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Assessing a Not for Profit Organisation

ACCA APM – Performance Management in the Not for Profit Sector

One of the most common exam questions in the ACCA’s APM exam surrounds KPIs. The examiner is keen that students can evaluate an existing KPI system against the businesses objectives. This can be for any business type, but let's look at the not for profit sector and in particular a university.

This is a critical skill and without it, passing this exam will be difficult.

The most common issues with the existing KPI system in the exam will often be:

· An objective for which there is no KPI

· A KPI that is in some way badly set:

· The KPI could be easily manipulated

· The KPI is unrealistic or unachievable

· The KPI is outside the control of the organisation or the individual made responsible

· The KPI could result in poor decisions·

The KPIs are much more likely to be non – financial or non – traditional due to the nature of these organisations, so being able to think clearly will be important.

Let’s consider a University as an example

Suppose a University has the following objectives agreed.

  • To Gain income from world class research

  • To deliver first class education

  • To provide pastoral care to students

Further suppose that the university has the following KPI system.

  • Minimum 25% of professor hours spent on research

  • Degree classifications to be at least 70% at 2nd class or above

  • At least 80% of graduates to find jobs at the end of their course

Your mission in the exam will be to evaluate this system….

What points could you make?

Inadequate KPI - Minimum 25% of professor hours spent on research

Whilst one would hope that spending time on research would be fruitful, the KPI simply demands that time is spent and there is no mention of income production.

This could mean “pet” projects are worked on rather than those more likely to be financially successful.

An objective for which there is no KPI

The objective concerning pastoral care is not dealt with in the existing KPIs

Perhaps having a KPI which targeted that access to care was offered within 2 days of a request would be appropriate?

A KPI that is too easily manipulated

The KPI targeting at least 70% of students gain an achievement level at 2nd class or above is easily manipulated given the university would likely mark its own degree programmes and indeed set its own exams.

A KPI not closely related to an objective

The KPI requiring at least 80% of graduates to gain employment does not tie in with the stated objectives very well. On the other hand, one could argue that gainful employment is helpful in assessing the quality of the education.

Your assessment needs to be balanced and see the positives and the negatives of the existing system although you should expect to find more negatives!

The ACCA APM exam has a fearful reputation driven by low pass rates. In my view this is undeserved. Students just need the right guidance. ACCA APM Specialist online tutor

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