lOMoARcPSD|6050997 EPM Assignment Enterprise Performance Management (University of Melbourne) StuDocu is not sponsored or endorsed by any college or university Downloaded by Rachael Mathews (rmmat@student.unimelb.edu.au) lOMoARcPSD|6050997 ACCT30002 Enterprise Performance Management Assignment Semester 1 2020 Due date: 1.00pm Friday 15 May 2020 Group: EPM assignment 95 Group Members: 1. Oi Ying Lau (1024902) 2. Pei Xing Lee (1025250) Downloaded by Rachael Mathews (rmmat@student.unimelb.edu.au) lOMoARcPSD|6050997 2 Question 1 Culture is an important control itself as it can perform functions of an organisational control system, namely goal emphasis, organisational integration, autonomy with control and implementation and strategic planning. Organisational culture achieves goal congruence by influencing employees to act in accordance with organisational goals. Goal congruence motivates decisions and actions of employees to align with organisational goals (Flamholtz, 1996). In an organisation, the type of culture implemented is selected by managers. Employees naturally adopt the values as they are exposed to the culture (Flamholtz, Das & Tsui, 1985). Culture acts as a control invisibly assisting managers to educate and control employees without them knowing (Owoyemi & Ekwoaba, 2014). Therefore, values adopted influence their views on what is considered to be important and thus motivates them to achieve organisational goals perceived to be important. Through influencing behaviour and thoughts, culture emphasises on goal congruence which increases chances of employees acting in accordance with organisational objectives (Flamholtz et al., 1985). The organisational integration function is achieved using culture by reducing the probability of conflict in goals. Organisation integration allows combining of efforts of different parts of the organisation (Flamholtz, 1996). By establishing a culture consisting of clear values, it results in alignment of individual and organisational goals (Sørensen, 2002). Therefore, this reduces the possibility of conflicts due to difference in goals and thus achieve coordination within the organisation which allows different units to work together effectively. Downloaded by Rachael Mathews (rmmat@student.unimelb.edu.au) lOMoARcPSD|6050997 3 Culture will achieve autonomy with control by establishing acceptable norms within the organisation. Autonomy with control aims to allow organisations to evaluate results while simultaneously permitting people to operate without having every decision reviewed (Flamholtz, 1996). Culture sets a norm as a guideline and behaviours that deviate from the norm would be unacceptable and inappropriate (Cooke & Rousseau, 1988). As such, there is a higher chance of employees behaving in accordance with culture and thus allows autonomy to be granted to employees for areas where culture is covered as their decisions are guided by company’s culture. Culture assists in strategic planning and implementation as it guides decision making and promotes unification within the organisation. The interpretation of strategy will be subjected to judgements by managers whose values are shaped by the culture of the organisation (Shrivastava, 1985). Although culture is invisible, it plays a significant influence in strategic planning. It provides clear direction for strategic planning and assists planning of strategies aligning with culture (Sørensen, 2002). During implementation, culture provides clear goals and expectations that assist smooth completion of implementation , it reduces ambiguity and doubts and allows effective execution of plans. Enron is an example that shows culture is an important control. It is believed that corporate culture in Enron was the main reason contributing to its downfall (Kulik, 2005). Enron established a culture which was not appropriate for the organisation and it led to dysfunctional behaviours of employees which caused the downfall. Enron’s culture encouraged fierce competition among employees and promoted values like ‘employees sacrificed their today in hope of a better tomorrow’. They also established their organisational goal as being the world’s leading company. Employees exposed to such culture aligned their individual goal with organisational goal. They worked towards Downloaded by Rachael Mathews (rmmat@student.unimelb.edu.au) lOMoARcPSD|6050997 4 a common goal of being the world's leading company, sacrificing themselves for the benefits of the company. Moreover, culture in Enron supported autonomy with control. Employees were given high autonomy in the organisation as strong values established through culture defined acceptable behaviours. In addition, The establishment of a “greedy and competitive” culture allowed integration of efforts between parts of the organisation. Furthermore, culture in Enron assisted in their strategic planning process. Culture promoted a common goal within the organisation which allowed managers to adapt and transform the business model when needed to satisfy market needs in order to achieve overall goal. Downloaded by Rachael Mathews (rmmat@student.unimelb.edu.au) lOMoARcPSD|6050997 5 Question 2 Downloaded by Rachael Mathews (rmmat@student.unimelb.edu.au) lOMoARcPSD|6050997 6 Question 3 Downloaded by Rachael Mathews (rmmat@student.unimelb.edu.au) lOMoARcPSD|6050997 7 Question 4 Firstly, the balanced scorecard could be used to improve MLC’s profitability by providing an early warning for inadequate cash flows and helping identify the cause of delay in receipt of payment. MLC is experiencing weak financial performances due to widespread deficient project management practices that resulted cost overruns, delayed billings and slow receivables collections. The balanced scorecard provides a number of days taken to bill a customer and days sales outstanding to monitor the billing and collection managerial performance. The former shows days taken for MLC to bill their customers while the latter measures days taken to collect payment after a project is finished. The resulting numbers should be compared to a benchmark that is considered to be acceptable for MLC. If they are underperforming compared to the benchmark, it creates an early warning that the firm may be having inadequate cash flow and hence warrants the firm to take actions to ensure adequate cash flow before it actually runs into a shortfall in cash flow. In addition, causes of delay in receipt of payment could be identified, whether it is due to inefficiency in billing procedures or ineffective receivables collection policies. This helps MLC understand the area of focus to improve its profitability. Therefore, MLC will be able to strengthen its financial position and allow further growth of the company in the long term. Secondly, the balanced scorecard could be used to identify components of employee satisfaction which provides feedback to the company in order to boost employee satisfaction and hence attract employee purchase of MLC’s shares. The decline in MLC’s employee interests to purchase shares is due to its negative organisational climate and employees’ concerns about work-life balance, stress and low morale present in MLC. The balanced scorecard provides an employee satisfaction index as a measure of level of satisfaction among employees. Since the level of employee satisfaction is positively correlated with employee’s desire to purchase MLC shares, a Downloaded by Rachael Mathews (rmmat@student.unimelb.edu.au) lOMoARcPSD|6050997 8 higher index would indicate that more employees are willing to purchase MLC shares. If the index is below acceptable level, it indicates that MLC needs to investigate components that contribute to low satisfaction index and take actions to bring the component back in line with expectations. This facilitates efficient use of managerial resources as only the components that are underperforming are investigated into and made improved with additional resources. MLC’s decision to improve the right component could boost the level of employee satisfaction among the employees that would ease their worries with the negative organisational culture and hence employees would be more willing to buy shares in MLC. Thirdly, the progress of strengthening leadership could be monitored through the use of the balanced scorecard. Since MLC’s partners only focus upon the tasks and technical issues rather than project management and control issues, it contributes to the aforementioned deficient managerial practices. This is due to the partners’ lack of knowledge of formal project management approaches. BSC provides a leadership performance index as a measure of the company’s progress in developing technical and management leaders at all levels. The index could be used to assess the performance of the leaders in different aspects through assigning a score to the components of the index. A score in a particular component lower than the acceptable level indicates unsatisfactory performance and hence the areas of improvement. This allows MLC to efficiently allocate more resources to enhance the performance of leaders in that particular area. Hence, the development of an all-rounded leader is facilitated. In addition, the average training and education hours per employee could also serve as an indicator of the progress for development of leaders. If the resulting number is below preset standards for partners, partners should undertake more training to ensure that they receive sufficient training that allows them to develop their expertise in project management. Therefore, the balanced scorecard could be used to monitor the progress of leadership development in MLC through ensuring Downloaded by Rachael Mathews (rmmat@student.unimelb.edu.au) lOMoARcPSD|6050997 9 it is all rounded with the leadership performance index and average training and education hours per employee. Lastly, the balanced scorecard assists MLC by providing insights of employee development and supporting development of new capabilities in MLC. MLC is facing a loss of intellectual capital as many long-term partners with technical knowledge and experience that MLC has staked its reputation upon, are approaching retirement. Hence, managing the loss of intellectual capital while developing new capabilities have significant implications for MLC’s future success. The balanced scorecard uses the number of ongoing clients for each employee and average training and education hours per employee as measures of the progress of each employee in developing individual practices and MLC’s investment in training and education respectively. The former metric could serve as one of the criteria for rewards. If it is above MLC’s standard, employees should be given a bonus. This encourages employees to strengthen their individual practices, to build up clients’ confidence in their abilities and hence develop long term relationships with more clients. The latter metric could serve as a diagnostic control for training hours. If an individual’s training hours are below the average, it indicates the need for them to undertake more training. This ensures employees get enough training to maintain competitiveness and facilitates development of strong individual practices. This allows MLC to keep developing new capabilities and hence reduce MLC’s reliance on the retiring partners to maintain their service standards. Downloaded by Rachael Mathews (rmmat@student.unimelb.edu.au) lOMoARcPSD|6050997 10 References Baum, J. F., & Youngblood, S. A. (1975). Impact of an organizational control policy on absenteeism, performance, and satisfaction. Journal of Applied Psychology, 60(6), 688-694. Cooke, R. A., & Rousseau, D. M. (1988). Behavioral norms and expectations: A quantitative approach to the assessment of organizational culture. Group & Organization Studies, 13(3), 245-273. Flamholtz, E. (1996). Effective organizational control: a framework, applications, and implications. European Management Journal, 14, 596-611. Flamholtz, E. G., Das, T. K., & Tsui, A. S. (1985). Toward an integrative framework of organizational control. Accounting, organizations and society, 10(1), 35-50. Kulik, B. W. (2005). Agency theory, reasoning and culture at Enron: In search of a solution. Journal of Business Ethics, 59(4), 347-360. Owoyemi, O., & Ekwoaba, J. O. (2014). Organisational Culture: A Tool for Management to Control, Motivate and Enhance Employees’ Performance. American Journal of Business and Management, 3(3), 168-177. Shrivastava, P. (1985). Integrating strategy formulation with organizational culture. The Journal of business strategy, 5(3), 103-110. Sørensen, J. B. (2002). The strength of corporate culture and the reliability of firm performance. Administrative science quarterly, 47(1), 70-91. Sun, S. (2008). Organizational culture and its themes. International Journal of Business and Management, 3(12), 137-141. Downloaded by Rachael Mathews (rmmat@student.unimelb.edu.au)
