Lecture 4
Financial Management
Responsibility accounting and performance measurement
Organizations are complex – divisionalization
Quick example of a RAS
Some considerations
- Goal congruence criterion
- Fairness criterion (aka the controllability principle)
- Measurability of outputs (SMART)
Goal congruence criterion
- Alignment between the goals of managers of individual responsibility centers and
the organization overall
- Aligning incentives
- Consequences of violation?
Fairness criterion
- Aligning responsibility and control
- Consequences of violation?
1
Financial Management
Responsibility accounting and performance measurement
Organizations are complex – divisionalization
Quick example of a RAS
Some considerations
- Goal congruence criterion
- Fairness criterion (aka the controllability principle)
- Measurability of outputs (SMART)
Goal congruence criterion
- Alignment between the goals of managers of individual responsibility centers and
the organization overall
- Aligning incentives
- Consequences of violation?
Fairness criterion
- Aligning responsibility and control
- Consequences of violation?
1
