PERFORMANCE MEASURES FOR NON PROFIT MAKING ORGANISATIONS(NPO)
WTM ? (WHAT TO MEASURE)
•
EFFICIENCY getting out as much as possible for what goes in
NPOs
EFFECTIVENESS relationship between an org’s outputs and its objectives
ECONOMY spending money frugally
HOW CAN BE MEASURE
INPUTS
JUDGEMENT
COMPARISON
QUANTITATIVE MEASURE
• Efficiency measurement input and output is illustrated as follows: • •
Where input is fixed = actual output ÷ max output obtainable for a given input
• •
Where output is fixed = min input needed for a given output ÷ actual input
• • • •
Where input and output are both variable = Actual output ÷ actual input compared Standard output ÷ standard input
VFM ECONOMY • Acquiring appropriate resources (input) for minimum cost whilst maintaining quality e.g. money, materials EFFICIENCY output/input • Maximising output for a given input • Achieving minimum input for a given output • In terms of monetary & non monetary measures
EFFECTIVENESS ….RESULTS • Output achieves the desired objectives • Use monetary, non monetary & quality measures The 3 measures may be in conflict with each other & may sometimes complement each other TewYouHoo/Performance Analysis in NPO
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• • • • • •
PERFORMANCE MEASURES IN POLICE FORCE Fall/ increase in crime rates Average cost per crime % of total crimes solved How efficiently costs have been controlled Quality of support for crime victims Courtesy and friendliness of police force to the public
PERFORMANCE MEASURES IN CHARITIES • Amount collected from the public compared to target • No. of people helped by the charity • Success of appeals • Public awareness of charity • Commitment of charity workers TewYouHoo/Performance Analysis in NPO
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PERFORMANCE MEASURES IN HOSPITALS • • • • • • • •
Number of operations performed compared to targets Survival rates No. of nurses and doctors per patient Response time for emergencies Waiting list periods Quality of hospital food Comfort or overcrowding in hospitals Courtesy and friendliness towards patients by staff
TewYouHoo/Performance Analysis in NPO
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PERFORMANCE MEASURES FOR SERVICES
SERVICE VS MANUFACTURING The problems associated with performance measurement of service businesses is due to the following Service characteristics • Intangibility – lack of substance • Inseparability – created at the same time as consumed • Perishability – a service is perishable • Variability – problem of consistency of output • No transfer of ownership – no transfer of property
What are services ?
perishable intangible
SERVICES
simultaneous
heterogeneous
BUILDING BLOCKS DIMENSIONS COMPETITIVE FINANCIAL QUALITY of SERVICE FLEXIBILITY RESOURCE UTILISATION INNOVATION
Dimensions • Competitive performance (sales, market share, new businesses) • Financial performance – budget (i.e. budgeted expenditure limit, standard performance measures) • Quality of service • Flexibility (speed of delivery, ability to respond to customers’ specifications, coping with demand) • Resource utilisation measures (emphasis productivity) • Innovation
MEASURES FOR FINANCIAL DIMENSION
Profitability
2. Liquidity
• Profit
• Debtors days . Creditors days
• Return on net assets
3. Capital structure
4. Market ratios
• debt/equity • LT to ST debt
• PE • ROCE
ANMTYH/Scope of performance measurement
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MEASURES FOR COMPETITIVENESS DIMENSION
Sales growth
Market share
Repeat business
Number of customers
ANMTYH/Scope of performance measurement
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MEASURE FOR QUALITY DIMENSIONS 1. 2. 3. 4. 5. 6. 7. 8.
Reliability Competence Customer relation/feedback Number of complaints Customer retention rate Responsiveness Friendliness Cleanliness
ANMTYH/Scope of performance measurement
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MEASURES FOR FLEXIBILITY
Volume flexibility (coping with demand)
ANMTYH/Scope of performance measurement
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MEASURES FOR RESOURCE UTILISATION DIMENSION
Productivity
Service rendered per labourhour
Utilisation rate
ANMTYH/Scope of performance measurement
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ADDITIONAL MEASURES FOR RESOURCE UTILISATION DIMENSION Business Input Output Accounting firms Man hours available Chargeable hours Hotels
Rooms available
Rooms occupied
Railway companies
Train miles available
Passenger miles
Banks
Number of staff
Number of accounts
ANMTYH/Scope of performance measurement
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MEASURES FOR INNOVATION DIMENSION
Average development cost per service Development cost of individual service % of turnover spent developing new service/products/processes
How many new services developed per annum How many new services that are successful Proportion of new services to total services provided Time to adopt new concept from outside the firm
ANMTYH/Scope of performance measurement
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