Controllability - part 1

In this lesson

1. 0:00 Controllability principle in performance appraisal
2. 0:48 Controllable versus uncontrollable costs explained
3. 2:22 Identifying uncontrollable costs in practice
4. 3:08 Divisional performance versus managerial performance
5. 4:35 Worked example: Investment centre controllability
6. 7:01 Multiple choice analysis and correct answer

About this lesson

You'll discover how to distinguish between controllable costs—those managers can influence, like material purchases or labour efficiency—and uncontrollable costs set by external factors, head office, or market forces. Understanding this distinction is critical for CIMA Performance Management (PM) and Advanced Performance Management (APM) papers, as it ensures managers are assessed only on what they can actually control. The lesson explores why managers must be appraised fairly on controllable factors alone. If they're judged on uncontrollable elements—such as wage rates set by HR or apportioned head office costs—they'll understandably see the system as unjust and resist it. You'll learn to separate divisional performance (the division's overall results) from managerial performance (what the manager directly influenced), and work through practical examples of which costs fall into each category. This foundation is essential for designing performance management systems that motivate rather than demoralise your team.

Duration: 8m