1 Prepare the answers to the following questions from the recommended textbook as noted below:
Chapters 20/22:
Discussion Questions (Romney & Steinbart 2018)
. Question 20.4 pp. 665-666
. Question 20.9 p. 666
Chapters 20/22:
Problems (Romney & Steinbart 2018)
. Problem 20.11 p. 671
. Problem 22.8 p. 729
Optional Question
The question below is optional. All students are encouraged to attempt question. Tutors will discuss this question if there is time available in the tute. If there is no time, students are encouraged to see their tutor and/or Lecturer-in-Charge during student consulting to discuss answers if necessary.
The following notice was posted in the employee cafeteria on Monday morning: To: All Accounting and Clerical Employees
From: I.M. Krewel, President
Subject: Termination of Employee Positions
Effective this Friday, all accounting and clerical employees not otherwise contacted will be terminated. Our new computer system eliminates the need for most of these jobs. We’re grateful for the loyal service you’ve rendered as employees and wish you success. You may wish to pick up your final checks on Friday before you go.
∙ Discuss the president’s approach to human resource management.
∙ What are the possible repercussions of this episode?
∙ Assuming that job termination is the best alternative available, how should management approach the situation?

1 Contribute to the class discussion of the preparation questions from the text Romney & Steinbart (2018).
Please remember that to earn participation marks you need to ACTIVELY PARTICIPATE in the discussions. Both attendance and participation will be recorded systematically by your tutor.
3 Use time left (if any) to address outstanding issues and/or seek clarifications from your tutor.

. Reflect on questions (and answers) discussed in the tute and seek help from your tutor and/or lecturer-in-charge if you need clarification and help.
. Practice MCQ questions in chapter 20 (pp. 664-665) and chapter 22 (pp. 722-723).
Chapters 20/22:
Discussion Questions (Romney & Steinbart 2018)
. Question 20.4 p. 665-666
20.4 For each of the following, discuss which data-gathering method(s) are most appropriate and why:
a. Examining the adequacy of internal controls in the purchase requisition procedure – Observation of procedures, interviews with employees, and documentation reviews (of document or control flowcharts, for example) will all aid in understanding purchase requisition procedures. Each type of procedure will identify different aspects of the internal controls in the purchasing department.
b. Identifying the controller’s information needs – An in-depth interview with the controller is one way to determine her information needs. However, managers often don’t know what information they need; they say they need the information they are now getting and little else. Therefore, the interviewer/analyst must understand the manager’s function and the role of that function in the organization. The interviewer should also ask the controller what information she would like to receive that she is not now receiving. Interviewing is an efficient fact-finding technique that allows a prepared and informed interviewer to ask “why” or probing questions to better identify the controller’s needs.
Reviewing the reports that the controller currently receives is also a good way to identify her needs.
c. Determining how cash disbursement procedures are actually performed – If the cash procedures are documented, a review of that documentation will help understand how it is supposed to work. The best way to understand how cash disbursement procedures are actually performed is to interview employees, observe them, and prepare flowcharts and notes.
d. Surveying employees about the move to a total quality management program – By using a questionnaire, the opinions of many different employees can be gathered. Questionnaires also produce information in a standardized format. A questionnaire allows employees to think about the questions before giving answers and it is more objective than other data gathering methods. Anonymous questionnaires will encourage employees to give honest answers.
Questionnaires produce a “breadth” but not a “depth” of information. To go beyond the questions in the questionnaire, interviews should be held with selected employees. The purpose of the interviews is to probe deeper to find out why employees feel as they do.
e. Investigating an increase in uncollectible accounts – Interviews with employees and examination of documents will provide good initial sources of information to investigate the problem. Documents will show which accounts are uncollectible and help with an understanding of the company’s collection policies. Interviews will help determine why uncollectible accounts have increased.
. Question 20.9 p. 666
20.9 Ajax Manufacturing installed a new bar code based inventory tracking system in its warehouse. To close the books each month on a timely basis, the six people who work in the warehouse must scan each item in a 36-hour period while still performing their normal duties. During certain months, when inventory expands to meet seasonal demands, the scan takes as many as 30 hours to complete. In addition, the scanners do not accurately record some inventory items that require low operating temperatures. A recent audit brought to management’s attention that the inventory records are not always accurate. Which aspect(s) of feasibility did Ajax fail to consider prior to installing the inventory tracking system.
Ajax Manufacturing failed to consider operational and technical feasibility when implementing their inventory tracking system.
Operational feasibility considers whether the organization’s personnel can and/or will use the system. For Ajax, the 30 hours required to scan all inventory in a 36-hour period was very difficult on personnel and most likely led to human error in the inventory count due to fatigue.
Technical feasibility deals with whether the technology is in place for the system to work. For Ajax, although the technology was in place and worked under normal circumstances, the scanners did not always work in the cold conditions of Ajax’s warehouse. Therefore, the technology sometimes failed, which resulted in inventory errors.
Chapters 20/22:
Problems (Romney & Steinbart 2018)
. Problem 20.11 p. 671
20.11Don Richardson, JEM Corporation’s vice president of marketing, is part of a management team that for several months has been discussing plans to develop a new line of business. Rumors about the major organizational changes that may be required to implement the strategic plan have been circulating for months.
Several employees who are anxious about the expected changes confronted Don. The sales manager said, ‘‘It is imperative that we speak to you right away. The employees are very apprehensive about the proposed changes, and their job performance has slacked off.’’ The accounting manager added, ‘‘That’s right. My staff are asking me all sorts of questions about this new line of business, and I don’t have any answers for them. They’re not buying the ‘We will make an official announcement soon’ line any longer. I suspect that some of them are already looking for jobs in case the department changes phase out their positions.’’
Implementing organizational change is one of the most demanding assignments an executive faces. It has been suggested that every change requires three steps: unfreezing the current situation, implementing the change, and refreezing the effected change. This view, however, lacks the specific details needed by an operating manager who must initiate the change. Adapted from the CMA Examination
a. Explain why employees resist organizational change.
Uncertainty and fear. Employees become anxious and nervouswhen they fear the unknown. They worry about losing their jobs and their ability to meet new job requirements. If they do not understand the change or its implications or mistrust those initiating the change, there is even more uncertainty and fear of the unknown.
No perceived need. Employees may not perceive the need for change, preferring to maintain the status quo. Many people believe that what has proven successful in the past will be satisfactory for the future.
Lack of time. Employees may not have or may be unwilling to expend the time and effort required to learn how to use the new system with its attendant new procedures.
Interpersonal relationships threatened. Changes may disrupt existing social networks, which threatens the social stability of the organization. People often have emotional attachments to their duties or to the people they work with and don’t want to change.
Personal characteristics and background. Generally speaking, the younger people are, the fewer years they’ve been with the company, and the more highly educated they are, the more likely they are to accept change.
Manner in which change is introduced. Resistance is often a reaction to the methods of instituting change rather than to change itself. Employees may not feel the change is beneficial if the employee was not consulted or did not participate in the decision-making.
Amount of trust. If previous dealings with management have not created a feeling of trust, confidence, and cooperation, users may feel they are trying to “put something over on me.”
Experience with prior changes. If employees have had a bad experience with prior changes, they will be more reluctant to cooperate with planned changes.
Top management support. Employees sense top management attitudes toward a proposed system and the extent of top-level support. When there is a lack of support, lower-level employees may think, “If top management doesn’t support it, why should I?”
Communication. Employees often do not know why changes are made. Unless it is clear that a change is not an indication of poor performance, they may react negatively to it.
Disruptive nature of the change process. Requests for information and interviews are disruptive of the normal routine and place additional burdens on people.
b. Discuss ways JEM Corporation can alleviate employee resistance to change.
Employee participation. Encourage employees to participate in the change planning and implementation. Employees who express their opinions, suggest ways to improve the system, and hear the positions of others are more likely to accept change.
Keep the lines of communication open. Inform managers and users of systems changes as soon as possible. Clear and frequent communication about the need for change and the expected results of the change will alleviate employee fears. The company should listen to employee grievances and help to resolve problems.
Provide feedback on employee suggestions. If they are not told why their suggestions were not implemented, they may foster bad feelings toward the new system.
Train. Teach the employees how to use the system. Effective use or support cannot be obtained if users do not understand the system. Acceptance of the system is not likely if an individual believes that the computer is controlling him or has usurped her position
Satisfy user needs. Design the form, content, and volume of system output to satisfy user needs and they are more likely to welcome the changes.
Build trust. If employees perceive management as fair and honest and have confidence in management’s abilities, they are more likely to cooperate and less likely to resist change.
Get management support. Top management should make it clear that they fully support the system and everyone else to do so. When management is supportive of the changes, employees are more willing to accept the change.
Allay fears. To the degree possible, management should provide assurances that there will be no major loss of jobs or changes in job responsibilities.
Sell the system but control user expectations. Emphasize that the system may provide greater job satisfaction, more important and challenging tasks, and increased advancement opportunities. Do not oversell the system and create unrealistic expectations. When employee expectations are not met, the “seller” and the system will be blamed.
Properly test the system prior to implementation to minimize initial bad impressions.
Avoid emotionalism and threats. When logic vies with emotion, logic loses. Threatening behavior or employee intimidation often strengthens resistance to change
Keep the system simple. Avoid complex systems that cause radical changes.
. Problem 22.8 p. 729
22.8 During final testing, just before launching a new payroll system, the project manager at Reutzel Legal Services found that the purchased payroll system was doing the following:
∙ Writing checks for negative amounts
∙ Printing checks with names and employee numbers that did not match
∙ Making errors; for example, $8 per hour became $800 per hour if a decimal point was not entered
∙ Writing checks for amounts greater than a full year’s salary
Fortunately, payroll was still installed on time, and only 1.5% of the checks had to be manually reissued every payday until the problem was solved.
Other problems were that no one had made sure the new system was compatible with the existing payroll database, and there appeared to be no formal transition between the development of the project and the implementation of the project. The system was never run in parallel.
Although the programming manager lost his job, the payroll problems helped raise awareness of the company’s growing dependence on IT. Lacking a major problem, there was a perception that the information system did not affect operations.
a. What does “the system was never run in parallel” mean?
Running in parallel refers to operating the old and new systems simultaneously for a period. A company processes all transactions with both systems, compares the output, reconciles the differences, and corrects problems. The old and new
systems are run in parallel until the new system proves itself and the organization is certain that the new system is functioning properly.
b. If the company had run the system in parallel, what should have occurred?
Parallel processing protects companies from errors, but it is costly and stressful because the same set of transactions and activities must be processed twice. This places a significant burden on the company, a burden many companies are not willing to undertake. However, because companies often experience problems during conversion, parallel processing has gained widespread popularity.
If the company had operated the new and old systems in parallel, they should have been able to use the paychecks produced by the old system until all errors were detected and corrected.
a. What other testing methodologies could have been used by the firm?
The company could have implemented a pilot conversion where one office or branch of the company could have implemented, tested, and corrected any errors before releasing the system to the rest of the organization.
Alternatively, the company could have performed a phased conversion where a new system is implemented, tested, and modified one phase or module at a time.
b. What other types of problems are evident from reading the case?
There does not appear to be proper management or leadership of the system development, implementation, or testing processes involved in this system. For example
∙ Final testing should have been attempted prior to just before launching the payroll system.
∙ Management should have made sure the new system was compatible with the existing payroll database and the new system should have been tested using the existing database.
∙ There should have been a formal transition between the development of the project and the implementation of the project.
Optional Question (Discuss if there is time available; otherwise encourage students to attempt questions and contact you in student consulting to discuss answers) The following notice was posted in the employee cafeteria on Monday morning: To: All Accounting and Clerical Employees
From: I.M. Krewel, President
Subject: Termination of Employee Positions
Effective this Friday, all accounting and clerical employees not otherwise contacted will be terminated. Our new computer system eliminates the need for most of these jobs. We’re grateful for the loyal service you’ve rendered as employees and wish you success. You may wish to pick up your final checks on Friday before you go.
Discuss the president’s approach to human resource management. This approach is clearly unproductive and it would not work.
What are the possible repercussions of this episode?
∙ Sabotage of the new system by disgruntled employees.
∙ Employees not released will probably harbor ill feelings towards the company. Employees may reflect these feelings through poor work
performance, lower productivity, higher absentee rates, and resentment towards the new system.
Assuming that job termination is the best alternative available, how should management approach the situation?
∙ Management should discuss the situation in person with each employee. ∙ The changes that are being made should be clearly communicated to each employee.
∙ Every effort should be made to relocate employees within the company and offer early retirement incentives where possible.
∙ Terminated employees should be told in person.
∙ Giving employees a week’s notice that they are “being replaced by a computer” may well result in the system being sabotaged.
∙ Employees should be terminated on Friday afternoon and given the appropriate severance pay.
∙ The termination should not come as a complete surprise to the employees. The employees should have already known that every effort was made to relocate them within the company and that termination was a last resort.


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