Reliable Cleaning services was started a number of years ago by Pick Elber to provide cleaning services to both large and small businesses in his home city. Over the years, as local businesses reduced their in house building maintenance staff, more and more cleaning services were subcontracted to Reliable. Reliable also expanded into other building services such as painting and local office removals.

Reliable maintains a pool of skilled workers who are contracted to perform the non-cleaning services because these services do not recur on a day-to-day basis for the individual buildings. Many of Reliables full-time employees have been with the firm for a number of years. Five zone managers are each responsible for providing ongoing nightly cleaning services to several businesses. In addition, the zone manager sells and schedules non-cleaning service jobs for the company's central pool of skilled employees. Informal meetings are held periodically to discuss Reliable's performance. Reliable's allocations, and scheduling problems. Reliable's budgeting and planning have been done also manages variations from budgets.

Elber recently decided to retire and sold the business to Commercial Maintenance Ltd (CML), which provides similar Services in a number of metropolitan locations that surround Reliable's business area. After news of the sale, several of Reliable's long-term employees appeared resentful of the change in ownership and did not know what to expect.

Commercial Maintenance Ltd's senior management met with Reliables managers and announced that George Fowler would become CEO of Reliable and that Reliable would operate as a subsidiary company of CML. Furthermore, in accordance with CML's management philosophy, a responsibility accounting system would be implemented at Reliable. Also, in line with other CML subsidiaries, a participatory budgeting process is being considered I4owever. no decision will be made until an evaluation of Reliables existing policies, operational culture and management is completed. In view of the significant change in management philosophy, CML has taken Considerable time to explain how each system operates and to assure Reliable's managers that they are expected and encouraged to participate in both the planning and implementation of any of the systems that are to be adopted.

Required:

Two new initiatives are being considered at Reliable Cleaning Services

1. Responsibility accounting system.

2. Participatory budgeting system.

For both of these new approaches:

(a) Identify at least two behavioral advantages that could arise.

(b) Identify at least two potential problems that could arise.

(c) Discuss the likelihood that the new approach will contribute to the alignment of organizational and personal goals?