L1 - intro

Question 1

According to Ferreira & Otley D (2009), what is a performance measure?

Answer 1

Performance measurement
* regular collection and feedback of data concerning resources, activities, results and outcomes (measures)
* for an individual, team, organization or larger system

Question 2

According to Ferreira & Otley D (2009), what is a contemporary performance measurement system?

Answer 2

• an array of financial and non-financial performance measures
• measures –> indicators –> KPIs

Question 3

Why an ”array” of different measures? What are the dimensions to a performance measure (and the BSC)

Answer 3

• Financial measures usually ”lagging” (reflecting the past, looking backwards, through the rear window)
• Non-financial measures possibly more ”leading” (looking forward, through the windshield)
• BSC dimensions:
  - customer (what do they think of us?)
  - internal business processes (exploitation/efficiency)
  - learning and growth (exploration/innovation)

Question 4

What are the three kinds of measures? Using a health-care example

Answer 4

Outcome measures
* survival
* quality of life

Process measures
* Compliance to evidence based guidelines

Input/structural measures
* doctors training
* facilities, equipment

Question 5

What is the use of control systems by new top managers (Q12 in Ferreria Otley)

Answer 5

• Descriptive rather than prescriptive
• Focusing on relationships between strategy and control systems

Question 6

What are the four control problems and ”levers” of controls?

Answer 6

Core values –> Beliefs systems
* If you have the mandate to change the system, you start with the belifs systems - when it is changed, you change the interactive control and boundary system.

Risk to be avoided –> Boundary systems

Critical performance variables –> Diagnostic control
* Focus on reaching targets. Performance Measurement System

Strategic uncertainties –> Interactive control
* How to handle uncertainties

Question 7

What are the two types of control?

Answer 7

Coercive (”mechanistic control”)
Enabling (”organic control”)

Question 8

Describe Coercive (”mechanistic”) control

Answer 8

• Control is constraining and restrictive
• Employees are to comply
• Not to think, understand, or question
• Clarify expectations, increase efficiency, curb opportunism
• (Boring simple task)

Question 9

Describe Enabling (”organic”) control

Answer 9

○ Control is empowering
○ Employees are to be informed and involved
○ To think, understand, and question
○ Increase autonomy, empowerment, engagement
More complexed

Question 10

What are the design principles of Enabling (“organic”) control?

Answer 10

Repair, flexibility
* capabilities to fix breakdown of processes, override standards, use controls selectively

”Mental maps”
* Internal transparency, understanding of the working of local processes
* Global transparency
* understanding of where and how these local processes fit into the organization as a whole

Question 11

Why enabling control?

Answer 11

• To support rather than constrain operational management when operations are not totally programmable
• To mobilize local knowledge and experience in support of central objectives
• More important when learning and exploring, when facing uncertainty and rapid change and in professional service firms (autonomy important)
• With more autonomy, boundaries becomes more important

Question 12

Key issues
- Why an array of measures? Why non-financial measures? Difference between lead and lag measures?
- The importance of alignment (strategy, different types of measures)
- Understanding of Simons LOC and how it relates to performance measurement & management
- Understanding of coercive and enabling control and how it relates to performance measurement & management
Understanding relationship between type of strategic change and forms of control

Answer 12

do you know these?

Question 13

What are the three dimensions in BSC?

Answer 13

Customer
Internal Business Processes
Learning and Growth

4th (Financial)

Question 14

What are the three (four) dimensions in the production model?

Answer 14

Structural measure
Process measure
Input/ Structural measure

Question 15

What are the 12Q of Ferreria & Otley (2009) and how are they interconnected?

Answer 15

Q1. Vision and mission
Q2. Key Sucess Factors
Q3. Organizational structure
Q4. Strategies and plans
Q5. Key Performance Measures
Q6. Target setting
Q7. Performance evaluation
Q8. Reward Systems
Q9. Information flows, systems, and networks
Q10. PMSs use
Q11. PMSs change
Q12. Strenght and Coherence