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Where you stand depends on where you sit: Making sense of Responsibility Center Management at the University of Pennsylvania

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  • Education
  • Finance|Education
  • Administration|Education
  • Higher
  • Communication


Decentralized management systems such as Responsibility Center Management (RCM) delegate financial and decision-making authority to improve the quality of decisions, control costs, and provide incentives to increase revenue. However, the literature indicates that the resulting independence can introduce costly duplication, and the participants can become competitive and focused on the rules of system. In order to create a system that removes the focus from the internal allocations, minimizes behaviors that are not productive for the organization as a whole, and maximizes the benefits of RCM, it is important to understand the system from the perspectives of the participants. ^ This qualitative study evaluates the way a particular implementation of RCM functions at the University of Pennsylvania. It evaluates the perspectives of the participants at multiple levels throughout the organization through interviews with individuals who manage the RCM process and those who participate in it. Study participants included deans of the schools, school senior business officers, and University central administrators. Karl Weick's framework of sensemaking is used to examine the perspectives of various participants to provide insight into the benefits and liabilities of an RCM system. The study answers the questions: (a) How do various constituencies describe the principles of RCM and its implementation at the University of Pennsylvania; (b) how do the views of the participants in the system differ; and (c) what are the implications of these differences? ^ Results of the study underscore the importance of transparency, consultation, and communication. Recommendations for changes are provided. ^

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