1 ACC8000 Research in Accounting Practice Assignment 3, Semester 1, 2018: Due 11 June 2018 ______________________________________________________________ Weight: 50%, Expected words (excluding...

RESEARCH IN ACCOUNTING PRACTICES
RESEARCH IN ACCOUNTING PRACTICES    
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The case involves Terrific Telephone Company which provides mobile telephone services. The motive is to form a compensation package so that the package supports the motivation of executives (called goal congruency) since the company wants to maximize shareholders return. At present fixed salary is given to all the employees.
The following answers are given in accordance with the given scenario:
Question 1:
(a)     Alfie Kohn, in his article has stated that incentives just change what we do for the time being but does not change the attitude of the persons and their behavior as well as does not create any enduring commitment to any value or action. There are several other factors which motivate the employees rather than only salary and incentives, those are listed below:
· Positive Working Ambiance – Employees spend most of their time at office, so a good working environment will make them work comfortably. Interactions among employees and leader will lighten the ambiance.
· Supportive Leader – Leaders must make their subordinates feel that they are skilled and can produce good work. They should be like role models to their subordinates.
· Job Satisfaction – Employees must be satisfied with their job to increase their productivity. Company should make an effort to eliminate any dissatisfaction present.
· Individual Applaud – Every employee should be applauded for the individual tasks done by them, this will increase their productivity.
· Teamwork – In the decision making process if the individual opinions are valued, employees will feel important, eventually increasing their productivity.
(b)     Jacques Igalens and Patrice Roussel, in their article have affirmed, there is a relationship between different components of compensation, job satisfaction and work motivation. A few components of compensation package are listed below:
· Commission – Employees will be given commission for each of the new customer they bring for the company, thus motivating them to develop the business.
· Overtime Pay – Employees will be paid an incentive for the work they do beyond normal office time, it will increase their zeal to work overtime and increase their productivity.
· Bonus – Bonus will be given to the employees at the end of the year based on their performance, which will work as an incentive by motivating them to increase their productivity at the work.
· Travel Allowance – If any employee is required to travel for the office work, travel allowance will be provided for the expenses incurred.
· Retirement Benefits – Employees will be paid a fixed sum of money every month after their retirement, it will motivate them to be loyal to the company and working with it rather than going for other companies.
· Health Insurance – All the employees will be provided health insurance that is their hospital bill charges, medical expenses will be covered. This will make them think, company cares for them, motivating them.
· Stock Option – Employees will be provided stock options, that is company shares will be offered to them at a very nominal price, making them feel like a part of the company.
· House Allowance – House rents will be paid on behalf of the employees. House accommodation will also be provided for the employees based on their performance.
c.     Steven Slutsky and Scott Olsen, in their article has stated that compensation packages motivate employees but company should always look out if employees are putting business in the risk for their personal gain. But keeping this aside the employees must be encouraged to take risks by using the compensation packages. An employee will be required to take more risks to perform better and to produce more works, he will have to work overtime for the overtime incentive, have to perform better than the other for the year-end bonus, since travel expenses will be provided so employees will take more risk to explore more place to expand the business. The employees will take more risks to reach to new people to gain customers for the commission. The employee will also take the risk of staying in this company at bad times and will not go to other companies for the retirement benefits.
(d)    Bridget Miller, in his article has discussed the following three factors that may limit the effectiveness of performance based compensation packages in motivating the employees to work productively are:-
i. Enough fixed salary – If the fixed salary is enough for the employee he will not get motivated by the compensation packages and will not look out to increase the productivity of his work, so he will not be ready to work overtime, will not be interested to travel and even will not be interested to get new customers for the company. The employee is just happy with his current situation and find out no motivation to work harder or try to increase the productivity.
ii. Missing out of goals – If the employee misses any goal to achieve a compensation, he gets disheartened and lose his further interest to work for further incentives and loses his motivation as well as productivity. Like if an employee fails to achieve any new customer for a week he will get disheartened and will stop trying or if he fails to perform well one year and gets low bonus he will stop trying next year to perform well getting disheartened. This is a psychological state.
iii. Bad leader and negative work ambiance – If the work ambiance is uncomfortable or the leader does not have good relation with other employees, even a good compensation package will not be able to boost the motivation of employees. If an employee is always made to feel that he is unskilled and can not produce any good work, he will start to believe so and will not work for the incentives. A good leader and positive working ambiance is required for the compensation package to work.
(e)    As per Clifford W. Smith, Junior, a planned executive compensation package decreases the tax liability of the company as well as it influences the managers to...