Chapter 11: Performance Management
Introduction
- Business must operate effectively & efficiently
- Cooperation & integration
- Advantages of quality control:
- Improved profitability because less time & money are wasted on
correcting something that should have been done in the first place
- Quality control will help to encourage workers to deliver good
quality products & services that may serve as a basis for
remuneration decisions. This in turn will improve morale and reduce
staff turnover
- Distributors such as wholesalers and retailers will have fewer
complaints & comebacks, which may translate into a higher
turnover
- Problems relating to quality issues should be seen as an opportunity
for improvement
Quality Improvement
- Quality perception is important
- First impression based on: responsiveness & willingness of staff to help
- Customers expect reliability: NB CUSTOMER SERVICE
- Service business – value driven leadership to ensure service quality
Performance in Business impacts success/failure
- Performance Gap: the difference between actual business
performance and desired performance
Performance Gap = desired performance – actual performance
- Result of changes in either both internal or external environment &
success depends on how change is dealt with
- Strategic planning: originates at top management level,
implementation is delegated down
- Control with looking at individual sectors of business
Business Functions
1. General Management
- Planning is a management tool
- Bad strategy at top – no sense of direction within the business
, - Ensure good plan: in writing, common understanding of what needs to
be achieved
- Focus should not always be future-oriented – take current events into
account
- Plan must be accurate & objective, all factors considered
- Must be realistic and economical
- Effective communication to inform supervisors & workers
- Timing is important for plan & execution
- KISS principle (keep it straight and simple)
- Need a HOW & WHAT component
2. Human Resources/ Human Capital
- Can assist other functional managers to create an atmosphere
conducive to continuous quality improvement
• HR Roles
- Organise training programmes
- SDA ensures business world is involved in development of workforce
- Task: develop & implement organisational structure (understanding
relationship of departments & impact of actions)
- Effective feedback mechanism (performance appraisals, Know what
you doing right and wrong)
- 360º feedback (EVERYONE does analysis of employees)
- Self evaluation (personal performance)
- Feedback (were goals achieved)
- Employees need to be motivated (intrinsic is difficult, extrinsic factors –
incentive bonus)
3. Finance
- Owners invest capital and expect ROI
- Financial tools include: drafting financial statement, budgeting, ratios
• Liquidity Ratio
1. Current Ratio
- 2:1 CURRENT ASSETS : CURRENT LIABILITES
- Above: too much cash, too Norm: 2:1
much retained stock
- Below: current liabilities
cannot be paid from current assets (Not liquid)
2. Acid Test Ratio
- 1:1
- Inventory is CURRENT ASSETS – Trading Stock : CURRENT LIABILITES
eliminated: Norm: 1:1
least liquid
Introduction
- Business must operate effectively & efficiently
- Cooperation & integration
- Advantages of quality control:
- Improved profitability because less time & money are wasted on
correcting something that should have been done in the first place
- Quality control will help to encourage workers to deliver good
quality products & services that may serve as a basis for
remuneration decisions. This in turn will improve morale and reduce
staff turnover
- Distributors such as wholesalers and retailers will have fewer
complaints & comebacks, which may translate into a higher
turnover
- Problems relating to quality issues should be seen as an opportunity
for improvement
Quality Improvement
- Quality perception is important
- First impression based on: responsiveness & willingness of staff to help
- Customers expect reliability: NB CUSTOMER SERVICE
- Service business – value driven leadership to ensure service quality
Performance in Business impacts success/failure
- Performance Gap: the difference between actual business
performance and desired performance
Performance Gap = desired performance – actual performance
- Result of changes in either both internal or external environment &
success depends on how change is dealt with
- Strategic planning: originates at top management level,
implementation is delegated down
- Control with looking at individual sectors of business
Business Functions
1. General Management
- Planning is a management tool
- Bad strategy at top – no sense of direction within the business
, - Ensure good plan: in writing, common understanding of what needs to
be achieved
- Focus should not always be future-oriented – take current events into
account
- Plan must be accurate & objective, all factors considered
- Must be realistic and economical
- Effective communication to inform supervisors & workers
- Timing is important for plan & execution
- KISS principle (keep it straight and simple)
- Need a HOW & WHAT component
2. Human Resources/ Human Capital
- Can assist other functional managers to create an atmosphere
conducive to continuous quality improvement
• HR Roles
- Organise training programmes
- SDA ensures business world is involved in development of workforce
- Task: develop & implement organisational structure (understanding
relationship of departments & impact of actions)
- Effective feedback mechanism (performance appraisals, Know what
you doing right and wrong)
- 360º feedback (EVERYONE does analysis of employees)
- Self evaluation (personal performance)
- Feedback (were goals achieved)
- Employees need to be motivated (intrinsic is difficult, extrinsic factors –
incentive bonus)
3. Finance
- Owners invest capital and expect ROI
- Financial tools include: drafting financial statement, budgeting, ratios
• Liquidity Ratio
1. Current Ratio
- 2:1 CURRENT ASSETS : CURRENT LIABILITES
- Above: too much cash, too Norm: 2:1
much retained stock
- Below: current liabilities
cannot be paid from current assets (Not liquid)
2. Acid Test Ratio
- 1:1
- Inventory is CURRENT ASSETS – Trading Stock : CURRENT LIABILITES
eliminated: Norm: 1:1
least liquid
