Monday, March 14, 2011

Disciplinary and grievance procedures by R Das Gupta

Disciplinary and grievance procedures

by S R Das Gupta
31 Jan 2001

This article is written specifically for Certified Accounting Technician students preparing for Paper C6 (Managing People). Students are required to answer any four (out of five) questions, each question carrying 25 marks.
This article will focus on disciplinary and grievance procedures in two sections. In the first section, we will cover various aspects of ‘discipline’. The second section will discuss different issues on ‘grievances’.

Section 1


Discipline may be defined as a safe, healthy and orderly working atmosphere created by the employees with appropriate behaviour and proper attitude and who are following all company rules and policies in an efficient manner.

A past question

There was a whole question on ‘discipline’ in the June 1999 sitting which is reproduced in Figure 1. We will make reference to it later in the article to illustrate some of our points.

Disciplinary actions

Normally in any organisation there will be a set of rules that need to be followed by the employees to ensure the smooth running of its business. Such rules will prescribe what may or may not be done by the employees during the course of their employment. All these rules are implemented not only for meeting company objectives but also to ensure a safe working environment for the employees.
It would be an ideal situation if all rules were always properly followed by all employees. In reality, however, the situation may not be so perfect. There may be occasions of non-compliance, instances of abnormal behaviour or existence of attitude problems. Disciplinary actions are then taken to stop recurring non-compliance and improve the situation. In serious cases, disciplinary proceedings may also be necessary to punish an errant employee. In section (a) of Figure 1, 5 marks were allocated for explaining ‘discipline’.

Figure 1
The accounts manager understands the need to motivate employees, but 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?
(5 marks)
(b) Provide examples of situations where disciplinary action may be required.
(8 marks)
(c) Describe the steps involved in a formal disciplinary procedure.
(12 marks)

(25 marks)

Consideration for disciplinary actions

Different organisations may have different rules for disciplinary action. Certain employee actions are sure to attract disciplinary proceedings although the level of punishment may differ from organisation to organisation. Severity or seriousness of the infraction is the key factor to decide actual disciplinary action. The more serious the infraction, the more severe the punishment would be. Unless it is a serious offence, the employee’s past performance records would also be taken into consideration before deciding on disciplinary action.
In finalising any disciplinary action, the following key principles must be followed:
·  disciplinary proceedings should be based on facts and not hearsay;
·  affected employees must be given all reasonable opportunity to explain and defend (if necessary) his/her action. Final action can only be taken after such explanation/defence has been given due consideration by the management;
·  no employee should be punished more than the infraction warrants;
·  personal bias against an employee should not be used to influence disciplinary action.

Situations requiring disciplinary actions

To save some time in the examination hall, students should remember some of the incidents that would invariably result in disciplinary actions. Please refer to section (b) of Figure 1, where 8 marks were allocated for providing 8 such examples. It is not possible to compile a comprehensive list of all such actions, however we have listed sixteen instances which may be remembered easily from the acronym:
Sleeping while on duty
Threatening co-workers
Refusing to perform assigned duties
Conviction of criminal offence
Tarnishing company image
Infraction of company policies
Safety procedures ignored
Carrying out illegal/immoral activities in company premises
Irregular attendance
Poor performance
Improper behaviour
Negative attitude

Steps taken in disciplinary action

Some countries may have labour laws stipulating the exact steps to be followed when disciplinary actions are necessary. In the absence of any such legal requirement, organisations are at liberty to develop their own internal policies.
Generally such actions are taken in steps to provide the employee an opportunity to rectify the situation. However, the severity of the offence is the key factor in deciding whether the employee is entitled to such progressive steps or if drastic action is necessary. In more serious cases, management will obviously start proceedings at a higher step commensurate with the offence/non-compliance. As an example, management may decide to immediately discharge an employee found to have stolen company property.
Usually the steps are as follows:
(a) Informal discussion. Direct communication between employee and supervisor to highlight and resolve the issue.
(b) Verbal warning/reprimand. Here the supervisor clearly explains the problem and makes it clear to the employee that more serious disciplinary action will follow if it is not corrected within a specified time. (It is important to note that steps (a) and (b) are not documented in company records.)
(c) Official warning. A written warning is issued to the employee.
(d) Suspension or lay-off. If an official warning does not improve the situation, the employee may be placed on suspension (temporary lay-off) for a specific period, without pay.
(e) Demotion. The employee is downgraded to a lower position usually associated with a reduction in pay.
(f) Discharge. The final action comes in the form of retrenchment when the employee is terminated from the company. (Actions under steps (c) to (f) are appropriately documented and a copy is placed in the employee’s personnel file.)
Students should note that 12 marks were allocated in section (c) of Figure 1 for describing these steps. An accounting supervisor should be fairly familiar with company policy on disciplinary matters. With efficient handling of such matters, the supervisor should not only resolve the issue for the company but also earn respect from the rest of the employees.

Section 2

What is grievance?

Disciplinary proceedings are the result of employees not following rules and regulations or not performing according to standards set by the company. The reverse situation is also possible when an employee feels that he is being treated unfairly or inequitably. His grievances may arise due to many factors such as inappropriate interpretation of rules, unfair treatment, personal grudge, non-recognition of work performance, etc.
Unless the employee’s grievance is addressed from the very beginning, it can be a constant source of worry and anger for the employee which in turn may impact on his work performance. Disgruntled employees may be a source of danger not only to the organisation but also to the other employees in the organisation. Such an employee can also cause nuisance value to the company. Therefore grievances should be addressed and resolved at the earliest opportunity.

Management responsibility

Managers should be extremely sensitive in handling grievance situations. Every case of grievance must be treated as an opportunity to improve the working environment and not viewed as a nuisance created by an employee. A clearly defined grievance policy should exist in every organisation. The policy should be made available to all employees.
The policy should allow the employee complete freedom to air his grievances to different levels of management. It should also provide for a fair hearing with assurance of complete privacy where necessary. No action should be taken against the employee simply based on hearsay or unconfirmed reports.
In summary, a grievance policy should be seen by the employees as a right to express their complaints, unhappiness or disputes. This is also their opportunity to work towards prompt and orderly resolution of such issues.

Key principles

In developing a grievance policy the following considerations must be given:
·  employees must be accorded at all times an open-door policy without any fear;
·  reasonable opportunity must be provided for the employees to adequately express their grievance(s);
·  if desired by the employees, permission should be given to be accompanied by a labour union or other representative;
·  every employee must be given adequate opportunity to pursue his case until a satisfactory resolution is reached;
·  specific time limit must be set for a fair and equitable resolution.

Grievance policy

As a start, the employee should contact his immediate supervisor who should endeavour to amicably resolve the issue. Most grievances can be settled by open, effective and regular communication between the employee and his supervisor. If, unfortunately, the immediate supervisor’s efforts do not satisfy the employee, he should have the right to approach higher levels of management for assistance. Because of the high importance placed on the employee-supervisor relationship to resolve grievances, it is critical that the manager makes his best efforts to first understand and then resolve the complaint. To do this, he must first arrange an interview with the employee. His role in such an interview is usually three-fold:
1 Exploration: to obtain all the details of the complaint with relevant and complete facts and related information.
2 Consideration: to analyse all available information and determine different options available to address the issue;
3 Resolution (response): to arrive at a final decision and communicate same to the employee.
The supervisor’s final resolution should be documented for reference in future actions, if any. If the employee is not satisfied with this resolution and decides to pursue the matter with higher authorities, this documentation would serve a key role in future proceedings.

Figure 2
A grievance occurs when an individual thinks that he or she has been wrongly treated by colleagues or supervisor. An unresolved feeling of grievance often leads to further problems for the organisation. The purpose of a procedure is to resolve the grievance to the satisfaction of all concerned.
(a) Briefly describe what should be in an organisation’s grievance procedure.
(13 marks)
(b) Describe three stages in a grievance interview within an organisation.
(12 marks)

(25 marks)

Reproduced in Figure 2 is a question on grievances from the December 1999 sitting. By reading this article, students should be able to answer both sections (a) and (b) comfortably.
In this question, students were not asked to give examples of “further problems” that unresolved grievances may lead to. It is difficult to compile a comprehensive list of potential problems but the following are some of the key dangers that may seriously DISRUPT normal operations of the organisation:
Divulge sensitive information to competitors and external business associates/destroy company records/damage company properties
Instigate fellow workers to engage in undesirable activities
Spread damaging and/or false rumours against the company
Resort to inappropriate behaviour and/or unacceptable attitude
Use company assets for personal benefits
Purposely slow down business activities
Tamper with safety/security equipment


The impact of employee grievances may have a significant and long-lasting negative impact on the organisation. The impact may be even more severe if it is a collective grievance i.e., several employees share the same concern. To avoid any such problem, the manager must handle all cases of grievances with speed and sensitivity. He should not underestimate the situation until it has been resolved to the complete satisfaction of employee(s) and management.

Data and information by Philip Dunn

Data and information

by Philip Dunn
01 Mar 2002

Accounting Technicians studying Paper B3 Information Technology Processes need to develop knowledge and understanding of the operation of systems and procedures found within an information technology environment. Item (b) in the content elements of the syllabus includes the following reference to information: "attributes of information, data versus information, quality – reliability, accuracy, consistency, completeness and brevity".
The purpose of this short article is to define both data and information, consider the information hierarchy within organisations and outline the attributes of quality information. It may also be of interest to Professional Scheme students studying Paper 2.1 Information Systems.
Data and Information
The terms 'data' and 'information' are commonly used interchangeably but they can be distinguished from each other.
Data is defined as the raw material for data processing and relates to facts, events and transactions.
Data can also be classified as:
  • quantitative;
  • qualitative;
  • discrete;
  • continuous;
  • primary;
  • secondary.
Quantitative data is that capable of being measured numerically, e.g. the standard labour hours required to produce one unit of output.
Qualitative data is that not capable of being measured numerically but may reflect distinguishing characteristics, e.g. the grade of labour used to produce the unit of output.
Data is said to be discrete when it can only take on specific fixed values, e.g. the actual number of vehicles through a car wash per day could be 35 but not 35.3. Whereas continuous data takes on any numerical value and we could, in an eight hour day, measure the throughput of cars as 4.375 per hour i.e. 35 cars / 8 hours.
Data needs to be collected and summarised to the form required by the user.
Primary data is collected for a particular enquiry, for example by observation, employees would be observed performing a 'value adding' activity when establishing a standard time for the activity.
Data collected by a trade association from a number of firms and comprising trade association statistics would become secondary data when used by a firm in the sector making an enquiry of its own.
What then is the distinction between data and information?
Information is defined as 'data that has been processed in such a way that it is meaningful to the end user'.
Within organisations information has a defined hierarchy. This is shown in Figure 1.
Figure 1

Information is classed as:
  • Strategic � that information relating to the longer term planning and strategic focus of the business.
  • Tactical � that used in short term planning and decision making within an organisation.
  • Operational � that relevant to day-to-day decision making.
  • From bottom up, the following example refers to capital equipment utilisation:
  • Operational information would include a current week�s report for a cost centre on the capacity of the plant utilised in the period. Such a measure may include:
actual machine hours   x   100
budgeted machine hours    1
i.e. the percentage capacity utilised.
Tactical information could include the short-term budget for 12 months and would show the budgeted machine utilisation in terms of machine hours for each item of plant. The total machine hours being predetermined from the production budget for the period.
Strategic Information would relate to the longer- term strategy on the company�s market share, which in turn informs the production plan. This plan would be used to predetermine the level of investment required in capital equipment in the longer term. This process which 'compels planning' would lead to investigating new methods and technology.
Attributes of Information
Quality information is that, which when used, 'adds value'. Research suggests that information should possess numerous attributes which include:
  • relevant for its purpose;
  • complete enough for the issue in question;
  • accurate for the purpose;
  • from a reputable source;
  • communicated to the right person;
  • timely in communication;
  • communicated in an appropriate channel;
  • the volume should be manageable;
  • must be understandable by the end user;
  • must be cost effective.
The attributes which 'add value' and together underpin quality of information are examined further below.
Relevant for purpose
Information should always be relevant to the issue being considered. It is often the case that memos, reports and schedules contain irrelevant sections which can have an adverse effect on the understanding of the issue by the user.
It is desirable that all information required for decision making is made available. There must be close co-operation between the information provider and the end user. Therefore, all factors influencing decision making should be included.
Accurate for purpose
Managers rely on information to effectively manage their 'value-adding' activities. For example, to satisfy the VAT regulations, a VAT invoice must be accurate to the nearest penny. However, the aged debtors list would contain rounding to the nearest '£'.
Reputable source
For information to be used effectively by managers, the users must have confidence in its source.
This would be supported by the fact that the source was reliable in the past and that there is a good and clear channel of communication between the provider and the user of the information.
Communicated to the right person
Where responsibility accounting is used in practice, managers have a clear and defined level of responsibility and must achieve their predetermined objectives.
Managers should therefore receive information to carry out their defined tasks. Such information should be communicated to the right person at the right level within the organisation.
For effective decisions to be taken, information needs to be reported to management on a timely basis.
For example, a budgetary control or standard costing report containing adverse variances would need to be timely for managers to take immediate corrective action. Likewise if a favourable position was reported 'late', the reward and recognition to employees may be delayed and effect morale.
Communicated in an appropriate channel
For a manager to use information effectively it must be transmitted in the communication process. The process takes many forms and the channel selected must take account of nature, purpose, speed and requirement of the user.
The detail and volume of the information communicated should be that consistent with the need of the user.
The information should focus clearly on the issue and the main points highlighted and not 'clouded' by superfluous and excessive volume.
Managers can only use information to good effect if they understand its purpose.
The level and skill of the manager is important here. Managers need to continually update their skills and therefore, Continuing Professional Development (CPD) is important. For example, for managers to fully understand their role in a responsibility accounting environment and to interpret the management accounting reports they need training.
"Training aids understanding."
The provider also needs to choose the style and language appropriate to the user.
The costs of providing the information must not outweigh the 'value-added' benefits derived from its use.
An understanding of the underpinning knowledge, principles and concepts outlined above are all relevant to your development as trainee accounting technicians � the providers of information for the effective financial management of business.
Dr Philip E Dunn, Esk Valley Business School

communication is not just sending messages or e-mails, or indeed producing management reports or final accounts : John Bell


by John Ball
03 Nov 1999

"What do accountants do?" How many times have ACCA students been asked that question? The answer, of course, is that accountants, and accountancy, is about communication. But communication is not just sending messages or e-mails, or indeed producing management reports or final accounts. It is about understanding the nature of the communication process, especially for the management of people. If people do not communicate then the accountant’s work can never be complete.
Central to the communication process are two fundamental elements of management — understanding the nature of the organisational structure, and the way in which communication flows within that structure. Take the idea of the organisational structure first of all. Everyone knows what an organisation chart is; every accounting practice, factory, shop and office proudly displays such a chart. But what message is it intended to convey?
The organisation chart describes in diagramatic form the structure of the organisation. It is the skeleton upon which every other activity depends, more importantly, it is the framework which explains the communication process. It illustrates to everyone who communicates with whom, how the control system works, who is in control, who has authority and above all, who is responsible. It explains how the organisation is co-ordinated and how individual departments relate. Formal structures are often based on specific tasks, and it is how these tasks are allocated and the authority which they carry which is explained by the organisational structure.
A business organisation may be structured in many different ways, depending upon the environment within which it operates. Traditionally, the structure — and therefore the communication process — is based upon individual departments, although more and more organisations now see the product and the market as more fundamental to structure than individual departments. There are, however, always problems with any communication system. Traditional organisations based on departments often tend to be bureaucratic and slow in distributing information, whilst organisations which are informal and often more aware of the external environment sometimes lack the formality and control of the traditional organisation.
In more formal organisations, especially accounting practices, the organisation chart defines the way that communication and work flows through the organisation. The typical organisation chart assumes a hierarchical structure, reflecting communication flowing downwards from top management to the departments further down the organisation. But of course communication also flows in reverse, instructions received from above have to be acted upon and reported. However, in many modern organisations where conventional communication structures either do not exist or are less formal, communication tends to be horizontal between individuals and departments, rather than the upward or downward flow assumed by so many to be the normal case. Whichever structure is adopted, problems of communication will always occur.
There are, of course, other forms of communication. Teams are very much a modern form, but the role of the committee is still important, again especially within the formal structures of accounting. This is, of course, why committees are still important; because of their formality. Unlike teams (which are often established to tackle individual problems or projects), committees are often permanent, have authority and provide a fixed opportunity to resolve conflict and promote cooperation between departments. They follow well established procedures and provide a well tried way of resolving difficult decisions because all individuals and departments are formally involved in the decision-making process.
Internal communication is not the only form of communication. All organisations interact with the environment, and in people management terms a particular and unique form of external communication arises when new employees are required. How are new employees found? Specialists, such as accountants, may be sought through advertising in specific professional journals, whilst unskilled production operators might be sought through the local employment system or government agency. Whatever new employees are required or whatever recruitment medium is used, the recruiting organisation must ensure that information about the vacancy is clear, concise and positive — and that the organisation itself knows what it requires of the new employee. Employees cost a great deal of money, and if the communication is incorrect or inappropriate the wrong employee can be expensive!