3562350923925Management Control System of the Bank of South Pacific in Fiji SENIANA BOSE ID# 2016137825 360000Management Control System of the Bank of South Pacific in Fiji SENIANA BOSE ID# 2016137825 centercenter950009500044000332613025002667004000070000455003439795690007377430370000 Contents TOC o “1-3” h z u 1

3562350923925Management Control System of the Bank of South Pacific in Fiji
SENIANA BOSE
ID# 2016137825
360000Management Control System of the Bank of South Pacific in Fiji
SENIANA BOSE
ID# 2016137825
centercenter950009500044000332613025002667004000070000455003439795690007377430370000
Contents
TOC o “1-3” h z u 1.0Introduction PAGEREF _Toc520203771 h 22.0Historical Background – The Management Control System PAGEREF _Toc520203772 h 22.1Management and Management Control PAGEREF _Toc520203773 h 32.1.1Merchant’s Management Control Alternatives PAGEREF _Toc520203774 h 42.2Control system tightness PAGEREF _Toc520203775 h 53.0Management Control Systems in Commercial Banking Sector PAGEREF _Toc520203776 h 64.0Historical Background of the Bank of South Pacific PAGEREF _Toc520203777 h 64.1Management Control System of the Bank of South Pacific in Fiji PAGEREF _Toc520203778 h 74.1.1Management Control System for Selection of Employee PAGEREF _Toc520203779 h 84.1.2Generic Strategy PAGEREF _Toc520203780 h 84.1.3Marketing of New Services PAGEREF _Toc520203781 h 84.1.4Target Setting Practice PAGEREF _Toc520203782 h 84.1.5Performance Measurement PAGEREF _Toc520203783 h 84.1.6Reward System PAGEREF _Toc520203784 h 94.1.7Encouragement to Employees to Learn New Skills PAGEREF _Toc520203785 h 94.1.8Cooperation PAGEREF _Toc520203786 h 94.1.9Combination of Merchant’s Control Alternatives PAGEREF _Toc520203787 h 95.0Conclusion PAGEREF _Toc520203788 h 10References PAGEREF _Toc520203789 h 12 TOC h z c “Figure”
Figure 1. Management Control System of the BSP Fiji PAGEREF _Toc520203890 h 7

IntroductionThis paper analysed the management control system of the Bank of South Pacific (BSP) operations in Fiji. Commercial banking sector in Fiji is competitive. Most commercial banks in Fiji have customer retention on its top priority like any other commercial banks around the world. The Bank of South Pacific as a commercial bank encouraged their employees to upgrade their knowledge and skill. The working environment was also congenial in Fiji commercial banks; therefore, management control systems were essential tool to help BSP management to steer the organization towards its strategic objectives. Designing and implementing an appropriate management control system based on Fiji’s multicultural system could improve both the short and long-term performance of BSP Banking company. This would make BSP more efficient and cost effective in extending banking services to all the customers. However, future research needs to examine the relationship between management control system and effectiveness of BSP operations in Fiji.

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Historical Background – The Management Control SystemThe need for management control arose after the Industrial Revolution and gave companies the opportunity of greater growth and expansion than what had been possible earlier. Larger parts of the value chain were situated within these new and greater companies instead of being spread on different locations in smaller companies or single persons. After these great changes, companies started to require financial measures as business ratios and transfer pricing, and from that point the development of different types of management controls and accounting controls began ADDIN ZOTERO_ITEM CSL_CITATION {“citationID”:”qLYRkaW5″,”properties”:{“formattedCitation”:”(Johnson & Kaplan, 1987)”,”plainCitation”:”(Johnson & Kaplan, 1987)”,”noteIndex”:0},”citationItems”:{“id”:359,”uris”:”http://zotero.org/users/4779914/items/9XUIM96N”,”uri”:”http://zotero.org/users/4779914/items/9XUIM96N”,”itemData”:{“id”:359,”type”:”article-journal”,”title”:”Relevance lost: the rise and fall of management accounting”,”source”:”Google Scholar”,”shortTitle”:”Relevance lost”,”author”:{“family”:”Johnson”,”given”:”Thomas H.”},{“family”:”Kaplan”,”given”:”Robert S.”},”issued”:{“date-parts”:”1987″}}},”schema”:”https://github.com/citation-style-language/schema/raw/master/csl-citation.json”} (Johnson ; Kaplan, 1987).

The Dupont Company was often considered to be the inventor of the modern management control ADDIN ZOTERO_ITEM CSL_CITATION {“citationID”:”5FSpGc9B”,”properties”:{“formattedCitation”:”(Kaplan, 1984)”,”plainCitation”:”(Kaplan, 1984)”,”noteIndex”:0},”citationItems”:{“id”:361,”uris”:”http://zotero.org/users/4779914/items/BPSE4WSR”,”uri”:”http://zotero.org/users/4779914/items/BPSE4WSR”,”itemData”:{“id”:361,”type”:”chapter”,”title”:”The evolution of management accounting”,”container-title”:”Readings in accounting for management control”,”publisher”:”Springer”,”page”:”586–621″,”source”:”Google Scholar”,”author”:{“family”:”Kaplan”,”given”:”Robert S.”},”issued”:{“date-parts”:”1984″}}},”schema”:”https://github.com/citation-style-language/schema/raw/master/csl-citation.json”} (Kaplan, 1984). In the early 1900s, DuPont decided to organize itself by dividing the organization into separate functions, e.g. manufacturing, sales and purchasing. Every single one of these functions had their own manager who could be very specialized in how to manage the specific function. Hence, the senior managers did not have to be involved much in those activities and could fully focus on things as long- term strategies. It was this type of decentralized organization that made Dupont realizes that they needed a performance measurement system. They launched a new accounting measure, return on investment (ROI), because they thought it would be more accurate to use than the old measures which measured earnings and profits as a percentage of sales or costs. Dupont along with General Motors are considered as the pioneers in this area and were also involved in creating different types of decentralized organizations, budgeting and planning cycles ADDIN ZOTERO_ITEM CSL_CITATION {“citationID”:”H4LRpyq0″,”properties”:{“formattedCitation”:”(Kaplan, 1984)”,”plainCitation”:”(Kaplan, 1984)”,”noteIndex”:0},”citationItems”:{“id”:361,”uris”:”http://zotero.org/users/4779914/items/BPSE4WSR”,”uri”:”http://zotero.org/users/4779914/items/BPSE4WSR”,”itemData”:{“id”:361,”type”:”chapter”,”title”:”The evolution of management accounting”,”container-title”:”Readings in accounting for management control”,”publisher”:”Springer”,”page”:”586–621″,”source”:”Google Scholar”,”author”:{“family”:”Kaplan”,”given”:”Robert S.”},”issued”:{“date-parts”:”1984″}}},”schema”:”https://github.com/citation-style-language/schema/raw/master/csl-citation.json”} (Kaplan, 1984). In an article from 1984, Kaplan discussed what had happened in the development of the area from 1925 to that point. He considered that not as much as expected had happened between 1925 and 1984. Of those new ideas that had been presented, many were just academic theories which had little or no influence on the real organizations, who should be the beneficiaries.

As of today, the opposite problem from what Kaplan said in 1984 could be spotted. Today there were almost too many choices in accounting and management control, and they are not as well studied as the older theories and tools ADDIN ZOTERO_ITEM CSL_CITATION {“citationID”:”LsWoKvo9″,”properties”:{“formattedCitation”:”(Malmi & Granlund, 2009)”,”plainCitation”:”(Malmi & Granlund, 2009)”,”noteIndex”:0},”citationItems”:{“id”:363,”uris”:”http://zotero.org/users/4779914/items/AX9DIXXS”,”uri”:”http://zotero.org/users/4779914/items/AX9DIXXS”,”itemData”:{“id”:363,”type”:”article-journal”,”title”:”In search of management accounting theory”,”container-title”:”European Accounting Review”,”page”:”597–620″,”volume”:”18″,”issue”:”3″,”source”:”Google Scholar”,”author”:{“family”:”Malmi”,”given”:”Teemu”},{“family”:”Granlund”,”given”:”Markus”},”issued”:{“date-parts”:”2009″}}},”schema”:”https://github.com/citation-style-language/schema/raw/master/csl-citation.json”} (Malmi ; Granlund, 2009). There is also another problem with the new theories and tools, companies and organizations seem to have too much faith in them and use them in an uncritical way. They are considered as the solution of all management problems. Examples of these new theories and tools are, activity- based-costing (ABC), business process reengineering (BPR), balanced Score cards (BSC) and total quality management (TQM). These systems are often expensive to acquire and use, and companies perhaps, do not evaluate the relation between costs and benefits of the systems they use, or why they use it at all. Are they used just because they are modern, and all the competitors use it, or do they really create value for the company ADDIN ZOTERO_ITEM CSL_CITATION {“citationID”:”iyJ3tl3y”,”properties”:{“formattedCitation”:”(Siverbo & \\AAkesson, 2009)”,”plainCitation”:”(Siverbo & \AAkesson, 2009)”,”noteIndex”:0},”citationItems”:{“id”:365,”uris”:”http://zotero.org/users/4779914/items/K8VVBCGH”,”uri”:”http://zotero.org/users/4779914/items/K8VVBCGH”,”itemData”:{“id”:365,”type”:”article-journal”,”title”:”Överdos av styrning”,”container-title”:”CIO Sweden”,”page”:”32–35″,”volume”:”4″,”source”:”Google Scholar”,”author”:{“family”:”Siverbo”,”given”:”Sven”},{“family”:”\AAkesson”,”given”:”J.”},”issued”:{“date-parts”:”2009″}}},”schema”:”https://github.com/citation-style-language/schema/raw/master/csl-citation.json”} (Siverbo ; AAkesson, 2009).

Management and Management Control
Literature written on the subject, management was defined in several ways, but all have something to do with the process of allocating resources and direct activities to fulfil the organization’s overall objectives. Management was a broad subject and can be divided into smaller elements such as operations, finance, marketing/sales and product development. The management process could also be separated into smaller parts that were objective setting, strategy formulation and management control. Objective setting was a necessary process to formulate and sometimes reconsider the direction and destination of the company. If the objectives were not set it would be impossible to determine if the resources were allocated in the right way and if the right activities have been performed. Strategy formulation was the process where organization finds out how to use their resources to meet their objectives. The management processes of objectives setting, strategy formulation and management control was a process of continuum ADDIN ZOTERO_ITEM CSL_CITATION {“citationID”:”sPmuYCG7″,”properties”:{“formattedCitation”:”(Merchant & Van der Stede, 2007)”,”plainCitation”:”(Merchant & Van der Stede, 2007)”,”noteIndex”:0},”citationItems”:{“id”:367,”uris”:”http://zotero.org/users/4779914/items/97RTERPN”,”uri”:”http://zotero.org/users/4779914/items/97RTERPN”,”itemData”:{“id”:367,”type”:”book”,”title”:”Management control systems: performance measurement, evaluation and incentives”,”publisher”:”Pearson Education”,”source”:”Google Scholar”,”shortTitle”:”Management control systems”,”author”:{“family”:”Merchant”,”given”:”Kenneth A.”},{“family”:”Van der Stede”,”given”:”Wim A.”},”issued”:{“date-parts”:”2007″}}},”schema”:”https://github.com/citation-style-language/schema/raw/master/csl-citation.json”} (Merchant & Van der Stede, 2007).

Merchant’s Management Control Alternatives
According to Merchant and Van der Stede (2007) companies and other organizations have four management control alternatives; result control, action control, personnel controls and cultural controls. The process of result controls includes four steps, the first was defining the dimensions on which results were desired, the second was measuring performance on these dimensions, the third was setting performance targets for employees to strive for and the last was providing rewards to encourage the behaviours that would led to the desired results.
Result Controls
Results controls were usually used on professional employees who were able to work effectively without being told how to do things, but instead work efficiently towards targets ADDIN ZOTERO_ITEM CSL_CITATION {“citationID”:”30OaVeH8″,”properties”:{“formattedCitation”:”(Merchant & Van der Stede, 2007)”,”plainCitation”:”(Merchant & Van der Stede, 2007)”,”noteIndex”:0},”citationItems”:{“id”:367,”uris”:”http://zotero.org/users/4779914/items/97RTERPN”,”uri”:”http://zotero.org/users/4779914/items/97RTERPN”,”itemData”:{“id”:367,”type”:”book”,”title”:”Management control systems: performance measurement, evaluation and incentives”,”publisher”:”Pearson Education”,”source”:”Google Scholar”,”shortTitle”:”Management control systems”,”author”:{“family”:”Merchant”,”given”:”Kenneth A.”},{“family”:”Van der Stede”,”given”:”Wim A.”},”issued”:{“date-parts”:”2007″}}},”schema”:”https://github.com/citation-style-language/schema/raw/master/csl-citation.json”} (Merchant ; Van der Stede, 2007).
Action Controls
Action controls were somewhat the opposite of results controls, employees were told what to do and how they should do it, e.g. by rules and procedures. The difficulty with this was that the rules and procedures must be optimized, or else the employees would do everything wrong, despite their doing what they were told by their managers ADDIN ZOTERO_ITEM CSL_CITATION {“citationID”:”zPyk1ghB”,”properties”:{“formattedCitation”:”(Merchant & Van der Stede, 2007)”,”plainCitation”:”(Merchant & Van der Stede, 2007)”,”noteIndex”:0},”citationItems”:{“id”:367,”uris”:”http://zotero.org/users/4779914/items/97RTERPN”,”uri”:”http://zotero.org/users/4779914/items/97RTERPN”,”itemData”:{“id”:367,”type”:”book”,”title”:”Management control systems: performance measurement, evaluation and incentives”,”publisher”:”Pearson Education”,”source”:”Google Scholar”,”shortTitle”:”Management control systems”,”author”:{“family”:”Merchant”,”given”:”Kenneth A.”},{“family”:”Van der Stede”,”given”:”Wim A.”},”issued”:{“date-parts”:”2007″}}},”schema”:”https://github.com/citation-style-language/schema/raw/master/csl-citation.json”} (Merchant ; Van der Stede, 2007).
Personal Controls
Personnel controls refer to the assumption that employees by nature want to control themselves. Managers do not have to tell employees what to do and then monitor their every move to be sure that they do the tasks that that where intended. The assumption was that employees like to perform well for themselves and this should result in a well performing company. Unlike, or at least not as much as results and action controls, these types of controls require more careful selection of employees. Everyone has to fully qualified for the position they occupy on the organization to make it possible to use personnel control. Motivation was another important aspect to make this work; managers have to keep their employees constantly motivated. This may be achieved by training, further work-related education or different types of rewards ADDIN ZOTERO_ITEM CSL_CITATION {“citationID”:”YCSnIW0L”,”properties”:{“formattedCitation”:”(Merchant & Van der Stede, 2007)”,”plainCitation”:”(Merchant & Van der Stede, 2007)”,”noteIndex”:0},”citationItems”:{“id”:367,”uris”:”http://zotero.org/users/4779914/items/97RTERPN”,”uri”:”http://zotero.org/users/4779914/items/97RTERPN”,”itemData”:{“id”:367,”type”:”book”,”title”:”Management control systems: performance measurement, evaluation and incentives”,”publisher”:”Pearson Education”,”source”:”Google Scholar”,”shortTitle”:”Management control systems”,”author”:{“family”:”Merchant”,”given”:”Kenneth A.”},{“family”:”Van der Stede”,”given”:”Wim A.”},”issued”:{“date-parts”:”2007″}}},”schema”:”https://github.com/citation-style-language/schema/raw/master/csl-citation.json”} (Merchant ; Van der Stede, 2007).
Cultural Controls
Cultural controls rely on the ability that group to keep up the values and approaches the organization aims at. In the group organization everyone was supposed to take responsibility and care of everyone else and the peer pressure was important. The idea is that the group should motivate itself; the assignment of the managers was in this case to instruct the group in what to be motivated to do. To their help managers could use things as codes of conduct or group rewards and if the group performs well the group would receive a reward. If only group rewards were provided the individual employee would try to do his/her best to make the group perform well, instead of just caring about themselves ADDIN ZOTERO_ITEM CSL_CITATION {“citationID”:”GuhC1quE”,”properties”:{“formattedCitation”:”(Merchant & Van der Stede, 2007)”,”plainCitation”:”(Merchant & Van der Stede, 2007)”,”noteIndex”:0},”citationItems”:{“id”:367,”uris”:”http://zotero.org/users/4779914/items/97RTERPN”,”uri”:”http://zotero.org/users/4779914/items/97RTERPN”,”itemData”:{“id”:367,”type”:”book”,”title”:”Management control systems: performance measurement, evaluation and incentives”,”publisher”:”Pearson Education”,”source”:”Google Scholar”,”shortTitle”:”Management control systems”,”author”:{“family”:”Merchant”,”given”:”Kenneth A.”},{“family”:”Van der Stede”,”given”:”Wim A.”},”issued”:{“date-parts”:”2007″}}},”schema”:”https://github.com/citation-style-language/schema/raw/master/csl-citation.json”} (Merchant ; Van der Stede, 2007).

Control system tightnessThe benefit from any well-functioning management control system (MCS) was that the likelihood that the company will achieve its objectives increases. This benefit could be described in terms of MCS tightness (or looseness), where a tight MCS increases the probability that the employees will take actions that was desirable by the organization. Managers often use more than one kind of management control alternative to tighten control. Sometimes these controls overlap and sometimes they are complementary, which enables the combination of them to create tight control over all of the factors critical to the organization’s success ADDIN ZOTERO_ITEM CSL_CITATION {“citationID”:”wBDiE9TM”,”properties”:{“formattedCitation”:”(Merchant & Van der Stede, 2007)”,”plainCitation”:”(Merchant & Van der Stede, 2007)”,”noteIndex”:0},”citationItems”:{“id”:367,”uris”:”http://zotero.org/users/4779914/items/97RTERPN”,”uri”:”http://zotero.org/users/4779914/items/97RTERPN”,”itemData”:{“id”:367,”type”:”book”,”title”:”Management control systems: performance measurement, evaluation and incentives”,”publisher”:”Pearson Education”,”source”:”Google Scholar”,”shortTitle”:”Management control systems”,”author”:{“family”:”Merchant”,”given”:”Kenneth A.”},{“family”:”Van der Stede”,”given”:”Wim A.”},”issued”:{“date-parts”:”2007″}}},”schema”:”https://github.com/citation-style-language/schema/raw/master/csl-citation.json”} (Merchant & Van der Stede, 2007).

Whether a results control was tight or loose depends on the characteristics of the definitions of the desired result areas, the performance measures, and the reinforcement or incentives provided. According to Merchant and Van der Stede (2007), for management control to be considered tight in a results controls system, the results dimensions must be congruent with the true organizational objectives, the performance targets must be specific, with feedback in short time increments, the desired result must be effectively communicated and internalized by those whose behaviours were being controlled, and if results controls were given exclusively in a given performance area, the measures must be complete (PP 118 – 119). Congruence problems could exist because the management does not understand the organization’s true objectives do not reflect the organization’s true objectives ADDIN ZOTERO_ITEM CSL_CITATION {“citationID”:”OUDLHOQG”,”properties”:{“formattedCitation”:”(Merchant & Van der Stede, 2007)”,”plainCitation”:”(Merchant & Van der Stede, 2007)”,”noteIndex”:0},”citationItems”:{“id”:367,”uris”:”http://zotero.org/users/4779914/items/97RTERPN”,”uri”:”http://zotero.org/users/4779914/items/97RTERPN”,”itemData”:{“id”:367,”type”:”book”,”title”:”Management control systems: performance measurement, evaluation and incentives”,”publisher”:”Pearson Education”,”source”:”Google Scholar”,”shortTitle”:”Management control systems”,”author”:{“family”:”Merchant”,”given”:”Kenneth A.”},{“family”:”Van der Stede”,”given”:”Wim A.”},”issued”:{“date-parts”:”2007″}}},”schema”:”https://github.com/citation-style-language/schema/raw/master/csl-citation.json”} (Merchant & Van der Stede, 2007). For a result control system to be tight, the performance measures also have to be precise, objective, timely and understandable. If the performance measures used do not possess these characteristics the control system could not be considered tight since behavioural problems were likely.
Management Control Systems in Commercial Banking Sector
The banking sector serves as the main source of resource mobilization in developing economies. Commercial bank plays significant role in the economic development. Today and more precisely in future, companies, organizations (banks) and other decision-making entities whether profit making or not, will face major management challenges. Irrespective of whether the main goal of the organization is to make profit or not, it becomes necessary to institute a mechanism in those entities to control the activities of managers so that they remain on track of the proper routes as established by management. In order to keep activities of the organization in track a management control system is essential.

Historical Background of the Bank of South Pacific
The Bank of South Pacific (BSP) is the leading bank in Papua New Guinea (PNG) and has a long and proud track record of serving the needs of customers in PNG and other countries across the South Pacific with operations dated back to 1957, when it was founded in Port Moresby as a branch of National Bank of Australasia Ltd. In 1993, a consortium of PNG businesses acquired the bank and created the first and only PNG private sector owned bank at the time. In 2002, BSP merged with the state-owned PNG Banking Corporation creating the largest bank in PNG. Other acquisitions followed, including Habib Bank in Fiji in 2006, National Bank of Solomon Islands in 2007 and Colonial Bank and Colonial Fiji Life Insurance Ltd in 2009. In 2015 and 2016, BSP completed the acquisition of Westpac’s operations in Cook Islands, Samoa, Solomon Islands, Tonga and Vanuatu, significantly expanding and strengthening BSP’s geographical reach. Today, BSP continues to be a leading force in PNG and the South Pacific markets with the largest branch network and was a pioneer in bringing financial innovation and technology to the region.
The bank engaged in commercial banking and related services. The bank is currently operating through 79 branches and 52 sub-branches with target market conceits of individual client as well as number of business organization and has segment the market on demographic, psychological and behavioural style to target maximum number of segments with different varieties of products suitable for each segment. Dynamic and high value product includes Car Financing, Home Financing, Travelers Cheques, Credits Cards, Debit Cards, Online Banking, ATM and consumer Durables. In addition to this, BSP extended its services to improve access to financial services for Fiji’s rural and unbanked population. This facilitates their commitment to a culture of innovation and seeks out synergies with clients and service providers to ensure interrupted services to its customers.
Management Control System of the Bank of South Pacific in FijiThe bank perceived the requirements of customers and matches them with quality products and service solutions. During the past five years, BSP has emerged as one of the foremost financial institution in the region endeavouring to meet the needs of tomorrow as well as today. To continually upgrade the quality of service to the customers, training of team members in all the integral aspects of banking, customer service and management control system (MCS) was specially focused. Figure 1 below depicted the MCS employed by BSP operations in Fiji. The management control units are indicated by blue arrows and relates to each other for effective and efficient control. These control units are further elaborated in the Sub-Sections of Section 4.1. The benefits of each control units are described by the combination of the Merchant’s Control Alternatives.
left75565Management Accounting
Extensive Measurement
Management Control
Selection of Employee
Generic Strategy
Marketing of New Services
Target Setting Practice
Performance Measurement
Reward System
Employees New Skills
Cooperation
Combination of Merchant’s Control Alternatives
00Management Accounting
Extensive Measurement
Management Control
Selection of Employee
Generic Strategy
Marketing of New Services
Target Setting Practice
Performance Measurement
Reward System
Employees New Skills
Cooperation
Combination of Merchant’s Control Alternatives

Figure SEQ Figure * ARABIC 1. Management Control System of the Bank of South Pacific operations in Fiji (Source: By the Researcher 2018).Management Control System for Selection of EmployeeEvery new employee is carefully selected to fit the profile of how BSP wants them to be and the employees need to know how important the core values are for the bank. The education and banking experience have important consideration during selection of new employees. The personality and which values you have are also important. Hence, selection of employees is important and tries to employee people that already have the right values and beliefs to fit the culture. They also think it is important that the applicants have an interest in bank job. They believe that if the applicant has visited their own website to look for employment, they have taken the first step to show to show interest in bank job. When a new person is employed he or she undergoes an introduction education and training for few days.

Generic Strategy
The generic strategy of BSP was divided for two main areas of business, deposit and lending. The different branches of the same commercial banks at the different geographical location were adopting result, action, personnel and culture controls jointly. In case of lending majority of branches uses result and action control simultaneously.

Marketing of New ServicesMost of the commercial bank branches promote their products/services very aggressively by using result and action control. The majority of the commercial bank branches are concentrating in maintaining customers and only some branches are competing for customer acquisition.

Target Setting Practice
The commercial bank set target for their branches for the purpose of planning and controlling the activities. In most of the branches target is fixed in terms of number of clients, amount of deposit and the amount of lending. Individual target was also set and properly communicated to them.

Performance Measurement
The Bank of South Pacific compares actual performance with predetermined target of their branches frequently.

Reward System
The Bank of South Pacific, benefit/reward/salary/promotion is mostly determined by performance followed by education, experience, new relationship/ customer marketed in deposit or lending and factors respectively like majority get benefit for better performance and some did not get performance benefit. The bank provides bonus to their employees out of profit. The amount of bonus was based on the amount of salary the employees received. Some bonuses were related to outstanding performance.

Encouragement to Employees to Learn New Skills
The Bank of South Pacific was encouraging their employees to discharge better performance and enhance educational qualification and attain trainings. The majority of employees working in the bank get leave sanctioned from their bank to attain training related to their jobs. It also supports that the commercial bank is encouraging employees to learn new skill and knowledge.

Cooperation
Majority of the employees feel they get complete cooperation from their co-workers. It indicates the working environment was very conducive in the bank to discharge better performance.

Combination of Merchant’s Control Alternatives
As described by Merchant and Van der Stede (2007) the benefit from a management control system could be expressed by the tightness or looseness of the management control system. As specified, a tight results control system must include results dimensions that are congruent with the organizations true objectives, performance targets that were specific, feedback in short time intervals, effective communication of the desired result and complete measures if the results control system was used exclusively (Merchant and Van der Stede, 2007). As author argued below, he thought all these factors were met at the Bank branch.

According to Merchant and Van der Stede (2007), a tight results control system also has comprised performance measures that were, precise, objective, timely and understandable. Furthermore, they argued that the results control system was likely to be tighter if rewards or punishments were directly and linked to the accomplishment or non-accomplishment of the desired targets. The performance measures of the Bank of South Pacific (BSP) met the characteristics described by Merchant and Van der Stede (2007). The salary system used by the bank was also linked to their performance on the desired targets. Hence, it seems like the results control system of the bank could be considered as tight.

The action control systems of a BSP do not include as many rules, but instead they have a quite strict organization and governance structure. They also use daily, weekly, monthly performance follow up sheets and manuals to control the actions of employees. Merchant and Van der Stede (2007) exemplified action controls as behavioural constraints, preauction reviews and action accountability and further argued that the action control systems could be considered tight only if it is likely that employees would consistently perform the actions. Bank branch does not use as many physical constraints but rather more administrative constraints such as restricting some decisions making to higher levels of the organization. However, in general, the bank branch managers and supporting employees have quite a high influence on their own department of the branch and could make many decisions on their own.

The employee’s actions were supervised by their closest manager and since bank has many different organization levels and each has their own manager it was likely that the managers could track their subordinate’s actions quite carefully. Furthermore, since the results control system was tight, it was reasonable to believe that undesirable actions would be discovered quickly. Reinforcements used were group rewards such as one basic or two basic salaries that would be paid if the bank employees have achieved the targets. The bank action control systems could not be considered as either tight or loose, but rather moderate or average.

The Bank of South Pacific culture controls includes customer’s care-consciousness, equality, advances/loans and deposits target focus. These values are prominent and present in their vision, mission as well as in everything they do. They also emphasize the importance that every employee should share their values to fit in. This implies that bank corporate culture was strong which enables me to conclude that their personnel/cultural control was tight or at least moderately tight.

Conclusion
The Bank of South Pacific (BSP) is very competitive. The bank was competing mainly in services to put in competitive position, to retain customer’s services at top priority. The bank branches have been using results control system and were applying the concept of management control system by setting targets for their branch and at individual and comparing it with actual performance. The target for a branch is fixed in terms of number of clients, amount of deposit and lending. Target was also fixed for most of the individuals employees. The target of the branches and individuals level was frequently monitored against their performance. The manager of the different branches desired to evaluate the performance of the branch by encouraging employees to participate in decision-making process. The employees financial and non-financial benefits were based on performance followed by education, training and experience and their yearly bonus was based on the salary. Future research needs to examine the relationship between management control system and effectiveness of BSP.

References
ADDIN ZOTERO_BIBL {“uncited”:,”omitted”:,”custom”:} CSL_BIBLIOGRAPHY Johnson, T. H., ; Kaplan, R. S. (1987). Relevance lost: the rise and fall of management accounting.

Kaplan, R. S. (1984). The evolution of management accounting. In Readings in accounting for management control (pp. 586–621). Springer.

Malmi, T., ; Granlund, M. (2009). In search of management accounting theory. European Accounting Review, 18(3), 597–620.

Merchant, K. A., ; Van der Stede, W. A. (2007). Management control systems: performance measurement, evaluation and incentives. Pearson Education.

Siverbo, S., ; AAkesson, J. (2009). Överdos av styrning. CIO Sweden, 4, 32–35.