ADMS 1000 Lecture 2: Session-2-Management-Challenges

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chocolatecrocodile755

10 Dec 2016

School

York University

Department

Administrative Studies

Course

ADMS 1000

Professor

Paulette Burgher

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ADMS 1000 Full Course Notes

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Independent contractors usually determine the hours they work and the manner in which the work is performed, they can also hire others to perform the work. Employees are usually told when and how to do the work and is under supervision of some sort. Independent contractors take the risk of nonpayment of bills by customers, loss of customers, as well as the potential profits. Employee is usually paid their wages regardless if a customer pays their bills, but they usually do not share directly in profits. Degree to which the worker performs an essential service for an organization: Independent contractors could be perceived as being hired to perform an inessential task to the orga(cid:374)izatio(cid:374)"s (cid:271)usi(cid:374)ess (cid:894)e(cid:454)a(cid:373)ple: a perso(cid:374) (cid:449)ho is retai(cid:374)ed to (cid:272)ut the grass o(cid:374)(cid:272)e a (cid:373)o(cid:374)th(cid:895) Employees are usually person who performs and important task for the organization (example: a chemist is more likely to be perceived an employee of a chemical company)

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Part 1: The Paint Shop (20 points)

The Rookery Company, a large financial services organization,owns and occupies many facilities including a property that islisted on the National Register of Historic Places. Rookerymaintains a Paint Shop. The Paint Shop employs a dozen peopleincluding painters who are especially skilled.

Department executives in the various divisions of Rookery havethe decision rights regarding the choice of painters they engage.At Rookery, it has never been the case that all painting is done bythe in-house Paint Shop. Over the years outside paintingcontractors have been hired in various circumstances. For example,outside contractors were brought in for some major projects andwhen the Paint Shop was overwhelmed or not equipped to tacklejobs.

The Paint Shop is organized as a profit center as are all of theunits of Rookery that would engage the Paint Shop to providepainting services. When a department needs painting work, they cancontact the paint shop for an estimate. If the Paint Shop contractsto do the work, Rookeryâs accounting department charges an expenseagainst the profit of the department requesting the work andcredits the revenue of the Paint Shop. The Paint Shop is a captivesupplier, that is, the paint shop does not do work for anycustomers outside of the Rookery Company.

Department heads have not always been pleased with theturn-around times of the in-house Paint Shop. Also, some in-housecustomers have been displeased with the price charged and theattitude of some of the staff members in the Paint Shop. As aresult, department heads have increasingly been turning to outsidepainters instead of using the Paint Shop.

The CFO noticed the falling revenues and the resulting fall inprofits of the Paint Shop. They are a high fixed cost unit. Inresponse the CFO sent memos to the department executives who havedecision rights over painting contracts to strongly urge them toalways give the Paint Shop the ârightof-first-refusalâ wheneverpainting work needs to be done.

The CFO is a strong supporter of the Paint Shop and believesthat Rookery needs to maintain the inhouse paint shop. However, hisrepeated requests to the department executives to use the PaintShop have not succeeded in creating work. To be candid, many jobsare being out-sourced to independent contractors and it appearsthat the CFOâs memos are being ignored. In fact, the Paint Shopâsrevised pricing structure necessitated by the need to raise pricesto improve their bottom line has only aggravated theirsituation.

The CFO is angry. At best he feels ignored, at worst he regardsthe decision of Rookery units to use outside painters as a disloyalact. But, the CFO lacks authority to require the departmentalexecutives to use the Paint Shop. If he had the authority, he wouldrequire every department within the company to use the Paint Shopunless he decides that for some reason the Print Shop is not ableto do the work.

To put an end to the practice of Rookery units selecting outsidepainting contractors, the CFO has recently communicated to theoutside painting contractors who have been doing most of the workfor Rookery units. He indicated that he does not want the outsidecontractors to accept painting work from any Rookery departmentthat he has not authorized. Of course, the CFO will not authorizeany work to go to outside contractors unless the Paint Shop isunable to complete the work.

The consequence to an independent contractor of performing worknot authorized by the CFO as outlined by the CFO is that whenRookery does need to employ an outside contractor for a majorproject the CFO will remember those who are his friends and thosewho did cooperate with his wishes. Of course, the CFO has access toall invoices making it a simple task to identify any who do notcomply with his wishes.

Required:

1. (10 points) Speculate on why the department heads areignoring the CFOâs wishes with regards to using the services of thePrint Shop.

2. (10 points) When the volume of work declined at the PaintShop, to maintain profitability the Paint Shop increased bidprices. The increase in bid prices resulted in further decreasingthe number of jobs the Paint Shop was winning and the spiralcontinued downwards. This is an illustration of what some refer toas the âdeath spiral.â What other responses could the Paint Shop incollaboration with the CFO have made to feedback received withinthe management control system when the Paint Shop was no longercompetitive with outside contractors? Also, speculate on why itseems to be the case that the leadership of the Paint Shop did notinitiate any of the responses you discussed. Be certain to give acomprehensive response.

Based on following text in your own words, list anddefine the four categories of employment income,providing an example (other than regular pay) foreach category.

Employment Income

An individual working for an employer receives compensation orpay, known as remuneration, for the services they perform. Where anemployee-employer relationship exists, remuneration is referred toas employment income. Employment income can be categorized intoearnings, allowances, benefits and taxable expensereimbursements.

Earnings

Earnings are dollar amounts the employer pays an employee forthe work they perform. Earnings can be paid as:
Â· a salary
Â· a rate for each hour worked
Â· a rate per piece of goods produced or picked
Â· a disability payment for time off work due to illness
Â· a payment for vacation time
Â· a premium payment for overtime hours worked
Â· a premium payment for hours worked on shift

Deciding which types of earnings are paid and how they arecalculated is primarily a decision made by the employer. Earningsare pensionable, insurable and taxable, and therefore subject toall statutory deductions.

Allowances

Allowances are additional dollar amounts paid to employees forthe use, or anticipated use, of their personal property forbusiness purposes. Allowances can also be provided to employees tocover the cost of personal living expenses associated withemployment. The most common types of allowances cover the costsincurred by the employee for car, meals, uniforms, safety shoes orother particular types of clothing for business reasons. Undercertain conditions, allowances are not considered employment incomeand therefore are not subject to statutory withholdings.

Benefits

Benefits are dollar values attributed to something the employerhas either provided to an employee or paid for on an employeeâsbehalf. Usually, when an employer provides an employee withsomething (for example, a company-leased automobile is given to theemployee for both business and personal use) or pays for somethingon an employeeâs behalf (for example, group term life insurancepremiums), it results in a benefit to the employee. There arecertain situations where benefits are not included in employmentincome and therefore are not subject to statutory withholdings.

Expense Reimbursements

Similar to allowances, expense reimbursements are also dollaramounts paid to employees to cover expenses that they incur whileperforming their job. For the most part, expense reimbursementsgenerally fall outside of payroll because they are business-relatedand therefore not employment income to employees. These expensesare claimed on an expense report, supported by receipts, andusually submitted directly to the accounting department forreimbursement. As such, they are not considered in the calculationof an employeeâs pay. Some organizations choose to reimburseexpenses through payroll in which case they are not subject to anystatutory deductions; they will, however, affect the net pay. Anyreimbursements made to an employee for personal living expenses areconsidered taxable to the employee, included in income and subjectto statutory withholdings.

business law

QUESTION 18

Partnership property:

	a.	is always personal property.
	b.	is owned by the partners as tenants in partnership.
	c.	can be pledged to a partner's personal creditor.
	d.	all of the above

3.572 points

QUESTION 19

Under apparent authority:

	a.	a principal is never liable for the acts of an agent.
	b.	a principal is liable for creating the appearance of an agency relationship.
	c.	there is no agency relationship.
	d.	none of the above

3.572 points

QUESTION 20

Religious discrimination is lawful if:

	a.	a church is looking for a pastor.
	b.	the person's religion prevented them from working a certain shift.
	c.	the religious beliefs will interfere with effective work.
	d.	none of the above

3.572 points

QUESTION 21

The business judgment rule holds directors liable for:

	a.	errors in business judgment.
	b.	their mistakes.
	c.	failure to obtain necessary information for making decisions.
	d.	none of the above

3.572 points

QUESTION 22

OSHAâs enforcement powers include:

	a.	Research
	b.	Investigations
	c.	Record-keeping requirements
	d.	All of these answers

3.572 points

QUESTION 23

Which is not an example of an independent contractor relationship?

	a.	master/servant
	b.	lawyer/client
	c.	accountant/client
	d.	All of the above are not independent contractors.

3.572 points

QUESTION 24

The Americans with Disabilities Act:

	a.	applies to all employers.
	b.	limits the impact of the Rehabilitation Act.
	c.	applies only to government contractors.
	d.	prohibits the use of tests that screen out handicapped workers.

3.572 points

QUESTION 25

Under workersâ compensation:

	a.	the employee loses the right to sue the employer for covered incidents.
	b.	employee fault controls compensation.
	c.	injuries by other employees are not covered.
	d.	None of these

3.572 points

QUESTION 26

Which of the following is not one of the benefits provided by workersâ compensation:

	a.	Hospital and medical expenses
	b.	Full wages
	c.	Partial wages
	d.	Death benefits

3.572 points

QUESTION 27

A partnership by estoppel:

	a.	is the same as a partnership by implication.
	b.	results when third parties are led to believe a partnership exists.
	c.	is the same as a joint venture.
	d.	none of the above

3.572 points

QUESTION 28

A shareholder proxy is:

	a.	good until revoked.
	b.	not subject to any securities laws.
	c.	a transfer of a right to vote.
	d.	none of the above

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ADMS 1000 Lecture 2: Session-2-Management-Challenges

ADMS 1000 Full Course Notes

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