Fab1

ACCA F1 ACCOUNTANT IN BUSSINESS
Chapter 1The nature and structure of organizations

Organisations:
An organisation can be defined as: "A social arrangement which pursues collective goals, which controls its own performance, and which is a boundary separating it from its environment " This is, perhaps, a deceptive ! si"p e definition# $robab ! the "ost i"portant %ord is &socia # Organisations consist of peop e and %e are a socia ani"a s# 'e have to get on %ith o(r co eag(es) idea ! %e %o( d i*e o(r boss, or at east respect o(r boss# 'e have to get on %ith c(sto"ers) %e have o(r o%n a"bitions) %e have o(r o%n "otivations# Ear ! "anage"ent theor! tended to neg ect the socia side of organisations and "anage"ent and had a rather co d, "i itaristic approach# +odern theories have changed this considerab !# Another i"portant aspect of the definition is that of &co ective goa s# There has to be an ass("ption that peop e %ithin an organisation are ( ti"ate ! ai"ing at the sa"e end res( ts, if the! are not, then chaos is i*e ! to r( e# One of the f(nctions of "anage"ent is to arrange the b(siness and the peop e in it so that ever!one is p( ing in the sa"e direction, and the co ective goa s are ( ti"ate ! estab ished#
!ystem
The definition of an organisation inc (ded the ter"s &bo(ndar!& and &environ"ent&# These ter"s co"e fro" s!ste"s theor!# The environ"ent is %hat the organisation sits or ives in# For e,a"p e a b(siness ives in its nationa or co(ntr! environ"ent and perhaps in the internationa environ"ent# The bo(ndar! separates the environ"ent fro" the organisationa s!ste"# Inp(t nor"a ! goes into the organisation and o(tp(t co"es o(t of the organisation) so"e sort of processing ta*es p ace %ithin the organisation# A organisations or s!ste"s can be divided into s(bs!ste"s# For e,a"p e, an organisation %i have a sa e and "ar*eting depart"ent, an acco(nting depart"ent, a "an(fact(ring depart"ent and so on# S(bs!ste"s can then be f(rther sp it do%n into even s"a er s(bs!ste"s# For e,a"p e, the acco(nting depart"ent %i consist of the receivab es edger, the pa!ab es edger, the cash boo*, the no"ina edger and so on#
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So"e s!ste"s are *no%n as &c osed s!ste"s&: the! ta*e no inp(t fro" the environ"ent and give no o(tp(t to it# These are ver! theoretica and have no ong ife# It %i be diffic( t to see organisation contin(ing to co"pete s(ccessf( ! if it paid no heed to techno ogica advances, or %hat its riva s %ere doing, or %hat its c(sto"ers %anted# Open organisations on the other hand do receive inp(t fro" the environ"ent and prod(ce o(tp(t %hich is sent to the environ"ent# These are the on ! ones of an! practica i"portance#
Types of organization
/o( need to be a%are of the characteristics of severa t!pes of organisation# Co""ercia organisations are profit3see*ing# The! can be so e traders, partnerships, i"ited iabi it! partnerships and i"ited co"panies# The "ain advantage of i"ited iabi it! partnerships and i"ited co"panies is that if the organisation hits hard ti"es and has to go to i4(idation, the o%ners of the organisation are protected# Creditors and ban*s can p(rs(e on ! the assets %hich are in the co"pan!# So e traders and partners, on the other hand, have (n i"ited iabi it! for a the b(siness&s debts# The second t!pe of organisation is a not3for3profit organisation# An e,a"p e of a not3 for3profit organisation co( d be a charit!, s(ch as a charitab e hospita # Instead of prod(cing a profit and oss acco(nt, the! tend to prod(ce inco"e and e,pendit(re acco(nts# U ti"ate ! their inco"e has to e,ceed their e,pendit(re or the! %i r(n o(t of "one!# $(b ic sector organisations are o%ned b! the state either at a nationa eve or at a oca eve # E,a"p es co( d be the defence depart"ent, "an! hea th services and ed(cationa s!ste"s# In so"e econo"ies other ind(stries or b(sinesses are a so o%ned b! the state# For e,a"p e, "an! nationa air ines are state3o%ned# Non3govern"enta organisations tend to be not3for3profit organisations b(t %ith an internationa brief# +an! United Nations organisations %i fa into this categor!# Co3operatives are o%ned b! the peop e %ho %or* in the organisation# So"e far"ers, for e,a"p e, set (p co3operatives to "ar*et their prod(cts "ore effective ! than the! co( d on their o%n# Us(a ! the! see* so"e sort of profit, b(t the o%nership is shared %ide ! a"ongst the peop e %ho are %or*ing in the organisation#
Organisation str(ct(res Organisation str(ct(res can be described as: Entreprene(ria , F(nctiona , $age 5
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.ivisiona , or +atri,#
Entreprene(ria str(ct(res are ver! si"p e) basica ! it&s a boss and the %or*ers# The! are s"a , often fa"i !3o%ned, and are not arge eno(gh to be divided into separate depart"ents# Once a b(siness begins gro%ing it %i nor"a ! deve op into a f(nctiona str(ct(re# This "eans that there are separate depart"ents according to f(nction 3 a sa es and "ar*eting depart"ent, an acco(nting depart"ent, a pa!ab es depart"ent, receivab es depart"ent, research and deve op"ent depart"ent and so on# This can be a ver! efficient str(ct(re as e,pertise is concentrated in each depart"ent and there co( d be great econo"ies of sca e# If the b(siness contin(es to gro% it "a! find it %orth%hi e to divisiona ise# This "eans sp itting the co"pan! (p, perhaps on the basis of prod(ct or geograph!# For e,a"p e !o( "ight have a North A"erican division and a E(ropean division# /o( "ight have a division %hich "a*es and se s paint and !o( "ight have a division %hich "a*es and se s phar"ace(tica s# The rationa e for sp itting a co"pan! (p into divisions is to achieve specia isation# If !o( are se ing paint and phar"ace(tica s it is i*e ! that the "an(fact(ring is ver! different, the "ar*ets and co"petition %i be ver! different, as %i the reg( ation of the b(siness# There is probab ! not "(ch point in *eeping it a together as one and the b(siness is better off being divided (p into different divisions %hich can specia ise# +atri, organisation is "ore co"p e,# A good %a! to thin* of a "atri, organisation is to thin* of a pro6ect tea"# A pro6ect tea" for pro6ect A, for e,a"p e, %i have a pro6ect eader or "anager for pro6ect A# The "e"bers of the tea" report to that "anager# B(t the "e"bers of the tea" a so have f(nctiona responsibi ities# For e,a"p e, there %i be a pro6ect acco(ntant and so"eone %ho oo*s after the 4(a it! contro aspects of the pro6ect perhaps so"eone %ho dea s %ith the personne invo ved in the pro6ect# These peop e, as %e as reporting to the pro6ect "anager, a so have to report to their f(nctiona heads# Therefore each person can have t%o bosses# C assica "anage"ent s(ggested that this %as (nfair# B(t in fact depicting the organisation as a "atri, doesn&t ca(se there to be e,tra press(re on the peop e %ho %or* for the pro6ect# It is perhaps si"p ! a "ore honest representation of the press(res that the pro6ect "e"bers are (nder#
Mintzberg's structure
+int7berg divides organisations into five parts#
The strategic ape, is e4(iva ent to top "anage"ent or the Board of .irectors#
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The "idd e ine is the "idd e "anagers, so"eti"es ca ed the sca ar chain# This is the 0ierarch! as it passes do%n thro(gh the organisation#
The operating cores are the peop e near the botto" %ho for the "ost part do the da!3to3da! %or*# S(pport staff %o( d inc (de the acco(nting staff and IT staff# The techno3str(ct(re# This is perhaps the hardest to (nderstand and is the part of the organisation responsib e for devising and enforcing standards and proced(res# It is the techno3str(ct(re that %o( d %rite the 4(a it! contro "an(a , the e"p o!ee handboo*, the hea th and safet! "an(a , the finance "an(a # The si7e and i"portance of the five parts of the organisation change as %e change the organisation# In an entreprene(ria organisation there %i be a strategic ape, and the operating core# /o( "a! re"e"ber that entreprene(ria organisation %as a basica ! a boss and the %or*ers %ith itt e "idd e ine and the organisation %as so s"a that there %as not s(pport staff and no need for techno3str(ct(re# One of the "ost interesting adaptations of the basic str(ct(re is %hat +int7berg ca ed professiona organi7ation# 0e %as thin*ing of so"ething i*e a arge fir" of acco(ntants and a%!ers# In these organisations, the "idd e ine is "(ch shorter, representing that there is rea ! 4(ite a c ose re ationship bet%een the partners at the top of the organisation and the peop e doing the a(dit or ega %or* at the botto"# These peop e need to co""(nicate and cooperate ver! c ose !# There are of co(rse "idd e "anagers b(t the "idd e ine is re ative ! short# S(pport staff is sti 4(ite arge# B(t %hat is s(rprising is that the techno3 str(ct(re is ver! s"a # This is perhaps s(rprising beca(se a(ditors and a%!ers have arge fi es of standardised proced(res, for e,a"p e, a(dit progra"s to fi in, and !o( "ight thin* that a(dits and ega %or* %ere high ! reg( ated and standardised# B(t if !o( thin* abo(t it, ever! c ient an a(ditor goes to, or ever! c ient co"ing to see a a%!er, %i have s ight ! different prob e"s# 'e are not in the "ass prod(ction "an(fact(ring ind(str! an!"ore# 'e are dea ing %ith tai oring so (tions to c ients# So the techno3str(ct(re, s(ch as it is, represented b! standard for"s is so"e%hat s(perficia # Each c ient and each service has to individ(a ! devised and de ivered, so the po%er of the techno3str(ct(re is re ative ! a #
Levels
Organisations are often regarded as having three eve s# The top eve is the strategic eve # This is basica ! the ver! top "anagers and the board of directors# The! sho( d be oo*ing after the strateg! of the $-E$A-E. B/ 'A0A1 A20TE- 20AN $age 9

organisation, and %henever !o( hear the %ord :strateg!,: !o( sho( d be thin*ing of so"ething i*e a five3!ear p an for the %ho e organisation# 'hat %i the organisation be doing in five !ears; In %hat co(ntries %i it be operating; 'i it sti be "an(fact(ring or %i it have s%itched to predo"inant ! service provision; -ight at the botto" of the organisation is the operationa eve # This is the eve %here the da!3to3da! activities are carried o(t# The ti"e hori7ons are ver! short, often things are dea t %ith in a da!, and p anning is often not "(ch onger than a %ee* or t%o# These peop e are predo"inant ! dea ing %ith or recording transactions %hich are either happening or have a read! occ(rred: processing invoices, sending o(t orders, dea ing %ith c(sto"er 4(eries, these are a at the operationa eve # In bet%een there is the tactica eve , thin* of the tactica eve as being the eve of a "anager of a depart"ent# T!pica ! this person %i have a ti"e hori7on of abo(t a !ear beca(se this person %i often be concerned %ith "eeting the !ear&s b(dget# Of co(rse the! have to dea fro" ti"e3to3ti"e %ith da!3to3da! activities, b(t their partic( ar priorit! %i be to "a*e s(re that the! organi7e their depart"ent to "eet this !ear&s b(dgets and e,pectations#
Tall/narrow, wide/flat
Organisations are often described as being ta 3narro% or %ide3f at# In the ta narro% organisation each "anager or s(pervisor oo*s after re ative ! fe% peop e# In the %ide f at organisation the span of contro is "(ch %ider# In this diagra" %e&ve sho%n a span of contro of seven, "eaning that each s(pervisor or "anager has seven peop e reporting direct ! to hi" or her# /o( %i see in a ta narro% str(ct(re there are "an! a!ers and beca(se each "anager oo*s after on ! a fe% peop e, there can be ver! c ose s(pervision# Indeed it "ight not be s(pervision) it "ight be c oser to re3perfor"ance or interference# The ta narro% str(ct(re is so"eti"es described as ver! b(rea(cratic, ver! for"a , strict 6ob descriptions, great i"portance p aced on e,act ! %hat one&s grade is, and the sort of pa! and benefits and conditions that %o( d go %ith that grade# The %ide f at organisation is "(ch "ore ega itarian) there is "(ch ess distance bet%een top and botto" in the organisation and co""(nication bet%een top and botto" %i be "(ch faster# Beca(se it is "ore ega itarian, there tends to be ess e"phasis on strict 6ob descriptions and a greater e"phasis on ho% can %e get the 6ob done, a greater e"phasis on a being a part of a tea", rather than being a part of a hierarch!# In the 1<<=s there tended to be de iberate "oves fro" ta narro% to %ide f at b! "an! organisations# The! ca ed this &de a!ering& or &f attening& the shape of the organisation# There %ere t%o "otives for doing this# $-E$A-E. B/ 'A0A1 A20TE- 20AN $age >

First of a in the &<=s there began to be ver! great cost press(re fro" Far Eastern "an(fact(rers %here "an(fact(ring %as re ative ! cheap# In response to this, 'estern b(sinesses had to be so"e%hat r(th ess# The! had to as*, :Is an! va (e being added b! these peop e in the "idd e, or are the! 6(st "anagers, "anaging s(pervisors, "anaging assistant s(pervisors;: It %as decided that often these peop e %ere not adding va (e and that the! co( d safe ! be re"oved fro" the organisation# Second ! in the 1<<=s, things began to "ove 4(ic* !# Techno og! changed ver! rapid !) there %ere h(ge changes in %or d "ar*ets, and operations based in China or India or +a a!sia beca"e ver! s*i ed and ver! adept at designing and a(nching ne% co"peting prod(cts# 'estern organisations to change and respond 4(ic* ! and the ta narro% organisation %ere ver! s o% to change# +an! a!ers had to agree to the change, and "an! peop e %ere protecting their o%n partic( ar grade# Therefore to get faster and "ore f e,ib e responses to change, the %ide f at organisation %as often adopted#
Centralization/Decentralization
The shape of the organisation is independent of %here po%er ies %ithin the organisation# /o( co( d have t%o organisations of e,act ! the sa"e shape and str(ct(re, !et in one a partic( ar grade of e"p o!ee co( d be given an e,pendit(re a(thorit! of on ! 1== E(ros b(t in another, the sa"e grade of person co( d be given an e,pendit(re a(thorit! of 1=,=== E(ros# .ecentra isation or centra isation describes ho% far do%n the organisation po%er is passed# ?enera ! it is agreed that so"e decentra isation is good b(t too "(ch decentra isation can be co(nterprod(ctive# Claimed advantages are as follows: If nothing is decentra ised, a decisions have to re"ain at the top of the organisation, %ith the "anaging director or the board of directors for e,a"p e# Those peop e %o( d be over%or*ed, the! %i be "i,ing (p trivia decisions %ith i"portant decisions, and rea ! their s*i s sho( d be reserved for "a*ing i"portant decisions# Second !, if re4(ests have to be passed (p thro(gh an organisation for a decision to be "ade and then the ans%ers are passed do%n) decisions are i*e ! to be "(ch s o%er# So decentra isation adds speed# Third, it "ight be better to decentra ise po%er to areas of e,pertise# For e,a"p e the best person to "a*e a decision abo(t %here to p ace advertising is so"ebod! in the sa es and "ar*eting depart"ent, not the "anaging director %ho "a! have co"e fro" an acco(nting or engineering bac*gro(nd# Si"i ar !, perhaps the best person to dea %ith co"petitive press(res in So(th A"erica is the head of the So(th A"erican organisation, not so"ebod! based in @ondon or $aris# The person in So(th A"erica has oca or geographic e,pertise# $age A
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Fo(rth, "otivation: good e"p o!ees i*e to "a*e decisions and i*e r(nning their o%n depart"ents or divisions# If !o( don&t decentra ise and a o% the" to have po%er, the good peop e %i eave# Fina !, training and assess"ent# If !o( never a o% an! 6(nior peop e to "a*e decisions, ho% %i !o( *no% %ho the good ones are and %ho sho( d be pro"oted in the f(t(re;
The big potentia disadvantage is poor co3ordination, so"eti"es described as d!sf(nctiona decision3"a*ing# That&s %here one division co( d "a*e a decision %hich a tho(gh good for it "a! har" the organisation as a %ho e# It "ight be, for e,a"p e, that a "an(fact(ring division stops "a*ing a co"ponent %hich is vita so"e%here e se in the organisation# $oor co3ordination "eans it&s a "essed (p# Therefore there has to be so"e degree of co3ordination bet%een the vario(s depart"ents and divisions in an organisation, and this "a! re4(ire the head office or the board of directors occasiona ! to interfere %ith the decentra isation and to i"pose decisions#
ecent trends
There have been so"e recent trends in organisationa str(ct(re# .o%nsi7ing has been necessar! to *eep costs do%n# .e a!ering, %e have disc(ssed recent !, "oving to%ards %ider, f atter organisations, both to save costs and to achieve f e,ibi it!# O(tso(rcing "eans getting an o(tside fir" to perfor" so"e of !o(r operations# These operations %i genera ! be !o(r s(pport operations# Therefore, it is re ative ! co""on to o(tso(rce !o(r IT and perhaps !o(r receivab es edger# +ost b(sinesses don&t "a*e "one! fro" the receivab es edger or fro" their IT# These are to the" necessar! evi s# The! "a! "a*e their "one! fro" c ever engineering or thin*ing (p c ever adverts if the! are an advertising agenc!# The tho(ght behind o(tso(rcing is that fir"s sho( d concentrate on %hat the! are good at, their core activities, and tr! to o(tso(rce ever!thing e se, beca(se those f(nctions are iab e to be "anage"ent distractions# +anage"ent sho( d concentrate on %here it adds va (e: %here the organisation can "a*es its "one!#
!ormal and informal organizations

In st(d!ing this paper, !o( %i often co"e across the concepts of for"a and infor"a organisations# The for"a organisation is %hat "anage"ent has de iberate ! designed, it&s %hat "anage"ent *no%s abo(t, and a so it&s often %ritten do%n in so"e "anner# Therefore "anage"ent *no%s abo(t the organisation chart and *no%s %ho is "anager of the depart"ent, %ho is s(pervisor, and %ho %or*s in it# +anage"ent $-E$A-E. B/ 'A0A1 A20TE- 20AN $age B

%i have ca(sed proced(res "an(a s to have been %ritten to set o(t the proper %a!s of doing things# Staff appraisa s, sho%ing %hich staff "a! be better and %hich ones have certain %ea*nesses %i a so be caref( ! recorded# 0o%ever, an enor"o(s a"o(nt of the organisation is infor"a # If "anage"ent is (na%are of the infor"a organisation then the! are iab e not to be ab e to "anage ver! %e # So, for e,a"p e, if !o( have t%o peop e %ho hate each other b(t neverthe ess, according to the organisation chart, are s(pposed to co3operate, then that depart"ent %i not %or* %e # Si"i ar !, despite o%er "anage"ent iss(ing ne%s etters and e3"ai s to a their staff, r("or and gossip gets aro(nd organisations ver! 4(ic* !# It&s often inacc(rate, b(t that doesn&t "ean it&s not going to be be ieved# A gro(p nor" is another i"portant e,a"p e# A gro(p nor" is an arrange"ent peop e co"e to, often s o% !, abo(t ho% the! sho( d behave# For e,a"p e it "ight be the gro(p nor" that nobod! ever %or*s past > o&c oc* on a Frida!# The! have co"e to this arrange"ent so"e%hat infor"a ! b(t an!one ne% 6oining the organisation %i genera ! fa in ine) other%ise the! are frightened the! are not going to fit in# And once certain gro(p nor"s have been adopted b! a n("ber of peop e, it can be ver! diffic( t for "anage"ent to shift those nor"s to so"ething e se as a of those peop e resist together# +(t(a cover3(p# If !o( "a*e a "ista*e, it sho( d be reported to !o(r "anager, b(t !o( have a friend in the other depart"ent and !o( and !o(r friend agree to concea that "ista*e# After a , !o(r friend never *no%s %hen he %i need the favo(r again one da!# +anage"ent no%ada!s is genera ! fa"i iar %ith the e,istence of infor"a organisations, b(t %i find it diffic( t is to (nderstand the nat(re and detai s of the infor"a organisation# 'hat are peop e&s persona a"bitions; 'hat a iances have been "ade; 'hat persona prob e"s or re ationships have been for"ed; 'hat %a!s have peop e decided to act that co( d be %i d ! different fro" %hat&s aid do%n in the proced(res "an(a s;
Chapter 5 Infor"ation and infor"ation techno og!

"nformation
'e no% co"e to oo* at the i"portance of infor"ation techno og! in b(siness# First %e need to decide %hat is "eant b! the ter" :infor"ation#: The "ost nor"a definition is that infor"ation is data %ith "eaning# .ata is the ra% fact and fig(res# B(t genera ! of itse f it isn&t ver! "eaningf( # For e,a"p e, a ist of a o(tstanding invoices in va (e order is not ver! (sef( to a credit contro er# $-E$A-E. B/ 'A0A1 A20TE- 20AN $age C

That data on ! beco"es (sef( , if first of a it is sorted b! c(sto"er, and then perhaps sorted and presented b! the age of the invoice# Then it has beco"e "eaningf( as the (ser can interpret it and do so"ething %ith it# One of the i"portant considerations for an infor"ation processing s!ste" is that it does present the infor"ation in a %a! or in %a!s %hich are (sef( to the vario(s (sers of that infor"ation# #$at are t$e c$aracteristics of good information % and $ere t$e word &'CC( 'T)& can be used* Acc(rate# 0igh 4(a it! infor"ation sho( d be acc(rate) that doesn&t necessari ! "ean acc(rate to the ver! ast cent# It "eans acc(rate eno(gh for the p(rposes for %hich it is going to be (sed# And for e,a"p e the board of directors "a! be perfect ! happ! %ith acco(nts ro(nded to nearest tho(sand or even the nearest "i ion do ars# Co"p ete# The infor"ation sho( d be co"p ete) it sho( d inc (de ever!thing that needs to be inc (ded to "a*e proper decisions# Cost3beneficia # It sho( d be cost beneficia , there is no point in gaining infor"ation at a h(ge cost, if the benefits derived fro" that %hether financia or other%ise are "ini"a # 'e are not in the b(siness of infor"ation for infor"ation&s sa*e# 'e either %ant to "a*e "ore profit or to r(n an organisation "ore efficient !# User3targeted# It sho( d be (ser3targeted# The infor"ation sho( d be presented in a %a! %hich is (sef( to the (ser# For e,a"p e senior "anagers "a! %ant s(""aries) acco(nt staff needs "(ch "ore detai ed infor"ation# -e evant# It sho( d be re evant# /o( sho( dn&t s(pp ! peop e %ith "ore infor"ation than the! need other%ise the! "a! over oo* the i"portant infor"ation# A(thoritative# It sho( d be a(thoritative# The so(rce of the infor"ation sho( d be one %hich can be re ied (pon# Those of !o( %ho have (sed the Internet sho( d be %e a%are of this# /o( p(t a ter" into a search engine, a sorts of "ateria co"es o(t# So"e of it is fro" a(thoritative so(rces, others fro" a"ate(rs, others fro" char atans# Ti"e !# It sho( d be ti"e !# Infor"ation sho( d be s(pp ied 4(ic* ! eno(gh to he p !o( "a*e a better decision# So"e infor"ation has to be provided ver! 4(ic* ! %ithin seconds, or even fractions of a second in so"e ind(stria processes# For other p(rposes !o( "ight easi ! be ab e to %ait for a %ee* or even t%o %ee*s before the infor"ation is re4(ired to enab e !o( to "a*e a decision on ti"e#
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$age <

Eas!3to3(se# Fina ! the infor"ation sho( d be eas! to (se# It sho( d be %e presented, %e doc("ented# Eas! to (se "ight "ean that it&s "ore beneficia to see infor"ation in the for" of graphs than in the for" of tab es#
ole of information tec$nology

Infor"ation techno og! p a!s an enor"o(s ro e in the %a! %e %or* no%# For e,a"p e: Infor"ation and co""(nications# 1(st thin* of the sort of infor"ation and co""(nication that is easi ! obtained over the Internet, %hether b! oo*ing (p infor"ation, or %hether no%ada!s b! "a*ing te ephone ca s over the Internet thro(gh DOI$ Evoice over internet protoco F techno ogies s(ch as S*!pe# E3"ai can a so be inc (ded (nder ne% co""(nication channe s# Office a(to"ation# Consider the enor"o(s abo(r3saving that can be obtained fro" a si"p e spreadsheet, or fro" being ab e to oo* (p a database, or fro" being ab e to enter an order %hich then initiates the dispatch and the invoicing of goods %itho(t f(rther h("an invo ve"ent# 0o"e3%or*ing# ?ood co""(nication "eans that "an! peop e to %or* fro" ho"e, at east so"e da!s of the %ee*, or if not at ho"e, at east fro" ocations a%a! fro" the "ain office# For e,a"p e, sa es personne can co""(nicate %ith the head office at the end of the da! and trans"it ne% orders, "a*e in4(iries, and so on#
Types of system
There are so"e fair ! %e 3defined t!pes of IT s!ste"s and genera ! these describe the historica deve op"ent of IT s!ste"s#
Transaction processing systems

The ear iest t!pe of s!ste" %as *no%n as the transaction processing s!ste"# Essentia ! this %as deve oped in the 1<A=s and it does %hat it sa!s# It processes transactions s(ch as sa es, %ages, sa aries# It %as essentia ! 6(st a(to"ation of %hat had been done b! ar"ies of acco(ntants# There %as nothing ver! c ever abo(t it, b(t it too* a ot of repetitive ca c( ation o(t of organisations, speeded (p processing and probab ! added to acc(rac!# It certain ! saved costs#
Management information systems

Der! soon after transaction processing %as %e estab ished, peop e began to thin* that if, for e,a"p e, %e have the receivab es edger in a co"p(teri7ed s!ste", %e can (se the data %hich is there to create (sef( "anage"ent infor"ation, s(ch as an aged receivab es ana !sis# +anage"ent infor"ation ca"e into its o%n in the 1<B=s# It %as prod(cing infor"ation %hich %as going to be (sef( for "anage"ent for "a*ing decisions# B! and arge, the infor"ation $-E$A-E. B/ 'A0A1 A20TE- 20AN $age 1=

%as for decisions %hich %ere fair ! b ac* and %hite, right or %rong# Either so"eone is above that credit i"it or the! are not, therefore %e either a(thori7e their order or %e ref(se it#
Decision support systems

In the 1<C=s decision s(pport s!ste"s beca"e "ore co""on# Again this does %hat it sa!s# It he ps and s(pports peop e %hen "a*ing decisions) the IT s!ste" doesn&t "a*e decisions# Der! good e,a"p e of the decision s(pport s!ste" is ho% do !o( decide %hat ne,t !ear&s b(dget sho( d be# 0ere there is no right or %rong %a! of deciding %hat ne,t !ear&s sa es sho( d be: it&s a process %hich depends on 6(dg"ent and e,perience# 0o%ever so"ething i*e a spreadsheet %here !o( set (p a b(dget is going to be e,tre"e ! (sef( in he ping !o( to co"e to a conc (sion abo(t %hat ne,t !ear&s b(dget sho( d be# /o( can change the inp(t ass("ptions and ver! 4(ic* ! the res( ts are ca c( ated# The spreadsheet isn&t drafting ne,t !ear&s b(dget b(t is giving !o( great he p in arriving at ne,t !ear&s b(dget# It is s(pporting !o(r decision3"a*ing#
)+ecutive information systems

Fina !, in the 1<<=s %e had e,ec(tive infor"ation s!ste"s# There is perhaps not a h(ge difference bet%een decision s(pport s!ste"s and e,ec(tive infor"ation s!ste"s# B(t the characteristics !o( tend to find in the atter are the fo o%ing: First of a it provides ver! f e,ib e access to infor"ation#
Second !, e,ec(tives often need infor"ation fro" o(tside the organisation# So an e,ec(tive infor"ation s!ste" a "ost certain ! has in*s to e,terna databases or at east to the Internet#
Third, it a o%s e,ec(tives to dri do%n# The e,ec(tive "ight see initia ! tota receivab es b(t if that fig(re is c ic*ed on, then it %i divide into the receivab es fro" each of the "a6or divisions# If one of those is c ic*ed on, it %i then begin to sho% the receivab es fro" each of the "a6or c(sto"ers and so on# /o( are dri ing do%n into s(ccessive eve s of detai and "ore infor"ation as re4(ired# The fina characteristic %hich is often ta *ed abo(t %ith e,ec(tive infor"ation s!ste"s is that the! are high ! graphica # E,ec(tives need to see trends beca(se the! %i often be (sing trends to pro6ect the f(t(re and to decide on ho% the organisation sho( d "ove for%ard# It&s ver! often easier to see a trend s(ch as gro%th or dec ine b! oo*ing at a graph rather than oo*ing at tab es or fig(res#
"nformation tec$nology
IT s!ste"s can a so be categorised b! their hard%are# Standa one s!ste"s are sing e co"p(ters not connected to an! other co"p(ters# $age 11
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@ANs or oca area net%or*s are a n("ber of co"p(ters connected to other co"p(ters# @oca area net%or* "eans that the gro(ps of co"p(ters are in a re ative ! confined area, perhaps %ithin a hospita , a schoo , a (niversit! or a sing e office b oc*# @oca area net%or*s (se a specia cab e in* to a o% the different co"p(ters to co""(nicate %ith each other# The i""ediate benefit is that infor"ation can be shared bet%een a (sers on the net%or*# It a so faci itates the trans"ission of e3"ai s# Us(a ! one of the co"p(ters on the net%or* is %hat&s *no%n as a fi e server# This is a co"p(ter %ith a arge capacit! dis*, %here "(ch infor"ation is he d centra ! and then accessed b! the vario(s (sers of other co"p(ters# 'ide area net%or*s are so"e%hat si"i ar to oca area net%or*s e,cept that their geographica spread is "(ch greater, t!pica ! over a n("ber of different cities or perhaps over a n("ber of different co(ntries# This "eans that specia cab ing can&t be (sed for a co""(nications and (se has to be "ade of co""ercia te eco""(nication net%or*s s(ch as the ordinar! phone s!ste"# T!pica !, !o( "ight have a oca area net%or*, a @AN in @ondon, another @AN in Ne% /or* and these are connected over the sate ite s!ste" to prod(ce a 'AN so that the @ondon and E(ro offices can be connected and share infor"ation# The Internet is a net%or* of net%or*s# The Internet co"prises %ebsites, each %ith a (ni4(e address, (s(a ! beginning :%%%: and %hen this is t!ped in, !o( are s%itched thro(gh the net%or*, potentia ! (sing "an! different path%a!s, to access a co"p(ter %hich ho ds the infor"ation for that %ebsite# Navigation thro(gh the Internet is b! (se of so"ething i*e Internet E,p orer or Firefo,# An intranet is an interna Internet# In "an! %a!s it&s ver! si"i ar to a @AN, the "ain difference is the h("an interface %hich again is thro(gh so"ething i*e Internet E,p orer or Firefo,# Intranets are e,tre"e ! good %a!s of sharing infor"ation thro(gho(t an organisation and often ne%s etters, personne handboo*s, prod(ct handboo*s and c(sto"er infor"ation is shared in this %a!# An e,tranet is an intranet b(t %hich can a so co""(nicate %ith the intranet of another organisation# A good e,a"p e %o( d be an intranet be onging to a s(per"ar*et having access to the intranet be onging to a s(pp ier# 'hen goods in the s(per"ar*et fa be o% the re3order eve , an e ectronic order is sent over the e,tranet to the s(pp ier s!ste" and the order is then dispatched#
Levels % types of information

The different eve s %ithin an organisation re4(ire ver! different t!pes of infor"ation#
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$age 15

Ta*e the strategic eve # This can be represented b! the board of directors over senior "anagers# The infor"ation re4(ired b! these peop e is (s(a ! high ! s(""arised, for%ard oo*ing, ad hoc, often e,terna # ,ummarisation The! are oo*ing at %ho e divisions or %ho e co"panies, and part of their s(""arisation %i "ean that the! don&t need the infor"ation in a its acc(rac!# It "a! be ro(nded to the nearest tho(sand or "i ion# !orward%loo-ing Second !, it is a ver! i"portant f(nction of top "anagers to oo* for%ard, to p an, to tr! to see %here the b(siness %i be in one, three or five !ears& ti"e# Therefore the t!pe of infor"ation needed b! these "anagers %i often be f(t(re esti"ates of "ar*et si7e, interest rates, co"petition action# This infor"ation is needed for p anning# Top "anagers are not so concerned %ith the retrospective recording of %hat&s happened# That is of co(rse i"portant b(t there sho( d be "ore concern %ith p anning for the f(t(re: %hat %i o(r cash f o% b(dgets i"p ! for o(r f(nding re4(ire"ents: .o %e need to borro% "one! or raise "ore share capita ; Sho( d %e thin* no% abo(t b(i ding ne% factories; 'd $oc Strategic infor"ation is often ad hoc, in other %ords non3ro(tine# For e,a"p e a one3off report "ight be re4(ired on the co"petition and "ar*et si7e in a partic( ar co(ntr! %hich the co"pan! "ight be thin*ing of e,panding into# 0aving received that report, it "a! never be re4(ired again# Therefore there is a great need for f e,ibi it! in s(pp !ing the re4(ired infor"ation#
)+ternal Fina ! strategic "anagers have a high need for e,terna infor"ation# The! need to *no% %hat is happening in their environ"ent, their co"petitors and the technica advances ta*ing p ace in their area of b(siness# At the botto" of the organisation is the operationa eve # An e,a"p e of so"eone at the operationa eve %o( d be an acco(nts c er*# $eop e at this eve are (s(a ! dea ing %ith ver! detai ed infor"ation, the! are recording transactions %hich had a read! happened, therefore the infor"ation is historica , it&s retrospective# The infor"ation and the processing are often ro(tine# Ever! "onth the! do an aged receivab es printo(t or a s o%3"oving inventor! printo(t and fina ! the infor"ation is a "ost a %a!s interna # For e,a"p e, the! "ight be co"paring act(a res( ts %ith b(dget res( ts# In bet%een these t%o e,tre"es !o( have the tactica eve # B! and arge a tactica "anager is concerned %ith a !ear&s res( ts# Are %e going to hit b(dget; Are %e going to sta! %ithin the e,pense constraints; The! re4(ire so"e sort of $-E$A-E. B/ 'A0A1 A20TE- 20AN $age 18

"i, of infor"ation, and so"e aspects of %i be i*e that re4(ired b! the strategic eve , and so"e "ore i*e that re4(ired b! the operationa eve s#
"nternal and e+ternal information

0ere are so"e e,a"p es of interna and e,terna infor"ation# Be a%are of the ver! %ide variet! of infor"ation and infor"ation so(rces that "ight be (sef( to organisations# o o Interna so(rces Sa es ana !ses Inventor! reports .ebtor aging Attendance records E,terna so(rces Internet +ar*eting iterat(re Conferences and co(rses Co""ercia databases ?overn"ent
Chapter 8 An organisation&s environ"ent

)nvironmental influences % .),T /)L0
This paper is ca ed :The Acco(ntant in B(siness#: And of co(rse b(sinesses e,ist %ithin an environ"ent# It&s therefore (sef( to categori7e the environ"enta inf (ences that b(sinesses "a! s(ffer# The $ESTE@ "ode oo*s at the environ"enta inf (ences %hich are ver! arge: "acro3environ"enta # $ESTE@ stands for $o itica , Econo"ic, Socia , Techno ogica , and re ative ! recent !, Eco ogica and @ega # It&s eas! to see ho% these %i inf (ence ho% a b(siness gets on#
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$age 19

.olitical For e,a"p e 6oining the EU, po itica tensions, %ar, a iances can a inf (ence "an! b(sinesses# )conomic It goes %itho(t sa!ing that econo"ic changes can have ver! serio(s inf (ences on b(siness and (nder :econo"ic: %i co"e effects s(ch as interest rates, e,change rates, ta, rates, and %hether the %or d econo"! see"s to be doing %e or is in dec ine# ,ocial Socia changes inc (de %hat&s *no%n as &de"ographic changes&, that is, changes in the pop( ation# And in "an! 'estern co(ntries, this is characterised b! re ative ! fe% !o(ng peop e and "ore and "ore o d peop e in the pop( ation# This can have serio(s i"p ications %hen it co"es to recr(it"ent or in ca c( ating the pension or "edica iabi ities of b(sinesses# Tec$nological Techno ogica changes are eas! to (nderstand# /o( on ! have to consider %hat the Internet has done to "an! b(sinesses# Ban*s, for e,a"p e, need fe%er branches, as "ore and "ore peop e opt to dea %ith their acco(nts on ine# +an! boo*shops and "(sic shops have been affected b! A"a7on %hich "a*es sa es on ine thro(gh a sophisticated %ebsite. )cological Eco ogica inf (ences are re ative ! ne% considerations# These are effective ! green iss(es# So"e b(sinesses are affected "ore than others# Air ines for e,a"p e are co"ing (nder increasing press(re beca(se it is c ai"ed that 6et trave "a*es da"aging e"issions high in the at"osphere# +ore and "ore b(sinesses are pa!ing attention to pac*aging and to %aste disposa #
Legal @ega is so"eti"es inc (ded (nder po itica inf (ences b(t obvio(s ! ne% a%s, s(ch as cons("er protection, safet! a%s, e"p o!"ent protection can have profo(nd effects on ho% b(sinesses operate#
Competitive forces
$orter&s > Forces "ode is a pop( ar and (sef( fra"e%or* %ith %hich to ana !se ind(str! attractiveness#
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$age 1>

Ind(str! attractiveness refers to ho% eas! a b(siness %i find it to "a*e reasonab e profits# And b! reasonab e profits %e "ean profits arge eno(gh to co"pensate investors for their ris*, and a so to "a*e eno(gh "one! to reinvest to *eep the co"pan!# The first of the forces is co"petition or riva r!# This can range fro" perfect co"petition %here se ers have no choice as to the se ing price that is charged Ethe! are governed b! the "ar*et priceF a the %a! thro(gh to "onopo !# A "onopo ! gives se ers "(ch "ore choice as to %hat price can be charged, tho(gh the price %i nor"a ! a ter de"and# And re"e"ber, 6(st beca(se !o( have a "onopo ! doesn&t "ean !o( %i "a*e profits 3 !o( "ight be the "onopo ! s(pp ier of so"ething nobod! %ants# 0o%ever, b! and arge, the nearer an ind(str! gets to "onopo !, the easier a ti"e its participants %i have# Therefore, provided it&s ega , it co( d be a (sef( strateg! to ta*e over a riva or to force it o(t of b(siness b! perhaps o%ering prices te"porari !# No% %e %i oo* at b(!er press(re# If b(!ers are ver! po%erf( , then the! can e,ert press(re on prices, 4(a it! and de iver! ti"es# Se ing a "ost a o(tp(t to a fe% po%erf( b(!ers %i be an (nco"fortab e sit(ation# The "ore b(!ers !o( have and the harder it is for the" to s%itch bet%een different s(pp iers, the better# B(sinesses sho( d tr! to b(i d in s%itching costs, that is, rea costs or i"pedi"ents that "ean that b(!ers prefer to sta! %ith e,isting s(pp iers# Si"i ar !, on the other side %hen !o( are b(!ing goods fro" s(pp iers, if !o( have to b(! a specia co"ponent fro" a "onopo ! s(pp ier, !o( %i be in an (nco"fortab e position# That s(pp ier co( d raise prices and !o( have to pa!# Or even %orse, that s(pp ier co( d be ta*en over b! one of !o(r co"petitors, and then !o( %i have no s(pp ies at a # Idea ! a fir" sho( d tr! to "( tiso(rce and if the! get rea ! %orried abo(t ass(rance of s(pp ! the! sho( d thin* abo(t setting (p their o%n s(pp ! organisation or perhaps ta*ing over an e,isting s(pp ier# $otentia entrants are sitting on the edge of the ind(str! and "a! be attracted into it if the! can see that good profits can be "ade# An!thing %hich *eeps o(t potentia entrants is *no%n as a &barrier to entr!&# Occasiona !, potentia entrants are deterred beca(se there is a ega "onopo ! %ithin the b(siness# So"eti"es reg( ations "a*e it hard for potentia entrants to get into a b(siness# For e,a"p e, setting (p as a ban* is re ative ! diffic( t beca(se of the vario(s reg( ator! a(thorities that have to give their per"ission# The needs for high capita e,pendit(re and for *no%3ho% are t%o other i"pedi"ents to potentia entrants# S(bstit(te prod(cts arise (s(a ! b! the advance of techno og!# Often the appearance of s(bstit(tes %i s(rprise a b(siness and ta*e it off3g(ard# For e,a"p e, and ine te ephone co"panies tho(ght that the! %ere a "ost in a "onopo ! position beca(se the cost of digging (p roads and a!ing and ines into ho(ses, apart"ents and b(sinesses, %o( d have been a considerab e barrier to entr!# 0o%ever, then "obi e te ephones, ce phone techno og!, %as invented, and good te ephone coverage can be achieved %ith "(ch ess e,pense# There is $-E$A-E. B/ 'A0A1 A20TE- 20AN $age 1A

not "(ch !o( can do to avoid s(bstit(tes# Once techno og! is invented, it can&t rea ! be sent bac*# +ost o d ind(stries have to 6oin the ne% ind(stries as %e # So no% "an! conventiona te ephone co"panies a so have "obi e phone net%or*s in an atte"pt to retain their overa "ar*et share in te eco""(nications#
Chapter 9 Organisational culture

Cultural web
'hereas $ESTE@ and $orter&s > forces re ate to inf (ences o(tside the b(siness, %ithin the b(siness its c( t(re is ver! i"portant# Char es 0and! defined the c( t(re as :the %a! %e do things aro(nd here#: /o( %i be a%are of the effect of c( t(re# For e,a"p e %henever !o( 6oin a ne% organisation, %hether schoo or co ege or %or*, !o( tend to go caref( ! for the first co(p e of da!s or co(p e of %ee*s (nti !o( see ho% peop e behave, and then !o( tr! to fit in (s(a !# Starting at the top, symbols and titles# Are !o( an organisation %ith "an! presidents and vice3presidents; 'here ever!one has a partic( ar tit e i"p !ing that the organisation "ight be rather for"a ; 'here s!"bo s "ight be those s(ch as a private dining roo" for top "anagers or reserved par*ing spaces or partic( ar per*s %hich on ! those of a certain grade obtain; So"e organisations are 4(ite hierarchica i*e that) others tr! to be "(ch "ore ega itarian# .ower relations* .o top "anagers *eep "ost po%er to the"se ves or is it dispersed; Are !o( to d %hat to do or is it "ore i*e ! !o( %i be as*ed to contrib(te !o(r ideas abo(t %hat sho( d be done; 1rganisational structure* So"e organisations are %hat&s *no%n as &ta narro%& %ith "an! a!ers, each a!er being caref( ! s(pervised b! the s(pervisor or "anager above# Other organisations are %hat&s *no%n as &f at %ide& organisations, re ative ! fe% vertica a!ers and each "anager therefore having to oo* after a re ative ! arge n("ber of peop e, b(t inevitab ! beca(se the! are oo*ing after "ore peop e, peop e have to be better at oo*ing after the"se ves# Control systems* For e,a"p e ho% caref( ! do !o( have to acco(nt for !o(r ti"e# So"e organisations, perhaps for bi ing p(rposes, insist that peop e record %hat the! are doing ever! 15 "in(tes# Other organisations don&t contro individ(a activities 4(ite so c ose ! and are "ore interested in the overa res( ts# ituals and routines* For e,a"p e, in so"e organisations %hen a sa e is "ade, the person %ho has "ade the sa e has to stand (p and ring a be # Other peop e then app a(d# To so"e of !o( this "a! see" chi dish# B(t those organisations %hich do it pres("ab ! thin* it&s %orth%hi e in ter"s of "ora e3boosting and $-E$A-E. B/ 'A0A1 A20TE- 20AN $age 1B

cha enging others %ho have not !et "ade the sa e# In so"e organisations !o( are e,pected to socia i7e, sa! on a Frida! evening after %or*# Myt$s and stories* 0o% the co"pan! in the past %on a partic( ar contract %hich %as ver! va (ab e, the %a! in %hich a c ever presentation %as "ade or the %a! in %hich the! %or*ed hard against the c oc* to ens(re that a 6ob %as finished on ti"e# 1rganisational assumptions* For e,a"p e the ass("ption that %e are the best, that %e are never beaten, that %e on ! prod(ce %or* of the highest 4(a it!#
Types of culture % 2andy's classification

Char es 0and! identified fo(r t!pes of organisationa c( t(re# Each of these categories %as given the na"e of a ?ree* god# I don&t thin* those na"es are ver! (sef( b(t !o( o(ght to *no% the" for the e,a" an!ho%# power culture* First, there is the po%er c( t(re EGe(sF# In the po%er c( t(re po%er is concentrated in the hands of essentia ! one person, the boss 3 probab ! the person %ho started the co"pan!, or at east the person %hose na"e is probab ! the sa"e as the co"pan!# This person&s %ord is a%# There is ver! itt e de egation, ver! itt e decentra isation# A "ost a decisions are "ade b! that person# ole culture* It beco"es diffic( t to s(stain a po%er c( t(re as the b(siness gro%s, there is si"p ! too "(ch to *no%, too "(ch to do, and it "a! then change into a ro e c( t(re EApo oF# In the ro e c( t(re there is effective ! a "anage"ent str(ct(re %ith different peop e having different ro es# The prob e" %ith the ro e c( t(re is that so"eti"es the tit e, the 6ob, is regarded as "ore i"portant than act(a ! getting the 6ob done# Often associated %ith ro e c( t(re are ver! strict 6ob specifications and if so"ething isn&t on the specification then peop e %i ref(se to do it even if it h(rts a c ient or c(sto"er# Tas- culture* The tas* c( t(re EAthenaF is %here there is a great e"phasis on getting the 6ob done and achieving the tas*# $eop e do not depend so "(ch on their 6ob specifications or their partic( ar p ace in a hierarch!# -ea !, ever!one p( s together for the sa*e of the organisation and to p ease c ients and c(sto"ers# .erson culture* A re ative ! rare t!pe of c( t(re is the person organisation E.ion!s(sF# 0ere !o( have peop e %ho are essentia ! p(rs(ing a private a"bition in the conte,t of an organisation# It&s not ver! i"portant in b(siness# An e,a"p e "ight be a s(rgeon in a hospita # The s(rgeon gets enor"o(s 6ob satisfaction fro" perfor"ing operations and "a*ing peop e better# To so"e e,tent s(rgeons "ight not be terrib ! interested in interacting %ith the rest of the organisation# The! are there pri"ari ! to fi their persona a"bitions and the rest of the organisation is a "ost an essentia evi #
,c$ein % t$ree levels of culture

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Schein (sef( ! identified three eve s of c( t(re# 'rtifacts* The top"ost and the "ost s(perficia eve is that of artifacts# These are essentia ! %hat !o( see, the %a! peop e dress, the %a! the! behave, the str(ct(re of the co"pan! as set o(t in the organisation chart, the %a! in %hich !o( have to have !o(r e,penses approved# These are "ost obvio(s things that !o( see %hen !o( 6oin an organisation b(t in so"e %a!s the east i"portant# )spoused values* At a s ight ! deeper eve are espo(sed va (es# These are the stated goa s, strategies, and phi osophies# The "ission state"ent of a co"pan!, for e,a"p e, "a! set o(t %hat the co"pan!&s p(rpose is and ho% it perceives itse f %ithin the "ar*etp ace, ho% it va (es e"p o!ees, ho% it tries not to har" the environ"ent#
(nderlying assumptions* The "ost f(nda"enta eve is the basic

(nder !ing ass("ptions# These are ver! i"portant b(t are often the "ost diffic( t to identif! and to (nderstand# The! %i often not be stated, b(t there is an ass("ption abo(t the 4(a it! of %or*, abo(t never "issing dead ines, abo(t o(r %i ingness to %or* overti"e even if not aid in order to hit a dead ine, the ass("ption that %e are the best# It can ta*e ti"e before these basic (nder !ing ass("ptions are (nderstood b! ne% members of organizations*
3ational cultures
0ofstede e,a"ined ho% peop e fro" different co(ntries are i*e ! to deve op different organisationa c( t(res and ho% nationa c( t(re inf (ences ho% peop e %or* and e,pect to be "anaged# 0ofstede identified the fo o%ing variab es: .ower/distance* .o peop e e,pect to be to d %hat to do and then do it %itho(t 4(estion; Or do peop e co"e fro" a nationa c( t(re %here that approach %o( d not be e,pected and probab ! not be acceptab e, %here the! e,pect to have a "ore participative ro e to contrib(te to decisions; (ncertainty avoidance* So"e nationa c( t(res sh! a%a! fro" ta*ing ris*s) those peop e "a! prefer certaint!# The! don&t co"e fro" a bac*gro(nd %hich e,pects peop e to ta*e ga"b es and %hich s(pports fai (re# It&s so"eti"es said that the A"erican b(siness c( t(re is one %here fai (re, and effective ! therefore (ncertaint!, is %e to erated, that there is no disgrace in tr!ing and fai ing, and the on ! disgrace is in not tr!ing# It co( d be that this is %hat part ! contrib(tes to the d!na"is" of the A"erican econo"!# "ndividualism%collectivism* To %hat e,tent are a peop e %ithin the organisation e,pected to agree %ith partic( ar decisions and to confor" to %hat other peop e are doing, or are the! e,pected to go their o%n %a!; To a arge e,tent 1apanese c( t(re e,pects co ectivis"# Ever!one is e,pected to agree on %hat&s being done and an individ(a approach is fro%ned (pon# In so"e co(ntries individ(a approaches are i*e ! to be praised and the! have great respect for the "averic*#
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$age 1<

Masculinity* This oo*s at the e,tent to %hich socia gender ro es are i"portant# C( t(res %ith high "asc( init! va (e assertiveness, co"petition, "ateria s(ccess, and being do"inant, %hereas in those c( t(res fe"inine va (es of "odest!, reaching consens(s, (nderstanding, and re ationships are not va (ed so high !#
C$apter 4 'n organization5s sta-e$olders

,ta-e$olders
The ter" :sta*eho der: refers to an! person or instit(tion in an! %a! affected b! organisation# Sta*eho ders can be bro*en do%n into three gro(ps tho(gh this is not partic( ar ! he pf( # "nternal sta-e$olders are those %ho are definite ! inside the organisation# A good e,a"p e %o( d be the e"p o!ees, the shareho ders and the "anagers# Connected sta-e$olders are o(tside the organisation b(t connected b! %a! of a contract of so"e sort# ?ood e,a"p es here %i be s(pp iers, c(sto"ers, and enders# )+ternal sta-e$olders are entire ! o(tside the organisation %ith no contract(a re ationship# The best e,a"p e for this is %i be the peop e iving nearb! a factor!# The! are obvio(s ! affected, b(t have ver! i"ited contract(a rights over %hat the factor! does# 'h! is the st(d! of sta*eho ders i"portant; -ea ! the reason is that (s(a ! %hat sta*eho ders %ant %i be in conf ict# Shareho ders %ant higher profits b(t e"p o!ees %ant higher %ages) c(sto"ers %ant better 4(a it! at o%er prices, shareho ders %ant better profit) c(sto"ers "a! %ant the operation to r(n 59 ho(rs a da!, B da!s a %ee* b(t e"p o!ees "ight %ant to on ! %or* > da!s a %ee*, C ho(rs a da!# If !o(r organisation %as an airport the oca pop( ace %o( d %ant !o( to r(n fe%er f ights Eand certain ! not after abo(t 11 o&c oc* at nightF, %hereas !o(r c(sto"ers and !o(r shareho ders "a! %ant !o( to r(n services "ore fre4(ent !# There is no eas! %a! of reso ving these conf icts# Basica ! it co"es do%n to "anage"ent tr!ing to get sta*eho ders to co"pro"ise# The! have to tr! and *eep "ost peop e happ! "ost of the ti"e, bearing in "ind, ho%ever, that so"e sta*eho ders "a! be ab e to stop cooperating a together# For e,a"p e %hen e"p o!ees %ant better %ages, the! co( d go on stri*e and ( ti"ate ! this can $-E$A-E. B/ 'A0A1 A20TE- 20AN $age 5=

affect the profits %hich are en6o!ed b! the shareho ders# +anage"ent has to be a%are that there are conf icts and tr! its best to "anage these#
Mendelow
Abo(t the on ! too or "ode avai ab e for the ana !sis of sta*eho ders is +ende o%&s "atri,# It sets o(t on one a,is the po%er that a sta*eho der can %ie d# And a ong the other a,is their interest, b! %hich %e "ean ho% i*e ! is it that the sta*eho der %i ta*e action# Sta*eho ders %ho have high po%er and high interest are *no%n as *e! p a!ers# +anage"ent rea ! needs to *eep those peop e happ!# The! have the po%er and the! have the %i ingness to do so"ething abo(t it if the! are (pset# So"e sta*eho ders have high po%er b(t the! are not i*e ! to ta*e action even if "anage"ent does so"ething %hich the! dis i*e# The! "a! be (n%i ing to ta*e action beca(se of professiona or ethica reasons# For e,a"p e, "edica staff in hospita s is ver! (n i*e ! to ta*e ind(stria action# +anage"ent doesn&t have to be 4(ite so caref( %ith these peop e# 0o%ever the! have to be *ept satisfied, other%ise the! co( d be provo*ed to ta*e action and t(rn into *e! p a!ers# $eop e %ith o% po%er b(t high interest have to be *ept infor"ed# The! can&t do "(ch abo(t it the"se ves b(t the! "ight be ab e to inf (ence *e! p a!ers to ta*e action on their beha f# Fina ! %e have peop e %ith o% po%er and o% interest# +anage"ent can near ! ignore these peop e# After a , %hat are the! going to do if the! don&t i*e %hat&s happening;
C$apter 6 Corporate governance and et$ical considerations

Corporate governance
Corporate governance refers to ho% co"panies are directed and contro ed# The rea prob e" is the separation of o%nership and contro # Shareho ders o%n the co"pan!, b(t (n ess the co"pan! is ver! s"a the! %i not nor"a ! be dea ing %ith the da!3to3da! r(nning of the co"pan!# Instead shareho ders appoint directors to do that# Technica ! the directors are the agents of the shareho ders# The shareho ders are the principa s in this re ationship and the directors sho( d act in the best interests of the $-E$A-E. B/ 'A0A1 A20TE- 20AN $age 51

shareho ders# Another %a! of describing this is ste%ardship# The directors are the ste%ards of the co"pan! assets# The! oo* after the" on beha f of the shareho ders# B(t ho% do %e *no% if the directors are acting in this %a!; .irectors have da!3to3da! "anage"ent responsibi ities and shareho ders "a! on ! get a set of acco(nts once a !ear and attend an ann(a genera "eeting once a !ear# It can therefore be ver! diffic( t for the shareho ders to *no% %hether or not the directors are r(nning the co"pan! in the shareho ders& best interests# There have been "an! e,a"p es of directors ab(sing the tr(st p(t in the" b! the shareho ders# The! can a%ard the"se ves e,cessive a"o(nts of sa ar! and share options, give the"se ves genero(s per*s) the! can "a*e oans fro" the co"pan! to the"se ves) the! can ta*e (nd(e ris*s beca(se, if the ris* pa!s off the directors& sa aries "a! increase, b(t if the ris* doesn&t pa! off it&s the shareho ders %ho %i ose the "ost, and the directors& positions can re"ain re ative ! sec(re# Corporate governance r( es have recent ! been tightened (p so that shareho ders can better "onitor %hat the directors are doing and ho% their co"pan! is act(a ! perfor"ing#
)lements of corporate governance

+an! of the "odern e e"ents of corporate governance re ate to the board# There has to be a ba ance of e,ec(tive and non3e,ec(tive directors# A ba ance "eans abo(t ha f and ha f# Non3e,ec(tive directors ta*e no part in the da!3to3 da! r(nning of the co"pan! b(t the! do attend board "eetings and have f( voting po%er at those "eetings# Their f(nction is to %arn, advice and "onitor %hat the e,ec(tive directors are doing# The offices of chair"an and chief e,ec(tive officer sho( d be he d b! different peop e so that too "(ch po%er is not given to one person# There has no% to be a remuneration committee# The p(rpose of this co""ittee is to fi, the re"(neration of the directors# It (sed to be that the directors co( d fi, their o%n re"(neration and this %as obvio(s ! open to ab(se# The "a6orit! of "e"bers of the re"(neration co""ittee are non3e,ec(tive directors# There a so has to be an appointments committee oo*ing after the appoint"ent of ne% directors# There had been an ab(se insofar the directors %o( d appoint their friends to their co"panies# No% appoint"ents have to be at ar"&s ength# The! %i be advertised i*e the appoint"ent of an! other e"p o!ee# There %i be intervie%s of potentia candidates and the best one %i be appointed# The audit committee oo*s after the re ationship bet%een the a(ditors and the co"pan!# It (sed to be that a(ditors pri"ari ! co""(nicated %ith the financia $-E$A-E. B/ 'A0A1 A20TE- 20AN $age 55

director b(t, of co(rse, the financia director had responsibi it! for the financia s!ste" and the acco(nts and it %as (nsatisfactor! for the a(ditors to have to co"p ain to the finance director that the! %eren&t getting a the infor"ation the! re4(ired, or that the set of interna contro %ithin the co"pan! %as inade4(ate# No% there is an independent a(dit co""ittee, again consisting pri"ari ! of non3e,ec(tive directors and this co""ittee oo*s after the appoint"ent, re"(neration and other "atters of co""(nication %ith the a(ditors# There is no% a re4(ire"ent that the directors insta a proper s!ste" of internal control# 0o% e se the directors co( d be said to be proper ! "anaging the co"pan! if the! didn&t have a set of interna contro %hich oo*ed after the proper recording of transactions and safeg(arded the assets of the co"pan!# T$ere are two main approac$es to t$e system of corporate governance* First there is the co"p iance3based approach %hich is favo(red b! the US a(thorities# 0ere the directors and the a(ditors have to sign off a arge a"o(nt of doc("entation affir"ing that specific aspects of corporate governance are in p ace# The approach favo(red b! E(ropean 6(risdictions is a princip es3based approach# 0ere !o( don&t sign off detai ed affir"ations that partic( ar aspects of corporate governance %ere in p ace# Instead, !o( are oo*ing "(ch "ore at the spirit of corporate governance#
Combined code of corporate governance

In the U2 the corporate governance r( es do not have the force of a%# Instead the! are fo(nd in %hat&s ca ed the Combined Code of Corporate 7overnance, and this is a code %hich is enforced b! the Stoc* E,change# @isted co"panies are e,pected to co"p !# If the! don&t co"p !, the reason for non3 co"p iance "(st be e,p ained in the ann(a report# And, indeed, the a(dit report %i refer to %hether or not there is non3co"p iance#
Corporate ,ocial
esponsibility
'e stated ear ier that shareho ders o%n co"panies and the! appoint directors to r(n the co"panies for the benefit of the shareho ders# That is certain ! the ega position, b(t recent ! peop e have 4(estioned %hether r(nning co"panies p(re ! for the benefit of shareho ders is a that sho( d be done# This has given rise to the so"e%hat fashionab e idea of corporate social responsibility# To %hat e,tent sho( d the interests of other sta*eho ders be ta*en into acco(nt; For e,a"p e, certain ! co"panies sho( d be r(n %ithin the a% and no do(bt there are a%s re ating to "ini"(" %ages, "a,i"(" %or*ing %ee*s, and per"itted eve s of po (tion# If co"panies adhere to those a%s sho( d the! go $-E$A-E. B/ 'A0A1 A20TE- 20AN $age 58

f(rther; Sho( d the! pa! peop e "(ch in e,cess of the "ini"("; Sho( d the! red(ce the ho(rs that peop e have to %or*; Sho( d the! tighten (p even f(rther on the discharges "ade fro" the factor!; +an! observers arg(e that co"panies sho( d go f(rther than si"p ! "eet the "ini"(" ob igations as set b! a%# B(t this can be a diffic( t area# First of a , going f(rther %ith these socia responsibi ities nor"a ! red(ces the profit of a co"pan!# $rofit is of itse f a good thing) profit enab es a co"pan! to e,ist "ore per"anent !, to p(t "one! into research and deve op"ent, to give "ore stab e e"p o!"ent# And of co(rse, the higher the profit, the higher the ta,es, and ta,es are then spent for the good of societ! as a %ho e# Co"panies sho( d certain ! not be e"barrassed abo(t "a*ing profits# Second ! it can be arg(ed that instead of a co"pan!, sa! "a*ing charitab e donations, shareho ders if the! get arger dividends can "a*e those donations the"se ves, and f(rther"ore, the! can "a*e those donations to parties the! fee "ost deserving# Third !, do directors have the ega a(thorit! to "a*e non3essentia pa!"ents; This is the directors (sing co"pan! assets %hich are ( ti"ate ! the assets of the shareho ders# $eop e co( d arg(e that the! have no right to give those a%a! or to spend the" need ess !# B(t ast ! %ho decides the beneficiaries; Are the beneficiaries si"p ! the pet charities and interests of the directors; 'hat e,act ! is a de"ocratic re ationship %hen it co"es to decide %ho benefits fro" the e,tra donations or the e,tra benefits distrib(ted a"ongst non3 shareho ders;
)t$ics 8 importance
There are va id arg("ents abo(t %hether or not a co"pan! sho( d adopt corporate socia responsibi it!# B(t %hen it co"es to ethics there is ver! itt e arg("ent, and one doesn&t have to appea to a "ora or ethica stance to see that co"panies sho( d be ethica # An ethica stance can be 6(stified on a p(re ! econo"ic basis# This rests on the fact that if the co"pan! acts (nethica ! or i""ora !, it %i (s(a ! be fo(nd o(t, and %hen it is fo(nd o(t it is (s(a ! p(nished, either thro(gh the operation of the a%, co"pensation, or b! the oss of good%i and rep(tation# Therefore, an ethica co"pan! red(ces ris*# Ever!one can "a*e "ista*es b(t if !o( o%n (p to "ista*es then !o( are i"iting the da"age, and !o( are red(cing the ris* that f(rther da"age %i be done and the p(nitive da"ages that "a! ater be a%arded against !o(# If ris* is o%er so too is cost# Ethica organisations often have to spend ess ens(ring that reg( ations are fo o%ed# @o%er ris*s a so "ean that ban*s and other providers of capita %i be %i ing to s(pp ! the "one! at o%er rates# In genera o%er ret(rns are re4(ired beca(se ris* and ret(rn go together#
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$age 59

If !o(r rep(tation is good, !o( are "ore i*e ! to find good, %i ing partners %ith %ho" !o( can co3operate perhaps to for" 6oint vent(res or perhaps 6(st to be satisfied c(sto"ers# A good rep(tation %i tend to attract better e"p o!ees# No one rea ! %ants to be associated if possib e %ith a co"pan! %hich has a rep(tation %hich is poor# Fina !, a good rep(tation sho( d increase good%i and increase sa es# Co"panies %hich are regarded as being (nethica tend not to be tr(sted and certain ! not i*ed b! c(sto"ers# C(sto"ers %i a %a!s be tr!ing to find an a ternative# Therefore for ver! so(nd co""ercia reasons, it pa!s co"panies to be ethica #
"ndividual influences on et$ical be$avior

There are a n("ber of individ(a inf (ences on one&s ethica behavior# 3ational and cultural beliefs* One is inf (enced b! nationa and c( t(ra be iefs# It&s eas! to see that different c( t(res have different vie%s of %hat is acceptab e and (nacceptab e) si"i ar !, different co(ntries# )ducation and employment* It&s possib e to arg(e that better3ed(cated peop e and those %ho %or* in %hat "ight be ca ed &professiona 6obs& have perhaps a "ore high ! deve oped sense of ethica behavior# .syc$ological factors* So"e peop e fear being fo(nd o(t and this is a "ain reason %h! the! don&t do an!thing %rong# Other peop e tend to see* ris*s and if !o( see* ris*s it co( d be arg(ed that !o(r ethica behavior "ight not be so strict# .ersonal integrity* So"e peop e %o( d never do an!thing %rong, a co"bination of the %a! the! have been bro(ght (p, parenta and fa"i ! inf (ences# Other peop e see" to be ab e to co""it even re ative ! arge breaches of ethica behavior %itho(t %orr!ing abo(t it at a # Moral imagination* This refers to the idea that %hat "ight "a*e (s ethica is being ab e to i"agine the effect on the other part! if %e act (nethica !# It&s *ind of %anting to treat other peop e in the %a! %e %o( d i*e to be treated# 'e can i"agine their disco"fort and pain and disadvantage if %e act (nethica ! to%ards the"#
,ituational influences on et$ical be$avior

There are a so so"e sit(ationa inf (ences on ethica behavior# eward mec$anisms* If, for e,a"p e, !o( are ver! high ! re%arded for hitting a b(dget, this co( d pers(ade !o( to record infor"ation incorrect ! so that !o( sho% satisfactor! perfor"ance# Indeed, so"e of the ca(ses of corporate fai (re, partic( ar ! the arge financia scanda s that happened $age 5>
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d(ring the 1<<=s, have been b a"ed on the re%ard "echanis"s %hich re%arded e,ec(tives e,cessive ! for apparent s(ccess# 'ut$ority* If !o(r s(perior is partic( ar ! strict and !o( *no% that this person %i not to erate an! breach of ethics then !o( are i*e ! to behave %e # B(t if !o(r boss is "ore re a,ed abo(t ethica behavio(r, then !o( are "ore i*e ! to be re a,ed abo(t ethica behavio(r a so# 9ureaucracy* So"e co"panies are ver! tight ! r(n, for e,a"p e, re4(iring a(thorisation of even "inor e,pendit(re and for a so insisting that ever!one&s %or* is caref( ! chec*ed# In s(ch a sit(ation !o( are (n i*e ! to ris* being (nethica beca(se the! chances are ver! high that !o( %i be discovered# #or- role* /o( "ight arg(e that if !o( %ere to%ards the botto" of a co"pan! !o( "ight be %i ing to act so"e%hat (nethica ! beca(se the da"age !o( are i*e ! to do is s"a , the chance of !o( being fo(nd o(t is s"a , and %hat !o( "ight ose is s"a # If ever !o( are in a s(pervisor! ro e %here !o( are as*ed to approve the actions of others, !o( "a*e ta*e a stricter stance# It&s not (nco""on for peop e %ho %ere re ative ! re a,ed abo(t e,pense c ai"s, to s(bse4(ent ! beco"e ver! to(gh indeed abo(t their s(bordinates& e,pense c ai"s# 1rganisational field* If !o( %or* in an organisation %here ethics are ver! i"portant, for e,a"p e a fir" of acco(ntants or a fir" of a%!ers or perhaps in the "edica profession, then there is no escaping fro" ethics# /o( %i be contin(a ! bro(ght (p against ethica di e""as, and indeed !o( %i probab ! have for"a training in ethics# 1rganisational culture* So"e organisations, perhaps %ithin their "ission state"ents, p(t a ver! high e"phasis on proper behavio(r and the proper treat"ent of e"p o!ees, s(pp iers, c(sto"ers, and indeed a sta*eho ders# If that c( t(re is contin(a ! pro"oted then it&s i*e ! that the peop e %ithin the organisation %i act ethica !# 3ational cultural conte+t# If !o( are in a c( t(ra conte,t %here ethics and ethica behavio(r %ithin b(siness is regarded as being i"portant, inevitab ! so"e of that %i r(b off on !o(# 0o%ever there "a! be so"e nationa c( t(ra conte,ts %here ethica behavio(r is interpreted ver! different !#
Ethica stances E1ohnson and Scho esF

1ohnson and Scho es identified fo(r ethica stances# And indeed these stances a so have so"ething to do %ith corporate socia responsibi it!# $-E$A-E. B/ 'A0A1 A20TE- 20AN $age 5A

The first stance sa!s that it is the p(rpose of co"panies to oo* after shareho ders, and in partic( ar the short3ter" interests of shareho ders# This %i a o% the" to do a "ost an!thing %hich "a,i"i7es short3ter" profits# The second stance oo*s at the ong3ter" interests of shareho ders# This is "ore ethica si"p ! beca(se in the ong r(n (nethica behavio(r is "ore i*e ! to be p(nished# If !o( are fo(nd to have cheated, or !o(r prod(cts har" peop e, then the short3ter" profits "a! be increased, b(t onger3ter" profits %i be decreased %hen !o( are fo(nd o(t# Third, "( tip e sta*eho der ob igations# In other %ords, %idening ob igations be!ond 6(st shareho ders to sta*eho ders in genera # So one has to ta*e into acco(nt e"p o!ees, s(pp iers, c(sto"ers, the oca pop( ation, and govern"ent %hen "a*ing decisions abo(t the co"pan!# Fina ! there is the shape of societ! %here a co"pan! or organisation sets o(t to f(nda"enta ! change the %a! societ! is r(n# So"e co"panies, for e,a"p e, "a! atte"pt to be ver! green and ver! eco ogica ! respectab e# B(t it&s diffic( t to *no% to %hat e,tent the! sho( d be doing this# Are co"panies and individ(a organisations the proper bodies to shape societ!; Sho( d that not be govern"ent; Neverthe ess there have been so"e e,a"p es of co"panies %hich have ta*en partic( ar ethica stances and %hich have had a profo(nd inf (ence on other co"panies in the econo"!#
C$apter : 'ccountancy and t$e accountancy profession

"nfluence of t$e accountancy profession
The acco(nting profession has the ver! %ide3ranging inf (ence# !inancial accounting* The acco(ntanc! profession dea s %ith ho% ite"s sho( d be sho%n in the acco(nts# In other %ords, the! estab ish the acco(nting standards# 'uditing* Once co"panies get to a partic( ar si7e the! have to be a(dited# An a(dit is an independent gathering of evidence that a o%s the acco(ntants to report %hether or not the acco(nts prod(ced b! the co"pan! sho% a tr(e and fair vie%# Management accounting# 'ithin co"panies there needs to be "anage"ent acco(nting# This %i be oo*ing at b(dgets, f(t(re esti"ates and %i be recording on a "onth3to3"onth basis ho% the co"pan! is doing, and investigating %h! it "ight not be on trac* to hit the re4(ired profits#
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$age 5B

Consulting* +an! acco(ntants a so provide cons( tanc!# For e,a"p e re ating to the IT s!ste", partic( ar ! for the acco(nts f(nction, and in setting (p re"(neration sche"es and s!ste"s of interna contro # Ta+ation* Acco(ntants have a ver! i"portant ro e in he ping organisations to ca c( ate their ta, iabi ities and reporting this to the govern"ent reven(e a(thorities# 7overnment* 'ithin the p(b ic sector, that is govern"ent organisations, acco(ntants are ver! i"portant in trac*ing and recording the e,pendit(re of p(b ic f(nds that have been raised b! ta,ation#
.rofessional et$ical codes

The Internationa Federation of Acco(ntants is the g oba organisation of the acco(ntanc! profession# It %or*s in over 15= co(ntries and 6(risdictions to protect the p(b ic interest b! enco(raging high34(a it! practices b! the %or d&s acco(ntants# Thro(gh its independent standard3setting boards, IFAC deve ops internationa standards on ethics, a(diting and ass(rance, ed(cation and p(b ic sector acco(nting standards# It a so iss(es g(idance to s(pport professiona acco(ntants in b(siness, s"a and "edi(" practices and deve oping nations# The IFAC Code of Ethics is a good i (stration of a professiona ethica g(ide# The code states that the acco(ntanc! profession has a responsibi it! to act in the p(b ic interest and it then goes on to estab ish detai ed g(idance on f(nda"enta princip es and ethics# /o( %i short ! see %hat the f(nda"enta princip es refer to# 0aving identified the f(nda"enta princip es, the fra"e%or* then re4(ires acco(ntants to identif!, eva (ate, and address the threats to co"p iance, app !ing safeg(ards to e i"inate the threats or to red(ce the" to an acceptab e eve # For e,a"p e, !o( %i short ! see that one of the f(nda"enta princip es is independence# B(t ho% can an a(ditor be independent if the a(ditor receives an a(dit fee fro" the c ient; So there %e have a f(nda"enta princip e and %e have identified a potentia threat to that f(nda"enta princip e# The safeg(ard app ied is to p(t a i"it on the a"o(nt of fees co"ing fro" an! one c ient so that the a(ditor %o( d not fee (nd( ! threatened if that c ient %ere to eave after a disp(te abo(t the acco(nts#
'CC' Code of )t$ics and Conduct*

The ACCA&s f(nda"enta princip es are as fo o%s: "ntegrity* Basica !, this "eans that the "e"bers sho( d be honest and straightfor%ard# If the! see so"ething is a"iss, the! sho( d sa! so# The! sho( dn&t tr! to concea , the! sho( dn&t tr! to be a"big(o(s# The! sho( d state things p ain !#
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$age 5C

1b;ectivity* +e"bers sho( d be inf (enced b! the facts and the facts on !# The! "(st avoid bias, conf ict of interest, and (nd(e inf (ence# .rofessional competence and due care* Acco(ntants "(st *eep the"se ves (p to date %ith egis ation and recent deve op"ents# The! sho( dn&t ta*e on %or* %hich the! are not 4(a ified for or for %hich the! have no s*i s# The! "(st be di igent, the! "(st be caref( # Confidentiality* +e"bers, partic( ar ! perhaps a(ditors, have access to infor"ation %hich is high ! confidentia and %hich is price3sensitive# That infor"ation "(st be he d confidentia !# +e"bers sho( d not disc ose confidentia infor"ation (n ess the! have a ega or professiona d(t! to do so# An e,a"p e of the ega d(t! to disc ose infor"ation can arise if a "e"ber thin*s that a c ient or the person that the! are %or*ing for is invo ved in "one! a(ndering# +an! co(ntries have ver! strong reg( ations no%ada!s stating that "one! a(ndering s(spects sho( d be reported to the a(thorities# .rofessional be$aviour* Acco(ntants sho( d co"p ! %ith the a% and the! sho( d avoid an! action %hich discredits the profession# So, for e,a"p e, %hen the! are tr!ing to advertise their services, the! sho( dn&t sa! that other "e"bers are bad or poor# The! sho( d confine the"se ves to pro"oting %hat the! are good at# The! sho( dn&t r(bbish other professiona s#
(sers of accounting information

The potentia (ses of acco(nting infor"ation inc (de:
+anagers of the co"pan!# Shareho ders of the co"pan!# Trade contacts: s(pp iers and c(sto"ers#
$roviders of finance to the co"pan!# The In and -even(e# E"p o!ees of the co"pan!# Financia ana !sts and advisers# ?overn"ent and their agencies# The p(b ic#
Management accounts and financial accounts

$-E$A-E. B/ 'A0A1 A20TE- 20AN $age 5<

Acco(nting infor"ation is (s(a ! divided bet%een "anage"ent acco(nts and financia acco(nts# Management accounts are: Interna # The! can be in an! for"at, The! oo* to the f(t(re, for e,a"p e setting b(dgets) and bac*, for e,a"p e oo*ing at perfor"ance to date# The! are often %hat&s *no%n as &ad hocH# That "eans the! can contain non3 ro(tine specia reports# Their for" and content is not governed b! stat(te# +anage"ent acco(nts are governed si"p ! b! the need for infor"ation and ho% that can be best provided# Fina !, the! are not s(b6ect to a(dit or independent chec*ing of an! sort#
!inancial accounts are The p(b ished acco(nts of a co"pan!, partic( ar ! provided for the "e"bers or shareho ders of the co"pan!# The for"at and content is tight ! reg( ated b! stat(te# The! a %a!s oo* bac*, %hat the ba ance sheet at a partic( ar date %as at %hat the profit and oss acco(nt for a period %as# The! are abso (te ! ro(tine, nor"a ! appearing ann(a !# The! "(st co"p ! %ith stat(tor! and other acco(nting r( es# Often the! are s(b6ect to a(dit, certain ! are once a co"pan! beco"es a significant si7e#
'udit
'e have "ade severa references to the ter" :a(dit#: So et&s 6(st cover a itt e bit "ore abo(t %hat that "ight entai # If !o( re"e"ber bac* to the prob e"s of corporate governance, these arose fro" the fact that the o%ners of the co"pan!, the shareho ders, appointed directors to r(n the co"pan! on a da!3to3da! basis# B(t ho% do the o%ners *no% that the directors are r(nning the co"pan! proper !; Origina ! the on ! rea chec* %as that once a !ear the directors had to prod(ce a set of acco(nts# To tr! to ens(re that these %ere %hat&s *no%n as :tr(e and fair,: independent a(ditors %ere then appointed b! the "e"bers to chec* those acco(nts# $-E$A-E. B/ 'A0A1 A20TE- 20AN $age 8=

'e ta * abo(t &acco(nts& b(t rea ! %e sho( d ta * abo(t &financia state"ents& and the financia state"ents co"prise the: $rofit and oss acco(nt or no%ada!s that %i be ca ed the inco"e state"ent# Ba ance sheet, probab ! no%ada!s ca ed the state"ent of financia position, Cash f o% state"ent, Notes to these doc("ents State"ent of reserves#
The e,terna a(ditors oo* at these financia state"ents, do "an! chec*s, and co"e to a conc (sion abo(t the"# &Tr(e& "eans that the financia state"ents are "ore or ess arith"etica ! acc(rate# &Fair& is a s ight ! "ore diffic( t concept and "eans the! are not "is eading# So"ething can be arith"etica ! acc(rate, !et sti give an incorrect i"pression#
Additiona !, the a(ditors e,a"ine the s!ste" of interna contro of the co"pan! and transactions that happened d(ring the !ear and the! then prod(ce reports to "anage"ent o(t their acco(nting proced(res# So if the a(ditors find for e,a"p e that invoices are not being priced (p proper !, the! %i report this to "anage"ent, and "anage"ent can then ta*e action to tr! to ens(re that and errors or prob e"s do not occ(r again in the f(t(re#
T$e regulatory system

In the U2, acco(nts are reg( ated as fo o%s: Company law* This, for e,a"p e, insists that co"panies prod(ce acco(nts ro(gh ! ever! !ear# A tho(gh there are certain stat(tor! disc os(res set o(t in co"pan! a%, b! and arge co"pan! a% doesn&t go into h(ge a"o(nts of detai abo(t e,act ! ho% different e e"ents of the financia state"ents "(st be sho%n# That&s rea ! too co"p e, a "atter to have in a% beca(se fre4(ent changes and great e,pertise is needed to decide ho% things sho( d best be sho%n# 'ccounting standards* The detai ed reg( ations abo(t disc os(re and presentation are (s(a ! fo(nd in the acco(nting standards# The "a6or bodies of acco(ntants "(st s(bscribe to the acco(nting standards# The s!ste" for estab ishing acco(nting standards is headed (p b! the Financia -eporting Co(nci and, in partic( ar, the Acco(nting Standards Board iss(e acco(nting standards# Its standards are ca ed the financia reporting standards or F-Ss# In genera , a sets of financia state"ents sho( d co"p ! %ith the financia reporting standards# $age 81
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(rgent issues tas-force* Fro" ti"e to ti"e (rgent iss(es arise, for e,a"p e, the recent ban*ing crisis co( d potentia ! have given rise to iss(es %hich had to be dea t %ith ver! 4(ic* !# -ather than going thro(gh the f( and perhaps rather s o% process of estab ishing financia reporting standards in the nor"a %a!, the Urgent Iss(es Tas* Force can dea %ith these (rgent "atters 4(ic* !# !inancial eporting eview .anel* So"eti"es co"panies depart fro" the financia reporting standards and the Financia -eporting -evie% $ane is concerned %ith e,a"ining and 4(estioning %h! that has ta*en p ace# Occasiona ! the! "a! conc (de the depart(re is 6(stified, b(t this tends to be a re ative ! rare occ(rrence#
7''.
?AA$ stands for ?enera ! Accepted Acco(nting $ractice# This is a co""on set of acco(nting princip es, standards and proced(res that co"panies (se to co"pi e their financia state"ents# A$ is a co"bination of stat(te, acco(nting standards, internationa acco(nting standards, stoc* e,change r( es, and convention# ?AA$ are i"posed on co"panies so that investors have a "ini"(" eve of consistenc! in the financia state"ents the! (se %hen ana !sing co"panies for invest"ent p(rposes# Co"panies are e,pected to fo o% ?AA$ r( es in reporting their financia data thro(gh their financia state"ents#
C$apter < "nternal control and t$e implications of fraud

"nternal controls
The ter" &interna contro s& refers to the co ection of "echanis"s %hereb! an organisation tries to ens(re that a its transactions are proper ! a(thorised and recorded, and that its assets are safeg(arded# The proper "anage"ent of a b(siness Eand indeed no% part of corporate governance re4(ire"entsF "eans that there has to be a good s!ste" of interna contro in p ace if directors and other "anagers are going to e,ercise their ste%ardship responsibi ities correct !# The s!ste"s of interna contro s fa into t%o parts# $-E$A-E. B/ 'A0A1 A20TE- 20AN $age 85

Control environment* This essentia ! refers to the c( t(re %ithin the organisation# So"e organisations p(t a ver! high priorit! on having a good s!ste" of interna contro in p ace %hereas others see these as a n(isance# If the s!ste" of interna contro is going to be effective there "(st be a good contro environ"ent, other%ise detai ed contro s %hich are there in theor! %o( d si"p ! be ignored in practice beca(se peop e don&t fee that these are i"portant# Detailed control processes* For e,a"p e If so"eone %or*s overti"e !o( e,pect this to be a(thorised b! a "anager# Once a s(pp ier&s invoice has been paid, !o( e,pect that to be cance ed in so"e %a! to prevent it being paid t%ice# Before !o( send goods to a ne% c(sto"er !o( sho( d ta*e (p credit references, perhaps b! %riting to their ban* and then setting a credit i"it# It sho( d be i"possib e to dispatch goods to that c(sto"er if it p(ts it over their credit i"it# There sho( d be a s!ste" of revie%ing receivab es and fo o%ing (p s o% pa!"ents to tr! to prevent the occ(rrence of bad debts#
"mplications of fraud
If a good s!ste" of interna contro is not in p ace and if corporate governance is not operating correct ! then there is a "(ch higher chance that fra(d %i occ(r, and this has got serio(s i"p ications# !inancial* The co"pan! "a! find that it hasn&t "ade the profit it tho(ght, it "a! have ost assets, it "ight have a i4(idit! crisis# +ost fra(d "eans re"oving assets fro" a co"pan! and of co(rse this %i adverse ! affects its perfor"ance# Misrepresentation* At a higher eve directors so"eti"es co""it fra(d to "isrepresent ho% the co"pan! is act(a ! doing, and there have been severa high profi e events recent ! %here financia instit(tions have pretended to be in a "(ch better sit(ation than the! act(a ! %ere# If the finances of the co"pan! are incorrect ! recorded then incorrect decisions co( d be "ade# The co"pan! "ight decide to e,pand %hen in fact the cash is not there or it "a! thin* a partic( ar cost is ver! high, b(t that cost has artificia ! been boosted beca(se of a fra(d# And fina ! the eputation* The rep(tation of the co"pan! co( d be bad ! affected, and indeed "an! co"panies, for re ative ! "inor fra(ds, prefer to *eep these secret# It doesn&t oo* good if the directors have to ad"it that so"eone has been defra(ding the co"pan! over a n("ber of !ears# It rather "a*es peop e as*: %hat have the directors been doing; 0o% co"petent are the!; .o %e %ant to have dea ings %ith that co"pan!; $-E$A-E. B/ 'A0A1 A20TE- 20AN $age 88

Detecting and preventing fraud
$reventing and detecting fra(d depends on the fo o%ing: First, a good internal control system# As %e said before, "a*e s(re that overti"e pa!"ents are a(thorised, p(rchases are a(thorised, invoices are cance ed, ban* reconci iations are perfor"ed and so on# This "a*es it "(ch "ore diffic( t that either innocent or de iberate "anip( ation of fig(res can occ(r# $art of the interna contro s!ste" %i be interna a(dit# This is a tea" of peop e %ithin the organisation %hose f(nction is to go aro(nd the organisation, chec*ing if the s!ste" of interna contro is effective and being operated as e,pected# Second !, et$ics# It goes %itho(t sa!ing that if ever!one %ithin the co"pan! is of a high ethica standard, fra(d %i not be co""itted# It&s therefore essentia to e"phasise the ro e of ethics# This is partic( ar ! i"portant at the higher eve s of the co"pan! %here "anagers "ight be ind(ced to "isrepresent fig(res so the co"pan! appears to be doing %e # Both contro s!ste"s and ethics depend on training# If training is not given, ho% %i peop e *no% ho% to act appropriate !, either to act in ine %ith the interna contro s!ste" as set do%n, or ho% to dea %ith ethica di e""as 3 %hich can so"eti"es "ean as*ing for he p and advice#
esponsibility
Fina ! in this section %e have to see %ho is responsib e for %hat# The directors are responsib e for setting (p a s!ste" of interna contro for ens(ring that the proper infor"ation for "anage"ent contro is provided, and for prod(cing the financia state"ents# The e,terna a(ditors are responsib e for a(diting the financia state"ents# The! %i carr! o(t their a(dit proced(res to co ect evidence that the financia state"ents are presenting a tr(e and fair vie%# In the co(rse of that e,a"ination the! "ight re ! on the s!ste" of interna contro %hich is in p ace, and if this is inade4(ate, the! %i %rite a report to the directors advising the" abo(t ho% it co( d be changed# The e,terna a(ditors are not responsib e for setting (p and "aintaining the s!ste" of interna contro , nor are the! responsib e for providing "anage"ent infor"ation, nor are the! responsib e for prod(cing financia state"ents#
C$apter = Management
T$e purpose and process of management
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$age 89

'e no% t(rn to consider the s(b6ect of "anage"ent# There are "an! possib e definitions and here are t%o: &7etting t$ings done t$roug$ ot$er people&* +anage"ent i"p ies that !o( are in so"e %a! organising %hat other peop e are doing, and indeed the idea of organising sho( d "a*e (s consider %hat&s "eant b! an organi7ation# :A socia arrange"ent %ith a contro ed perfor"ance of co ective goa s:# The i"portant %ords here are :socia ,: :contro ed,: and :co ective:# The %ord :socia : recognises that %e are not "achines, that %e are peop e, that %e have an i"portant socia or h("an aspect to o(r characters# 'e %i see that in the ear ! theories of "anage"ent, the socia di"ension %as often rather (nderstated# The idea of :contro ed: is i"portant# Basica ! one of the ro es of "anage"ent %i be to set so"e sort of goa s or targets and then to tr! to ens(re that peop e achieve that# Fina !, :co ective:) the idea that in an organisation %e sho( d a be %or*ing together#
Trait t$eory
+(ch of the disc(ssion of "anage"ent concerns %hat "a*es a good "anager and %hat activities good "anagers sho( d act(a ! (nderta*e# One of the ear iest theories is *no%n as :trait theor!#: 0ere the hope %as that %e co( d perhaps spot %ho %i be a good "anager thro(gh certain other traits that the! "ight possess s(ch as inte igence, initiative, se f3ass(rance, even ho% ta the person %as# This never rea ! got ver! far) it %as too s(b6ective# For e,a"p e, ho% %o( d !o( ba ance inte igence vers(s charis"a; +an! good eaders are ta b(t then eaders s(ch as Napo eon and "an! others %ere rather s"a and %ere perhaps overco"pensating# Trait theor! %as rea ! a dead end: it proved to be no good %hatsoever b! predicting %ho the good "anagers "ight be#
2enri !ayol % Classical Management

One of the ear iest "anage"ent theorists %as 0enri Fa!o %ho %as active in the ear ! 1<==s# 0e be ieved that the "anage"ent theories co( d be deve oped, then that "anage"ent co( d be ta(ght# 0e said that "anagers have five f(nctions:
. anning 1rgani7ing Co""anding

$age 8>
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Coordinating Contro ing
There are perhaps t%o things to note here# First of a , he rea ! said nothing abo(t inspiring or eading or "otivating) "(ch of the socia aspects of "anage"ent %ere "issing# And second !, a tho(gh none of (s is i*e ! to den! that p anning, organising, co""anding, coordinating, and contro ing are i"portant aspects of "anage"ent, dividing the "anage"ent tas*s into these five f(nctions doesn&t necessari ! he p (s to be better "anagers# 'e are (n i*e ! to set o(r diaries sa!ing that fro" <:== to 1=:== in the "orning %e %i do a bit of p anning, fro" 1=:== to 11:== perhaps a bit of co""anding and so on# 2no%ing %hat !o( sho( d do is ver! different fro" being ab e to do it at appropriate ti"es# Fa!o &s %or* co"es (nder the heading of :c assica "anage"ent: and c assica "anage"ent theories ho d a vie% that there is a correct %a! of "anaging, 6(st as c assica architect(re p(t for%ard the idea that there are proper proportions of b(i dings %hich p ease the e!e and %hich are therefore correct# C assica "anage"ent he d a vie% that there %as a set of go den r( es and if !o( obe!ed these !o( %o( d be a good "anager# In genera c assica "anage"ent is not be ieved, or at east not naive ! be ieved, an! "ore#
Taylor % scientific management

Frederic* Ta! or %as an A"erican %ho deve oped his theories of scientific "anage"ent in the ate 1C==s# 0e %as the first "an %ho dee"ed %or* deserving of s!ste"atic observation and st(d!# /o( "(st re"e"ber that rea ! (nti the ate 1C==s "ost b(sinesses had been re ative ! s"a , often consisting of one or t%o peop e, perhaps %ithin a fa"i !, "a*ing (se of individ(a crafts and s*i s# As b(sinesses gre% in si7e, (nti Ta! or ca"e a ong, no one tho(ght that e"p o!ees sho( d be to d ho% to do so"ething# That %as si"p ! not tho(ght to be a f(nction of "anage"ent# Ta! or said that it is a f(nction of "anage"ent to st(d! %or*, to deve op a science of %or*, and fro" that to %or* o(t ho% 6obs co( d be designed so that the! co( d be carried o(t efficient !# This co( d a o% e"p o!ees to earn "ore# -( e of th("b "ethods sho( d be rep aced b! "ethods based on scientific st(d! of the tas*s# Scientifica ! se ect, train, and deve op each e"p o!ee rather than etting the" train the"se ves) provide detai ed instr(ctions and s(pervision of each %or*er) divide %or* near ! e4(a ! bet%een "anagers and %or*ers so that the "anagers app ! scientific "anage"ent princip es to p anning the %or* that the %or*ers have to act(a ! carr! o(t# Inevitab ! this ed to tas* specia isation, %hich is basica ! the c assic prod(ction ine, beca(se it %as discovered that one of the "ost efficient %a!s of carr!ing o(t %or* %as to do a re ative ! si"p e tas* over and over again# In ater ife Ta! or %as criticised for deh("anising %or*# B(t it&s i"portant to re"e"ber that $-E$A-E. B/ 'A0A1 A20TE- 20AN $age 8A

his a"bition %as not to do this 3 his a"bition %as to enab e %or*ers to earn "ore thro(gh %or*ing in a "ore efficient environ"ent# .otential benefits arising from Taylorism are: Increases in prod(ctivit!,
Fair and higher %age a ocation based on o(tp(t, and

'or*force care progra"s beca(se if !o( didn&t care for !o(r %or* force, !o( have to %aste "one! thro(gh additiona recr(it"ent, training, and inefficiencies#
On the do%nside it had a great capacit! for deh("anising %or*#
2uman relations sc$ool*

Aro(nd 1<8>, E ton +a!o carried o(t a ver! i"portant series of e,peri"ents at the 0a%thorne p ant of the 'estern E ectric co"pan!# In one of these e,peri"ents he divided a depart"ent into t%o# 0a f of the %or*ers %ere the contro gro(p, b(t for the other ha f he varied the ighting, so"eti"es "a*ing it better, so"eti"es %orse# 0e then as*ed those %or*ers %hat ighting the! preferred and %hat s(ggestions the! "ight have for i"proving it# +(ch to his s(rprise he discovered that %hether or not the ighting %as increased or decreased, the prod(ctivit! of the peop e in the e,peri"enta gro(p %ent (p# The conc (sion fro" this e,peri"ent %as that b! "a*ing these peop e fee specia , b! as*ing their opinions, b! as*ing for s(ggestions, the! %ere "otivated# The! en6o!ed being treated as individ(a s, as peop e, rather than si"p ! being to d %hat to do# This ed to %hat %as ca ed a :h("an re ations schoo : in recognition that there is "ore to good "anage"ent than si"p ! p anning, organi7ing, contro ing, coordinating, and co""(nicating# The second part of these st(dies dea t %ith gro(ps# +anage"ent had tried to increase prod(ctivit! b! offering peop e higher %ages, and %as s(rprised to discover that prod(ctivit! did not increase# 'hat +a!o discovered %as that there %as a sophisticated b(t infor"a s!ste" %hereb! peop e agreed %hat the proper eve of prod(ctivit! act(a ! %as# These peop e for"ed %hat&s no% *no%n as a gro(p: a n("ber of individ(a s %ho deve op gro(p nor"s, in other %ords, an accepted standard of behavio(r# If !o( don&t co"p ! %ith the nor"s of the gro(p, !o( are i*e ! to be e,c (ded fro" that gro(p# Note that "anage"ent did not de iberate ! for" gro(ps) these %ere for"ed b! peop e 6(st beca(se the! %or*ed together or re ied on each other or the! beca"e friends# $eop e inevitab ! i*ed being part of the gro(p and being associated %ith other peop e# These gro(ps have a ver! profo(nd inf (ence on ho% peop e are i*e ! to behave# $-E$A-E. B/ 'A0A1 A20TE- 20AN $age 8B

,tyle t$eories
'e have a read! said that trait theor! has been discredited# 'e no% co"e on to %hat&s *no%n as :st! e theories:, in other %ords, a good "anager beco"es a good "anager beca(se of his st! e of "anage"ent# 'hether or not this infor"ation he ps to be a good "anager is another "atter b(t !o( have to *no% the na"es and the *e! ter"s that the! %ere associated %ith# First, $eter .r(c*er %ho stated that "anage"ent has three f(nctions# /o( have to +anage a b(siness +anage other "anagers +anage the %or*ers and the %or*#
0e bro*e these do%n into five categories of activit!#
Druc-er
.r(c*er said that a "anager&s activities consist of: Setting ob6ectives, Organising the gro(p, +otivating and co""(nicating, +eas(ring perfor"ance, and .eve oping peop e
There are t%o i"portant additions here to %hat Fa!o s(ggested# First, .r(c*er said that "otivation is a ver! i"portant part of "anage"ent, and second !, deve oping peop e is i"portant, so the! fee f( fi ed, that the! are gro%ing, that the! are gaining ne% s*i s, that the! are achieving their "a,i"(" potentia # -ea ! the rest of the ist isn&t ver! "(ch ne% on %hat Fa!o s(ggested abo(t p anning, organising, contro ing, coordinating, and co""(nicating#
Mintzberg % managerial functions

+int7berg divided (p "anageria f(nctions in a s ight ! different %a! and again %hether !o( find this (sef( or not is irre evant and !o( "(st be ab e to associate the na"e of +int7berg %ith the ter"s in bo d be o%: $-E$A-E. B/ 'A0A1 A20TE- 20AN $age 8C

Interpersonal roles
arising fro" for"a a(thorit! and stat(s and s(pporting the infor"ation and decision activities
Fig(rehead @iaison eader
Information processing roles.
Decisional roles
For e,a"p e, the! "onitor infor"ation "a!be b! oo*ing at "anage"ent acco(nts and the! distrib(te infor"ation "a*ing significant decisions, perhaps abo(t ho% reso(rces sho( d be a ocated, negotiating %ith s(pp iers or ead "e"bers of staff, and dea ing %ith disp(tes) in other %ords, the dist(rbance hand ing ro e
"onitor disse"inat or spo*es"an
i"proverI changer dist(rbanc e hand er reso(rce a ocator negotiator
Once again, *no%ing that "anage"ent "ight have these three f(nctions 3 interpersona , infor"ation processing and decisiona 3 doesn&t necessari ! he p one be a better "anager#
.ower, aut$ority, responsibility, delegation

There are fo(r i"portant ter"s regarding "anage"ent:
.ower* $o%er is the abi it! to inf (ence peop e or events# 'hat gives peop e
po%er; -ationa 3 ega , that&s the po%er !o(r "anager has# /o( do %hat !o(r "anager te s !o( beca(se that person is ca ed :"anager: and part of !o(r contract of e"p o!"ent i"p ies that !o( sho( d do %hat !o(r "anager te s !o( provided that it&s ega # Coercive po%er 3 (se of force# -e%ard po%er 3 offering !o( "ore pa! or pro"otion if !o( do %hat !o( are to d# 2no% edge po%er 3 the po%er that so"e peop e have beca(se the! have specia ist *no% edge %hich the! re ease se ective !#
$-E$A-E. B/ 'A0A1 A20TE- 20AN
$age 8<

Charis"atic po%er 3 the po%er that so"e peop e have si"p ! b! their force of persona it! or their char"#
'ut$ority* Of co(rse having po%er doesn&t "ean !o( have a right to e,ercise that po%er# If !o( have the right to e,ercise po%er then !o( have %hat&s *no%n as a(thorit!# So for e,a"p e, !o( %i be %e a%are of the ter" :a(thorit! i"its: %here peop e "a! be ab e to b(! fi,ed assets (p to J1,=== b(t not be!ond that# 0aving po%er %itho(t a(thorit! is poor b(t so is having a(thorit! %itho(t po%er# 'e probab ! a re"e"ber so"e schoo teachers %ho have the a(thorit!, the right to te the c ass to sit do%n and be 4(iet, b(t %hen the! tr! to e,ercise that a(thorit!, the! had a co"p ete ac* of po%er over the c ass# esponsibility* This is the sa"e as acco(ntabi it!# If !o( are "ade responsib e or co(ntab e for so"ething then as the sa!ing goes :the b(c* stops %ith !o(:# Delegation* This is the transfer of a(thorit!# Note that it is the transfer of a(thorit!: !o( cannot transfer responsibi it!# If !o(r "anager as*s !o( to do so"ething and !o( de egate that tas* to one of !o(r staff "e"bers, and that staff "e"ber "esses it (p, %hen !o(r "anager repri"ands !o(, !o( can&t b a"e that staff "e"ber# The tas* %as !o(rs and either !o( have to do it !o(rse f or ens(re that !o( de egated it proper ! to a staff "e"ber %ho had the ti"e and s*i s, and %ho" !o( co( d s(pervise to "a*e s(re that the tas* %as act(a ! co"p eted#
C$apter >? Leaders$ip

's$ridge Management College model
'e have t%o f(rther st! e theories to oo* at# First the Ashridge +anage"ent Co ege "ode # This identified fo(r t!pes of eadership st! e, b(t re"e"ber these are on ! points in the contin((" of "anage"ent st! es# First and the "ost a(tocratic or dictatoria is :te s#: The "anager si"p ! te s the staff %hat to do# The "anager does not even fee a need to have to e,p ain %h! that&s %hat has to be done# A s ight ! "ore ibera approach is :se s#: 0ere the "anager te s peop e %hat to do b(t then se s that idea to the", convinces or pers(ades the", or e,p ains %h! it has to be done that %a!# Ne,t, there is the :cons( ts: st! e# 0ere the "anager %i as* staff %hat the! thin* o(ght to be done, b(t then the "anager %i "a*e the fina decision# 0o%ever, this is 4(ite a participative st! e# Fina ! there is :6oins: or 6oins %ith# This can be entire ! de"ocratic %here the "anager act(a ! abandons "anage"ent and as*s peop e to vote on %hat sho( d be done# This "ight be the sort of st! e adopted for deciding things i*e %here sho( d the s(""er o(ting be# 0o%ever, "an! peop e regard this $-E$A-E. B/ 'A0A1 A20TE- 20AN $age 9=

e,tre"e ! de"ocratic st! e of eadership as abandoning one of the i"portant f(nctions of "anage"ent %hich is to direct and contro #
9la-e and Mouton's managerial grid

The fina st! e theor! is B a*e and +o(ton&s "anageria grid# These researchers "eas(red t%o e e"ents of "anage"ent or eadership# First, the eader&s concern for peop e, and second their concern for the tas* that had to be acco"p ished# The grid %as initia ! devised as a %a! of ana !sing a "anager&s approach thro(gh a series of 4(estionnaires and their position %o( d then be p otted on the grid# This %o( d give the" so"e indication of %here i"prove"ent %as needed# First of a %e go to the top eft of the grid 3 so"eone %ho has a ver! high concern for peop e b(t re ative ! o% concern for acco"p ishing the tas*# This "anager adopted a co(ntr! c (b st! e# In a %a! the! %eren&t rea ! ver! interested in acco"p ishing tas*s at a as ong as peop e had a nice ti"e# 0ence their na"e :co(ntr! c (b:: ever!thing %as fine as ong as peop e %ere happ!# The other e,tre"e is at the botto" right of the grid, the a(thoritarian or tas*3 oriented st! e# 0ere the eader p(ts a their energies into getting the tas* done b(t co( dn&t care ess abo(t the peop e# These "anagers %o( dn&t be ver! nice to %or* for: the! %i p(t !o( (nder a ot of press(re, the! certain ! %o( dn&t be interested in dea ing %ith an! persona iss(es that !o( "ight have %hich stood in the %a! of getting the tas* done# The best st! e is pres("ab ! at the top right, so"eone %ho has great concern for peop e a so great concern for the tas*# This is regarded as the tea" eadership st! e: so"eone %ho %i be a ver! good eader si"( taneo(s ! getting tas*s acco"p ished as re4(ired b(t a so "a*ing their staff fee %anted and needed, and having ti"e for the"# +ost ordinar! "anagers are probab ! going to be near the "idd e, the >,> position, the "idd e of the road st! e# -easonab ! good %ith peop e, reasonab ! good %ith the tas*, b(t of co(rse %hat %e %ant to do is to tr! and shift peop e (p to%ards the <,< position# There %i be so"e "anagers at the 131 position, the i"poverished st! e: not "(ch good at an!thing# One rea ! has to as*: 'h! are the! "anagers; Is there an! %a! their perfor"ance can be i"proved at a ;
Contingency t$eories
'e no% co"e to a gro(p of theories *no%n as :contingenc! theories:# These are the "ost "odern theories and are "i es a%a! fro" the origina c assica theories# If !o( re"e"ber, the idea behind c assica theories %as that the! presented a set of go den r( es %hich pro"ised that if !o( "anage i*e this, then !o( %i "anage s(ccessf( !# $-E$A-E. B/ 'A0A1 A20TE- 20AN $age 91

Contingenc! theories sa! that there aren&t an! go den r( es# There is no sing e, proper %a! of "anaging# If !o( as* so"eone, :0o% sho( d I "anage;: the appropriate rep ! is, :'e , it dependsK# It "ight depend for e,a"p e on the peop e !o( are "anaging, the (rgenc! of the tas* and the reso(rces !o( have avai ab e# Contingenc! theories "ean that st! e of "anage"ent is contingent or dependent on the sit(ation# /o( %i probab ! find so"e of these "ore interesting and "ore he pf( than others, b(t again that doesn&t "(ch "atter, the! are a "entioned in the s! ab(s# /o( have to be ab e to tie (p the *e! %ords (sed in each theor! %ith the a(thor of that theor!#
'dair % action%centred leaders$ip

Adair is associated %ith action3centred eadership# 'e *no% that B a*e and +o(ton p otted peop e&s approach to eadership b! oo*ing at their concern for individ(a s and the concern for the tas*# Adair added a third variab e L a recognition that there sho( d be a concern for the gro(p# 0o% sha %e "anage; 'e , according to Adair, it depends# On so"e occasions there "a! be a ver! (rgent tas* and %e have to red(ce o(r concern for individ(a s and the gro(p and concentrate on the tas*# So"eti"es there "a! be crisis %ithin a gro(p) perhaps their eader has eft, perhaps there is disagree"ent %ithin it, and then the "anager or eader sho( d pa! "ore attention to "a*ing s(re that the gro(p operates proper !# Of co(rse, so"eti"es the proper approach to eadership %i "ean concentrating on an individ(a and seeing to their needs, perhaps i*e giving advice or training#
2andy's best fit t$eory

2andy's best%fit t$eory identified four variables: @eader S(bordinates Tas* Environ"ent
0and! said that each of these variab es co( d be %hat he described as & oose& or &tight&# A tight eader is ver! a(tocratic# Tight s(bordinates i*e being to d %hat to do and %ant to avoid ris*# The! %ant repetitive tas*s) tighter tas*s are ro(tine and %e (nderstood, re ative ! si"p e# And a tight environ"ent %o( d be one %here, perhaps, ti"e is short or there isn&t "(ch reso(rce to go aro(nd# &@oose& %o( d "ean that the eader is ver! participative or de"ocratic) s(bordinates %ant to participate and contrib(te to so (tions# The tas*s are nove , $-E$A-E. B/ 'A0A1 A20TE- 20AN $age 95

co"p e,, high ris*) the environ"ent is one %hich is "ore genero(s in ti"e and reso(rces to a o% co"p e, tas*s to be dea t %ith# 0and! said that provided a fo(r variab es ine (p, either a oose or a tight, things %i %or* fair ! %e # So an a(tocratic "anager in charge of staff %ho %ant to be to d %hat to do, doing ro(tine, repetitive tas*s in an environ"ent %hich is rather constrained %i tend to %or*# 0o%ever, he said that once !o( get a crossover !o( are in tro(b e# If !o( p(t an a(tocratic eader in charge of high ! trained s(bordinates %ho are (sed to contrib(ting to%ards so (tions or prob e"s, and %ho are (sed to participation, and these peop e are given ro(tine tas*s %ith not "(ch ti"e to do the" in, then it&s not going to %or* ver! %e # The s(bordinates %i not get on %ith their eader) the s(bordinates %i not en6o! the tas*# So %hen it co"es to :0o% sha %e "anage;:, 0and! is sa!ing it depends on the sit(ation and the variab es# The best %a! of "anaging is to "a*e s(re the eader, s(bordinates, tas*, and environ"ents a "atch# Note that this is 4(ite different fro" sa!ing that tight is better than oose or oose is better than tight# 'hat %e are sa!ing is that either %i %or* provided the fo(r variab es "atch#
9ennis
Bennis "a*es a distinction bet%een the ter" :"anager: and the ter" : eader:# A "anager is pri"ari ! concerned %ith ad"inistering the stat(s 4(o# In other %ords, pri"ari ! oo*ing after the e,isting b(siness so"e%hat in the short ter", *eeps an e!e on the profit for the co"ing !ear# That&s not to sa! it&s not an i"portant activit!# B(t best to thin* of a "anager as having a ti"e hori7on of abo(t a !ear# A eader is "ore concerned %ith innovation, %i be oo*ing at the ong3ter" f(t(re of the organisation, %i not be so concerned %ith "atters of detai ed contro , b(t %i be foc(sing on peop e, inspiring tr(st, as*ing :0o% can %e i"prove, %here sho( d the b(siness go, %hat sho( d the b(siness do;:# The eader can therefore be regarded as transfor"ationa 3 in other %ords, concerned %ith doing the right thing) %hereas the "anger is "ore concerned %ith transactiona eadership 3 in other %ords, doing things right, b(t not necessari ! 4(estioning %hether %hat %e are doing and contro ing is (sef( # Bennis s(ggested that great eaders have certain 4(a ities# /o( "ight i*e to co"pare this ist %ith the 4(a ities of good "anagers !o( have *no%n or good %or d eaders and po iticians !o( *no% abo(t# Integrit! 3 that rea ! "eans honest!) .edication) +agnani"it! 3 "agnani"it! is i*e generosit!, partic( ar ! %hen !o( have %on a batt e) h("i it!) $age 98
$-E$A-E. B/ 'A0A1 A20TE- 20AN

Openness, so that peop e can tr(st !o() Creativit!, so that !o( can thin* of nove so (tions to diffic( t prob e"s#
2eifetz % adaptive leaders$ip

0eifet7 %as responsib e for the idea of adaptive eadership# The princip es of this approach are as fo o%s: +ove bet%een the ba con! and the batt efie d# In partic( ar, "a*e s(re !o( "ove to the ba con! %here !o( get a ong vie%, an overvie% of a %ho e prob e"# +a*e s(re !o( don&t concentrate p(re ! on fine detai # Identif! %hat the adaptive cha enge is# This %i be a cha enge for %hich there is no read! so (tion and %here there "a! be a gap bet%een c(rrent behavio(r and the behavio(r re4(ired# Create a ho ding environ"ent# That is a safe environ"ent, an environ"ent %here !o( %i agree to s(pport those %ho are responsib e for p(tting thro(gh the changes# .on&t i"pose change b(t give it bac* to the peop e %itho(t prob e"# $rotect the voices of eadership fro" be o%# @eaders are not a %a!s the top of a hierarch!, there co( d be i"portant and inf (entia eadership %e do%n in a hierarch! and their vie%s and interests "(st a so be ta*en into acco(nt# -eg( ate the distress Se4(ence and pace the %or* so that it doesn&t beco"e too over%he "ing# $a! discip ined attention to the iss(es, *eep peop e foc(sed, (se conf ict positive ! and ens(re that peop e *eep their e!e on the ba #
!iedler
Fied er s(ggested that eadership effectiveness depends on: @eadership st! e 3 that&s the eader&s o%n attrib(tes, and the eader can either be ps!cho ogica ! c ose or ps!cho ogica ! distant, and Sit(ationa favo(rab eness, the degree to %hich a sit(ation gives the eader contro and inf (ence#
A eadership st! e %hich is ps!cho ogica ! distant is one %here there tends to be ver! for"a , effective ! distant re ations bet%een the eader and the s(bordinates# For e,a"p e, the! prefer for"a cons( tations %ith s(bordinates rather than "ore infor"a see*ing of opinions#
$-E$A-E. B/ 'A0A1 A20TE- 20AN
$age 99

A ps!cho ogica ! c ose eader %i be "ore concerned to "aintain good h("an re ationships at %or* than to ens(re that tas*s are being carried o(t %e # The! are a friend ier, perhaps "ore eas!going t!pe of eader# A favo(rab e sit(ation is one %here there is a good re ationship bet%een the eader and fo o%ers# For e,a"p e, if the fo o%ers tr(st the eader, or %here the str(ct(re of the tas* is c ear ! defined so that ever!one *no%s %hat has to be achieved, or %here the eader has po%er to, for e,a"p e, re%ard and p(nish# S(ccessf( or effective eadership depends on adopting the right st! e so that it "atches the sit(ation# Fied er s(ggested that a ps!cho ogica ! distant st! e %o( d %or* %e %here either the sit(ation %as ver! favorab e or ver! (nfavorab e# So in these t%o e,tre"es, the eadership st! e sho( d be ps!cho ogica ! distant# If ho%ever the sit(ation %as (nfavorab e, a "ore diffic( t sit(ation, then it %o( d be "ore i"portant for the eader to tr! to adopt a c ose eadership st! e#
@otter
2otter had si"i ar ideas to Bennis, "a*ing an i"portant distinction bet%een eadership and "anage"ent# 0e said that eadership and "anage"ent are t%o distinct and co"p e"entar! s!ste"s and both are necessar!# +anage"ent is abo(t coping %ith co"p e,it!# 'itho(t good "anage"ent co"p e, co"panies and organisations tend to beco"e chaotic# ?ood "anage"ent brings order and consistenc!# @eadership b! contrast is abo(t coping %ith change# A change a %a!s de"ands "ore eadership# Co"panies "anage co"p e,it! b! p anning and b(dgeting, b! organising their staff, b! contro ing perfor"ance, and prob e"3so ving# @eading an organisation, ho%ever, invo ves setting a direction, deve oping a vision of the f(t(re, deve oping strategies to achieve that vision, "otivating and enth(sing peop e to *eep the" "oving in the right direction#
C$apter >> T$e nature of groups

7roups
2no% edge of gro(ps is an i"portant aspect of "anage"ent theor!# ?ro(ps can be for"a or infor"a # $-E$A-E. B/ 'A0A1 A20TE- 20AN $age 9>

The formal group is si"p ! one %hich is for"ed and *no%n b! "anage"ent# /o( "a! re"e"ber gro(ps %ere "entioned %hen %e ta *ed abo(t the h("an re ations schoo of "anage"ent first identified b! E ton +a!o# In his st(d! at the 0a%thorne p ant of the 'estern E ectric Co"pan! the e,istence of infor"a gro(ps %as discovered#
"nformal groups are not for"ed b! "anage"ent action and indeed

"anage"ent "a! not even be a%are of their e,istence# 0o%ever %e are socia beings and %e i*e being part of a gro(p and therefore (nderstanding gro(ps is i"portant to "anage"ent#
0and! defined a gro(p as : :An! co ection of peop e %ho perceive the"se ves to be a gro(p:# This is a ver! good definition beca(se it inc (des both for"a and infor"a gro(ps# 0and! id an! gro(p %i have: A sense of p(rpose or ai" An identit!) in another %ords, there is a fee ing of %ho is %ithin the gro(p and %ho isn&t %ithin the gro(p# ?ro(p nor"s, that is, accepted %a!s of behaving and if !o( don&t fa in ine %ith gro(p nor"s, !o( are i*e ! to be e,c (ded fro" the gro(p# Co""(nication bet%een the "e"bers of the gro(p#
Team
oles
A tea" is an e,a"p e of a for"a gro(p: the tea" %o( d have been de iberate ! created b! "anage"ent# One of the great advantages of the tea" is that peop e %ith different s*i s are bro(ght together so that the tea" is stronger than an! one person individ(a ! co( d be# So if !o(&re for"ing a tea" to oo* at the i"p e"entation of a ne% IT s!ste", !o( probab ! have so"eone %ith IT s*i s, so"eone %ith acco(nting s*i s, so"eone %ith prod(ction s*i s, and so on# Each of these peop e %i bring *no% edge and a so can represent their o%n partic( ar interests# 0o%ever, as %e as bringing different technica s*i s it has been recognised that peop e bring different ps!cho ogica profi es, and this has been e,a"ined b! .r# +eredith Be bin %ho categorised eight or perhaps nine tea" ro es, and prod(ced 4(estionnaires that %o( d a o% peop e to assess %hat their partic( ar characteristic or characteristics %ere# C$airman Eso"eti"es ca ed, the &coordinator*&0 This person c arifies goa s, pro"otes decision3"a*ing and is a good de egator#
$-E$A-E. B/ 'A0A1 A20TE- 20AN
$age 9A

,$aper* Is so"eone %ho is so"eone driven, thrives (nder press(re, %ants to overco"e obstac es, tends to %ant to get their o%n %a!# Monitor/evaluator* Sees a options, 6(dges things acc(rate ! and fair ! ob6ective !# Company wor-er Eso"eti"es ca ed an :i"p e"enter:F# T(rns ideas into practica actions# The!&re not partic( ar ! the theoretica person, "ore the :ro !o(r s eeves (p and get on %ith it: sort of person# esource%investigator* E,p ores opport(nities, e,a"ines contacts# Team wor-er* @istens, b(i ds, tries to p a! do%n potentia friction, ca "s the %ater# .lant9 rather (n(s(a (northodo, person 3 creative, i"aginative, and is de iberate ! p(t into the tea" 3 p anted in other %ords 3 %ith the hope that the! %i so ve diffic( t prob e"s and bring so"e s ight ! offbeat ideas into consideration# Completer/finis$er* Is painsta*ing, conscientio(s, caref( , oo*s for errors and is *een on finishing %ithin the dead ine# And then there is a ,pecialist* A sing e3"inded person %ho provides partic( ar *no% edge and the s*i s %hich "a! be in rare s(pp ! other%ise#
Be bin sa!s that !o( %ant peop e %ith a of these characteristics %ithin a tea") this doesn&t "ean !o( have to have eight or nine peop e beca(se "an! peop e are strong in "ore than one of these characteristics# /o( a so have to so"eti"es be caref( not to have "ore than one person of a partic( ar sort# For e,a"p e if !o( have t%o shapers 3 the! %ere the peop e %ho 4(ite i*ed their o%n %a!# If !o( have t%o shapers there is i*e ! to be so"e conf ict#
Tuc-man % ,tages of team development

Another area of gro(ps %hich %i easi ! end itse f to 4(estions in the e,a"ination is T(c*"an&s stages of tea" deve op"ent# 0e said ever! tea" or indeed gro(p %i go thro(gh these stages# First, there is the forming stageA a rather s o% tentative stage 3 sho( d %e for" a gro(p; 'hat "ight it be for; In infor"a gro(ps, a grad(a co"ing together of peop e %ith i*e interests# Then he there %o( d be a storming stage, a stage %here different peop e "ight co"pete for different ro es %ithin the gro(p) perhaps t%o peop e %ith shaper3 t!pe characteristics fighting over %ho is act(a ! going to beco"e the "ain spo*esperson for the gro(p# Then there %o( d be norming 3 estab ish"ent of ho% the gro(p is going to behave, acceptab e "ethods of behavior# $-E$A-E. B/ 'A0A1 A20TE- 20AN $age 9B

At ong ast the gro(p begins to perform) %e get so"e o(tp(t fro" it# $eop e *no% each other, the! *no% %hat the gro(p is for, the! *no% %ho is the eader of the gro(p, the! *no% %ho is the spo*esperson of the gro(p, the! *no% %ho the co"p eterIfinisher is, the! *no% ho% often the! are going to "eet, %hether for"a records are going to be *ept and so on, and the! can perfor"# Fina ! there is a dorming stage# This is %here a gro(p "eets o(t of habit rather than o(t of an! rea need# At the dor"ing stage, effective ! the s eeping stage, not "(ch is achieved and rea ! the gro(p at this point sho( d be disbanded# Are there an! essons to be earned fro" these stages of tea" deve op"ent; 'e , the "ain one is that no (sef( o(tp(t is rea ! achieved (nti the gro(p reaches its perfor"ing stage# Therefore an!thing "anage"ent can do to acce erate the passage fro" for"ing, tro(gh stor"ing and nor"ing (nti %e get to perfor"ing, is good# So %hen a for"a gro(p is created, "anage"ent can for" it, the! %i sa! %ho is in it, %hat it&s for# The! %i sa! %ho the eader of the gro(p or the tea" is going to be) that&s the stor"ing o(t of the %a!# The! "ight te the gro(p that !o( %i "eet once a %ee*, that %e %ant !o( to report once a "onth# And ver! 4(ic* ! the gro(p can get do%n to act(a ! perfor"ing so that the organisation gets (sef( o(tp(t# The second thing that T(c*"an said %as that ever! ti"e the co"position of the gro(p changes 3 one "e"ber eaves, another one 6oins 3 !o( go thro(gh these stages again# There is a s ight oss of perfor"ance# And once again "anage"ent co( d ta*e action to tr! to introd(ce a ne% person to the gro(p in s(ch a %a! that the gro(p is dist(rbed re ative ! itt e, and the perfor"ing contin(es a "ost (nabated#
Teams and committees

Fina ! on gro(ps, a co(p e of descriptions of t%o t!pes of for"a gro(p# First of a a tea" and %e (se the %ord &team& a(to"atica ! %hether it&s an IT i"p e"entation tea", a pro6ect tea", a footba tea"# Tea"s are de iberate ! for"ed, the! have ver! specific ob6ectives, a "ost a %a!s the! bring together "i,ed s*i s, and the! %i have a definite eader or captain# Committees are a so for"a gro(ps de iberate ! for"ed, and certain ! %ith specific areas to dea %ith# 0o%ever, rather than act(a ! carr!ing o(t specific tas*s the! tend to be "ore concerned %ith decision3"a*ing, bringing together peop e fro" different depart"ents, disc(ssing "atters and co"ing to a conc (sion# There %i be a chairperson or chair"an, or no%ada!s even 6(st ca ed :chair: This person tends to coordinate the co""ittee rather than giving it orders# The! %i be dra%n fro" different depart"ents and the! %i have "i,ed s*i s so the infor"ation is shared, and fina ! an! decisions "ade are nor"a ! recorded for"a !#
$-E$A-E. B/ 'A0A1 A20TE- 20AN
$age 9C
C$apter >B T$eories of motivation

Motivation
+otivation has been described as the (rge to r(n to%ards a target rather than 6(st to "ove s o% ! to%ards it# Understanding "otivation is i"portant for "anagers# /o( %ant !o(r staff to be *een to r(n to%ards target, to never be satisfied# If !o( don&t (nderstand %hat "otivates individ(a s or ho% the! can be "otivated then it can be diffic( t to get the" to %or* enth(siastica ! in a %a! that %i f( fi the organisation&s ob6ectives#
Motivation
There are t%o gro(ps of "otivation theor!# First, content t$eory# This as*s %hat is the 6ob content or the re%ards of the 6ob that %i "otivate peop e# The other theor! is process t$eory# This tries to oo* at the "enta process b! %hich peop e beco"e "otivated# 'hat tho(ght processes do the! go thro(gh before peop e decide to act in a partic( ar %a! and head to%ards partic( ar goa s;
Maslow's 2ierarc$y of 3eeds

One of the "ost fa"o(s theories of "otivation is +as o%&s 0ierarch! of Needs %hich %as p(t for%ard in 1<98# This is a content theor! of "otivation# +as o% stated that %e a have a variet! of needs and %e&re "otivated to tr! to "eet those needs# 0o%ever, he said the needs for" a hierarch!# First if !o( have abso (te ! nothing, !o(r %or d %i be do"inated b! ph!sio ogica needs# Those are, effective !, ph!sica needs: so"e%here to ive, eating, food# Once those needs have been satisfied then !o( t(rn !o(r attention to%ards safet! needs# Not on ! do !o( %ant so"e%here to ive b(t !o( %ant so"e%here re ative ! safe to ive# In ter"s of 6obs and organisations one "ight arg(e that once one earns eno(gh to satisf! ph!sio ogica needs then one "ight t(rn to%ards satisf!ing safet! needs 3 ph!sica safet! in e %or*p ace, "edica coverage, 6ob sec(rit!# Once the safet! and ph!sio ogica needs have been "et, %e then t(rn o(r attention to socia needs, the need to get on %ith peop e, to fee %anted, to have friends# $-E$A-E. B/ 'A0A1 A20TE- 20AN $age 9<

After that there is estee", the need to be respect, to be recognised, to be oo*ed (p to, to be praised, to fee that !o(&ve done so"ething %e # Fina ! the se f3act(a isation needs# This is a need %e "ight have to thin* that %hat %e&re doing, the %a! %e&re iving is %orth%hi e, that it&s not a si"p ! a %aste of ti"e# +as o% said %e a have these needs# So"e of the" can be "et at %or* perhaps# So"e peop e don&t need to "eet the" at %or* if the! %ere born e,tre"e ! rich as there is no prob e" %ith their ph!sio ogica needs or safet! needs and there %i probab ! be no prob e" either %ith their socia , estee" or even se f3 act(a isation needs# There are "an! critics of this theor!# For e,a"p e that not a peop e go thro(gh the needs or p ace their needs in the sa"e hierarch!, and it co( d %e be that "an! peop e have higher socia needs than are s(ggested in this diagra"# So"eti"es %e "ight be ab e to "eet these needs thro(gh %or*# So"eti"es %or* "a! give (s no opport(nit! to "eet these needs# $erhaps the "ain esson to be earned fro" this theor! is that there is "ore to "otivating peop e than "one!# $eop e "a! prefer stab e e"p o!"ent to a pa! rise, for e,a"p e# The! "ight prefer a s"a pro"otion %ith itt e increase in sa ar!# The! "a! respond ver! %e to being praised and the! "a! respond ver! %e if the! fee %hat the!&re doing is %orth%hi e#
2ierarc$y of needs % limitations

0ere are so"e of the potentia i"itations of +as o%&s theor!# First of a is the order in %hich %e %ant to f( fi needs correct; Is that the on ! order; Second !, %e are a individ(a s, %e "a! have different needs, the! "a! be in different orders, and the i"portance of needs "a! %e change thro(gho(t o(r ives# The theor! "ight not proper ! e,p ain a tr(istic behavio(r) that is behaving in a %a! %hich doesn&t f( fi o(r needs b(t %hich is "ore directed and f( fi ing other peop e&s needs first# Fina ! the theor! is do"inated b! 'estern c( t(ra va (es# +as o% deve oped his theor! in A"erica and it co( d %e be that that c( t(re is "ore interested in "ateria %e 3being than so"e other c( t(res or perhaps socia needs are "ore i"portant# 'e certain ! have to be caref( %hen app !ing +as o%&s hierarch! of needs internationa !# It&s %e *no%n that peop e fro" different c( t(res "a! have different priorities#
2erzberg
$-E$A-E. B/ 'A0A1 A20TE- 20AN
$age >=

0er7berg presents another content theor! 3 the so3ca ed h!giene theor! of "otivation# 0e %as (sing the %ord :h!giene: as an ana og! %ith hospita s# If the hospita is going to "a*e !o( %e it "(st be h!gienic) in other %ords, c ean# If it&s not h!gienic !o(& get %orse# B(t h!giene itse f doesn&t "a*e !o( %e : h!giene is 6(st a starting point# First he arg(ed that an organisation "(st get its h!giene factors correct# If the h!giene factor is "issing then peop e beco"e dissatisfied# E,a"p es of h!giene factors %o( d be eno(gh "one! to ive on, reasonab e re ations %ith co eag(es and !o(r s(periors, reasonab e ph!sica conditions in %hich !o(&re %or*ing, a fee ing that !o(&re being fair ! treated# If an! of these is "issing !o( are i*e ! to be so (pset that none of the other "otivating factors that the organisation tries %i %or*# Once the h!giene factors are in p ace then !o( can have the "otivating factors s(ch as recognition, praise, a fee ing that !o( are advancing and getting better s*i s, a fee ing that %hat !o(&re doing is %orth%hi e interesting %or*# It sho( d be noted perhaps that the 0er7berg h!giene factor theor! is not co"p ete ! different to +as o%&s hierarch! of needs# +an! of the o%er order needs E ph!sio ogica needs and safet! needsF are ver! si"i ar to %hat 0er7berg %o( d ca h!giene factors# The higher order needs Esocia needs, estee" needs, se f3act(a isation needsF are ver! si"i ar to 0er7berg&s "otivating factors# The 0er7berg theor! is so"eti"es *no%n as a t%o3factor theor! Eh!giene factors M "otivation factorsF#
Croom % )+pectancy t$eory

Droo" s(ggested a process theor! ca ed e,pectanc! theor!# -e"e"ber, a process theor! oo*s at the process b! %hich !o( beco"e "otivated and Droo" said that the "otivating force depends on %hat he ca ed va ence and e,pectanc!# B! &va ence& he "eant ho% "(ch !o( %ant the o(tco"e that co( d be achieved b! a certain co(rse of action# The &e,pectanc!& is !o(r "enta e,pectation, !o(r assess"ent of a probabi it! that !o(& act(a ! achieve that res( t, and he said both of these are ta*en into acco(nt in the "otivationa process# So if !o( %ant so"ething ver! bad !, for e,a"p e a pro"otion, b(t !o( thin* there is ver! itt e chance of !o( getting that pro"otion beca(se there are no vacancies, va ence "ight be high b(t beca(se e,pectanc! is ver! o% the "otivationa force %i be ver! o%# If ho%ever !o( ver! "(ch %anted pro"otion and !o( tho(ght that so"ebod! %as going to be eaving, so that there&s a reasonab e e,pectanc! that !o( %o( d be pro"oted, then !o(&re going to %or* 4(ite hard for a %hi e to i"press !o(r s(periors# $-E$A-E. B/ 'A0A1 A20TE- 20AN $age >1

Si"i ar ! if !o(r s(periors or the organisation offered so"ething that !o( %eren&t terrib ! interested in, perhaps a bon(s that !o( tho(ght %as rather trivia , even tho(gh !o( "ight be ab e to get that fair ! easi ! Ehigh e,pectanc!F, beca(se !o( don&t %ant that o(tco"e ver! "(ch, the "otivationa force %i be o%# Therefore to get the highest possib e "otivationa force !o( "(st offer peop e so"ething the! %ant and va (e, and a so present the" %ith a reasonab e chance that the! %i achieve at#
Mc7regor % T$eory D and T$eory E

+c?regor&s na"e is associated %ith Theor! N and Theor! /# This can be regarded as a theor! of "otivation, b(t it can a so be regarded as a theor! of "anage"ent, in partic( ar a contingent theor! of "anage"ent# /o( "ight re"e"ber the Ashridge "ode of "anage"ent st! e: te s, se s, cons( ts, 6oins %ith, a range of st! e going fro" ver! a(tocratic and dictatoria to one %hich %as increasing ! de"ocratic and participative# Theor! N and Theor! / si"p ! represent the t%o e,tre"es# The Theor! N "anager ass("es that peop e rea ! don&t %ant to %or*, that the! have to be %atched ver! caref( !, that the! are a7!, that the! on ! go to %or* %ith so"e re (ctance beca(se the! have to earn "one! to ive# The Theor! / "anager be ieves that the %or*force thin*s that %or* is as nat(ra as p a!, that the! get enor"o(s socia re%ards fro" going to %or*, that the! get enor"o(s interest fro" going to %or*, that the! i*e being given prob e"s to so ve, and the! i*e recognition#
So ho% do %e "otivate these peop e; +c?regor recognised that there "a! be at the e,tre"es these t%o sorts of peop e# It %as ca ed Theor! N and Theor! / to be entire ! ne(tra , not Theor! 'rong and Theor! -ight# Basica ! he %as sa!ing that if !o( are p(t in charge of peop e %ho don&t i*e to %or* and %ho go there re (ctant !, then perhaps the %a! !o( have to get the best %or* o(t of these peop e is to be ver! strict %ith the", to %atch the" caref( !, to contro the" c ose !# ho%ever !o( are a "anager of peop e %ho have good 4(a ifications, %ho are (sed to being as*ed their opinion, %ho have high technica s*i s, then b! far the best %a! to "otivate the" is a "(ch "ore participative approach# So "otivation is effective ! a "atter of contingenc!# It depends %ho" !o( are tr!ing to "otivate# .ifferent peop e are "otivated b! different "anageria approaches#
"ntrinsic and e+trinsic rewards

$-E$A-E. B/ 'A0A1 A20TE- 20AN $age >5

+otivationa inf (ences can be ter"ed :intrinsic: and :e,trinsic re%ards:# Intrinsic re%ards co"e fro" %ithin 3 a fee ing of achieve"ent, cha enge, persona advance"ent, se f3f( fi "ent# E,trinsic re%ards co"e fro" o(tside# T!pica ! the! %o( d be pa!, praise, recognition#
"ncreasing motivation
So ho% on a practica basis co( d %e go abo(t increasing "otivation; The first approach %hich is nor"a ! s(ggested is participation# E ton +a!o&s investigations in the 1<8=s s(ggested that ta*ing an interest in peop e, as*ing their opinion, a o%ing the" to contrib(te to%ards decisions, see"s to "otivate# The second approach is 6ob design, of %hich there are three "ain t!pes# $robab ! the first t%o here aren&t going to be ver! "otivating in fact# Fob enlargement "eans "ore of a "ost e,act ! the sa"e# It is certain ! %hat %i be ca ed a hori7onta change) there is no "ore cha enge or responsibi it! in the 6ob# So if !o( are %or*ing in a car factor! and !o(r 6ob %as p(tting on the front %hee s, 6ob en arge"ent %o( d et !o( p(t on the bac* %hee s as %e # Fob rotation is a so a hori7onta change, no rea increase in cha enge# 0ere if !o( %ere %or*ing in a car factor! and !o(r 6ob %as p(tting on the %hee s then perhaps ne,t %ee* !o( co( d p(t in the head ights, the %ee* after that !o( co( d fit the e,ha(st pipe and so on# B(t the! are a essentia ! fair ! basic "an(a 6obs and at best perhaps 6ob rotation a eviates so"e of the boredo"# Fob enric$ment is a vertica change# It&s giving peop e "ore responsibi it! and "ore cha enge in their 6ob# 0ere %e (se o(r car factor! ana og! again# If !o(r 6ob %as p(tting on %hee s it co( d perhaps be enriched if !o( are a so given responsibi it! for so"e sort of 4(a it! contro # $erhaps as a car %ent past !o(&d be as*ed to identif! b e"ishes in the paint%or* and to report those# 0ere there is an (ndo(bted increased responsibi it! and interest and this is ass("ed to increase peop e&s "otivation so"e%hat#
.ay as a motivator
Fina ! on "otivation %e oo* at the e,tent to %hich pa!, %ages, and sa aries can be regarded as a "otivator# 'hen 0er7berg origina ! for"( ated his h!giene theor! pa! %as regarded as a h!giene factor# /o( had to give peop e s(fficient pa! that the! co( d ive reasonab ! fro" %ee* to %ee*# @ater on he revised his theor! and pa! ca"e in both sides# Basic pa! had to be s(fficient to ive on, then offering peop e bon(ses or increased pa! of so"e sort co( d be strong ! "otivating#
$-E$A-E. B/ 'A0A1 A20TE- 20AN
$age >8

If it&s going to "otivating it&s rea ! essentia that pa! is re ated in so"e %a! to effort or to achieve"ent, b(t there are certain diffic( ties here# First of a b(sinesses often don&t have co"p ete freedo" re ating to %hat to pa! peop e# The! have to bear in "ind %hat the! can afford, %hat the going rate is# /o( can&t *eep giving peop e increases over and above inf ation other%ise the!& si"p ! be priced o(t of their "ar*et# A so, "an! arge co"panies have strict pa! bands and if !o( are a certain grade !o(& be paid %ithin that band irrespective of ho% good !o( are# And fina !, perfor"ance3re ated pa! can be diffic( t to assess (n ess that person&s perfor"ance can be direct ! "eas(red and assessed# 0o%ever, in "an! organisations perfor"ance depends on %hat other peop e do as %e as %hat !o( do, and it can beco"e ver! diffic( t to be s(re that !o(&re giving gro(p re%ards or perfor"ance3re ated pa! in fair %a!s#
C$apter >G 2ow an individual can develop

.ersonal development plans
A persona deve op"ent p an is a c ear deve op"enta action p an for an individ(a # Us(a ! this %i incorporate a %ide set of a"bitions# It "a! re4(ire for"a training or it "a! re4(ire infor"a training, s(ch as si"p ! getting the correct %or* e,perience# The ai" of action p ans for individ(a s is first to i"prove !o(r perfor"ance in !o(r e,isting 6ob# Second !, !o(& be see*ing to i"prove !o(r s*i s and co"petences in f(t(re 6obs or in f(t(re steps in !o(r c(rrent career# It&s i"portant to tr! to ac4(ire transferab e s*i s# A transferab e s*i increases !o(r e"p o!abi it! and %i increase the chance that !o(& be ab e to arrange a change in career direction if !o( %anted to# Fina !, and i"portant !, there is persona gro%th# 'e a %ant to "ove to%ards 6obs and occ(pations that %e&re interested in, that %e fee is %orth%hi e and that is re%arding# 0o%ever, !o( need to set a p an and there is no point in 6(st having vag(e %ishes# The %ord :S+A-TE-: can he p !o( set a proper action p an# ,pecific* /o( sho( d set specific p ans) in other %ords, so"ething specific i*e perhaps earning Spanish# /o( can&t si"p ! sa! I %ant to be better at "! 6ob#
Measurable* Si"p ! sa!ing earning Spanish isn&t good eno(gh# It&s not 4(ite sa!ing to %hat standard %e&re going to earn it# So %e have to be even "ore specific and set a standard# So perhaps %e a ign o(r
$-E$A-E. B/ 'A0A1 A20TE- 20AN
$age >9

progress %ith standard e,a"inations and then %e can "eas(re ho% %e&re getting on# 'greed* 'e have to agree the p an %ith o(rse ves and certain ! %ith o(r teachers, and perhaps %ith o(r s(periors so that ever!one is behind the p an# It "(st be rea istic and achievab e# There is no point in setting an a"bition that stating %e&re going to be i*e a native Spanish spea*er %ithin a !ear# A "ost certain ! %e&re going to fai and that&s deep ! de"otivating#
ealistic*
Time%bound* It has to be ti"e3bo(nd# In other %ords %e&re going to sa! ho% %e&re going on b! si,3"onths, one !ear, t%o !ears# )valuate* eview* 'e have to eva (ate ho% %e&ve gone on# 'e have to revie% o(r p an# $erhaps it&s too a"bitio(s or not a"bitio(s eno(gh# -e"e"ber if the p an is not revie%ed it is i*e ! to beco"e irre evant and to beco"e ignored# Then %e are rea ! %asting o(r ti"e#
Time management
Ti"e "anage"ent is an i"portant s*i in the %or*p ace# It starts b! setting goa s %hich are s"art: specific, "eas(rab e, agreed, rea istic, ti"e3bo(nd# These overa goa s can then be bro*en do%n into specific action p ans, perhaps a to3do ist, a ist of things !o(&re going to do that da! or that %ee*, dead ines to be p(t into !o(r diar!# /o( have to prioritise res( ts and tas*s and this has to be *ept f e,ib e# 'hat do %e rea ! have to do toda!; 'hat co( d %e postpone to to"orro% if there is a prob e"; -e"e"ber that there is a difference bet%een %hat is i"portant and %hat is (rgent# I"portant tas*s have to be done b(t the! don&t necessari ! have to be done toda!# Urgent tas*s rea ! o(ght to be done toda! b(t if the!&re not done the %or d isn&t going to end# B! considering tas*s %hich are i"portant and tas*s %hich are (rgent %e can prioritise %hat %e have to do# Certain ! at the head of the ist are those tas*s %hich are both i"portant and (rgent# $art of prioritisation is to se4(ence tas*s b(t a so the se4(encing of tas* has a ogic associated %ith it# There are so"e things that %e si"p ! can&t do before other things have been acco"p ished#
Coac$ing, mentoring and counseling

Coaching, "entoring, and co(nse ing are i"portant aspects of "an! "odern b(sinesses# Coaching is a %a! of providing training# Instead of going to a for"a co(rse !o( sit beside or %atch or be s(pervised b! an e,perienced e"p o!ee %ho he ps !o( $-E$A-E. B/ 'A0A1 A20TE- 20AN $age >>

in !o(r da!3to3da! tas*s in a %or* environ"ent# For e,a"p e, the first da! the coach is i*e ! to be %ith !o( "ost of the ti"e# B(t once !o(&ve earned the tas* to the coach&s satisfaction !o(& be tr(sted to get on %ith it 3 a tho(gh !o(&re i*e ! to be revie%ed# Coaching is so"eti"es preferred to for"a training beca(se it is "ore i*e ! to be ver! re evant to !o(r 6ob and !o(r %or* sit(ation# It&s so"eti"es *no%n as &on3the36ob& training# A "entor isn&t rea ! so"eone %ho is training !o( in ho% to do !o(r 6ob# A "entor is i*e a friend at %or*, so"eone %ho oo*s after !o(r interests# In partic( ar a "entor sho( dn&t be !o(r boss# /o( sho( d fee free to be ab e to approach a "entor %ith prob e"s !o(&re having at %or* %hich co( d inc (de prob e"s %ith the re ationship %ith !o(r boss# There is a ong3ter" re ationship %ith !o(r "entor, so"eone to %ho" !o( can go in ti"es of diffic( t!# A co(nse or provides g(idance) tho(gh "(ch co(nse ing is %hat&s *no%n as &non3 directiona co(nse ing&# $roviding g(idance is not 4(ite the sa"e as giving advice# A co(nse or is (n i*e ! to sa! &I thin* !o( sho( d do so"ething&# A co(nse or is "ore i*e ! to sa!, &'e , !o( co( d do A or !o( co( d B 'hat do !o( fee abo(t those t%o options, %hich do !o( prefer;& The ai" of a of these is to increase prod(ctivit!, efficienc!, 6ob satisfaction and co"fort eve s %ithin the organi7ation#
C$apter >H T$e nature of communication

Communication
Co""(nication %ithin b(sinesses is obvio(s ! i"portant: in partic( ar it&s re4(ired for p anning, coordination, and contro # The co""(nication path%a! is "ore co"p e, than !o( "ight thin* and !o( need to *no% %hat these steps are# First of a , the person %ho %ants to do the co""(nicating for"s the tho(ght# Then the! encode it) the! find a %a! of e,pressing it, in other %ords# The tho(ght is trans"itted and that co( d be b! so(nd, it co( d be b! etter, it co( d be b! e"ai # It has to be received b! the recipient and recipient has to decode it# On "an! occasions after it&s decoded there %i be so"e sort of feedbac*# Feedbac* co( d be an action, it co( d be nodding !o(r head, it can be as*ing a 4(estion beca(se !o( don&t (nderstand the "essage proper ! or it has provo*ed f(rther 4(eries# The i"portant thing to rea ise is that co""(nication can brea* do%n at an! of these stages# If the tho(ght %as garb ed to start %ith, !o( are ost# If it&s not encoded proper ! for e,a"p e, if it&s %ritten do%n in a conf(sing %a! then that %i interfere# Trans"ission can be "essed (p# 'e have a had, no do(bt, $-E$A-E. B/ 'A0A1 A20TE- 20AN $age >A

e,a"p es of etters %hich have gone astra! or e"ai s %hich have gone to the %rong person# That person "ight not receive the "essage# One of the reasons it "ight not be received is the! si"p ! don&t open their inbo, and fina ! the! "ight decode it incorrect !, the! "is(nderstand %hat !o( are tr!ing to co""(nicate#
Communication
Co""(nication %ithin the organisation can be: Dertica , s(ch as bet%een s(bordinate and s(perior# 0ori7onta , bet%een the peop e of the sa"e eve s and different depart"ents# .iagona %hen a s(bordinate in one depart"ent has to report or give infor"ation to a s(perior in another depart"ent#
And it can be for"a or infor"a # E,a"p es of infor"a co""(nication %o( d si"p ! be chatting aro(nd the coffee "achine# An e,a"p e of a for"a co""(nication %o( d be "e"orand(" iss(ed to a "e"bers of staff#
9arriers to communication
It&s i"portant to (nderstand %hat can act as barriers to co""(nication# First, inappropriate ang(age# Obvio(s ! this co( d "ean spea*ing a foreign ang(age to peop e %ho don&t (nderstand it, b(t in practice it is "ore i*e ! to be (sing ter"ino og! %hich not ever!one (nderstands# So for e,a"p e, if !o( are in a fir" of acco(ntants and ( are %riting to a c ient and !o( are ta *ing abo(t ta, co"p(tations, ter"s s(ch as Odisa o%ab e:, :capita a o%ances:, :ad6(st"ent of profits: and so on "a! not si"p ! be (nderstood b! the c ients and if that&s the case co""(nication has not been s(ccessf( # Stat(s# .ifferences in stat(s can interfere# This can be in t%o %a!s# First of a it co( d be the person at the top of an organisation not %anting to hear %hat the peop e at the botto" are sa!ing, perhaps not be ieving that peop e at the botto" have an!thing of va (e to sa!# It can happen the other %a! ro(nd %here peop e at the botto" of the organisation are frightened to ta * to peop e at the top of the organi7ation# E"otion# If !o( go into an appraisa revie% and !o( are ver! angr! or %or*ed (p abo(t so"ething or even 6(st frightened abo(t so"ething, the chances are that co""(nication %i not be s(ccessf( # 'rong "edi("# If, for e,a"p e, !o( %anted to give !o(r e"p o!ees infor"ation abo(t the technica ities of their pension sche"e, probab ! giving the" a ong ect(re isn&t going to be ver! (sef( # There is too "(ch technica infor"ation in that for the" to (nderstand# $resenting the infor"ation in %ritten for" or perhaps a "i, of co""(nication, so"e ect(res in o(t ine and then the detai ed "ateria avai ab e in %ritten for", %i be "ore s(ccessf( # $-E$A-E. B/ 'A0A1 A20TE- 20AN $age >B

Not %anting to trans"it and not %anting to receive can both occ(r# It co( d be that a "anager doesn&t %ant to point o(t shortco"ings in a staff "e"ber&s perfor"ance# It co( d be that the staff "e"ber is not %i ing to be ieve that there is an!thing %rong %ith their perfor"ance# Fina ! a c(rse of the infor"ation age and e"ai s: infor"ation over oad# 'e are often bo"barded %ith so "(ch infor"ation that %e rea ! can&t see the %ood for the trees# 'e spend so "(ch ti"e oo*ing at infor"ation, deciding %hether or not %e need to *no% the infor"ation or not, that there is a rea danger %e over oo* the i"portant "ateria #
Leavitt
@eavitt identified severa other %a!s in %hich the patterns of co""(nication co( d be organised# Sho%n here are the / shape, the %hee shape, the circ e and the chain# 'e , the chain represents a t!pica hierarcha arrange"ent %ithin an organisation# At one end !o( "ight have the "anaging director) at the other end !o( have staff at the botto" of the organisation# C ear ! there is going to be rather s o% co""(nication bet%een top and botto"# In the %hee t!pe of co""(nication b! contrast, ass("ing that the boss is at the centre then there&s going to be ver! fast co""(nication %ith the rest of the organisation# This is a high ! centra ised, a "ost entreprene(ria organisation %ith po%er at the centre# This enab es organisation to "ove ver! 4(ic* !# The circ e t!pe is re ative ! s o% in co""(nication) the / is re ative ! fast in co""(nication#
C$apter >4 T$e recruitment and selection process

ecruitment and selection
-ecr(it"ent and se ection of staff is a ver! i"portant aspect of "anage"ent# 0("an reso(rces are a scarce reso(rce and perhaps beco"ing increasing ! scarce# The birth rate in "an! co(ntries is o%er The technica content of 6obs is higher#
Therefore it can be diffic( t to find eno(gh of the right peop e# It can a so be "entioned that in "an! econo"ies there is a "ove fro" "an(fact(ring to service 6obs# In "an(fact(ring 6obs "an! of the %or*forces never have an! direct contact %ith c(sto"ers# The %or*force arge ! re"ains in the factories# $-E$A-E. B/ 'A0A1 A20TE- 20AN $age >C

Us(a ! %ith service 6obs there is a "(ch greater invo ve"ent %ith c(sto"ers either on the phone or face to face# Again, better staff and certain ! better training is probab ! necessar!# Organisations "(st first define their re4(ire"ents# The! "(st have so"e sort of b(dget of ro(gh ! ho% "an! peop e the! need to recr(it over the ne,t fe% !ears# The! need to esti"ate %hether the! have to recr(it five peop e, fift! peop e or five h(ndred peop e, for e,a"p e# The! then have to %or* o(t ho% to attract app icants, perhaps b! advertising in a ne%spaper or on the Internet or perhaps b! going to an e"p o!"ent agenc! %hich "a! %e have peop e on their boo*s oo*ing for 6obs# And then !o( have to se ect the "ost appropriate candidates#
Fob analysis, description and person specification

The process of recr(it"ent starts %ith: 6ob ana !sis 6ob description, and person specification#
1ob ana !sis is the process of finding o(t e,act ! %hat the 6ob is# This "a! see" to be an odd step beca(se !o( often *no% %hat the 6ob is or at east !o( thin* !o( do# B(t if !o( are advertising, for e,a"p e, for an acco(nts assistant, e,act ! %hat is that person s(pposed to do; In one organisation the acco(nts assistant co( d be oo*ing after b(dgets and spreadsheets# In another one the! co( d be responsib e for getting o(t the "onth ! "anage"ent acco(nts and in another one it "ight si"p ! be oo*ing after the receivab es edger# 'i the! be %or*ing on their o%n or (nder c ose s(pervision; 'i the! be in charge of an!one; To %ho" do the! report; 'i the! have a ot of contact %ith c(sto"ers; So before !o( can advertise for a 6ob !o( have to *no% %hat the 6ob is# After the 6ob ana !sis, the content of the 6ob can be %ritten o(t in a 6ob description# And fro" the 6ob description !o( can create %hat&s ca ed a person specification, a specification of the t!pe of person, their s*i s and their attrib(tes, that !o( e,pect to be ab e to perfor" the 6ob proper !# -oger&s B3point se ection p an can he p (s to "a*e s(re that %e cover "ost of the points# This se ections p an spe s o(t the %ord BA.$I?S and the etters stand for: 9ac-ground* 'e have to be ver! caref( abo(t this no%ada!s, to %hat e,tent is a person&s bac*gro(nd act(a ! going to be i"portant# 'e %o( d certain ! have to be ver! caref( for e,a"p e abo(t in4(iring %hat the person&s parents did, or their ho"e circ("stances# 'c$ievements* 'e are on "(ch safer gro(nd %hen %e get to specif!ing their re4(ired achieve"ents# .o the! re4(ire a (niversit! degree, a professiona acco(ntanc! 4(a ification, do the! need a f( driving icense; $-E$A-E. B/ 'A0A1 A20TE- 20AN $age ><

Disposition is a sort of attit(de) are the! a"bitio(s, are the! cheerf( ; If !o( are e"p o!ing peop e %ho are to be %e co"ing to c(sto"ers, there is no point rea ! e"p o!ing so"eone %ho is "iserab e# .$ysical "ight be re evant# If !o( are e"p o!ing a pi ot for an air ine, then their sight has to be good# B(t in "an! 6obs the ph!sica aspects are not terrib ! i"portant# "nterests* 'hat are peop e interested in; Again, !o( have to be a itt e bit caref( abo(t this# This, if an!thing, is on ! a corroboration of other evidence# If so"eone for e,a"p e is a captain of a oca a"ate(r footba tea", then this gives !o( so"e insight into their persona it! perhaps# The! are probab ! fair ! sociab e) the! are probab ! 4(ite good at eading# If so"eone has a so itar! hobb! then !o( have to as* to %hat e,tent the! "ight be s(ccessf( as a sa es person# 7eneral intelligence "a! need to be assessed partic( ar ! if the person has no for"a 4(a ifications b(t is going to re4(ire training on the 6ob# 'i the! be ab e to (nderstand the technica co"p e,ities of the 6ob; ,pecial aptitudes* So"e peop e %ho are going to be co"p(ter progra""ers sho% specia aptit(des in ogic) other peop e sho% specia aptit(des for earning foreign ang(ages# 'hat !o( can do in the person specification is ist o(t the 4(a ifications and the attrib(tes the person "(st have and then the attrib(tes and 4(a ifications that %i be nice for the" to have# 'hen candidates co"e to intervie%, !o( can "ar* the" against this ob6ective specification# 'hat !o( are not s(pposed to do is to co"pare one candidate to another# /o( are s(pposed to co"pare the" to %hat !o( need#
'dvertising vacancies
Once !o( *no% the t!pe of peop e !o( %ant !o( can begin to tr! to advertise or to attract the candidates# Advertising vacancies is si"p ! done in ne%spapers, on the Internet, or !o( can approach an e"p o!"ent agenc!# /o( have to describe the 6ob in s(fficient detai , so that the right sort of candidates are i*e ! to app !# If !o( are too vag(e, !o( "a! get far too "an! candidates app !ing, "an! of %ho" are (ns(itab e# B(t if !o( are too restrictive !o( "a! not get eno(gh app !ing# I s(ppose !o( %ant abo(t 5= or 8= good app ications co"ing in and fro" that !o( %i red(ce it do%n to "a!be five or si, peop e %ho" !o( %i invite to an intervie%# Using e"p o!"ent agencies is "ore co""on in so"e sectors than others# In the U2 if !o( are searching for IT staff a "ost certain ! !o( go to an agenc!# Agencies can often 4(ic* ! "atch candidates oo*ing for 6obs %ith %hat !o( are offering# Agencies can a so a o% !o( to "aintain so"e anon!"it! for a itt e %hi e# Obvio(s ! if !o( advertise vacancies in the ne%spaper !o(r co"petitors see %hat !o( are (p to# $-E$A-E. B/ 'A0A1 A20TE- 20AN $age A=

,election met$ods
Once !o( have a the app ications received !o( oo* at these and choose five or si, peop e to investigate f(rther# T!pica "ethods of investigation inc (de# "nterviews* It&s ver! (n i*e ! that !o( %o( d ever e"p o! so"eone %ho" !o( had not intervie%ed tho(gh !o( need to be %arned that intervie%s, (n ess done %e , are often ver! (nre iab e at pic*ing the right candidate# ,election tests* /o( "ight give candidates a variet! of se ection tests# 'e %i see ater %hat those "ight be# eferences* /o( sho( d be strong ! advised to ta*e (p references fro" c(rrent e"p o!ers# C(rrent e"p o!ers are increasing ! (n i*e ! to be %i ing to pass 6(dg"ent on ho% good an e"p o!ee is b(t idea ! the! sho( d at east confir" fact(a infor"ation s(ch as ho% ong the person %as e"p o!ed for and %hat their 6ob %as# #or- sampling* So"e peop e are as*ed to bring a ong e,a"p es of their %or*# Sa! !o( %ere tr!ing to recr(it a graphic designer or so"eone %ho designed %eb pages# One of the best %a!s to see ho% good the! are is to oo* at their %or*# 7roup selection met$ods* Fina ! and ver! e,pensive ! there are gro(p se ection "ethods# 0ere !o( invite "an! candidates together and !o( "ight spend one or t%o da!s p(tting the" thro(gh a series of tests and ro e p a!s to "a*e s(re !o( get the best person# This is obvio(s ! ver! e,pensive and is (s(a ! reserved for peop e %ho are going to be fast3 trac*ed thro(gh so"e sort of "anage"ent training sche"e#
"nterviews
As %as "entioned, intervie%s are a ver! fre4(ent %a! of tr!ing to predict ho% candidates %i perfor"# Intervie%s can be one3to3one, the! can be one to "an!, the candidate can see a n("ber of different intervie%ers separate ! b(t (n ess the intervie%s are %e 3str(ct(red and cond(cted b! peop e %ho have the proper training and s*i s, the! are not i*e ! to be ver! re iab e# -e"e"ber, if !o( are intervie%ing, that !o( %i tend to get "ore infor"ation if !o( as* open 4(estions# An open 4(estion is one %hich cannot be ans%ered si"p ! b! !es or no# Additiona !, get the candidates to give e,a"p es of their s*i s# So if !o( as* a candidate, &Can !o( %or* (nder press(re;& candidates %i nor"a ! sa! &/es# Fo o% that (p b! as*ing, &$ ease give "e an e,a"p e of ho% !o( %or*ed (nder press(re and ho% !o( "et a tight dead ine; Fina !, re"e"ber that %hen !o( are intervie%ing the candidate, to so"e e,tent the candidate is intervie%ing !o(, and !o( don&t %ant the" to go a%a! %ith a bad i"pression of !o(r organi7ation# $-E$A-E. B/ 'A0A1 A20TE- 20AN $age A1

,election testing
Der! often, candidates are for"a ! tested to identif! or verif! their co"petence and attrib(tes# There are fo(r t!pes of tests# First of a , psyc$ometric tests# These in4(ire into the candidate&s persona it!# Are the! i*e ! to be good at %or*ing a one, can the! prioritise, for e,a"p e, are the! i*e ! to "a*e good s(pervisors; Second !, proficiency# If so"eone co"es and sa!s the! can %or* E,ce , %e it %i on ! ta*e a fe% "in(tes to see if indeed the! can %or* E,ce # Or if the! sa! the! can t!pe at C= %ords a "in(te on 'ord, %h! not test the"; -e"e"ber, if !o( recr(it the %rong person it&s ver! e,pensive, not so "(ch perhaps in "one! b(t in ti"e ost# Third, intelligence* If their for"a ed(cationa 4(a ifications aren&t great, !o( "a! %ant to carr! o(t inte igence tests to "a*e s(re that the! %i be ab e to dea %ith f(rther training# Fina !, aptitude tests* .o the! sho% partic( ar aptit(des at ogic or ang(ages and so on;
Developing and training

No% %e need to oo* at so"e "atters re ating to deve op"ent and training# First of a so"e definitions# Training* Training is ver! specific# It is needed for !o(r c(rrent ro e# So !o( %o( d ta * abo(t training in (se of a spreadsheet or a database or the acco(nting s!ste"# Development is "(ch ess specific) it&s needed at so"e ti"e in the f(t(re# Der! often the %ord :deve op"ent: is in*ed to "anage"ent to give the ter" &"anage"ent deve op"ent# Sa! that %e *no% that, probab !, as a "anager&s career progresses, the "anager %i be re4(ired to "a*e presentations, to %rite reports, perhaps to intervie% potentia ne% e"p o!ees# The "anager "ight not need to carr! o(t these activities %ithin the ne,t "onth or so or even the ne,t !ear# B(t %e *no% that probab ! at so"e ti"e in the f(t(re a ager sho( d be e4(ipped %ith these s*i s# )ducation is *no% edge ac4(ired grad(a ! thro(gh earning and instr(ction# It "ight or "ight not be %or*3re ated#
C$apter >6 2ow people learn

T$e learning process
$-E$A-E. B/ 'A0A1 A20TE- 20AN $age A5

There are t%o approaches to earning theor!# First, the be$aviourist approac$# In this approach %e are ass("ed to earn essentia ! thro(gh re%ard and p(nish"ent# It&s based on sti"( (s# So if %e do so"ething right and %e get re%arded, %e are i*e ! to do that again# If %e do so"ething e se and in so"e %a! get p(nished, %e are i*e ! to tr! to avoid that# And so as ti"e passes and %e earn, and %e %i tend to do "ore of the right things# This doesn&t "ean of co(rse that %e (nderstand %hat %e are doing# On ! that %e respond appropriate ! in certain circ("stances# The cognitive approac$ tries to oo* rather "ore at the "enta process %e "ight go thro(gh to gain (nderstanding# It arg(es that the "ind ta*es sensor! infor"ation and tries to i"pose so"e sort of ogic on that, so"e sort of rationa approach# Der! "(ch "ore in this approach %e (nderstand or atte"pt to (nderstand %hat&s happening and %h! %e are doing it# $robab ! the cognitive approach %i ( ti"ate ! be "ore f e,ib e# If %e are presented %ith a ne% sit(ation, %e "ight be ab e to thin* o(r %a! thro(gh it# B(t if %e have earnt si"p ! on the behavio(rist approach and %e don&t *no% %h! %e are doing so"ething, then a ne% sit(ation is i*e ! to conf(se (s#
2oney and Mumford

There are t%o sets of earning theories that !o( need to (nderstand for this e,a"ination# The first is b! 0one! and +("ford %ho e,a"ined different earning st! es# The! categorised different earning st! es as theorists, ref ectors, activists, and prag"atists# A t$eorist i*es to (nderstand the theor! before "oving on to practice or practica app ication# The theorist is i*e ! to read an instr(ction boo* first before tr!ing to %or* the ne% co"p(ter# eflectors observe %hat&s going on and caref( ! consider it# The! i*e to %or* at their o%n pace and tend to be a re ative ! non3participative and ca(tio(s earner# 'ctivists are a "ost the reverse of theorists# If the! had a ne% co"p(ter the! %o( d s%itch it on and tr! and %or* it before ever thin*ing of oo*ing at the (ser g(ide# The! are e,cited b! press(re, b! ne% pro6ects# 0o%ever the! do tend to r(sh into things %itho(t ade4(ate preparation# .ragmatists are inspired to earn if the! see a practica o(tco"e: the! %i earn so"ething if the! see it %i he p the" "a*e their 6ob better or easier# The! %o( dn&t at a be interested in earning for earning&s sa*e and the! probab ! %o( d find it 4(ite diffic( t if a theoretica approach %as ta*en to instr(cting the"#
$-E$A-E. B/ 'A0A1 A20TE- 20AN
$age A8

'hat&s the point of these fo(r categories; 'e , if !o( %ere tr!ing to train a gro(p of 5= peop e, re"e"ber, the! %on&t a earn in the sa"e %a!# So"e %i be theorists, so"e %i be prag"atists# $erhaps the best !o( can do is go for a variet! of activities and approaches so at each t!pe of earner is given so"ething the! can respond to#
@olb % e+periential learning

2o b is associated %ith the idea of e+periential learning 3 the idea that %e go thro(gh a n("ber of c!c es, grad(a ! earning b! o(r e,perience# @et&s ta*e as an e,a"p e a sit(ation %here %e have presented to a potentia ne% c ient for a ne% contract, and %e don&t %in it# That&s the e,perience# So %e go a%a! and thin* %h! %e didn&t %in it# It co( d be that o(r prices %ere too high) it co( d be that o(r presenters didn&t do a ver! good 6ob# An!ho%, fro" this ref ection %e deve op a theor!, and ne,t ti"e %e "a*e a presentation, %e tr! it o(t# If %e fai to %in the ne,t 6ob, %e need a bit "ore ref ection b(t if %e %in the ne,t 6ob then %e probab ! conc (de that %e have "oved in the t direction, that %e have earned better ho% to pitch for ne% %or*#
C$apter >6 .erformance and appraisal interviews

.erformance appraisal
'e no% co"e to oo* in another area of h("an reso(rces "anage"ent, perfor"ance appraisa # The p(rpose of perfor"ance appraisa is first to i"prove the organi7ationa perfor"ance and second ! to deve op individ(a s# This sho( d be %in3%in# .eve oping individ(a s sho( d "otivate the"# The! fee that the!&ve recogni7ed, the! fee their s*i s "a!be gro%ing ho% %e "a! be getting to%ards the top of the +as o%&s hierarch! of needs# Of co(rse, i"proving organi7ationa perfor"ance is ver! i"portant, b(t if !o( don&t et peop e *no% ho% the!&re getting on, %here the! perhaps need to i"prove, or %here the!&ve done %e , it is going to be re ative ! diffic( t to i"prove organi7ationa perfor"ance, beca(se ( ti"ate ! that depends on the perfor"ance of the individ(a s in the organi7ation#
'ppraisal systems
It&s often said that there are three e e"ents to an appraisa intervie%# First, reward# 'hat are %e going pa! these peop e ne,t !ear; $-E$A-E. B/ 'A0A1 A20TE- 20AN $age A9

Second !, performance, oo*ing bac* over the previo(s !ear and seeing %hether peop e hit their targets and "et their ob6ectives# And fina !, potential, oo*ing for%ard to the ne,t period, setting ob6ectives, istening to peop e&s preferences, deciding perhaps %here the! re4(ire training# It "(st be said ho%ever that so"e h("an reso(rces professiona s s(ggest that the re%ard part of the appraisa sho( d be *ept 4(ite separate fro" the other t%o parts# The! arg(e that there is "ore to re%ard than si"p ! basing it on perfor"ance# /o( have to oo* at %hat can the co"pan! afford Efor e,a"p e, the "ar*et rate and %hat the co"pan! can affordF and the! sa! it doesn&t oo* too good if !o( sa! so"eone has done rea ! %e and then !o( i""ediate ! sa!, :###b(t %e can&t give !o( "(ch of a pa! rise this !ear#: So"e peop e therefore s(ggest that the re%ard part of the revie% sho( d be abo(t si, "onths a%a! fro" the other parts of the revie%#
'ppraisal interviews
If appraisa intervie%s are not cond(cted proper ! the! %i a "ost certain ! do "ore har" than good# -e"e"ber, the e"p o!ee "a! have %aited a !ear and this is their chance to find o(t ho% the!&ve been doing# If the! go in and find !o( are not prepared and haven&t tho(ght abo(t their f(t(re, the! are i*e ! to be ver! disappointed# So the first thing !o( "(st to is to prepare the appraisa intervie%: oo* at %hat %as said at ast !ear&s appraisa intervie%) oo* at their 6ob specification) oo* at an! assess"ents %hich have been received fro" the co eag(es or the s(periors of that person# +a*e s(re !o( *no% abo(t an! acco"p ish"ents s(ch as e,a"inations passed, and be prepared to sa! so"ething abo(t %hat the! "ight be e,pected to be doing in the f(t(re# There are a n("ber of different %a!s of cond(cting the intervie%: /o( can tell and sell# That&s "ore or ess one3%a! co""(nication# The "anager te s the e"p o!ee %hat the!&ve been doing %e , %hat the!&ve been doing bad !, and the! se it to the"# In other %ords, convince the" that the "anager&s vie% is right# Tell and listen* The "anager te s the e"p o!ee %hat their point of vie% is and then "a! isten to so"e responses# Best of a ho%ever is problem%solving %here !o( go thro(gh their perfor"ance together, 6oint ! arriving at a conc (sion as to %hether or not it&s been satisfactor! or not# ?ain co""it"ent abo(t %hat the e"p o!ee is e,pected to do in the f(t(re, "a*e s(re ever!one agrees on that and s(""arise it# There sho( d be a report, probab ! t%o3part# The p cop! can go to the e"p o!ee %ith agreed conc (sions and perhaps ob6ectives# The other part %i go on the personne fi e# Fina ! there sho( d be fo o%3(p# If !o( have arranged for training then "a*e s(re it ta*es ace# If !o( have arranged for that e"p o!ee to spend three "onths $-E$A-E. B/ 'A0A1 A20TE- 20AN $age A>

in another depart"ent "a*e s(re that ta*es p ace# If the e"p o!ee has been having diffic( t! !o( "a! %ant to "onitor their progress contin(a ! before %aiting a %ho e !ear ti their ne,t appraisa intervie%#
C$apter >: ,ome legal obligations

,ources of law
'e no% co"e to the part of the s! ab(s %hich dea s %ith a%, and %e start b! oo*ing at so(rces of a%# For co(ntries in the E(ropean Union, E(ropean Union a% %i often s(persede or overr( e nationa a%# E(ropean Union a% can co"e into effect in t%o %a!s: First, thro(gh regulations# If the E(ropean Union passes that reg( ation it i""ediate ! beco"es direct ! app icab e to a "e"ber states# The! do not have to pass their o%n si"i ar a%s# Second !, the E(ropean Union can "a*e directives, and that is a directive to nationa govern"ents to pass their o%n nationa a%s to be in ine %ith the directive# Nor"a ! govern"ents are given a ti"e period in %hich this egis ation can be p(t for%ard and passed# +ost "odern a%s are egis ation or stat(te, %here the! are %ritten and passed b! E(ropean or do"estic par ia"ents# 0o%ever, in so"e co(ntries, partic( ar ! the United States and the United 2ingdo", there is a ver! strong tradition of case a%# Case a% can co"e fro" the ver! ancient co""on a% or e4(it!, and often depends on the idea of precedent* $recedent "eans that if the case has been decided in a higher co(rt then in the f(t(re o%er co(rts "(st fo o% the precedent or e,a"p e set b! the higher co(rt# Case a% does not overr( e an! t!pe of stat(te a% b(t even %ith tight ! %orded stat(te a% an interpretation prob e"s can e,ist and cases can be oo*ed at to give ight (pon interpretation and ho% the a%s sho( d be app ied#
Data .rotection 'ct implements Directive =4/H6/)C

One of the i"portant E(ropean a%s concerns data protection# The .ata $rotection Act in the U2 re ates to persona data# 'e are not ta *ing here abo(t data re ating to co"panies: %e are ta *ing abo(t data re ating to peop e# T$e act sets out certain principles: .ata sha be processed fair ! and a%f( !# It can on ! be obtained for one or "ore specified and a%f( p(rposes# $age AA
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It "(stn&t be e,cessive to %hat&s re4(ired# It "(st be acc(rate and *ept (p3to3date# It "(stn&t be *ept for onger than necessar!# $ersona data sha be processed on ! in accordance %ith the rights of data s(b6ects# The data sub;ect is a person abo(t %ho" the data is he d and that person has certain rights# For e,a"p e the! have a right to see the data and the! have a right to insist that it&s corrected# The peop e ho ding the data have to register %ith a govern"ent bod! and there the! have to sa! %hat data is he d, %h! it is he d and to %ho" it "ight be s(pp ied# Appropriate "eas(res sha be ta*en against (na(thori7ed and (n a%f( processing and a so care has to be ta*en over the accidenta oss or da"age to persona data# Fina ! persona data "(st not be transferred to a co(ntr! or territor! o(tside the E(ropean Econo"ic Area (n ess there is si"i ar egis ation giving si"i ar protection in that area#
is-s to data
Data can be sub;ect to a number of ris-s* 2uman error* For e,a"p e, so"eone de etes an i"portant fi e or i"portant infor"ation or indeed eaves a dis* on the b(s going ho"e# Tec$nical problems* 0ard dis*s can crash and data can be ost# Catastrop$ic events %o( d inc (de events s(ch as a fire or a f ood destro!ing co"p(ters and the data the! ho d# Malicious damage occasiona ! occ(rs# So"eti"es this is done b! an e"p o!ee %ho is (nhapp! or %ho has been sac*ed# So"eti"es it is done b! hac*ers, peop e fro" o(tside the organi7ation %ho infi trate the organi7ation&s data and change or stea it# "ndustrial espionage or sabotage* -iva s obtain an! data for their o%n p(rpose or de eting !o(r data to p(t !o( at a disadvantage# Dis$onesty or fraud* For e,a"p e, i ega ! ca(sing cash to be transferred, goods to be de ivered, receivab es to be %ritten off#
Organi7ations "(st tr! to safeg(ard their data# Not on ! can ost or sto en data ca(se financia oss and oss of rep(tation, b(t it can a so in so"e cases eave the" open to prosec(tion#
2ealt$ and safety % employer's duties

$-E$A-E. B/ 'A0A1 A20TE- 20AN $age AB

0ea th and safet! egis ation i"poses d(ties on both e"p o!ers and on e"p o!ees# First, oo* at the e"p o!er&s d(ties and there is probab ! not "(ch here that is s(rprising: 'or* practices and the %or* environ"ent "(st be safe and hea th!# The p ant and e4(ip"ent sho( d be "aintained to the necessar! standard# There sho( d be infor"ation, instr(ctions, training and s(pervision so peop e *no% ho% to %or* the "achiner! and that safe %or*ing practices are adopted# $eop e sho( d *no% that there is a po ic!# $eop e sho( d be a%are of the organi7ation&s safet! po ic!# E"p o!ers "(st carr! o(t ris* assess"ents, thin*ing ahead, identif!ing ris*s, seeing to %hat e,tent those ris*s need to be %orried abo(t, and providing training, g(idance, and protection as necessar!# Note there is a re4(ire"ent to share ha7ards and ris* infor"ation %ith others# /o( have to identif! e"p o!ees %ho are partic( ar ! at ris*# /o( "(st e"p o! co"petent safet! and hea th advisors# 'ithin the organi7ation there %i be a safet! representative effective ! fro" the e"p o!ee side, and probab ! a safet! co""ittee %hich "eets reg( ar ! to consider hea th and safet! "atters#
2ealt$ and safety % employees' duties

Note here, so"e of the e"p o!ee&s d(ties# The! have to ta*e reasonab e care of the"se ves and others and for e,a"p e these d(ties co( d be breached b! e"p o!ees p a!ing practica 6o*es %ith their co eag(es# The! "(st a o% the e"p o!er to carr! o(t the d(ties in re ation to safet!# The! "(stn&t interfere intentiona ! or rec* ess ! %ith "achiner! for e,a"p e b! ta*ing off g(ards fro" "achine#
The! "(st infor" the e"p o!er of an! sit(ation %hich the! thin* is a danger# For e,a"p e if an e"p o!ee sees that a "achine has deteriorated and is no% perhaps dangero(s the! have a d(t! to infor" their e"p o!er#
The! have to (se e4(ip"ent proper !, "a*ing (se of a the safet! feat(res that it "a! incorporate#
2ealt$ and safety policy

$-E$A-E. B/ 'A0A1 A20TE- 20AN $age AC

So"e co"panies estab ish and p(b ish a hea th and safet! po ic!# This %i (s(a ! have the fo o%ing sections: First, a state"ent of the princip es# There %i then be a section on certain proced(res, perhaps re ating to fire safet! proced(res# The! "a! e"phasi7e ho% i"portant it is to co"p ! %ith the a%, and in so"e cases state %hat is necessar! to co"p ! %ith the a%# There "a! be a section on the detai ed instr(ctions abo(t operating "achiner!# A section dea ing %ith the training re4(ire"ents, and perhaps the 4(a ifications needed to ens(re that hea th and safet! po icies are proper ! i"p e"ented#
)mployment protection
The a% increasing ! gives e"p o!"ent protection# 0ea th and safet! %as one aspect of that, and as %e& see ater, there are a%s governing e4(a opport(nities# 0ere %e dea %ith the ter"ination of e"p o!"ent and this co( d be carried o(t in three %a!s: one can retire, resign, or be dis"issed# Fair ! obvio(s !, controvers! is going to arise on ! in the case of dis"issa and there are three %a!s in %hich an e"p o!ee can be dis"issed: A contract can be ter"inated# For e,a"p e !o( co( d te so"ebod! that the! are sac*ed# If so"eone has been e"p o!ed on a fi,ed3ter" contract, et&s sa!, three !ears and at the end of that ter" that contract is not rene%ed that a so ran*s as dis"issa # Fina ! there is constr(ctive dis"issa # Constr(ctive dis"issa occ(rs %hen the e"p o!er breaches the contract of e"p o!"ent to s(ch as e,tent that the e"p o!ee is a o%ed to ass("e that he or she has been dis"issed#
'ith dis"issa %e have to then as*, &0as the dis"issa been fair or (nfair;H
!air/unfair dismissal
7rounds for fair dismissal are as follows: -ed(ndanc!, provided that the se ection for red(ndanc! is fair and that the 6ob disappears, then peop e "a! be "ade red(ndant# The! "a! be entit ed to so"e red(ndanc! co"pensation#
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$age A<

@ega i"pedi"ent# For e,a"p e, if to %or* in a partic( ar organi7ation !o( have to be of a certain nationa it! and it&s discovered !o( are not, then !o( can be dis"issed# Non3capabi it!# Si"p ! not being ab e to do the 6ob# $rovided !o( %ere given ade4(ate chance of i"prove"ent and training, and !o( sti can&t do the 6ob then !o( can be dis"issed for non3capabi it!# +iscond(ct# $rovided a s(itab e series of %arnings have been iss(ed to give !o( a chance to i"prove !o( can be dis"issed if the behavior contin(es# There are certain cases of gross "iscond(ct %here !o( can be i""ediate ! dis"issed# Other s(bstantia reasons# For e,a"p e, if !o( are "arried to a co"petitor !o(r e"p o!er doesn&t have to r(n the ris* that co""ercia secrets are going to be transferred#
It&s (p to the e"p o!er to prove that the dis"issa %as fair, b(t there are certain cases of dis"issa %hich %i a(to"atica ! be regarded as (nfair, s(ch as (nfair se ection for red(ndanc!, invo ve"ent %ith a trade (nion, pregnanc!, insisting on certain doc("entation, and %here !o( carr! o(t certain necessar! activities in connection %ith hea th and safet!# .on&t "i, (p (nfair dis"issa %ith %rongf( dis"issa # 'rongf( dis"issa is rather narro%er# It dea s p(re ! %ith a breach of the contract of e"p o!"ent# So for e,a"p e if !o(r contract of e"p o!"ent said !o( are entit ed to t%o "onths& notice and !o(r e"p o!er on ! gave !o( one "onth&s notice that %i be %rongf( dis"issa a tho(gh overa the dis"issa co( d be fair#
emedies for unfair dismissal

In the U2, so"eone %ho fee s the!&ve been (nfair ! dis"issed can ta*e their e"p o!er to an e"p o!"ent trib(na %hich is a for" of co(rt# If the trib(na finds for the e"p o!ee then there are three possib e re"edies# First is reinstatement* The e"p o!er gives the e"p o!ee the o d 6ob bac*# 0o%ever, !o(& (nderstand that (s(a ! the o d 6ob isn&t avai ab e an!"ore beca(se it %i have been given to so"ebod! e se# Second !, the e"p o!er co( d ta*e the e"p o!ee bac* and reengage the" b! giving the e"p o!ee a 6ob co"parab e to the o d one# Of co(rse there "ight not be a s(itab e 6ob and again !o(& rea i7e b! this stage of events the e"p o!ee and the e"p o!er probab ! aren&t on best ter"s an!ho%# And fina ! b! far the "ost nor"a re"ed! is compensation and so"eti"es the co"pensation can be ver! high if it&s fo(nd that the e"p o!er has acted ver! bad !#
)Iual opportunities
$-E$A-E. B/ 'A0A1 A20TE- 20AN $age B=

There is no% e4(a opport(nit! egis ation in "an! E(ropean states ai"ed at antidiscri"ination a% %ith respect to e"p o!"ent, %hether it&s engaging peop e, pro"oting the" or pa!ing the"# Anti3discri"ination a%s can re ate to: race, se,, disabi it!, re igion, se,(a orientation, age
)Iual opportunities legislation identifies t$ree types of illegal be$aviour* First of a , direct discri"ination# An e,a"p e of this %o( d be if !o( advertised for a sa es"an# That is direct discri"ination beca(se !o( are as*ing on ! for "a e app icants or "a e e"p o!ee# Indirect discri"ination is "ore s(bt e and indeed often e"p o!ers fa into this trap inadvertent !# An e,a"p e of rather obvio(s indirect discri"ination %o( d be if !o( advertised for a sa esperson b(t then stip( ated that that person had be t%o "eters ta %ith a arge, b ac* beard# +ost co(rts %o( d ass("e that this %o( d favo(r "a e app icants# Stip( ating height "ini"("s %o( d probab ! be an e,a"p e of indirect se, discri"ination beca(se "en are, on average, ta er than %o"en# Fina ! there is victi"i7ation# This is %here so"eone has co"p ained abo(t discri"ination and then ater on %ithin the %or*p ace the! are b a"ed or discri"inated against beca(se the! co"p ained#
Diversity
.iversit! of e"p o!"ent is ens(ring that the co"position of the %or*force ref ects the pop( ation as a %ho e# There are so(nd reasons for diversit!# First of a !o(&re i*e ! to attract a %ider range of candidates if !o( are *no%n as an e"p o!er %ho e"braces diversit!# .iversit! "eans "ore than race or se,(a diversit!) it can a so "ean offering peop e part3ti"e %or* or %or*ing fro" ho"e# If !o( can offer part3ti"e %or* or ho"e %or*ing !o( "a! %e get additiona good candidates %orth! of consideration# So %h! red(ce the fie d b! p(tting (nnecessar! restrictions; Second !, a diverse %or*force brings a variet! of s*i s# If !o( e"p o! peop e 6(st i*e !o(rse f !o(& probab ! get s*i s 6(st i*e !o(rs# $age B1
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Third, the diverse %or*force "ight better ref ect c(sto"ers and c ients so !o(r c(sto"ers and c ients are i*e ! to fee "ore co"fortab e# And fina ! !o( "a! be ab e c ai" the "ora high gro(nd b! having a diverse %or*force and this of itse f "a! be attractive to c(sto"ers, c ients, and potentia e"p o!ees#
C$apter >< )conomics

Macro%economic policies
The fina section of the s! ab(s %e consider is "acroecono"ics# +acroecono"ics dea s %ith the big things in societ!, contro ing inf ation, tr!ing to ens(re that e"p o!"ent sta!s at reasonab ! high eve s, sti"( ating econo"ic gro%th or providing an environ"ent in %hich econo"ic gro%th can ta*e p ace, distrib(ting %ea th according to !o(r po itica be iefs, "anaging foreign e,change rates and deciding ho% "(ch to spend on p(b ic services and ho% to raise the "one! for these#
7overnment influence on business

7overnments can $ave a $uge influence on businesses:
Policy Affects:
Overa econo"ic po ic! Ind(str! po ic!
de"and, ta,ation, cost of finance Einterest ratesF reg( ation, p anning, grants, tariffsI 4(otas, free trade
Environ"enta and infrastr(ct(re p anning, costs Eeg carbon or po (tion po ic! ta,F, transport costs and efficienc! Socia po ic! ed(cation, retire"ent, pensions, e"p o!"ent protection EU co"p iance, 'or d Trade Foreign po ic! Organisation, foreign aid, banned e,ports
$age B5
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"nflation 8 causes
'e need to oo* at the ter"ino ogies associated %ith t%o pieces of "acroecono"ics 3 inf ation and (ne"p o!"ent# First, inf ation# 'hat ca(ses inf ation; Demand pull* This is %here there is a ot of "one! in the econo"!, ots of peop e %ho %ant to spend "one!, and beca(se de"and is high, prices are p( ed (p%ard# Cost pus$* An e,a"p e of cost p(sh inf ation is %here peop e in the "an(fact(ring ind(str!, et&s sa! coa "ining, have a arge %age rise# Inevitab ! that %age rise is passed on and %i find itse f ref ected in the cost, sa!, of e ectricit!# The cost of e ectricit! goes (p and that&s an e,a"p e of cost p(sh inf ation# "mport cost inflation# A good e,a"p e of that %as the h(ge increase in the cost of oi that happened to%ards the end of 5==C# )+pectation* This is %here peop e e,pect there to be inf ation and beca(se the! e,pect inf ation, the! "a*e higher %age de"ands and the higher %age de"ands inevitab ! p(sh (p the price of goods that are going to be so d# "ncrease in t$e money supply* An increase in the "one! s(pp ! %i sti"( ate de"and# +ore peop e have "one! to b(! goods and this %i ca(se de"and p( inf ation#
(nemployment
The second co ection of ter"ino og! %e need to oo* at is (ne"p o!"ent# 'hat t!pes of (ne"p o!"ent are there; eal wage unemployment* This is %here peop e are effective ! being paid too "(ch# E"p o!ers can&t afford to *eep the" on and therefore the! ose their 6obs# The!&ve priced the"se ves o(t of their "ar*ets# That tends to be se f3correcting beca(se once there are a arge n("ber of peop e oo*ing for 6ob %ith partic( ar s*i s that %i tend to bring do%n the rea %age price# !rictional unemployment refers to the te"porar! (ne"p o!"ent of peop e as the! "ove fro" one 6ob to another# There %i a %a!s be so"e frictiona (ne"p o!"ent and it&s not terrib ! i"portant socia ! beca(se it is te"porar!# ,easonal unemployment is obvio(s# It %i refer to (ne"p o!"ent patterns in sectors s(ch as b(i ding and agric( t(re %here there tends to be high (ne"p o!"ent d(ring the %inter# $-E$A-E. B/ 'A0A1 A20TE- 20AN $age B8

,tructural unemployment is "ore per"anent# It occ(rs %here the str(ct(re of the ind(str! has changed# An e,a"p e of str(ct(ra (ne"p o!"ent can be seen in the U2 %here %e have c osed "ost of o(r coa "ines# It %as tho(ght to be cheaper to i"port coa fro" abroad# Tec$nological unemployment spea*s for itse f# It is (ne"p o!"ent bro(ght abo(t b! changes in techno og! so the o d s*i s and 6obs disappeared# Cyclical unemployment is a ver! ong c!c e of e"p o!"ent and (ne"p o!"ent as econo"ies rise and fa # To%ards the end of 5==C "ost of the %or d entered a recession# The recession is i*e ! to ast for so"e !ears and this ca(ses high c!c ica (ne"p o!"ent#
Monetary and fiscal policy

7overnments $ave two main ways in w$ic$ to control or regulate t$eir economies: "onetar! po ic!, and fisca po ic!#
!iscal policy First %e& oo* at fisca po ic!# And the %ord :fisca : is an o d %ord %hich referred to the *ing&s p(rse# 'here does the state get the "one! fro"; 'here does it spend it; If the state %ants to spend "one! it either has to raise inco"e thro(gh ta,es or borro% "one!# If it %ants to red(ce ta,es it either has to red(ce e,pendit(re or borro% "one!# The three have to be in ba ance# In the c(rrent recession govern"ents are see*ing to spend "ore "one!# This is a %a! of p(tting "one! into the econo"! to tr! to sti"( ate it# 0o%ever, if the! spend "ore b! raising ta,es the! "a! act(a ! not end (p p(tting ver! "(ch "ore "one! into the econo"!# The! are ta*ing %ith one hand and giving a%a! %ith the other# So %hat "ost govern"ents are doing is increasing govern"ent borro%ing# 2eep ta,es the sa"e) borro% "one!, spend it, once it&s spent it %i be earned b! peop e %ho %i spend it again# And that&s the %a! in %hich govern"ents hope the recession %i be bro(ght to an end# Monetary policy The second %a! in %hich govern"ents atte"pt to contro their econo"ies is b! their "onetar! po ic!: "anaging the s(pp ! of "one! in the econo"!# The "ore "one! in the econo"! the "ore econo"ies are i*e ! to be sti"( ated# There are t%o "ain %eapons# "nterest rates* If interest rates are ver! high peop e %i tend not to %ant to borro% "one!# If !o( don&t borro% "one! !o( can&t spend it, and if !o( can&t spend it then, for e,a"p e, de"and p( inf ation %i be re ative ! o%# If ho%ever !o( great ! red(ce the interest rates "ore peop e %i be enco(raged to borro%# The! spend that borro%ed "one! on te evisions, cars, $age B9
$-E$A-E. B/ 'A0A1 A20TE- 20AN

ho(ses, %hatever# And once it&s spent the "one! is in the econo"!, other peop e earn it, de"and goes (p, and the econo"! is sti"( ated# Credit controls* This is a contro over instit(tions, t!pica ! ban*s, on ho% "(ch the! re a o%ed to end# So for e,a"p e if !o( p(t J1,=== into a ban* and the reserve re4(ire"ent %as on ! 1=P, that "eans that the ban* co( d end J<== o(t of the J1,=== deposited# That J<== co( d be deposited again and the ban* co( d end on JC1= and so on# So the initia deposit of J1,=== can create a "(ch higher a"o(nt of "one! in the econo"!# Sa! ho%ever that the reserve re4(ire"ent %as >=Po 3 J1,=== in the ban*) the ban* on ! end on J>==# That J>== is p(t into another acco(nt, the ban* can end on on ! J5>= and so on# /o( can see that at the end of the c!c es a "(ch s"a er a"o(nt of "one! %i be created in the econo"!#
!unctions of ta+ation
Ta,ation has "an! f(nctions# 'e&ve a read! pointed o(t that it raises reven(es for the govern"ent b(t it&s a so (sed for other p(rposes# For e,a"p e: to disco(rage certain activities regarded as being (ndesirab e# And a good e,a"p e here %o( d be a ta, on cigarettes# It can a so be (sed to ca(se certain prod(cts to be priced to ta*e into acco(nt their socia costs# There is increasing ta * for e,a"p e abo(t a carbon ta, of so"e sort beca(se it is arg(ed that if !o( drive a car or f ! in a p ane the re ease of carbon has a socia cost that o(ght to be paid for# Obvio(s !, ta, can be (sed to redistrib(te inco"e and %ea th# Fre4(ent ! peop e %ith higher inco"e and "ore %ea th are ta,ed "ore high ! and that is redistrib(ted thro(gh govern"ent e,pendit(re to peop e %ho have ess %ea th# It can be (sed to protect ho"e ind(stries fro" foreign co"petition) e,a"p es are i"port d(ties, i"port tariffs %here i"ports have a ta, attached to the" to "a*e the" "ore e,pensive re ative to the ho"e3prod(ced prod(cts# Fina ! it can provide a stabi i7ing effect on nationa inco"e# ?overn"ents are often co""itted to ong3ter" e,pendit(re p ans b(t if the econo"! fa s so"e%hat govern"ents "ight see* to increase the ta, ta*e so that the nationa inco"e sta!s (p and the! don&t have to borro% an! "ore#
Types of ta+ation
Ta+es can be described as: regressive, proportiona , or progressive#
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A regressive ta+ ta*es a higher proportion of a poor person&s sa ar! than it does for a rich person# A si"p e e,a"p e is DAT# If the DAT rate is 5=P it doesn&t "atter %hether !o( are rich r poor !o( sti pa! 5=P and that is proportiona ! "ore ta*en fro" a poor person&s pa! than it is fro" a rich person&s inco"e# A proportional ta+ ta*es e,act ! the sa"e proportion of inco"e ta, fro" a eve s of inco"e# So !o( co( d have a f at rate ta, %hich ta,es ever!one at sa! 1=P fro" the ver! first do ar earned, (p to "i ions of do ars# A progressive ta+ ta*es a higher proportion of inco"e as inco"e rises# So "a!be for the first J1,=== of inco"e the ta, rate is 7ero, for the ne,t J9,=== of inco"e the ta, rate is 5=P, and an!thing be!ond that is ta,ed at sa! 9=P# A progressive ta, %o( d obvio(s ! be "ore effective at redistrib(ting %ea th and inco"e than either a regressive or a proportiona ta,#
More terminologyJ
Fina !, 6(st a co(p e of "ore ter"s on ta,# A direct ta, is paid direct ! b! a person to the reven(e a(thorit!# A good e,a"p e there %o( d be inco"e ta,# A certain proportion of !o(r inco"e goes direct ! to the reven(e a(thorit!# An indirect ta, is co ected b! the reven(e a(thorit! fro" an inter"ediar!, nor"a ! a s(pp ier of so"e sort# A good e,a"p e of an indirect ta, is DAT# /o( b(! so"ething, !o( pa! over the tota p(rchase price, and then the se er passes so"e of that on to the govern"ent# So"e ta,es are charged a fi,ed s(" per (nit so d# So if !o( %ere to b(! a bott e of %ine it doesn&t "atter %hether it costs J>, J1= or J5>) a fi,ed s(" %i go to the govern"ent# An ad valorem ta+ is charged as a fi,ed percentage of the price of the good# A good e,a"p e of an ad va ore" ta, is DAT#
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ACCA F1 ACCOUNTANT IN BUSSINESS

Chapter 1The nature and structure of organizations

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ACCA F1 ACCOUNTANT IN BUSSINESS

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ACCA F1 ACCOUNTANT IN BUSSINESS

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ACCA F1 ACCOUNTANT IN BUSSINESS

ACCA F1 ACCOUNTANT IN BUSSINESS

ACCA F1 ACCOUNTANT IN BUSSINESS

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ACCA F1 ACCOUNTANT IN BUSSINESS

!ormal and informal organizations

ACCA F1 ACCOUNTANT IN BUSSINESS

Chapter 5 Infor"ation and infor"ation techno og!

ACCA F1 ACCOUNTANT IN BUSSINESS

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ACCA F1 ACCOUNTANT IN BUSSINESS

ole of information tec$nology

Transaction processing systems

Management information systems

ACCA F1 ACCOUNTANT IN BUSSINESS

Decision support systems

)+ecutive information systems

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ACCA F1 ACCOUNTANT IN BUSSINESS

Levels % types of information

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ACCA F1 ACCOUNTANT IN BUSSINESS

ACCA F1 ACCOUNTANT IN BUSSINESS

"nternal and e+ternal information

Chapter 8 An organisation&s environ"ent

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ACCA F1 ACCOUNTANT IN BUSSINESS

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ACCA F1 ACCOUNTANT IN BUSSINESS

ACCA F1 ACCOUNTANT IN BUSSINESS

Chapter 9 Organisational culture

ACCA F1 ACCOUNTANT IN BUSSINESS

Types of culture % 2andy's classification

,c$ein % t$ree levels of culture

ACCA F1 ACCOUNTANT IN BUSSINESS

(nderlying assumptions* The "ost f(nda"enta eve is the basic

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ACCA F1 ACCOUNTANT IN BUSSINESS

C$apter 4 'n organization5s sta-e$olders

ACCA F1 ACCOUNTANT IN BUSSINESS

C$apter 6 Corporate governance and et$ical considerations

ACCA F1 ACCOUNTANT IN BUSSINESS

)lements of corporate governance

ACCA F1 ACCOUNTANT IN BUSSINESS

Combined code of corporate governance

ACCA F1 ACCOUNTANT IN BUSSINESS

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ACCA F1 ACCOUNTANT IN BUSSINESS

"ndividual influences on et$ical be$avior

,ituational influences on et$ical be$avior

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ACCA F1 ACCOUNTANT IN BUSSINESS

Ethica stances E1ohnson and Scho esF

ACCA F1 ACCOUNTANT IN BUSSINESS

C$apter : 'ccountancy and t$e accountancy profession