There are thousands of organizations in the world, including service providers, retailers, government enterprises, non-profit organizations and so forth. Although they have various differences between each other, they still have some things in common. For example, it is essential for each organisation to have a stated objective and then formulate strategies. In order to fulfil the objective, managers should conduct management control and then make decisions to implement strategies. At the end of planning and control hierarchy, carrying out specific activities to complete the task is also very important. This report will use the basic information of Management accounting and control systems (MACS) as the foundation, and then focus on discussing the challenge of establishing effective incentive and reward systems of Barclay Banks PLC. Moreover, it is necessary to talk about ways modern organisations exercise to compensate the executives.
2. Main Body
2.1. The importance of management accounting and control systems
Management accounting and control systems (MACS) play important roles in today’s business. Management control is regarded as a critical function and is prominent in a large amount of companies. Problems such as reputation damage, financial costs, will be caused by management control problems (Kenneth and Wim, 2011). That is to say, management control is very important. Otherwise, inadequate control may lead to the collapse of companies.
2.2 . functions of Incentive and reward system
After discussing the importance of MACS, it is necessary to introduce a major element of management control systems, incentive and reward systems. Designing an appropriate and effective incentive and reward system is very crucial for an organization. According to Merchant and Van der Stede (2012), rewards and incentives ask employees’ natural self-interests to coincide with the organisation’s objectives. The compensations and positive reward are regarded as the incentives to the employees. In fact, an effective reward system requires a company to pay attention to four parts, benefits, recognition, compensation and appreciation based on employees’ performance (Daniel, 2013). In other words, ignoring one or more elements will be harmful to the long term success of the enterprise.
The benefits brought by reward and incentive systems can be divided into several parts. Firstly, incentives make great contributions to attraction and retention of personnel. According to the Barclays remuneration arrangement report (2012), the purpose of performance-dependent salary is to recruit and retain people with proficient skills. The second benefit of incentive and reward system is that rewards help employees to understand which performance control parts are important and then guide them to place effort on the specific part. In fact, Barclays has recently launched a new incentive scheme for frontline employees (Daily, 2012). Incentive payments will be given...