MGMT 490 Lecture Notes - Lecture 5: Performance Measurement, Management System, Capital Structure
Lecture note 5 MGMT 490:
• Definition
• Defining a limited number of control indicators that can be used to measure the
development of the business. These key figures cover both internal and external
aspects, and are only financial in nature. They can provide early warnings of possible
deviations, and allow managers to monitor the implementation and efficiency of
strategic initiatives.
• Controllers
• Are responsible for the preparation of this financial data and for all internal
accounting.
- Controller is purely a watchdog who checks whether set financial targets have
been achieved. However, controllers should not do the checking themselves.
Instead, they should ensure that all employees can check their own financial
contributions to the company and how those contributions relate to the targets
set by management.
• Three purposes of Strategic Performance Monitoring:
• to provide early warning that targets are unlikely to be met or that there are
important changes in the marketplace
• to monitor the implementation of strategy projects
• to monitor the effectiveness of these projects
• Early warning: identification and monitoring of control indicators
• Early warning systems are also related to the development of effective crisis‐
management systems and an ex ante readiness to react, which will prevent the
company from being taken by surprise.
• Implementation monitoring: definition of how activities should be carried out and
monitoring:
• Performance measurement monitors whether activities are running according to the
prescribed standard routines or moving off course.
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Document Summary
Lecture note 5 mgmt 490: definition, defining a limited number of control indicators that can be used to measure the development of the business. These key figures cover both internal and external aspects, and are only financial in nature. They can provide early warnings of possible deviations, and allow managers to monitor the implementation and efficiency of strategic initiatives: controllers, are responsible for the preparation of this financial data and for all internal accounting. Controller is purely a watchdog who checks whether set financial targets have been achieved. However, controllers should not do the checking themselves. Innovation perspective: measuring whether the company is fit for the future. Targets for workforce satisfaction, productivity and staff retention are typically the most important. An annual survey of the workforce can provide information about employee satisfaction, in a way similar to the use of surveys within the customer perspective.
