- 6 Marks
MA – April 2022 – L2 – Q1b – Divisional performance
Discuss the impact of involving managers in financial target setting and the disadvantages of using financial indicators alone for performance assessment.
Question
The manager of the fitness club in Papase is dissatisfied with the quarterly bonus system and does not perceive it to be fair. He argues that the financial targets are based on a regional view of all Gyakie fitness clubs and do not take account of specific local circumstances. For instance, the fitness club in Papase is located in a less affluent area of the region. Managers also complain about using solely financial indicators in setting targets. The manager of the fitness club in Papase would like to see participation from all fitness club managers in the development of quarterly financial and non-financial targets.
Required:
i) Discuss the potential impact on Gyakie for involving the fitness club managers in the preparation of their quarterly financial targets. (3 marks)
ii) Explain THREE (3) disadvantages of using financial performance indicators alone to assess performance. (3 marks)
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