Second, in contrast to popular claims, nonfinancial
measures are not seen as significantly different from
financial measures in their contribution to operational
and strategic decision making and their capacity to align
intra- and interdepartmental objectives. Surprisingly,
subjective measures are seen as being the least effective
among the three measurement types along these
dimensions (except for “strategic decisions”). A plausible
explanation for this is that the strongest weight for
performance evaluation is still being placed on financial measures. In our sample, the performance evaluation
weights are, on average, 49% on financial, 30% on nonfinancial,
and 21% on subjective measures (not tabulated).
When financial performance dominates the
performance evaluation, it is perhaps no surprise that
departmental financial measures provide the primary
focus for managers’ short-term decision making.