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Part 1 Examination Paper 1.3 June 2006 Answers

Managing People

1 All organisations of whatever size need to understand and address the issues of the relationship between various levels of

management, especially the nature, source and limitations of authority, responsibility and delegation. Understanding responsibility,

delegation and authority is fundamental to the practice of management. Professional accountants should be able to show an

understanding of the problems and challenges associated with these concepts of management. Students are not expected to

remember definitions verbatim, but they are expected to show an understanding of the inherent logic contained in these concepts,

and to demonstrate a clear distinction between the two main concepts of authority and responsibility.

(a) There are many explanations of what managers do. The most widely understood approach is that of Henri Fayol, who said

that managers perform five duties, to forecast and plan, to organise, to command, co-ordinate and control. Managers are

ultimately responsible for the efficient use of the organisations resources and are accountable to the organisations owners.

At Flavours Fine Foods, the owners (the Jones brothers) must recognise this reality and allow the managers to manage.

It used to be said that a manager did his or her job by getting others to do theirs. In many ways this sums up the role of the

supervisor. However, management must ensure that supervisors understand organisational objectives and must make clear

the powers and limits of the supervisors authority. Supervision is an important and integral part of the task and process of

management.

The role of the supervisor is critical because of direct contact with and responsibility directly for the work of others. The

supervisor is unique; he or she is the interface between management and the workforce and is the direct link between the

two, being in direct physical contact with non-managers on a frequent basis. Supervisors are in the front line of management

and see that others fulfil their duties, resolve problems first hand and often quickly, direct the work of others and enforce

discipline. In addition, they often must have direct knowledge of health, safety and employment legislation and have authority

for negotiation and industrial relations within the department.

(b) (i) RESPONSIBILITY is the liability of a person to be called to account for their actions and results, and is therefore an

obligation to take some action to discharge that responsibility. Unlike authority, responsibility cannot be delegated. There

is however some discussion on the extent to which this statement is true: the idea that responsibility cannot be delegated

is too simplistic. Any task contains an element of responsibility. It is the idea of accountability and the direction of

responsibility that is the relevant concept and is the problem at Flavours Fine Foods; ultimate responsibility resides with

the owners. It is self evident that it is impossible to exercise authority without responsibility because this could lead to

problems of control and therefore undesirable outcomes for the organisation. However, the superior (the owner) is always

ultimately responsible for the actions of his or her subordinates. The key element here is the recognition of discretion by

virtue of the persons position. This underlines the doctrine of absolute responsibility; the superior is always ultimately

accountable.

(ii) AUTHORITY is the scope and amount of discretion given to a person to make decisions by virtue of the position held

within the organisation. The authority and power structure of an organisation defines the part each member of the

organisation is expected to perform and the relationship between the organisations members so that its efforts are

effective. Thesource of authority may be top down (as in formal organisations) or bottom up (as in social organisations

and politics). In the scenario, authority is from the top and should be delegated downwards.

(iii) DELEGATION is giving a subordinate the discretion to make decisions within a certain, defined sphere of influence.

Therefore the superior must possess the authority to delegate. The key element here is discretion and the level of

authority within a specific sphere which is behind the problems at Flavours Fine Foods. Authority should be clearly

delegated as appropriate to the managers and, through them, to the supervisors.

(c) (i) Without delegation, formal organisations could not exist. Without allocation of authority, responsibility and delegation, a

formal organisation cannot be effective. They are critical aspects. Managers must delegate because of the size and

complexity of the organisation (certainly an issue for Flavours Fine Foods). Delegation can help overcome the physical

and mental limitations of staff, managers and supervisors and it allows management to attend to other matters since

routine tasks and decision making can be passed down. However, superiors must call subordinates to account and co-

ordinate their activities.

(ii) Effective delegation can be achieved by assigning agreed tasks to the subordinate, ensuring that resources are allocated

and by specifying expected performance levels and ensuring that they are understood. In addition, it is necessary to

ensure that the subordinate has the ability and experience to undertake the tasks by maintaining frequent contact and

ensuring that the subordinate has authority to do the job. Sufficient authority must be delegated to fulfil the task. This

authority in turn may be specific or general; the scenario suggests that the authority of the managers and supervisors is

specific. The subordinate should not refer decisions upwards, and the superior should not expect this. In addition there

should be no doubts over boundaries; they must be clearly defined as to who holds what authority and who accounts

to whom. Therefore there must be clarity as to departmental functions and individual authority, which is at the root of

the problem at Flavours Fine Foods.

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(iii) Problems with delegation are threefold. Firstly, reluctance from managers who are afraid of losing control, who fear that

subordinates may carry out the work badly and who are resentful of subordinate development. Secondly, there is the

problem of lack of confidence, lack of self confidence in the manager and often a lack of confidence in the subordinates.

Thirdly, there are problems of trust; that is the amount of trust the superior has in the subordinate and the trust that the

subordinate feels the superior has in him or her.

(iv) Problems with delegation can be overcome by careful selection and training, an open communication system, the

establishment of an appropriate control system and a system that rewards effective delegation.

2 All organisations of whatever size have to work in a co-ordinated way to ensure that the objectives laid down are achieved.

However, for effective co-ordination to take place, the structure must be correct and understood. Very often, managers know the

structure but cannot explain its significance or appropriateness.

(a) The structure of an organisation is often depicted as a chart. The structure explains the communication pattern, the linking

mechanism between departments, tasks and individuals, the co-ordinating mechanism that ensures the entire organisation

is working toward the same objective, and who is in control of the organisations activities and at what level in the

organisation.

(b) The strategic apex is the highest level of the organisation and is therefore the highest level of management. This part ensures

that the organisations mission is followed and manages the relationship with the environment.

The operating core is the part that represents the productive activity of the organisation, gathering inputs and, through

conversion, turns them into outputs.

The middle line represents that part of the organisation where the middle managers operate. The role of this part is to turn

the instructions of the strategic apex into activities for the operating core.

The technostructure includes the staff who provide a technical or supportive activity but which are not a part of the core

activities. This part of the organisation includes the engineering, accounting and human resource departments.

The support staff carry out the ancillary activities that are neither part of the core nor the technostructure. Support staff have

no role in the direct activities of the organisation: these activities include catering and public relations.

(Students may draw the appropriate diagram)

3 The interview is extensively used for the selection of new employees and in many cases is the only method of selection. However,

interviews have been criticised for failing to identify appropriate candidates suitable for the organisation. It is essential therefore

that professional accountants recognise both the problems and opportunities that the formal selection interview presents.

(a) The purpose of the selection interview is to find the best possible person for the position who will fit into the organisation.

Those conducting the interview must also ensure that the candidate clearly understands the job on offer, career prospects and

that all candidates feel that fair treatment has been provided through the selection process.

In addition, the interview also gives the opportunity to convey a good impression of the organisation, whether the candidate

has been successful or not.

(b) (i) The face to face interview is the most common form of interview. In this situation the candidate is interviewed by a

single representative of the employing organisation.

The advantages of such interviews are that they establish an understanding between the participants, are cost effective

for the organisation (only one member of the organisations staff is involved) and, because of the more personal nature,

ensure that candidates feel comfortable.The disadvantages are that the selection interview relies on the views and impression of a single interviewer that can

be both subjective and biased. In addition, the interviewer may be selective in questioning and it is easier for the

candidate to hide weaknesses or lack of ability.

(ii) Panel interviews are often used for senior appointments and consist of two or more interviewers.

The advantages of such interviews are that they allow opinion and views to be shared amongst the panel. They provide

a more complete and coherent approach, hence problems of bias inherent in face to face interviews can be reduced.

They may also be appropriate where an individual with specialist or technical skills has to support the interviewer in

relation to assessing the technical competencies of the interviewee.

The disadvantages are that panel interviews can be difficult to control, interviewers may deviate or ask irrelevant

questions and they can be easily dominated by a strong personality who is able unduly to influence others. In addition,

such interviews can often result in disagreement amongst the panel members.

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However, later work by Maslow has suggested that there are two additional needs; freedom of enquiry (free speech and

justice) and knowledge (the need to explore and learn). These additional needs are a further development of social needs and

recognise the changing nature of modern life.

(b) This theory is based on the idea that the goals of the individual and the organisation can be integrated and that personal

satisfaction can be achieved through the workplace. It also assumes that individuals will achieve self-actualisation through

their role in assisting the organisation to achieve its objectives. It follows therefore that work is the principal source of

satisfaction.

The theorys practical application is that managers should recognise that subordinates needs are always evolving and

increasing, so continued attention to increasing the employees personal development, opportunities for advancement and

recognition of achievement are essential to keep them motivated.

6 To get the best out of people, managers need to have effective communication skills. Professional accountants as managers need

to understand the difference between aggressive and assertive behaviour. Often an exchange of communication can be interpreted

as a belligerent response from an employee. However, a slight difference in approach can communicate different feelings and

achieve a more positive result.

(a) Aggressive behaviour is competitive and directed at defeating someone else. It is standing up for oneself at the expense of

other people. It is defending ones rights but doing so in such a way that violates the rights of other people. Aggressive

behaviour ignores or dismisses the needs, wants, opinions, feelings or beliefs of others.

Characteristics of aggressive behaviour include excessive I statements, boastfulness, and the individuals opinions expressed

as fact, threatening questions or postures from the individual, sarcasm and other throw-away remarks and a constant blaming

of others.

Aggressive behaviour can be self defeating. It may cause such antagonism in the others in the organisation that they will

refuse to co-operate or work with the person showing aggressive behaviour.

(b) Assertive behaviour on the other hand is based on equality and co-operation. It involves standing up for ones own rights

and needs but also respects the rights and needs of others. It is not overbearing or aggressive but can be described as clear,

honest and direct communication.

Assertive individuals defend their rights in a way that does not violate another individuals rights. They express their needs,

wants, opinions, feelings and beliefs in direct and appropriate ways.

Characteristics of assertive behaviour include statements that are short, clear and to the point, distinctions made between fact

and opinion, suggestions weighted with advice and evidence. Constructive criticism is the norm and offered without blameor assumptions. Questions to establish the wishes, opinions and thoughts of others are used as ways of getting around

problems. There are no ought or should conditions, the first statement is often held, the individuals own feelings are

expressed and not those of others. Assertive behaviour can be successful if it displays a willingness to deliver a mutual

compromise as an aid to achieving a clear objective.

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Part 1 Examination Paper 1.3 June 2006 Marking Scheme

Managing People

1 (a) Explanation of the differences between the manager and supervisor

Five marks for the manager

Eight marks for the supervisor

(One mark for a specific reference to the interface role) Up to 13 marks

(Maximum for part (a) 13 marks)

(b) Explanation of:

(i) responsibility Up to 4 marks

(ii) authority Up to 3 marks

(iii) delegation Up to 3 marks

(Maximum for part (b) 10 marks)

(c) Explanation of:

(i) the need for delegation Up to 3 marks

(ii) achieving effective delegation Up to 6 marks

(iii) problems with delegation Up to 4 marks

(iv) how to overcome problems Up to 4 marks

(Maximum for part (c) 17 marks)

(Total for question 40 marks)

2 (a) Description of the term organisational structure.

(One mark per factor identified) Up to 5 marks


(b) Explanation of Mintzbergs five organisational components.

(Two marks per component) Up to 10 marks



3 (a) Explanation of the purpose of the selection interview

(One mark per factor identified) Up to 4 marks


(b) Explanation of the advantages and disadvantages:

(i) The face to face interview Up to 6 marks

(ii) The panel interview Up to 5 marks

(in each case, one mark per factor)



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4 (a) Explanation of computer based training Up to 3 marks


(b) Explanation of coaching Up to 3 marks


(c) Explanation of mentoring Up to 3 marks

(Maximum for part (c) 3 marks)

(d) Explanation of job rotation Up to 3 marks

(Maximum for part (d) 3 marks)

(e) Explanation of job instruction Up to 3 marks

(Maximum for part (e) 3 marks)


5 (a) Explanation of Maslows theory Up to 10 marks

(Two marks per step)


(b) Application of the theory Up to 5 marks



6 (a) Explanation and examples of aggressive behaviour Up to 8 marks


(b) Explanation and examples of assertive behaviour Up to 7 marks



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