Accounting Measurement for Leaders
http://www.aspencbe.org/documents/Accounting Syllabus by Jane Cote.doc
Author: Cote, Jane
Source: The Aspen Institute Center for Business Education's Corporate Governance and Accountability Project
This course syllabus and its author, Jane Cote, and the philosophy behind the course was recently featured in an audio Web-Conference that can be accessed here.
Accounting with its arcane language and rules is a subject often feared and reviled by MBA students. While the process of producing accounting information might indeed contribute to this reputation, framed differently, MBA students easily see the role accounting plays in achieving strategic goals and managing stakeholder tensions. MBA students are expected to be future business leaders, not accountants. Using this assumption to design the course results in less emphasis on computation and more emphasis on the consequences that choices made in the process of accounting measurement have on strategic direction, stakeholder commitments and performance expectations. Students then understand that accounting is a measurement system that lays the foundation for enlightened decision making.
Teaching Future Business Leaders, Not Accountants
Developing MBA students into business leaders requires students to learn how individual decisions are linked and impact the larger environment in which the organization operates. In accounting, this premise shifts the topics and tone of the course from primarily information production to how accounting information impacts decision makers and stakeholders. In this accounting course, we adopted a new theme, “What should be measured and how should it be measured”. It turns the course focus from rules, to the tools leaders need to manage a complex organization. At its heart, accounting centers on measurement, whether that be the measurement of historical transactions or the measurement of future opportunities. With all that we can measure, it is important to assess what should be measured and how it should be measured to assess performance and progress towards strategic goals. In designing the course around this theme, we need to answer the question, ‘What is it that business leaders need to know about measurement?'
Another theme that is repeated in the course is that leaders need to have a clear understanding that a new measurement is a strategic fit. Often managers get excited about a new measurement system, such as the balanced scorecard, but do not take the time to understand why it is needed for their organization at this point in time. This leads to adoption of new systems that are not embraced by the organization, leading to wasted time and resources, not to mention lost opportunities. Students often suggest a new set of measures in projects or cases and it is necessary to continually demand that they justify them. More is not better when it comes to measurement.