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Role of management accounting in modern business environment
Reward systems to motivate employees
Role of management accounting in modern business environment
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1. Introduction
There are thousands of organizations in the world, including service providers, retailers, government enterprises, non-profit organizations and so forth. Although they have various differences between each other, they still have some things in common. For example, it is essential for each organisation to have a stated objective and then formulate strategies. In order to fulfil the objective, managers should conduct management control and then make decisions to implement strategies. At the end of planning and control hierarchy, carrying out specific activities to complete the task is also very important. This report will use the basic information of Management accounting and control systems (MACS) as the foundation, and then focus on discussing the challenge of establishing effective incentive and reward systems of Barclay Banks PLC. Moreover, it is necessary to talk about ways modern organisations exercise to compensate the executives.
2. Main Body
2.1. The importance of management accounting and control systems
Management accounting and control systems (MACS) play important roles in today’s business. Management control is regarded as a critical function and is prominent in a large amount of companies. Problems such as reputation damage, financial costs, will be caused by management control problems (Kenneth and Wim, 2011). That is to say, management control is very important. Otherwise, inadequate control may lead to the collapse of companies.
2.2 . functions of Incentive and reward system
After discussing the importance of MACS, it is necessary to introduce a major element of management control systems, incentive and reward systems. Designing an appropriate and effective incentive and reward system is very cruc...
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...an der Stede, WA (2012) Management Control Systems ~ Performance Measurement, Evaluation and Incentives, Harlow: Pearson Education Ltd
Hope, J. and Fraser, R,(2003), New ways of Setting Rewards: the Beyond Budgeting Model, California Management Review, 104-119
Kohn, A, (1993), ‘why incentive plans cannot work, Ultimate Rewards’, Harvard Business School Press
Reporter, DM, (2012), ‘If you want a bonus, give better service’-Barclays ditches sales bonuses for branch staff’, available at: http://www.thisismoney.co.uk/money/news/article-2216037/Barclays-branch-staff-receive-bonuses-based-customer-satisfaction.html, (accessed: 9th April, 2014)
Van der Stede, WA (2009),’Designing Effective Reward System’, Finance and Management, magazine of the ICAEW’s, PP.170
Zea, E, (2010), ‘Key Principles for structuring Compensation for Agency Executives’, 4A’s Management Series
Management accounting in organisation is very important for decision-making and to make the business more efficient and therefore increasing its profits. Is the process of preparing accounts that can help managers to make day-to-day and short-term decisions, by providing them with accurate and timely key financial and statistical information...
Mujtaba, B. G., & Shuaib, S. (2010). An Equitable Total Rewards Approach to Pay for Performance Management. Journal of Management Policy and Practice vol. II (4), 111-121.
The functions of managerial accounting include planning, decision-making, controlling, and evaluation. To make good decisions, managers must constantly adapt to technological changes, changes in the organization's needs, and new approaches to other functional areas of business-- marketing, production, finance, organizational behavior, and corporate strategy. Planning is the setting of goals and developing strategies and tactics to achieve them. Controlling is concerned with achieving the goals and evaluating performance. The success of an organization lies heavily on the shoulders of those making these decisions.
Overall, the score of the article is a 95 out of a 100 because the author, Carol Patton was able to lure me into reading her entire piece. Additionally, after reading the article, I felt that I gained a bit of knowledge on the importance of reward programs and how it should be a “must have” in the work environment.
An incentive or reward system refers to a program designed by an organisation to reward high performance and motivate workers on an individual and group basis (Corby et al. 2009, p. 2). Rewards are useful to a company operating in a competitive market. Although used interchangeably, rewards and recognition where the former can be monetary or non-monetary but has a cost to the company, while the latter is meant to offer psychological reward, for instance, oral public recognition or end of the year award. While the company does not provide financial incentive, it provides non-financial in the form of cars for its Sales Division consultants. This improves the working condition of the employees, but it does not improve their financial stance. Wright (2004) notes that some employees are more concerned with status, for instance, an executive desk, attractive office or business card (p. 76). Such incentive make the jobs and company attractive.
Anthony, Robert N., and Govindarajan, Vijay. (2005) Management Control Systems. McGraw Hill Companies Inc., New York, NY (pp. 654-655)
Reward and recognition has to be promoted for small and large achievements. An effective reward’s program keeps employees engaged, dedicated, and committed to the organization.
Intrinsic rewards are not patterned financial rewards are associated with the requirement for employees to achieve greater success , recognition, a sense of responsibility , influence and development of other individuals. The requirements of the above is a strong motivator and contrast to the one . Each employee has different needs and desires . Rate a tremendous appreciation and gratitude is enough to inspire us all because of the appreciation of the value of giving someone touches his soul and give vigor to keep trying. Appreciate or appreciated regardless of age or where only a thousand meanings. Skinner ( 1969 ) reveals that the reward is a reinforcer . Reinforcing Here the meaning is interrelated aspects to the values that influence an individual's needs . However , Wether states that reward is what an individual received in return for a given job . It is the responsibility of an organization or institution to provide compensation and benefits to employees or students commensurate with a workforce that has been poured . The importance of rewards and benefits are indeed undeniable. If the employee or student is not satisfied with the compensation and benefits provided , then this will result in the existence of such problems as absenteeism , job rotation rate employing high , declining productivity and not serious in doing work .
PROBLEM : What effective management control system or systems should the Company adopt to attain maximum profitability not only of its divisions’ respective operations but that of the Company as a whole?
Rewards can have a positive influence on work motivation and performance. They contribute to fundamental human needs such as esteem or self-actualization, create a basis for communication amongst co-workers, and push employees to complete work related tasks. Rewards such as recognition, monetary payments, and privileges have many advantages and uses but also have some drawbacks. An example of a drawback of rewards is when the rewards reduces intrinsic motivation, this relates to the overjustification effect.
Bratton and Gold (2003) describe a reward system as “The combination of extrinsic and intrinsic rewards delivered by the employer. It also consists of the incorporated policies, processes, performs and administrative processes for executing the system within the framework of the human resources (HR) strategy and the total organizational system”.
Reward Based Programs Reward based programs within an organization has become a priority not only for both managers and human resource specialists. In fact, organizations that create and offer reward based programs often find employee moral higher which results in higher productivity and engagement. The purpose of a reward program is to identify the staff members who have excelled in specific areas of the company and encourage all employees to also excel in their specific responsibilities. Furthermore, by offering a reward based program, organizations will additionally retain employees for longer periods of time which increases productivity and lowers overhead costs associated with training and hiring new candidates. To create a rewards based program, HR departments should first create an effective system to measure and evaluate employee performance.
Johnson, Sam T. "Plan your organization’s reward strategy through pay for performance dynamics: Compensation & Benefits Review 30, Number 3: (May/June 1998): 67-72
The report highlight’s the essential aspects of the control process. In terms of concurrent feedback as well as feed forward, that companies can use to implement so that they can have better outcomes in terms of efficiency of the business. Consequently the report underlines as well as emphasizes of the many contributing factors of these controls. The authors have contrasting views on the control models of an organization, they believe that in order to create an effective control process, and organization first needs to determine its strategic plans for instance in terms of what it is and where is it going.
I am interested in conducting research and teaching in managerial accounting, auditing and assurance services and accounting information systems. In particular, I am interested in exploring the role of accounting information systems in decision making, internal control, and auditing. In order to gain an appreciation of these and related issues, it is essential for me to have a strong grounding accounting, accounting information systems, information technology, managerial accounting, as well as gain a general economic and management perspective.