A great part of my interest lies with the design and control of organisations. An area that consists from a large body of knowledge. During my Master Management Sciences the body of knowledge was categorised around the topics of strategy, organisational design & change, management control & human capital, and financial controls. The structure of this note matches that categorisation.
Essential for organisations is to thoughtfully design the organisations. Paradigms for designing organisations can help to make conscious design choices.
Control of an organisation is about leading the organisation towards the set goals in the best way possible. Management control focusses on the design of Management Control Systems, administrative systems, gathering and distribution of information and a set of methods & tools for management of risks, costs and investments. For leaders in the organisation it is important to Influence the organisation by management control. Psychological effects take place in various forms, an interesting case is Firefighting in organisations.
Human Resource Management is a broad field of expertise. Lots of research, practices and methodologies exists. A proven bundle of high-performance working practices can be found in High-performance Work Systems.
Finance, or more often used financial management, is not an ubiquitous term, at least Three meanings of finance can be recognised. In general financial management is concerned with raising and using capital. Financial accounting is about the provided information regarding the position and results of business operations in a certain timeframe. Different Theories of financial accounting exist. Governance is concerned with all processes of control. Broadly defined it is about the design, structure and control of organisations.
These elements are related on different levels. First of all, financial management sets financial targets that directly impact the governance of the organisation. Whether it is by the targets that are set, they way they should be achieved or the monitoring of those targets are met. At the end of the year the performance of the operation has to be shown via end of year reports. A process managed by financial accounting. Reporting on the operation and design of an organisation (governance) has grown to be part of the annual report.
Within accounting Measurements can be approached subjectively. Various measurement bases applies, leading to wildly different measurements. As such it is important to understand what approach is used in the financial statements. Fair values gives a different impression then historical cost.