What is a Boundary System?
In managerial accounting, boundary systems are minimum behavioral standards that employers set for their employees. In other words, it’s a standard of conduct that employees agree to uphold while they work at the company.
A Boundary System is a management system made out of rules and procedures, used to define the limits of freedom within the organization, such as: codes of conduct, predefined strategic planning methods, asset acquisition regulations, operational guidelines.
This type of restriction is normal in most companies. Newly hired employees typically receive a handbook that lists the types of actions and behaviors that are off limits and not allowed. For instance, employees might not be allowed to swear or speak a certain way in front of customers or clients.
These handbooks also cover acceptable ethical behavior and what is deemed to be unethical within the company.
What Does Boundary System Mean?
Many companies also list dress codes that require employees to wear certain clothes. Professional offices might require a jacket and tie while work zone might require steel-toed boots and a hard hat.