ACCA F1 Accountant in Business - 2010 - Study text

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Chapter 12: Learning, training and development and performance appraisal

 What have been the achievements during the year with which the employee is

pleased?

 How do the achievements during the year compare with previously-agreed

objectives or action plans?

 In what respects does the employee consider that further improvements can be

made?

 What factors outside the employee’s control have affected his or her

performance? Do these factors still affect performance? If so, what can be done to

remove the problem?

 What extra training or new work experience will help the employee to do the job

better?

 What personal aspirations and ambitions would the employee like to discuss,

with a view to deciding how these ambitions might be met?

Questions for the interviewer to prepare

If the interviewer wants to encourage a dialogue with the employee, the questions

to prepare in advance should be related to the following issues:

 What do you think were your most significant achievements during the year?

 What aspects of your job caused you the most difficulty?

 Have you met the targets or objectives we discussed at the previous appraisal

interview?

 What should be your objectives or targets for the next period?

 What training or coaching do you need in order to improve your performance

and abilities?

 What are your career ambitions? Is there anything that we can (reasonably) do to

help you to achieve them?

 Are there any other issues about your work and your job that you would like to

talk about?

Location of the interview

The location for an appraisal interview should be appropriate, and should

encourage the employee to feel that the appraisal is important for the employer as

well as for the employee.

 If the interview is held in the manager’s office, the employee must be notified

well in advance and should have an official time for the interview to begin.

Enough time should also be allowed for the interview, so that the discussion is

not rushed or finished abruptly.

 In some cases, the organisation may prefer to emphasise the importance of the

appraisal process by selecting a special location for the interviews, such as a

small conference room in a local hotel.

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The documents for an appraisal interview

As part of the preparation for an appraisal interview, the interviewer should obtain

and look at the following documents:

 The job description. This sets out the purpose and contents of the job. The

interviewer can use this to ask the employee which aspects of the job have been

performed well and which aspect have been performed less well.

 Records of previous appraisals. The interviewer needs to know what was

discussed and agreed at the previous appraisals of the employee, in order to ask

questions about the progress that has been made since then.

 Self-assessment form. A part of the appraisal process may include a

requirement for the employee to complete a self-assessment questionnaire before

the interview. The interviewer can compare the replies to the questions in the

questionnaire with his or her own opinions about the employee. Any differences

of opinion can be discussed in the interview.

 Other comments about the employee. There may be other comments about the

competence and performance of the employee, such as letters from customers or

suppliers about how they have been treated by the employee. (These could be

either favourable or adverse.)

 The employee’s HR record. The interviewer may use the employee’s

employment record to check for any notable aspects of behaviour, such as a

formal warning or any other disciplinary measure since the previous appraisal

interview.

Interviewing skills

Whatever approach a manager takes to the interview, he or she must remember to

give praise to the employee for work that has been well done and for the successful

achievement of objectives or targets. Giving praise as well as constructive criticism

will help to avoid confrontation, and will also help to make the interview fair and

objective.

It is the responsibility of the interviewer to make the interview a success. The

interviewer in an appraisal interview must therefore have some interviewing skills.

The following are ‘common sense’ requirements for good interviewing:

 Ask questions that allow the employee to give full answers. Do not ask ‘closed

questions’. (These are questions where the answer is a short ‘Yes’ or ‘No’.)

 In a ‘tell and listen’ or a ‘problem-solving’ interview, give the employee time to

ask questions and give opinions.

 Don’t ask complicated questions.

 Ask follow-up questions to clarify answers to initial questions. Try to develop

conversation.

 Listen. Don’t talk too much.

 Keep the discussion focussed on relevant issues.

 Handle difficult areas with sensitivity and consideration.

 Let the employee know that you are listening and that you have understood the

points that he or she is making.

Chapter 12: Learning, training and development and performance appraisal

 Look for constructive solutions to problems, and look for ways to develop the

employee.

7.3 Recording the results of an appraisal interview

A record should be taken of every appraisal interview. This should include details

of what was discussed, and what training and development measures were agreed.

The appraisal might also include some form of scoring system or assessment system

of the employee. However, although appraisal scoring systems are used, they may

be subject to bias and should be used with care.

Criteria for assessment

Whatever appraisal method is used, the employee needs to be clear about the

criteria for appraisal. What are the aspects of performance and ability that will be

used to make the assessment? They could be any of the following, or a combination

of any of the following factors:

 The volume of work produced by the employee within a given time period,

personal time management, evidence of working well under pressure and

meeting deadlines.

 Knowledge of the work. Also, how this has improved since the previous

appraisal, due to training or additional experience.

 Quality of work produced. This could be measured in terms of error rates or

wastage rates for junior staff. At a higher level (management level) the quality of

work could relate to the technical complexity of the work that has been done, or

its accuracy.

 Management skills. These relate to factors such as the ability of the employee to

communicate with colleagues or subordinates, the ability to delegate work to

others, an ability to motivate subordinates, and the ability to plan and control

operations.

 Personal qualities. Personal qualities relate to factors such as judgement, the

ability to show initiative, self-confidence, interpersonal skills, adaptability and

flexibility, and self-motivation and ambition.

 Performance targets. Whether the performance targets agreed with the employee at

a previous appraisal interview have been met, and if not, what are the reasons?

Techniques of assessment

One way of recording the results of an appraisal interview is to record what was

discussed and agreed.

The appraisal record should possibly also contain an assessment of the competence

of the employee by the interviewer. The purpose of making this assessment is that it

provides an ‘official’ record of the individual’s competence and achievements. The

progress (or lack of it) in the individual’s development over time can be monitored

by studying the historical records, and comparing them with the current

assessment.

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There are several ways of measuring the interviewer’s assessment of the employee:

 Ranking. When employees are interviewed by the same manager, the manager

can rank them in order of competence. This method of appraisal establishes

which members of the team are better than the others, and this can help with any

decisions that might be taken about promotion. However, this method of

appraisal is also subject to bias, and is only practical when there is a fairly small

number of employees to compare.

 Scoring. An organisation may use rating scales to score the competence of an

employee. In a scoring system, each employee may be given a numerical score

(up to a maximum) for each of a number of different competence factors or

performance factors. The overall competence of each employee is then calculated

by adding up the scores for each factor.

 Grading. A similar approach to appraisal is to give the employee a grade or

rating on a non-numerical scale – such as excellent, very good, good,

satisfactory, below average and poor.

 Critical incident method. Another method of appraisal is to focus on any critical

incident that has occurred during the time since the previous appraisal

interview. The basis of assessment is based on a discussion about how the

employee dealt with the critical incident (well or badly) and whether any lessons

can be learned for the future.

 Performance-related assessment. The competence of an employee may be based

on a comparison between the targets or objectives that had been set for the

employee (at the previous appraisal interview) and whether those targets have

been achieved.

7.4 Feedback from the appraisal interview

An important barrier to effective appraisal can be the view of employees that the

annual appraisal is not treated as something important, and that nothing is done

after an appraisal interview has finished.

To prevent this from happening, there must be a system of follow-up and feedback.

 There may be agreement between the interviewer and the employee in the

appraisal interview about further training that the employee needs, or ways in

which the employee can be developed. These agreements should be recorded as

part of the official record of the appraisal interview.

 The action plan that has been agreed with the employee should be reported to

senior management and the HR department.

 The interviewer is normally the manager of the employee. He or she should

follow up the appraisal report and should arrange the training or development

that has been agreed.

 At the next appraisal interview, the interviewer and the employee should

discuss whether the agreed training or development was provided, and what

has been its effect. Has the training, job rotation, secondment etc helped with the

employee’s development, and if so in what ways?

Paper F1

AccountantinBusiness

Q&A

Practice questions

Contents

Page

Types of organisation and organisation

structures

1 Typesoforganisation 413

2 Spanofcontrol 413

3 Managementlevels 413

4 Centralisationanddecentralisation 413

5 Criticismsofcommittees 414

Marketing. Information technology and

information systems

6 Marketingmix 414

7 Usesofinformation 414

8 Qualitiesofinformation 414

Culture, ethics, governance and social

responsibility

9 Formalorganisation 415

10 Scheinandculture 415

11 Handyandculture 415

12 Fourcultures 415

13 Hofstedeandculture 415

14 Stakeholders 416

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15 Businessandprofessionalethics 416

16 Accountant’sbehaviour 416

17 NEDs 417

18 Auditcommittee:trueorfalse? 417

Environmental influences and constraints

19 Currencyrisk 417

20 Interestraterise 418

21 Monopoly 418

22 Ageingpopulation 418

23 Downsizingandde‐layering 418

24 Personaldata 418

25 Shortquestions 418

26 Fiveforces 419

History and role of accounting in business

27 Basiclegalrequirements 420

28 Consequences 420

29 Accountingstandards 420

30 Creditcontrol 420

31 Payrollroutinesandpurchasing

routines

420

32 Workingcapital 420

33 Spreadsheets 421

34 Database 421

Functions of accounting and internal

financial control

35 Accountingfunction 421

36 Audit 421

37 Typesofinternalaudit 422

38 Auditwork 422

39 Internal control, internal controls and

internalchecks

422

Practice questions

40 ITrisksandITcontrols 422

41 Fraud 422

Management and leadership



42 FayolandMintzberg 423

43 Mayo 423

44 Authorityandresponsibility 423

45 Continuum 423

46 Action‐centredleadership 423

47 HerseyandBlanchard 423

Individual and group behaviour: team

management



48 Compositionofateam 423

49 Increasingagroupsize 423

Motivation



50 Participation 424

51 Payasamotivator 424

52 Calculus 424

53 Needstheory 424

54 Blake,MoutonandMcGregor 424

Recruitment and selection



55 Stages 424

56 Applicationform 424

57 Sevenpointplan 424

58 Ineffectiveinterviews 425

59 Discrimination 425

Individual effectiveness and effective

communication



60 Wheelsandcircles 425

61 Formalandinformal 425

62 Verticalandlateral 425

Paper F1: Accountant in business

Learning, training and development and

performance appraisal



63 Learningandtraining 426

64 Methodsoftraining 426

65 Traininganddevelopment 426

66 Effectivenessoftraining 426

67 Jobenrichment,enlargementand

rotation

426

68 Appraisal 427

69 Competence 427

Practice questions

1 Types of organisation

Organisations can be categorised into the following types:

(1) business organisations

(2) public sector organisations

(3) non-government not-for-profit organisations.

To which category or categories of organisation do the following entities belong?

(a) A charity receiving 60% of its annual funding from central government.

(b) A school

2 Span of control

Would you expect to find a wide or a narrow span of control for the following

managers?

(a) Head of research in a small pharmaceuticals company

(b) Site manager on a building construction site

(d) Fashion manager in a fashion design team.

3 Management levels

Using R N Anthony’s division of management decisions into strategic level, tactical

level and operational level decisions, at which level of management will the

following decisions be taken?

(a) Dealing with a breakdown in the computer system for inventory control.

(b) Deciding to expand business operations by moving into the North American

market.

purpose-written computer system for the planning and control of production

processes.

(d) Preparing a sales plan.

4 Centralisation and decentralisation

Within the same business organisation, some decision-making might be centralized,

with decisions made by senior management. Other decisions might be

decentralised, and taken by managers or employees involved in operations.

A company owns and operates five private hospitals. It has a head office, a

management team and staff in each hospital. Staff include the medical staff –

doctors and nurses. Would you expect the following decision-making to be made:

(1) by head office management

(2) by the management of each hospital

(3) by staff in each hospital?

Paper F1: Accountant in business

(a) Decisions about the medical treatment or surgical treatment for individual

patients.

(b) Establishing policy on hygiene standards in the hospitals.

(d) Discharging patients from hospital.

(e) Deciding the visiting times for patients in each hospital.

(f) Prescribing drugs for the treatment of patients.

(g) Hiring new staff, such as hospital porters and nurses.

(h) Dealing with payments from insurance companies for the treatment of

insured patients.

5 Criticisms of committees

Identify four major criticisms of many committees.

6 Marketing mix

A marketing mix consists of four elements: product, price, place and promotion.

Which of these four elements is each of the following?

Company

(a) Manufacturer and supplier of

computers (PCs)

Providing free Microsoft software with

every PC supplied

(b) Car manufacturer Displaying a new model of sports car at a

motor show/exhibition

domestic gas boilers

Offering to take the customer’s old boiler in

part-exchange for a new boiler

(d) Television company Offering downloads of TV programmes to

customers’ home computer via the internet

7 Uses of information

List three broad uses of information.

8 Qualities of information

Below there are five statements about the quality of good information. None of

these statements is fully correct.

You are required to amend each of the statements to make it more ‘true’.

(1) Information should be accurate.

(2) Information should be made available as soon as possible.

(3) Information should be complete.

(4) Information is worth obtaining if it has some value.

(5) Information should be easy to understand.

ACCA F1 Accountant in Business - 2010 - Study text - Emile Woolf Publishing

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