978-0137024971 Chapter 9 Part 2

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9-51 Some management thinkers believe that the best type of organizational culture

other incentives is highly motivating because people will exert extra effort if

empirical evidence is mixed regarding this claim.

9-52 The key difference is that gaming does not involve any falsification of data or

indicator.

9-53 Budget slack can be created by budgeting excess resources that are not really

gaming activity designed to facilitate achieving high performance evaluations.

9-54 Workers may believe gaming behavior is an appropriate response (to survive in

an organization) if the organization has set up a performance measure that is

include lowering the quality of output to meet the standard, cutting deals with

high producing coworkers to supply them with output, etc. In this situation,

Managers may believe it is appropriate (necessary) to game the budgeting

budget.

9-55 The employee who participates in decision making will generally be more

committed to the decisions made (such as attaining the participatively set

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greatly benefit management. For example, workers still perform the major

9-56 Participation in the budgeting process involves a subordinate setting the budget

joint decision–making occurs. Once the superior has the subordinate’s input,

the superior makes the final budget decision.

9-57 From the employee’s (subordinate’s) perspective, the benefits from building in

slack are twofold. First, the employee may be able to obtain excess resources to

reduce job stress for the employee. However, if incentives are graduated in

such a way that achieving higher and higher goals provides the employee with

lose income by selecting lower goals.

From senior management’s point of view, employees who build in slack are

as they can. In some cases, senior management may believe that employees

build in slack to relieve job pressure. If burnout of employees has been

from quitting.

9-58 Budgeting games occur when managers or other employees attempt to

manipulate information and targets to achieve their specific goals, such as

and beyond what they need to accomplish their budget objectives. This results

in a misallocation of resources for the organization as a whole. Employees may

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attempting to lower management’s expectations of their performance. If

employees succeed in this type of negotiation, they will find it easy to meet or

9-59 This question distinguishes between people who are driven exclusively by

extrinsic rewards, most often monetary, and people who receive satisfaction by

why some people value them.

Extrinsic rewards are rewards provided to the individual by someone else.

reward is a benefit that a person experiences, without the intervention of

anyone else, as a result of doing a job. It reflects satisfaction from doing a job

learn or grow.

9-60 The choice of the mix of performance measures and the decision about whether

those measures are input-based, output-based, or a combination of measures

make up one of the most difficult tasks in the design of performance

measurement and compensation systems. In general, the greatest alignment

outcomes and outputs may reflect circumstances and conditions that are beyond

the employee’s control, and when they do, the weaker link between

Under circumstances where outcome measurement is problematic,

organizations often choose to monitor and reward inputs (such as employee

learning, demonstrated skill, and time worked). Knowledge-based pay

Atkinson, Solutions Manual t/a Management Accounting, 6E

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completed, and the new skills mastered, the employees are moved to a higher

wage level. Governments often use knowledge-based pay to motivate public

9-61 This is a deep issue that has been the subject of many articles. The purpose of

the question is to identify the issues rather than to reach any definitive

Business Week and Fortune magazines, among others, have published many

articles that compare the compensation of executives with the compensation of

other executives. These articles define various measures of success, such as

growth in the value of the firm’s share price, and look at the correlation

performance relative to other organizations.

However, the issues in compensation are deeper and require a consideration of

the purpose, effect, and scope of motivation. Do these people really need to be

paid the amounts that they command to do the work that they do? A

Approaches might be to compare the compensation of the president with the

salary of a managing partner in a comparably sized public accounting or

consulting firm, or to the salary of a senior partner in a law firm.

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9-62 Incentive compensation plans are suitable when employees have the skill and

provide a reinforcement effect. Cash bonuses are best tied to measures of

or groups.

9-63 Incentive compensation plans are suitable when employees have the skill and

performance.

9-64 Incentive compensation plans are suitable when employees have the skill and

improve performance relative to that standard.

9-65 Incentive compensation plans are suitable when employees have the skill and

decisions.

9-66 The car design group is deliberately created to design a car. There is no place

for individual stars in this group—the key is to develop a successful product.

the more that individual talent can affect the outcome of the group, the greater

the potential for individual, rather than group, rewards.

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PROBLEMS

9-67 This question is designed to get students to reflect on the idea that a MACS

reports the results of human action and decision making, and therefore

A brief discussion of the scientific management school of motivation and the

human relations movement is important to set the stage for the human

human motivation and behavior, then the system will be designed

inappropriately in today’s environment. In addition, the major role of control

and consequences of MACS.

9-68 The 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

incentive system to reward performance.

(1) The MACS design should incorporate the principles of an organization’s

code of ethical conduct to guide and influence behavior and decision

making as people face ethical dilemmas on the job. Often managers are

(2) The ways in which organizations and individuals measure performance

sends signals to all employees and stakeholders about what the

organization considers its priorities. If organizations choose performance

measures without careful consideration, then behavior incongruent with

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Balanced Scorecard is a systematic approach to performance

measurement that translates an organization’s strategy into clear

objectives, measures, and targets.

satisfaction, as well as commitment to the decision. In many instances,

these heightened feelings translate into increased productivity as

employees begin to feel that they have some ownership and control over

what they do at work. Second, the organization is able to gather

The second critical element of empowering employees is ensuring that

they understand the information they use and on which they are

(4) MACS design involves choosing the most appropriate reward systems to

motivate desired behavior. Although intrinsic rewards are sufficient to

9-69 Reasons individuals may feel justified in cheating at golf include the

following:

 It’s only a game.

 My competitors are doing it.

Atkinson, Solutions Manual t/a Management Accounting, 6E

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reveals attitudes about bending the rules in other arenas. He further

expressed concern that cheating at “small” things could lead to cheating

9-70 This question is based on a situation described in an article by Andrew W.

Singer, “Can a Company Be Too Ethical?” Across the Board (April 1993), 17–

informed its competitor and the U.S. Government about the packet, and let its

original bid stand. The competitor won the contract. The CEO believed he

run prospects.

9-71 This type of situation is probably not uncommon. You can confront her again

sake and the good of the organization, you will have to tell your boss. Chances

are she will rectify the report.

9-72 This is a thornier situation than that portrayed in some of the earlier questions.

In this situation there is a threat that you, the employee, will lose your job if

The controller may be able to talk to the executive in an indirect manner and

have him back off. In this case the executive may disavow any knowledge of the

management is alerted to the problem they may be able to monitor the executive

and begin a file of his activities.

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9-73 (a) Preventive control: Preventive control is usually used in situations

where there is the possibility for the employee’s actions to deliberately or

accidentally cause damage, risk, or loss either to the employee or to the

organization. In preventive control, discretion in performing a task may

employee behavior.

(b) Monitoring: Monitoring involves inspecting the work or observing the

behavior of employees while they are performing a task. Monitoring is

most useful in settings similar to those indicating preventive control.

understanding of the differences between preventive control and

monitoring.

(c) Results control: Results control is most useful in situations where

not directly monitor or control the tasks to be performed, often because it

is difficult to measure the components of what the employee delivers to

the job. The disadvantage of results control is that results can be affected

by circumstances beyond the employee’s control. Therefore, results

directly assessed.

9-74 The discussion should focus on examples showing that most employees in

complex work environments perform a variety of tasks. Clearly, not all

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that more qualitative measures such as quality and customer satisfaction are

important, it becomes evident that a mix of measures is appropriate.

jobs:

 a used car salesperson

 a nurse in a hospital

 an auto mechanic

 a fund raiser

 an insurance underwriter

timeliness are also measurable.

9-75 The competitive characteristics are low price, conformance to specifications,

short cycle times, high quality, good service and on-time delivery. These

station), number of production system failures, conformance to schedule, cost

per unit, customer satisfaction scores, number of customer complaints and

material yield.

9-76 Both participation in decision making and education to understand information

the quality of the information contained in it, and whether employees find it