Instigating appropriate reward structures In Learning exercise 3.4 we noted that accountants have a role in encouraging and rewarding the right behaviours. Assuming that an organisation is concerned about issues associated with climate change, let’s consider what mechanisms an accountant might help put in place to encourage the organisation to, for example, reduce its consumption of electricity. An accountant and their team would first need to become familiar with the electricity consumption patterns of the organisation’s property, plant and equipment. Once knowledge of the organisation’s current or projected power consumption is gathered, then opportunities for electricity savings can be identified. The accountant’s team might:
• cost and source alternative items of property, plant and equipment that are proven to be more energy efficient
• encourage a decision to stop producing goods or services that are highly energy intensive, and switch to the production of alternative goods or services that generate sound financial returns but consume less electricity
• devise budgets for future energy use, which can be used as targets for staff to achieve – any significant departures from these targets would be subject to investigation
• introduce an incentive scheme or bonus plan for staff who are able to significantly reduce the electricity consumption of the organisation for particular levels of production or services – once targets are set for future energy consumption, some monetary reward might be paid to these people for meeting or exceeding targeted reductions in energy use.
If a particular aspect of performance is deemed to be important to an organisation, then the achievement of that objective needs to be supported by appropriate policies and procedures inclusive of appropriate accounting processes. That is, it needs to be supported by appropriate governance mechanisms.
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