MOJICO, BERNIE PREA 7.

1 ACTIVITY 1
BSA IV 09/04/2021

Performance Management Company

Neil Rogers is the controller for Performance Management Company (PMG), a manufacturing company with
headquarters in San Antonio, Texas. PMC has seven concrete product plants located throughout the Southwest
region of the United States. The company recently switched to a decentralized organizational structure. In the past,
the company did not try to measure profitability at each plant. Rather, all revenues and expenses were consolidated
to produce just one income statement.
Under the new organizational structure, each plant is headed by a general manager, who has complete responsibility
for operating the plant. Neil asked one of his accountants, Scott McDermott, to organize a small group to be in
charge of performance analysis. This group is to prepare monthly reports on performance for each of the seven
plants. These reports consist of budgeted and actual income statements. Written explanations and appraisals are to
accompany variances. Each member of Scott's group has been assigned to one specific plant and is encouraged to
interact with management and staff in that plant to become familiar with operations.
After a few months, Neil began receiving complaints from the general managers at several of the plants. The
managers complained that the reports were slowing down operations and they felt as though someone was
constantly looking over their shoulders to see if they were operating in line with the budget. They pointed out that the
performance analysis staff is trying to do their job (i.e., explanation of variances). The most vocal plant manager
claimed that 'those accountants can't explain the variances—they don't know anything about the industry!" president
of PMG, Ross Stewart, also complained about the new system for performance evaluation reporting. Ile claimed that
he was unable to wade through the seven detailed income statements, variances, and narrative explanations of all
variances each month. As he put it, "I don't have time for this and I think much of the information I am receiving is
useless!"
Requirements
1. Do you think it is a good idea to have a special staff in charge of performance evaluation and analysis?
a. I agree that having a specific team in charge of performance evaluation and analysis is a good
idea. Companies use performance assessments to acknowledge accomplishments, assess job
development, and offer training to help employees further develop their skills and strengths.
Recurrent evaluations help us understand each employee's strengths and then support their
interests.
2. In a decentralized organization such as this one, what would seem to be the best approach to performance
evaluation?
a. When it comes to evaluating and judging performance, I believe that the perfect performance
review connects each individual's performance to corporate goals and specifies the job at hand, as
well as the anticipated results. The subordinate's increasing competence will foster and enhance
communication between you and your employee. This will also serve as the foundation for salary
and promotion decisions, as well as boosting an employee's motivation.
3. What information would you include in a performance evaluation report for Mr. Stewart?
a. a. I'll include every employee's actions and performance, as well as their contribution to the
organization. For me, FS is not just the foundation for each plant's performance, but the
performance of each employee is also important.