Driving Performance in the Retail and Banking Industries: The Consequences of Dysfunctional Management Control Systems at W. T. Grant and Wells Fargo

Abstract

ABSTRACTManagement control systems—strategy, performance measures, and incentives—play a vitally important role in the success or failure of organizations. As such, management control systems represent one of the foundational topics in managerial accounting. However, as the case illustrates, developing, implementing, and continuously enhancing a management control system to be effective often proves challenging. This case develops students' ability to critically assess interrelationships between these three management control system elements. In particular, students are immersed into two dysfunctional management control systems—one at W. T. Grant in the 1970s and the other at Wells Fargo in the 2010s—to highlight the complexities, challenges, and power of such systems to elicit both positive and negative behavioral and decisional impacts on employees, customers, regulators and, ultimately, shareholders. This case also increases students' interest in studying managerial accounting, as well as their realization of its importance to an organization's success or failure.