Performance Management

D6: Performance Measurement and Control | Performance Analysis in Not For Profit Organisations and the Public Sector (ACCA F5)

D6- Performance Analysis in Not For Profit Organisations and the Public Sector

Performance Analysis in Not For Profit Organisations and the Public Sector examines the problems of having non-quantifiable objectives in performance management; explains how performance could be measured in this sector; identifies the problems of having multiple objectives in this sector and outlines Value for Money (VFM) as a public sector objective.

Performance Analysis in Not For Profit Organisations and the Public Sector

Not for profit organisations have general objectives which include:

  • “Surplus maximization (Similar to profit maximization)
  • Revenue maximisation
  • Usage maximisation
  • Usage targeting (Matching the capacity available)
  • Full/ partial cost recovery (Minimising subsidy)
  • Budget maximization – Maximising what is offered
  • Producer satisfaction maximization – Satisfying the wants of staff and volunteers
  • Client satisfaction maximization – Generating the support of the public”

a) Comment on the problems of having non-quantifiable objectives in performance management.

The problems with non-quantifiable objectives in performance management stem from the fact that:

  • There are multiple objectives
  • Outputs and benefits are non-quantifiable
  • There is a lack of profit measures because profits are not expected
  • The nature of services provided can not be measured financially
  • There is no revenue generation
  • Fixed budgets are set for projects and initiatives

b) Explain how performance could be measured in this sector.

Performance can be measured using the value for money criteria of economy, effectiveness and efficiency.

  • Economy is spending money frugally
  • Efficiency is getting the most for the money spent.
  • Effectiveness is getting what has to be done economically and efficiently

c) Comment on the problems of having multiple objectives in this sector.

Multiple objectives makes it difficult to assess performance especially if they are non-quantifiable. To deal with multiple objectives, the organization can prioritize or compromise the objectives.

d) Outline Value for Money (VFM) as a public sector objective.

Public sector organisations are encouraged to achieve value for money which is seen as good management.

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