MAF651 Final Notes PDF

lOMoARcPSD|11675594 MAF651 Final Notes seminar management accounting (Universiti Teknologi MARA) Scan to open on Studocu Studocu is not sponsored or endorsed by any college or university Downloaded by EZZA NURFADZREEN RUSLI (2...

lOMoARcPSD|11675594 MAF651 Final Notes seminar management accounting (Universiti Teknologi MARA) Scan to open on Studocu Studocu is not sponsored or endorsed by any college or university Downloaded by EZZA NURFADZREEN RUSLI ([email protected])  lOMoARcPSD|11675594 PERFORMANCE MEASUREMENT SYSTEM Inv = Net current assets (TCA – TCL) + Fixed Assets (NBV or replacement cost) What is PMS? ¥ System that facilitates the attainment of How to improve ROI? individual and corporate goals. ¥ ­ Sales price ¥ Enable firms to track and monitor the ¥ ¯ Expenses, Capital investment performance of individual employees, departments, and the organization overall. Advantages Drawbacks ¥ Continuous process where managers and Widely used. May encourage employees work together to plan, monitor managers to focus on and review the employee’s work goals of improving short term their overall contribution to the financial organization. performance which can reduce long term Effective PMS financial ¥ Measures are to be benchmarked to high performance. external standards. Encourage managers Managers may defer ¥ Embrace employees’ participation and to focus on profits asset replacement to empowerment in the formulation and and assets required to maintain higher ROI. operation of the system. generate profits. ¥ It should link to the reward system. Can be used to Discourage managers ¥ It should be holistic (aggregate) and evaluate the relative from investing in comprehensive that encompass various performance of profitable projects perspectives. investment centers which would decrease even when the the investment Features of effective PMS business units are of centre’s ROI. different sizes. ¥ Performance measure should link to organizational strategies and goals to How to minimize the behavioral problems of ROI? promote goal congruence. ¥ Use ROI with other performance measures ¥ Measures used are understandable and that can focus on both short- and long- communicated to employees. term financial performance. ¥ Measures are related to activities and ¥ Consider alternative ways of measuring processes that are under employees’ invested capital to minimize dysfunctional control. decisions. ¥ Measures are reported as close as possible to ¥ Promote teamwork and open the period they relate. communication between different departments to ensure a unified Financial performance measures understanding of ROI goals and metrics. 1. Return on investment Shows how much profit has been made in ¥ Offer continuous education to employees to relation to the amount of resources enhance their understanding of ROI invested. concepts, reducing misunderstandings and promoting informed decision-making. ROI= Net profit / Investment Net profit = PBIT, consider variable cost only, profit from operation activities only. Downloaded by EZZA NURFADZREEN RUSLI ([email protected])  lOMoARcPSD|11675594 2. Residual income Advantages Drawbacks Amount of profit that remains after EVA provides a clear The complexity can be subtracting an imputed interest charge. link between a drawback for Imputed interest charge is the required rate management actions managers who may of return based on the cost of capital of and shareholder value find it challenging to the firm. creation. understand and apply, potentially It encourages managers to make profitable leading to errors in investments that would be rejected by calculation and managers using ROI. interpretation. It considers the cost Managers might RI= NPBT - Investment charge of capital, providing a prioritize projects (Total Investment x Imputed interest rate) more comprehensive that boost EVA in the assessment of how short run but may Advantages Drawbacks well a division or not be conducive to Promote more goal Cannot be used to project contributes to the long-term congruence assess the relative the overall financial sustainability and compared to ROI. performance of health of the growth of the business that are of company. company. different sizes. Since EVA deducts the The adjustments Considers the Formula is biased in cost of capital, made in EVA required rate of favor of large managers are calculations can be return in businesses. motivated to subjective and it may measuring undertake projects lead to disputes or performance. that generate returns differing Encourages Encourage short exceeding the cost of interpretations investment in term focus and funds, thus increasing among managers and projects which yield financial aspect the company's value. stakeholders. a + RI to the firm. only. Limitations of financial performance measures ¥ Emphasizes immediate financial gains, 3. Economic value added potentially neglecting long-term strategic Measures company financial performance goals and overall business sustainability. based on the residual wealth calculated by ¥ Relies heavily on past financial data, deducting cost of capital from its limiting its ability to capture emerging operating profit, adjusted for taxes on a trends, changing market conditions, or cash basis. future risks. ¥ Concentrates on monetary aspects, EVA = NOPAT – (Invested capital x WACC) overlooking crucial non-financial factors like customer satisfaction, employee Invested capital = Debt + Capital leases + engagement, and innovation. Shareholders’ equity or Total assets – ¥ Time-consuming process of gathering and Current liabilities reporting financial information may result in delayed insights for timely decision- + EVA shows a project’s returns more than making, especially in fast-paced business the required minimum return. environments. ¥ Struggles to accurately quantify intangible assets such as intellectual property and human capital, leading to an incomplete assessment of overall performance. Downloaded by EZZA NURFADZREEN RUSLI ([email protected])  lOMoARcPSD|11675594 Non-financial performance measures Balance Scorecard Examples: ¥ Customer: Conversion rate, retention rate, customer satisfaction, customer complaints, wait time for the customer. ¥ Internal process: Product defect percentage, order accuracy, product efficiency, on-time delivery. ¥ Learning & Growth: Average time to hire, salary competitiveness ratio, employee productivity rate. Importance of NFPM ¥ Better indicators of future financial performance. ¥ Reduce earning management. ¥ It is an instrument designed and used to ¥ Provide indirect, quantitative indicators of assist managers to evaluate past a firm’s intangible assets. performance to drive future performance. ¥ Closer link to long term organizational ¥ Provides a framework that help planners strategies. identify what should be done and measured. Benefits of NFPM ¥ Enables managers to execute their ¥ Track strengths and weaknesses. strategies. ¥ Reveal business performance. ¥ It provides a clear prescription as to what ¥ Feedback to employees. companies should measure to balance the ¥ Assess the impact of external factors. financial perspectives. ¥ It also incorporates non-financial NFPM for operational control operational measures. ¥ Customer satisfaction: Customer survey. ¥ Measures are reported during the period ¥ Quality: Periodic inspections or testing of when corrections can be made, and small products. problems can be addressed before they are ¥ Accident report: Safety statistics. becoming big ones. ¥ Machine downtime: Number of hours that ¥ Use combination of lead and lag machines are unable to operate. indicators. ¥ Multi skilling: No. of employees who have ¥ Lagging indicators assess the current state attained skills to allow them to undertake of business and leading indicators predict a range of operational tasks. future conditions. ¥ Productivity: Ratio of outputs produced per unit of input Lag Lead Labour productivity = No. of units Financial produced / No. of direct labour hours ROI, EVA, product Sales mix, cost per profitability. product. Factor productivity = No. of units Customer produced / Cost of all inputs to Customer On time delivery, no. productions satisfaction, no. of of product returns, new/retained no. of customer customers. complaints. Downloaded by EZZA NURFADZREEN RUSLI ([email protected])  lOMoARcPSD|11675594 Internal processes Benchmarking No. of good units Product defects, no. ¥ Process of comparing the products, completed, no. of of product returns, functions, and activities in an organization products under product development against external businesses by identifying development. time. area for improvement. Learning and growth ¥ Identify the function to be benchmarked Employee satisfaction Improvements made and performance measures ® Select survey, no. of to employee facilities, benchmarking partners ® Data collection employees time spent developing and analysis ® Establish performance participating in employee programs. goals ® Implement plans ® Measure training programs. performance against benchmarks on a regular basis Benefits of BSC ¥ Provides a comprehensive view of Types of benchmarking organizational performance with both ¥ Strategic benchmarking financial and non-financial metrics. Comparing your organization's overall ¥ Aligns activities and initiatives with strategy with the best practices of other strategic objectives, ensuring everyone successful organizations. Example: Looking works towards common goals. at how successful companies in your ¥ Facilitates informed decision-making by industry approach long-term planning and offering a balanced set of metrics goals. reflecting different business aspects. ¥ Enhances communication and ¥ Performance/Competitive Benchmarking transparency by visually representing Comparing your organization's performance metrics for better performance metrics with direct understanding. competitors in the same industry. Example: ¥ Encourages a culture of continuous Analyzing your company's market share, improvement and learning, emphasizing profitability, or customer satisfaction human capital development and compared to competitors. innovation. ¥ Process Benchmarking Challenges of BSC implementation Comparing specific processes within your ¥ Overcoming resistance to the shift from organization with those of other leading traditional metrics to a balanced organizations to improve efficiency. measurement system. Example: Studying how a top-performing ¥ Dealing with the complexity and resource company handles its order fulfillment demands of implementing and process to enhance your own. maintaining diverse metrics. ¥ Ensuring the reliability of subjective ¥ Functional Benchmarking measures like customer satisfaction and Focusing on specific functions or employee morale. departments within your organization and ¥ Facing challenges if the organization lacks comparing them with similar functions in a well-defined and clear strategy. other organizations. Example: ¥ Addressing issues related to insufficient Benchmarking the HR practices of your employee training and communication on company against those of other successful the Balanced Scorecard. companies. Downloaded by EZZA NURFADZREEN RUSLI ([email protected])  lOMoARcPSD|11675594 ¥ Internal Benchmarking INCENTIVE SCHEME AND REWARD SYSTEM Comparing different departments or units Reward is benefits provided by the employers, within your own organization to identify usually money, promotion or benefits and best practices and areas for improvement. satisfaction derived from the job itself such as Example: Assessing the sales performance of pride in one’s work, a feeling of accomplishment one region against another within your or being part of a team. company. Types of Rewards ¥ External Benchmarking 1. Extrinsic reward Looking outside your organization for Tangible rewards such as pay raises, comparison, involving competitors, industry bonuses. Some intangible rewards like leaders, or companies in different sectors. praises also fall under this category. Example: Analyzing customer service practices in your industry by looking at 2. Intrinsic reward successful companies outside your Non-physical rewards such as feeling of organization. contentment, sense of achievement, words of praise, recognition & work ¥ International Benchmarking freedom. Comparing your organization's performance or practices with those of Performance related reward system companies in different countries. Example: 1. Individual incentive plans Evaluating environmental sustainability Individuals are rewarded for achieving practices by benchmarking against individual performance targets. international companies with strong green initiatives. 2. Profit sharing plans *** Cash bonuses are paid to each employee, Benefits of benchmarking based on a specified percentage of the company’s profit. ¥ Identifying areas for improvement and boosting overall performance. 3. Employee share plans ¥ Gaining insights for better strategic Provide employees with the right to decision-making. purchase company's shares at a specified ¥ Achieving cost savings through optimized price at some specified future time. processes. ¥ Aligning financial goals with industry 4. Gainsharing norms and competitors. Cash bonuses are distributed to ¥ Setting clear performance standards and employees when the performance of the promoting transparency. company, or their segment of the company, exceeds some performance Common pitfalls to avoid target. ¥ Skipping the definition of clear objectives. ¥ Choosing the wrong benchmarking partner. 5. Team based incentive scheme *** ¥ Benchmarking too many areas and KPIs. Individuals are rewarded based on their ¥ Ending the benchmarking with a variance work team exceeding certain report not action plans. performance targets. Intended to ¥ Assume results stay stable for long periods. encourage teamwork and cooperation between employees. ¥ Difficult to obtain data especially from competitors. *** Does not tie individual effort to ¥ Always a follower and not a first mover. individual rewards. Downloaded by EZZA NURFADZREEN RUSLI ([email protected])  lOMoARcPSD|11675594 Nonperformance related reward system Motivation Theories Giving reward to employees not based on their 1. Vroom’s Expectancy Theory work performance such as paid because of good The theory argues that humans act behavior. For instance, rewarding loyal employees according to their conscious expectations or employees who never took annual leaves etc. that a particular behavior will lead to specific desirable goals. Group vs individual performance reward Consider the following issues: ¥ Effort-performance expectancy ¥ Identification with the group. ¥ Performance-outcome ¥ Equity among employees ¥ Outcome- personal goal ¥ Competitiveness between employees ¥ Relating individual effort to reward Motivation = Expectancy x Instrumentality ¥ Rewarding only good performers x Valence Job performance Expectancy: individual’s capability and Performance = Motivation x Ability x difficulty of task assigned. Environment Instrumentality: The belief of the person Motivation is an internal and external factor that he/she will receive a reward (R) if the that stimulate desire and energy in people to be performance (P) expectation is met. [P > R] continually interested and committed to a job, role, or subject, or to try to attain a goal. result Valence: Refers to the value of the reward from the interaction of both conscious and according to the person. unconscious factors such as the intensity of desire or need, incentive or reward value and 2. Herzberg’s Two-factor Theory expectation of the individual and of his/her ¥ Hygiene (extrinsic factor) superior or peers. Provide the necessary setting for motivation, but do not themselves Ability meaning having the skills and knowledge motivate employees. required to perform the job is also important. Examples: salaries, incentives, job security Environmental factors such as having sufficient and working conditions, organizational resources, information, and support are critical policies. to determine performance. May create dissatisfaction if individuals Types of Motivations perceive them as inadequate or 1. Intrinsic Motivation inequitable, however, individuals will not Driven by internal individual's desire and be significantly motivated if these interests to perform a particular task. Exists factors are viewed as adequate or good. within the individual rather than relying on external pressures or desire for rewards. ¥ Motivators (intrinsic factors) Relate to job content or outcomes of the 2. Extrinsic Motivation job that encourage motivation. It focuses on performance which leads to attain an outcome and achieve a reward Examples: achievement, recognition, for showing the desired behavior. It is nature of work, responsibility, linked to competition because this opportunities for personal growth. encourages the individuals or team members to succeed and reap rewards. Downloaded by EZZA NURFADZREEN RUSLI ([email protected])  lOMoARcPSD|11675594 It can give satisfaction to employees in Principles of effective goal setting an organization. It is crucial to instill ¥ Clarity satisfaction in employees as it will create A goal must be specific and clear. confidence, loyalty and ultimately improves the quality of their outputs. ¥ Challenge An easy or tedious goal is demotivating. Keep 3. McClelland’s Needs Theory a realistic balance: don’t expect TOO much! The theory states that human behavior is affected by three needs: ¥ Commitment Need for Power: Urge to excel, to Your employees must understand and buy in accomplish a set of standards, to to the goal from the outset. struggle to achieve success. Need for Achievement: Desire to ¥ Feedback influence other individual’s behavior as Provide regular feedback throughout the per your wish. It is the desire to have whole process. This helps to keep the goal on control over others and to be influential. track. Need for Affiliation: Need for open and sociable interpersonal relationships. The ¥ Task complexity desire for relationship based on co- Prepare realistic timescale and break down operation & mutual understanding. the process into sub-goals with regular reviews. 4. Locke’s Goal Setting Theory states that specific and challenging goals alongside Prospects of GST with appropriate feedback contribute to ¥ Increase self-efficiency: higher and better task performance. The individual’s self-confidence and faith that he has potential of performing the task. Features: The higher the level of self-efficiency, the Willingness to work towards goal greater will be the efforts put in by the attainment. individual when they face challenging tasks. Specific and clear goals lead to greater output and performance. Realistic and challenging goals give an ¥ Create goal commitment: individual a feeling of pride and Goal setting theory assumes that the triumph when he attains them and sets individual is committed to the goal and will him/her up for the next achievement. not leave the goal. Better and appropriate feedback on results direct employees’ behavior & Goal commitment is dependent on the contribute to higher future following factors: performance. Goals are made open, known, and Employees participation in setting goal communicated. makes goal more acceptable and leads Goals are set self by individual rather to more involvement. than designated. Individual’s goals are consistent with organizational direction. Downloaded by EZZA NURFADZREEN RUSLI ([email protected])  lOMoARcPSD|11675594 CHANGE MANAGEMENT: MANAGING RISK & ¥ Revolution: It is a rapid and wide-ranging PEOPLE response to extreme pressures for change. A long period of strategic drift may lead to a Organizational Change crisis that can only be dealt with in this way. Organizational change is about reviewing and modifying management structures and business Change management process processes. To stay a step ahead of the competition, companies need to look for ways to do things more efficiently and cost effectively. There are internal and external events that trigger organizational change. ¥ Internal event: Introduction of new technologies, change in production technologies, outdated working processes, etc. Increasing competition ¥ External event: Change in social demographic (e.g. gender, age, and income), change in buying behavior and customer tastes, legal and political pressures. Perspective of change ¥ Scope of change (extent): The measure of scope is whether the methods and assumptions of the existing paradigm must Process of planned change (Lewin) be replaced. ¥ Nature of change: May be incremental and built on existing methods and approaches, or it may require a ‘big bang’ approach if rapid response is required, as in times of crisis. The types of change ¥ Adaptation: Common type of change that does not require the development of a new paradigm and proceeds step by step. ¥ Reconstruction: Common response to a long- term decline in performance. Can be undertaken with an existing paradigm but requires rapid and extensive action. ¥ Evolution: It is an incremental process that leads to a new paradigm. It may arise from careful analysis and planning or may be the result of learning process. Downloaded by EZZA NURFADZREEN RUSLI ([email protected])  lOMoARcPSD|11675594 Reasons for resist to change Managing resistance to change ¥ High uncertainty ¥ Education and support Organizational change might lead to Many individuals resist change because of uncertainty. Hence, the tendency for an ignorance. Promoting the benefits of individual to avoid experiencing change may be useful in creating ‘buy-in’ uncertainty of the unknown by of change among staffs. maintaining to be at the ‘status quo’. ¥ Participation and involvement ¥ Increased workload Allowing employees to participate in the When change is introduced, it is most likely change process may reduce change that the management affected would resistance. For instance, identifying issue, experience an upsurge in workload. prioritizing, and creating new routines in Management will be required to engage in the implementation of a new strategy. planning and implementing new systems and processes. This may result in ¥ Facilitation and support resentment as employees are expected to An informal policy can be implemented as perform tasks in additional to their daily an opportunity for staffs involved in the routine job. change process to ask questions. In extreme cases where change led to staff ¥ Rapid change redundancies, the management may The resistance may intensify when there is provide support by offering redundancy a forced and rapid change. This is because packages or training to support staffs in the employees affected are given future career. insufficient time to prepare themselves and understand the change. ¥ Negotiation and agreement. Where employees’ rights and pay are ¥ Loss of autonomy affected by the change, management may Change may require the management to offer incentives such as flexible working adopt different approaches in dealing with hours or additional pay, to ensure that operations and job routines. This may cause individuals & labor unions support the employees to move away from their change. traditional routines, giving rise to confusion about conducting work which ¥ Manipulation and co-operation. involves new processes and systems. In cases where there is a significant Individuals may sense that they are losing resistance to change, manipulation is control over their job. deemed to be appropriate although it raises several ethical considerations. ¥ Skills and competence When individuals lack the required skills to ¥ Coercion, implicit and explicit. use new systems in line with the Management may use its power to impose introduction of new technologies, the change via coercion, which is considered as resistance to change may increase. There is a strong form of direction. It may be an the risk where individuals feel inadequate ideal approach in times of crisis or as their existing skills are no more required. confusion but may also provoke opposition. Downloaded by EZZA NURFADZREEN RUSLI ([email protected])  lOMoARcPSD|11675594 Risk categories government. This risk is external to the ¥ Fundamental risks: Affect society in business. general, broad groups of people, and are beyond the control of any individual. eg. ¥ Financial risks: The risk of a change in a risk of air pollution financial condition such as an exchange rate, interest rate, and customers’ credit ¥ Particular risks: Risks which an individual rating. may have some measure of control. eg. risk Credit risk: Risk of non-payment by attached to smoking. customers. Political risk: Risk arising from ¥ Speculative risks: Those from which either government's actions that affect good (upside risks) or harm (downside risks) financial aspects of the business. may result. eg. A business ventures. Currency risk: Risk of fluctuations in the exchange rate. ¥ Pure risks: Those risks that the possible Interest rate risk: Risk that interest outcome is only causing harm. eg. risk rate change. facing those people infected by virus. Gearing risk: Risk in the way a business is financed (debt vs equity) Types of risks (that can be part of interest rate risk) ¥ Business risks: Risk that businesses face due to the nature of their operations and products. Risk can be looked at in two ways Strategic risk: Risk that business ¥ Upside risk (positive risk) is where things strategies will fail. work out better than has been expected. Product risk: Risk of failure of new ¥ Downside risk (negative risk) is the risk product launches or loss of interest in something could go wrong and the existing products. organization is damaged. Commodity risk: Risk of a rise in Benefits to be derived from the commodity prices. (e.g. crude oil) and management of risk, possibly at the risk of disruption to operations due to expense of profits, such as: a shortage of necessary supplies or Predictability of cash flows. sub-standard supplies. Well-run systems. Operational Risk: Risk that business Limitation of the impact of operations may be inefficient, or potentially bankrupting events. business process may fail. Increased confidence of shareholders Contractual Risk: Risk that the terms and other investors. of a contract do not fully cover a business against all potential Risk appetite: Risk attitude & capacity outcomes. Risk Appetite: Amount of risk that an Environmental and social risk: Risks organization is prepared to accept in pursuit of arising from changes in the business its objectives based on: environment (includes political, ¥ Risk Attitude: The overall views of the economic, social and technological board, whether the board is risk averse or issues) risk seeking. ¥ Risk capacity: The amount of risk that the ¥ Economic risks: Risk that changes in the organization can bear. economy might affect the business. The changes could be inflation, unemployment rates, international trade relations or Risk management strategy fiscal policy decisions announced by Downloaded by EZZA NURFADZREEN RUSLI ([email protected])  lOMoARcPSD|11675594 The overall risk management strategy may ¥ Culture is shared as it resides in shared define how the risks will be managed and the behaviours, values, and assumptions and is way these methods will interact: most commonly experienced through the ¥ Transfer risk norms and expectations of a group. Risk can be transferred wholly or in part ¥ Culture is pervasive that permeates multiple to a third party. A common example of this levels and applies broadly in organization. is insurance. It does reduce or eliminate It manifests collective behaviours, physical risks but some premiums have to be paid. environments, group rituals, visible symbols, stories, and legends. They include mindsets, ¥ Avoid or abandon risk motivations, unspoken assumptions, and Company may decide that some activities “action logics” mental models of how to are so risky that they should be avoided. interpret and respond to the world. This will always work but is impossible to ¥ Culture is enduring as it can direct the apply to all risks in commercial thoughts and actions of group members organisations as risks have to be taken to over a long time. People are drawn to make profits. organizations with characteristics similar to their own; organizations are more likely ¥ Pool risks to select individuals who seem to “fit in”; Risks from many different transactions and over time those who don’t fit in tend can be pooled together: each individual to leave. transaction or item has its potential upside ¥ Culture is implicit whereby people are and its downside risks. The risks tend to effectively hardwired to recognize and cancel each other out and are lower for the respond to it instinctively. Schwartz and pool as a whole than for each item Wilson have shown how evolutionary individually. processes shaped human capacity; because the ability to sense and respond to culture ¥ Diversify risks: Diversification is a similar is universal, certain themes should be concept to pooling but usually relates to expected to recur across the many models, different industries or countries. The definitions, and studies. objective is to reduce risk. The idea is that the risk in one area can be reduced by Culture and structure investing in another area where the risks 1. Power or club culture are different or ideally opposite. A ¥ Power and influence stem from a correlation coefficient with a value close to central source, which is the owner- -1 is essential if risk is to be nullified. directors or the founder of the business. Risk management [TARA] ¥ The degree of formalisation is limited, ¥ Transference with few rules and procedures. ¥ Avoidance ¥ The organisation is capable of ¥ Reduction or mitigation adapting quickly to meet change. ¥ Acceptance Personal influence decreases as the size of an organisation get bigger. ¥ Power culture best suited the smaller business firms, where the leaders have direct communication with all employees. ¥ Personnel have to get on well with each other for this culture to work. Attributes of culture Downloaded by EZZA NURFADZREEN RUSLI ([email protected])  lOMoARcPSD|11675594 2. Role Culture Hofstede’s cultural dimensions (2001) ¥ Role culture in bureaucratic 1. Power Distance, related to the different organisations have formal structure, solutions to the basic problem of human and operate according to well- inequality. established rules and procedures. 2. Uncertainty Avoidance, related to the level ¥ Individuals are required to perform of stress in a society in the face of an their job to the full, but not to overstep unknown future. the boundaries of their authority. 3. Individualism versus Collectivism, related to Individuals who work for such the integration of individuals into primary organisations tend to learn an groups. expertise without experiencing risk; may 4. Masculinity versus Femininity, related to do their job adequately, but are not the division of emotional roles between over-ambitious. women and men. ¥ The bureaucratic style, can be very 5. Long Term versus Short Term Orientation, efficient in a stable environment, when related to the choice of focus for people's organisation is large & the work is efforts: the future or the present and past. predictable. 6. Indulgence versus Restraint, related to the gratification versus control of basic human 3. Task culture desires related to enjoying life. ¥ In task culture, management is seen as Managing individual performance completing a succession of projects or The shaping of individual performance process solving problems. involves several steps as follows (Warner, 2012): ¥ The task culture is reflected in project 1. Identify a desired behavior for the teams and task forces. individual in pursuing the chosen goal. ¥ In such organisations, there is no 2. Identify the present level of performance dominant or clear leader. The main in displaying the desired behavior. concern is to get job done. Important 3. List the steps that will eventually take the individuals in task culture are the individual from his/her present level of experts with the ability to accomplish a performance to the final desired behavior. particular aspect of the task. The skill levels should be progressively more Performance is assessed by results. demanding. ¥ Task cultures are expensive, as experts 4. Tell the individual that s/he must demand a market price. accomplish step 1 to receive any reward (or ¥ Task cultures also depend on variety, avoid punishment). and tapping creativity requires a 5. Once the individual has mastered a tolerance of perhaps costly mistakes. specified behavior, require that s/he demonstrate the next stage of behavior to 4. Person culture receive a reward (or again avoid ¥ Person or existential culture is found in punishment). an organization whose purpose is to serve the interests of the individuals within it. ¥ The example might be a partnership of a few individuals who do all the work of the organization themselves. For example, accountants in accounting firms and doctors in private clinics. Downloaded by EZZA NURFADZREEN RUSLI ([email protected])