Financial Times(2017) defines non-financial performance measures as “any quantitative measureof either an individual’s or an entity’s performance that is not expressed inmonetary units.” Increasingly, companies are supplementing internal financialmeasures with non-financial information (Bhimani et al 2012: 631).
One of thebest ways to measure non-financial performance is to use the balance scorecard.It measures the non-financial performance using KPIs in three quadrants: customer,internal business process and learning and growth. In customerperspective, one of the KPIs is customer satisfaction. In a competitive market,customers are the key factor for the success of a firm because they accountedfor most of the income of the firm. By studying the figures, managers can have anidea of what customers think and which area they need to work on in order tomeet customer requirements. High customer satisfaction can facilitate newcustomers or retain customers. This can increase market share which further increasesales and shareholder wealth. The internal business process perspectivefocuses on internal operations which further the financial perspective bycreating shareholder wealth.
The KPI can be manufacturing capabilities ornumber of new products or services. By improving those KPIs, the company canproduce more products which lower fixed costs and improve profit margins. Learning and growth perspective help managersto identify areas to improve in order to achieve superior internal processesthat create value for customers and shareholders. Example of KPI will beemployee education and skill levels. If employees’ education level improvesthen they will be more efficient in completing their works or more innovativewhen designing new products. This can help the company to stay competitive inthe long run.