2016 BPP PASSCARD F1

Overview of Content Process Choosing an Rewards and Pay as a motivation theories theories approach incentives motivator Job satisfaction (which Herzberg considered the basis of all motiv ator factors) arises from Skill variety Task identity/meaning Task significance/importance Autonomy or discretion Feedback on performance Herzberg noted that the 'micro-designed' jobs Job enlargement favoured by scientific management are repetitive, A 'horizontal' extension of the job by increasing the meaningless, unimportant, programmed and number of operations or tasks: reducing the cycle of devoid of feedback! He suggested three ways of repetition, adding variety. (However, adding more redesigning jobs for job satisfaction. low-skill, meaningless tasks may not be a long-term source of satisfaction.) Job rotation Job enrichment Transferring the worker sequentially or A 'vertical' extension of the job by adding responsibility, cyclically from one job to another, to allow breadth and challenge: giving feedback, removing task variety. (Sometimes used as a form of controls. (Job enrichment is equivalent to training/development.) 'empowerment' on the level of individual job design.)

In line with the idea of job enr ichment, various related concepts have been put forward as potential motivators (or sources of job satisfaction), including: Certainty Participation must be perceived as genuine Participation/involvement Consistency Participation must be persevered with Clarity The objectives of participation must be clear Capacity Employees must have the information/ability required Commitment Management must believe in participation Organisation culture (Peters & Waterman) Employees can be 'switched on' to extraordinary loyalty and effort if: The 'cause' is perceived to be great: 'reaffirming the heroic dimension of work' – eg quality, customer, innovation People are treated as 'winners', valued contributors: 'good news swapping' and positive reinforcements Page 147 15: Motivating individuals and groups

Overview of Content Process Choosing an Rewards and Pay as a motivation theories theories approach incentives motivator Pay is an important motivator Pay is a limited motivator Money is a means of satisfying many needs Pay cannot (by itself) satisfy 'higher order' (Maslow) needs Herzberg recognised pay's importance in Pay is a 'hygiene' factor: it cannot offer job satisfying needs and symbolising/comparing satisfaction individual worth People tend to want equitable and sufficient People need money to live pay – not maximised earnings (at any 'cost') Some people have an 'instrumental' orientation to work: they put up with deprivations to earn money Remember that pay can be a powerful short-term motivator.

Pay levels/structures may be Payment by results (PBR) determined by: is related to output (in ter ms of units produced or Job evaluation: a systematic process of time taken). analysing job content (not job holder performance) to determine the 'value' of the job. Performance-related pay (PRP) Negotiation/collective agreements on pay Perceived fairness (equity) is related to results achieved (in terms of defined Market rates of pay standards for key tasks, fulfilment of objectives etc). Individual performance in the job Page 149 15: Motivating individuals and groups

Notes

16: Training and development Topic List Employees are resources to be developed, not just costs to be controlled. How people learn, and how they should The learning process be trained, is very relevant to organisational performance Development and training and should be approached systematically. At the core of Training needs and methods this topic is the need to ensure that tr ainee learning is Responsibility for training and applied in the work context. Development constitutes a development wider topic, and involves more than merely improving job Evaluating training programmes performance. Development

The learning Development Training needs Responsibility for Evaluating training Development process and training and methods training and development programmes Behaviourist theory Learning styles Stimulus → Response negative reinforcement Theorists prefer to understand principles Reflectors prefer to think things through first Stimulus → Different positive reinforcement Activists prefer to try things, 'hands on' response Pragmatists prefer to work with real tasks/problems Stimulus → Repeat successful response (Honey & Mumford) Cognitive theory Learning cycle Plan Select new goal Attempt behaviour Act Abstract Assess results Apply Analyse Learning theory suggests that motivation, objectives, (Kolb) feedback, positive/negative reinforcement are key to effective training

Learning organisation is one that facilitates the acquisition and sharing of knowledge, and the learning of all its members, in order continuously and strategically to transform itself in response to a r apidly changing and uncertain environment. Learning organisations: Keep plans and decisions flexible Seek out learning opportunities Insist on data rather than guesswork Develop HR policies to suppor t flexibility Encourage experimentation and questioning Develop management styles to suppor t flexibility Regard risks and failures as learning tools Focus training on 'learning how to learn' Gather information from all possible sources Share information through formal/informal networks Page 153 16: Training and development

The learning Development Training needs Responsibility for Evaluating training Development process and training and methods training and development programmes In order to achieve its goals, an organisation requires a skilled w orkforce. Training Development Education Planned programmes and instruction Growth of a person's ability and Knowledge acquired gradually, which enable people to achieve a potential through the provision of through a process of learning higher level of knowledge, skills and learning. and instruction. competence. Development planning 1 Identify necessary skills 2 Draw up development strategy 3 Implement

Benefits of training for the organisation for the trainee Increased skills/knowledge: enhanced job Enhanced competence → sense of achievement, performance self-esteem, security of greater employability Attraction and retention of quality labour Satisfaction from greater contribution to business Improvement of skill base: adding value to success, quality etc the human assets of the business Opportunities for career development and increased Enhanced workforce flexibility rewards Enhanced managerial succession Opportunities to extend own skills, interests Better quality and customer service, for competitive advantage Note: Training is not a substitute for effective selection, Fewer errors, complaints, accidents organisation and supervision! Not all problems are Less need for detailed supervision and amenable to training. Training must also be effectively managerial interventions planned, designed and managed. Page 155 16: Training and development

The learning Development Training needs Responsibility for Evaluating training Development process and training and methods training and development programmes A systematic approach to training Stage One: training needs analysis Organisational objectives Job requirements Human resource audit Job analysis, specifications, description People's current skills: Role/skill analysis Testing Employee surveys Observation Competence definition Self assessment Appraisal Environmental changes Performance criteria/standards New technology 'Learning gap' or training needs New legislation New standards

Stage Two: planning and Formulate training objectives implementing training (SMART) Validate: ie has it worked? Select and develop methods/media of training Implement training Post-training test or appraisal of Feedback to trainees performance 16: Training and development Evaluate whole process: was it worth doing? Page 157

The learning Development Training needs Responsibility for Evaluating training Development process and training and methods training and development programmes Off-the-job training methods include: Off-the-job methods Training room instruction In-house training facilities + Allow experimentation without risk, Lectures/taught classes or external training pressure of work Case study analysis providers – accessed via Role plays training leave, day + Away from interruptions, distractions Simulations/in-tray exercises release, evening classes of work Visits and tours etc Outdoor training Off-site training events + Can allow for own-pace study Distance or open learning + Suit theoretical learners Computer/video-based Flexible, use-anywhere – May not relate directly to task or job learning training packages context Training technologies include video, interactive video, – Less immediate motivation and online and various computer based training methods. feedback for learning – Does not suit all learners – Can create anticlimax on return to work

On-the-job training methods include: On-the-job methods 'Shadowing' a colleague Observation/imitation + Relevant to job skills Job instruction Demonstration/explanation + 'Fit' with job context Coaching Guidance, advice, teaching + Establish work relationships Job rotation Gaining work experience + Suit active/pragmatic learning styles Temporary promotion Gaining management experience – Depend on training skills of fellow 'Assistant to' positions Shadowing managerial work Committee/project work Exposure to other functions workers/supervisors Apprenticeships Mix of off- and on-the job – Risk, pressure, distraction of 'real' work Induction training context – May train unhelpful methods/culture is the introduction of new recruits to the job, work place and – Requires tolerance of error work group. It begins an on-going process of development. 16: Training and development Orientation to workplace: Introduction to work, superior and team Briefing on policies, rules Plan mentoring, initial training and so on Page 159

The learning Development Training needs Responsibility for Evaluating training Development process and training and methods training and development programmes Develop own Central concern with skills developing people Trainee HR department Needs of individual Fewer automatic New skills Managing and organisation promotion paths always needed careers Line managers Training managers Feedback and evaluation Identifying Coaching/ Reports to Programme training needs feedback HR director design Assessing Identifying learning opportunities Liaison Needs competences and organising programmes analysis Responsibility for training therefore lies with the individual, in collabor ation with managers and HR professionals.

The learning Development Training needs Responsibility for Evaluating training Development process and training and methods training and development programmes Validation of training Evaluation of training is measuring the results of the programme against is analysing the costs of the prog ramme against its its objectives: has it been effective in achieving its benefits: has it been worthwhile? goals? Validation Evaluation Appraise the work performance of trainees for Test post-training knowledge/skills for general or specific improvement comparison with pre-training tests Assess the effect of training on team and Survey the satisfaction of trainees, via organisation performance, for integrated feedback forms, attitude survey or appraisal improvement Analyse indicators of 'knock-on' effects: labour Monitor the on-going development of trainees turnover, disciplinary actions, suggestions etc for influence on promotability/succession Page 161 16: Training and development

The learning Development Training needs Responsibility for Evaluating training Development process and training and methods training and development programmes 'Development' is a wider concept than tr aining, although training provides learning and educational experiences for development. Skill/competence development Employability development Acquiring job-relevant knowledge, skills etc Acquiring a portfolio of experience/competence through education and training. that enhances mobility/value in the labour market. Career development DEVELOPMENT TRAINING Identifying career aspirations and planning EDUCATION progression through: Gathering different experiences Using mentors and role models Accepting opportunities and challenges Personal development Seeking wider learning experiences, to meet self-actualisation needs and goals.

17: Performance appraisal Topic List Appraisal is one of the control systems of the organisation – improving organisational efficiency by ensuring that Performance management and individuals within it are performing to the best of their assessment ability and potential. It should be a forward looking, The purpose of performance appraisal problem-solving, collaborative process, set firmly within The process of performance appraisal with organisational context and regularly evaluated. Barriers to effective appraisal How effective is the appraisal scheme?

Performance management The purpose of The process of Barriers to How effective is the and assessment performance appraisal performance appraisal effective appraisal appraisal scheme? Key features of performance measurement Aspect Comment Agreed framework of goals, standards The manager and the employee agree about a standard of and competence requirements performance, goals and the skills needed. Performance management is a process Managing people's performance is an ongoing activity, involving Shared understanding continual monitoring and assessment, discussion and adjustment. The goals of the individual, unit and organisation as a whole need to Approach to managing and be integrated: everyone needs to be 'on the same page' of the developing people business plan. Managing performance is not just about plans, systems or resources: it is an interpersonal process of influencing, empowering, giving feedback and problem-solving. Achievement The aim is to enable people to realise their potential and maximise their contribution to the organisation's success.

Performance management The purpose of The process of Barriers to How effective is the and assessment performance appraisal performance appraisal effective appraisal appraisal scheme? The general purpose of appraisal is to improve the performance of the organisation. Purposes of performance appraisal Why have a formal system? Establishing key results which a job holder needs to Ongoing informal feedback on performance is achieve for effective working an important part of management, but: Identifying improvement/training needs Identifying performance deserving merit pay awards Managers may obtain only random Identifying areas in which work methods, technology impressions based on most recent/obvious and other factors could better support performance incidents Identifying candidates for promotion/succession Negative aspects may get more attention Assessing organisational competences to aid HR than positive planning Feedback may be sporadic, subjective, Encouraging communication about performance hasty and inconsistent in applying cr iteria Creating a culture of openness to feedback, Formal appraisal makes both appraiser and problem-solving and continuous improvement appraisee accountable for their judgements, responses and follow-up actions. Page 165 17: Performance appraisal

Performance management The purpose of The process of Barriers to How effective is the and assessment performance appraisal performance appraisal effective appraisal appraisal scheme? Corporate Performance appraisal control system objectives Work systems and conditions HR plan Employee performance Identification Performance Assessment Review Jointly Follow-up of monitoring (report) (interview) agreed, action by concrete criteria for manager conclusion assessment Job requirements Job analysis

Appraisal techniques refer to what is appraised and how it is appraised/reported. Overall assessment Behavioural incident analysis requires the assessor to write an appraisal in compares employee behaviour in critical incidents narrative form. Can be unfocused, and depends to classifications of successful/unsuccessful on managers' writing skills. behaviours in such situations. Job-relevant, though complex to develop. Guided assessment Grading (or rating scales) adds guidelines on attributes/performance score workers according to the extent/level to which elements to be assessed, and how they are to they possess attributes. Graphic scales: be defined. eg Poor Fair Good There has been a trend towards more systematic, job relevant techniques such as: Competence assessment: based on competency definitions and standards developed for the job or occupation Results-based assessment: measuring performance against specific objectives and targets (eg MBO, performance management) Page 167 17: Performance appraisal

Performance management The purpose of The process of Barriers to How effective is the and assessment performance appraisal performance appraisal effective appraisal appraisal scheme? Traditional performance Alternative or multi-source feedback appraisal: 1 Self appraisal (by the appraisee) Appraisal by the worker's immediate + Removes judgement, fosters self-insight superior – Inevitably subjective + First-hand knowledge + Authority to act 2 Upward appraisal (by subordinates) – Perceived as top-down + Meaningful feedback on management style – May damage working – Inevitably defensive relationship 3 Peer and/or customer appraisal + Meaningful feedback on internal/external customer care – Peer feedback may be defensive 4 360º Feedback (any or all of above) + Well rounded picture of performance

Appraisal interviews 1 Prepare Review feedback reports 'Tell and sell' Time/venue Deliver assessment and 'sell' (gain acceptance of) improvement plan. Interview Be fair Collaborate (Requires human relations skills to criticise and motivate constructively.) 2 Listen 'Tell and listen' Deliver assessment and invite response. Plan (More opportunity for counselling.) 'Problem-solving' 3 Gain commitment Agree Summarise Invite employee to identify and discuss work problems, areas for improvement. Report (Replaces judgement with collaborative creative thinking and proactive 4 Finish appraisal report, with agreed development.) conclusions 17: Performance appraisal Follow up Monitor progress (Maier) 5 Take agreed action Page 169

Performance management The purpose of The process of Barriers to How effective is the and assessment performance appraisal performance appraisal effective appraisal appraisal scheme? Common problems with appraisal (or the way it is managed) include the following. Appraisal = confrontation Used for showdown, 'clearing the air': no developmental outcomes Appraisal = judgement Defensive on both sides; awkward negative feedback; suspicion of bias Appraisal = chat No clear purpose or objectives; waste of time; not taken seriously Appraisal = bureaucracy Regarded as a form-filling exercise: no positive outcomes expected Appraisal = unfinished business Used to deal with the most recent or ongoing issues only Appraisal = annual event 'In the current climate, to review performance once a year is ludicrously relaxed and undisciplined. Most targets ... become irrelevant and out of date within months or e ven weeks.' (Lockett) Hence the emergence of a performance management approach.

Performance management The purpose of The process of Barriers to How effective is the and assessment performance appraisal performance appraisal effective appraisal appraisal scheme? 1 Is appraisal perceived as Monitor appraiser/appraisee fair, relevant and important? attitudes, using surveys, feedback forms, interviews 2 Has appraisal been Performance improvement? Monitor individual/unit results effective in achieving Employee training? Monitor training provision and Management succession? outcomes 3 Is appraisal an efficient, Employee commitment? Monitor promotions, succession plans cost-effective use of Monitor HR indicators such as staff managerial time/effort? turnover, absenteeism, discipline Page 171 Cost-benefit analysis (Note: qualitative + quantitative benefits) 17: Performance appraisal

Notes

18: Personal effectiveness and communication Topic List This chapter draws together a range of material that relates to how people do their jobs. Beginning with a Personal development plan discussion of personal development plans, it moves Time management through 'personal effectiveness' topics and on to a study The role of IT of communication. It is only via communication that Coaching, mentoring and counselling people know what is to be done, by whom and how. Communication

Personal Time The role Coaching, mentoring Communication development plan management of IT and counselling Personal development plan (PDP) A clear action plan incorporating a wide set of developmental opportunities. Systematic approach: Improving Improving skills 1 Select an area for development performance and competences 2 Set a learning objective OBJECTIVES OF Planning 3 Research and evaluate relevant resources A PDP career path 4 Formulate action plan 5 Secure agreement if need be Pursuing Acquiring personal growth skills 6 Implement

Personal Time The role Coaching, mentoring Communication development plan management of IT and counselling Time management The process of allocating time to tasks in the most eff ective manner. Goal setting Action planning Prioritising depending on: ('SMART') (How?) (Importance) Consequences PRINCIPLES OF Dependency TIME MANAGEMENT Urgency Deadlines Focus Urgency Organisation (One thing at a time) (Do it now!) (of your work) How, when and by whom should the work be done? Work planning is another skill: allocating tasks; sequencing tasks; scheduling Page 175 18: Personal effectiveness and communication

Personal Time The role Coaching, mentoring Communication development plan management of IT and counselling Deciding on a communication tool Depends upon the characteristics of the message. Common tools Specific technologies Processing of include routine data Conversation Report can be done in Meeting Email Electronic, digital transmission bigger volume, Presentation Video Electronic data interchange (EDI) at greater Telephone conferencing Mobile telephones (including speed and with Fax Social media 'smartphones') greater Memo Voice messaging systems accuracy. Letter Computer bulletin boards Managers have Social media post (eg Twitter) more information!

Personal Time The role Coaching, mentoring Communication development plan management of IT and counselling Coaching Mentoring occurs when a trainee is put under the guidance of is a long term relationship in which a more an experienced employee ('expert'). experienced person fosters personal and career development. 1 Establish learning targets 2 Plan a systematic programme Features: 3 Identify opportunities Not usually an immediate superior 4 Take strengths/limitations into account Covers a wide range of functions 5 Exchange feedback Career Psychosocial functions functions Coaching focuses on achieving specific objectives. 18: Personal effectiveness and communication Page 177

Personal Time The role Coaching, mentoring Communication development plan management of IT and counselling Counselling Counselling can be defined as 'a purposeful relationship in which one person helps another to help himself . It is a way of relating and responding to another person so that the person is helped to explore his thoughts, feelings and behaviour with the aim of reaching a clearer understanding ... of himself or of a problem, or of the one in relation to the other.' (Rees) Organisational uses The counselling Situations for Preventing under-performance process counselling Retaining staff loyalty Solving work problems Problem recognition Appraisal Discipline Developing staff Problem expression/exploration Grievance Change Controlling conflict Empowering solution-finding Redundancy Retirement Resourcing solutions Personal/performance problems Traumatic events

Personal Time The role Coaching, mentoring Communication development plan management of IT and counselling Communication How is communication used? Communication involves the transmission or Giving instructions exchange of information and the provision of Giving or receiving information feedback. It is required for planning, co-ordination Exchanging ideas and control. Announcing plans Comparing results against budget How does it flow? Rules or procedures Vertically between ranks Information about the organisation Horizontally/laterally between peers Diagonally between departments Circle Communication Chain patterns Page 179 'Y' Wheel (also called the star) 18: Personal effectiveness and communication

Personal Time The role Coaching, mentoring Communication development plan management of IT and counselling The communication process Noise (interference) Information, Coded Medium Decoded Understanding of ideas, attitudes message message message and Desired action Channel meaning and/or Distortion Distortion action required SENDER RECEIVER Feedback (understood?)

Communication should be: Concise Complete Correct Courteous Clear (Gowers) Good communication is important in organisations because: Horizontal Downward flow flow Upward Organisational objectives depend on: flow Exchange of information for planning, control, Diagonal flow co-ordination, problem-solving etc Giving orders and instructions to initiate activity Information flows within the organisation Establishment and maintenance of working relationships 18: Personal effectiveness and communication Gathering and exchange of feedback for control, improvement, learning and customer care Communication of marketing and public relations messages 'Good' communication is effective and efficient in achieving its purpose. Page 181

Personal Time The role Coaching, mentoring Communication development plan management of IT and counselling Interpersonal behaviour is behaviour between people. It includes: Interaction between people: two way processes such as communicating, persuading, negotiating etc An individual's behaviour in relation to other people: assertiveness, empathy etc Interpersonal skills include: Assertiveness Rapport-building: establishing relationships Persuasion/influence Clear, honest, direct communication which respects Assertiveness the rights of self and other: not passive, not Negotiation aggressive. Conflict resolution Empathy: understanding others Assertiveness Oral/non-verbal communication Appropriate roles and relationships Asking clearly and openly for what you want Saying 'no' without being defensive Receiving feedback/criticism objectively Giving criticism constructively

Non-verbal communication Note: Non-verbal cues may emphasise, confirm or undermine verbal messages. Posture: way of sitting/standing Proximity: nearness to people How to be an effective non-verbal Appearance: grooming, 'style' communicator Gestures Facial expressions Be aware of the variety of non-verbal cues Eye contact Be aware of their different uses and meanings. Physical contact: eg handshake Be aware of your own non-verbal behaviours. Non-verbal sounds: eg sigh Use them to provide (or seek) feedback, project a Movements: eg pacing, nodding desired image, reinforce spoken messages etc. Behaviours: eg yawning Be aware of the non-verbal behaviours of others. Silence Interpret them to gather feedback, recognise underlying messages/responses/feelings etc Page 183 Be prepared to adjust your communication and response strategies. Be aware of cultural differences. 18: Personal effectiveness and communication

Personal Time The role Coaching, mentoring Communication development plan management of IT and counselling Barriers to communication Methods of improving communication Poor communication skills of sender/receiver Failure to give/seek feedback Encourage, facilitate and reward communication Differences in language (including jargon) using all HR systems and cultural methods Personal differences ('social noise') Model good practice from the top Conflict: politics or hostility ('emotional noise') Create opportunities for multi-directional Inappropriate amount/accuracy/format of communication (especially upwards) information Give training in communication skills Active/implied discouragement: eg organisations Give awareness training in difference/perceptions not giving opportunities for upward communication Manage interpersonal conflict Lack of trust in the source Break down artificial functional/status barriers Poor communication media/channels ('technical Adapt communication systems, tools and noise') technologies for greater efficiency/effectiveness Poor environment, making oral communication Use the informal communication system to inaudible ('physical noise') reinforce networking, information-sharing culture

Oral communication Oral communication skills include Appropriate language and usage Face to face (eg meetings, interviews) Clear, audible, expressive, delivery Particularly good for: Effective active, critical or empathetic listening – Generating new ideas – Sharing information sensitively How to be an effective listener – Real-time checking/questioning – Interpersonal interactions Be prepared to listen Remote (eg by telephone) Be interested: listen actively Particularly good for: Be patient: wait your turn – Personal communication over Keep an open mind: avoid prejudice Use your critical faculties distance Concentrate: don't get distracted/side-tracked – Swift communication in real time Give feedback: encourage, ask, confirm Use non-verbal cues Page 185 18: Personal effectiveness and communication

Personal Time The role Coaching, mentoring Communication development plan management of IT and counselling Factors in the choice of media Oral media Telephone/teleconferencing Time required to prepare/send the message (and Interviews/discussions time differences with the message destination) Meetings/committees/briefings Complexity: need for illustration/real-time Presentations explanation? Confirmation: need written record (eg for legal Written media purposes)? Interactivity: need for real-time responses, questions? Forms Memoranda Confidentiality: need for security? Notices/posters Emails Dissemination: need for large simultaneous Journals/bulletins/ Reports audience? manuals/handbooks Websites Sensitivity: personal tact/support/empathy? Letters Social media Cost of all the above: most effective medium at justifiable expense Note: The 'medium' is the vehicle (eg letter, email, poster): the 'channel' is the route (eg post, inter net, notice board)

Written communication Example Correct grammar/syntax/punctuation REPORT FORMAT Choice of vocabulary to suit recipient Choice of structure to suit recipient and REPORT TITLE purpose of communication I INTRODUCTION Suitable time and style to suit pur pose of communication Or 'Executive Summary', 'Terms of Legibility! Reference' or 'Background' Appropriate use of visual aids II ANALYSIS Attention to conventions of format and house Appropriately headed sections with style (where appropriate) body of report III CONCLUSIONS Page 187 Or 'Recommendations' or 'Summary' 18: Personal effectiveness and communication

Notes

19: Ethical considerations Topic List Ethics has an important focus in the FAB/F1 syllabus. Organisations are embedded in society and m ust A framework of rules respond to public concerns about ethical behaviour and Management accountability social responsibility. The ACCA has its own ethical code The ethical environment for members. Ethics in organisations Accountants and ethics

A framework Management The ethical Ethics in Accountants of rules accountability environment organisations and ethics Behaviour in society is required by the law, rules and regulations, and ethics. Act ethically Meet the expectations of society Meet legal obligations Illegal Acting ethically involves doing what is 'right', even if the right thing to do is not required under la w – and may exceed what society expects from a 'typical' organisation.

Fairness Take into account all stakeholders with legitimate interests Transparency Openness, disclosure in financial statements, press releases, websites Independence Need for independent non-executive directors who can monitor without conflicts of interest Probity Truth-telling/not misleading Responsibility Management responsible for organisation, means of corrective action and penalising mismanagement Accountability Directors and companies answerable for consequences of actions to shareholders, professionals to values, public sector to stakeholders Reputation Jeopardised by poor risk management/corporate governance, may impact commercially Judgement Taking decisions that enhance organisation's prosper ity Integrity Straightforward dealing and completeness, basis of trust Page 191 19: Ethical considerations

A framework Management The ethical Ethics in Accountants of rules accountability environment organisations and ethics An organisation's managers are collectively responsible for the conduct of an organisation's affairs: they have a fiduciary responsibility (duty of faithful service). How far do external pressures modify business objectives? Stakeholder view A business depends upon appropriate relationships with all groups who have an interest in what the organisation does. Each stakeholder group has its own objectives so that a compromise is required. Consensus theory Objectives emerge as a consensus of the diff ering views of shareholders, managers, employees, customers, suppliers and society at large but they are not all selected or controlled by management.

A framework Management The ethical Ethics in Accountants of rules accountability environment organisations and ethics 1 Ethics can be regarded as a set of mor al principles to guide behaviour, based upon concepts of duty and consequences absolute outcomes: moral 'the end justifies rules the means' 2 Other considerations are based upon rights to be respected, and virtues to be cultivated: firmness, fairness, objectivity, charity, forethought, loyalty ... 3 Social attitudes are also significant: work/life balance; 'green' concerns; minorities Translated into business objectives: Employees Customers Suppliers Society Minimum wage Product quality Regular orders Pollution control Job security/satisfaction Pricing Timely payment Sustainability Working conditions Safety Charity work Product quality Page 193 19: Ethical considerations

A framework Management The ethical Ethics in Accountants of rules accountability environment organisations and ethics Lack of objective standards Objective standards Non-cognitivism – no possibility of acquiring Cognitivism – objective, universal principles exist and objective knowledge of moral principles. can be known, ethics can be regarded as absolute. Moral relativism – right and wrong are culturally determined. Deontological ethics Teleological Consequentalist ethics Kant stated that acts can be judged in adv ance by moral criteria: Moral judgements based on outcomes or consequences. Utilitarianism means acting Do what others should be doing for the greatest good to the greatest number. Treat people as autonomous beings and not as means to an end Egoism Act as if acting in accordance with univ ersal laws An act is ethically justified if decision-makers Pluralism pursue short-term desires or long-term interests (justification for free market). Different views may exist but it should be possible to reach a consensus; morality is a social phenomenon.

A framework Management The ethical Ethics in Accountants of rules accountability environment organisations and ethics Organisations will have either a compliance-based, or integrity-based, approach. Other influences Personal ethics of employees Professional ethics (eg ACCA) Organisational culture Organisational systems (eg mission statements) Page 195 19: Ethical considerations