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Responsibility centers – essence and rules of extraction

Category: Blog, Management
Responsibility centers - essence and rules of extraction Archman

What are the responsibility centers?

Responsibility centers (decision centers) are segments of the business activity or its internal units, for which have been assigned some range of tasks and the corresponding scope of responsibility.

The manager of the center is responsible for the achieved results. He can be accounted for them based on synthetic grade indicators which kind relies on the sort of responsibility center. Responsibility centers are the equivalents of budget units, except that budget units recognize the scope of their responsibility numerically (financially) in revenue and cost budget.

Extracting the responsibility centers

Appropriate extraction of the responsibility centers is a crucial element of any controlling work. If every element of the organizational structure has an impact on the general financial result, then this result should be clearly defined, which will allow assigning the responsibility of specific managers. It’s important to remember that the right extraction of the centers is characterized by:

  • Putting responsibility on every manager proportionally to delegated competences
  • Factual (not apparent) influencing center managers on those plans positions, on which execution they are responsible
  • Judging the center managers for those volumes that they have a real influence on

Typical management solutions, which from the standpoint of their efficiency clearly require creating a map of the responsibilities centers are:

  • Budgeting
  • Process management
  • Activity-based costing
  • Advanced motivational system
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Has been working with the implementation of IT systems supporting management for 15 years. He specializes in Business and Workflow solutions. Enthusiast of using AI to support business processes. Archman’s CEO and chancellor of College of Economics And Computer Science in Cracow.

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