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Unformatted text preview: 1 Implementing strategy via strategic Implementing strategy via strategic performance measurement systems performance measurement systems 1 Course content overview External environment Topic 1 Internal environment Topic 2 Strategy Implementing Implementing strategy via strategy via Topic 4 2 analysis & formulation Topic 3 strategy via strategy via strategic strategic performance performance measurement measurement system system Are we creating Shareholder Value? Topic 5 Required Reading Reading 4.1 in your supplementary materials “Chapter 9 The Balanced Scorecard” [Atkinson et al. 2007] Please note that in this course we sometimes go beyond the textbook/reading; contents in seminars are examinable together with contents in the 3 are examinable together with contents in the textbook/required readings (unless otherwise specified) Learning objectives (LO) As a result of satisfactorily completing this seminar, you will be able to 1. Recognise and explain the role of performance management systems 2. Explain the limitations of focusing only on conventional financial measures 4 3. Understand and describe the characteristics and benefits of a balanced scorecard (BSC) 4. Design a BSC for a given organisational unit 5. Explain the difference between a BSC and an ad hoc collection of financial and non-financial measures 6. Critically evaluate the claims made of a BSC and to understand its limitations in theory and in practice Strategic performance measurement systems A p erformance measurement system measures performance by comparing performance with a target Contemporary approach to PMS “ Strategic performance measurement systems ” (SPMS) A set of causally linked non-financial and financial LO1 5 objectives, performance measures, and goals designed to align managers’ actions with an organization’s strategy (Webb 2005, Contemporary Accounting Research) The arguably most “popular” SPMS is the Balanced Scorecard • Bain & Co’s 2009 global survey of 25 management tools reported that BSC ranks 6 th , with 53% respondents indicating that they use BSC in their organisations The purposes of a performance measurement system 1. Communicate strategic objectives/plans 2. Motivate employees to help the company achieve its goals 3. Evaluate subordinates’ performance basis for rewards 4. Provide feedback to see if the company is ‘on track’ ACCT 2522 6 (track performance against targets) 5. Help managers allocate resources to most productive and profitable opportunities 6. Guide senior managers in developing strategies and programs 2 Limitations of focusing on conventional financial measures Conventional financial measures (e.g. ROE, ROA, net profit): Not actionable Emphasize only financial performance Provide limited guidance for future actions LO2 7 Provide limited guidance for future actions May encourage actions that reduce shareholder value Recall 2522??...
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- Spring '11
- Ground Crew