard perspective and performance measurement in service organizations in Chapter 21.