Feb 6: Management Control and Performance Evaluation & Issues in Non Profit
– Non profit organizations can often be more difficult to manage i.e.
Evaluating and motivating employees.
– Critical in organizations
– We must know the company's goals/objectives
– Non-profit – goals will vary. Some organizations' goal is to no longer exist i.e.
Canadian Cancer Society. Western's goal is to be research-intensive and
Conflicts in Goals
Organization doesn't make the decision; the people within it do.
– Their goal may not be the same as the individual employee – actions that
are going to make the company closer to the objective may not necessarily
make the individual employee improve
– Goal alignment is critical so employees are motivated
Motivations of Behaviour
– Money tends to become less and less important as people move on in their
– Positive incentives – rewards i.e. Gift cards, nicer offices – tend to work
better than negative ones
– Negative incentives – punishment i.e. Ranking people on a chart for amount
3M – many products. Made a goal that a certain percentage of sales must come
from newer sales. Objective to achieve this is the rewards structure.
Management Control Systems
– i.e. Being cost-conscious – m.c.s will support this.
Roles for Budgets
– Control mechanism.
– Important for benchmarking
– Evaluate both positive and negative variances
– In the short run, profit may be made, but in the long run, the company may
– eg. cleaning a hotel too fast – detrimental to company's quality standards
The Master Budget: An Overview
– Materials and labour will match manufacturing amount needed
– Manufacturing amount needed will not necessarily be the same produced –
look at leftover inventory from last sales period first.
Question: The net profit (loss) of the budgeted income statement will equal the total cash
generated (used) in the cash budget
– Income statement has non-cash items eg. Revenue that hasn't been
received yet, depreciation expenses.
The Budgeting Process
eg. video: Babycakes NYC – vegan bakery
– Makes company more efficient, more responsible planning
– Promote efficiency, can serve as a warning sign, knowing how much to