The role of financial and non-financial metrics in performance management: A case study of Lafarge Africa Plc
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Background of the Study
In contemporary business management, performance measurement is essential for ensuring the achievement of organizational goals, optimal resource utilization, and strategic alignment. Performance metrics are typically categorized into financial and non-financial indicators. Financial metrics such as return on investment (ROI), profit margins, and cost efficiency measure the monetary outcomes of a company’s operations. On the other hand, non-financial metrics, including customer satisfaction, employee engagement, and operational efficiency, provide a more holistic view of performance. Lafarge Africa Plc, a leading player in the cement manufacturing sector in Nigeria, operates in a highly competitive and volatile market, where both financial performance and non-financial aspects like customer satisfaction and employee performance play a critical role in determining its success. Previous research has shown that integrating financial and non-financial performance metrics improves decision-making, strategic planning, and competitive positioning (Olson et al., 2023; Okwu et al., 2024). However, the balance and integration of these metrics in organizations in emerging economies like Nigeria remain underexplored. Lafarge Africa Plc serves as an ideal case study to investigate how both types of performance metrics are employed to drive the company’s performance. This research aims to examine the role of financial and non-financial metrics in the performance management framework of Lafarge Africa and explore how these metrics contribute to the company’s success in a challenging business environment.
Statement of the Problem
While Lafarge Africa Plc is a leading cement manufacturer in Nigeria, the company faces intense competition, rising operational costs, and fluctuating demand. The effective use of performance metrics is crucial for making informed decisions regarding resource allocation, customer satisfaction, and operational efficiency. However, it is unclear how Lafarge Africa Plc integrates financial and non-financial metrics within its performance management system and whether the company strikes a balance between short-term financial results and long-term strategic goals. In particular, there is limited understanding of how non-financial metrics, such as employee engagement and customer loyalty, influence the overall performance outcomes of Lafarge Africa. This study, therefore, seeks to explore the role of both financial and non-financial metrics in performance management at Lafarge Africa Plc, to assess their contributions to the company’s success and to identify opportunities for improving the integration of these metrics.
Objectives of the Study
- To assess the integration of financial and non-financial metrics in the performance management system at Lafarge Africa Plc.
- To examine the impact of financial and non-financial metrics on the overall performance of Lafarge Africa Plc.
- To identify challenges in balancing financial and non-financial performance metrics at Lafarge Africa Plc.
Research Questions
- How are financial and non-financial metrics integrated into the performance management system at Lafarge Africa Plc?
- What is the impact of financial and non-financial metrics on the overall performance of Lafarge Africa Plc?
- What challenges does Lafarge Africa Plc face in balancing financial and non-financial metrics in its performance management system?
Research Hypotheses
- The integration of financial and non-financial metrics significantly improves the performance management system at Lafarge Africa Plc.
- Both financial and non-financial metrics positively influence the overall performance of Lafarge Africa Plc.
- Balancing financial and non-financial metrics is a significant challenge for Lafarge Africa Plc in its performance management system.
Scope and Limitations of the Study
This study focuses on Lafarge Africa Plc, one of Nigeria’s leading cement manufacturers. It will explore the integration of financial and non-financial performance metrics in the company’s performance management system, using both qualitative and quantitative data over the past five years (2020-2025). Limitations include the potential for bias in internal company data and the challenges of generalizing findings to other industries in Nigeria.
Definitions of Terms
- Financial Metrics: Quantitative measures that evaluate the financial performance of an organization, such as ROI, profit margins, and revenue growth.
- Non-Financial Metrics: Qualitative indicators that measure aspects of an organization’s performance that are not directly related to financial outcomes, such as employee satisfaction, customer loyalty, and operational efficiency.
- Performance Management: A strategic approach to ensuring that an organization’s goals are consistently being met in an efficient and effective manner.
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