Non-financial performance measures are strongly linked to the co-operative’s strategic plan. The process of identifying a plan for the future operations of the co-operative revolves around the co-operative’s purpose.
A co-operative with the purpose of processing and selling milk on behalf of its dairy farmer members will be focused on identifying and establishing a market and ensuring that its members can supply milk products into that market. Similarly, a local organic food co-operative will focus on engaging local organic producers to supply product and having local consumers buy these products.
These outcomes do not happen overnight but are arrived at through a series of smaller stages or milestones.
The milestones become non-financial performance indicators, once a way of measuring them is settled. Measurement need not be financial or even quantitative and can be qualitative, but should objective or capable of clear description so that progress can be identified.
A dairy co-operative wanting to increase its market settles on a milestone by specifying the quantity of milk that buyers commit to purchase within a time frame. At the same time, the co-operative may also identify the number of new farmer members it will need to meet buyer demand.
An organic food co-operative might specify a minimum number of organic growers to be engaged to supply products to the co-operative, whilst also specifying the hours the retailing operation of the co-operative will be open.
These examples of non-financial performance indicators are key to delivering financial outcomes and value to members.
There are other aspects of performance that will also be important for co-operatives. For co-operatives that rely on members supplying products, the efficiency with which the co-operative pays for those goods will be important. A co-operative that fails to pay its members promptly will not be delivering the benefits members expected.
A community service co-operative is likely to set goals related to the number of services provided or the number of community members who were reached by their services.
A co-operative in its start-up phase will be engaged in a variety of administrative and other possible set-up arrangements such us obtaining any necessary licenses or approvals, or acquiring premises and staff. The non-financial performance indicators for a co-operative at this stage may be related to settling the necessary preconditions to operating.
Identifying non-financial performance indicators is part of the board’s strategic planning task. The board must identify milestones that are:
- appropriate for the co-operative having regard to its stage of growth and purpose,
- able to be measured or quantified objectively, and
- identified as being short or long term.
One approach to strategic planning that aids in the identification of non-financial performance indicators and their measurement is known as the Balanced Scorecard. Learn about this approach by viewing our online training course. The Mutual Value Measurement framework is another option, with resources and consultancy for implementation available from BCCM.
Finally, it is important to communicate the co-operative’s strategic plan to members. Reporting on progress against milestones in the strategic plan will be the basis for reporting to members on progress towards achieving the co-operative’s purpose.
Learn more about financial and non-financial performance measures in our free, online training course starting up and measuring for co-ops.
Guidance for identifying appropriate performance indicators for co-operatives and reporting to members can be found in the following resources: