Management Controls Systems by Stockland Corporation Limited

Introduction to Stockland:

In the year 1952, Albert & Ervin started a real estate property development business with an intention to bring
betterment to the cities and country where the business will be operational. They never knew that the idea to
bring real estate development to next level will get the entity’s total equity and assets in billions of dollars.
Stockland and its controlled entities since after their evolution and getting listed in Australian Stock Exchange
have been diversified and involved in management of shopping centers, retirement living residencies, offices,
logistics warehouses and others.

There are several management techniques that have helped the Stockland in getting itself developed into this
massive size entity, the most commonly used by Stockland is Management Control System.

Stockland is a target oriented company and they have to complete their desired objective by the deadline to
keep the operations and assignments smooth. This control can only be attained with the assistance of
management control system.

Perspective of Management Control Systems:

A management control system is defined as a process where the management makes sure that the targets and
objectives are achieved in a desired manner (Strauß and Zecher, 2012). All the techniques and mechanisms
used by the management keeping their employees’ motivated straight to the organization objectives and
strategies are counted under the management control system. There are several management control systems
that are been used by the Stockland as well, 4 of the most common perspectives are discussed as under.

1- Results Controls:

Stockland has emphasized a lot in the results controls by means of rewarding its employees so they can achieve
the objective they have set for the individual employees and in this way it has been observed that the
employee strives hard to achieve the target so he can get the announced incentives by the Stockland. In the
latest Stockland’s report it is mentioned in the remuneration outcomes clause that the employees are provided
with the short term incentives after getting their targets accomplished. Same way the Stockland has also
initiated a program called Long-term incentives where the employee’s achievements are calculated during the
COVID 19 pandemic.

The Covid has brought the global businesses on their knees (Donthu and Gustafsson, 2020). During the time of
pandemic, it is Stockland who has not let down their valuable employees as the team lead stood firm with their
employees which has encouraged the employees to work hard and smart to achieve the objectives set by the
Stockland as mentioned by the Stockland’s People and Culture Committee in its annual report. The board has
already announced a company-wide short term incentive pool of $23.4 for its employees. Melinda, the
chairperson of People and Culture also confirmed in Annual Report 2020 that all of the entitlements and the
incentives will be provided to the retired employee who is enlisted to any of the company’s incentive program.
The financial performance as defined in the Annual Report states the changes with the incentives on yearly
basis that how the that how the employees from all hierarchy has benefitted from the results control
management process.

The Stockland’s success lies on the rate of customer satisfaction and that is why the customer’s expectation has
been given a full priority at all the time. Although the objective of customer satisfaction is at 91% but somehow
the Stockland has managed to get 80% of the customer satisfaction from their customers of retail town and
other communities, hence it proves that Stockland has empowered their employees to get their customers
satisfied against the incentives they will be getting in STI (short-term incentive) scorecard assessment. Mark
Steinert in his CEO letter has heed in serving their customers to the optimum level.

2- Action, Personnel & Cultural Controls:

Being a massive and renowned organization, Stockland is really conscious of the behaviors of the employees
that may affect its valuable customers or the organization itself. Therefore the most important type of control
that the Stockland practices is the Action control through which it is able to observe the employee’s
performance or act if it will be beneficial or alarming to the company’s image. It is the organizational
responsibility to enforce the ethical and cultural norms into the daily operations (Magala, 2010).

With the ongoing COVID-19 pandemic and the large-scale bush fires in Australia Stockland has responded
promptly to its action control challenges and so far the stats speak that it has managed to get the things under
control. In the year 2020 the Stockland has got no fatality or life threatening injury that it has able to maintain
for last many years. As measured by Lost time injury frequency rate(LTIFR) the Stockland is doing pretty much
amazing keeping its workplace safer for both the employees and the customers. For the fraudulent activity
control the Stockland has created a separate Audit and Risk committee that is responsible to eliminate the risks
of fraud and making sure the transparency prevails in the company operations.

The budgeting, action and investment plans are all well defined in the Board Charter that is personally headed
by the CEO of the company and makes sure that everyone in the organization follows the protocols while
preparing the company friendly budget and policies and code of conducts are identical for everyone in the
company.

Personnel and Cultural control is taken as a whole as for its implementation is concerned. The Stockland takes
the personal control, self-monitoring, ethics, trust and loyalty to the next level as for many of the personnel
and culture related control it has created a separate committee.

Stockland is keen on organizing a development program known as Leading the Recovery through which the
committee teaches the directors, managers and employees to understand how the organizational goals is
actually a self-satisfaction and how the self-monitoring and morality can prevail in the day to day activities.
Regular virtual live events are conducted on weekly basis where a specific committee is responsible to give the
employees recent updates related to the organization and answering all of the employee’s concerns and
helping them getting resolved so an atmosphere of loyalty and understanding can be developed. A program
called 30 days of Well-being was launched by the Stockland management in which the employees were taught
about the recent health issues and as well as the mental issues as well and how the Stockland is always
standing with them in this hard time. The Stockland’s personnel and cultural control is top notch and this is all
due to their committees and the programs they launch which has helped the employees in keeping their calm
and loyalty to the organization.

3- Financial Results Controls:

Theoretically speaking, there are 3 core elements present in the financial results control, Financial
Responsibility Centers, Formal Management Process and Motivational Contracts and it will not be wrong to say
that the Stockland has one of the best financial results control in the business of its kind.

The Corporate Governance framework compliance as per ASX framework mentioned in Annual Report 2020
clearly states the delegation of authorities to each of the department. The board is the head of all and it is the
one who delegates the authorities to the departments and the departments are required to be accountable to
the board directly.

There are targets and projects mentioned in Annual Report 2020 in which it explains that all of the targets and
departments are headed individually and they have set a timeframe where they will be getting the targets
accomplished. The Stockland are having separate revenue, expense and profit department which assist the
company’s financial statements in letting them know what the facts and figures will be. So far the Stockland has
progressed better by achieving all of the targets related to Climate, Carbon Energy, Biodiversity, Waste and
materials and Water management. All of the departments are required to report to the audit department
which consists of external and internal auditor along with the finance department and later a report is
submitted to the board which observes the strength and weakness of the organization. All the salaries or
commissions being paid to the employees are all controlled by the audit department as well. There are
competent teams which are responsible for managing the revenue out of investments and the profit
generation for the company. Irrespective of the loss that the company has gone through due to the Covid-19
and bush fires the company has been transparent to the shareholders and has provided everything that the
controls they have placed on the operations and how they will bear fruitful results in the future.

The Australian giant, Stockland has posted the loss of $14 million for 2019-20 due to the bushfires and Covid-19
[ CITATION Reb20 \l 1033 ]

4- Financial Performance Measures:

Since the Stockland is involved in service sector of the business (Property development) therefore there are
investments in the form of service contracts for projects and the performance is measured on the basis of the
return/satisfaction that has been provided to the customers/residence as per the contract. The motto of the
Stockland remains in striving to provide the community as well as to the country as a whole. By looking at the
financial position of the company and the objectives and plans the Stockland is having in pipeline and the
timely success it is getting from its previous projects it can be said that the Stockland is able to steer its way out
of the pandemic and bushfire curse and cruising its way to the profitability of the organization. The company
has managed to reduce 65% of the carbon emission in commercial properties and 46% in the residential
communities. However, Stockland is able to renew its energy capacity by 18 Megawatt that is 36% of the whole
energy consumption (Stockland, 2020). The work speaks for itself, the Stockland has recently got an investment
for $33 million against its renewable energy setup.

The Stockland has inducted a new Deliver on Demand program that will help the customers as well as the
Stockland [ CITATION Sho20 \l 1033 ]

Conclusion:

The Stockland has managed to get its cruise straight during the pandemic and after the bushfire as it is directly
related to the business of Stockland. It can be observed with the company’s financial statements that the
company is going through loss in 2020 where they were in profit in 2019 but by comparing the business to the
other companies the loss seems minor and recoverable. The cash in-flow has increased dramatically as
compare to the preceding year which shows the investors trust on Stockland and the expenses the company is
able to curtail. Since the Steinert has joined the earning per share has grown by 7.2% per year [ CITATION
Ton21 \l 1033 ] .By going through all of the Annual report of the company for 2020 and the projects that are
under process, it can be concluded that the Stockland is the 7 th biggest company of its kind in Australia for a
reason and when the dust of this pandemic will settled down, the Stockland will emerged stronger than ever.

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