Rover Satellites manufactures navigation systems for rockets that are used for the launching of satellites. The...

  

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Rover Satellites manufactures navigation systems for rockets that are used for the launching of satellites. The company has been in operation for the past five years and has experienced a steady increase in financial performance over these years. The company has been paying employee bonuses since its inception to its staff based on the financial performance of the company. The structure of the bonus system is that for every dollar earned over the budgeted profit, 20% of these additional profits earned by the company would be shared equally amongst all staff of the business. The idea around this bonus system was to motivate all staff in the organisation and feel that their contributions to the business were appreciated. The business has experienced significant growth particularly over the last year and the owners of the business are wishing to develop a new bonus structure for all employees based on departmental performance. The idea is that each department would be given a budget and for every dollar earned above the budget, the team within that department would share in 20% of the additional profits earned by their department and placed in a bonus pool. This bonus system is being investigated in a way to encourage team performance amongst departments, empower managers within departments and as a way to align each department with the overall strategy of the organisation. (a) Outline the strengths and weaknesses of each of these bonus structures (2 strengths and 2 weaknesses for each structure. (4 marks) (b) Which bonus structure would you recommend and why? (2 marks) (c) List and provide examples of potential agency costs that may arise as a result of your chosen bonus structure. (4 marks) (d) The International Federation of Accountants (IFOA) have identified eight drivers of sustainable organisational success, that accountants of the future will need to understand, in order to assist organisations in achieving optimal performance. List and explain five (5) drivers of organisational success as outlined by the IFOA[5 marks)] Rover Satellites manufactures navigation systems for rockets that are used for the launching of satellites. The company has been in operation for the past five years and has experienced a steady increase in financial performance over these years. The company has been paying employee bonuses since its inception to its staff based on the financial performance of the company. The structure of the bonus system is that for every dollar earned over the budgeted profit, 20% of these additional profits earned by the company would be shared equally amongst all staff of the business. The idea around this bonus system was to motivate all staff in the organisation and feel that their contributions to the business were appreciated. The business has experienced significant growth particularly over the last year and the owners of the business are wishing to develop a new bonus structure for all employees based on departmental performance. The idea is that each department would be given a budget and for every dollar earned above the budget, the team within that department would share in 20% of the additional profits earned by their department and placed in a bonus pool. This bonus system is being investigated in a way to encourage team performance amongst departments, empower managers within departments and as a way to align each department with the overall strategy of the organisation. (a) Outline the strengths and weaknesses of each of these bonus structures (2 strengths and 2 weaknesses for each structure. (4 marks) (b) Which bonus structure would you recommend and why? (2 marks) (c) List and provide examples of potential agency costs that may arise as a result of your chosen bonus structure. (4 marks) (d) The International Federation of Accountants (IFOA) have identified eight drivers of sustainable organisational success, that accountants of the future will need to understand, in order to assist organisations in achieving optimal performance. List and explain five (5) drivers of organisational success as outlined by the IFOA[5 marks)]

Answer rating: 100% (QA)

The problems fundamental facts are as follows 1 The company has been in operation for the past five years with consistent financial growth during that time 2 The company has been using a bonus payment ... View the full answer