Strategic Performance Management in Specialised Contexts
Not-for-profit and public sector
In not-for-profit (NFP) and public sector organisations, the value-for-money (VFM) framework applies: economy (cost of inputs), efficiency (inputs to outputs), effectiveness (outputs to outcomes). Understand the multiple, often conflicting, objectives and the difficulty of measuring outcomes. The trap is applying profit-based measures where they do not fit; instead discuss stakeholder value, service quality and social impact.
Multinational and divisional contexts
Understand performance evaluation across borders: currency translation, differing inflation, and the choice of functional versus local currency for appraisal. Know the impact of exchange rate movements on divisional results and the fairness of comparing divisions in different economies.
Service and knowledge organisations
Recognise the characteristics of services (intangibility, inseparability, variability, perishability) and how these affect measurement. For knowledge-intensive firms, understand the role of intellectual capital (human, structural, relational) and why traditional financial measures are incomplete.
Sustainability and integrated reporting
Know the triple bottom line (profit, people, planet) and the integrated reporting framework's focus on capitals and value creation over time. Questions often ask you to evaluate whether sustainability measures are genuinely integrated or merely reported.
Worked rule of thumb
For VFM questions, map each measure to economy, efficiency or effectiveness explicitly. If a measure describes cost per unit of input, it is economy; cost per unit of output is efficiency; achievement of intended outcomes is effectiveness.
Exam traps
- Using profit maximisation logic for NFPs.
- Ignoring currency effects when comparing divisional performance.
- Treating sustainability reporting as automatically integrated.