Financial Managers Analysis 2022

Financial managers are responsible for both the financial and non-financial
goals. Financial objectives are to increase the business revenue and profit
margin of the firm where as the non-financial objectives are to provide
high quality customer service, to perform CSR activities and to follow all
the rules and regulations. The motives for these goals can be maximising
of the shareholder’s wealth but sometimes the managers can work for
their own interests rather than that of the firm. So, the compensation of
the managers is generally linked with the stock or business performance
by adding stock options in the compensation plans. This kind of
compensation can motivate the mangers to increase the profitability of
the firm without considering the impact they can have on other non-
finance goals. For example, in order to increase the revenues the firm can
concentrate mainly on the marketing and sales side but not on the
customer support side that can hurt the expectation of the customers and
future growth of the company. These kinds of practices can hurt the brand
reputations as such misconducts do not go well with the customers and
regulators in the long run. Other scenario can be the aggressive use of
natural resources to increase firm’s sale without taking into account the
environmental impacts. Also, In order to increase the overall profitability
some firms do not pay attention to the working conditions and facilities
but rather reduce the costs by using unsafe and harsh practises. The
management can be focused on increasing the overall efficiency of its
operations by investing in the new technology and innovation but if the
result of this is just a low-cost product with lower quality then it will hurt
customer’s loyalty. The challenge faced in these situations is that it is
difficult to measure the impact on the non-financial goals in terms of
concrete number. Also, another issue is that these issues sometimes do
not become clear suddenly but only later when they can affect the
involved stakeholders and the firm in an adverse manner. It is clear that
these issues can create effect on the various factors important for the
success of the firm like customer loyalty, social acceptance and employee
satisfaction. It is learnt in the topic that both financial and non-financial
goals are important for the firm. The conflicts arising between both goals