Management and Organizational Studies 1023A/B Lecture Notes - Canadian Cancer Society, Veganism, Income Statement

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MOS 1023 Notes
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
provide education.
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
of sales
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.
The net profit (loss) of the budgeted income statement will equal the total cash
generated (used) in the cash budget
a true
*b false
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
Erin McKenna
Makes company more efficient, more responsible planning
Promote efficiency, can serve as a warning sign, knowing how much to
spend, stocking inventory, looking at sales trends, minimize waste,
allocating resources during busy holidays eg. Valentine's Day
Planning – long-term. Budgeting – short-term financial management
Sales Budget – first budget prepared. Company considers many factors.
Challenges of no sales history – look at other locations' sales forecasts
Marketing – social networking
Specific demographic – hard to look at industry trends such as sprinkles
(Time required to make a budget varies among companies)
Past Performance
People may not want to achieve as much this year if they know there will be
small percentage increases.
Evolutionary Patterns of Strategy and Organizational Structure
No wrong or right structure – company may have outgrown a simple or
functional structure. Structure will change as companies evolve.
Because there is success in implementing a strategy, companies will
experience growth problems – not enough infrastructure to support
company i.e. Investment in technology, labour
Head of each department can make decision, rather than the CEO making
all the decision
Highly centralized organization makes decisions at the top.
vs. Centralized: about the decision making authority – Western's head
department has the authority
Responsibility Accounting
Often mirrors the departmental setup, but it sometimes does not.
Responsibility Centres
Group information and give people a centre that only contains items that
they can influence/control.
Increasing ROI
Reducing expenses: problem – it could lead to decisions that are not in the
best interest for the company eg. Selling a lot in one year, making a bonus.
Next year, the market is flooded, and half the employees are laid off
Issues in Non Profit Organizations
Company's existence will benefit society in some way
5. Unlikely that you will be giving to a charity you are using.
6. CEOs may be torn between employee and executive needs if they have
previously been part of the staff eg. Former doctor now the CEO of a non-
profit hospital.
Measuring Success
Social Indicators: problem is the difficulty in collecting information – information
that we are unable to collect. Could be inaccurate information – other factors
could contribute to change in statistics