Nonfinancial Metrics, Strategy, and Culture
Selecting the nonfinancial metrics that will be used to assess and communicate company performance is now a critical responsibility for management teams and boards of directors.
When chosen carefully, nonfinancial metrics (in tandem with financial metrics) are essential for providing internal and external stakeholders with a complete view of a company’s progress toward its strategic goals.
NACD recently convened a meeting of Fortune 500 audit and compensation committee chairs to discuss the key issues and challenges the board faces in the selection and use of nonfinancial metrics.
Three key takeaways emerged from the meeting.
- Boards should link nonfinancial metrics to strategic and cultural objectives.
- Audit committees should leverage internal audits to meet the challenge of nonfinancial data quality oversight.
- Compensation committees are focusing on the role nonfinancial metrics play in compensation-plan design and in eventual payouts.
The full report from the meeting includes
- key questions for boards to ask about nonfinancial metrics
- the four critical roles for internal audit in support of governance over nonfinancial reporting
- special considerations for the compensation committee
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