Appropriate Control and Incentive Systems in Place Discussion & Replies
Discuss why it is important for international companies to have appropriate control and incentive systems in place. What is the connection between strategy, structure, and control?
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Hi for feedback 1.Hill (2021) stated that strategy, structure, and controls, are all a part of an organization’s architecture. Also included in an organization’s architecture are incentives, processes, culture, and people. Organizational architecture is the totality of the company, and each piece is important and lends to the overall success of the organization. An important factor for international companies is the need to have consistency throughout these areas. A lack of consistency can lead to poor performance. The structure and strategy of a company need to be a fit and make sense considering the competition within the market. International companies require a degree of both integration and local responsiveness. If this balance is off compared to what is required to compete in the market, then the organization, no matter the levels of controls and incentives, will perform poorly (Hill, 2021). International companies measure the performance of each location and typically link a reward to performance measures. Thomé and Medeiros (2016) proposed that the process put in place to preform such measurements is considered the organizations controls. Incentives are the reward associated with good performance both behaviorally and numerically. For example, a company conducting international business could use incentives to enhance the performance of each location. It is important that each location have the same incentive structure or unhealthy competition occur and employees would consider leaving one location for another, hence a loss in talent. The idea between the two, is that with the use of controls, a company can determine if a location or subunit has met the requirements to receive an incentive. Controls are important for each business unit and ultimately measure the success of each area (Thomé & Medeiros, 2016). For example, lets suppose that each subunit has a sales goal of $50,000 per quarter and that any sales above this goal will result in a bonus. The bonus structure could be in a variety of formats, perhaps it’s a cash bonus for subunit leaders or a retreat for those subunits that are in the top tier of sales each quarter as compared to other subunits. The important component to these elements is consistency. Each subunit must have the same controls and receive the same rewards, even if the total number of sales is different. In my experience I have seen this measurement as a precent to goal.ReferencesHill, C. (2021). International business: Competing in the global marketplace. McGraw Hill. (14th ed.).Thomé, K. M., & Medeiros, J. J. (2016). Drivers of successful international business strategy: Insights from the evolution of a trading company. International Journal of Emerging Markets, 11(1), 89-110. https://0634o0z9q-mp01-y-https-doi-org.prx-keiser.lirn.net/10.1108/IJoEM-09-2012-01202. The reasoning behind controls is to recruit the best of the best to titles affiliated and invested in weeding out the loopholes as well making a sense of urgency to disclose the book and the Sarbanes Oakley act. Which was written out and adopted to establish a measure on control to financial efforts and policy in regards to finance. In an article it established a need for financial controls “While some authors opine that the internal control rules have increased the transparency of the capital markets in the United States and improved their reliability, other comment that the auditing and reporting of internal control under section 404 of US-SOX cannot detect internal control weakness effectively (Glass Lewis and Co, 2007; Besch, 2009; Whitehouse, 2010, 2011).” Kenichi Yazawa (2015) The Incentive factors for the (Non-) Disclosure of Material Weakness in Internal Control over Financial Reporting: Evidence from J-SOX Mandated AuditsWhen it comes to incentives given to employee’s to create and promote new advances in technologies and procedures I read in an article that “There is no significantly difference between the effect of monetary incentives and non-monetary incentives on creative performance.”.” Sariyatul IIyana, Mafud Sholihin (2020) THE EFFECT OF INCENTIVES AND LEADERSHIP STYLES ON CREATIVE PERFORMANCE It also talked about management style in relationship to empowering and directive leadership in allowing to be creative. “Some previous studies have found that directive leadership is more effective in stimulating.” Sariyatul IIyana, Mafud Sholihin (2020) THE EFFECT OF INCENTIVES AND LEADERSHIP STYLES ON CREATIVE PERFORMANCEThe harmony between strategy, structure and control should come together after each of these directive are analyzed to its fullest and continually scrutinized for objectivity quarterly. This will allow you to stay a head of the curve. A company should employ outside review of their finding as it relates to these three topics for review. An outside set of eyes! ReferencesSariyatul IIyana, Mafud Sholihin (2020) THE EFFECT OF INCENTIVES AND LEADERSHIP STYLES ON CREATIVE PERFORMANCE Kenichi Yazawa (2015) The Incentive factors for the (Non-) Disclosure of Material Weakness in Internal Control over Financial Reporting: Evidence from J-SOX Mandated Audits