Essay on How to Measure Individual Managers Performance

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Table of Contents

3.1 Performance measures for Cost Centre Management 3
3.2 Performance measures for Profit Centre Management 3
3.3 Performance measures for Investment Centre Management 4
5.1 Marginal/ Variable Costing 6
5.2 Full or Absorption costing 7
5.3 Activity Based Costing 8


As Financial Director for a large multinational company operating its business in 20 countries around the world the task of assessing different ways to measure the performance of individual manager who each has responsibly for one part of the portfolio was assigned. To do this an audit was carried out at several different centres that played a major role in how the company was run and managed on a daily basis. I looked at the different methods used of evaluating the individual managers who were responsible for different parts of the portfolio and how their decisions affected the success of the organisation in order to maximise profitability.
To maximise profitability it was very important to consider in such a diverse environment the best way to organize and plan their activity and resources. After evaluation of all the different methods of measuring performance using the three approaches it was clearly seen that in such environment no one way is suitable for measuring performance and a combination of approaches would be best suited according to the operational and environmental setting of the organisation.
The departments were also given the responsiblity for costing products and services in order to make better decisions. In this case we consider different costing systems and looked at act...

... middle of paper ...

...eMeasurement7e.htm?, (15th December 2013)
Jan,O. Standard Costing and Variance analysis. Available from:. [20 December 2013].
Reece, R.S & Cool, W.R ,Measuring investment centre performance . Available From :<(>.[20th December, 2013)
Ottley, D., 2001. Accounting performance measurement: a review of its purpose and practice. Available at: [ 22nd December 2013].
2001. Cost centre and profit centres,. Available at :[23rd December 2013]
Cost allocation and activity based costing systems. Available at :< > [ 20th December 2013]

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