Evidence suggests that in recent years, non financial performance indicators have been given considerable attention by the management accounting scholars and there have been several studies carried on Non Financial performance measurement practices in the manufacturing settings. Among the scholars who have carried out these studies are Govindarajan and Gupta, 1985; Govindarajan and Fisher, 1990; Scapens, 1997; Ezzamel, 1992; Simons. 1987; Hoque and James, 2000; Abernethy and Lillis, 1995; Ittner et al., 1997. Despite the service sector contributing an important part of gross domestic product and employment in most advanced economies (Fitzgerald et al., 1991), few studies have been carried out about this phenomenon in the non manufacturing settings such as banks. Exceptions include Evans et al., 1997; Modell, 1995, 1996; Smith, 1998; Ballantine et al., 1996, Fitzgerald et al., 1991.
There are two types of performance measurement:
1. Financial performance measurement
2. Non Financial performance measurement
Performance measurement is a key factor to ensure that the company's strategies and techniques are successfully implemented in pursuing its goals and ensuring success of the business in both short term and long term (Fitzgerald et al., 1991. In the short term, performance measurement directly related to profitability such as return on investment or net earnings are appropriate measures of performance which distracts from the non financial factors such as market share, customer satisfaction and quality among others that lead to profits in the long run. Kaplan and Norton (1996, 2001) found that a firm's long run performance is better predicted by non financial measures and they help managers in assessing and monitoring the firm's progress towards its strategic goal and objectives.
Performance measurement systems are very important and have been emphasized a lot by the literature since they capture a series of strategically important criteria in the financial and non financial terms (Lillis, 2002). The performance measurement systems have been characterized as dynamic (Bitici et al., 2000; Neely et al., 2002; Garengo et al., 2005; Stringer, 2007) and balanced (Kaplan and Norton, 1996; Garengo et al. 2005; Stringer, 2007). Since business environments and organisations keep on changing, the Performance Measurement systems also should change so as to remain useful and retain their relevance in order to survive.
Before the 1980s, the organizational performance measurement process was characterized by a cost accounting orientation which emphasized selective financial indicators such as profit and return on investment (Carlos F.Gomes, Mahmoud M.Yasin, Joo V.Lisboa, 2004) but, however, this approach was not totally acceptable since it considered solely financial factors which may promote short term thinking. Johnson and Kaplan (1987) were among the first scholars to criticize on the cost- accounting based approach performance measurement. Therefore, both Johnson and Kaplan (1987) and Mc Nair and Moscini (1987), found the need to have an integrated performance measurement approach. Several performance measurement models have been developed in order to respond to the dissatisfaction of the traditional Performance Measurement models. Some of these models were the balanced scorecard (Kaplan and Norton, 1992). The performance pyramid, see figure 1, (Lynch and Cross, 1991), integrated performance measurement (Nanni et al. 1992) and performance measurement in service businesses (Fitzgerald et al., 1991).
Furthermore, L'?ts K.; Haldma, T.; Moeller, K. (2011) found that market share and employee satisfaction were ranked higher than other non financial performance indicators in the services sector businesses. In addition, they stated that both service and manufacturing companies increased their use of non financial performance indicators. Bank managers stated that, if financial performance measures were good enough, then non financial performance measures would have been considered else not (Hussain, M.M.; Hoque, Z., 2002). If non financial performance measures are given less attention in an organisation, then it is less likely for the management to pay attention whether the non financial performance measures are being used effectively or not.
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