Reward

ACCA - F1   ACCOUNTANT  IN  BUSINESS

CASE I

Employees want return for time and effort contributed to an organisation. This return is termed as reward. Most often it takes a form of financial payment (payment in term of money and equivalent). Financial reward is essential to create employment satisfaction and retain employees hired and developed by an organisation.

CASE II

Not-surprisingly, many trainees engage in performing organisational task for just a little (far below national minimum wage) or no financial incentive and in those professions where professional ethics values a most (a few examples like: medical, accounting, law). Often controversies surrounding these issues are suppressed. However, the bright side is that this type of involvement helps trainee gain experience, enhance profile and stand ahead in competitive business environment where capabilities and competencies is weighted by explicit individual values like profile and experience.

CASE III

Many volunteers work in not-for profit sectors. There sole intention may be (philanthropic) to contribute their spare time in social reforms. Some may see the future prospect whereas other may take as a self-enrichment program.

CASE IV

Executives contribute their valued time to organizations for a golden return. A belief exist that the perks they receive is justified by the return they bring to organisation. There should be the tradeoff between the reward shared by organisation and executives.

How do organisations account all this different kinds of rewards achieved by its staffs? Clearly, we cannot quantify intrinsic rewards like work satisfaction, self-enrichment and self-actualization. All quantified and monetary extrinsic rewards are accounted through organizational accounting system.

Extrinsic rewards are classified as direct rewards (prime cost of production like: basic pay in form of salary and wage) and indirect rewards (Overheads like: bonus, benefit contribution, idle time and sick pay).

Labour turnover (Churn rate) is an indicator of job satisfaction. High turnover rate suggest unsatisfied staffs. Revisiting reward system can help reduce churn rate. High turnover rate results increased expenses in recruitment and development. It long run, it can form a substantial part of the organisational expenses. Increase turnover also decreases efficiency of the employees because the trained staff leaves and fresh staff fills the vacancy.