会计学：企业决策的基础（管理会计分册）（原书第19版）指导手册 -Chap025-REWARDING BUSINESS PERFORMANCE

Chapter25—RewardingBusinessPerformance

Chapter25—RewardingBusinessPerformance

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25 REWARDINGBUSINESSPERFORMANCE

ChapterSummary

Incentivesareformalandinformalrewardsbasedonperformancethatenhancemanagerialefforttowardstheorganizationalgoals.Thechapterfocusesonmotivatingbusinessemployees,customers,suppliers,andotherstohelptheorganizationachieveitsgoalsandobjectives.NumerousperformancemeasuressuchasROI,residualincome,economicvalueadded,andthebalancedscorecardarediscussedinthechapter.

TheDuPontsystemandcomponentsofreturnoninvestment(ROI)arediscussedandcritiqued.Wethenpresenttwootherbusinessperformancemeasures,residualincome(RI)andeconomicvalueadded(EVA).Finally,thebalancedscorecardisdiscussed.

Amajorcriticismofreturnoninvestment,residualincome,andeconomicvalueaddedasperformanceevaluationtoolsisthattheyfocusononlyonecomponentofthebusiness,financialoutcomes.Asdiscussedinapreviouschapter,totalqualitymanagementincludescarefulconsiderationofqualityacrosstheentirevaluechain.Thus,performancemeasuresthatignorethelinksinthevaluechainruntheriskofafailuresomewhereonthechain.Thebalancedscorecard,aperformancemeasurementapproachdevelopedforsettingstrategicgoalsandmeasuringprogresstowardallgoalsacrosstheentirevaluechain,isthenpresented.

Thechapterconcludeswithadiscussionofmanagementcompensationandthetradeoffsthatcompensationdesignersmake.

LearningObjectives

Explaintheimportanceofincentivesystemsformotivatingperformance.

UsetheDuPontsystemtoevaluatebusinessperformance.

Identifyandexplainthecriticismsofusingreturnoninvestment(ROI)astheonlyperformancemeasure.

Calculateandexplainresidualincome(RI)andeconomicvalueadded(EVA).

Usethebalancedscorecardtoidentify,evaluate,andrewardbusinessperformance.

Identifyandexplainthecomponentsofmanagementcompensationandthetrade-offsthatcompensationdesignersmake.

BriefTopicalOutline

Motivationandaligninggoalsandobjectives

Communicatinggoalsandobjectives

Accountinginformationandfeedbackaboutgoalachievement

Rewardinggoalachievement

TheDuPontsystem

Returnoninvestment

Thecomponentsofreturnoninvestment

Returnonsales—seeYourTurn(page1091)

Capitalturnover—seeCaseinPoint(page1092)

CriticismsofROI

Theshorthorizonproblem

Failingtoundertakeprofitableinvestments

Measurementproblems—seeCaseinPoint(page1094)

Residualincomeandeconomicvalueadded

Residualincome

Economicvalueadded

Thebalancedscorecard

Thefinancialperspective

Thecustomerperspective

Thebusinessprocessperspective

Thelearningandgrowthperspective

Difficultieswiththebalancedscorecard—seeYourTurn(page1098)

Managementcompensation

Componentsofmanagementcompensation

Fixedsalary

Bonuses

Othertypesofincentives—seeEthics,Fraud&CorporateGovernance(page1101)

Designchoicesformanagementcompensation

Choiceoftimehorizon

Choiceoffixedversusvariablebonus

Choiceofstock-versusaccounting-basedperformanceevaluation

Choiceofrewardinglocalversuscompanywideperformance

Choiceofcooperativeversuscompetitiveincentiveplans

Internationalfinancialreportingstandardsandmanagementcompensation

Goalsandrewardsinlife—seePathwaysConnection(page1102)

Concludingremarks

TopicalCoverageandSuggestedAssignment

ClassMeetingsonChapter

TopicalOutlineCoverage

DiscussionQuestions*

Brief

Exercises*

Exercises*

Problems*

CriticalThinkingCases*

1

A–D

1,2,3,5

1,5,6

1,3,5

1

1

2

E–G

10,11

2,3,4,7

2,3,6

*Homeworkassignment(tobecompletedpriortoclass)

CommentsandObservations

TeachingObjectivesforChapter25

Explainandillustratehowincentivesystemsprovideatoolthathelpalignemployeegoalswiththoseoftheorganization.

Computethetwocomponentsofreturnoninvestment:returnonsalesandcapitalturnover.

Discusstheadvantagesthatresidualincomehasoverreturnoninvestment.

Explaineconomicvalueadded.

Describethefourlensestoconsiderbusinessperformance.

GeneralComments

Thefocusofthischapterisrewardingbusinessperformanceusingincentivecompensationsystemstomotivatedecisionmakerstoaligntheirgoalsandobjectiveswiththeorganizations.WediscussedhowtheDuPontROIsystemmeasuresfinancialperformanceandwhysomecriticsthinkROIisflawed.WesawhowRIandEVAcancorrectsomeofthecriticismsofROI.

Thebalancedscorecardisabroadermeansformeasuringandrewardingbusinessperformance.Finally,wedescribedthecomponentsofanddesignchoicesformanagementcompensation.

AnasideHarvardBusinessReviewhasselectedthebalancedscorecardasoneofthemostimportantmanagementpracticesofthepast75years.Well-knownenterprisessuchasMicrosoft,NASA,andtheDepartmentofTransportationareusingthebalancedscorecard.Toimplementthebalancedscorecard,managersmustimplementfourkeysteps:articulatethestrategytoeveryemployee;engageanemployeeteamtodesignmeasuresthateliminateunnecessarytasks;providemeasurementfeedbackroutinely;andmakesurethesystemisacceptedbyemployeesandalignedtorewards.

SupplementalExercises

GroupExercise

Inatypicalapproachtothebalancedscorecardmethod,abusinesswilldevelopgoalsanddetermineareasneedingimprovement,developasystemformeasuringimprovement,providefeedbacktoemployees,andrewardachievements.Developamockbusinesswithareasneedingimprovement.Identifytheareasneedingimprovementandestablishmeasurementcriteriainfinancial,operational,andcustomer-satisfactionpractices.

InternetExercise

VisitwebsitesofseverallargecorporationsandgovernmentalagenciesincludingMicrosoft,theDepartmentofTransportation,theInternalRevenueService,ChaseBank,andPrudentialInsuranceCompany.Dothewebsitesprovideanyinformationonhowthecorporationsoragenciesareusingthebalancedscorecardoreconomicvalueaddedtoimproveperformance?

CHAPTER25 NAME #

10-MINUTEQUIZA SECTION

ThefollowinginformationregardingGreenwichCompanyisavailable:

Sales $1,512,000

Costofsales $882,000

Operatingexpenses $252,000

Operatingearnings A

Averageinvestedcapital B

ROI C

Returnonsales D

Capitalturnover 40%

ComputetheanswersforitemsA–D.

A

B

C

D

CHAPTER25 NAME #

10-MINUTEQUIZB SECTION

ThefollowinginformationregardingBaronCompanyisavailable:

Sales $264,000

Costofsales $99,000

Operatingexpense A

Operatingearnings $66,000

Averageinvestedcapital $660,000

ROI B

Returnonsales C

Capitalturnover D

ComputetheanswersforitemsA–D.

A

B

C

D

CHAPTER25 NAME #

10-MINUTEQUIZC SECTION

Statethefourperformancelensesinabalancedscorecardandbrieflydescribeeachofthem.

SOLUTIONSTOCHAPTER2510-MINUTEQUIZZES

QUIZA

LearningObjectives:1,2

A$1,512,000−$882,000−$252,000=$378,000

B$1,512,000÷40%=$3,780,000

C$378,000÷$3,780,000=10%

D$378,000÷$1,512,000=25%

QUIZB

LearningObjectives:1,2

A$264,000−$99,000−$66,000=$99,000

B$66,000÷$660,000=10%

C$66,000÷$264,000=25%

D$264,000÷$660,000=40%

QUIZC

LearningObjective:5

Financialperspective—Thislenshelpsemployeesconsidertheimpactofstrategicdecisionsonthetraditionalfinancialmeasuresbywhichshareholdersandcreditorsevaluatebusinessperformance.

Customerperspective—Inthislens,employeesexaminehowtheorganization’sstrategies,products,andservicesaddvaluetothecustomer.

Learningandgrowthperspective—Thislensfocusesonthepeople,informationsystems,andorganizationalproceduresinplacefororganizationallearningandgrowth.

Businessprocessperspective—Thislensfocusesoninternalbusinessprocessesandexternalbusinessrelationswithsuppliersanddistributors.

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AssignmentGuidetoChapter25

BriefExercises

Exercises

Problems

Cases

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