PERFORMANCE

and that listed organisations then advance their performance by tailoring and integrating these best practices into their own operations, not by copying but by innovating. This is further evidence that benchmarking can improve the financial performance of an organisation.

6.4 STRATEGIES WHICH INFLUENCE DECISION-MAKING AND

PERFORMANCE

a. Does your organisation employ research and development in its line of business for it to remain sustainable and to continually improve financial performance?

“I know we have quite good teams that do research on how we are perceived in the market and they produce lots of information that is related also to the BSC” Participant [7]. Research and development within an organisation may be the key to identifying new ideas and opportunities and learning how to do things better. Managers of organisations can formulate and describe their strategy clearly and communicate it throughout the organisation in order that it operates successfully. Executives need to free managers from the shackles of bureaucratic strategy- formulation processes and harness the intellectual capital inherent in their people (Hope & Player 2012:29). Participant [3]: “Our marketing department looks at how they can do innovations better, let’s say for instance we have Bio-plus strawberry and we want to implement Bio-plus apple, we will look at how will it affect our sales, factory, volume and market as well as costs regarding new products. And from a human point of view we train graduates and develop them to become part of our business rather than spending huge costs on experienced professionals in the market, but we train and retain them unlike what our government is doing with organisations out there where they train young people and get incentive from government and let them go.” This suggests that organisations implement their strategy carefully, taking into account the long-term performance of the organisation

as well as its impact on the financial performance of the organisation. “We have got mining industry department that focus on research such as new equipment and other research that I cannot recall now, but we have people that focus specifically on research and development. We also have a whole company that looks at technology, research and more information that helps drive organisation for [the] future” Participant [1]. By having a department that focuses only on the sustainability of an organisation through researching new ideas and developing new ways of doing things, organisation can derive benefits in the long-term through its sustainability, competitiveness and performance. Participant [2]: “We have people that focus on research facilities and other BU segments do not have specific departments but use the group information obtained from research.” The participants noted that their organisations had a department that focused solely on research and development of new ideas that best fit the business that they were in, including new technology, new machinery and equipment. As a result of this, sustainability had become an important factor, such as the life span of mines or products manufactured by an organisation and their relevance to the long-term survival of the business. Some participants indicated that there were research facilities within the organisation that focused on the development and testing of chemicals and ways of improving products or doing things differently at a lower cost, and at the same time taking safety and sustainability into account. Albelda (2011) remarks that Management Accounting practices function as a facilitating mechanism for management to reinforce commitment to the continued improvement of performance, compliance with legislation and communication with interested parties. This may indicate that implementing research for development purposes within the organisation can yield positive results for an organisation in terms of sustainability, good financial performance and compliance with legislation guidelines that affect the organisation. Bertels, Papania and Papania (2010:9) argue that an organisation’s sustainability and financial improvement consists of managing the triple bottom line and this includes decision-making that takes into consideration financial, social and environmental risks, obligations and opportunities. Therefore organisations that employ research and development within their business may benefit a great deal from sustainability and improvement in financial performance.

b. Does your organisation apply other Management Accounting tools to improve financial performance?

Participant [3]: “Nowadays we have performance contracts which are aligned to what is expected from operations and manufacturing which affect bottom line at the end of the day.” Although participants indicated the importance of Management Accounting tools, it was evident that in conjunction with other strategies they used, the desired financial performance could be achieved. Participants indicated that their organisations had Management Accounting departments that dealt with different sections of their units for specific purposes. Management accountants play an important role in the planning, implementation, and measurement of shareholder- value creation (IMA 1997:6). Therefore organisations that use other Management Accounting tools not mentioned above may stand a better chance of improving their financial performance.

c. Does your organisation take measures to ensure that sustainability information generated from Management Accounting tools sustains future financial performance? If so, in what way?

The way an organisation explains its purpose and aims and the way it articulates its goals affects how its employees think, behave, and act in any given situation. Many organisations focus their purpose, aims and goals on making a profit and maximising stakeholder value rather than establishing great businesses and satisfying stakeholders (Hope & Player 2012:1). Participant [6]: “Strategies are revised on a year to year to year basis and all the information gathered is compared on a month to month basis. Any deviations are addressed for improvement or for sustainability: meaning consideration is given to micro and macro factors and realignment accordingly, economic conditions, people issues and objective of the organisation.” Reviewing strategies may be the best option to remain relevant and for organisations to conquer future challenges. Participant [3]: “We hired the best Management Accountants to drive the organisation’s strategy and vision further at about costs of R4 million a year as there was a need for that in our factories.” This remark confirms that organisations may be taking Management Accounting tools very seriously as a driver in obtaining better information that can successfully drive financial

performance and sustainability. “We do [a] strategy budget that looks at year 2050 being long-term and also 10 year strategy that looks at profitability, cost and also life span of the organisation” Participant [1]. This may substantiate the notion that organisations take measures to ensure that sustainability information generated from Management Accounting tools sustains future financial performance. Participant [1]: “Our strategy is to be industry leader in cost, quality and safe production through inspired people.” This indicates a drive towards future successful financial performance. Participant [2]; “sustainability of the organisation therefore depends on the actions that executive team do based on the information management accountants give them. In our case it’s not the issue of information but it’s the issue on how decisions are made by executives rather than producing reports that are not used by executive team.” Participants indicated that sustainability depends on decision-making by executives and directors and also on quality information from operational departments. Considering the life of the organisation, it is often one of the main functions of management to make decisions as part of their everyday lives in order to ensure that the organisation remains sustainable and profitable in the future as well (Kociatkiewicz et al. 2006). Hence good decisions are significant and ensure the wellbeing but also the survival of an organisation.

6.5 SUMMARY

In Chapter 6 the results and findings were discussed under different sub-headings. The research objectives were achieved as a result of the analysis of the information obtained from semi-structured interviews. It was established that organisations use ABC mainly as a form of cost management; although some organisations use ABC systems based on the nature and complexity of their business, others do not as these systems are not applicable as a result of their type of business. It was also established that ABC provides sustainability information for decision-making and that this does improve financial performance if implemented and used accurately.

Although benchmarking may be conducted monthly, quarterly or whenever the organisation chooses, the process encourages better results and adds value, and sustainability information generated from benchmarking may improve the financial performance of an organisation, as indicated by participants. Benchmarking advances performance by recognising and applying best demonstrated practices to operations and listed organisations can use this to advance their performance by

tailoring and integrating these best practices into their own operations, not by copying, but by innovating.

Lastly, the use of the BSC aligns organisational activities with its strategic vision and seeks to improve internal and external communications and more effectively monitor and control activities. BSC also assists management in forming a more balanced view and making more informed strategic decisions, and it may help the organisation to identify where it is doing well and where improvement is needed.

Therefore the results and findings of the research on the role of Management Accounting tools in providing sustainability information for decision-making and its influence on financial performance led to the following conclusions:

• Management Accounting tools are used by JSE listed organisations, providing sustainability information for decision-making and improving financial performance.

• Management Accounting tools are very useful in improving the financial performance of an organisation.

• Management Accounting tools provide strategies that influence decision- making and performance, although decision-making lies with the executive or director of the organisation.

Although Management Accounting tools are relevant and are useful in providing sustainability information for decision-making to reap exceptional results in any listed organisation, success depends on the decisions made by executives and directors based on the information provided in Management Accounting reports.

Chapter 6 contains the conclusions, findings, recommendations, and suggestions for further research.

CHAPTER SEVEN: CONCLUSION, RECOMMENDATIONS AND FURTHER