The course introduces students to the main concepts and instruments of performance measurement and management control in organizations.
Questions will revolve around the relevance and efficiency of such accounting & financial measures used for behavioral & economic purposes.
For instance: How should the performance of managers, departments, or divisions within an organization be measured? What accounting and control tools should organizations use to ensure higher performance?
The course focuses on both the economic & organizational dimensions of firms.
At the end of the course, students should:
- Understand the most common organizational structures and their development in the past decades; responsibility centers, matrix organizations
- Know the most common accounting tools and financial performance measures that are used for evaluating managerial performance: budgeting, variance analysis, rolling forecasts, transfer pricing, ROIs, EVAs (value creation)
- Be able to "read" and evaluate managerial performance using such measures
- Be able to critically assess the use and limitations of financial & accounting performance measures in specific organizational settings
- Understand the relevance and strategic implementation of non-financial measures and strategic PMM systems such as the balanced scorecard
- Achieve a global understanding of the risks and limitations faced in performance measurement.
Five main takeaways for this course:
- Understand how and why a company is composed of different types responsibility centers (e.g. profit centers, cost centers, revenue centers, and investment centers).
- Learn the principles through which organizational units negotiate and set prices for the goods and services transferred within the organization.
- Understand how budgeting is used to plan and control business performance.
- Identify the uses, benefits, and limitations of financial measures such as ROI, EVA, and residual income.
- Learn how to optimize the organization’s strategy through performance measurement systems (such as the Balanced Scorecard).