Kế toán - Kiểm toán - Chapter 14: Contemporary approaches to measuring and managing performance

Nội dung text: Kế toán - Kiểm toán - Chapter 14: Contemporary approaches to measuring and managing performance

1. Chapter 14 Contemporary approaches to measuring and managing performance Copyright  2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Management Accounting: An Australian Perspective 3/e by Langfield-Smith, Thorne & Hilton Slides prepared by Kim Langfield-Smith
2. The purposes of performance measurement s Communicate the strategy and plans of the business and align employee’s goals s Track performance against targets s Identify problem areas s Evaluate subordinates’ performance and as a basis of rewards s Guide senior managers in developing future strategies and operations Copyright  2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Management Accounting: An 2 Australian Perspective 3/e by Langfield-Smith, Thorne & Hilton Slides prepared by Kim Langfield-Smith
3. Problems with conventional performance measures s They are not actionable s Financial measures emphasise only one perspective s Financial performance measures provide limited guidance for future actions s May encourage actions which decrease shareholder and customer value Copyright  2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Management Accounting: An 3 Australian Perspective 3/e by Langfield-Smith, Thorne & Hilton Slides prepared by Kim Langfield-Smith
4. Contemporary performance measurement systems s Include non-financial and financial measures s Have a strategic orientation—directly measure areas that provide competitive advantage s Use external benchmarks s Emphasis continuous improvement Copyright  2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Management Accounting: An 4 Australian Perspective 3/e by Langfield-Smith, Thorne & Hilton Slides prepared by Kim Langfield-Smith
5. Non-financial measures for operational control s Non-financial measures reflect the drivers of future financial performance s More actionable s More understandable and easier to relate to Copyright  2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Management Accounting: An 5 Australian Perspective 3/e by Langfield-Smith, Thorne & Hilton Slides prepared by Kim Langfield-Smith
6. Non-financial measures s Customer satisfaction ÙMeasured by survey administered to customers s Defect measures ÙMeasurement of faults in a product that occur during manufacturing process ÙSupport a high quality strategy s Quality ÙPeriodic inspections or testing of products continued Copyright  2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Management Accounting: An 6 Australian Perspective 3/e by Langfield-Smith, Thorne & Hilton Slides prepared by Kim Langfield-Smith
7. Non-financial measures s Productivity ÙThe ratio of outputs produced per unit of input continued Copyright  2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Management Accounting: An 7 Australian Perspective 3/e by Langfield-Smith, Thorne & Hilton Slides prepared by Kim Langfield-Smith
8. Non-financial measures s Stock status s Accident report/safety reports s Multiskilling s Machine down time ÙNumber of hours, or percentage of total production hours that machines are unable to operate s Delivery on time Copyright  2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Management Accounting: An 8 Australian Perspective 3/e by Langfield-Smith, Thorne & Hilton Slides prepared by Kim Langfield-Smith
9. Problems with non-financial performance measures s Wide choice of non-financial measures available s Their development can be ad-hoc and undirected s Managers must necessarily make trade-offs s Some measures lack integrity s Some measures not easily translated into financial outcomes Copyright  2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Management Accounting: An 9 Australian Perspective 3/e by Langfield-Smith, Thorne & Hilton Slides prepared by Kim Langfield-Smith
10. Measuring performance with a balanced scorecard s A performance measurement system that identifies and reports on performance measures for each key strategic area of the business s The Kaplan and Norton model translates an organisation’s mission and strategies into objectives and performance measures s Four perspectives continued Copyright  2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Management Accounting: An 10 Australian Perspective 3/e by Langfield-Smith, Thorne & Hilton Slides prepared by Kim Langfield-Smith
11. Measuring performance with a balanced scorecard s Financial perspective ÙReflects perspective of the shareholder ÙSummarises the financial outcomes of decision and actions ÙMeasures include various cost and product measures, return on investment, cash flow measures, shareholder value measures continued Copyright  2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Management Accounting: An 11 Australian Perspective 3/e by Langfield-Smith, Thorne & Hilton Slides prepared by Kim Langfield-Smith
12. Measuring performance with a balanced scorecard s Customer perspective ÙMeasures of the company’s success in achieving customer value ÙOutcome (lag) measures include customer profitability, market share, number of new customers ÙLead indicators include on-time delivery, number of defects continued Copyright  2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Management Accounting: An 12 Australian Perspective 3/e by Langfield-Smith, Thorne & Hilton Slides prepared by Kim Langfield-Smith
13. Measuring performance with a balanced scorecard s Internal business processes ÙObjectives relate to specific processes that contribute to achieving customer and financial objectives ÙProcesses critical to delivering products to customers and achieving financial strategies ÙProduct design, operations, marketing, sales, customer service processes ÙMeasures of cost, product quality, time-based measures, new product development continued Copyright  2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Management Accounting: An 13 Australian Perspective 3/e by Langfield-Smith, Thorne & Hilton Slides prepared by Kim Langfield-Smith
14. Measuring performance with a balanced scorecard s Learning and growth ÙFocuses on the capabilities of the organisation to achieve superior internal processes that create both customer and shareholder value ÙTo deliver long-term growth and improvement ÙMeasures focus on employee capabilities, information systems capabilities and organisational climate ÙEmployee satisfaction, training, skills, employee suggestions continued Copyright  2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Management Accounting: An 14 Australian Perspective 3/e by Langfield-Smith, Thorne & Hilton Slides prepared by Kim Langfield-Smith
15. Copyright  2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Management Accounting: An 15 Australian Perspective 3/e by Langfield-Smith, Thorne & Hilton Slides prepared by Kim Langfield-Smith
16. Measuring performance with a balanced scorecard s Lag indicators ÙMonitor progress towards the organisation's objectives ÙDifficult to monitor directly ÙSummary financial measures, market share, customer satisfaction s Lead indicators ÙMeasures that driver the outcomes and provide information that is actionable and management ÙRelate to the processes and activities of the business Copyright  2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Management Accounting: An 16 Australian Perspective 3/e by Langfield-Smith, Thorne & Hilton Slides prepared by Kim Langfield-Smith
17. Measuring performance with a balanced scorecard s Measures in the balanced scorecard provide balance between ÙShort-term and long-term objectives ÙFinancial and customer measures, and measures of business processes and learning and growth ÙOutcome measures and drivers of those outcomes ÙObjective and easily quantified measures and subjective performance measures Copyright  2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Management Accounting: An 17 Australian Perspective 3/e by Langfield-Smith, Thorne & Hilton Slides prepared by Kim Langfield-Smith
18. Linking non-financial measures to financial performance s Improvements in non-financial measures will not result in improved profits if: ÙManagement has selected the wrong critical success factors ÙManagement fails to utilise freed up resources ÙThe performance measurement system is incorrectly designed continued Copyright  2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Management Accounting: An 18 Australian Perspective 3/e by Langfield-Smith, Thorne & Hilton Slides prepared by Kim Langfield-Smith
19. Linking non-financial measures to financial performance s Du Pont chart ÙIdentifies the linkages between key performance drivers, key performance indicators and financial performance measures Copyright  2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Management Accounting: An 19 Australian Perspective 3/e by Langfield-Smith, Thorne & Hilton Slides prepared by Kim Langfield-Smith
20. Benchmarking s A process of comparing the products, functions and activities in an organisation against external businesses ÙIdentify areas for improvement ÙImplement a program of continuous improvement Copyright  2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Management Accounting: An 20 Australian Perspective 3/e by Langfield-Smith, Thorne & Hilton Slides prepared by Kim Langfield-Smith
21. Steps in the benchmarking process s Identify the functions/activities to be benchmarked, and performance measures s Select benchmarking partners s Data collection and analysis s Establish performance goals s Implement plans Copyright  2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Management Accounting: An 21 Australian Perspective 3/e by Langfield-Smith, Thorne & Hilton Slides prepared by Kim Langfield-Smith
22. Forms of benchmarking s Internal benchmarking ÙBenchmarking operations that are internal to the larger business group s Competitive benchmarking ÙBenchmarking with other companies within the same industry ÙIdentify the strengths and weaknesses of competitors continued Copyright  2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Management Accounting: An 22 Australian Perspective 3/e by Langfield-Smith, Thorne & Hilton Slides prepared by Kim Langfield-Smith
23. Forms of benchmarking s Industry benchmarking ÙComparing against companies that have similar interests and technologies within an industry ÙPerformance measures and practices may be directly comparable s Best-in class or process benchmarking ÙBenchmarking against the best practices that occur in any industry Copyright  2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Management Accounting: An 23 Australian Perspective 3/e by Langfield-Smith, Thorne & Hilton Slides prepared by Kim Langfield-Smith
24. Benchmarking against competitor cost structures s Costs can be inferred by using publicly available information, such a sales volume, market share , product mix s Industry-sponsored databases s Stockbroking firms s Specialist benchmarking consulting firms Copyright  2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Management Accounting: An 24 Australian Perspective 3/e by Langfield-Smith, Thorne & Hilton Slides prepared by Kim Langfield-Smith
25. Inadequate performance measurement system s Performance is acceptable on all dimensions, except profit s Customers do not buy, even when prices are competitive s No one notices when performance reports are not supplied continued Copyright  2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Management Accounting: An 25 Australian Perspective 3/e by Langfield-Smith, Thorne & Hilton Slides prepared by Kim Langfield-Smith Cont.
26. Inadequate performance measurement system s Significant time is spent debating the meanings of measures s Measures have not changed for some time s The business strategy has changed Copyright  2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Management Accounting: An 26 Australian Perspective 3/e by Langfield-Smith, Thorne & Hilton Slides prepared by Kim Langfield-Smith
27. An effective performance measurement system s Linked to strategy and goals of the organisation s Simple s Recognise controllability s Emphasises the positive s Timely continued Copyright  2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Management Accounting: An 27 Australian Perspective 3/e by Langfield-Smith, Thorne & Hilton Slides prepared by Kim Langfield-Smith Cont.
28. An effective performance measurement system s Includes benchmarking s Embraces participation and empowerment s Includes only a few performance measures s Links to rewards Copyright  2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Management Accounting: An 28 Australian Perspective 3/e by Langfield-Smith, Thorne & Hilton Slides prepared by Kim Langfield-Smith
29. Designing measures for continuous improvement s Continuous improvement can be built into performance measurement systems by ÙSelecting relevant performance targets ÙDefining and re-defining the measure ÙMaking the performance target more challenging Copyright  2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Management Accounting: An 29 Australian Perspective 3/e by Langfield-Smith, Thorne & Hilton Slides prepared by Kim Langfield-Smith
30. Behavioural implications of changing performance measures s Resistance to change ÙIndividuals consider targets unfair or unachievable ÙIndividuals’ pay is involved s Changes are most likely to succeed if ÙSupported across the entire organisation ÙNot seen as an ‘add on’ to an inadequate performance measurement system Copyright  2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Management Accounting: An 30 Australian Perspective 3/e by Langfield-Smith, Thorne & Hilton Slides prepared by Kim Langfield-Smith