Haengbok Bancorp Essay

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Evaluate Haengbok Bancorp’s system of controlling the behaviors of the account managers in the New York branch. What changes would you suggest be made, if any? Explain. In your answer, comment specifically on the merits and demerits of the control philosophy and each of the significant individual control system elements, such as the use of mini profit centers and the associated performance measures and incentives." It is good for Haengbok generating additional businesses, since many of its clients have international operations. And it also helps Haengbok following the worldwide banking trends. However, Haengbok has many competitors, which are also Korean-owned banks. Kim told account managers that he did not care how they get their clients, as long as they can make good deals. The 10% bonus of aggregate profits is still lower than the other banks. To make things better, Haengbok would not penalize account managers for aggregate losses. Haengbok Bancorp is a Korean-owned bank, which recently opened a branch in New York, USA. In order to make Haengbok grow more rapidly, Hyun Ki Kim, a senior manager in New York, quickly hired five experienced account managers, and allocated them based on location. For monitoring and incentive purpose, Kim set up a “mini profit center” for each manager. The profit centers would credit the interests earned in the loans, and deduct the expenses and costs. And 10% bonus of aggregate profits from “mini profit center” will be added to account managers basic salaries. And aggregate losses will not be panelized to managers. This control method would positively stimulate account managers. They are willing to put their effort on generating more profits for Haengbok, since the organization profits are highly related to their own benefits. The evaluation of account manager “mini profit center”, which considers interests, costs, and expenses

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