MONDAY 14 JUNE 2004
Time allowed 3 hours
This paper is divided into two sections
This ONE question is compulsory and MUST be
FOUR questions ONLY to be answered
The Association of Chartered Certified Accountants
Section A – This ONE question is compulsory and MUST be attempted
Watkin Williams is a small accountancy practice based in a small British town. The two partners, Reg Watkin and
Oscar Williams are supported by a small team of qualified and part qualified accountants, technicians and support
staff. The staff consists of five account managers who look after the main clients, a customer liaison manager (whose
role it is to look for new clients), four account managers who maintain contact with smaller and newer clients and a
support staff of five technicians and four secretaries. The practice is regarded as outgoing and constantly seeking
The two partners feel that the practice has grown so much that it can no longer be managed in an informal way. Reg
Watkin has been studying management in his spare time and suggested to his partner that a staff appraisal scheme
should be introduced. He believes that rewards should be related to performance and wants to use the appraisal
scheme as the basis for salary increases, annual bonuses and other incentives. Despite the office being very busy and
there being substantial demands on staff, the scheme has been active for the last six months, with appraisal interviews
being fitted in as time has become available.
The two partners are soon to discuss strategy and amongst other things, intend to discuss the salaries budget for the
coming year. However, feedback from the staff has identified a number of problems with the appraisal system. It has
been alleged that nobody on the staff knows what appraisals are for, whether they are simply a discussion or a session
to ask for more money. Some members of staff regard appraisals as a waste of time and resources since their own
performance depends on others’ work, how well they perform and the time they are given. The partners are rarely
available in the office and are therefore seen as out of touch. Staff members feel that appraisal interviews are a low
priority for the partners, who hold them only at short notice when convenient to them. As a consequence, some staff
say nothing, others complain and in reality, there has been no follow up to the interviews. The staff now feel that an
informal system should be introduced since the formal system has failed because, in their view, it is inappropriate to
The partners are concerned about the views of the staff and have commissioned you to report on performance
(a) Briefly describe the three main components of an appraisal system.
(b) Outline the potential benefits of the appraisal from the viewpoint of:
The employees at Watkin Williams;
(ii) The employer – Watkin Williams.
(c) Describe five main barriers to an effective appraisal system at Watkin Williams.
(d) Describe the documentation that should be prepared BEFORE an appraisal interview.
(e) Describe three approaches the partners of Watkin Williams might use for conducting the appraisal interview
and explain which method you think might be most beneficial and why.
Explain what actions should be taken after the appraisal has been completed.
Section B – FOUR questions ONLY to be attempted
Your manager has decided to introduce a system of Management by Objectives but is uncertain how to set about it.
You have been asked to advise.
Describe the seven key stages that should be followed in a Management by Objectives programme.
Selection testing has become a common method of seeking information about potential employees. Such tests
however are subject to some limitations.
(a) Briefly describe the purposes of:
(ii) Aptitude Tests;
(iii) Competence Tests;
(iv) Personality Tests.
(b) Briefly outline four limitations of selection tests.
Training programmes play an important part in improving employee skills and organisational performance.
(a) Briefly explain the advantages of training for the organisation.
(b) Briefly explain the advantages of training for the individual.
(c) Briefly explain what is meant by the following different types of training:
(ii) Job rotation;
(iii) Work shadowing.
Your manager has heard of Action Centred Leadership and wishes to involve the department in this idea. You have
been asked to explain the idea to your colleagues.
(a) Briefly outline three skills a leader might possess.
(b) Briefly explain the term ‘action centred leadership’.
(c) Describe the three major goals of action centred leadership.
The accounts manager does not understand what is meant by discipline within the employment context. You have
been asked to explain.
(a) What do you understand is meant by the term ‘discipline’ in the employment context?
(b) Explain what is meant by the terms:
(ii) negative discipline.
(c) Provide four examples of situations where disciplinary action may be required.
End of Question Paper