CMA-Adapted Responsibility Accounting - Improving Performance and Accountability in Family Resorts, Inc.

 CMA-Adapted Responsibility Accounting - Improving Performance and Accountability in Family Resorts, Inc.

Introduction

In the competitive world of hospitality and vacation hotels, effective management and financial control are crucial for success. Family Resorts, Inc., a prominent holding company for vacation hotels, has been using responsibility accounting to evaluate the performance of its managers and ensure the company's profitability. In this blog, we will explore responsibility accounting, its benefits for a company like Family Resorts, and the advantages it offers to managers within the organization.

1. What is Responsibility Accounting?

Responsibility accounting is a management control system that divides a company's activities into various segments or responsibility centers. Each center is assigned to a specific manager or individual who is responsible for its performance. These managers are held accountable for the results achieved within their designated areas, and they have the authority to make decisions related to their responsibilities.

In the case of Family Resorts, the company's operations are divided into regional and district segments, each managed by regional and district managers, respectively. These managers are responsible for preparing and submitting proposed budgets for their areas of control.

2. Benefits of Responsibility Accounting for Family Resorts

a. Enhanced Performance Evaluation: Responsibility accounting allows Family Resorts to evaluate the performance of individual managers and specific segments of the business. By comparing actual results to budgeted figures, the company can identify areas of excellence and areas that require improvement. This evaluation aids in rewarding high-performing managers and providing appropriate support to those who may need it.

b. Clear Accountability: With responsibility accounting, managers are aware of their specific responsibilities and are accountable for the outcomes within their areas. This clarity in accountability encourages better decision-making and fosters a sense of ownership among the managers.

c. Improved Decision-Making: The division of the company into responsibility centers enables quicker and more effective decision-making. Managers have the authority to make decisions within their spheres, which reduces bureaucracy and enhances responsiveness to market changes and customer needs.

d. Performance Benchmarking: Responsibility accounting enables Family Resorts to set benchmarks and standards for each segment. This facilitates the comparison of performance across different regions and districts, identifying best practices, and encouraging healthy competition among managers.

3. Advantages of Responsibility Accounting for Managers

a. Autonomy: Responsibility accounting grants managers a degree of autonomy within their respective areas. They have the freedom to make decisions and implement strategies that best suit the unique characteristics and challenges of their regions or districts

b. Motivation and Incentives: The system of responsibility accounting often includes performance-based incentives for managers. These incentives serve as motivators, encouraging managers to strive for excellence and achieve or surpass the set targets.

c. Professional Growth: Managers under the responsibility accounting system have opportunities to develop their skills and expertise. As they are accountable for their performance, they are encouraged to seek continuous improvement and professional development.

Conclusion

Family Resorts, Inc., has been successful in utilizing responsibility accounting to enhance its management control, evaluate performance, and drive the overall profitability of the company. By dividing its operations into distinct responsibility centers, the organization ensures clear accountability and autonomy for its managers, leading to better decision-making and improved performance.

In the competitive hospitality industry, responsibility accounting has proved to be an indispensable tool for Family Resorts, empowering its managers to deliver exceptional services and memorable experiences to vacationing families.