Analysis Conducted on The Management Control System - NextDC - Management Assessment Answer

Management Assessment Answer

The analysis conducted on the management control system of NextDC gives an insight of the pattern of remuneration offered by the organisation to its senior executives and non-executive Directors. It is seen that the organisation follows a fair and competitive remuneration policy as part of the salary package of the executives are fixed which is 40% of the constituent while the rest 60% are variable. So most of the salary being variable, the executives need to assure a greater revenue proposition and profitability for the business to have a greater benefit for themselves. Again it is seen that the Non-Executive Directors have a different pattern of pay which is fixed by the competent authorities and their pay are not influenced by the organisational profitability. But they play a significant role in carrying out the business functions for NextDC efficiently in an ethical and sustainable manner.

So it is quite clear that the organisational performance say financially has been benevolent in exerting an influence in the remuneration of the senior executives. NextDC has earned a sufficient revenue in 2018 which was around 30.73% higher than the last year but owing to rising costs it suffered to have a suitable profitability. Therefore it could be stated that owing to the declining profitability, the senior executives of NextDC would take home a lesser pay establishing direct proportion between the organisational profitability and executive remunerations. In the current scenario it is the responsibility of the company executives not only to maintain the revenue proposition of the company but also control the costs to retain a greater level of profitability. It would be quite significant to explore avenues for the executives to control the costs as it not only affects the profitability but influences the stock price as well. This is because a lower level of profitability would affect the confidence of the investors which would hurt the organisational goal.

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