Podcast
Questions and Answers
Which of the following is NOT a key element in the implementation of results controls?
Which of the following is NOT a key element in the implementation of results controls?
- Defining performance targets
- Providing rewards related to target attainment
- Measuring employee skills and competencies (correct)
- Setting performance requirements for each organization, unit, and activity
What is the primary purpose of results controls?
What is the primary purpose of results controls?
- To provide rewards to employees based on their individual actions
- To define the dimensions on which results are required (correct)
- To measure financial performance only
- To limit the autonomy of individual employees
Which of the following is a key challenge in implementing results controls?
Which of the following is a key challenge in implementing results controls?
- Limiting the autonomy of individual employees
- Defining the appropriate performance measures and indicators (correct)
- Ensuring that all employees have the necessary skills and competencies
- Providing rewards to all employees equally
What is the primary advantage of results controls?
What is the primary advantage of results controls?
How do results controls help organizations attract employees?
How do results controls help organizations attract employees?
What is the primary purpose of results controls in addressing control problems?
What is the primary purpose of results controls in addressing control problems?
According to the passage, which of the following is a key feature of enabling controls?
According to the passage, which of the following is a key feature of enabling controls?
What does 'repair' in the context of management control refer to according to the passage?
What does 'repair' in the context of management control refer to according to the passage?
What is the relationship between enabling controls and coercive controls according to the passage?
What is the relationship between enabling controls and coercive controls according to the passage?
What is the main purpose of flexibility in enabling controls according to the passage?
What is the main purpose of flexibility in enabling controls according to the passage?
What does 'internal transparency' refer to in the context of enabling controls?
What does 'internal transparency' refer to in the context of enabling controls?
How do enabling controls and coercive controls differ in their impact on employees according to the passage?
How do enabling controls and coercive controls differ in their impact on employees according to the passage?
What are some common forms of ROI-type ratios employed by companies?
What are some common forms of ROI-type ratios employed by companies?
Which measure combines operating decisions and financing decisions?
Which measure combines operating decisions and financing decisions?
What can both the numerator and denominator include in ROI-type ratios?
What can both the numerator and denominator include in ROI-type ratios?
Which method involves decomposing ROI into two components?
Which method involves decomposing ROI into two components?
What does the measure 'Total assets employed minus current liabilities' exclude?
What does the measure 'Total assets employed minus current liabilities' exclude?
Why might the measure 'Total assets employed minus current liabilities' encourage managers to use an excessive amount of short-term debt?
Why might the measure 'Total assets employed minus current liabilities' encourage managers to use an excessive amount of short-term debt?
What is the main purpose of offering flexible hours as a non-monetary compensation policy?
What is the main purpose of offering flexible hours as a non-monetary compensation policy?
How can job sharing be described based on the text?
How can job sharing be described based on the text?
In the context of non-monetary compensation policies, what does the provision of child care facilities aim to do?
In the context of non-monetary compensation policies, what does the provision of child care facilities aim to do?
What is the classification of incentive systems mentioned in the text?
What is the classification of incentive systems mentioned in the text?
What is the effect of strong training programs on a company, according to the text?
What is the effect of strong training programs on a company, according to the text?
Why is it mentioned that time-based incentives follow the same method but with different formulas?
Why is it mentioned that time-based incentives follow the same method but with different formulas?
Sales managers who are accountable for their salespeople's salaries, commissions, and certain expenses are considered to manage:
Sales managers who are accountable for their salespeople's salaries, commissions, and certain expenses are considered to manage:
Which of the following statements about profit centers is true?
Which of the following statements about profit centers is true?
Which of the following is NOT a characteristic of profit centers?
Which of the following is NOT a characteristic of profit centers?
Which of the following is an example of a profit center given in the text?
Which of the following is an example of a profit center given in the text?
Which of the following is a reason why business terminology is often not precise?
Which of the following is a reason why business terminology is often not precise?
In the context of the text, what does it mean for a responsibility center to be 'charged' for something?
In the context of the text, what does it mean for a responsibility center to be 'charged' for something?
Study Notes
Control Mechanisms
- Control Mechanisms are categorized into Results Controls, Action Controls, Personnel Controls, and Cultural Controls
- Results Controls are used to alleviate lack of direction and solve motivational problems
Results Controls
- Involves defining the dimensions of results required and measuring performance
- Difficulties in defining the "right" measures and indicators
- Combination of financial and non-financial measures
- Setting performance targets and providing rewards related to target attainment
Elements of Results Controls
- Defining dimensions on which results are required
- Measuring performance
- Setting performance targets
- Providing rewards related to target attainment
Advantages and Disadvantages of Results Controls
- Advantages:
- Feasibility even when information about overall organizational goals is lacking
- Allow for autonomy of individual action as the emphasis is placed on the outcome
- Disadvantages: Not specified
Enabling Controls
- Features:
- Repair: allowing employees to solve problems or repair processes that do not work efficiently
- Flexibility: allowing employees to depart from procedures in their work if the situation requires it
- Internal transparency: employees' understanding of the control system
ROI (Return on Investment) Measures
- Common ROI measures: Return on Investment (ROI), Return on Equity (ROE), Return on Capital Employed (ROCE), Return on Net Assets (RONA), Return on Controllable Assets (ROCA)
- ROI can be decomposed into its two components using the DuPont Method of Profitability Analysis
- Alternative definitions of investment:
- Total assets available
- Total assets employed
- Total assets employed minus current liabilities
- Stockholders equity
- Alternative definitions of cost: Not specified
Incentive Systems
- Classification: Individual, Team-Based, Organization Level
- Individual Incentive Systems:
- Time-based: incentives paid on the basis of time saved
- Time-based incentives: follow the same method with different formulas
Responsibility Centers
- Classification: Revenue Centers, Profit Centers, Investment Centers
- Profit Centers: whose managers are held accountable for some measure of profits
- Investment Centers: whose managers are held accountable for investments made to generate profits
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Description
Test your knowledge of control mechanisms used in organizations to manage and direct employee behavior towards achieving organizational goals. Explore different types of controls such as results controls, action controls, and personnel controls.
