Are nonfinancial metrics good leading indicators of future financial performance?

• Autores: Vincent O'Connell, Don O'Sullivan
• Localización: MIT Sloan management review, ISSN 1532-9194, Vol. 57, Nº 4, 2016, págs. 21-23
• Idioma: inglés
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• Resumen

  • In recent years, more companies have begun using non-financial measures as leading indicators of future financial performance. Corporate boards have extended executive compensation schemes to embrace measures for, among other things, customer satisfaction, employee engagement, and openness to innovation. Inclusion of such measures is thought to encourage behaviors that some say have the power to increase the company's long-term value rather than simply maximizing short-term financial performance. Although the notion of using nonfinancial metrics such as customer satisfaction to shape executive behavior is attractive to managers, the extent to which including these measures in compensation schemes actually improves company value and financial performance is a matter of debate. When it comes to nonfinancial metrics, there's no such thing as one size fits all. By utilizing the power inherent in our measures of lead indicator strength, companies can avoid the pitfalls and cost of incentivizing the wrong measures.