Strategic performance measurement systems combine financial and nonfinancial measures… 1 answer below »

Strategic performance measurement systems
combine financial and nonfinancial measures
to translate strategy into an actionable set of
performance indicators (Chenhall, 2005). According to Bento and White (2010), strategic
performance measurement systems (SPMS)
may take various forms but share three basic
characteristics:
• “They include financial measures that
capture the short-term consequences of
managers’ decisions regarding issues such
as revenue growth, asset utilization, and
cash flows (Kaplan & Norton, 2001);
• They supplement financial measures with
nonfinancial measures that indicate operational achievements likely to drive future
financial performance;
• They are designed to fulfill multiple purposes, from simple cost determination to
complex value creation, with an emphasis
on strategy execution.” (Bento & White,
2010, p. 4)
The practice of combining financial and
nonfinancial performance measures is not
new, and there are well-documented cases of
companies that formalized their use during the
middle of the twentieth century. For instance,
in the 1950s, the General Electric Company





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