A Study Of Management Through Achievement Contract Based On Activity-based-budget

In a modern enterprise, members of different levels of the organization may have different benefit targets, and benefit conflicts may arise among them. To avoid beneficial conflicts we cannot simply rely on compulsory administrative means, but should rely on contract signed by members of different levels. Of the contracts, the achievement contract is an internal contract of importance. In the management of a business, the achievement contract should not be restricted to an agreement only between the shareholders or owners and the managerial personal, but extended to between the managing directors and the basic managers, and workers. Management of budgeting is an important component in running the business, which has been proved and accepted as an effective means, while achievement contract based on budget is a guarantee, for the enterprise's strategic realization, and an important means to go deep to financial control of lower levels.This paper argues that traditional budget control system attached too much importance to financial targets, but overlooked the function of non-financial targets in contract management systems. Nor did it combine the evaluation with the inspiring mechanism. The traditional management of budgeting emphasized economic balance between inspiration and control of managing directors, thus ignoring supervision on different levels, especially neglecting the supervision and assessing of middle-and-lower level managers and workers. Activity-based-budget, which can integrate different accounting managing devices, is a running system set upon all the activity levels involving all the members of the organization and all the working procedures. Therefore, it can exercise a systematic and overall control of the organization. Achievement contracts based on activity-based-budget can be regarded as the ground for setting up inspiring and controlling mechanism inside the enterprise, while the compensation agreement based on activity-based-budget can make inspiration and control of agents of all levels come true.This paper deals with the management pattern of achievement contracts with normal study and case study. Firstly, achievement contract management focuses on each activity and each worker in the working flow, which was transferred from working department before. Secondly,Through activity analysis, working flow reform balancing recording cards, the system can dissect the strategic targets and set the mini-targets for the specific activities, so as to provide ample information for the improvement of the achievement contract. Finally, the achievement evaluation index system, which incorporates both financial targets and non-financial targets, can make reasonable evaluation of achievements by the employment and the working flow as well, thus set up a scientific achievement measurement and evaluation device to form a link between the agents'efforts and their pays.