Finance and People In Business Flashcards
Budgetary control or Budgeting
A business system which involves making future plans, comparing the actual results with the planned results and then investigating causes of any differences.
Variance
The difference between actual financial outcomes and those which were budgeted.
Variance analysis
The process of calculating variances and attempting to identify their causes.
Zero - based budgeting or zero budgeting
A system of budgeting where no money is allocated for costs or spending unless they can be justified by the fundholder (they are given a zero value).
Creditors
Those to whom a business owes money for goods or services delivered but not yet paid for.
Credit control
The process of monitoring and collecting the money owed to a business.
Debtors
Those who owe a business money for goods or services delivered but for which they have not yet paid.
Overtrading
A situation where a business does not have enough cash and other liquid resources to support its production and sales.
Trade credit
Given when a supplier allows a customer to receive goods or services but pay for them at a later point in time. Typically, trade credit is given for 30 days.
Gross Profit
Total sales revenue or turnover minus cost of sales, the direct costs of production.
Gross profit margin or mark-up
Gross profit expressed as a percentage of turnover.
Net profit
Total sales revenue or turnover minus cost of sales and overheads.
Net profit margin
Net profit expressed as a percentage of turnover.
Profit margins
Profit expressed as a percentage of turnover.
Return on capital
The amount of profit expressed as a percentage of the capital invested in a business.
Authority
The right to command a situation, a task or an activity.
Chain of command
The way authority and power are passed down in a business.
Delegation
Authority (and sometimes responsibility) to pass down from superior to subordinate
Formal organisation
The relationships between employees and the organisational structure determined by the business, as shown in an organisation chart.
Hierarchy
The order or levels of management of a business, from the lowest to the highest.
Informal business structure
The relationships between employees that are based on the common interests of employees.
Organisation chart
A diagram which illustrates the structure of an organisation.
Organisational or business structure
The way in which a business is organised.
Responsibility
Being accountable and required to justify an action.
Span of control
The number of subordinates working under a supervisor.
Rate of absenteeism OR Absenteeism rate OR Absentee rate
The number of staff absent as a percentage of the total number of staff employed. It can be calculated for different periods of time, i.e. daily rates or annual rates.
Work-life balance
The relationship between time spent at work and time spent away from work.
The time spent at work as a proportion of total time.
Curriculum vitae
A brief description of an individual’s personal details, experience and qualifications
External recruitment
When an employer looks for applicants for a job from outside the organisation.
Internal recruitment
When an employee seeks to find applicants for a job from inside the organisation.
Interview
A meeting where an applicant answers questions from and asks questions of selectors for a job.
Job analysis
A study of what the job entails, such as skills, tasks and performance expected.
Job description
A statement of the tasks to be undertaken and responsibilities of the employee holding the job.
Person specification
A description (or profile) of the personal qualities that match the requirements of the job specification.
Psychometric tests
Tests which aim to uncover the personality of individuals.
Induction training
Training which occurs when a worker starts a job with a business.
Market failure
When the operation of free market forces fails to provide an optimum level of output.
Off-the-job training
Training which takes place outside the business through an external training provider like a local college or university.
On-the-job training
Training given in the workplace by the employer.
Training
The process of increasing the knowledge and skills of workers so that they are better able to perform their jobs.
What are five attributes of Maslow’s hierarchy of needs?
Self-actualisation Esteem needs Love and belonging Safety needs Physiological needs
Hawthorne effect
The idea that workers are motivated by recognition given to them as a group.
Hygiene or maintenance factors
Those things that can lead to workers being dissatisfied.
Motivated
Being encouraged to do something.
Motivators
Those things that can lead to workers being satisfied
Self-actualisation
A level on Maslow’s hierarchy where an employee realises his or her full potential.
Scientific management
A theory that suggests that there is a ‘best’ way to perform work tasks.
Annualised hours contracts
A payment system based on a fixed number of hours each year, but a flexible number of hours each day, week or month.
Appraisal
Where the performance of an individual is reviewed against a set of criteria.
Blue collar (or manual) workers
Workers who do mainly physical work, like assembly line workers.
Bonus
An extra payment made in recognition of the contribution a worker has made to the company.
Commission
Payment made, typically for achieving a target, such as a sales target.
Fringe benefits
Payment in kind over and above the wage or salary paid, such as a company car or luncheon vouchers.
Overtime
Time worked over and above the basic working week.
Payment by results
Payment methods that reward workers for the quantity and quality of work they produce.
Performance related pay (PRP)
A payment system, typically where workers are paid a higher amount if they achieve certain targets set for them by their employer.
Piece rates
A payment system where employees are paid an agreed rate for every item produced.
Profit sharing
Where workers are given a share of the profits made by the company which employs them.
Salary
Pay, usually of non-manual workers, expressed as a yearly figure but paid monthly.
Time rates
Rates of pay based on an amount of time, usually per hour.
Wages
Payments made to employees for work done, usually given weekly to manual workers.
White collar (or non-manual) workers
Workers who do non-physical work like office workers or teachers.
Empowerment
To give official authority to employees to make decisions and control their own activities.
Job design
The process of organising the tasks and activities required to perform a job.
Job redesign
Changing the tasks and activities of a job, perhaps in an attempt to motivate workers.
Job enlargement
Giving an employee more work to do of a similar nature.
Job enrichment
An attempt to give employees greater responsibility and recognition by ‘vertically’ extending their role in the production process.
Job rotation
The changing of jobs or tasks from time to time.
Multiskilling
The processes of enhancing the skills of employees
Teamworking
Employees working in small groups with a common aim..
Quality control circles or Quality Circles
Small groups of regular workers in the same area of production which meet regularly to study and solve all types of production problems.
