Strategic Cost Management
Dr. Dave Bukovinsky
Analysis Assignment #1
This assignment builds on the balanced scorecard concept by considering the implications of linking compensation to the balanced scorecard metrics. Students will consider the advantages and disadvantages of linking compensation to the scorecard, implementation issues, as well as the appropriateness of the compensation plan.
Read Case 2-48 on page 53 of your text.
Answer the following questions:
1. What are some general advantages and areas of concern surrounding the linking of compensation to a Balanced Scorecard?
2. Why might employees resist the change in determining compensation?
3. Mobil allowed the individual business units to create their own Balanced Scorecards, including the measures and targets. that would be used to determine the managers’ compensation. Additionally, the individual managers could assign weights to the various measures to determine how much each would contribute toward the calculation of the manager’s bonus. What are the advantages and possible problems with this method?
4. Assume the company previously based bonuses on the financial performance of the business unit. How would you suggest the company handle the transition from the previous method of determining compensation to one based on the Balanced Scorecard?
Papers should be typed, double-spaced. Papers should not exceed eight pages. Number the question you are answering. Your responses should reflect a grasp of the issues, be clearly and concisely expressed, and integrate readings and course material where appropriate.
This assignment is worth 25 points (10% of your final grade). Points will be based on thoroughness and depth of analysis, organization and clarity and conciseness of answers, spelling, grammar, etc. You may e-mail your case to me.
Monday class: Monday, October 8th.