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4. Profit centers and internal billing
Performance control can also be organized by decentralizing responsibilities to profit centers. This type of organization is often reserved for large companies, the aim being to recreate the conditions for dynamic management by playing on entrepreneurial motivations, and avoiding the risks of bureaucratic drift.
4.1 Principles
A profit center manager is highly autonomous in his management, but is judged on his results. Logic dictates that this manager is financially interested in results if they are good. On the other hand, he's on an "ejector seat" if the results aren't up to scratch. He may even be fired...
The aim is to benefit internally from the optimal resource allocation mechanism which, theoretically, acts like an invisible hand...
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