UNIVERSITY OF LAY ADVENTISTS OF KIGALI

UNILAK

FACULTY OF ECONOMIC SCIENCES AND MANAGEMENT

DEPARTMENT OF ACCOUNTING

COURSE: MANAGEMENT CONTROL SYSTEM

ASSIGNEMENT

SUBMITTED BY:

Group: 11

1. 08236/2013
2. 08859/2014
3. 08927/2014
4. 09067/2014
5. 09248/2014
6. 09478/2014
7. 09539/2014

A ) OBJECTIVES OF REWARDING OF THE PERFOMANCE OF MANAGERS

Drive Workforce desired behaviors

Reinforce Overall Business Strategy & ensure Organizational Success

Meet Legal Standards (compliant with laws and regulations)

Be cost-effective and affordable

Increase the employees commitment to an organization, including productivity, work quality,

competitiveness and facilitate employee engagement and involvement

Maintain remuneration and benefits that are competitive in the industry

Provide tax-effective purchase of insurance and benefits

Create a process based on what the organization values and wants to achieve

Reward people for the value they create

 Align reward practices with both organizational goals and employee values

Reward the right things to communicate expected behaviors and outcomes

Attract, motivate and retain the skilled and competent people

Support the development of a performance culture

Develop a positive employment relationship

B) Advantages of managerial rewards

The elements of reward management within a business organization are all the things that they
use to attract potential employees into their business which includes salary, bonuses, incentive
pay, benefits and employee growth opportunities such as professional development and training
opportunities. Having a reward management system in place provides the business with many
advantages, especially in small to medium size organizations where the managers must have a
good relationship with the employees. Reward programmers have proved to be very successful in
motivating employees and in turn increase the performance of the organization as a whole.

Below are some of the reasons why a reward system is important:

Mutually beneficial- A reward system is beneficial not only to the employee but also to the
organization. The employee will feel more motivated to work harder.by having a reward system
in place the employee will feel more committed to their work and their productivity will
increase. An increase in productivity will then benefit the organization. Therefore a reward
system is mutually beneficial to the employee and the organization.

Motivation-A reward system will motivate employees by reaching targets and organizational
goals in exchange for rewards. A reward system is great at motivating employees but they will
also be motivated to prove themselves to the organization.

Absenteeism-A reward system will reduce absenteeism in the organization. Employees like being
rewarded for a job well done and if there is a reward system in place, employees will be less
likely to be ringing in sick and not showing up for work. Also by having a reward system in
place the employees will be clearer about the targets and goals of the organization as they will be
rewarded when reach certain targets. So by having a reward system as an incentive they will be
less likely to be absent from work.

Loyalty-A reward system will increase the employee's loyalty to the organization. By a reward
system being in place the employee feels valued by the organization and knows that their opinion
matters. If an employee is happy with the reward system, they are more likely to appreciate work
place and remain loyal to the organization

a reward system in the organization.

Teamwork- The reward system will increase the Morale-Having a reward system in place
providing employees with incentives and recognition will boost their morale. By encouraging
employees to meet goals and targets it gives them clear focus and purpose which will their
morale. By the employees morale being boosted this will increase the morale of the entire
organization. This is all down to teamwork spirit in the organization. The reward system will
promote teamwork to the employees. The employees will work together as part of a team to
achieve their targets in return for rewards. Teamwork within the organization will help increase
efficiency and create a happier workplace. This is another reason why reward systems are
important in business organizations.

c) Types of managerial rewards

1. Intrinsic versus extrinsic rewards: The satisfactions one gets from the job itself are its
intrinsic rewards. These satisfactions are self-initiated rewards, such as having pride
in ones work, having a feeling of accomplishment, or being part of a team. The
techniques of flex time, job enrichment, shorter work weeks, and job rotation, can
offer intrinsic rewards by providing interesting and challenging jobs and allowing the
employee greater freedom.

On the other hand extrinsic rewards include money, promotions, and fringe benefits. Their
common thread is that extrinsic rewards are external to the job and come from an outside source,
mainly, management.
Thus, if an employee experiences feelings of achievement or personal growth from a job, we
would label such rewards as intrinsic. If the employee receives a salary increase or a write up in
the company magazine, we would label those rewards as extrinsic.

While we have stressed the role of extrinsic rewards in motivation, we should point out that
intrinsic and extrinsic rewards may be closely linked.

2. Financial versus Non-financial rewards: Rewards may or may not enhance the employees
financial wellbeing. If they do they can do this directly through wages, bonuses, profit sharing,
and the like, or indirectly through supportive benefits such as pension plans, paid vacations, paid
sick leaves and purchase discounts.

Non-financial rewards are potentially at the disposal of the organization. They do not increase
the employees financial position, instead of making the employees life better off the job, non-
financial rewards emphasize making life on the job more attractive.

The old saying one mans food is another mans poison applies to the entire subject of rewards,
but specifically to the area of non-financial rewards. What one employee views as something
Ive always wanted, another finds superfluous. Therefore care must be taken in providing the
right non-financial reward for each person, yet where selection has been done assiduously, the
benefits to the organization should be impressive.

Some workers are very status conscious. An attractive office, a carpeted floor, a large executive
desk, or a private bathroom may be just the office furnishing that stimulates an employee
towered top impressive job title, their own business cards, their own secretary, or a well located
parking space with their name clearly painted underneath the Reserved sign.

3. Performance based versus membership based rewards: The rewards that the organization
allocates can be said to be based on either performance criteria or membership criteria. While the
managers in most organizations will vigorously argue that their reward system pays off for
performance, you should recognize that this is almost invariably not the case. Few organizations
actually rewards employees based on performance. However, without question, the dominant
basis for reward allocations in organization is membership.
Performance based rewards are exemplified by the use of commission, piecework pay plans,
incentive systems, group bonuses, or other forms of merit pay plans. On the other hand,
membership based rewards include cost of living increases, profit sharing, benefits, and salary
increases attributable to labor market conditions, seniority or time in rank, credentials (such as a
college degree or a graduate diploma), or future potential (the recent M.B.A. from a prestigious
university). The demarcation between the two is not always obvious. For instance company paid
membership in a country club or use of company owned automobiles by executives may be
given for membership or performance. If they are available to say all middle and upper level
executives, then they are membership base. However, if they are made available selectively to
certain managers based on their performance rather than their entitlement, which of course
implies they can also be taken away, we should treat them as performance based rewards for
those who might deem them attractive.

D) discuss objectives and advantages of balanced score card

Comprehensive

The balanced scorecard allows a comprehensive view of all functions that affect business
performance, not just financial results. Balanced scorecards include key performance indicators
in each of the employee, internal processes, customer, and financial categories. These KPI are
specific to your business and chosen to support your corporate strategy. For example, if a
company believes financial success depends on having well-trained employees, efficient
production processes and satisfied customers, then performance in each area would be reported
in the scorecard. Once the KPI have been identified, they must be measured. Financial
performance is measured by metrics such as profit margin, but nonfinancial areas need
nonfinancial measures. Employee skill can be measured by the amount of training completed,
production efficiency by the amount of materials or time required per item, and customer
satisfaction by number of complaints. Company performance in all categories can then be easily
presented in a balanced scorecard and compared with the desired targets. Comparable

By using the same key performance indicators and metrics consistently, improvement can be
tracked over time. In fact, balanced scorecards are often used in companies with continuous
improvement programs. Comparison can be made to company targets and industry
benchmarks.CommunicationA balanced scorecard is not just a measurement tool; it is a
communication tool. Its simple, concise format conveys all the essential information about your
company's strategy and performance one page. Therefore, it can be used to educate your
employees on company strategy and demonstrate how their work affects overall performance. It
can also be used to shoe performance and continuous improvement to outside stakeholders such
as investors, lenders and the community. Sustainability

The Dow Jones Sustainability Indexes defines corporate sustainability as "a business approach
that creates long-term shareholder value by embracing opportunities and managing risks deriving
from economic, environmental and social developments." The balanced scorecard method can be
adapted to this model to include environmental, social and economic factors. For example,
environmental performance can be measured and tracked in terms of carbon footprint or
compliance to environmental law. Social performance can include support of community groups
and charitable organizations. Companies can measure and communicate their sustainability
strategies to internal and external stakeholders using the balanced scorecard.

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E) Discuss Characteristics of Balanced Scorecard:

Performance measures used in the balanced scorecard approach tend to fall into four groups:
financial, customer, internal business process and learning and growth.

Financial

"Has our financial performance improved?" What are our financial goals? Vision
and

Strategy

Customer

"Do customers recognize that we are delivering more value?" What customers do
we want to serves?


Internal Business Processes

"Have we improved key business processes so that we can deliver

more value to customers? What internal business processes are critical to providing
value to customers?

Learning and Growth

"Are we maintaining our ability to change and improve?"

F) Discuss the perspectives of balance of scorecard

Balanced Scorecard: The Four Perspective

The basic principles of Kaplan and Norton's original Balanced Scorecard model have proved
hugely influential on subsequent thinking about the subject. While individual organizations tailor
the quadrant of perspectives to suit their own circumstances, the general spread of viewpoints
has changed little - and is worth examining.

1.The financial perspective

Focuses on financial performance of an organization. It normally covers the revenue and profit
targets of commercial companies as well as the budget and cost-saving targets of not-for-profit
organizations. The financial health of an organization is a critical perspective for managers to
track. It is important to note that financial performance is usually the result of good performance
in the other three scorecard perspectives.

2.The customer perspective

Focuses on performance targets as they relate to customers and the market. It usually covers
customer growth and service targets as well as market share and branding objectives. Typical
measures and KPIs in this perspective include customer satisfaction, service levels, net promoter
scores, market share and brand awareness.

3.The internal process perspective

Focuses on internal operational goals and covers objectives as they relate to the key processes
necessary to deliver the customer objectives. Here, companies outline the internal business
processes goals and the things the organization has to do really well internally in order to push
performance. Typical example measures and KPIs include process improvements, quality
optimization and capacity utilization.

4.The learning and growth perspective

Focuses on the intangible drivers of future and is often broken down into the following
components:

Human Capital (skills, talent, and knowledge)

Information Capital (databases, information systems, networks, and technology infrastructure)

Organization Capital (culture, leadership, employee alignment, teamwork and knowledge

management).

Typical example measures and KPIs include staff engagement, skills assessment, performance
management scores and corporate culture audits.