Posted: May 1st, 2025

discussion response 3

please respond to the following discussion post as a peer making a comment. For a well-rounded assessment of a company’s performance, both financial and non-financial metrics are essential. While financial metrics like net income provide a snapshot of current profitability, they can’t capture the full picture. A company might show strong profits but have declining customer satisfaction, a potential future liability. This is where non-financial metrics like customer satisfaction scores (CSAT) come into play. These metrics provide valuable insights into customer perception, a key factor for long-term financial success (Kuzey, 2021). Both financial and non-financial metrics offer actionable data and can be used for benchmarking against industry standards. However, they differ in their focus and measurability. Financial metrics are primarily historical, reflecting past performance in dollars and cents (Cleverley, 2024). Non-financial metrics can be quantitative, like CSAT scores, or qualitative, like employee feedback. Some non-financial metrics, such as employee engagement, can even act as leading indicators, offering a glimpse into future performance and its potential impact on the bottom line (Kuzey, 2021). Relying solely on the wrong metric can lead to misleading information and misguided decisions. By incorporating a balanced approach that leverages both financial and non-financial metrics, businesses gain a holistic view of their performance. This comprehensive understanding allows them to identify areas for improvement and foster long-term sustainability. Strong non-financial metrics, like high customer satisfaction, can translate into customer loyalty and repeat business, ultimately impacting profitability (Vélez-González, 2011). Therefore, a balanced approach that utilizes the strengths of both financial and non-financial metrics is critical for effective performance evaluation and achieving long-term success.