Case study

You are the Senior Management Accountant of Better Gardens Ltd(BGL), a well-established manufacturer of a range of conservatories, summerhouses and large garden ornaments. The company's revenue and after-tax profits for the year ending 31 May 20X7 are forecast to be$100 million and $20 million respectively. The company has 350 employees in total who are comprised as follows:

Function Level; No. of Employees

Directors 20

Sales Staff 40

Assembly Staff 250

Administrative and 40

Support Staff

BGL's products are sold to specialist 'Garden Centres' by its sales staff, each of whom is home-based. The forty sales staff work from home and are supported by administrative and support staff who also undertake telephone-based selling activities.

The manufacture of conservatories and summer-houses is undertaken by 210 assembly staff, some of whom work in teams and others who work on an individual basis.

The large garden ornaments, each of which is hand-finished, are produced by 40 assembly staff who are responsible for their individual output.

The directors of BGL are considering whether to implement a reward scheme for all employees within the organisation. They have approached you for advice with regard to this matter. The production director recently stated 'if we implement a reward scheme then it is bound to be beneficial for BGL'.

Required:

1)Explain the potential benefits to be gained from the implementation of a reward scheme.

(6 marks)

2)Explain the factors that should be considered in the design of a reward scheme for BGL.

(7 marks)

3)Explain whether you agree or not with the statement made by the production director.

(3 marks)

4)Briefly discuss how stakeholder groups (other than management and employees) may be rewarded for 'good' performance.

(4 marks)