1. Master in Industrial Management
Course:
MANAGEMENT CONTROL
Chapter 1:
Key Ideas for Management Control

2. SUMMARY The Value and Measurement of Performance
The expectations for Performance
The Implications in the Management Control Models
The Role of Management Control
The Users of Management Control
The Instruments of Management Control

3. Value and Performance Measures Top Managers as performance agents
To MANAGE means to lead and motivate all members of the organization to achieve the best performance at several levels

4. Managers need to have relevant, timely and reliable information.
Value and Performance Measures
... BUT TO ACHIEVE IT
Managers need to
have relevant, timely and reliable information.

5. Value and Performance Measures
RELEVANT INFORMATION ... IT’S THE ONE THAT:
Shows how the organization creates value for its multiple stakeholders, through performance metrics in multiple perspectives

6. To know who are their stakeholders and what are their expectations
Value and Performance Measures
A GUIDELINE FOR THE CREATION OF VALUE TAKE IN CONSIDERATION:
To know the MISSION (Reason for existing/ of Being) of the Organization
To know who are their stakeholders and what are their expectations

7. Value and Performance Measures EXPECTATIONS OF VALUE:
SHAREHOLDER: financial results.
CLIENTS: satisfaction, ...
EMPLOYEES: Motivation, wellness, participation, ...
MANAGERS: efficiency, effectiveness, recognition, ...
STATE: social contributions (taxes, employment, ...)
CREDITORS/SUPPLIERS: fulfilling of commitments.
etc. ….

8. Value and Performance Measures TRADITIONALLY the VALUE ...
Has been seen mainly in a financial perspective, so:
Information emphasis in economic and financial indicators
System of rewards and incentives based on financial results, etc ...
Resulting in:
Limited models targeted only for one of its multiple stakeholders: SHAREHOLDERS

9. Value and Performance Measures
SO, THERE IS A NEED TO:
TO ALIGN THE EXPECTATIONS OF THE MULTIPLE PARTIES IN THE ORGANIZATION
And, therefore:
TO ADOPT METRICS THAT ALLOW MONITORING THE MULTIPLE PERSPECTIVES OF PERFORMANCE

10. The dimensions of the SPM (Systems of Performance Monitoring)
KEY ASPECTS OF PERFORMANCE
To align individual actions with organizational actions
To select only what is critical to the entity
To have an integrated view of the results and developed activities
To confront the fulfilled with the planned, using consistent metrics and an integrated vision
To concentrate efforts on "value drivers"

11. Performance of organizations The dimensions of the SPM BUSINESS MARKET
(Systems of Performance Monitoring)
TO PROVIDE METRICS IN MULTIPLE DIMENSIONS:
BUSINESS
Performance of
organizations
MARKET
PEOPLE
PROCESSES

12. Implications in Information Management Systems (IMS)
TO THIS END, IT WILL PROVIDE:
FINANCIAL INFORMATION
NON FINANCIAL INFORMATION

13. INTEREST OF FINANCIAL METRICS
Implications in Information Management Systems (IMS)
INTEREST OF FINANCIAL METRICS
To have in consideration the principle that:
TO DECIDE ABOUT THE USE OF MEANS OR RESOURCES
FINANCIAL IMPLICATIONS
HAS

14. Implications in Information Management Systems (IMS)
BUSINESS PERSPECTIVE
FINANCIAL INFORMATION:
WHICH PRODUCTS AND SERVICES CONTRIBUTE MORE TO GET VALUE?
WHAT ARE THE COST OF PRODUCTS AND SERVICES, AND WHAT ARE THE BENEFITS?

15. Implications in Information Management Systems (IMS)
FINANCIAL Information and BUSINESS perspective :
Need to segment the financial information of organization by "Business / Products / Services"
Examples:
Analysis of Results (or costs) by:
Business Areas
Products / Services
Projects / Programs / Initiatives
Works
Shops , etc.

16. Implications in Information Management Systems (IMS)
MARKET PERSPECTIVE
HOW TO FACE OUR CLIENTS / USERS?

17. Implications in Information Management Systems (ISM)
FINANCIAL Information and MARKET perspective:
Management accounting system oriented to the "internal costs“ loss relevance, in favour of a management accounting concerned to find out external costs or results (market, distribution channel, customer, etc.).
Examples:
Analysis of PROFITABILITY by:
Markets (ex: countries / regions, professional / public)
Customers or Categories of customers (ex: client x; companies)
Distribution channels (ex: retail / big supermarkets)

18. PROCESSES PERSPECTIVE
Implications in Information Management Systems (IMS)
PROCESSES PERSPECTIVE
WHICH PROCESSES GENERATE VALUE?

19. Implications in Information Management Systems (IMS)
FINANCIAL Information and PROCESSES perspective: :
Recognize that the Organization is a sequence of processes and activities, from which depends their results;
Examples:
To Know the COST of “What is made”:
Processes (ex: purchasing)
Activities (ex: revealing an exam)
Resources used (ex: use of vehicles)

20. PEOPLE PERSPECTIVE (Organizational Development)
Implications in Information Management Systems (IMS)
PEOPLE PERSPECTIVE (Organizational Development)
IS THERE ABILITY TO INNOVATE AND GROW IN A SUSTAINABLE WAY?

21. Implications in Information Management Systems (IMS)
FINANCIAL information and perspective from PEOPLE :
To recognize that are the people who generate good and bad results, so it should emphasize the aspects of organizational behaviour, motivation, models of evaluation of performance and systems of bonus and incentives;
Example:
To charge for RESULTS:
Responsibility Centres (Cri, CC, etc)
Team
Seller, etc.

22. NON-FINANCIAL INFORMATION
Implications in Information Management Systems (IMS)
NON-FINANCIAL INFORMATION
Must have in consideration:
NON-FINANCIAL INFORMATION REFLECTS THE POSSIBILITY OF IMPACTS ON ECONOMIC AND FINANCIAL FUTURE VALUE
FINANCIAL INFORMATION REPORTS PAST ECONOMIC AND FINANCIAL VALUES
WHILE

23. IMPLICATIONS of Information in SMP (System of Monitoring Performance)
Implications in Information Management Systems (IMS)
IMPLICATIONS of Information in SMP (System of Monitoring Performance)
Increase on the relevance of technical tools like ‘tableaux de bord’ or ‘balanced scorecard’;
Use of several physical indicators (waiting time, complaints, satisfaction levels, number of rejections, implementation deadlines, etc.);
Introduces indicators about business environment (external factors that affect performance);
Greater adherence of SMP to the monitoring of the goals and actions of the responsible.

24. Management Control must answer these Multiple Perspectives
Its principles are:
Orientation for people;
Emphasis on performance evaluation;
Relevance of "tableaux de bord;
More action, less information;
Diversified goals;
The managers are the players;
The future as a basis for the decision.

25. SO, WHAT IS
MAMAGEMENT
CONTROL?

26. WHO IS IT FOR? Clients: MANAGERS TopM INTERMEDIATE HIERARCHY
OPERATING MANAGERS

27. Role of Managers TopM. STATEGIC MANAGEMENT INTERMEDIATE HIERARCHY
OPERATING MANAGERS

28. Role of Managers (cont)
TopM.
INTERMEDIATE
HIERARCHY
OPERATIONAL
MANAGEMENT
OPERATING MANAGERS

29. THE ROLE OF MANAGEMENT CONTROL
STATEGIC MANAGEMENT
MANAGEMENT
CONTROL
OPERATIONAL
MANAGEMENT

30. The three categories of tools:
Instruments of Management Control
The three categories of tools:
Steering tools
Tools for guiding the behavior
Dialogue tools

31. Steering instruments Medium term operational plan Budget
Strategy
Medium term operational plan
Budget
Tableaux de bord
Budgetary
Control

32. Instruments of Behaviour Orientation
Responsibility centers
Criteria for evaluating the financial performance
Internal Transfer Pricing

33. Dialogue Instruments Negotiation of goals Negotiation of meansP E R A T I N L
Negotiation of means
Analysis and interpretation of results
Negotiation of corrective actions
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