Week Task 2 asignment on non-financial objectives PDF

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Question: How important are non-financial objectives to UK listed companies? (Hint: Review some company websites and see if you can find their main objectives) Answer Businesses are increasing recognizing that for a more balanced approach to performance measurement includes both financial and non-financial objectives. Nonfinancial objectives provide the rationale and the methods to capture and use information about the many intangible variables that impact performance of the business. Non-financial objectives, such as customer loyalty and employee training, target assets that are difficult to quantify but are equally as important as financial objectives. Non-financial objectives theory emphasizes the need for companies to create customized performance measurement systems. One-size-fits-all non-financial objectives cannot equally meet the needs of all companies. Identification of all groups is the first step toward identifying non-financial objectives that appeal to the groups and meet the company’s needs. The interest groups of the non-financial objectives include; equity investors, creditors, customers, employees, managers and community at large. Sometimes non-financial information could refer to social accounting, corporate social responsibility (CSR), environmental reporting, sustainability, service performance reporting, etc (Reza et al. 2016). These objectives are important because they provide non-financial data that is relevant to your business can illuminate the connection between non-financial objectives and improvements in financial objectives. For instance, improved customer satisfaction and a resulting decrease in the loss of existing customers might drive decisions to invest in new communication technologies. Measuring employee training against workplace accidents might reflect a decrease in costly absenteeism. Therefore it is important that all organizations have non-financial objectives which would normally affect achievement of financial goals. These include: 1. Welfare of employees. A firm should make good remuneration to the human resource. This may involve provision of good training to employees as well as career development skills. 2. Welfare of the management. Improving management's welfare may include providing good salary packages, enrolment to entertainment facilities and provision of good transport mechanism. 3. Welfare of society. Organizations do not operate in a vacuum. Therefore, firms must be involved in social activities for the benefit of the society. 4. Welfare of the government. Firms should pay taxes to the government and adhere to the rules of the country.

5. Welfare of customers and suppliers. An organization should always satisfy customers and suppliers since they are the main stakeholders of the organization. 6. Business ethics. Firms should practice human behaviour which is acceptable and considered ideal. For example, firms ought to practice healthy competition. Some of the listed UK companies whose objectives are reviewed were Prudential and Uniliver and all their main objectives give more emphasis to non-financial objective as as opposed to the financial objectives. For example out of every three objectives reviewed for each of the companies two of them were non – financial objectives. Below are some of the non-financial objectives reviewed; Prudential is a an insurance company and its purpose is that to help people get the most out of life. One of its major non- financial objective is; offering products to new customers in Africa, one of the fastest-growing regions in the world (https://www.prudentialplc.com/) Unilever is over 120 years serving over 2.5 billion people will use our products to feel good, look good and get more out of life. The brand gives them a unique opportunity to create positive change, to grow our business, and to achieve our purpose of making sustainable living commonplace. One of their non-financial objective is to serve people everywhere: Through data-driven relationships and channel availability. Another objective reviewed gives both a blend of financial and non- financial objective that is; to deliver long-term, superior value: By reshaping our portfolio, and being a fast, low cost and fully digitalized company (https://www.unilever.com/).

The non-financial objectives are very key in contributing to the financial objectives and help the companies to achieve growth of sales, diversify the products offering, business survival during the crisis and contributing to environmental protection and sustainability. Reference Reza Malek-Yonan, Mahmoud Bakhtiar and Milad Rafsanjani ( 2016). Analytical study on the importance of non-financial information in company reporting. International Journal of Management and Business Studies ISSN 2167-0439 Vol. 6 (3), pp. 251-255, March, 2016. Available online at www.internationalscholarsjournals.org Accessed on 21.09.2020...