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Unformatted text preview: PA2 Performance measure - Bonus system ( Case 3 56161718 ) : (1) 1 It should align manager / staffs interests to that of the overall firm. ( align manager decisions with corporate long-term goal) 2 Consider the cost-volume-profit factors 3 Different performance evaluation and controls should be implemented in order to ensure motivation is consistent with desired result and behavior and ensure there are no conflicts. () 4 Consider the long-term effects (interests) for the company as well as short-term. ( Goal congruence between long-term and short-term and reduce the incentive to engage in short-range practices to pump up current earnings to the detriment of future earnings) 5 Using balanced scorecard approach to assess management performance based on the qualitative and quantitative factors. (consider the key success factors) (2) It should avoid the behavior of earnings management using by mangers (Earnings management often involves managers aiming earnings to an amount that maximizes their compensation package. Tools for control of earnings management include auditors, regulators, the board of directors, and the managerial labour market) (3) The bonus may sets expectations for future projects and other employees may expect similar rewards in the future. (4) Motivate better performance, control, long-term development of company. (5) current bonus system: Redesign the performance incentive program to ensure that employee (or manager) and company goals are more congruent. 1 Evaluating performance based on a longer term instead of one year result. 2 Allocate the bonus based on several months instead of a year. 3 Increase the considering factors for whether to award for bonuses. ( balanced scorecard: financial performancelearning and growthcustomer satisfactoryinternal business efficiency) Strategic leadership (Case 1 345171820) <1> (Budget and Benchmarks) : Benchmarks: The Company can establish annual benchmarks to measure its success in moving toward this goal. Budget: The Company should establish a budget based on the Benchmarks and reasonable expectation. <2> (strategic-planning tool)SWOT Analysis () Strengths : Peopletechnologymanagementcorporate policiesbrand and high reputation (wide client group)bonus systemsupplier Weaknesses : ( turnover of people) Opportunities : Expansion Increasing demand Threats: Potential Competitors high technology requirement(high-tech staffs)potential threats for the weak internal control <3> ( Business strategy to create a competitive advantage)Cost leadership (Cost control ABC to better...
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- Spring '11