Lecture 6 + 7 - Functional departments + Public sector Flashcards
Describe different cost situations
Production oriented model:
General:
- Important cost hierarchy
Examples:
- Direct, step-down or reciprocal
- Single or dual rate
- Stand alone & incremental
Cost hierarchy considerations:
- Homogeneous cost pools
- Logical link: Cost allocation
- Fairness: Reasonable CD’s
- Ability to carry cost
__________
Cost function:
General:
- When link btw. mean & result
Methods:
- Standard costs
- ABC
- Zero based budgeting
- Performance ratios
__________
Non-financial measures:
Methods:
- Orders pr. purchaser
- % of Staff in admin. positions
(?) Describe the possible status´ of an activity
(!) Control & type of relationships btw. functional & operational departments
- Departments linked by flow of regular operations:
- Def. of each department’s responsibilities & norms
- Process reengineering & trans-functional teams
- E.g. Invoice, inventory handling, prod. scheduling
___________
- Service providers to operational depts. when needed:
- Choose right status for service provider: Exp. center or PC
- Determine activities to subcontract service unit
- E.g. Brochures & training
__________
- Assessment of operational dept. controlled by functional dept.
- Expense center
- Balance btw. auditors independence & assistance
- Balance btw. operational department efficiency & power
- E.g. Internal auditing
(?) Describe shared services
.
(!) Describe the issues of outsourcing & shared service centers
Outsourcing:
- Loss of specific knowledge
- Strategic importance
- Reliability, quality & flexibility
- Costs
- Innovation
Shared service centre:
- Service factories
- Standard
- Reliability, quality, flexibility
- Costs
- Innovation
(!) Describe what is meant by a service
General:
- Difficult determining objectives & result of activities
Types:
- Service industry: Tertiary sector. Eg. Health care or financial
- Internal services: Functional departments
- Public services: Administration
Characteristics:
- Traditionally: Intangible product. Process
- New perspective: Co-production
Dimensions:
- Discretionary
- Idiosyncratic: Unique dimension
- Political dimension
(!) Describe the MC challenges of discretionary activities in functional departments
General:
- Eg. Administration, marketing & R&D
- Hard to allocate ress.
- May take several periods
Ambiguity of objectives & results:
- Difficult to determine
- Difficult to measure
- Depend on division asked
Poor knowledge of relationship btw. means & results
- Non-linear
- Discretionary
- Continuum: Discretionary, idiosyncratic, political
- Due to complexity, randomness & non-repeated processes
- Eg. Student or teacher accountable for bad grade?
Co-production & co-responsibility:
- Who responsible for result?
Lack physical context
- Process: Intangible
- Used at time of delivery
- Spread
Risks:
- Spend too much on activities not contributing to goals
- Spend too little on activities contributing to goals
(!) Describe the production vs. service oriented model
Traditional model:
- Production model
- Cost of input –> Process –> Output or results
__________
Service oriented model:
General:
- Input –> Result
- Input = Intrants + Process
- Result = Output + Outcomes
- Measures
Categories of input:
Intrants:
- Separate from ress. used to transform these
- Often neglected
- Eg. Demand, student, skills, intellectual capabilities, patient
Process:
- Ress. & costs
- The means
- Info available: From budget
- Eg. Time spent, #Supplier visits, Quality of staff, Training
Categories of results:
Output:
- Relate to intrants & process quality
- Quality = Efficiency
- Realizations
- Prod. of service to fulfill mission
- Eg. Average grade, # orders, Efficiency Failure rate, patient satisfaction
Outcomes / Impact:
- Quality = Effectiveness
- Difficult & costly to measure
- Often influenced by external events
- Tempting to eliminate
- Eg. Purchase price, Customer, company, employee satisfaction, income
(!) Describe PM in services
Stimulus-response behaviour:
- Poss. Future buy if customers has good experience
- Product & service must fulfill/exceed expectations
Quality of customer satisfaction measurement:
- Unambiguous & precise concepts: Specific key service feature
- Customers’ knowledge about service
- Driven by customers’ ideal or wish for performance level
Norm:
- How satisfied should customers be
Measures vs. indicators:
(?) Describe the profession-driven control
Members of special occupation:
- Decide objectives, terms, methods & criteria
- Require special knowledge & skills, good character & ethical values
- Managed by ideals of profession > profit
Justify self-control abilities:
- Can control themselves: Dont misuse privileges
- Institutionalized rules & norms, education & self-monitoring
- Have to be significant for segments of society
- Shared values makes goal agreements easier
- “Confidence” in competence & integrity make goal commitment easier
(?) Describe the paradoxes of MA techniques in public organizations
- Budgeting, Cost allocation & performance measures often interrelated
- Management control, registration procedures & structure
- Ideally assists transparency, info access, allocation of responsibility, optimization & efficiency
Describe new public management / NPM
General:
- Evolved due to dissatisfaction w. public sector
Elements:
- Employ prof. managers
- Explicit standards & performance measures
- Greater emphasis on service consistency
- Decentralisation
- Increased competition btw. org. & sub-units
- Emphasis on private-sector management styles
- Increased accountability & parsimony(sparsommelighed) in ress. use
Focus:
- Budget cuts
- Accountability for performance
- Decentralization
- Performance measurement
- User charges
- Competition
- Strategic planning & management
- Improved accounting
- Contracting
- Customers
- Business techniques to improve efficiency
- Rise of “better management”
(?) Describe the four types og measures when going from performance management to performance measures in the public sector
General:
- More challenging to develop measures in public vs. normal sector
Measures:
- Output: How much produced?
- Welfare: Value to the final user
- Performance: How services are produced
- Composite indicators
(!) Describe the idea of incompleteness & relate it to RAPM
General:
- Incomplete = Acc. info don’t capture all important performance dim.: Eg. Quality in hospital
- Always something not measurable
- Problem if indicators are means of control, not tools
- Pragmatic attitude: Incompleteness not always a problem
- Performance measures = Often control tool, not just facilitating action
- Incompleteness = Lower representational quality
- Only problem if inflexible: Eg. Revise measures
- Use ST measures when adjusting & comparing indicators
- Problem if evaluation pressure & cause-and-effect thinking
- Ref. Enabling vs. coercive
Pragmatic attitude on measures:
- Doing > Measuring
- Means > Ends
- Direction > Objective truth
- Vision > Specific target
Reliance on accounting performance measures / RAPM:
- “Budget-constrained” style vs. “Profit-concious” style
- Negative reactions if reliance on incomplete controls
- Evaluation pressure
(!) Describe enabling & coercive control, factors & benefits
General:
- Ref. Incompleteness
- Depend on design
__________
Indicator representations:
Narrow form:
- Look at actual measure feasibility
- Reliability, accuracy & precision
Broad form:
- Concerned w. flexibility & other enabling element
___________
Enabling:
General:
- Not feeling limited by incomplete system
- Not used as control purpose: Challenge use for TM
- Little perceived evaluation pressure
- Build upon existing practices & concerns
Factors for being enabling:
Flexibility:
- Users allowed to modify measures
- Less control at a distance by TM
- Broad financial measures = More flexible
- Hard if evaluation pressure
- Eg. Guidelines for adjustments
Internal transparency:
- Understand logic of system
- Understand definition & measures
- Change amount of questioning system
- Eg. By communication
Global transparency:
- Understand up- & down-stream implications of work
- Alignment & coordination
- Understanding strategies & objectives poss. to relate control system to bigger picture
- Eg. Vision & strategy statement
__________
Coercive:
General:
- Control at a distance
Situations for use:
- Fully understandable
- Agreed upon priorities
- Complete
- Introducing new control system
