Designing a Balanced Scorecard for a Pharmaceutical Company Chadwick

PROBLEM 12-47

Requirement: Two new systems are being considered at Building Services Co:

* Responsibility – accounting system

* Participatory budgeting system

For each of these systems:

1. Identify at least two behavioural advantages that could arise.

Responsibility-accounting system | Participatory budgeting system |

Managers will try to come up with the best way to improve the performance of their assigned department as it will reflect their leadership skills. | Employees will feel belonged to the organization as they are also given the right to participate in the planning process. |

Transferring the responsibilities to lower level managers will enhance the efficiency of each department as the managers will concentrate and focus on the department they are assigned to. | Each department will provide a detailed cost allocation to be presented to the top management for approval. This will enhance the transparency. |

2. Identify at least two potential problems that could arise.

Responsibility-accounting system | Participatory budgeting system |

Managers tend to ignore other business units that are not under their responsibility. | Participations will not come from all employees. Some employees prefer to remain passive and just follow instructions. |

Resources might be under-utilized as employees and managers tend to care for their own department and will not likely to contribute to other units. | Ideas that are not accepted will cause employees to feel under-motivated, which may affect their performance negatively. |

3. Discuss the likelihood that the system will contribute to the alignment of organizational and personal goals.

* Both systems will motivate the managers and employees as the systems offer more challenging tasks, which will lead to job satisfaction.

* The systems also will instil a form of ownership to the employees as they involve the whole organization in the planning process.

* The systems will...