Managerial Processes and Styles

ACCA F2 - Management Accounting

Managerial approach to control and monitor performance of sub-ordinate is distinguished feature involved of managerial process and managerial style. The three different styles identified by Hopwood are: budget constrained style, profit-conscious style and non-accounting styles. Whichever style manager adopts, he/she need to go through decision-making processes (analysis, choice and implementation) at their own level (strategic, tactical and operational).

Managerial process at different level:

Ø  Strategic planning - At executive level (senior) managers

o    Issues regarding growth (organic or diversification)

o    minimise diversification gap - use of strategic benchmark - focus on ROI - long term planning

o   Implementation of decision and follow up control and monitoring

Ø  Tactical planning - Middle managers

o   address divisional interest - minimise expansion gap

o   use of functional benchmark - focus on variance analysis - short term planning

o   implementation of decision and follow up for control and monitoring

Ø  Operational planning - Line managers /operational staff level

o   address changes needed in process - minimise efficiency gap

o   use of operational benchmark - focus on compliance rules and regulations - day to day planning

o   implementation of decision and follow up control and monitoring

Different management styles defined by Hopwood:

Ø  Budget constrained style: managerial planning, choice and implementation of policies reflect short-term vision and compliance with defined target and budget. Performance is measured using targets (financial and non-financial).Good for government organisation where bureaucracy prevails.

Ø  Profit conscious style: managerial planning, choice and implementation of policies reflects long-term vision of the business. Performance is measured through financial key performance indicators (KPI's). Good for profit motive organisations demanding form continuous improvement.

Ø  Non-accounting style: managerial planning, choice and implementation focus on quality, satisfaction and effectiveness of the program. Performance measures for non-accounting styles are hard to quantify in term of numbers and therefore may easily distract manager from achieving optimal performance. Non-financial performance indicators are used to measure managerial performance. Good for service motive organisations.