Performance Evaluation of Responsibility Centers in the Organization

This study is aimed at elaborating conceptual, methodological and methodical fundamentals of a model for performance evaluation of responsibility centers in budgetary management of the organization. The model is based on: 1) assumption that budgetary deviations of responsibility centers have fuzzy nature in mathematical terms, and 2) complex instruments including ones of modern trends in management science and applied mathematics as management theory of measurement, the fuzzy set theory and the theory of fuzzy logic.The object of the study are responsibility centers of organizations (business and nonprofit) that operate in uncertain and stable/dynamic environment and whose budgetary deviations are described by fuzzy numbers/ fuzzy subsets. The author’s approach involves transformation of: 1) budgetary deviations described by fuzzy subsets in budgetary deviations described by fuzzy numbers and 2) qualitative scales and evaluations of inputs of the model in resulting performance evaluations of responsibility centers, which evaluations are described qualitatively and quantitatively.This study is structured in three parts. Preconditions for the subject elaboration and the author’s concept of performance evaluation of responsibility centers in budgetary management are systematized in the first part. Choice of instruments for implementation of the author’s concept is also grounded in this part. Methods for performance evaluation of responsibility centers in uncertain environment are presented in the second part. The third part illustrates an application of the author’s methodology for performance evaluation of responsibility centers. The approbation is in four variants for a cost responsibility center operating in uncertain environment. Results from the application of the methodology are analyzed as well.Results of the approbation show that the author’s methodology is applicable in practice to all organizations (business and nonprofit) for each type of environment (uncertain, stable and dynamic) and budgetary deviations of responsibility centers described by fuzzy subsets or fuzzy numbers.