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The Performance Measurement Revolution.

There are many complex branches that constitute the design, development and implementation of a Performance Measurement and Management System. Critics and academics often address specific aspects of this discipline because it is very broad and difficult to grasp in whole. Eccles focused on the revolution from “treating financial figures as the foundation for performance measurement to treating them as among a broader set of measures” (1991). This essay seeks to delve a bit deeper into this paradigm shift and compare the use of financial and non-financial measures to logically deduce whether one is better than the other or best work together with equal status. The success of a chosen system depends on the reliability and validity of information gathered for input. It is therefore important to discuss the selection of data beginning with the traditional financial measures and reasons for this radical change to nonfinancial measures. The conclusion suggests that although more sophisticated nonfinancial measures provide some relevance, its diversity and lack of specificity makes businesses reluctant to reject financial measures. Therefore to maximise benefits, nonfinancial measures supplement financial information to produce quality and quantity.

Traditional Financial Measures

In its most historical beginnings, financial measures provided the foundation for performance measurement. There were not many critics in this era because people were content with existing principles and markets were less sophisticated. The reawakening of learning in the Renaissance was the starting point of an intellectual transformation in the 14th to 17th century followed by the Industrial Revolution in 18th century and Great Depression 1930s were all significant influences (Hendriksen and Breda 1992). People started to formulate standards and regulation to guide the preparation and presentation of financial information. Several...