ACCA Paper 1.3 Managing People 2003 Answ 1

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Part 1 Examination – Paper 1.3

Managing People June 2003 Answers

1 Communication is a core activity of management and the accounting profession. It is the process of transmitting information from one person to another, or from one organisation to another, or a combination of both.

Communication can be described as ‘the process by which ideas and information are transmitted to others for the purpose of effecting a desired result.’ Ideas and information are the content of the message communicated.

(a) The function of communication is to ensure that every member of the organisation knows what is expected of them and to allow an opportunity for feedback. Good communication in an organisation is critical in ensuring coordination and control of individuals, groups and departments.

The management of Sunshine Sweets need to understand that good communication ensures individuals know what is expected of them, the correct information is received by the appropriate person and consequently there is co-ordination within the organisation. Good communication ensures that there is control of the organisation’s plans, procedures and the instructions to staff by management are understood. Group and team cohesiveness is encouraged and stress can be reduced. Many problems such as bias, distortion and omission can be reduced and removed, as can secrecy, rumour and innuendo, resulting in a reduction of conflict.

(b) The need for clear and concise communication and the consequences of poor communication should be understood by the management of Sunshine Sweets. Poor communication leads to ineffective control, poor co-ordination and management failure. Very often barriers to communication are not recognised as such. In Sunshine Sweets the directors, managers and staff are using different phrases and expressions.

Barriers to communication are many; the personal background of the persons communicating, including language differences, the use of jargon, especially by different professions and different education levels as is often the case in factories and is the case here. The concept of organisational ‘noise’ is often an issue. The message is confused by matters unrelated to the matter in hand, or there is overload, where too much information is being communicated. The different perception of individuals can lead to conflict within the organisation and thus to a communication barrier. The distance between those individuals communicating with each other is often overlooked in the business environment. This often leads to distortion of information and thus to misunderstanding between departments and individuals.

(c) Communication cannot take place if there are barriers to the communication process. These must be recognised and removed. Barriers to communication can be overcome by a consideration of the needs and understanding of the message recipients with careful and clear reporting. Information should be expressed clearly, avoiding jargon or abbreviations. The use of more than one communications system can assist, as does the encouragement of dialogue rather than monologue and ensuring that there are as few links as possible in the communication chain.

Communication can often be improved by identifying appropriate written, verbal or electronic methods. Meetings, interviews and video conferencing involve personal, face to face communication.

Telephone, email, faxing and public address systems can be used where personal communication methods are difficult. Written communication is often the most suitable and clearest means of communication. This takes the form of memoranda, internal and external reports, forms, notices, house journals, rules and procedures, standard documentation, manuals and job descriptions.

Visual communication is a powerful communication media. Charts, files, slides, videos or films provide an immediate and clear message.

Electronic means of communication are increasingly becoming more relevant. Electronic mail, document imaging, telex, fax, internet and email are instantaneous and provide clear communication possibilities.

(d) Communication is vital in all organisations and the communication process may take many forms. It is important that managers and supervisors recognise the nature of channels of communication.

There are many forms of communication within an organisation, both formal and informal, but in the main, communicated information often flows through quite clear channels and in defined directions. The direction of the three main information flows are downwards, upwards and lateral.

Downwardscommunication (or superior-subordinate communication)

This form of communication is often the one most easily recognised. Its purpose is to give specific directives, provide information about procedures and practices or provide information about the task in hand. Control of subordinates and information about their performance is an important use of downward communication, as is the provision of information on organisational and departmental objectives.

Upwards communication (or subordinate initiated communication) tends to be non directive in nature and generally takes two forms, personal problems or suggestions or technical feedback as part of the organisation’s control system.

Lateral or horizontal communication is increasingly important and necessary in modern organisations, especially as traditional communication theory assumes only vertical communication. It can take the form of task co-ordination, such as departmental managers or supervisors meeting regularly, problem solving through departmental meetings to resolve an issue, and sharing ideas with other departments. Properly understood, this form of communication can resolve conflict and interdepartmental friction.


(e) One traditional and well tried formal communication method is the establishment of a committee. Properly structured and understood, they are a useful method of communication. They can however be wasteful and time consuming if not structured and managed effectively.

A committee is a group of people who meet for a particular purpose. Committees differ from other forms of communication, notably teams, because they are often a permanent part of the organisation’s structure and communication mechanism. Committees make formal recommendations and are able to make decisions, or if need be, have the authority to delay decisions if insufficient information is available. Committees provide inter departmental co-ordination, can relay decisions in the form of briefings, represent different people, departments and disciplines and through their membership provide information and feedback to others.

Committees are often used as a task force or working party to solve problems by consultation, through synergy by brainstorming in an effort to arrive at different or difficult decisions that cannot or will not be made by an individual. If the workforce is fragmented, committees can be useful to bring co-ordination and the sharing of information and viewpoints.

2 Accountants as managers should develop and understand the process that links employee performance with organisational goals and organisational success. However, before the process of performance management begins the organisation must itself have developed a clear, planned strategy.

The process of performance management typically involves five stages:

Stage One – identify and describe the essential job functions and competencies and relate them to the objectives of the organisation as laid out in the corporate plan.

Stage Two – develop realistic and appropriate performance standards which will form the basis of a performance agreement. This defines the expectations of the individual or team and includes the establishment of performance standards and indicators, together with the skills and competencies needed.

Stage Three – draw up an individually agreed performance and development plan. This details the action needed to improve performance and involves identification of areas in need of development, agreement on performance and development and training requirements.

Stage Four – performance is evaluated throughout the year, counselling and guidance is given as appropriate. Activity requirements are updated and control action taken. Communicating constructive performance evaluation is important as is the giving and receiving of feedback about performance.

Stage Five – the performance review. At an agreed time during the year, actual performance is measured against the agreed performance plan. The meaningful part of stage five is the planning and providing of education and development opportunities to build upon and improve employee performance in the future.

3 Interviews are extensively used for the recruitment of new employees, but have been criticised for failing to identify appropriate candidates suitable for the organisation. It is essential that professional accountants recognise both the problems and opportunities that formal selection interviews present.

(a) The purpose of the selection interview is to find the best possible person for the position and who will fit into the organisation. Those conducting the interview must also ensure that the candidate clearly understands the job on offer, the associated career prospects and that he or she feels that fair treatment has been provided throughout the selection process.

In addition, the interview also provides the opportunity to provide a good impression of the organisation, whether the candidate has been successful or not.

(b) (i) The face to faceinterview 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 very cost effective for the organisation (as compared with panel interviews) and, because of the more personal nature, ensure that candidates feel comfortable.

The disadvantages however are that the selection relies on the views and impression of a single interviewer which 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) Panelinterviews 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 have the authority to reach immediate decisions and provide a more complete picture, hence the problems or any bias inherent in face to face interviews can be removed.


4 Health and safety is an issue for all organisations. It is something that has only recently become a responsibility for management. Few managers and employees take safety seriously or indeed recognise the dangers in the workplace.

(a) All places of work contain hazards, including the accounts’ or finance office. Work and office based hazards can include slippery and wet floors, especially after cleaning. Torn and worn floor coverings can lead to slips or falls.

In many offices, computer, telephone and electrical leads are left to hang loose over which employees may trip, as they could do over obstacles in corridors or stairways used for storage.

Poor lighting and unlit areas, especially corridors and stairs can also lead to trips, falls or collision with other objects. Unmarked glass doors are particularly dangerous since not only could employees collide with them, but sufficient force could cause breakages and significant injury. Filing cabinets which are top heavy, or left open can fall on to employees whilst the lifting of heavy items, papers and files can often lead to physical injury to the back. Perhaps the most dangerous of all is the deliberate removal of safety guards or screens from machines or machines being operated by untrained staff, which can lead to very serious injury.

Other, less obvious physical hazards to employees are the danger from staff using drugs or abusing alcohol, for which the organisation must have a disciplinary procedure. Computer screens and repetitive strain injury are other, less obvious dangers but can be alleviated by screen covers, careful use of computers, breaks and exercise.

(b) Management should be aware that appropriate preventative action can reduce the risks in the workplace. These include: Consultative participation – The most important and involves formal participation between management and employees (or their representatives) such that health and safety rules are relevant, understood, accepted and followed.

Safety rules and instructions – Should be formalised, issued to all employees and form part of any training programme. Encourage safety consciousness – Ensures that safety forms a part of the culture, practice and duties of all the workforce, that pride is taken in maintaining a good record of safety.

Materials handling – A major cause of accident and injury, even in an office environment. Management should ensure that materials handling is minimised or designed for safe working and operation and that appropriate training and equipment is provided.

Satisfactory safety standards –- Should be adopted so that everyone is aware of the standards required to maintain a safe workplace and against which safety measures can be measured.

Adoption of an ongoing maintenance programme – So that temporary measures to keep equipment working do not prejudice safety.

5 Much has been written about the need for teams and team working; they have to develop, mature and often eventually terminate. It is possible to identify distinct stages of development through which teams pass.

B W Tuckman has described these stages as:

Forming– the members meet and decide upon the purpose of the team and how it will operate. At this stage the team is no more than a collection of individuals, finding out about one another and about the task, although objectives may be unclear. This stage is wasteful and time consuming, although essential since the prospective team members are not at this stage comfortable with each other.

Storming– the phrase ‘storming’ is a deliberate reference to this stage which is characterised by conflict. Previous ideas, ideals, norms, attitudes and behaviour is challenged and often rejected. There is competition for the roles within the team. This is a constructive and often fruitful stage with trust developing. If the individuals come successfully through this stage then a stronger team will result.

Norming – the norms under which the team will operate are established. The team is settling down, members investigate ideas and test the reactions of the team as a whole and consequently, norms are established. In addition, it is at this stage that the team establishes patterns of behaviour, levels of trust and the methods by which decisions will be taken.

Performing– the team is now complete and able to perform to its full potential. Difficulties with team roles, individual conflicts and problems of adjustment have been resolved.

Dorming– has been suggested as a final and fifth stage. This is when the team becomes complacent, has lost interest in the task and exists only for self preservation.

(Some students may refer to this final phase as ‘adjourning’ or ‘mourning.’)


6 Situations can arise in the workplace which require particular and careful people-centred skills. In such circumstances, professional accountants as managers may be called upon to act as counsellors. What constitutes counselling and the sensitive skills required in this process is often misunderstood.

(a) Counselling can be defined as ‘when a person agrees explicitly to offer time, advice, guidance and support to another person (or persons) temporarily in the role of client; in the organisational context, the client being a fellow employee or subordinate.’ It may be used in giving career development advice and in coaching and mentoring staff.

(b) In assuming the role of the counsellor, the manager should be able to:

– help others to identify problems, issues and possible solutions to problems – adopt a passive role and avoid leading or suggesting

– encourage reflection and discussion of past issues – allow the employee to lead and talk around issues

– use open questions to help the employee explore ideas and feelings – maintain active listening and not interrupt the employee

– speak only to clarify issues and elicit answers when appropriate (c) For the organisation, the advantages of counselling are that:

– it provides a confidential service to the employee to discuss problems

– allows human resources policy to be developed based upon an understanding of individual problems – provides a service to external agencies to assist with personal problems if appropriate

– prevents under performance and increases commitment – demonstrates organisational commitment to the employees


Part 1 Examination – Paper 1.3

Managing People June 2003 Marking Scheme

1 (a) Brief description of those factors that ensure good communication Up to 5marks (one mark each) (Maximum for Part (a) 5 marks)

(b) Identification of five barriers Up to 5marks

(one mark each) (Maximum for Part (b) 5 marks)

(c) Explanation of how communication barriers can be overcome Up to5 marks

Identification of alternative communication methods Up to 5marks

(Maximum for Part (c) 10 marks)

(d) Explanation of different channels Up to10 marks

(Maximum for Part (d) 10 marks)

(e) Outline of the usefulness of committees Up to10 marks

(Maximum for Part (e) 10 marks)

(Total for Question 40 marks)

2 (a) Description of the five stages in ‘performance management’ Up to 15marks

(Three marks awarded for description of each of the five stages)

(Total for Question 15 marks)

3 (a) Explanation of the purpose of the selection interview Up to 4marks

(Maximum for Part (a) 4 marks)

(b) Explanation of, and the advantages and the disadvantages

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

(ii) the panel interview Up to 5marks

(Maximum for Part (b) 11 marks)

(Total for Question 15 marks)

4 (a) Brief description of any three hazards that might be found in the workplace Up to 5marks (Maximum for Part (a) 5 marks)

(b) Brief description of preventative action Up to 10marks

(Maximum for Part (b) 10 marks)

(Total for Question 15 marks)

5 Description of the five steps in team development Up to 15marks

(Three marks for each step, including ‘dorming’)

(Total for Question 15 marks)


6 (a) Explanation of the term ‘counselling’ in the workplace Up to 2marks (Maximum for Part (a) 2 marks)

(b) Explanation of the role of the manager as counsellor Up to 7marks

(Maximum for Part (b) 7 marks)