Core Activity C - Manage performance and cost to aid value creation Flashcards
Describe FLATHALL’s value chain ? How can It be improved?
Primary activities
Split into project work and daily operations
- Inbound logistics
- Operations
- Outbound logistics
- Market and sales
- After sales service
Secondary activities
- Infrastructure (QM, employee/ leadership)
- HR
- Tech
- Procurement
Flatthall specific balanced scorecard ?
Maintenance vs project work
Solution for transfer pricing
Financial (Capturing Value)
- Margins
- Leverage
- Asset turns
- MIRR
- PPE/ debt
- Accounting return
- NAV per share
- Loan to value
- EPS growth
Customer (Defining & Delivering Value)
- Occupancy rate
- % nomination agreements
- NPS scores
- Retention rates
- Security incidents
- Valid complaints
Process (Creating value)
- Check out time
- Maintenance request / time to resolve
- Projects on time
- Projects on budget
Learning and growth (Creating Value)
- Staff turnover
- Staff training
- R&D
What leadership styles exist
Authoritative
Democratic
Participative
Describe the balance scorecard approach
Financial
Customer based
Operations
Learning and growth
How does FLATHALL ensure TCM?
Frequent inspections of the accommodation
What costs transformation tools could be used to help FLATHALL manage rising costs?
ABC
ABM
TQM via frequent inspections
Cost conscious culture
Link cost to profitability
Hedging utilities
Understand risks involved in reducing costs
How are costs currently managed?
Centrally perhaps for hedging ?
Unclear how the buildings are run in terms of responsibility centres
How are pricing decisions currently managed ?
Pricing appears to be managed centrally and is very sensitive due to affordability and relationships with institutions. Demand also very high which allows us to charge realistic rents for the standard of accommodation.
Why does flathall appear to have low liquidity ?
Nature of the business
Receives deposits and rentals in advance with low receivables balance and has a high payables balance due to the nature of building projects
Key changes that could affect ROCE
Revaluation method portfolio
Increase capital employed and reduce ROCE
Increased depreciation lowering profitability
Explain cost transformation techniques?
CGMA cost transformation model
- cost conscious culture
- understanding cost drivers
- incorporating sustainability
- managing risks with cost competativness
- connect products / service with profitability (segmented reporting)
- generate maximum value through new products
Explain target costing
Market driven price, desired margin and target cost
How might Flathall currently run each building in relation to responsibilities centres ?
Cost centres may be more affective as revenues are likely to be determined by central management due to price sensitivity of the market.
Describe the 4 stages of data analytics? Including management financial information
Descriptive - What has happened?
Diagnostic - Why this has happened?
Predictive - What is likely to happen?
Prescriptive - What should we do next?
How could we improve employee engagement?
- Set clear goals/ objectives and responsibilities
- Understand how performance will be measured
- Have clarity around remuneration for achieving and exceeding targets.
- Ensure employee’s strengths align with their roles
- Improve efficiency and optimisation to promote job satisfaction
How might you best retain high performing employees ?
Differentiated motivators
- Impact ( how their work impacts overall purpose and vision)
- Discretion
- Opportunity to show excellence
Great company
Aligned values
How should you approach goal setting with an individual?
Develop (10 mins)
- 3/5 per person annually
- Outcomes driven
- Aligned to the companies goals
Discuss (10 mins)
- Them
- You
- Next steps
Describe the goal setting ‘the table’ checklist?
Impact
Discretion
Excellence
Great company
Aligned Values
Other criteria for goal setting ?
Listen speak plan
SMART - Specific, measurable, achievable, realistic, time bound
FAST - Frequent, Ambitious, Specific, Transparent
One page plan
What might you need to do before assessing performance appraisals?
- Ensure all goals are aligned to company goals
- Team or individual goals?
- Bell curve appraisal? or all employees are required that meet performance criteria.
- Ensure goals are set annually, reviewed Quarterly. Milestones? Objectives managed weekly if possible.
Describe envelope superstition?
Junior employee (low discretion)
Direct - What, when, why, how
Middle experience
Coach - What, when, why
Expert (high discretion)
Unleash - What, When
Describe the hierarchy of needs pyramid model?
Impacts motivation
- Self actualisation
- Esteem
- Love/ belonging
- Safety
- Physiological - Food / water
Define the competence development cycle?
Define
Assess
Design
Act
Reflect
Evaluate
Describe the main difference between management and leadership?
Management focuses on status quo
Process, efficiency etc
Leadership focuses on change
What considerations can be chosen when choosing a how to lead people?
Direct vs Develop
Considerations / slider chart
- Expertise
- Importance
- Time
- Frequency
- implementation
What management tools could be useful for project communication?
RACI chart
Responsible
Accountable
Consulted
Informed
What are the three C’s in leadership?
Commitment
Character
Competence
Describe how the Ashridge College developed a model that distinguishes leadership styles ?
Telling / Autocratic
Selling / Explanation to convince staff
Asks / Consults with staff for their views, democratic
Joins / participative style and allows staff to make decisions with certain guidlines
What are the 4 principles for TQM?
‘Get in right first time’
Continuous improvement
Customer focus
Ownership and resolution of problems
What are the advantages of TQM?
- Greatly improved quality of the final product or service
- Cost savings through a reduction in waste
- Increased productivity because staff time is used more effectively
- Increased market share as a result of improved products and services creating a competitive advantage
What are the disadvantages of TQM?
- Extremely time consuming
- Not a quick fix
- Costly to implement
What are the first steps in risk and the role responsibilities of the Risk Oversight committee?
- Identify risk
- Asses risk (Impact / probability)
- Plan response / mitigate (TARA model)
- Implement mitigation strategy
- Monitor risk performance / self assessment, internal audit.
What tool can be used to quantify risk?
Probability distribution,
expected value (arithmetic mean)
SD
COV
What can impact decision making around risk?
Risk appetite
Averse - low risk
Risk seeking
Risk neutral
Maximax
Maximin
Minimax regret (smallest opportunity cost)
How variables are used to calculate standard deviation?
Potential outcome
Probability of outcome
Expected outcome (Average outcome)
What is standard deviation?
How far on average the different outcomes of a data set lie from the mean (volatility of data?)
How can we measure and compare relative risk using standard deviation ?
Calculating the coefficient of variation
Cov = Standard deviation / expected outcome
Higher number = higher variability and perceived risk
Lower number = less perceived risk
What is and how do we calculate expected outcome?
It is the average NPV expected if the decision or action is repeated multiple times.
= sum all possible outcomes, multiplied by the probability of there occurrence.
When is sensitivity analysis useful?
To analyse how sensitive the returns of a project are to one particular variable.
Commons tests
Revenue sensitivity
Discount rate sensitivity
Capital investment sensitivity
What is the formula for sensitivity analysis?
Total expected return / total value of variable under consideration*100
Lowe number means more risk as a move by that amount would discredit the project returns.
What is stress testing?
More extensive analysis that sensitivity as it reviews multiple variables in one scenario.
Also called ‘What if’ analysis or scenario planning
In any analysis what key things need to be considered?
The variables under consideration but most importantly, the drivers of those variables as this allows us to implement actionable change
Variables
Drivers
What could also be useful when planning risk responses?
Scenario planning via decision trees
Stages of a project?
IPECC
Initiation
planning
execute & control
close & review
