1) Mat Jon Involvement
First and foremost, Mat Jon as the owner of the petrol station must realize that he should involve in the operation of the station. Even though he has this mindset of did not want to spend too much time at the petrol station, at least he must follow some sort of control mechanism by monitoring the operation rather than assigning Jamel to handle everything. Thus, a professional skepticism must always delivered by Mat Jon. He must not put too much trust in his nephew. This is due to the fact that Jamel could impose threat of perpetrating fraud as he has the power of control over the petrol station.
On the other hand, both Mat Jon and Jamel must understand the concept of agency relationship. This is due to the fact that, Mat Jon appointed Jamel to act on his behalf as an agent. The agency relationship also involves the fact that Mat Jon had given certain authority to Jamel for the purpose of operating the petrol station. So, Jamel must realize that his decision and action should always align with the interest of Mat Jon. Conflict of interest must be avoided so that goal congruence between both of them can be achieved.
2) Human resource management
Human capital could be considered as an important feature in order to make sure that the operation of the petrol station could run smoothly. Mat Jon must consider the principle of attracting, developing and retaining human capital. For the attracting purpose, among the perspective that should not be overlook is attitude. Operation personnel will spend their working hours communicating and serving customers. Their good attitude will be perceived by customers as an attracting factor that will create a ripple effect of repeated buying behavior. Currently, the petrol station is experiencing exaggerate competition from Caltex and Petronas. Mat Jon may lose their competitive advantage if he did not carefully take a corrective action as rivalry among competitors could be concluded as high. As an alternative, Mat Jon could retain their competitive advantage by improving his value chain activity which is marketing and sales. His petrol station can be ahead of the rivals by providing an excellent customer service that arises from the good attitude of his staff.
For the developing purpose, Mat Jon must realize that learning is a continuous process and it will add value to the human capital. He must always provide training for each staff to ensure that they are equipped with adequate skills and knowledge to operate the petrol station. It will also develop efficient workers and thus they could perform their task in an effective manner. Besides that, staff should also be equipped with a proper accounting knowledge. Accounting will always be connected to every monetary facet and it is the key ingredient in determining the financial performance of the petrol station.
Somehow, Mat Jon did not have an adequate accounting personnel and that is why the petrol station is having difficulties to keep pace in the environment. For the retaining purpose, Mat Jon could possibly implement an attractive reward system. This comprises of both monetary and non-monetary benefit. Mat Jon can refer to the Herzberg Theory, where he could create a satisfied and motivated employee. Hygiene factor such as salary and wages will make his employee satisfied with their work. On the other hand, motivation factor such as achievement recognition and growth in career path will make the employee feel satisfied and motivated to work.
3) Internal Control system
A vigorous downturn in the financial performance experienced by the petrol station could be the cause of poor internal control system. A significant event that could be easily identified is the shortfall in physical stock balance of unleaded petrol. Stock loss could jeopardize the operation and such situation could be triggered by a potential misappropriation of asset which is a fraudulent activity. In order to solve the problem, Mat Jon could possibly implement a proper inventory control and monitoring system. Major restructuring could be performed as he must adopt the concept of segregation of duties. No control personnel should do the monitoring task.
For instance, Jamel’s suspicious behavior of monitoring everything and avoiding supervision from Mat Jon could be the red flags of peculiar activity that might happen. Such behavior could possibly indicate that Jamel might be exposed to the threat of self-interest and this could be mitigated by segregation of duties. Besides that, monitoring activities must be performed to ensure that no discrepancy of stock could happen again. Such control procedure could be completed through the adequate maintenance of daily sales record. The sales record must be offset with the inventory record. Account personnel might be assigned to review both records in order to make sure that both of them tally with each other.
Courtney from Study Moose