1. What is the company’s management structure?
The company is divided into four operating divisions (Glasseal, Hermetic Seal, Hermetite and Sealtron) , each of which is run completely independent by a general manager. These managers are responsible for the whole business operated in their division except for the control function, which is run by the division controllers who report directly to Chris Bateman, the CFO. The reason why control is separated from everything else is to ensure that there is autonomy and objectivity on the controller’s judgments: if they were reporting to the division managers and earning bonuses on the same basis than them, they would have an incentive to window dress the accounts and report a better situation than the real one. However, the disadvantage of this separation is that corporate monitoring and recommendations are not well seen by the division managers, who feel that they are being controlled by people who is not working day by day with them. Additionally, there is a staffing department (legal and human resources division), which helps the whole company address problems related with those particular topics. As can be seen in Exhibit 2, the four division managers report on the Chief Operating Officer who at the same time reports directly to Andy Goldfarb, the President and CEO. However, this is not the top of the organization chart, since there is an additional level above: Jack Goldfarb, who is the Chairman of the firm.
2, 3 & 4. What are the primary differences between HCC’s new and old budget processes? What were the problems with the old system? How did the new system address these problems? (PROCESS?) HCC old budget system was based on stretch performance and aggressive targets, in order to stimulate division managers work at the hardest possible level. This resulted in a continuously misachievement of goals making harder to earn the portion of bonuses related with performance. Since everybody in the company...
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