Management Accounting
Student’s Name
Institution
Management Accounting
Application of management control systems in commercial banks
it always has been my dream to join the banking industry and work in a conventional commercial bank in our country in the future. Our class has had a detailed discussion about how management control systems are essential to organizations. We defined a management control system to entail approaches for gathering information and utilizing it to make decisions for controlling and planning purposes, performance evaluation and employee behavior motivation (Hermason et al., 2016).
I wish to apply this concept in a commercial bank’s operational environment in the future when I get the opportunity to work there. I understand that the management control system is always in line with the goals and objectives and re meant to ensure that every firm’s operation is directed towards achieving such plans. Additionally, the systems help in the budgeting and forecasting process in an organization.
To ensure that these systems are utilized effectively, I will ensure that the goals and objectives are well defined and communicated to the bank’s internal stakeholders. Also, I will ensure that every manager and employee clearly understand what they must do to accomplish the bank’s goals. Moreover, I will initiate both the bank managers and general staff’s motivation to achieve the bank’s objectives.
Since performance measures motivate a firm’s managers, I will ensure that I put mechanisms to help measure their performance. Also, I will ensure that there is a consistency of such measures with the bank’s goals. It is believed that in management control, one gets what he measures. Studies have shown that an organization without well-defined measuring performance techniques is doomed to fail since it cannot know with certainty to which extent its goals are near to their achievement.
The achievement of any organization’s goals is a collective responsibility among the managers and the employees of such an organization; hence I will have to design management control systems to ensure that everyone is working toward achieving the bank’s objectives. I will first determine what can motivate the employees and develop techniques for measuring employees’ performance based on these motivations. Additionally, I will find out a structure for monitoring and reporting the performance measures.
I understand that employees’ motivation is regarded as a fundamental goal in any organization as it makes the employees have the firm’s interest in their hearts. Motivation makes the employees work specifically to ensure the interests of the organization are protected. I will design a control system of management that advances the effort of the management and the goals of the bank (Weygandt et al., 2020).
To confirm if the system backs the bank’s goals, I will check the employees’ manner to the system’s incentives to find out if the decisions they are making are meant to achieve the bank’s objectives. The backing of the goal’s achievement should be accompanied by the management’s effort to work harder and smart. I will ensure the managers supervise the operations well, plan well, and carry out their analysis to enhance their efficiency and effectiveness in achieving the bank’s objective.
I understand there come challenges when inducing the employee’s decision that accomplishes the goals of an organization. They may negatively perceive the purpose of continuous improvement of the efficiency of employees. They may think that such enhancements will tighten the standards put in place, fasten the work’s pace, and even make them lose their job. To counter this, I will put rewards to make them understand such efforts are for their benefits and interests.
I will also develop key success factors and approaches to measuring performance and identify particular actions. I will trust the lower-level managers and critical process managers to develop performance measures for a specific action. The goals, standards and targets will be set by the managers at the top level of management. The full government will identify the crucial processes needed for the achievement of the bank’s goals.
Employees’ better performance comes when they see a correlation between personal rewards and performance reports. In line with this, I will ensure that the bank’s targets are accompanied by the bonus plans for both the employees and the managers at all management levels (Weygandt et al., 2020). Unfortunately, employees are differently motivated, which makes the control system a bit complicated and ill-structured. The design ought to fit the environment of the organization and the behavior of the employees. I will ensure that I align the self-interest of each employee with the objectives of the bank. I will have to have a prediction of what the impact of motivation would have on the system.
I will ensure that I work hand in hand with the top management to design performance measures as their direction is vital. I understand that it is impossible to establish how the bank’s stakeholders will react to the system. Therefore I will engage them directly to know if I will have the effect intended. I will ensure that management control tools, such as variances and budgets, positively influence employees’ behavior.
I will e courage managers to make use of these tools positively and have the employees encouraged to improve their performance. The managers must not have a mentality of punishing employees, placing the blame for looking for fault; instead, they should aim to find better employee performance solutions. Studies have shown that performance pressure on employees may harm the company. Employees opt for unethical methods to enhance their performance measures, which has led to many organizations’ collapse. Being aware of this, I will ensure that performance pressure on employees is moderate and ethical in all parameters.
On matters of developing performance measures, I will ensure that the system captures various performance measures, both financial and non-financial. I will ensure such estimates reflect all activities in line with the bank’s goals, how they are impacted by the actions of both managers and employees and are well understood by the employees (Marenych & Polyvana, 2019).
The accounting system will provide financial measures such as operating budgets, the target of profits and ROI. Still, I will ensure that the system has financial and non-financial measures since no one can manage something he can’t measure. Non-financial measures help in employee motivation in the achievement of critical goals of an organization.
Conclusively, management control systems are very crucial to any organization’s performance. Organizations should consider ensuring that the control system supports employee motivation since motivation is essential to achieving a firm’s goals.
References
Hermason, R., Edwards, J., & Maher, M. (2016). Accounting principles: Managerial accounting.
Marenych, T. G., & Polyvana, L. A. (2019). Generalization of scientific approaches to the definition of the principles of managerial accounting.
Weygandt, J. J., Kimmel, P. D., Kieso, D. E., & Aly, I. M. (2020). Managerial Accounting: Tools for Business Decision-Making. John Wiley & Sons.