ACCA Paper 1.3 Managing People 2006 Question1

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Managing People




Time allowed

3 hours

This paper is divided into two sections

Section A

This ONE question is compulsory and MUST be


Section B

FOUR questions ONLY to be answered

Do not open this paper until instructed by the supervisor

This question paper must not be removed from the examination


The Association of Chartered Certified Accountants



Section A – This ONE question is compulsory and MUST be attempted

1 Bailey’s is a large toy manufacturer based in a traditional industrial region. Established in the 1970s, it has faced

many changes in the market and survived. This has been due in part to employing a largely unskilled low paid staff, and maintaining its main advantage, that of low production costs based on low pay. Most of the production involves repetitive and boring work with little challenge and opportunity for innovation. Although many of the employees have been with the company for some time, there has been a high level of employee turnover.

However, an unhappy atmosphere has been apparent for some time. There has been a number of instances of arguments between the staff, friction between different departments, disturbance, low morale, poor production and general unrest, made worse recently by a decline in business which may lead to staff reduction and redundancy. Poor pay is leading to family problems that are affecting the commitment and motivation of the employees.

The business was recently sold to the new owner, Rebecca Stonewall. She is concerned that the negative atmosphere she has found will harm the prospects of the business and is determined to address the issues that have become apparent.

She has therefore decided that it is time to take account of opinions and views of the employees in an attempt both to identify the problems and to resolve them. She has appointed external counsellors since she thinks that a programme of individual counselling might be appropriate and is also of the opinion that some form of different or improved approach to motivation might be the answer to the problems at Bailey’s.


(a) Define the role that the external counsellor must fulfil at Bailey’s. (3 marks)

(b) Describe the skills that a counsellor should possess. (14 marks)

(c) Briefly describe three advantages to Bailey’s of counselling. (3 marks)

(d) Explain to the management of Bailey’s why consideration should be given to resolving the problems through: (i) job rotation; (5 marks)

(ii) job enlargement; (5 marks)

(iii) job enrichment. (5 marks)

(e) Briefly provide five reasons to the management of Bailey’s why financial rewards could be considered to improve motivation. (5 marks)

(40 marks)


Section B – FOUR questions ONLY to be attempted

2 Traditionally, the only objective of a business was to make a profit. However, some writers have suggested that this

idea is simplistic and that profitability is only one objective amongst many.


State and explain Drucker’s eight classifications of objectives.

(15 marks)

3 An organisation has decided to compare the benefits of promoting existing staff with those of appointing external

candidates and to assess whether the use of external recruitment consultants is appropriate.


(a) Describe the advantages of internal promotion. (5 marks)

(b) Describe the advantages of external recruitment. (5 marks)

(c) Briefly describe five factors to be taken into account when deciding whether to use recruitment consultants.

(5 marks)

(15 marks)

4 A properly conducted appraisal interview is fundamental in ensuring the success of an organisation’s performance

appraisal system.


(a) Describe three approaches to conducting the appraisal interview. (5 marks)

(b) Describe five main barriers to an effective appraisal interview. (10 marks)

(15 marks)

5 All managers need to understand the importance of motivation in the workplace.


(a) Explain the ‘content theory’ of motivation. (5 marks)

(b) Explain what is meant by McGregor’s

(i) Theory X; (5 marks)

(ii) Theory Y. (5 marks)

(15 marks)


6 Communication is important for all organisations and requires an understanding of communication flows and channels.


(a) Briefly explain the main purposes of the three main formal communication channels in an organisation: (i) Downwards; (3 marks)

(ii) Upwards; (3 marks)

(iii) Lateral or horizontal. (3 marks)

(b) Briefly explain the two types of informal communication known as the grapevine and rumour. (6 marks)

(15 marks)

End of Question Paper





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