Management Control Systems Case
Table of Contents
INTRODUCTION
EMPIRICS BUSINESS CONCEPT AND STRATEGIES CORE VALUES AND CODES OF CONDUCT MEASUREMENTS & EVALUATIONS FEEDBACK AND LEARNING ANALYSIS BELIEFS AND BOUNDARY SYSTEMS DIAGNOSTIC CONTROL SYSTEMS INTERACTIVE CONTROL SYSTEMS INFORMATION FLOWS CONCLUSION REFERENCES 1 2 2 3 3 5 6 7 7 8 9 9 11
Introduction Is it possible for an organization to optimize shareholder value by setting their stakeholders first? If so, how can this process be controlled? This empirical case study examines the Tax Department (KPMG Tax) within KPMG AB (KPMG Sweden) and their focus on creating value for stakeholders as a strategy for shareholder value creation. By applying the theoretical frameworks of Simons (1995) and Otley (1999), the report investigates how KPMG Tax controls value-creating processes through the use of management control systems. Both Simons (1995) and Otley (1999) have developed rather holistic frameworks, however, prior empirical research within management control systems have focused mainly on manufacturing companies. It is therefore interesting to investigate how these frameworks apply to a knowledge intensive service company instead. Moreover, another aspect where KPMG Tax differs from previous case companies is that all their shareholders are active employees in the firm as partners, hence, there is no separation between ownership and control. KPMG Tax is a department within KPMG Sweden, which is owned by the partners of the firm and is a member of the KPMG International Cooperative (KPMG International). Although most findings will be relevant for all of KPMG, this report will only focus on the Tax department (KPMG Tax) within KPMG Sweden. The core business of the department consists of Advisory services which range from solving the
INTRODUCTION
EMPIRICS BUSINESS CONCEPT AND STRATEGIES CORE VALUES AND CODES OF CONDUCT MEASUREMENTS & EVALUATIONS FEEDBACK AND LEARNING ANALYSIS BELIEFS AND BOUNDARY SYSTEMS DIAGNOSTIC CONTROL SYSTEMS INTERACTIVE CONTROL SYSTEMS INFORMATION FLOWS CONCLUSION REFERENCES 1 2 2 3 3 5 6 7 7 8 9 9 11
Introduction Is it possible for an organization to optimize shareholder value by setting their stakeholders first? If so, how can this process be controlled? This empirical case study examines the Tax Department (KPMG Tax) within KPMG AB (KPMG Sweden) and their focus on creating value for stakeholders as a strategy for shareholder value creation. By applying the theoretical frameworks of Simons (1995) and Otley (1999), the report investigates how KPMG Tax controls value-creating processes through the use of management control systems. Both Simons (1995) and Otley (1999) have developed rather holistic frameworks, however, prior empirical research within management control systems have focused mainly on manufacturing companies. It is therefore interesting to investigate how these frameworks apply to a knowledge intensive service company instead. Moreover, another aspect where KPMG Tax differs from previous case companies is that all their shareholders are active employees in the firm as partners, hence, there is no separation between ownership and control. KPMG Tax is a department within KPMG Sweden, which is owned by the partners of the firm and is a member of the KPMG International Cooperative (KPMG International). Although most findings will be relevant for all of KPMG, this report will only focus on the Tax department (KPMG Tax) within KPMG Sweden. The core business of the department consists of Advisory services which range from solving the
References: Literature CIMA Technical Report, 2004, Maximising shareholder value: achieving clarity in decisionmaking Ezzamel, M., Willmott, H., Worthington, F., 2008. Manufacturing shareholder value: the role of accounting in organizational transformation. Accounting, Organizations and Society, 33(2/3), 107-140. Kraus, K. & Lind, J. 2007, Management Control in Inter-organizational Realationships, pp. 269-296. In: Hopper, Trevor, Northcott, Deryl & Scapens, Robert W., eds, (2007). Issues in management accounting. 3. ed. London: Prentice Hall. Martin, R. 2010, The age of customer capitalism, Harvard Business Review, 88(1/2), pp. 5865 Mundy, J. 2010, Creating dynamic tensions through a balanced use of management control systems, Accounting Organizations and Society, 35(5), pp. 499-523 Otley, D, 1999, Performance management: a framework for management control systems research, Management Accounting Research, 10(4), pp. 368-382 Simons, Robert, 1995, Levers of control - how managers use innovative control systems to drive strategic renewal, Boston: Harvard Business School Press. Interviews Carlstedt, Martin. “Senior Manager.” Personal interview. 21 Sept. 2012. Hammarsten, Louise. “Senior Associate.” Personal interview. 19 Sept. 2012. Hanno, Viveka. “Head of People Services.” Personal interview. 12 Sept. 2012. Robertsson, Helena. "Head of Tax." Personal interview. 6 Sept. 2012. Internet sources Formal values of KPMG International: URL: Core values of KPMG Sweden: URL: 11