Divisional performance
Divisional performance assesses the economic results and resources of a decentralised unit, while managerial performance focuses on the decisions its manager can influence. Measures may include profit, ROI, residual income and non-financial indicators. Asset measurement, central costs, market conditions and transfer prices can affect comparisons. Use consistent definitions and strategic context and avoid rewarding local success that harms the group or encourages rejection of beneficial investment.
Worked example
A division’s total profit includes a centrally controlled property charge. Report both its overall economic result and the manager’s controllable performance.
Common mistake
A low divisional return does not automatically imply a poor manager, and a high return does not prove the division creates value after all relevant risks.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | APM | Direct | September 2026–June 2027 |
| ACCA | PM | Direct | September 2026–June 2027 |