Do You Believe These Incentives And The Hands-Off Management Approach Is A Good Structure For Ath?
Learning Objective
We now better understand how to design internal controls to ensure that organizations are adhering to laws, generating reliable financial statements, and being good stewards of company assets. That said, prosperous organizations also promote innovation and creativity from employees, which often requires organizations to give much higher degrees of decision-making authority to their employees than is assumed when developing internal controls. As we will learn in this session, increasing the decision making authority of employees often necessitates changes in the design of accounting control systems.
Read BSW Chapter 11 (pages 355-366)
Read ATH Case
In the case you read about the earn-out structure Scepter provided ATH management. Also, Scepter took a hands-off approach to ATH. ATH management was given complete control to run the company any way it wanted.
- Scepter did not want to kill the entrepreneurial spirit of the start-up.
- Scepter did not want to meddle in ATH affairs so not to be blamed for failure to reach earn out clauses.
Do you believe these incentives and the hands-off management approach is a good structure for ATH?
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Do you believe these incentives and the hands-off management approach is a good structure for ATH?
Strong incentives and the hands-off management approach fostered creativity and independence at ATH Technologies and this is a good structure for the company that was acquired by Scepter. Decentralized decision-making allows flexibility even among the lowly ranked among employees making it easier to address quality issues and improve productivity (Brickley, Smith and Zimmerman 356). However, employees respond to incentives but are less vigilant in how they use an organization’s resources as they are not the owners. Sometimes there is a need to use incentives to ensure that the employees use the information to improve outcomes. For ATH, the incentives are a good part of the structure since there is motivation to excel where performance is rewarded
Hands-off management produced impressive results at ATH where the employees work in teams and they are invested in t...
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