Accounting Essays | Towards An Integrated
Management Accounting Approach
1.Introduction:
Accounting data are the most important source in making important
executive decisions, advanced management accounting techniques
depend on building business models that have feedback loops
to evaluate the impact of management decisions on internal and
external stakeholders, this loop requires cooperation between
customers, shareholders and employees.
Companies in the US and the UK have been slow in adopting the
new business models which depends on empowering employees by
giving them more responsibility and reward, the reason for the
delay is the manipulation in the financial data that undermined
the mechanism for rewarding employees, Ezzamel,M, Lilley, S,
Wilmott, H and Green, C (1995)
2.Main Text:
2.1-The power of People:
Employees are considered the most important asset in the company.
Competitors can copy the company's technologies, products and
management style. But No one, however, can match the highly
loyal, dependable and motivated employees who care. People are
the firm's stock of knowledge and they are central to any company's
competitive strategy and competitive advantage, employees if
empowered is more important that machines, investors and suppliers.
Corporations do not talk and do not do jobs, Well educated,
empowered, and highly motivated people are critical to the development
and execution of the corporate strategies, especially in today's
faster-paced and competitive world, where senior management
alone can no longer assure your firm's competitiveness.
2.2-Why Employee Empowerment?
People are the firm's most underutilized resource; corporations
use the knowledge and the experience of their employees. In
the new knowledge economy, independent entrepreneurship and
initiative is needed in order to survive the current competitive
markets. In today's corporate competitive environment a manager
must work hard towards engaging the organization's employees
towards achieving the objectives of the organization. Hierarchical
organizational structures and highly skilled workforce are shaping
new knowledge-based corporations. Managers are expected to perform
more leadership and coaching tasks and work hard in order to
provide employees with the necessary resources and working environment
that they need to accomplish the goals they've assigned to.
In brief, managers work for their staff, and not the opposite.
Empowerment is the oil that runs the process of learning. Talented
and empowered intellectual capital is becoming the prime ingredient
of organizational success. A critical feature of successful
teams, especially in knowledge-based corporations, is that they
are invested with a significant degree of empowerment, or decision-making
authority. Equally important, employee empowerment allow the
company to gain the co-operation and the compliance of its employees,
Hales,C(2000) empowerment changes the managers' priorities and
leaves them with more time to engage in more strategic decisions,
visioning, and innovation. This intelligent and productive division
of duties between visionary leaders, focusing on emerging opportunities,
and empowered employees, running the business unit day to day
(with oversight on the leader's part) provides for a well-managed
enterprise with strong growth potential.
The empowerment theory is not new, it is very old, and many
economists have talked about empowering employees as a way of
improving the level of output and the profitability of the company.
Empowering employees makes them feel that they are important
to the company, it helps develop a positive attitude to employees
and reduce staff turnover and increase productivity.
Empowering employees is the only way in which capitalism could
survive the crisis of continuing conflict between management
and employees, it is the only way to create people's capitalism,
Saunders, P & Harris, C(1994).
2.3Empowerment and philosophy:
The roots of the empowerment had come from philosophy, philosophers
always dreamed about achieving justice, democracy and social
equality.
For a long time, people lived and they are still living in a
society that does not distribute wealth and power evenly among
its members.
Empowerment is trying to answer the questions that have been
arisen from the political philosophy.
"Human beings always questioned the nature of power, the role
of the citizen in the polis, and the achievement of justice
in civic life. From this vantage point, empowerment is a continuation
of this theoretical search for elusive, but critical, answers
to timeless human questions", Spreitzer, G & Doneson, D (2005).
Many researchers consider empowerment the natural completion
of democracy; empowerment most if not all the employees should
be seen as the only way to democratising corporations.
Empowerment is not about whether or not to democratise corporations,
empowerment is about removing the barriers that prevent employees
from participation by changing organizational policies and procedures.
Employees should develop a sense of responsibility and commitment
while directors should listen and give real powers to employees.
Employees should exercise their power not because managers have
agreed to give it to them but because they are part of the society
that give them right to descent standard of life by bearing
their responsibilities.
2.4-How to empowering employees and achieve justice:
Empowering employees includes sharing power and wealth in the
organization. 1-
Sharing profit: sharing profit is one of the most important
tools that management of corporations usually uses in creating
incentives to employees to work harder and be a real part of
the corporation, sharing profit takes the shapes of "profit
sharing schemes", "stock options", "Employee stock ownership",
"pensions" and "staff incentive schemes", Sesil, J, Kruse, D,
and Blasi, J(2001).
Profit sharing depends usually in its calculations on accounting
values, accounting has been subject to wide manipulations in
the last few years, this has created a crisis of confidence
between the management and the employees, employees do not trust
their managers when it comes to calculating their profit share.
Employees and trade unions are likely to have done their part
prior to submitting a profit sharing demand. The question is
always 'how much can the company would like to pay?' answering
this question will depend on the company's balance sheet and
profit and loss statement. It is assumed that the larger the
profits, the more the company can afford to pay? Therefore,
company directors instruct their accountants to report lower
rather than higher profits in order to minimise the expectations
of the employees and their trade unions, Simon, J (1998). 2-
Sharing power: according to the economic literature, employees
used to get wages or salaries because they do not take the risk
that the capitalist or the entrepreneur usually takes, but things
have changed because sharing profit should lead to sharing power,
employees should take more responsibility should they want to
get some of the profit, employees are assigned more than their
traditional roles, employees are assigned more tasks that the
middle and the low-level managers used to do, employees see
themselves doing more than before and get paid little, this
situation has been created by the dependence on accounting information
in calculating profit shares for employees.
