|Behavioral and Organizational Issues in Management Accounting and |[pic] | |Control Systems | |
9-1In the context of a management accounting and control system, control refers to the set of procedures, tools, performance measures, systems and incentives that organizations use to guide and motivate all employees to achieve organizational objectives.
9-2The four stages that are needed to keep the organization in control are:
1. Plan: develop an organization’s objectives, choose activities to accomplish the objectives, and select measures to determine how well the objectives were met;
2. Do: implement the plan;
3. Check: monitor by measuring and evaluating the system’s current level of performance; compare feedback about the system’s current level of performance to the planned level in order to identify discrepancies and prescribe corrective action;
4. Act: take appropriate actions to return the system to an in-control state.
9-3The two broad technical considerations that designers of management accounting and control systems must address are the relevance of the information generated and the scope of the system.
9-4When addressing the relevance of a MACS, designers should develop a system that provides information that is timely and accurate enough to be relevant and useful for decision making. The system should provide a consistent framework for the organization, in the sense that the language used and the methods of producing management accounting information do not conflict within various parts of the organization. Finally, employees should be able to use the system’s available information in a flexible manner so that it can be customized for the decisions at hand.
9-5The four major behavioral considerations in MACS design are: (1) embedding the organization’s ethical code of conduct into MACS design, (2) using a mix of short- and long-term qualitative and quantitative performance measures (or the balanced scorecard approach), (3) empowering employees to be involved in decision making and MACS design, and (4) developing an appropriate incentive system to reward performance.
9-6The scientific management view of motivation is that most people find work objectionable, money is the key to inducing performance, and people have little desire to be creative on the job or make good decisions. In this view, management must tightly monitor and control employee behavior and break down tasks so employees need only focus on production, not decision making.
9-7The human relations movement view of motivation is that people have needs that go well beyond performing simple repetitive tasks and that money is only one aspect of what people desire. In this view, employees desire respect, a feeling that they contributed something valuable to the organization, and discretion at their jobs. Management’s task is to develop a better working environment for people with the goal of improving employee morale, job satisfaction, and performance.
9-8The human resources model of motivation view is that people do not find work objectionable. Instead, they want to participate in decision making and have specific goals that they are trying to achieve. Individuals have information and knowledge that they can contribute to the organization; further they are creative, responsible, and wish to improve the organization. The task for management is to create a working environment that will allow creativity to blossom.
9-9There are a number of choices that individuals can make when ethical conflicts arise. These include: point out a discrepancy or problem to a superior and refuse to act unethically, point out a discrepancy to a...