Bhimani, Horngren,
Datar and Rajan,
Management and Cost Accounting, 5
th
Edition, Instructor’s Manual
© Pearson Education Limited 2012
based on a variety of factors, financial and non-financial, internal and external (e.g. the balanced scorecard approach.
Teaching tips Team-based incentives encourage employees to work together to achieve common goals.
Individual-based incentive compensation rewards employees
for their own performance, consistent with responsibility accounting. A mix of the two encourages employees to maximise their own performance, while working together in the firm’s best interests. You can help students experience individual and team-based compensation by giving a quiz individually and then giving the
same quiz to teams of students, with each student’s grade to bean average of the two scores (let the students decide what percentage of their quiz grade is determined by the team quiz score. The team quiz score is usually better than the scores of individual members, which demonstrates the advantages of working in teams. Students also learn by trying to convince each other of the best answers and ill-prepared students maybe embarrassed into preparing better in the future.
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