Gordon Potter

CONTEXTUAL ANALYSIS OF PERFORMANCE IMPACTS OF OUTCOME-BASED INCENTIVE COMPENSATION

This study investigated how contingency factors such as competitive intensity, customer profile, and behavior-based control influenced the effectiveness of an outcome-based incentive plan supportin...

An empirical analysis of manufacturing overhead cost drivers

Abstract Empirical validity of the claim that overhead costs are driven not by production volume but by transactions resulting from production complexity is examined using data from 32 manufacturing plants from the electronics, machinery, and automobile components industries. Transactions are measured using number of engineering change orders, number of purchasing and production planning personnel, shop-floor area per part, and number of quality control and improvement personnel. Results indicate a strong positive relation between manufacturing overhead costs and both manufacturing transactions and production volume. Most of the variation in overhead costs, however, is explained by measures of manufacturing transactions, not volume.

A field study of the impact of a performance-based incentive plan

Much management accounting research focuses on design of incentive compensation contracts. A basic assumption in these contracts is that performance-based incentives improve employee performance. This paper reports on a field test of the multi-period incentive effects of a performance-based compensation plan on the sales of a retail establishment. Analysis of panel data for 34 retail outlets over 66 months indicates a sales increase when the plan is implemented an effect that persists over time. Sales gains however are significantly lower in the peak selling season when more temporary workers are employed.

Association of Nonfinancial Performance Measures with the Financial Performance of a Lodging Chain

A test of nonfinancial measures used as part of a management-incentive program by a U.S.-based, full-service hotel chain found that improvements in the nonfinancial measures were followed shortly by increases in revenue and profit. The two nonfinancial measures are customer satisfaction as measured by guests’ comment card indications of likelihood to return and level of complaints. The lag between the nonfinancial measures and changes in revenue and operating profit was six months in this case. While the test applies directly to that one chain, the lesson is important to the rest of the hotel industry.

Hospitality management accounting: Current problems and future opportunities

This paper discusses areas for future research opportunities by addressing accounting issues faced by management accountants practicing in hospitality organizations. Specifically, the article focuses on the use of the uniform system of accounts by operating properties, the usefulness of allocating support costs to operated departments, extending our understanding of operating costs and performance measurement systems and the certification of practicing accountants.

Accounting Research in the Cornell Quarterly: A Review with Suggestions for Future Research

An analysis of accounting-related articles published in the Cornell Hospitality Quarterly shows a shift from prescription to description, with an increasing use of scientific research methods. The authors found that the literature has examined the industry’s use of the Uniform System of Accounts, cost management, and management control systems, including the effects of nonfinancial measures and the balanced scorecard. Although a uniform system of accounts offers consistency, it may limit a hotel manager’s ability to match costs with departmental revenues. Budgeting and capital budgeting are particularly difficult issues for the hospitality industry, due to the fact that most hotels involve independent parties as ownership and management. One oddity of the hospitality industry is that few managers adjust budgets to reflect operational outcomes. In addition to their review, the authors provide suggestions for future research.

Serving More Segments and Offering More Products: What Are the Costs and Where Are the Profits?

A profit-enhancing strategy for hotels must begin by examining both the customer mix and the product-and-service mix of a particular hotel. Looking at the variety of products offered and the customers served in combination with historical information on profits and losses can help a manager understand more fully the connection among customers, products and services, revenues, costs, and profits. This study shows that properties with great product-and-service variety and serving a large number of customer segments had higher undistributed operating costs per available room than properties offering less variety and serving fewer market groups. At the same time, the greater the variety of products and services offered, the higher a hotels departmental profit per available room and the higher its gross operating profit (GOP). That is, efforts to increase product-and-service variety increase costs, but those costs are fully offset by increases in GOP. Therefore, a hotel that expands its variety of products and services not only achieves an increase in revenues, but also has higher profitability than when it offers fewer products and services. In contrast, hotels that increase the variety of customer segments they serve did not experience increases in departmental profit and GOP. Thus, a hotel serving a large variety of customer segments may not recoup the costs of implementing that strategy.A profit-enhancing strategy for hotels must begin by examining both the customer mix and the product-and-service mix of a particular hotel. Looking at the variety of products offered and the customers served in combination with historical information on profits and losses can help a manager understand more fully the connection among customers, products and services, revenues, costs, and profits. This study shows that properties with great product-and-service variety and serving a large number of customer segments had higher undistributed operating costs per available room than properties offering less variety and serving fewer market groups. At the same time, the greater the variety of products and services offered, the higher a hotels departmental profit per available room and the higher its gross operating profit (GOP). That is, efforts to increase product-and-service variety increase costs, but those costs are fully offset by increases in GOP. Therefore, a hotel that expands its variety of products an...

The impact of supervisory monitoring on high-end retail sales productivity

Based on a two-stage analysis of a panel of data on 12 outlets of a high-end retailer for 24 months, we investigate how the level of supervisory monitoring affects retail sales productivity. In the first stage, we use Data Envelopment Analysis (DEA) to compute the relative productivity of retail outlets in using their labor and capital resources to generate store sales. In the second stage, we regress the logarithm of DEA scores on contextual variables to obtain consistent estimators of the impact of contextual variables on productivity (Banker and Natarajan in Operation Research 56:48–58, 2008). Contrary to agency theoretic prediction that supervisory monitoring leads to an increase in retail sales productivity, our empirical results indicate that the higher the level of supervisory monitoring, the lower is the retail sales productivity for high-end retail outlets.

Managerial Accounting in the Hospitality Industry

Abstract In this chapter we review the scholarly literature on managerial accounting that is set in the hospitality industry. Despite the fact that the hospitality industry is one of the worlds largest, there is very little research on its management accounting issues and practices. We conclude the chapter with a discussion of research opportunities focused on the hospitality industry.

On the use of regression and verbal protocol analysis in modeling analysts' behavior in an unstructured task environment: A methodological note☆

Abstract We use two techniques—linear regression (LR) and verbal protocol analysis (VPA)—to model the decision behavior of four experienced financial analysts performing an unstructured valuation task. The research examines the structure and implied data use for each model type. We also assess the conclusion of prior research that the two techniques are complementary. This research also claims that these techniques are interchangeable in most decision contexts, in effect treating them as substitutes. Our results suggest that the techniques are complementary; however, each adds unique contributions to model development.