Performance Measurement and Management Control Systems - Profit-Oriented Corporations vs. Non-Profit Organazations

University essay from Lunds universitet/Department of Business Administration

Abstract: In profit-oriented companies, success is most commonly measured by the amount of profit earned. This thesis aims to probe corresponding measures of success available and employed in non-profit organizations, and to find out the possibility of applying the same or similar techniques in both kinds of organizations.Although in theory Value for Money (VfM = Anticipated Outcomes/Required Resources), an indication of efficiency and effectiveness, can be considered a surrogate for profit in non-profit organizations, in the real world evaluation seems to be the closest measure corresponding to profit. The procedure specifies the actual outcome of projects, but, in contrast to profit figures which provide easy to grasp and concentrated information, here the results, reasons for deviations and different influential factors need to be analyzed and explained with words.In spite of shared basic principles, management control depends on prevailing situations and circumstances governing each particular organization in both sectors; thus the employment of an ultimate and conclusive system fitting all organizations and situations is unrealistic. Nevertheless, there are a number of control systems such as budget, the accounting system, auditing and project control that can be used in both kinds of organizations.