Literature Review Of Definitions Of Performance - Free Essay Example

Sample details Pages: 22 Words: 6652 Downloads: 2 Date added: 2017/06/26 Category Statistics Essay Did you like this example? In a simple way performance means à ¢Ã¢â€š ¬Ã…“doing something successfullyà ¢Ã¢â€š ¬? mainly by using the available resources. Performance can be elusive concept. It deals with the outcomes, results, and accomplishments achieved by a person, group or Organisation. Don’t waste time! Our writers will create an original "Literature Review Of Definitions Of Performance" essay for you Create order (William J. Rothwel, Carolyn K.Hohne Stephen B. King: 2007).In many cases people do define performance based on financial aspects of the business. Focusing only on financial matters does not tell us what should we do and how to do in order to be successful. à ¢Ã¢â€š ¬Ã…“Performance is the definition and progressive achievement of tangible, specific, measurable, worthwhile and personally meaningful goals.à ¢Ã¢â€š ¬? (Darryl D. Enos 2007).We get a clear point in this definition that organisation should have well defined, specific and measurable goals. This serves as the first requisite in assessing the organisationà ¢Ã¢â€š ¬Ã¢â€ž ¢s performance. Having vague and general goals without proper measurement, pose a problem in evaluating corporate performance and proposing techniques for improving the performance. Michael Milgate 2004 said that,à ¢Ã¢â€š ¬?by monitoring performance for each measure and taking appropriate remedial action, improve revenues, business growth, reduced expen ses and compliance with sector regulations have resulted.à ¢Ã¢â€š ¬? 2.1 PERFORMANCE IMPROVEMENT There is a clear relationship between performance improvement and change management (discussed in Section 2.5 of this chapter).Many studies concluded that most organisations either fail or achieve very limited success in their efforts to improve performance. à ¢Ã¢â€š ¬Ã…“Success or failure in performance improvement efforts begins with the reasons why organisational decision makers decide to get involved in the first place.à ¢Ã¢â€š ¬? Darryl D.Enos 2007).Personally, I feel that there should be a motivation factor to stir up the process of improving performance. In addition to this Darryl Enos 2007 added that commitment and involvement of leadership is the most critical element for the performance efforts to be successful. Rephrasing Enos unless a leader is motivated by authentic interest and be committed in the process then efforts of performance improvement have little chance to work. Every organisation has problems. A good start is to admit the problem and find what is to be accomplished to solve the problem. à ¢Ã¢â€š ¬Ã…“Sometimes performance improvement starts with a targeted program for dealing with a problem that is limiting achievement of a worthwhile goal.à ¢Ã¢â€š ¬?(Darryl Enos 2007).As a suggestion, before approaching any technique to boost performance or implementing the efforts, management should identify areas which need improvements. The problem of poor performance or constant/stagnant performance may be caused by the top management itself.( Refer Enronà ¢Ã¢â€š ¬Ã¢â€ž ¢s Scandal 2001).Thus, the areas for performance improvement must be clearly identified and evaluated to avoid investing efforts in areas which are not critical to performance improvement. In trying to adopt efforts and strategies to achieve corporate performance, Organisations face challenges and end up failing. In one of their research Kaplan and Norton found that 9 out of 10 companies fail to implement their strategies. (Bob Paladino 2007). Paladino explains four barriers that contribute to Organisationà ¢Ã¢â€š ¬Ã¢â€ž ¢s failure to achieve expected results from their efforts and strategies put in process. There barriers are: Vision barrier (where research shows that only 5 % of companyà ¢Ã¢â€š ¬Ã¢â€ž ¢s employees fully understand their companyà ¢Ã¢â€š ¬Ã¢â€ž ¢s strategy); Management barrier (where 85 % of executive teams spend far less time discussing strategies and strategic issues than traditional operating results); Resource barrier (where most companies do not link their budgets to strategy): and the fourth barrier being People barrier (where research shows that only 25 % of managers have incentives linked to strategy). 2.2 PERFORMANCE MANAGEMENT SYSTEM (PMS1) Performance management system (PMS1) is not an end by itself, but its improvement enables an Organisation to perform better. Improving its efficiency ensures the data generated will tell where the Organisation is, how it is performing and where it is going. à ¢Ã¢â€š ¬Ã…“Effective management depends on the effective measurement of performance and resultsà ¢Ã¢â€š ¬? (Gobal. K. Kanji, 2002). Mohan Nair (2004) argued that Corporations sometimes measure too much of something and too little of others. Contributing to this it is even possible that Organisations unknowingly does not measure some of the business aspects. Moreover many organisations fail to link what they measure with corporate strategy. Nair added that many of these measurements are un-integrated and serve the wrong goals. à ¢Ã¢â€š ¬Ã…“Many corporations lack an overarching model for monitoring, measuring and managing the business. Balanced Scorecard offers a broad and overarching skin to the structural architecture of the business.à ¢Ã¢â€š ¬? (Nair 2004) Gobal K. Kanji (2002) explains the role of PMS1 and how an organisation may achieve business excellence by identifying areas to improve and how it can use its limited resources to reflect the improvement of the system. The design and implementation of a new PMS1 may in one way or another bring questions and tensions to employees. Kanji (2002) stated that, à ¢Ã¢â€š ¬Ã…“It is important to build a measurement system where measures are used as a management and motivational toolà ¢Ã¢â€š ¬?. I personally back this idea as will help in gaining management and employees support during designing and implementing the new system. In this regard, the PMS1 should be clear to employees explaining how each will contribute to the overall strategy. The efficient PMS1 also serves as the communication and rewarding tool. Furthermore, Kanji (2002) explains the past and present performance measurements and their implication on todayà ¢Ã¢â€š ¬Ã¢â€ž ¢s business era. à ¢Ã¢â€š ¬Ã…“Traditionally, performance measurement focuses on financial measures .. that do not match entirely with competencies skills companies require to face todayà ¢Ã¢â€š ¬Ã¢â€ž ¢s business environment.à ¢Ã¢â€š ¬? In insisting that financial measures of performance are under criticism in todayà ¢Ã¢â€š ¬Ã¢â€ž ¢s world, Paul Niven (2003) said that à ¢Ã¢â€š ¬Ã…“they lack predictive power, reinforce functional silos, may sacrifices long term thinking and are not relevant to many levels of the Organisation.à ¢Ã¢â€š ¬?. Kanji then supports the significant contribution by Kaplan Norton (1992) to overcome the shortcomings of traditional PMS1 that employs only financial measures. 2.3 THE BALANCED SCORECARD (BSC) Robert S. Kaplan and David P. Norton (2005) invented BSC in 1992 due to the fact that traditional accounting measures like Return on Investment and Earning per Share give misleading picture while in todayà ¢Ã¢â€š ¬Ã¢â€ž ¢s business environment continuous improvement and innovation is very important. The authors realised that many managers do not depend on single set of measures in isolation of the other. This implied the need of balanced presentation of both financial and non financial measure. Kaplan Norton complemented financial measures by operational measures calling it Balanced Scorecard (BSC). Kaplan and Norton define BSC as, à ¢Ã¢â€š ¬Ã…“a set of measures that gives top management a fast but comprehensive view of the business. The BSC includes financial measures that tell the results of actions already taken. And it complements the financial measures on customer satisfaction, internal processes, and Organisation innovation and improvement.à ¢Ã¢â€š ¬? These (including financial measures) are the four perspectives of BSC as mentioned by the authors. They suggested that for each of the perspective, managers should translate their visions and missions to strategic goals and objectives and these goals should be translated into specific measures. The word à ¢Ã¢â€š ¬Ã‹Å"Balanceà ¢Ã¢â€š ¬Ã¢â€ž ¢ in the Balanced Scorecard represents the balance between financial and non financial performance indicators; internal and external elements stakeholders of the Organisation; and lag lead indicators (Paul Niven 2003). Michael Milgate (2004) defines scorecard as a à ¢Ã¢â€š ¬Ã…“balanced management system in which shared vision and strategy are reference points for the management process; achieving this balance enables synergy and a practical fit with other frameworksà ¢Ã¢â€š ¬?. BSC serves as a powerful tool as it focuses on achieving breakthrough performance considering all measures without isolating non financial performance measures (Kanji 2002).Since its creation in 1992 by Drs. Norton Kaplan of Harvard Business School the Balanced Scorecard has been implemented by different business units in the Public as well as in the Private sectors-worldwide.( Michael E. Nagel- Vice President, BSC Collaborative) Henri .JF (2006) applied the BSC framework in his survey on how top management in a manufacturing company could use PMS to improve the strategic management and Organisational performance. à ¢Ã¢â€š ¬Ã…“Given its depth as a strategic management system, the BSC principle will continue to be widely adopted and further refined in user Organisation as experiences in its implementation emergeà ¢Ã¢â€š ¬? ( Michael A.Milgate 2004). This shows how widely BSC is used to improve the PMS if the Organisation chooses to adopt and implement it. Henri .JF (2006) poses a question that top managers should ask themselves; à ¢Ã¢â€š ¬Ã‹Å"How can we improve our system?à ¢Ã¢â€š ¬Ã¢â€ž ¢ .However, the author suggested that the improvement of the PMS is a continuous process that involves changing measures to reflect the new ideas and insights brought to the Organisation through creativity and other development activities. BSC can be successfully implemented in any organisation where the management is committed and devote time to formulate strategy and ready to accept changes. BSC has been implemented many organisations including services business , military units, schools, government institutions and also for profit organisations ( Wikipedia). An important point to note here is that an organisation should design its own BSC as management is knowledgeable of its responsibilities organisations operations rather than adapting another Organisationà ¢Ã¢â€š ¬Ã¢â€ž ¢s BSC. David P. Tarantino (2003) complements the work of Kaplan and Norton. He defined BSC, à ¢Ã¢â€š ¬Ã…“as a performance management tool that is used to provide an integrate perspective of an organisation.à ¢Ã¢â€š ¬?He also pointed out the four perspectives of the BSc as, external (how customers views the Organisation; Internal (Look at where the organisation must succeed and improve); Growth learning (examine how organisation grows and learns) and Financial (study financial performance of the organisation).These perspectives depend and influence one another. Tarantino (2003) said, à ¢Ã¢â€š ¬Ã…“To concentrate on only one, such as financial performance fails to recognise the contribution and balance of the other three perspectives.à ¢Ã¢â€š ¬? Of interest from the author is the explanation on how to develop the BSC. The first step he suggested is for the organisation to decide which goals are to be measured that should be included in the four perspectives. Then the organisation shou ld figure out the measures for each of the four BSC perspectives and determine the weight of each for ultimate evaluation of overall performance. Harvard Management-Update (2000), à ¢Ã¢â€š ¬Ã…“No need to wait for a companywide initiative-the key principles of this strategic-management system can be put to work in your unit right away.à ¢Ã¢â€š ¬?The author of the article tries to convince management to apply BSC reporting system. He is of the views that even if companies take years and spend millions to implement the scorecard across their operations the effects can be dramatic when the system takes root. He said that managers today donà ¢Ã¢â€š ¬Ã¢â€ž ¢t have to wait for a scorecard- inspired corporate transformation before learning- and implementing some of the methods centred ideas. He explained the four lessons from BSC that can be applied right away in virtually any business unit or department. Watch a variety of metrics Connect your metrics to strategy Develop a strategic budget Get everyone involved in tracking metrics The author still insists that BSC is a method that helps managers to develop a well à ¢Ã¢â€š ¬Ã¢â‚¬Å"rounded strategy and then get everyone in the company involved in implementing it. Mohan Nair 2004, arguing in favour of BSC, the changes in the character of business assets has exaggerated the challenges faced by business. à ¢Ã¢â€š ¬Ã…“In the past company assets would be reflected in the balance Sheet but now 85% of the assets are intangibles.à ¢Ã¢â€š ¬?Having the same arguments as previous authors about the inefficiencies of the financial measures, Nair also added that those financial measures are applied only to tangibles, when the intangibles are what fuels the future. According to an online source, www.balancescorecard.org/BSCresources the benefits of BSC are: improve organisation alignment, improve communication, more emphasis on strategy and organisational results, linked strategy and operations, and integrated strategic planning and management. 2.3.1 BSC development Kaplan and Norton explained four steps which many organisations have used to develop their balanced scorecard. The process includes: Define the measurement architecture à ¢Ã¢â€š ¬Ã¢â‚¬Å" To a beginner, it is recommended to start with a business unit applying the metrics as designed in the BSC rather than to the corporate level. Specify strategic objectives à ¢Ã¢â€š ¬Ã¢â‚¬Å" This step includes deriving strategic objectives for each of the four perspective from corporate goals. Choose strategic measures à ¢Ã¢â€š ¬Ã¢â‚¬Å" The third step is to choose related measures for the strategic goals to evaluate the performance so as to achieve the strategic objectives. Develop the implementation plan à ¢Ã¢â€š ¬Ã¢â‚¬Å" After selecting measures for each of the perspective, remains implementation process.à ¢Ã¢â€š ¬Ã…“Target values are assigned to the measuresà ¢Ã¢â€š ¬?. A link is then established from various metrics from the top to bottom of the BSC. The established scorecard is then incorporated in the organisationà ¢Ã¢â€š ¬Ã¢â€ž ¢s management system.. The online source www.balancescorecard.org/BSCresources also recommended nine steps to success develop and deploy BSC framework- In a sequential order these are; Organisation assessment, strategy development, strategic objectives, strategic mapping, performance measures and targets, strategic initiatives, automation, cascading the BSC throughout the organisation and last evaluation. Overall the BSC involves the following steps: Clarify the vision Communicate to middle manager and develop business unit scorecards Eliminate Non-strategic investments and launch corporate change programs Review business unit scorecard Refine the vision Communicate the BSC to the entire company and establish individual performance objectives Update long-range plan and budget Conduct monthly and quarterly reviews Conduct annual strategy review Link everyone à ¢Ã¢â€š ¬Ã‹Å"s performance to the BSC 2.3.2 BSC criticisms The use of the balanced scorecard system may not result to what managers expect. Some professionals spoke some problems that make the BSC under criticisms. It has been noted by professionals that the BSC concept does not guide how the approach can be deployed within an organisation. It is just been viewed as an approach that attracts managers to install and implement without a real sense on how it works, and what should be expected. (Stephen Smith 2006).From his article à ¢Ã¢â€š ¬Ã‹Å"problem with a balanced scorecardà ¢Ã¢â€š ¬Ã¢â€ž ¢, Smith pointed out some of the key issues that can cause BSC initiatives to fail. These are: Poorly defined metrics-These should be relevant ,clear and easily understood Lack of efficient data collection and reporting-Smith is concerned with the investments made in collecting metrics data, whether consuming too much time and energy. He then suggests the importance of prioritising key performance indicators to get most relevant information. Lack of formal review structure- This is necessary to accommodate any change in metric value. Reviewing is a cross functional activity. No press improvement methodology- Many organisation lack basic and standard toolkits and approaches for tracking problems. It therefore consumes a lot of time an efforts to address a problem that is caused by the performance gap. Too much internal focus- Smith ranks this as one of the major criticism of BSC. He suggests that Organisation should always start with an external focus through analysing organisationà ¢Ã¢â€š ¬Ã¢â€ž ¢s markets, shareholders, competitors, employees and other stakeholders. However Smith assured that all is well with the introduction and the concept of balanced scorecard. This means that the BSC approach is a useful tool and can bring desired results if management knows how to structure it and take the above points in considerations to avoid its initiatives from failing. It has also been learnt that BSC is being criticised by academic society on its practical nature, applicability and functionality. (Wikipedia).They also noted that some of the criticisms focus on technical flaws in the method and design of the original BSC proposed by Kaplan Norton. Supporting the main problem as seen by Smith 2006 other academicians have focused on the lack of citation support. à ¢Ã¢â€š ¬Ã…“Another criticism is that the BSC does not provide a bottom line score or a unified view with clear recommendations; it is simply a list of metrics.à ¢Ã¢â€š ¬? (Wikipedia).Regardless of these criticisms the studies done so far indicated that BSC is a useful tool in strategic performance management in an Organisation. An online source www.netmba.com added to the BSC pitfalls that during implementation managers should avoid the use of generic measures, which are being adopted by successful firms. Management should not take BSC as a guarantee of success in companyà ¢Ã¢â€š ¬Ã¢â€ž ¢s operations. It should think clearly the companyà ¢Ã¢â€š ¬Ã¢â€ž ¢s strategy and implement the scorecard for improving performance in operational level that derives improved financial performance. Kaplan and Norton said, à ¢Ã¢â€š ¬Ã…“Even an excellent set of BSC measures does not guarantee a winning strategy. The BSC can only translate a company strategy into specific measurable objectives.à ¢Ã¢â€š ¬? They also advised that by combining the four perspectives, the BSC helps managers understand implicitly many interrelationships. The four perspectives relate to each other and the effect on either of the perspective will impact the other. à ¢Ã¢â€š ¬Ã…“A well designed BSC should describe your strategy through objectives and measures you have chosen. These measures should link together in a chain of cause and effect relationshipsà ¢Ã¢â€š ¬? (Paul Niven 2003). Thus, it is suggested that all have equal importance and neither should be taken in isolation of others. 2.4 COMPARISON BSC AND OTHER PERFORMANCE IMPROVEMENT TECHNIQUES When we talk of performance improvement in an organisation apart from BSC, Six sigma and Total Quality Management (TQM) come under discussion. Both tools when applied properly work to achieve what management really expects. These tools are contrasted with BSC in the subsequent sections. 2.4.1 Balanced Scorecard (BSC) Vs Six Sigma It has been learnt that BSC and Six Sigma work independently from each other. BSC translates corporate strategy into actions that help to achieve the strategy. Six Sigma aims to solve the problem of poor performance by closely looking at the root cause of performance problem. In this case Six Sigma tries to minimise the errors and reduce other causes of defects in business processes. However, à ¢Ã¢â€š ¬Ã…“these frameworks are complementary and if used together they offer huge potential value.à ¢Ã¢â€š ¬? (Michael E. Nagel). BSC and Six Sigma when used together can deliver great and unexpected business performance (Alastair Horn 2006) . Nagel justifies his idea by clarifying that à ¢Ã¢â€š ¬Ã…“BSC and Six Sigma are complementary because the former provides the strategic context for targeted improvement initiatives and the latter is a business improvement approach that solve a myriad of performance issues.à ¢Ã¢â€š ¬? To make the difference more clearly, Nagel stated that, unlike Six Sigma, BSC is not a solution for closing specific strategic performance shortfalls. He then concluded that BSC describes the strategy for creating value and aligns resources to ensure the strategy is successfully executed. Six Sigma executes the strategy by using data and process improvement tools. It has been learnt that both BSC and Six Sigma strive for good performance through fixing up the performance gaps. In a clear manner a corporation may choose to implement any of the frameworks but the use of both the approaches would result to high performance according to the way each of them works. Rephrasing Horn, Six Sigma focuses on the best processes that organisation may adopt to improve its performance of products and processes on a continuous basis. while BSC focuses on performance management that translates strategy into executions. In explaining how both BSC and Six Sigma can work together, Henry Killackey (2008) speaks his idea that it is a very common practice to label organisation performance matrix in the BSC with red ( poor performance), yellow ( mixed results),and green ( excellent). If the organisation implements Six Sigma approach then the red ratings alert Six Sigma practitioners the areas which need immediate attention so that they can figure out ways of reversing the poor situation. In simple words, we may say that BSC serves as a communication tool for Six Sigma professionals. It has been learnt that BSC prompts weak and bad performing areas for Six Sigma professionals to act upon. As previously explained, the ultimate aim of both BSC and Six Sigma is to improve the performance of the organisation. In this regard the organisation can simultaneously implement both the approaches. They both rely on accurate data from customers and external stakeholders. Moreover the output indicators in Six Sigma may be used as measures in the BSC framework where by both the BSC and Six Sigma professionals will concentrate on the same goals. (Henry Killackey 2008) However Paul Grizzell (2004) in his article admitted that many authors see Six Sigma as the most effective performance management control system ever. But he cautioned readers that it is important to first consider the assumptions that were used to generate the opinions. Grizzell put forward his opinion that all performance management tools (in his case, Six Sigma, lean, BSC, Baldrige) when used as an integrated approach to maximise performance will lead to breakthrough and not just incremental improvement. 2.4.2 Balanced Scorecard (BSC) Vs. Total Quality Management (TQM) It is argued that the best approach for an organisation between BSC and TQM depends on the organisation itself. When developing a business strategy an organisation must consider multiple factors including leadership, customers ,business processes, financial goals and the structure, culture and the size of the corporation.( Schwartz Jay 2005). Jay continues that TQM and BSC share a common theme of improving communication in an organisation. He also added another shared goal of the BSC and TQM as the reduction of costs and improvement of services of an organisation. Moreover both TQM and BSC need management support to ensure that all employees support the new initiatives. However BSC and TQM differ in other aspects. à ¢Ã¢â€š ¬Ã…“The difference between TQM and BSC is in the number of people involved in the process; TQM requires full participation, compared with limited involvement for the BSCà ¢Ã¢â€š ¬?(Schwartz Jay 2005).With my little knowledge on the BSC, I think it also requires full participation. This is very important to prevent any possible resistance. Another difference named it à ¢Ã¢â€š ¬Ã…“major differenceà ¢Ã¢â€š ¬? by Schwartz is that BSC places more emphasis on finance i.e. using traditional financial objects; TQM while not diminishing the importance of financial solvency, it focuses more on the systems of the organisation, the concept of empowering people and employees involvement. I also raise my concern to Schwartzà ¢Ã¢â€š ¬Ã¢â€ž ¢s views on where the focus is in BSC .i.e. finance!!.Looking at the four perspectives of the BSC ( financial, customer, internal process and learning growth) it is clear that BSC involves both finan cial and non financial aspects. BSC was established to compliment the financial measures, so it does not put much emphasis on financial matters only but includes also non financial measures. The BNET business dictionary defines BSC as à ¢Ã¢â€š ¬Ã…“ a system that measures and manages an organisationà ¢Ã¢â€š ¬Ã¢â€ž ¢s progress towards strategic objectives. Introduced by Kaplan Norton (1992) ,the BSC incorporates not only financial indicators but also other perspectivesà ¢Ã¢â€š ¬? . To conclude this Schwartz (2005) suggests that before managers decide whether TQM or BSC which fits the organisation they must ask themselves the following questions: What is the organisation structure?, What is the corporate structure? What is the size of the organisation?. He then recommends that for a large and bureaucratic organisation BSC fits best and TQM fits best with small service related organisation. However Schwartz didnà ¢Ã¢â€š ¬Ã¢â€ž ¢t make it clear how to define a à ¢Ã¢â€š ¬Ã…“large organisationà ¢Ã¢â€š ¬? either in terms of capital, employees ,etc. I would rather say that whether using BSC or TQM the most important aspect to consider is whether the organisation is real committed and has a leader to initiate the change including involving all the employees. I would personally recommends the use of BSC as its structure is clear and helps the organisation to put the strategy into measurable goals. 2.5 MANAGEMENT CHANGE Management change involves the process of reducing the chances for resistance done by top management personnel and executives. In many organisations the tendency of management to resist changes, especially in adopting a new system keeps on growing day by day. Thus for the organisation to manage the changes there should be a systematic process, planned properly and which involves the shareholders and other key stakeholders. In this respect a change may be defined as any addition to an existing or modification to an old system or any deletion of an aspect of an old system. Some of the reasons for making changes could be solving problems, growth motives/purposes, improving performance, accommodating technology change, etc. In any organisation for a change to be successful, management should commit itself to make the change operational within a reasonable time. In many organisations this has not been the case as it has been relative difficult to implement changes especially adding a new thing to an existing system. It may be said that the systematic approach to implement changes reduces the negative impact of changes and the possible failure. The researcher will evaluate the performance of the Local Authorities Pensions Fund ( LAPF) using the metrics as structured in the proposed Balances Scorecard (Table 1) which is relevant to the Fundà ¢Ã¢â€š ¬Ã¢â€ž ¢s operations. Some metrics may be in use while others may not. In this case LAPF may wish to fully adopt the performance metrics as shown in the proposed BSC. Thus all issues relating to change management should be considered before trying to implement BSC approach to measure and improve the overall performance. This is the essence of analysing how change process may be done, possible challenges and change failure together with suggesting how to maximise chances for successful change process. Improving the performance is a continuous process, that necessitates new measures and approaches to be adopted. This also justifies why changes cannot be avoided by an organisation if it wants to occupy large market share, beat competition and improve the overall performance.( Henry J.F, 2006). à ¢Ã¢â€š ¬Ã…“Change management means to plan, initiate, realise, control and finally stabilise change process on both corporate and personnel level. In some situation change brings problems for instance disturbing system , staff programs and other development programs that are in progress. ( Oliver Recklies 2001).The author shows much concerns on those management and staff who have negative thoughts and perception on what is change and why change.. Management always fears to be questionable for failure while employees have fears of losing their jobs. Majority of employees tend to put forward resistance to change without considering that change facilitates improvements (Oliver Recklies 2001). The effects of change may be unclear to employees and thus fear something bad may happen that affects their tasks, responsibilities and worse enough even their lives. Management should consider possible aspects that may have negative impact on the change initiative so as to achieve the desired results. The success of change projects depends on the Organisationà ¢Ã¢â€š ¬Ã¢â€ž ¢s ability to make all their employees participate in the change process in one way or the other.à ¢Ã¢â€š ¬? ( Oliver Recklies 2001). Lawler (1986), viewed from Rob Paton James Mc Calman (2008),said that overall change is not impossible but it is often difficult. à ¢Ã¢â€š ¬Ã…“The difficult is that most organisations view the concept of change as a highly programmed process which takes as its starting point the problem that needs to be rectified, breaks it down to constituent parts, analyses possible alternatives, select the preferred solution and applies this relentlessly- problem recognition, diagnosis and resolutionà ¢Ã¢â€š ¬? Recklies (2001) made a significant contribution on how to minimise the negative effects of change to arrive at successful change process. He therefore divided the change process into seven stages it is relative better for management to understand in which stage they should expect what kind of problems. The stages are : shock and surprise, denial and refusal, rational understanding, emotional acceptance, exercising and learning, realisation and last being integration.( diagrammatically presented in figure 2.1) Shock surprise- This involves confrontation with unexpected situations Denial refusal-No need for change, i.e. Change is not necessary Rational understanding- people realised the need for change but unwilling to change own pattern of behaviour Emotional acceptance-This is the most important stage characterised by slow pace. Management should succeed in creating willingness for change for the organisation to exploit its real potentials that lie in different aspects. Exercising learning-This is the learning stage that will be influenced by peopleà ¢Ã¢â€š ¬Ã¢â€ž ¢s willingness. It is a trial for a new system and process. The stage is characterised by failure and success. This leads to the increased perceiveness of people own competence. Realisation-This stage highly depends on stage 5 above, as people get more information through learning and allows mind to receive new challenges and experiences, The stage is characterised by flexibility and thus perceived competency increased. Integration-At this stage people have acquired new skills and patterns of thinking The introduced change becomes familiar and a routing process. Figure 2.1 .Change process ( adapted from Oliver Recklies 2001) The seven stages simplify the implementation of the new process or change. Those who are responsible to accommodate the changes into the business should understand these stages so as to apply them systematically. John P. Kotter (1996) in his book à ¢Ã¢â€š ¬Ã‹Å"Leading changeà ¢Ã¢â€š ¬Ã¢â€ž ¢ explained clearly the most common mistakes done by organisations when adopting change and also he came up with their solutions. As Recklies 2001 (above) Kotter 1996 also explained eight stages for change process. Letà ¢Ã¢â€š ¬Ã¢â€ž ¢s now examine the change mistakes done by management ( by Kotter ) and later we will explain the change stages and contrast them with Reckliesà ¢Ã¢â€š ¬Ã¢â€ž ¢ change stages. Allowing too much complacency-This is one of the biggest mistake as ranked by Kotter. The over confidence attitude of an executive wishing to process change may cause change failure. Having been successful in the past drives the executive to proceed with change plan without establishing and understanding the urgency of change as perceived by management and employees. Kotter said, à ¢Ã¢â€š ¬Ã…“If complacency were low in most organisations today, this problem would have limited importance.à ¢Ã¢â€š ¬? To successful accommodate changes people need to devote their time and efforts to make it done. Failing to create a sufficiently powerful guiding coalition- Organisations need to have powerful guiding coalition. An active Chief executive is not sufficient to process the change. The head need a committed team that is expected to be powerful ,experienced, competent and leadership talented. In other words the head of the organisation should not undervalue the need for such a team. As said before the team should have leadership traits so as to overcome possible sources of resistances. Underestimating the power of vision- Power of vision complements the urgency and strong team. We have seen many plans fail because they lack clear vision. There should be a clear and appropriate vision to reduce chances for confusion so that the whole project goes into the right direction. Under-communicating the vision- Communication serves a lot in letting people/employees understand the vision ( change idea). Employees need to know how the change will affect their working either in a positive or negative side. They will not be willing to make sacrifices and give support to change unless they believe that the changes are the betterment for their welfare and the organisation as well. All these should be facilitated by proper communication. Permitting obstacles to block the new vision-In implementing changes, an organisation may face several obstacles. These may be within the organisation itself or from an external sources. In many cases people do think in their minds of the obstacles and other roadblocks. Kotter poses a challenge on convincing them that no external barrier exist. V. Nilakant S.Ramnarayan (2006) said that à ¢Ã¢â€š ¬Ã…“ Change can be brought about most effectively by weakening an organisationà ¢Ã¢â€š ¬Ã¢â€ž ¢s forces of stability.à ¢Ã¢â€š ¬? They argued that to weaken these forces of stability, the organisation needs to first understand the dynamics of these forces of stability. These forces of stability are counted as obstacles that block the way to changes. Having the same idea with Kotter ( 1996) ; Nilakant Ramnarayan (2006 ) believe that the forces of stability are within the organisation and the solutions to pave way for changes are also within the organisation, cannot be found outside the or ganisation. Failing to create short term wins- Referring to this mistake, organisation should divide the long term vision into short term goals ( say 6 to 18 months) whose results may be seen and encourage management and employees to be more productive. Kotter then said, à ¢Ã¢â€š ¬Ã…“ without short term wins ,too many employees give up or actively join the resistanceà ¢Ã¢â€š ¬?. Management declaring victory too soon. It is very risk to declare and celebrate victory too soon. Kotter suggested that the new approach adopted is still subjected to regression and possible failures unless the changes are takes as part of the organisation culture which may take 3 to 10 years. A interesting example he cited in his book is of a company which completed a first major part of change and declared victory, paying expensive consultants, with much à ¢Ã¢â€š ¬Ã‹Å"thank youà ¢Ã¢â€š ¬Ã¢â€ž ¢ without considering whether employees accepted the changes or the evidence that the original goals were accomplished. By doing this within few years all the changes introduced slowly disappeared and the subsequent it became even hard to trace any change element. Neglect to anchor changes firmly in the corporate culture- I personally understand it as accepting what has been changed taking it as part of your life and stick to it, i.e. make it a culture that you are used to. The author is of the view that changes can only stick when it is taken and embrassed as the way of doing things in that operating environment. In anchoring change ,Kotter suggested that there should be a conscious attempt to show that the new approach have helped improve performance; and should not be left to employees as there exist a danger that they may create an inaccurate links-that show no improvement after the change. Any of the above explained errors/mistakes may cause serious problems. It is not necessary that all errors be committed for a change or transformation to fail. These errors may also associate with budgets reduction, laying off employees, and eventually put great pressure those who remain in the organisation. Most of organisations want to change mainly to improve performance and to grab opportunities so as to increase their competitive advantage. Moreover technological change, globalisation and international integration necessitate changes and major transformation in the organisation. à ¢Ã¢â€š ¬Ã…“ Managers face three challenges, One being increased competition for an organisationà ¢Ã¢â€š ¬Ã¢â€ž ¢s resources, organisations competing in a world that is constantly changing, globalisation, technological change à ¢Ã¢â€š ¬?( Nilakant Ramnarayan,2006). The occurrence of these events ,to managers signals the need for change. Through assessing the internal context of change, they get more clear clues whether it is worth to introduce the change. Government legislation and changes in society value system are added as the causes of change ( Rephrased- Robert Paton James Mc Calman 2008) It is not unusual to hear a CEO addressing that they want to increase productivity by 20 to 30 percent or improving the quality by 30 to 50 percent. These pose challenges to managers who start thinking how successful they can change or introduce a new approach that can help to realise the targets. Letà ¢Ã¢â€š ¬Ã¢â€ž ¢s now look at the stages for change process as explained by Kotter (1996). Kotter (1996) came up with eight stages for changing process. Unlike Recklies (2001) whose change process is associated with what situation and problems managers should expect in the process ,Kotterà ¢Ã¢â€š ¬Ã¢â€ž ¢s change process is associated with the previously explained mistakes. These stages serve as the solutions for the mistakes advocated by Kotter. The following are the process of creating major change (quoted from page 21 à ¢Ã¢â€š ¬Ã¢â‚¬Å"à ¢Ã¢â€š ¬Ã‹Å"Leading Changeà ¢Ã¢â€š ¬Ã¢â€ž ¢). Stage 1: Establishing a sense of urgency. Stage 2: Creating the guiding coalition Stage 3: Developing a vision and strategy Stage 4: Communicating the change vision. Stage 5: Empowering broad-based action Stage 6: Generating short time wins. Stage 7: Consolidating gains and producing more changes. Stage 8: Anchoring new approaches in the culture. Kotter (1996) stresses the sequential use of the stages in the change process without skipping any stage to avoid problems. He said, à ¢Ã¢â€š ¬Ã…“ Although one normally operates in multiple phases at once, skipping even a single step or getting too far ahead without a solid base almost always creates problems.à ¢Ã¢â€š ¬? Organisations should also remember the effect of culture and managers who lack leadership traits to change process. à ¢Ã¢â€š ¬Ã…“ The combination of cultures that resist changes is lethal errors described are almost inevitable under these conditions.à ¢Ã¢â€š ¬?. It should be noted that to take change process, leadership skills are very important as compared with managerial skills. We need a manager who can lead people to change. For the transformation process to be successful management should be competent. In many organisations leading change posses a big challenge It is therefore important for managers to have appropriate leadership skills. To get the best results and change process be successful Oliver Recklies stages are also very important. A manager knows in advance what resistance is expected, so preparing to tackle the problem. Both Recklieà ¢Ã¢â€š ¬Ã¢â€ž ¢s and Kotterà ¢Ã¢â€š ¬Ã¢â€ž ¢s stages may be linked together for a successful change process. 2.6 ANSWERS TO THEORETICAL QUESTIONS What is performance measurement?:It is a process which an organisation defines criteria for determining how effectively and efficiently its operations are. The aim of measuring performance is to determine whether the organisation meets its pre-defined objectives. Performance measurement can also be applied to individuals or particular business unit/department. ( Section 2.1) How can it be improved?: Performance measurement can be improved by establishing and maintaining an effective performance measurement system ( PMS1).This system should link the organisationà ¢Ã¢â€š ¬Ã¢â€ž ¢s operations to corporate strategy. The PMS1 identifies areas to be improved, figures out different ways of improving those areas and assign resources for the process. ( Section 2.2) What is Balanced Scorecard ( BSC)?: Balanced Scorecard is a performance measuring and reporting system that translates the organisationà ¢Ã¢â€š ¬Ã¢â€ž ¢s strategy and vision into specific measurable and actionable goals.BSC provides a link between organisation long term strategy with short term actions whereby different relevant metrics are applied to measure the organisationà ¢Ã¢â€š ¬Ã¢â€ž ¢s performance. The measurement includes both financial and non financial measures. BSC serves as the effective means of improving both external and internal communication. ( Section 2.3) How widely is BSC used?:BSC can be used in business, industry, government and non profit organisation regardless of the size. According to Bain Company survey 62% of the 708 surveyed companies had adopted the BSC. Most of those adopted have reported a high level of satisfaction of 3.86 against a maximum of 4. (Section 2.3) What are the benefits of using the BSC?: The benefits depend on how the BSC is implemented. A well defined ,developed and applied BSC brings benefits to the company user.BSC provides a more effective way of monitoring the organisation performance and stir up its improvement initiatives. Moreover BSC serves as a management report whereby it provides operational performance across the perspectives. One of the main strategic benefit of the BSC is the process of articulating the pre-set objectives aligned to the corporate vision ( Section 2.3) What are the problems or challenges in implementing the BSC?: Implementing a BSC is a long term process. Developing and sustaining the BSC needs management commitment. One of the biggest challenge is having a leader who can lead the BSC development throughout its implementation. Another challenge relates to defining the measurable goals with their metrics which link with the corporate strategy and vision. Other challenges are: -Underestimating time for BSC implementation Maintaining momentum -Leader not involving all organisation staff; Poor communication may result to resistance.( Section 2.3.2) How to reduce chances for BSC failure?: All in all management should be ready and committed to change. Communication serves as an effective tool to gain support and reduce resistance that in most cases cause failure. Managers should feel an ownership for BSC. The organisation should also have a strong team working together; this determines peopleà ¢Ã¢â€š ¬Ã¢â€ž ¢s behaviour and conducts. The objectives and expectations should be clearly and concise communicated to all within the organisation. Another approach is to link the performance of the objectives contained in the BSC to rewards. Management should also align the existing processes within the organisation with the BSC goals. What are the metrics for measuring performance? :Every organisation has metrics which are relevant to its operating environment. Management should not just adopt the metrics established and implemented in another organisation as may be irrelevant to what they intend to measure. Depending on the corporate vision, strategy, objectives and goals, management has to establish own measures of performance.( Section 2.3.3) Are there any other tools for improving performance measurement besides the BSC?:Apart from Kaplan and Norton, other professional have also developed some measures which are used to improve performance measuring. Some of these are six Sigma, Total Quality Management ( TQM ), Baldrige, APIC etc. Six Sigma and TQM are explained in sections 2.4.1 and 2.4.2 of this chapter.

Adam Smith s Economic Philosophy - 1500 Words

If I was to create the perfect society today, I would use Adam Smith’s economic philosophy. Adam Smith is known today as a modern philosopher. In order for a society to prosper, Smith believed that their economy would have to function as a capitalist economy. The perfect, most efficient, society would include specifically Smith’s capitalist ideas of the division of labor, the sufficient pay of workers, and would not include the use of slavery. These ideas will make the perfect society prosper. The most important component of having the perfect, most efficient society, would be the division of labor. The division of labor consists of one person doing one small task, another person doing another small task, and other workers continuing the same process until the final product is complete. An example of this would be the use of an assembly line while making pins, as Smith mentions in his book An Inquiry into the Nature and Causes of the Wealth of Nations. Smith explains that the larger pin manufacture he saw with many workers, was more efficient than the small manufacture of only ten employed workers who could make â€Å"upwards of forty-eight thousand pins in a day† (Smith, 4). Smith then goes on to explain that, â€Å"But if they had all wrought separately and independently†¦in consequence of a proper division and combination of their different operations† (Smith, 4-5). Smith is saying that the workers could have made more than forty-eight thousand pins i n a day if they divided thereShow MoreRelatedSmith vs. Marx - a Comparison Essay1247 Words   |  5 PagesSmith versus Marx Ââ€" A Comparison S. Glen Balanoff July 04, 2004 Smith versus Marx Ââ€" A Comparison Modern economic society can be described as a combination of certain points from several theories combined into one. Changing dynamics and economic needs of nations has spawned a development of various, and contrasting, economic systems throughout the world. 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Echoes free essay sample

After the music stops, and the piano collects dust, only few will hear that glorious sound. Tchaikovsky, Beethoven, and Chopin continually ring through my ears. And once heard, the sound becomes unforgettable–just like him. The things he did always came off a little strange–constantly inventing thing, improving lasers, and editing picture. But, despite his odd habits, he was a kid-genius, especially when it came to music. Music was his life and his everything. And that keyboard in his room? It got used at least an hour every day. Yet, his life was cut short when hit by a car, laser batteries in hand. Practice, practice, and more practice–always striving to attain the best. His attitude was to work hard, knowing thered be payoff in the end, knowing he could stand out in this world. He knew he could be someone. Someone well-known. Yet, he was unknown to the surrounding witnesses at the scene. We will write a custom essay sample on Echoes or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page Just as it was in his life, music is a priority to me. Although Ive had constant pressure to press on with my skills, and continue with the Milwaukee Youth Symphony, there have been countless times Ive wanted to quit. But then I recall my cousins dedication, and continue forward. I need to do this for him–to help others know me, and Georgie. He has been absent from Earth for a little over a year now. Yet, his piano still rings.

MLC and the environmental management accounting

Phases of the case study The project has three phases which will be discussed in detail. The first phase identifies the current cost of accounting system in the Methodist Ladies College. The institution currently uses the conventional accounting system that does not apportion the environmental management system. The objective of exploring the current environmental management of the system is comparing the convectional accounting with the environmental management accounting.Advertising We will write a custom case study sample on MLC and the environmental management accounting specifically for you for only $16.05 $11/page Learn More The environmental management accounting involves development of the company resources to ensure that there are appropriate aspects of developing proper mechanisms to account for usage of energy and identifying costs of conserving the energy. The second phase of this study on MLC identifies the cost and revenue opportunities tha t are not recorded when using the traditional accounting methods. The objectives of this phase are two, the first objective is to determine the necessary changes that are appropriate to the system to include all the environment related costs. The second objective is to provide the stakeholders with meaningful information on the costs and opportunities presented through environmental management accounting. The information creates awareness among the stakeholders and provides them with a basis to make changes in the company. The third phase involves trial recording of the changes to determine how change would produce different results from the current management accounting system. The objective of this trial phase is to determine how the Environmental Management contributes to good management by providing information to managers on how to handle purchases in a way that is environmental conscious and cost effective. Black bud accounting practice used in MLC MLC uses the convectional ac counting system that is not environmental conscious. The accounting system is cost oriented and not activity oriented. It classifies the costs in general terms and not as per the source of the cost. The first classification of environmental related expenses is the administration expenses. These costs involve costs such as printing and distribution of newsletters to parents by the school administration. The other cost is the photocopying costs, this is an expense incurred through photocopying of learning material by students as well as teachers. The other generalised expense is water expenses, which are the rates paid to the Water Corp by the institution. The one is the lighting expense that includes the power and electricity expenses within the institution. The other expense recorded in the system is the waste costs that refer to the cost of waste products disseminated from the company (Romney 2009). The environmental impacts associated with MLC’s operations and costs associa ted with the environmental impacts The first environmental impact associated with MLC operations is the paper usage expense. This expense accrues to the photocopying activities within the institution. It includes the cost of buying the plain paper. However, the current accounting system does not record expenses except photocopying labour. It also includes the printing activities done by the students and the energy used in the printing process. All these are classified together as paper usage expense.Advertising Looking for case study on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More The other impact associated with the MLC operations that has a direct impact on the environment is lighting costs. It takes fossil fuel to make electrical energy used in lighting and conserving light automatically means conserving fuel used in the generation of light. The current MLC accounting cists usually includes lighting costs as the onl y energy cost. However, the costs not only result from lighting but also replacement of lighting equipment, wear and tear and cooling of machines using air conditioners. The third environmental impact associated with the environment is the water usage. The institution incurs this expense using water in showers and toilets as well as in the running taps. The other activity interconnecting use of energy is the administrative activities. The administrative purposes involve activities such as printing and dissemination of newsletters to parents. The parents receive newsletters either through the students or by mail. Costs of envelopes and plain paper to print the newsletter, the toners and labour of printing the newsletters are all included in the administrative costs (Romney 2009). Limitations of the existing accounting system with regard to cost savings and how costs can be reclassified to improve decision-making The current accounting system has its limitations. The first limitation of the current accounting system used by the MLC is that it does not provide information on the specific environmental cost. It is complicated, which makes it hard to trace costs involved (Romney 2009). The other challenge of this manner of accounting is that it does not trace the actual sources that incurred the expense because it generalises all environmental costs (Romney 2009). The other limitation is that it does not give insight to the management on how to conserve energy as well as area that costs may be minimised. It provides scanty information on the impact of activities engaged by the institution on the environment. It denies the institution an opportunity to receive funding from parents and friends to assist in the efforts of becoming energy efficient. The traditional accounting system is inappropriate in making organisation energy efficient. The other major aspect of consideration in the organisation is that the organisation may develop its own systems of conserving and generating resources such as using river Swan to cater for its need for water rather than use water from the Water Corp. Benefits of Activity Based Costing to MLC The activity based accounting is beneficial to the company in the sense that it has to work using the areas related to the development of the organisation. The activity based costing is advantageous to the institution mainly because the reporting of expenses enable one to trace the sources that incurred the environment related costs. It establishes responsibility centre and each centre has an account where expenses are recorded.Advertising We will write a custom case study sample on MLC and the environmental management accounting specifically for you for only $16.05 $11/page Learn More This assists the organisation to trace costs and identify opportunities and costs incurred from the environment related expenses. The other major factor of consideration is that it informs the management and the stakeholders on the costs incurred and how each unit incurred the expenses. This makes it easy for the management to make prudent decisions on how to conserve energy as well as how to develop appropriate measures to make the company cost effective. The activity based costing unravel the hidden costs in the conventional accounting such as labour costs and it presents a clear picture on the actual expense incurred when doing a particular activity (Langfield 2009). How costs associated with environmental impacts within MLC can be allocated and what are the limitations associated with the cost drivers identified in the study. The costs identified in the study can be allocated as follows. The power and lighting costs can be classified as costs per square metre such that each cost is assigned as per the responsibility centre that generated that cost. The cost is in such a way that it is saving from the source. In the lighting costs, additional costs such as replacing the lighting equipme nts as well as wear and tear of the power equipments are all considered differently not just as part of lighting expense (Langfield 2009). The other environmental impact cost allocated differently is the water expenses. The water costs are usually a generalised expense. However, the new accounting system allocates the water usage according to the kind of machine or source that releases the water. Water is classified as either shower water, tap water or washing machine water. This makes it easy to identify the outlets that use a lot of water. The other allocation is on the photocopying costs. These costs are usually generalised in the current accounting system. However, the environment management accounting classifies the cost into different categories. The first one is the labour used in the photocopying prices; it also includes the cost of the plain paper. In the new accounting process, expenses such as use of envelope are part of the photocopying expense (Langfield 2009). The wast e costs are also not generalised in the environment management accounting where the expenses are classified as per the specific activity. Activities such as tipping fees are distinct from the waste costs that are the actual price of the material put to waste. It also involves costs of disposing the equipments either through paying someone to dispose the equipment or other expenses such as the development expense.Advertising Looking for case study on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More The benefits to the responsibility centres within AMP from maintaining records on both energy and water usage Maintaining the records of energy and water usage provide a clear picture of how each responsibility centre contributes to the energy and water expenses. This makes every part of the institution participate to the use of energy, and the energy expenses cease to be generalised expense without a clear outline on who uses the energy. The other benefits that result from the use of energy are the increased awareness about personal contribution to the environmental related expenses. It provides a motivation to control and reduce those costs in order to prevent losses that are likely to occur. The motivation results only when there are specific accounting that indicates the responsibility centre responsible for each cost. It also enables the responsibility centre to classify the expenses further into sub centres that serve as an indication to the development of the company resource s. The other effect of the responsibility centres’ recording their expenses is that it results in identifying opportunities of cutting down the costs unlike when using the convectional method of cost accounting. It assists in identifying other costs related to the major expense. When there is recording in the sub-centre it is easier to identify costs that relate to the major expense such as labour costs or breakage and maintenance costs involved as opposed to when the costs are generalised. The institution saved more than twenty seven thousand dollars when allocations of expenses were through responsibility centre records. How could MLC develop additional records for identifying, allocating, and managing the costs associated with waste and the associated financial benefits? There are additional records that the MLC must have to ensure that there is appropriate accountability on how the resources are used. The first additional record that is necessary in the incorporation of t he environmental management accounting in the MLC is the photocopy expenses. The photocopy expenses include renting photocopiers to use as well as the labour and time spent in operating the photocopiers. It includes the cost of the plain paper used in photocopying. Such records in the sub centre make it easy to see how the organisation uses the resources (Maskell 2003). The other aspect of consideration is having the company to include records of expenses incurred in administration and specifically the newsletter expenses such as envelopes and the labour involved in the preparation of the newsletters. The other additional records relates to the water expenses, to account for water usage it is imperative to classify the use of water as per the way or the equipment used to discharge water. Having records of the volumes of water released using the taps, washing machines, toilets and other domestic purposes make it easy to identify and to trace where the water expenses originate from an d how to control them (Maher 2005). Waste expenses may also need additional records to include costs such as the labour incurred in disposing the waste. Other additional record in waste expense is that cost of buying dustbins and other waste handling equipment. The other cost that is usually not accounted for or recorded in the conventional methods yet it is a major environmental cost is the cost of the waste material. This refers to the cost of the material that is disposed. Other cost that applies to the waste materials is the cost of training personnel as well as the stakeholders of the institution on how to handle waste. Currently, MLC uses the paper recycling techniques to reuse the papers. However, it requires training of staff and students on how to handle papers meant for recycling (Bruns Kaplan 1987). How a life cycle costing system (LCC) could be implemented within, MLC and what would the environmental impact issues that would need to be considered and cost within the LCC exercise The life cycle costing usually refers to the costing exercise that looks into the total cost of equipment rather than the purchase cost of equipment. This applies when making purchasing decisions on equipments that may have implications on the environmental management accounting. The total cost refers to the additional cost of having equipment and it includes the purchasing costs, maintenance costs as well as the waste cost. The waste cost is the coast of disposing the equipment. When someone considers all those costs mailing decision on the appropriateness and the effectiveness of the product used usually applies (Bruns Kaplan 1987). The lifecycle costing also considers the life cycle of the equipment or the durability of the product bought. This is the length that particular equipment is expected to last while it is effective and efficient in its use. This aspect also includes warranty of the equipment and the cost of maintaining the equipment. The other expense is the development expense where an organisation spends its time to develop appropriate structure to cater for the organisational needs of the particular equipment. The following are some of the environment impact issues that need consideration as lifecycle costing issue. The first environmental impact issue is the air conditioners. The main use of the air conditioners is to provide cooling for the machines used in the institution to prevent overheating of the machines. The project hopes to install three air conditioners because the cost is high yet it is right in consideration of the fact that replacing damaged machines is more expensive. The other cost is the swimming pool by closing down the pool and use of another swimming pool from the neighbouring school (Maher 2005). The other area where lifecycle costing will apply is development of new classrooms as the current classrooms have an occupancy rate of eighty per cent. This can be done through the development of timetables that ensure there is an occupancy level of one hundred per cent. This will prevent additional expenses in development of the classes and focus the resources in other areas that are significant in the project. The other area where the life costing will apply is in the water conservation where the institution is looking for ways of reducing the water expenses by building new taps and toilet flushers that use six litres of water than the flushers that use eleven litres of water. This will reduce the amount of money used on water because the quantity of water required is reduced. When expenses are reduced where appropriate, the cost will reduce which results to increase in the revenue generated from the project. Considering these aspects using the lifecycle costing ensures that the management makes appropriate and cost effective decisions. References Bruns, W Kaplan, S 1987, Accounting and management: A field study perspective, Harvard Business School Press, Massachusetts. Langfield, K 2009, Manag ement accounting: Information for managing and creating value, 5th edition, McGraw Hill, New York. Maher, L 2005, Fundamentals of cost accounting, McGraw-Hill, New York. Maskell, B 2003, Practical lean accounting, Productivity Press, New York. Romney, M 2009, Accounting information systems, Pearson Prentice Hall, Upper Saddle River. This case study on MLC and the environmental management accounting was written and submitted by user Graysen K. to help you with your own studies. You are free to use it for research and reference purposes in order to write your own paper; however, you must cite it accordingly. You can donate your paper here.