Behavioral & Organizational Issues in Management Accounting & Control SystemsContemporary Management Accounting IssuesAccounting 586Chapter 9
Focus of the Theme & Prior Theme•Management Accounting & Control System (MACS) •Theme 1 focused on how the MACS supports strategy and its formulation•Theme 2 focuses on how the MACS supports strategy implementation, monitoring, & control
Focus of this Chapter•Define & describe–Control–Management control systems•Describes the behavioral aspects of the MACS–Employee incentives–Employee motivations
Importance•Every management accounting and control system (MACS) depends on people–People make decisions, perform activities etc.… (Usually data from MACS)–What people do or how they behave influence the effectiveness of MACS•MACS plays an important role in motivating employee behaviors to be matching with organizational objectives–An effective MACS creates incentives for employees•Well designed: desired behavior: Poorly designed: perverts behavior•Get the behavior you reward
Definitions•Control: procedures, tools, measures, systems & Incentives to motivate and guide employees to achieve firm's objectives & follow defined procedures•MACS consists of systematic methods by which–Information on operations in terms of meeting organizational objectives is collected & distributed•Perform evaluation & feedback•If objectives are being met, organization is said to be in control; if not it is out of control•If out of control corrective actions are taken
MACS Summary•Provides data and information for–Feedback•Performance and decisions–Control •Corrective actions to keep firm in control•Formal system to collect data, prepare information and distribute these in the organization–Notice the demands on data collective and IT and IS
Characteristics of a Well-Designed MACS•Technical–Accurate: relevant of information–Timely: up to data information–Consistent: same format, definitions used throughout the organization over time–Flexible: ability to be customized at the local level
Characteristics of a Well-Designed MACS•Behavioral–Has an embedded ethical code–Has mixtures of•Long run and short run measures•Quantitative and qualitative measures–E.g. balance scorecard–Involve employee groups in decision-making–Provides incentives to reward desired behavior and punish other behaviors
Historic Perspective on MACSEarly 1900s: Motivational assumptions•Work objectionable•Money the only motivation to work•Workers need to be given detailed instructions•Workers require close monitoring and control–To assure work is done correctly
Historic Perspective on MACSHuman Resources Movement•Workers need something other than money from work–Respect, identity, feeling of contribution•These impact –Job satisfaction, morale, quality of work life•Employee motivation–Want to participate in decision making–Want to creatively control tasks performed
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