Answer:
What benefits does the use of Non-financial indicators have for your company, as opposed to accounting indicators?
FINANCIAL MEASUREMENTS AND THEIR LIMITATIONS
There is no standard model that dictates what an organization should do to measure a business performance; the traditional method of measurement has been essentially financial. Financial measures of performance have evolved, and today concepts such as Return on Investment (ROI) are quite prevalent.
The work of financial professionals is to be commended. As we move ahead; however, many are questioning our almost exclusive reliance on financial measures of performance. Perhaps these measures served better as a means of reporting on the stewardship of funds entrusted to management’s care rather than as a way to chart the future direction of the organization.
A problem with assessing performance with financial measures like EPS (earnings per share), ROI (return on investment), and Residual Income is that the financial measures are backward looking. In other words, today's financial measures inform about the accomplishments and failures of the past. An approach to performance measurement that also focuses on what managers are doing today to create future shareholder value or to avoid/mitigate a future/potential risk can be found in non-financial information.
