7. National kulttuuri ja kontrollit Flashcards
IMPACT OF NATIONAL CULTURE ON CONTROLS
Quite a lot of research on cultural differences in accounting and control exist, mainly comparing Anglo-Saxon to Eastern cultures
Hofstede and e.g. GLOBE studies have looked for cultures and shown that people vary considerably on many dimensions
– Individualism vs. collectivism – Power distance
– Uncertainty avoidance
– Masculinity
These are likely to have implications on how performance management should be exercised -> How?
In addition to culture, many other ”institutional” aspects do vary between nations
– Corporate governance regulations
– Employment law and contract law
– Power of labor unions
– Banking system / financial markets
– Governance institutions (role of auditors, finance authorities,..)
These may also have an impact on how performance management systems are designed and used
MALMI ET AL JoMC PAPER (2022)
Study of how and why the use of controls vary between Anglo-Saxon, Germanic and Nordic countries
Anglo-Saxon SBUs (strategic business units)
– delegate decision rights, i.e. are decentralized
– participative (e.g. strategic planning)
– emphasize performance based pay
more than their counterparts in Germanic and Nordic regions do
Comparing Germanic to Nordics
– Germanic rely more on individual behaviour in performance evaluation, whereas Nordics rely more on quantitative measures.
– Nordics select employees based on values and rely on rotation in promotions more
The role of subordinates in
– action planning
– diagnostic use of budgets and performance measurement systems
– etc.
appear similar across regions, despite differences in cultural traits.
ADDITIONAL CHALLENGES FROM MULTINATIONALITY
Inflation
– How e.g. ROI behaves in high and low inflation environments?
FOREX risks
– Performance evaluation can be done in local currencies, so MNCs need to decide whether local management should be exposed to this risk or not
Political risks
Availability of talent
– When employees are less talented, decision making is typically more centralized and action controls are used
– When mobility of workforce is low, less need for long term incentive plans
Controls in NOT-FOR-PROFIT ORGANIZATIONS
- Give examples of different not-for-profit organizations?
- How big is their role in contemporary western societies?
- What are the key reasons for challenges in performance management in many of such organizations?
- In governmental organizations role of budgets is big, not necessarily in “performance management”, but in controlling costs
PRODUCTIVITY HIGHLY EMPHAZISED IN GOVERNMENTAL ORGANIZATIONS
Paul Krugman:
”Productivity isn’t everything, but in the long run it is almost everything”
BIG DIFFERENCE IN PRODUCTIVITY?
Child welfare - cost of institutional care:
Per day - €349 vs. €286
Per child per year- €135 604 vs. €81 730
Suomen suurimmat kaupungit: onko suurin osa omia vai ulkoistettuja palveluita?
Hieman suurempi osa on omaa tuotantoa vs ostetut.
Kuntien oma tuotanto maksoi 2014 noin 22% enemmän, kun vastaava ostopalvelu.
Kaupungit: omat tuotanto versus ostettu -> LESSONS TO BE LEARNED FROM THIS EXAMPLE?
Price can describe differences in productivity, but one can not judge why differences exist and what to do for those based on it
- You have to measure other aspects as well => seldom one indicator is enough when productivity is assessed
Previous comparison was between prices and costs, what would be the true difference in productivity?
Selitä PRODUCTIVITY?
Productivity is a measure of economic performance that compares the amount of goods and services produced (output) with the amount of inputs used to produce those goods and services.
Lue vain -> PRODUCTIVITY
- Important both for business and not-for-profit sector
- In business competition forces firms to improve productivity
- In public sector productivity targets are common
- In many cases rhetoric related to productivity means a desire for savings, but in practice non-business organizations attempt to produce more output with current inputs
=> what might be the consequence?
SOME CONCEPTS RELATED TO PRODUCTIVITY
Cost -> Input -> Output -> Effect
Noiden^ väleissä on nämä tässä järjestyksessä:
Cost efficiency -> Productivity -> Effectiveness
Can PRODUCTIVITY CAN BE DECOMPOSED IN SOCIAL AND HEALTH CARE?
Hell yeah! PRODUCTIVITY CAN BE DECOMPOSED IN SOCIAL AND HEALTH CARE
Production efficiency
– Activities / treatments are produced efficiently, recall our example above
Allocation efficiency
– We perform right treatments
Social efficiency
– We provide treatments to right persons
Lue mitä W. Edwards Deming sanoi PRODUCTIVITYYN liittyen!
”Figures on productivity in the U.S. do not help to improve
productivity in the U.S. Measures on productivity are like statistics on accidents: they tell you all about the number of accidents in the home, on the road, and at the work place, but they do not tell you how to reduce the frequency of accidents”
- Remember that measuring and managing productivity are different things!
FEW QUESTIONS
* Do you agree with Deming?
* In which kind of circumstances productivity measurement is easy? When it is likely to be difficult?
* If the measurement is difficult, should we still try to measure productivity?
Koko kurssin Wrap-up 1/3
Core questions we started with:
– How do we get others to do what we want them to do?
– How do we get others to perform well?
– How do we get employees to do the best for the organization?
- Causes of control problems
- Management control alternatives and their effects
- Financial responsibility centers and various financial indicators of performance, including EVA
- Transfer prices and budgets
- Scorecards – different uses and design implications
- Linking measures to strategy, and between organizational levels
Koko kurssin Wrap-up 2/3
- Identify drivers of performance and measure and manage (set targets, create accountabilities) those
- Purposes of incentives, types of rewards
- Design choices (shape of pay function, formula based or not, size of bonus) and criteria for evaluating incentive systems
- Targets – where do they come from, how challenging those should be and subordinate involvement in setting targets
