In the two-day executive education program, Strategic Cost Analysis for Managers, MIT Sloan Professor John Core and co-lecturer Christopher Noe focus on how to use internal accounting information for decision making—a particularly pertinent topic for mid-level managers who need to think about why information was prepared the way it was, as well as how they can use the information most effectively.
“Companies make mistakes all the time with this kind of internal accounting information, which has been prepared for some other purpose than what they are using it for. This course teaches you how to be disciplined about thinking about the information you have.”
In addition, the program covers subjects such as fixed and variable costs and delves into the common pitfalls that can occur if managers use information without thinking through what they actually have. “In decision making, you need to think about what costs are going to change as a result of your decision and not assume they are going to go up one-to-one.” This applies to managing people and employee pay scales.
One highly visible example of how internal accounting is affecting corporate decision-making relates to CEO pay levels. According to new data, not only are CEOs and other C-level execs earning higher salaries, they’re also raking in bigger and better perks. Core says that long-term incentive plans in the U.S. are using act-based performance measures more than they used to, which, in turn, is changing the way top executives are being evaluated and compensated. Also, recent changes in accounting regulations in the U.S. have made it more attractive to use accounting based-measures as opposed to stock-based measures.
“A lot of people think that CEOs make way too much money. But when you think about it carefully, it’s not inappropriate that they get paid well, because of the scope of their position and the fairly rare talent it takes to be able to run an organization well.”