BU620

1. BU620 Management Controls

2. 1st Class - Objectives • Introduction • Course Outline & Objectives • Expectations • In class case exercises

3. Introduction • Professor: Dr. Laura MacDonald • Contact Information: • Lmacdona@wlu.ca or ext. 2815 • P2052 • Office Hours: • Thursday 12:30 – 1:30 or by appointment • Class: • Monday 1- 4 p.m., SBE 2260 • Faculty Assistant: • Sandra Castellanos, SBE2201

4. Course Overview • Performance measurement and control is an essential function of management • ensure that the organization’s objectives and strategies are carried out effectively. • it increases the probability of organizational success.

5. Course Overview Management can use a combination of mechanisms to achieve organizational control. • One is to hire good people who can be relied upon to serve the firm well (personnel controls). • ensure that employees do not perform certain actions known to be harmful to the organization (action controls). • rewarding individuals for generating good results (results controls).

6. Course Overview • We will focus on the use of results controls • measurement and evaluation of financial and non-financial performance. • Focus on key decisions that must be made in using results controls: • performance measures, standards and targets • performance-based incentives. • Limitations of traditional measures • Recently developed approaches

7. Course Overview • The course is designed to be useful to those aspiring to be: • Managers • Compensation consultants or human resource specialists • Management consultants • Management accountants

8. Course Objectives • After completing this course you will; • Be able to evaluate the efficacy of an existing management control system; • Understand the role played by effective management accounting and control systems in modern organizations; • Be able to design and develop an effective management accounting and control systems; and, • Be familiar with a number of emerging ideas and concepts in the field of management control.

9. Seminar Course • my role is primarily as a resource person to help guide your exploration of the material. • your role as a student is to contribute to class. The real learning comes from • your preparation for class and • participating in the exploration of ideas during class. • Your level of preparation for class largely decides the value you will take away from each session. • The case method facilitates the exploration of the management control issues in a broad range of settings

10. Expectations • Prepared for class and ready to contribute • most of the course will involve a discussion of ideas, concepts, opinions, and analysis that follow from the cases and readings • You should therefore come to each seminar ready to discuss issues from the assigned readings as well as the cases assigned for that day.

11. Expectations • For each case, a number of members of the class will be assigned responsibility for presenting the “basics” of each case: an overview of the firm/industry, an overview of the MCS in place, and an overview of the presenting problem • The class as a whole will be responsible for analyzing the situation, proposing alternatives and making recommendations.

12. Evaluation Participation: • Hand-in case summaries 10 % • Case Overviews 10 % • Classroom contribution 5% Report and Presentation 40% Examination 35% 100%

13. Hand-in Case Summaries • Each member of the class will provide a one-page summary of the cases at the beginning of the class in which the case is discussed. • This summary will not be graded for “correctness” but only for an honest attempt to consider the issues in the case and make a preliminary recommendation. • You must be present at the class for this summary to be accepted for grading. • These items will not be returned to you, as I will assemble them into a portfolio of work on which I will assess your performance collectively over the term. I will also contact any student whose case submissions I deem to be unacceptable for graduate level work. • If you fail to submit a case summary, I will interpret your not submitting a required hand-in as an indication that you did not prepare for class and will record your contribution accordingly.

14. Case Overviews • For each case, 2-4 members of the class (depending on course registration) will be assigned responsibility for presenting the “basics” for each case: • an overview of the firm/industry, • an overview of the MCS in place, and • an overview of the presenting problem (i.e., the symptoms). • Your job is not to solve the case – just to kick off the discussion. • Your grade will reflect your ability to present an informative summary and kick start class discussion

15. Group Formation • Form groups for purposes of case overviews and fiasco report/presentation. • Allowable group size will be 2-5 (depending on enrollment) • A sign-up sheet listing all cases will be posted on Monday, May 7 in class. Students will form groups and pick cases.

16. Classroom Contribution • You are encouraged to take an active part in the course discussions by providing thoughtful, constructive, worthwhile comments, questions and debate. Oratory skills are a must for professionals, so meaningful classroom contribution is expected. • Please use a name card in my class. Grading class participation requires that I get to know everybody as soon as possible. My expectation is that you will come to class every time. If you will be absent, please let me know before class [by email].

17. Classroom Contribution • Good participation grades are assigned to students who: • Are always well prepared; • Ask insightful, penetrating questions; • Push the discussion of the case to a higher, more sophisticated level; • Help other students understand, in a constructive manner, that some of the arguments that have been voiced are somehow flawed or incomplete. • Failing participation grades are assigned to students who: • Rarely talk; • Skip classes; • Make irrelevant, shallow comments; • Are unprepared when they are called on.

18. Fiasco Report/Presentation • As part of a 3-5 person team, you will • identify an organization, (i.e. for-profit, not-for-profit, public or private sector) that has experienced a major management fiasco and • prepare a case study of how the company’s management control system contributed to that fiasco. • This research must be completed from secondary sources without contacting the company, so ensure you choose a company whose fiasco was widely publicized and can be researched from publicly available resources. • Peer evaluation will also be considered on a group by group basis, as requested.

19. Initial Report • by June 11 you must provide a brief report to me detailing: • the name of the company • the names of those in the group • disclose any relationships that group members may have with the company • an overview of the firm and its strategic position (i.e., what customers and markets does it serve, who are its competitors, what is its business model and what are the critical success factors for this business). • an overview (description) of the management control fiasco you plan to analyze. • a research plan specifying how you will collect information about the fiasco and control system. • This document will be worth 10 of the 40 marks for this project.

20. Final Report • byJuly 23you must provide a final report to me in digital and hard copy: • The digital version will be posted on the website for the class to read prior to the presentation • You must also send a copy to Turnitin.com [address provided on course website] • Your final report should include • a description of the company and its context, • a detailed description of the management control fiasco • an overview of the MCS in place, • an analysis of the MCS and the role it played in the fiasco [using the concepts in the course], • your evaluation of the effectiveness of the MCS • any recommendations for improvement that are warranted. • This document will be worth 20 of the 40 marks for this project.

21. Presentation • Each group will present their study to the class on July 30 or 31: • Each group will have 30 minutes to present the key issues, analysis and recommendations, and to answer questions (do not spend a lot of time repeating material company information that is included in your written description). • The oral presentation will be graded by the class based on the contribution that you make to their understanding of management control system design/functioning. • Provide a hard copy of your slides and handouts to me at the beginning of the session in which your group is scheduled to present. • All members of your group must be involved in the presentation – ideally for equal amounts of time. • This presentation will be worth 10 of the 40 marks for this project.

22. Final Examination • The examination will be case analysis to be completed on an individual basis. • The Final Exam case and instructions will be distributed during the August 1st class. • You must submit your final examination paper no later than 4 p.m. on August 15th to the MBA office, as well as an email copy to me and turnitin.com. • Details will be provided closer to the time as to requirement for turnitin.com and format, length etc.

23. Module 1Management Control Alternatives and their (Dis)advantages • This module introduces the subject of management control, the major management control alternatives, and their advantages and disadvantages.

24. Module 2: Financial Results Control Systems • Financial results controls dominate in importance in managerial levels in most North American firms. This module examines the major elements of these systems (i.e. responsibility centres, planning and budgeting systems, performance evaluations and reward structures).

25. Module 3: Common Financial Results Control Problem Areas • In this module, we explore problems that measuring performance in accounting terms create, including management myopia, sub-optimization and game playing. We also discuss several methods to mitigate these problems.

26. Module 4: Special Concerns in Management Control • This module examines control-oriented roles in organizations and how to deal with a range of control-related ethical issues. As well, we discuss control in distinctive circumstances.