Non-financial measures

In this lesson

1. 0:00 Why non-financial measures matter
2. 2:18 Mission, strategy and critical success factors
3. 4:21 Introduction to the balanced scorecard
4. 5:39 Four perspectives of the balanced scorecard
5. 10:22 Balanced scorecard in practice: Easy Air Co
6. 12:24 Labour efficiency, capacity and production volume
7. 14:00 Calculating efficiency, capacity and volume ratios

About this lesson

You'll discover why non-financial measures matter—they're leading indicators that reveal future potential, whereas financial results are lagged indicators that only tell you about the past. Understanding this shift is crucial for Performance Management and helps you avoid short-term decisions that damage long-term value. The Balanced Scorecard organises performance measurement across four interconnected perspectives: customer, internal business process, innovation and learning, and financial. For each perspective, you identify critical success factors—the things your organisation absolutely must get right to achieve its mission—then measure performance against them using key performance indicators (KPIs). For example, an airline might track on-time delivery rates for customers, aircraft downtime for internal processes, employee retention for learning and growth, and return on capital employed for shareholders. The framework works because if you excel in the non-financial areas, the financial results follow naturally. You'll also learn workforce efficiency ratios used in Performance Management: efficiency (comparing standard hours to actual hours), capacity (actual hours versus budgeted hours), and production volume (actual output versus budgeted output). These metrics reveal whether your team is working faster than expected, delivering more hours than planned, or producing beyond target. Each ratio tells a different story about operational performance and helps you identify where improvements are needed. By the end of this lesson, you'll be able to design a balanced scorecard for any organisation, select appropriate KPIs for each perspective, and interpret efficiency and capacity ratios—all essential skills for the PM paper and real-world management accounting.

Duration: 17m