financial reporting
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This presentation discusses strategic management accounting and behavioral aspects of performance management. It outlines potential benefits of reward schemes, noting they can encourage employees to achieve goals and shape behaviors in ways consistent with organizational objectives. However, it also lists specific behavioral problems that can occur, such as tunnel vision, sub-optimization, myopia, and gaming of performance measures. The presentation concludes by opening the floor to any questions.
financial reporting
- 4. CHAPTER:16 BEHAVIORAL ASPECTS OF PERFORMANCE MANAGEMENT
- 5. POTENTIAL BENEFITS OF REWARD SCHEMES Management encourage employees to achieve goals by having rewards linked to their success of failure in achieving desired levels of performance.
- 6. Rewards and incentive shape the behavior of employees –a well – designed scheme will be consistent with the organizational objectives. A reward scheme provide an incentive to achieve good performance. Key incentive can be emphasized in the reward scheme it is way of communication the goals of the company to the employee.
- 7. An effective scheme will create an in which all employees are focused on continuous improvement. Schemes that share ownership can encourage behavior that in the longer term increases the market value of the business.
- 8. SPECIFIC BEHAVIORAL PROBLEMS In one of his articles for student accountant, the previous examiner highlighted the following specific problems that can occur with performance measurement schemes: Tunnel vision: under focus on performance measurers to the detriment of other areas. Sub- optimization: under focus on some objectives resulting in other objectives not being achieved.
- 9. Myopia: Focusing on the short term resulting in the ignoring of the long-term. Measure fixation: Behavior and activities in order to achieve specific performance measures, that may not be effective. Misrepresentation: Using creative reporting to suggest that performance measures have been achieved.
- 10. Gaming: Deliberate distortion of the measure in order to achieve some strategic advantage. Ossification: The unwillingness to change performance measure scheme once it has been at set up.
- 12. Thank you