Published by:
Harvard Business Publishing
Length: 5 pages
Share a link:
https://casecent.re/p/47476
Write a review
|
No reviews for this item
This product has not been used yet
Abstract
The performance measurement system in many decentralized companies actually works against good management. It encourages profit center managers to cover up bad news, take short-term actions that may hurt the real interests of their organizations, and accept responsibility for things over which they have little or no control. The solution is to measure the performance of profit centers and their managers with different yardsticks. Measure profit centers with profit center financial statements that follow traditional accounting systems. To measure the managers, use separate profit budget reports.
About
Abstract
The performance measurement system in many decentralized companies actually works against good management. It encourages profit center managers to cover up bad news, take short-term actions that may hurt the real interests of their organizations, and accept responsibility for things over which they have little or no control. The solution is to measure the performance of profit centers and their managers with different yardsticks. Measure profit centers with profit center financial statements that follow traditional accounting systems. To measure the managers, use separate profit budget reports.