MyCourses has some issues in functionality, which could not be fixed before this course will commence. Hence, you find full course syllabus attached. In the syllabus you find information regarding the cases we discuss in each class, questions related to those cases, as well as required readings and e-mail questions. I will insert cases into assignments section.
This file contains grading of cases Atlanta and KCC as well as your points from first e-mail question.
What comes to grading the Atlanta case, I did not reduce points in case you did not manage to classify controls properly. There were large differences in how thoroughly various controls used were discussed. Also, to get 2 points (outstanding) required good discussion of the second question of the case. I was quite liberal in grading this case as this was the first case to be graded and to be done before any lecturing. So it may be that you got one point from this with an answer that normally would not give you any points at all.
KCC case contained 4 questions. Three first ones were graded out of 2 and the last one gave 1 point (two last questions were dealing with performance evaluation and incentives)
In the first question, recurring decisions means those decisions managers need to do on an ongoing bases. Similarly, arguing that someone decides on sales does not mean anything. In sales you need to decide on who to sell, what products, what price etc. Based on the case it was not perfectly obvious how the decision rights were truly allocated in terms of how and where to manufacture, how to advertise, what products to develop, etc.
In the second question addressing how far the decentralisation went, those groups which developed a frame / criteria to justify their thoughts got two points. It is not very fruitful to argue that they went too far or did not go far enough just based on the observed consequences. You might want to think what are the advantages and disadvantages of decentralisation and use these to judge what to do with decision rights regarding e.g. R&D and Supply Chain.
Third question asked you to evaluate performance management and incentive system. This could have started from analysing what type of units these new divisions were and how well the developed financial measure is likely to work for such units. Also incentive system had many features that were to be evaluated here. A reasonable evaluation of both performance measurement and incentives gave you one point. Addressing required changes and justifying those properly gave second point from this question.
In the fourth question many of you picked up the fact that no allocation of R&D costs would be required in case those activities were decentralised to divisions. It is not obvious though that this alone would require any changes to the basic design of performance measurement and incentives. However, decentralisation may potentially cause myopia (short term profit maximation) by not investing enough in R&D, if those decisions were decentralised. How to deal with this risk in terms of KPI*s and incentives was one topic to be considered here.
For most questions most groups had good answers. However,
following might explain why you did not reach 2 points.
First question was about key elements of Mainfreights
results control systems. Some of those were financial and nonfinancial KPIs
they used, how they set targets for those, how performance was evaluated
(relative evaluation etc.) and how incentive systems were designed. Some of you
discussed e.g. only incentive systems.
When assessing how Mainfreights system perform functions
typically performed by budgets, it was useful to use some categorization of
functions of budgets (planning, motivation, performance evaluation, resource
allocation, coordination, etc.). Some of the groups made very brief comments on
This file contain grades from Johansen's case. Most groups did very well on this case. When we discuss organisational structure in the context of performance management, it refers to cost, revenue, profit, investment centres and decision rights those managers have. This might explain why you did not get full points. Other reasons for less than full mark was limited assessment of how performance was evaluated in various perspectives and limited justification and discussion to support your views on what grade Clark should be awarded.
Attached file contains grading of HCC and Houston Fearless in addition to previous cases. E-mail answer points are also updated to be in line with syllabus. Thanks Daniel for pointing this out!
HCC case was graded so that first question gave three points and other two questions two points. For first question outlining the reasons for change provided one point. Evaluation of new system and why it does not seem to be that successful provided two points.
For the second question, pointing out the differences in businesses of these divisions and how those should impact on the workings of the new system yielded one point. The other points come from considering the characteristics, styles and experiences of GM's of those divisions and likely impacts those would have on the workings of the new system.
Most of you were able to suggest improvements in implementation, including enhanced participations etc.
Houston case was difficult to achieve a mark ”outstanding” or 2
Most groups identify easily why management was not happy
with existing incentive system, but most groups had somewhat limited analysis
about was this incentive system really a major reason for company problems.
What comes to features of the new system, many groups did
not discuss the small weights placed on MBO targets at all. How likely it is
that those targets have some impact on behaviour, if the total impact of those
is very small. Some groups proposed ideas to resolve unresolved issues,
which is good, but you may also want to consider the potential shortcomings /
issues of your proposals, as some of them appeared somewhat problematic.
What comes to bonuses to sales assistants, some groups
seemed to be willing to increase their bonuses, but did not articulate how this
increase would pay off to the firm. Essential here was to suggest some kind of
link between compensation and activities they do / objectives they can have an
Some answers contained issues in logic. How can this
type of sales incentive plan become a financial burden to a firm even without
caps? More profits (and sales) to the firm means more money to both
shareholders and salesmen.The fact that larger proportion of those sales that exceed
targets goes to salesmen does not mean that the firm and shareholders do not
benefit from this additional sales as well.
USC case is now graded. File contains also points from the last e-mail question. I will add points from your class room activity into this file on Monday when at office next time.
What comes to USC grading, first question was about types of responsibility centres. Administrative ones were cost centres and others profit centres, but those who discussed that they were somewhere in between profit and investment centres got full points as well. Most of the groups got one point from this question, which was also the maximum.
The second question was graded out of two and most of the groups were able to outline well why the system was effective.
Third question was graded out of three. Many groups took for granted that those problems outlined in the case description were major issues (some were, some perhaps less) and that the system caused or contributed to those. Some of you discussed, for example, that deans were willing to sacrifice teaching quality by focusing on financials only. Please be careful with this type of conclusions. Most managers understand what they need to do well to be successful in the long run. And USC seems to be doing extremely well in many fronts. If the quality of teaching suffers, students would choose some other university, tuition fees would go down and deans would be falling short from their financial targets. Hence, even if the system focus mainly on financial outcomes, other aspects were assessed as well, and the idea was to leave deans a lot of freedom on how to make their schools and units successful. Academic success is prerequisite for financial viability in this context. Similar arguments can be put forward regarding e.g. innovations. I am sure deans evaluate and assess various innovative ideas and execute those that are likely to be truly beneficial. In all academic organisations you find a lot of talented people with both good and not so good ideas. Not all ideas can be implemented, and it is quite natural for those, whose ideas do not get support to blame something, in this case university management system.
To get maximum points from this, you needed to discuss the severity of these problems, whether those were truly caused (or contributed) by the system and to what extent the changes addressed some of these issues and to what extent issues remained despite changes in the system.
The last question was graded out of one. To get full points you needed to discuss both whether you believed system was still causing perverse outcomes or not AND what to do next.
Please find attached grades for class discussion. Roughly one third of the class was active and got some points from class discussion. Should you feel I have missed your contribution, let me know. In that case I need a picture from you and your view on whether a) you contributed few times b) you contributed in almost every class at least once c) you contributed in almost all classes and in many classes many times.
The file also contains sum of your points before final exam.
The exam is now graded. You needed to get 20 points or more to pass the exam. For those of you who passed the exam, I scaled your points up by 4 points. The distribution of grades is nine fives, 17 fours and 17 threes, 6 twos and two failed.
The scale I used in grading was 50-54 =1; 55-64 = 2; 65-74 = 3; 75-84 = 4 and 85-100 =5.
I attached an other file containing answers to exam questions and how the exam answers were graded. The grading of exam was relatively strict as the exam itself was quite easy. Before questioning your mark, please note that exactly the same criteria was applied to all of you. At the end, I scaled your grades up to make sure the overall assessment is fair.