One of the signs that a firm's performance measurement system is inadequate is when performance measures show improvement but this is not translated into profit. In which of the following circumstances may this occur?
i. Resources freed up through improvements may not have been utilised to improve profitability.
ii. Factors being measured are not critical success factors.
iii. Too many similar measures are used.
iv. There is a time lag between improved performance and improved profitability.
A) i, ii and iii
B) ii, iii and iv
C) i, ii and iv
D) i, iii and iv

Question

Quizplus · Accepted Answer

Inadequate translation of improved performance into profit may occur when resources freed up through improvements are not utilised to improve profitability (i), the factors being measured are not the critical success factors (ii), and there is a time lag between improved performance and improved profitability (iv). Measure proliferation (iii) can lead to confusion and difficulties in tracking progress, but that alone does not necessarily lead to inadequate translation of improved performance into profit.

One of the Signs That a Firm's Performance Measurement System