The Effect of Compensation Management in Improving Employees’ Performance in an Organization

Abstract of The Effect of Compensation Management in Improving Employees’ Performance in an Organization

This project work attempts to evaluate the management accounting techniques used by the manufacturing company (A case study of Cadbury Nigeria, PLC) on decision making process. Lists of traditional and modern management accounting techniques were identified and the extent of their use was evaluated. Some of the techniques evaluated are; make or buy decision, opportunity cost, relevant cost, incremental cost, just-in-time, inventory management, budgeting, standard costing (variance analysis) cost-volume-profit analysis; activity based costing and linear programming.

Chapter One of The Effect of Compensation Management in Improving Employees’ Performance in an Organization

INTRODUCTION

BACKGROUND OF THE STUDY

Management accounting techniques have in no small measure assisted different organizations especially manufacturing companies, in their decision making processes. It is a known fact that techniques change over the time largely because business themselves and the societies that they operate change as well. What was considered as a good management technique year ago may be considered ineffective in making decision in the future.

Also, changing external business environment has resulted in further developments in the tools and techniques used for management accounting. Traditional management accounting techniques had certain limitations associated with them, for instance, absorption costing methods have been found to be inappropriate in the modern environment. Similarly, standard costing suitability with respect to its general philosophy and detailed operations has come under severe criticism. It is believed that, traditional management accounting performance measures can produce the wrong type of response. However, the current techniques used by the management in making their decisions such as; make or buy, cost-volume-profit analysis, just-in-time, inventory management,budgeting,variance analysis, activity based costing, linear programming, relevant cost, incremental cost and opportunity cost are the techniques to be discussed in this write-up.

Decision making may be simply defined as choosing a course of action from among many alternatives. If there are no alternatives, then no decision is required. A basis assumption is that the best decision is the one that involves the most revenue or the list amount of cost. The task of management with the help of management accountant is to find the best alternative. From the descriptive model of the basic features and assumptions of the management accounting perspective of business, it is easy to recognize that decision making is the focal point of management accounting. The concept of decision making is a complex subject with a vast amount of management literature behind it. In management accounting, it is useful to classify decisions as:

· Strategic and tactical

· Short-run and long-run

In any organization, whether a decision is good or acceptable depends on the goals and objectives of management. Consequently, a prerequisite to decision making is that management have set the organization’s goals and objectives. For instance, management must decide strategic objectives such as the company’s product line,pricing strategy, quality of product, willingness to assume risk, and profit objective. All these can be efficiently achieved when appropriate technique(s) is applied.

STATEMENT OF THE PROBLEM

It is more or less easy to notice the usefulness of management accounting techniques in decision making process. Therefore, there arise questions as;

§ Does the management accounting techniques really useful on organization’s profit maximization decision making process?

§ What led to the dependence of the company on the use of techniques considered to be modern?

§ Does application of management accounting techniques in organization decision making improve their performance?

§ Indeed, all the above points would take me into a comprehensive research on the effectiveness of management accounting techniques on decision making process in manufacturing industry (CADBURY NIGERIA PLC).

OBJECTIVES OF THE STUDY

The main aim of this study is an attempt to:

· Evaluate the effectiveness of management accounting techniques on organization decision making process.

· Determine how useful the management accounting techniques are to the manufacturing company when making decision.

· Demonstrate by using some variables in calculating how each of these techniques will influence organization decision making process if practically implemented.

· Examine the benefits of using management accounting techniques in organization indecision making.

RESEARCH QUESTIONS

Research questions are those interrogative statements that arise often from the course of study or alternatively they can be defined as research objectives stated in interrogative form. Research questions are meant to generate possible answers to different aspects of the research problem and they should be clearly stated such that they act as guides in identification, collection and analysis of relevant data. In order to achieve the purpose of this research study, the study will

attempt to provide answers to the following research questions in order to arrive at a logical conclusion

i. Does using management accounting techniques in making decision have tremendously enhance rapid growth for the company?

ii. Is there any significant relationship between the management accounting technique used on organization decision making process and the effective result of the decision made?

iii. What are the yardsticks or parameters to measure the effectiveness of management accounting techniques used in the organization?

iv. Are there significant challenges attached to the use accounting technique in making their decision?