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Guideline - Using non-financial measures

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Published: 14 Nov 2014 Updated: 04 Jul 2023 Update History

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Given that most organisations will use a mixture of financial and non-financial measures (NFMs) in running their businesses, it follows that their budgeting, forecasting and reporting systems will also use a combination.

Management will invariably want to know what levers they can pull to improve performance, and these levers will be non–financial, as a result establishing a relationship to financial measures is necessary. In an ideal world this would be a quantitative relationship which could be built into a business model, but the reality is that just showing the linkage between NFMs and financial measures is a sufficient start for most. 

The purpose of this guideline is to illustrate how to link NFMs with financial measures. In doing so, you should arrive at a comprehensive and balanced set of measures. 

This guideline directs you to a number of different ways of linking financial and non-financial KPIs: 

  • A balanced scorecard approach 
  • A quality model (European Quality Model) 
  • Other corporate models 
  • A checklist type approach

Further reading

Further reading into some of the tools and models discussed here is available through the ICAEW Library and Information Service resources below.

These resources are available to ICAEW members and ACA students.

Exclusive Traditional vs contemporary management accounting practices
  • Article
  • Jun 2023
  • Lu Jiao, Kevin Baird, Abubakar Nuraddeen Nuhu
  • Strategic Finance
Results of a survey examining the direct and moderated effects of traditional and contemporary management accounting practices on organizational performance and competitive advantage. The survey investigated the effectiveness of several practices, including: capital budgeting, standard costing, activity-based management, balanced scorecard and strategic cost management.
Exclusive Performance management shouldn’t kill collaboration
  • Article
  • Sep 2022
  • Heidi K. Gardner, Ivan Matviak
  • Harvard Business Review
Companies today need cross-silo collaboration to survive a volatile competitive environment but often their performance management systems discourage it. The authors outline specific ways companies can retool their performance management systems to boost collaboration.
Exclusive Key performance indicators: developing, implementing and using winning KPIs
  • eBook
  • Jan 2020
  • David Parmenter
Key Performance Indicators (KPIs) help define and measure the organizational goals which are fundamental to an organization's current and future success. This book provides a model for simplifying the complex areas of KPIs while helping organizations avoid common mistakes and hazards.
Exclusive Revision of performance measurement tools and methods
  • Article
  • Jan 2019
  • Alladyn Elmgasbi
  • Financial Internet Quarterly
The article discusses and compares several popular performance measurement tools and methods, including: the Balanced Scorecard, Tableau de bord, Skandia Navigator, Intangible Assets Monitor, German Scorecard, Business Excellence Model, Dutch system of performance management, Performance Prism and the EFQM Excellence Model.
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  • Update History
    14 Nov 2014 (12: 00 AM GMT)
    First published
    04 Jul 2023 (12: 00 AM BST)
    Page updated with Further reading section, adding additional reading on some of the tools and models discussed. These new resources provide fresh insights, case studies and perspectives on this topic. Please note that the original article from 2014 has not undergone any review or updates.