Role of Monetary Incentives in Management Control: An Analysis

1572335 BS3517 word count:
Contents
Introduction.......................................................................................................................................1
Effective management control and monetary incentives.................................................1
Motivation.............................................................................................................................................3
Motivation theory..................................................................................................................................5
Maslow’s hierarchy of needs.............................................................................................................5
Herzberg’s two factor theory.............................................................................................................7
Conclusion.............................................................................................................................................7
References.............................................................................................................................................8

MANAGEMENT ACCOUNTING AND CONTROL 1
Introduction
The essay brings about the discussion on the concept of management
control and the attainment of objectives and goals through the aspect of
employee motivation. Organizational goal has analyzed as the strategic
objectives established to by an organization through guiding employee
efforts. It is essential for the organization to have effective management
control to achieve the specific objective. Effective management control
can maintain when the management accounting and control systems
encourage the managers by attaining the organizational goals and
objectives. The discussion of all these aspects will be surrounded on the
topic “role of monetary incentives in the exercise of management control”
in organizations. In later part, the essay will enlist some financial
incentives to increase motivation of employees, and their satisfaction for
the purpose of organization’s growth and success in the long-term.
Effective management control and monetary incentives
In the perspective of Anthony, the process of Management control system
has been defined as the process through which managers ensures the
utilisation of resources is done in accordance to the attainment of pre-
determined organisational objectives (Birnberg, 2011). The process helps in

MANAGEMENT ACCOUNTING AND CONTROL 2
analysing and evaluating the performance of organisational resources,
which influences the behaviour of organisation to implement strategies
(Berry, Broadbent and Otley, 2016).Human resource is most valuable resource of
the company, which helps to attain the competitive advantage and
capture a high share in the market. This system of the company
influences the performance of human resources to achieve the objectives,
as it facilitates enhancement of the organisational efficiency (Cleverism,
2018). Monetary Incentive is a motivation tool and change management
programs that helps to achieve the organisational objectives, and it
facilitates the enhancement of goal congruence, and objective to perform
best. It consists of some fixed or variable pay, and other financial and non-
financial incentives, as these lead to the employee motivation and higher
performance in the long-term (Bhasin, 2017).
Monetary incentives are the financial incentives provided by employers or
managers within an organisation to the employees towards accomplishing
their targets. Thus, it states the important role of monetary incentives in
exercising control over the management of an organisation. However,
there are both positive and negative aspects of monetary incentives, as
positive aspects include increased morale or motivation of employees,
and better working environment (Berry, Broadbent and Otley, 2016). On the

MANAGEMENT ACCOUNTING AND CONTROL 3
contrary, monetary incentives also lead to inequality, which may further
lead to dissatisfaction or demotivation amongst them within organisation.
Motivation
Monetary incentive is a motivation tool that encourages employees to
perform their duties in an effective manner. It influences the behaviour of
employees to show commitment and dedication through putting their
efforts towards attaining organisational goals. Rewards attract the human
resources working within an organisation, and inform them about the
relative competing results areas. It has observed as a common practice in
many of the companies, which utilise this tool to achieve the objective
such as Barclays. Barclays offer the rewards to their employees to provide
quality services through their employees. However, it affects the
organisation in terms of financial burden, and impact on the firm’s
financial stability (Bonner and Sprinkle, 2002). Thus, it is good to provide the
incentive to employees provided from the total profits of the company.
Due to this reason, the profit of the company reduces to some extent,