Lack of Supportive Leadership

Discuss About The Nonprofit And Voluntary Sector Quarterly.

There have been many ways of motivating employees over the years. One of the ways has been through the use of salaries. Salaries in most cases are usually fixed whereby a specific accounting of money is paid to an employee for working for a period of time. The role and importance of using fixed salaries as a motivating factor for employees cannot be underestimated. However, in some instances, salaries have been found to fail as a motivating factor for workers to work more productively. These instances are properly explained by the agency theory. Research has shown that better performance is not only brought out by higher pay but also other factors such proper leadership and recognition of the tasks executed by employees (Allan, 2018, np.). It is therefore true to say that in certain circumstances, salaries would usually fail to motivate employees. These circumstances include:

Since leadership is one of the key factors of motivating employees, lack of it would lead to less a focused and underdeveloped team. Research has found out that unsupportive leaders usually fail to put in place appropriate incentives for keeping the employees on the right track (Page, 2018, np.). An organizations leader ought to act as role models by being supportive and being accountable for every actions of the employees. This means that even if employees in an organization are paid well, failure by its leaders to create the appropriate conditions of working will make them less dedicated to their jobs.

In some instances, it is usually common to find employees generally dissatisfied because of dissatisfaction. This can be due to a lot of pressure on the job or lack of appropriate retention and promotion policies. In this case, employees will be dissatisfied not because they are not paid well but because of pressure or uncertainty about the future security of the job.

Research has found out that even if employees are paid well in terms of salaries and allowances, lack of recognition can have very disastrous effects on the productivity in the workforce (Page, 2018, np.). Real motivation can be created by rewarding the best-performing employee’s trough giving gift cards or providing vacations. Rewards make the employees feel that they are appreciated and they would eventually feel motivated.

Just like other employees in other organizations, workers at Terrific Telephone Company cannot be motivated even if they are paid well in a situation where there is lack of teamwork and good environment for working. Teamwork usually enables employees to learn to trust each other and have healthcare responses to the organizational objectives (Page, 2018, np.). On the other hand, lack or good environment can also be a discouraging factor on the employees. This is because employees usually spend most of their time working, a fact which requires that the environment should be good so that productivity can be increased.

General Employee Dissatisfaction

There are four main components of compensation packages that can be used to motivate employees. They include:

This is a fixed monetary reward that paid in form of cash by an employer to the employee for services rendered. The most commonly known form of guaranteed pay in human resource accounting is the basic salary. Salary is the largest component of a compensation package that is usually tied to the employee’s skills and experiences (Ray, 2018). Although guaranteed pay also includes cash allowances such as transport, housing, medical and hardship, the allowances have to be for a long period of time so that it qualifies as a form of guaranteed pay. Guaranteed pay, therefore, provides a long-term motivation for employees to work productively.

This is a non-fixed monetary reward that is paid by an employer to the employee in form of cash. This pay is contingent on performances, discretion and results that have been achieved by the employee. Forms of variable pay include bonuses and incentives.

Benefits is another component of employee compensation package that involves programs that are used to supplement the basic pay offered to employees. Benefits include medical insurance cover for employees, company car, paid leave and vacations. Benefits motivate employees to work more productively over a long-term.

Equity is another component of compensation where the employees are given an opportunity to hold some certain amount of shares of a company. This is usually done so as to create a perceived ownership from the side of the employee and therefore compel him or her to be motivated for work. The motivation of employees has an effect of tying the kind of work done by the employees towards long-term success of the company.  Stock options are, therefore, a long-term compensation component for motivation.

• How Can an Employees Attitude to Risk Influence Their Desired Compensation Package?

Despite the fact that not many researchers have concentrated on the effect of risk on the compensation package desired by employees, contemporary studies based on the agency theory have shown that performance-based kind of pay usually omits the element of risk. The contemporary researchers have therefore shown that compensation has been predominantly taken and focused on incentives properties of performance pay alone but not risks. A number of human resource consultants have argued that the presences of risks when it comes to the desire of a compensation cannot be overlooked by present day human resource managers (Mabaso and Dlamini, 2018, pp 80-90). According to the normative agency theory, employee’s attitude to risks has been found to have tremendous influences on the desires of a compensation package.

Lack of Recognition and Rewards

Research studies aimed at identifying the effects that risk has on the formation and outcomes of performance-based types of contracts. Studies have found out that the structures of performance-based contracts are usually affected by risks such that an employee would want to be given a compensation package that commensurates with the kind of achievements he or she is required to attain after factoring the elements of failure of attainment. Based on a study to investigate the relationship between risks and performance-based pay where incumbent managers are drawn from 356 companies in New York- United States; It was found out that attitude risk influences compensation-related outcomes by changing the structure of compensation arrangements of an employee (Bloom and Milkovich, 2018pp.10-20).

According to the perspectives of the normative agency, the element of risk in an organization has a big impact on the attitude and desires of the employees when it comes to compensation packages (Birmingham.ac.uk, 2018, np.). Since the risk-return relationship is usually tied to the way in which managers have directed their strategies for the purpose of attainment of organizational objectives, employees would be interested to know this because it makes them aware when it comes to the form and structure of the obligations and returns involved in the nature of work they are going to undertake (Sullivan and Archive, 2018, np.).

• Factors That Can Limit the Effectiveness of Performance-Based Compensation Packages in Motivating Employees to Work Productively

 Despite the fact that performance-based compensation has been found to be the most effective way of motivating employees in an organization, there have been a number of limiting factors that have hindered PBC as a way of motivating employees (Callan, 2016, np., Mitroff, and Mason, 1988.np.). These factors include.

Many organizations across the world have been consistent with the view that PBC is an incentive that can be used to boost performance. Despite this increasing trend, some managers and executives of organizations have misused the issue of PBC to perpetuate discrimination (Joseph, 2017, np). These managers would sometimes go against the society’s slogan of equitable, fair and justice pay by discriminating against those whom they favour.

Despite the fact that merit pay as a form of Performance-Based Pay has been used to motivate hardworking employees, there are disastrous effects that merit pay can have on the employees. Based on a research that was conducted by Perry (1996) to investigate the effects of merit pay on performance increments in the public sector. The study found out that merit pay in the public sector has failed to motivate employees as intended (Callan, 2016, np.). Instead, performance-based compensation has been found to hinder performance for those who are unfairly denied the merit because PBC has been plagued by information asymmetries and invalid contracts (Heskett, 2007, np.).

Lack of Team Work and Good Environment for Working

Despite PBC being one of the best tools for motivating employees to improve their performances, PBC in some instances has been characterized by lack of transparency. Lack of transparency leads to loss of trust in a program which means that employees would not be motivated to work harder so that they can be paid higher (Smolkin, 2016, np.). This, therefore, makes PBC a program that is typically unfit for both short-term and long-term expectations. Failures of PBC to effect more performances has therefore been found to be incompatible with public institutions due to the unwillingness by public officers to accept the rules attached (Ims, Pedersen, & Zsolnai,  2014, pp. 353-60 ).

• Benefits of Using an Executive Compensation Committee in Determination of Components to Include in Compensation Packages

 The role and importance of an Executive Compensation Committee in an organization cannot be underestimated. The benefits attached to their duties and responsibilities are far-reaching. Some of the benefits include:

• The committee assists in reviewing, monitoring and approving on a timely basis the benefits programs and organizations compensation plans that have been developed by the human resource managers for accuracy and relevance.
• The committee reviews and monitors the overall employment environment of the organization to ensure components of compensation packages are adequate, equitable and reflects those offered in the prevailing market conditions.
• The ECC also reviews and provides management recommendations regarding transfers, firings and promotions of employees including their send off and severance packages.
• The ECC reviews and approves the management’s recommendations regarding the corporate-wide compensation guidelines such as the development and administration of human resource manager’s and executive’s compensation components of short-term nature such as bonus plan.  
• The ECC consults with the management on a regular basis to evaluate whether the compensation plans of the organization complies and meets the requirements of applicable laws and regulations of best practices towards company’s intended objectives(Rizzuti, 2015, np.).

Agency theory seeks to address the critical issues between the owner-manager relationship. In this case, the owner is the principal while the manager is the agent. The owner or shareholders main goal in any company is to maximize wealth in their investment. The managers, on the other hand, make decisions that will benefit them at the expense of shareholder’s wealth. The discrepancies result in a conflict of interest. The preparation of accounts enables the managers to make full disclosure on matters relating to the company. The disclosure can include directors allowance, debt issued, revenue, profit margins and any other relevant information necessary for shareholders to make a decision. The accounts should also indicate the profit made by the company, dividend payout and its earnings per share over the years (Lambert, 2006, pp.250). The EPS figure will enable the shareholders to monitor the growth of their investment and ensure maximization of their wealth is the key priority of the management.

• The Need for Preparation of Audit Accounts According to Agency Theory

The audit function in any organization is handled by two entities the internal and external audit team. Agency theory dictates that audit function to be an integral part of the monitoring of shareholder’s wealth. The external auditor is hired by the principal (shareholders) to look into the books of account and the resulting financial statement and express an opinion as to whether they represent a true and fair view of events. The shareholders will need an assurance from an expert that the management is abiding by the strategic plans laid down by the company and that shareholders wealth is being maximized. Additionally, the external auditor will look into the going concern aspect of the company to ensure that the company will be in existence in the near future (Masoud, 2017, pp.10). The internal audit department reports directly to the board and audit committee on their finding relating to the internal controls and any other issue surrounding the company. The internal audit ensures that the accounting and finance team adhere to the recommended standards while preparing the books of account. Also, they ensure that the organization has a strong internal control system that is able to detect and prevent any fraud and irregularities that is bound to happen. Consequently, the audit need is so real in solving the conflict in agency theory between the agents and principal. The audit reassures the shareholders they can rely on the financial statement and make a critical decision.

Components of Compensation Packages and How They Motivate Employees

Governance is the pillar of leadership in any organization. Governance is an asset of the relationship between the board of directors, shareholders and external entities. The relationship results in structures that are critical in coming up with a set of objectives and goal the organization is aligned towards achieving (Mallin, 2011, np.). The objectives form the basis of coming up with policies to help the organization in the implementation phase and consequent success of the company. Governance enables the company to sustainable in the quest for success in the long run.

• Use of Agency Theory in Studying Governance in Non-profit Organizations

Application of agency theory to Non-Profit Making Organization (NPMO) is limiting enough. From the definition, the organization is not tasked with making profits, unlike other firms. Maximization of wealth is also not their priority. The application of the theory is limited by two ways. First the existence of multiple principals in the relationship which include: board members, clients, donor and government (Van Puyvelde, 2013, np.). Considering the numerous number of principal establishing controls is a hurdle, also the principals and not in the journey to make a profit and maximize wealth as such the need for critical scrutiny of the agents’ operations is of less priority. Secondly, there is lack of monitoring role among the stakeholders in the non-profit-making organization (Van Puyvelde, 2013, np.). Profit making organization rely on agency theory since the monitoring role by the stakeholder of high value hence the reason why it succeeds. In this case, the application of agency theory is limited due to lack of monitoring.

• Application of the Stewardship Theory When Studying Governance in Non-Profit Organizations

The use of stewardship theory as an alternate theory in studying governance in the non-profit-making organization. The theory suggests that should managers be left on their own they will be responsible for managing the assets and liability of organization. This theory is critical in that in NPMO has multiple principals which make it hard to maintain control. The belief is that the managers will do everything to protect the interest of all stakeholders and increase their accountability level. Stewardship governance requires that the director be honest and trustworthy in order to drive the company in achieving its needs and objectives (Van Puyvelde, et al. 2012, pp. 440). The director, in this case, acts as a single source of communication within the organization and the needs of the various stakeholders is addressed and communicated.

 The mixed research method used in this research study is sequential explanatory research design. This method involves the collection and analysis of quantitative data of data gathered from other researchers followed by an analysis of qualitative data. From the research, it is evident that Masoud gathered both quantitative and qualitative data from a number of past researchers and made use of the results to explain and interpret the findings arrived at from analysis of the quantitative data. Survey and questionnaire research techniques were used to gather from diverse sources of empirical information.

• The qualitative portion of Masoud’s (2017) study
• How were participants selected and was it an appropriate method?

Guaranteed Pay/ Basic Pay

The selection of the participants for the research by Masoud according to me was done appropriately. This is because a representative sample from each sample groups including auditors, auditee, the financial community and non-financial community was done appropriately. The participants were made to complete a questionnaire which was modified slightly in terms of wording followed by semi-structured interviews over the phone.

• Where the number of participants interviewed appropriate? If so, why do you believe this is an appropriate number, and if not, how many interviewees would have improved the rigour?

The research considered interviewing 988 participants who were expected to have some general knowledge about financial reporting over the phone. These parties include company managers, general auditing bureau, regulators, policymakers, financial statement preparers and financial institutions.  In some instances, written submissions were also delivered to the commission and other consultants considered to be well informed in terms of auditing and financial reporting. According to me, 988 participants were sufficient enough to give the research a usable response. Although only 44% of the responses were usable from the overall participants, I consider the data that was gathered having to be categorical enough as supported by Saunders et al. 2009 who argues that a sample of more than 30 participants will usually result to a sampling distribution for a mean that is close to a normal distribution.

• How were the qualitative data analysed and was this analysis appropriate? If so, why do you believe this analysis is appropriate, and if not, what alternative analysis would have improved the rigour?

The empirical data derived from the research were analyzed statistically using various statistical research tools to test the significance of each of the groups of parties sampled. Out of the analysis, conclusions were drawn and opinions made about each of the response groups included in the research with respect to the duties they perform. According to me, I can say that the analysis of the qualitative data was appropriate up to a great extent.

• What is your opinion about how the qualitative data analysis was written up?

In my opinion, the qualitative data analysis for the research was written up perfectly. This is because the researcher recognized the research objectives for each of the empirical researchers considered for the study. Out of the individual research objectives, the researcher formulated a general major objective to seek in the research. All the relevant information relating to the formation of an informed conclusion are recognized and written in the research.

According to me, I think Masoud was very successful in drawing upon the first phase of the study in preparation for the second phase. This is evident from the fact that he first introduces the research problem regarding the existence of audit gaps in Libya. He then gives a contemporary background about the role of auditing in financial reporting before relating the research topic to some theoretical framework. When it comes to the second phase, the methodology for the research, analysis and conclusions are made.

Variable Pay

Both Masoud (2017) and Salifa and Mahama (2015) used questionnaires to vividly gather data from the surveys made on a number of respondents. Comparing the two research’s, I can say that both researchers used rigorous questionnaires for the study. For instances Salifa and Mahama (2015) administered 50 questionnaires to each of the respondent groups sampled.26 of the respondents from one of the groups returned a 100% response rate while 48 from bankers and 45 from external auditors were parts of the survey strategies used to collect descriptive and explanatory data for the research. The data collected were was then analyzed using the SPSS tool version 16 (Salifu, & Mahama, 2015, pp 25). As for Masoud 2017, questionnaire was used to succinctly examine whether audit expectation gap exists to the auditing profession in Libya. The questionnaire surveys were carefully structured to include questions that collects the data required (Masoud, 2017, pp.5-6).

From the data gathered using the survey questionnaires, both Masoud’s and Salifu and Mahama’s researchers use rigorous approaches. However, the approach used by Masoud (2017) tends to be more superior than that used by Salifu and Mahama (2015). As for Masoud, the data collected were analyzed using descriptive and inferential statistics to arrive at answers to most of the research questions. Out of the 988 respondents sampled, 431 questionnaires were administered to interest groups consisting of auditors, auditees and audit beneficiaries (Masoud, 2017, pp.6). With a general response rate at 47% Masoud’s findings can be considered to be more rigorous and superior as compared to that of Salifu and Mahama

According to me, the only aspect of Masoud’s Study that was done poorly is the analysis of the empirical literatures. Although he recognizes the chronological order in which the research studies were done, Masoud does not give the relationships that each research studies done in the past has on the current research. Instead, the research aims and conclusions are just mentioned without being related to the research topic underhand (Masoud, 2017, pp.3).

As for Salifu and Mahama, the aspect that I believe has been done poorly is the results and discussion section. In this section, the researches gives us the demographics of the respondent groups such as their genders and age brackets which according to me are meaningless according to the targeted research objectives. Although, qualifications, years of experience and accounting qualifications of the respondents are appropriate for the research study, gender does not aid much towards attainment of the research objectives. This section has therefore been done poorly since irrelevant contents have been included (Salifu and Mahama ,2015, pp. 26)

Benefits

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