CHAPTER 25
REWARDING BUSINESS PERFORMANCE
OVERVIEW OF BRIEF EXERCISES, EXERCISES, PROBLEMS, AND CRITICAL
THINKING CASES
Brief
Exercises
B. Ex. 25.1
B. Ex. 25.2
B. Ex. 25.3
B. Ex. 25.4
B. Ex. 25.5
B. Ex. 25.6
B. Ex. 25.7
B. Ex. 25.8
B. Ex. 25.9
B. Ex. 25.10
Topic
Motivating employee performance
Evaluate business performance using ROI
Comparing ROI and residual income
Balanced scorecard perspectives
Computations for the DuPont model
Criticisms of ROI
Calculate residual income
Calculate EVA
Variable vs. fixed compensation
Components of ROI
Learning
Objectives
25-1, 25-6
25-2, 25-3
25-2, 25-4
25-5
25-3
25-3
25-2, 25-4
25-4
25-6
25-2
Exercises
25.1
25.2
25.3
25.4
25.5
Topic
Accounting terminology
Balanced scorecard activities
Employee
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Because individual students’ answers will be different, this makes a good class discussion question.
30 Medium
25.3 A,B
Fairfax Industries/Wilson Company
This problem demonstrates the impact of a choice of depreciation method on operating earnings. Because operating earnings are instrumental in determining the performance evaluation and resulting bonus of the manager of a division, the ethics of the choice are considered. 30 Medium
25.4 A,B
Tootsie Roll Industries
This problem demonstrates that information found in annual reports can be used to evaluate business segments. Financial information for computing ROI, capital turnover, and return on sales is included.
20 Medium
25.5 A,B
Fastwhere Inc./Save Some, Inc.
A set of potential investment projects is evaluated on both ROI and residual income measures. The calculations demonstrate that the project rankings are different if residual income is used rather than ROI to rank project attractiveness.
40 Strong
25.6 A,B
Valance Autoparts/Eatwell Restaurant Chain
This problem asks students to role play as a consultant to a firm that is having some problems with the balanced scorecard approach. It is a good problem to be used for a group report or presentation.
40 Strong
25.7 A,B
Hinkley Corporation/Bronson Corporation
Students consider management compensation
The client is an expert about himself or herself. Furthermore, it is of critical importance that the
Jackall (1988:144) enhances the importance of relationship-building skills by stating that the real issues consultants face are the political and social structures of corporations rather than the problems defined within them.
4. How does your view of behavior affect how you might address this consulting assignment?
Businessballs. (1995-2011). Performance Appraisals. Retrieved October 2, 2011, from businessballs.com: http://www.businessballs.com/performanceappraisals.htm#360 degree feedback 360 degree feedback
Sandra Sanchez is a vice principal for Los Santos High School. She has been approached by the principal of Los Santos and the superintendent to head up a pilot to implement the Common Core standards. Sandra was selected given her experience with the bilingual makeup of the district, and her work on her PhD in assessment. In addition the district had decided to bring in an outside design consultant, Vincent Peters, to assist Sandra in developing the training courses and assessment that will be used in the pilot at Los Santos. Given these dynamics it is apparent that the client is the Los Santos High School. It could be debated that Sandra is the client, but since she will be assisting in the full design process of both the training and the assessment she falls more into the designer classification. Vincent’s role is solely the designer of the training and assessment he will just have support from Sandra in doing so.
Different retailing businesses have very different distribution methods based on the types of product that they sell, some arguably more effectively than others.
Directions: Read the case study below and complete the questions at the end. You will form small groups in class to collaborate and produce your final answer.
supporting change and continuous improvement in accounting education, Issues in Accounting Education, Vol. 14. No 3
Describe an agency problem within the firm and discuss what you think is causing the problem and how the problem might be better controlled.
I recall sitting down in the workshop last Thursday. The company’s tent cards boasted a quote from Niccolo Machiavelli. It read, “There is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things, because the innovator has for enemies all those who have done well under the old conditions, and lukewarm defenders in those who may do well under the new” (Machiavelli). The owner of the firm took an unfortunate turn as he generalized the entire group, admonishing us all that we chose this life. What he referred to was the life of a consultant. This consulting assignment was reorganizing and transitioning individuals off permanently off the project. What he failed to understand was that over half of the group did not make this choose willingly. Many of the companies we came from laid the group off due to their economic environment. It was as if he was a father admonishing his children. He asked for questions, where he would challenge individuals to verbal humiliation to express his point. At one time, he required to see the degree of an individual, not knowing she was had a Ph.D. Unfortunately, many of us became
The case presented through the simulation gives the students the chance to assume the position of a Human Resources Director of a medium sized company. According to the HRManagement Case, the company has expanded in the last couple of years; however, the Human Resources department has not been able to keep up with the growth of the company (HRManagement Case, 12). Therefore, the Chief Executive Officer has advised for the student to help the department by setting specific goals. The case gives the following detailed information in regards to the Human Resources budget, staffing methods, productivity of employees, wages, and training programs.
Chapter 2 Harvard Press Book (2006). Performance management: Measure and improve the effectiveness of your employees. (Chapter 2) Motivation: The Not-So-Secret Ingredient of High Performance. Harvard Business School Publishing. Cambridge, MA. Lynn, I., Hodge, Y. & Yemen G. (2007). Teamwork turmoil. University of Virginia Darden School Foundation. Beamish, P. & Jiang, R. & (2011). The Chinese fireworks industry. Richard Ivey School of Business Foundation. Kaplan, R.S. (2010). Leading change with strategy execution system. Harvard Business School Publishing. Cambridge, MA. Karkhardt, D. & Hanson, J. (1993). Informal networks: The company behind the charts. Harvard Business School Publishing. Cambridge, MA. Katzenbach, J. & Smith, D. (1993). The discipline of team. Harvard Business Review. President and Fellows of Harvard College. Kerr, S. (1995). On the folly of rewarding A, while hoping for B. Academy of Management Executive. 9 (1), 7-14 Download on class site Kramer, R.M. (2003). The harder they fall. Harvard Business School Publishing. Cambridge, MA. Montgomery, C.A. (2005). Newell Company: Corporate Strategy. Harvard Business School Press.