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2010/2011  KAN-ASC_AS53  Performance Measurement and Incentives

English Title
Performance Measurement and Incentives

Course Information

Language English
Point 7,5 ECTS (225 SAT)
Type Mandatory
Level Full Degree Master
Duration One Semester
Course Period Spring
Time Table Please see course schedule at e-Campus
Study Board
Study Board for MSc in Economics and Business Administration
Course Coordinator
Allan Hansen
Main Category of the Course
  • Economics, macro economics and managerial economics
Last updated on 29 maj 2012
Learning Objectives
The aim of the course is to strengthen the student’s competence to design incentive systems in organizations. By building on the student’s knowledge of accounting as a tool for strategy implementation (obtained at the course Accounting and Control, 1. semester) this course advances the discussion of multi-dimensional performance measurement, target setting, evaluation and compensation which are all key issues in the provisions of incentives in organisations.

At the exam the students must be able to:
Explain, structure and combine the various concepts, issues and models related to performance measurement and incentives introduced at the course.
Identify and analyze problems related to the provision of incentives in firms by using the concepts and models from the course
Critically reflect upon various design solutions proposed by theories and models applied at the course.
Marking Scale 7-step scale
Exam Period Spring Term
Individual oral examination. The exam is internal and will be graded by a teacher and an internal censor cf. General Degree Regulation § 25. The exam will take place in March. Make-up/ re-exam will take place in May
Prerequisites for Attending the Exam
Course Content

The course continues the analysis of strategic control systems in a transaction cost/agency theory perspective as introduced in the course ‘Accounting and Control’ and adds game theory as the basis for understanding, analysing and designing incentive systems. Key topics addressed at the course are:
Congruity and controllability of performance measures
Subjective and objective performance measures
Target setting
Intrinsic and extrinsic reward
Promotion versus pay-for-performance as incentive systems
High powered and low powered incentives
Control and trust

Teaching Methods
Theoretical dialog lectures are mixed with exercises and cases. The lectures introduce concepts and models decisive for understanding incentive and measurement issues and outline their theoretical assumptions. Through cases and exercises students train the application of concepts, theories and models in order to design value creating incentive systems in organizations.
The teaching methods is through debate, case studies and a constant dialog between theory and practice

Development of individual and social skills (competencies)
Through debate and dialog the student will develop oral and presentation skills. Since case preparation and presentation is conducted in teams the students develop cooperative skills.

Selected chapters from Milgrom & Roberts: Economics, Organizations and Management and Hendrikse: Economics and Management of Organizations, McGraw-Hill
Selected papers on Performance Measurement and Incentive Systems.