Chapter 12, Problem 46P

Building Services, Co. (BSC) was started a number of years ago by Jim and Joan Forge to provide cleaning services to both large and small businesses in their home city. Over the years, as local businesses reduced underutilized building maintenance staffs, more and more cleaning services were subcontracted to BSC. BSC also expanded into other building services such as painting and local moving.

BSC maintains a pool of skilled workers who are contracted to perform the noncleaning services because these services do not recur on a day-to-day basis for the individual buildings. Many of BSC’s full-time employees have been with the firm for a number of years. Five zone managers are each responsible for furnishing recurring nightly cleaning services to several businesses. In addition, the zone manager sells and schedules noncleaning service jobs for the company’s central pool of skilled employees. Informal meetings are held periodically to discuss BSC’s performance, personnel allocations, and scheduling problems. BSC’s budgeting and planning have been done by the Forges, who also manage variations from budgets.

The Forges recently decided to retire and sold the business to Commercial Maintenance Inc. (CMI), which provides similar services in a number of metropolitan locations that surround BSC’s business area. After news of the sale, several of BSC’s long-term employees appeared resentful of the change in ownership and did not know what to expect.

CMI’s senior management met with BSC’s managers and announced that George Fowler would become president of BSC and that BSC would continue to operate as a separate subsidiary of CMI. Furthermore, in accordance with CMI’s management philosophy, a responsibility-accounting system is to be implemented at BSC. Also, in line with other CMI subsidiaries, a participatory budgeting process is being considered. However, no decision will be made until an evaluation of BSC’s existing policies, operational culture, and management is completed. In view of the significant change in management philosophy, CMI has taken considerable time in explaining how each system operates and assuring BSC’s managers that they are expected and encouraged to participate in both the planning and implementation of any of the systems that are to be adopted.

Required: Two new systems are being considered at Building Services Co.:

• Responsibility-accounting system
• Participatory budgeting system

For each of these systems:

1. 1. Identify at least two behavioral advantages that could arise.
2. 2. Identify at least two potential problems that could arise.
3. 3. Discuss the likelihood that the system will contribute to the alignment of organizational and personal goals.