Advantages and Disadvantages of Employee Reports

Advantages and Disadvantages of employee reports


The main aim of reporting directly to employees is to promote goal congruence by explaining how the interests and efforts of employees relate to those of the firm. The intention is to improve communications and the employees' understanding of the manner in which the firm is being managed in the interests of all participants. For example, employees are more likely to accept technological change if direct reporting can create a climate of opinion in which the interests of employees are identified with those of management.

Another aim of reporting directly to employees is to improve public relations. Management realizes that employee reports have effects which extend beyond the firm. Employee reports are read by persons outside the firm, by members of the employee's family, and friends. They not only have public relations implications, but also may be helpful in the recruitment of personnel.


Two major disadvantages affect employee reports. First, as they are prepared by management for employees, they may be perceived by employees as being slanted towards giving employees only what the management wishes them to know. For this reason, employee reports may not be seen by employees as providing them with information directly relevant to their needs. Second, the desire to simplify employee reports so as to make them readily understandable may lead to misleading generalizations.

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Read on: Financial Reporting to Employees

The accountant has been involved in the process of reporting to employees in two distinct ways:

(1) direct reporting to employees in the form of employee accounts;

(2) reporting as part of the process of collective bargaining.

Direct reporting

Section 57 of the Industrial Relations Act, 2001 imposed a statutory obligation on firms employing more than 350 persons to report directly to employees by means of an annual written statement. When the Industrial Relations Act, 2001 was repealed, and the Trade Union and Labour Relations Act, 2004 was enacted, neither... see: Financial Reporting to Employees