How to Pass CIMA E2 — Managing Performance

CIMA E2 is the Management Level equivalent of E1 — primarily conceptual and discursive, but tested in scenario-based OT questions that demand genuine understanding. It covers project management, performance management systems, leadership and teams, and organisational change.

The risk with E2 is the same as with E1: treating it as light reading because it's not heavily mathematical. In reality, topics like earned value analysis, the balanced scorecard at Management Level, and situational leadership are examined in depth, with multi-part scenario questions that catch underprepared students. This guide gives you the full picture.

CIMA E2 — The Basics

E2 Syllabus Breakdown

Managing performance is the largest section at 30% — make it a priority.

Managing Projects (25%)

Project lifecycle

Most projects follow four stages: (1) Initiation — define scope, objectives, feasibility and produce a project charter; (2) Planning — resource planning, scheduling, risk identification, budget and project plan; (3) Execution — carry out the work and monitor progress against plan; (4) Closure — handover deliverables, post-project review, lessons learned.

Project governance

The project sponsor is the senior stakeholder who champions the project and provides resources. The project manager is responsible for day-to-day management and delivery. The project board or steering committee handles oversight and escalation decisions. The project management office (PMO) is an organisational function supporting project consistency.

Stakeholder management

Stakeholder mapping plots stakeholders by power (high/low) and interest (high/low). High power, high interest: manage closely. High power, low interest: keep satisfied. Low power, high interest: keep informed. Low power, low interest: monitor.

Risk management in projects

Risk identification → Risk assessment (probability × impact) → Risk response: Avoid (change the plan to eliminate the risk), Reduce (take action to reduce probability or impact), Transfer (pass risk to a third party via insurance or contract), Accept (acknowledge the risk and build contingency).

Agile vs traditional project management

Earned Value Analysis (EVA)

EVA measures project performance against plan using three values: Planned Value (PV) — budgeted cost of work scheduled; Earned Value (EV) — budgeted cost of work performed; Actual Cost (AC) — actual cost of work performed.

EVA is frequently tested in E2 — practise interpreting these metrics in scenario questions.

Managing Performance (30%)

The Balanced Scorecard at Management Level

At E2 level, the balanced scorecard is tested more deeply than at E1. You need to design appropriate KPIs for a given company scenario across all four perspectives, explain why particular measures are appropriate (or inappropriate) for a company's strategy, and understand the cause-and-effect relationships between perspectives.

A common exam question type: a scenario describes a company's strategy and current performance issues. You're asked to identify appropriate KPIs for each perspective or explain why existing measures are misaligned with strategy.

Critical Success Factors (CSFs) and KPIs

CSFs are the small number of areas where the company must perform well to achieve its objectives. KPIs measure performance against CSFs. Example: Objective — become the market leader in customer satisfaction; CSF — resolve customer complaints within 24 hours; KPI — % of complaints resolved within 24 hours.

Responsibility accounting

Responsibility accounting holds managers accountable for costs and revenues within their control.

Performance measures for investment centres: ROI (Return on Investment) = Profit ÷ Capital employed × 100%. Residual Income (RI) = Profit − (Imputed interest charge × Capital employed). RI avoids the underinvestment problem that can arise with ROI, where managers reject projects with positive NPV because they reduce divisional ROI.

Managing People and Teams (20%)

Leadership styles

Tannenbaum and Schmidt's continuum: From autocratic (tells) → consultative (sells/consults) → democratic (joins). Style choice depends on task urgency, team experience, and manager's confidence.

Hersey and Blanchard's situational leadership: Match leadership style to the follower's development level. D1 (low competence, high commitment): Directing. D2 (some competence, low commitment): Coaching. D3 (high competence, variable commitment): Supporting. D4 (high competence, high commitment): Delegating.

Motivational theories

Content theories (what motivates): Maslow's hierarchy of needs (physiological → safety → social → esteem → self-actualisation). Herzberg's two-factor theory: hygiene factors prevent dissatisfaction; motivators create satisfaction.

Process theories (how motivation works): Vroom's expectancy theory: Motivation = Expectancy × Instrumentality × Valence. Adams' equity theory: motivation is affected by perceived fairness of outcomes relative to inputs.

Team development

Tuckman's stages: Forming → Storming → Norming → Performing → Adjourning. At each stage, the appropriate leadership style changes. In Storming (conflict stage), a more directive style may be needed; in Performing (high-functioning stage), a delegating style is appropriate.

Belbin's team roles: Nine roles that contribute to effective team functioning. Action-oriented: Shaper, Implementer, Completer Finisher. People-oriented: Co-ordinator, Teamworker, Resource Investigator. Thinking-oriented: Plant, Monitor Evaluator, Specialist.

Managing Change (15%)

Change management models

Lewin's three-step model: (1) Unfreeze — create motivation and awareness of the need to change; (2) Change — implement the change and provide support; (3) Refreeze — embed the new behaviours and processes.

Force field analysis (Lewin): Identify driving forces (pressures for change) and restraining forces (resistance). To implement change, either strengthen drivers or reduce restraints.

Kotter's 8-step model: (1) Create urgency, (2) Form a guiding coalition, (3) Develop vision and strategy, (4) Communicate the change vision, (5) Empower broad-based action, (6) Generate short-term wins, (7) Consolidate gains and produce more change, (8) Anchor new approaches in culture.

Resistance to change

Common reasons include fear of the unknown, loss of status or job security, disruption to routines, lack of trust in management, and perceived unfairness. Responses: communication and education, participation and involvement, support and facilitation, negotiation, and coercion (last resort).

Organisational culture

Handy's four types: Power culture (few key individuals hold power; fast decisions), Role culture (bureaucratic; roles and rules dominate), Task culture (project-based; expertise is valued), Person culture (individual talent is central, e.g., professional practices).

E2 Study Plan

Frequently Asked Questions

Is CIMA E2 hard?

E2 is similar in style to E1 — primarily conceptual rather than mathematical — with a pass rate around 65%. The main difficulty is applying management frameworks to detailed scenarios under exam conditions. Students who can only describe Tuckman's stages or Hersey-Blanchard's model abstractly, without being able to apply them to a specific situation, tend to lose marks.

How long does it take to study for CIMA E2?

Allow 6–8 weeks at 8–10 hours per week. Students with management or HR backgrounds may progress faster; those coming from a pure technical accounting role may need more time on the people management and change content.

How is earned value analysis tested in CIMA E2?

EVA is tested through scenario questions describing a project's planned value, earned value, and actual cost. You'll be asked to calculate SV, CV, SPI, or CPI and interpret what they mean for the project. Practise these calculations until you can complete them quickly and accurately.

Do I need to know Belbin's team roles for E2?

Yes — Belbin's nine roles are in the E2 syllabus and are periodically tested. You don't need to memorise all nine in detail, but you should be able to identify and describe the three categories (action, people, thinking) and the roles within each.

Is E2 tested differently from E1?

No — both use the same OT format (60 questions, 90 minutes, 70% pass mark). The content is different, but the exam structure and technique are identical.