Eastvaco, due to its decreasing financial condition, is concerned with maintaining control over their costs. This is particularly a problem at the Charlotte plant. The plant manager has been under some pressure to improve performance measurement. The three products, envelopes, cups and packaging are made from recycled materials. Unfortunately, there is not always enough recycled material available and Charlotte has to purchase other material. Since all three products have similar manufacturing processes some aggregation of data is possible. There are three product managers responsible for envelopes, cups and packaging, respectively. The plant manager asks the three product managers to meet with him to discuss how best to measure performance and control costs. A heated discussion erupts about the effectiveness of financial vs. nonfinancial measures.
The cup manager contends that numbers do not tell the whole story while the packaging manager states, "numbers are objective" and is the only way to determine how we are doing. The envelope manager takes a middle ground, "we need both." After several hours the plant manager becomes impatience and states, "how can we even begin to measure anything when my managers don't agree on how or what to measure." He asks for the following:
1. What nonfinancial issues and measures should we consider and why?