ACCA P5 Performance Pyramid revision theory

you the performance pyramid developed by Lynch & Kross includes the hierarchy of financial and non-financial performance measures the aim is to produce a comprehensive list of performance measurements the model is based on the belief that each level of the organization has different focus however each level must support and be coordinated with each other thus the performance pyramid links a business strategy with day-to-day operations in order to achieve success objectives are set from top-down and measured from bottom-up level one start at the top of the organization this is the organization's mission here is where the organization describes how it will achieve long term success and competitive advantage level to these focuses on the achievement of the organization's critical success factors in term of market related measures and financial measures the marketing and financial success of a proposal is the initial focus for the achievement of the organization's mission level 3 the marketing and financial strategy set at level 2 must be linked to the achievement of customer satisfaction increased flexibility and high productivity these are the guiding forces that drive the strategic objectives of the organization the status of level 3 driving forces can be monitored using the lower-level departmental indicators of quality delivery cycle time and waste the left-hand side of the pyramid contains measures which are externally focused and which are predominantly non-financial those on the right hand side are focused on internal efficiencies of the organization and are predominantly financial the advantages of the performance pyramid is that it's a systematic method of ensuring performance management measures are comprehensive enough to examine the results and determinants of an organization's performance the disadvantages of the performance pyramid is that the performance pyramid tends to concentrate on two groups of stakeholders shareholders and customers it's necessary to ensure that measures are included which relate to other stakeholder as well the cost of time and implementation of the performance pyramid is high and measurements may conflict such as with quality and cost you

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Keywords: Association Of Chartered Certified Accountants (Award Winner), Finance (Industry), ACCA, ACCA P5, performance pyramid

Id: l273_btpVFM

Length: 2min 46sec (166 seconds)

Published: Wed Jul 08 2015