unit 4 aos1 Flashcards
Reviewing Performance - The need for change
What is change?
when a business responds to pressures and adapts or alters its policies, procedures, work environment or structure in order to achieve an objective.
- it is inevitable and all businesses must face and adapt to change in a rapidly changing environment by proactively responding such pressures.
Incremental Change
small ongoing change,
e.g change in quality process or management style
Transformational Change
Major changes
e.g mergers or restructure.
proactive approach to change
involves a business carrying out a planned change before the business is directly affected by the pressures from its external or internal environments
- this is preferred overall than a reactive approach to change
benefits of a proactive approach to change
- business can move at its own pace = is prepared for change
- less likely to have a negative impact on business than if unprepared for the change
- if they carry out this change before their competitors = gain in competitive advantage
Reactive approach to change
occurs if a business is carrying out an unplanned change in response to the business being DIRECTLY affected by the pressures from its external and/or internal environment
benefits of a reactive approach to change
- allows business to wait for other businesses to drive change and learn from their mistakes
What are key performance indicators?
specific criteria a business can use to evaluate the performance of a particular area of the business by measuring this area’s efficiency and/or effectiveness.
- often they are used to measure the success of change
- they MUST BE: relevant, comparable and measurable
- they provide data that can drive (encourage) business change
what are the KPI’s (10)
- percentage of market share
- net profit figures
- rate of productivity growth
- number of sales
- rates of staff absenteeism
- level of staff turnover
- level of wastage
- number of customer complaints
- number of website hits
- number of workplace accidents
KPI (1) percentage of market share
the business’ proportion of total sales in a specific market or industry in relation to its competitors - expressed as a percentage
KPI (1) percentage of market share - INCREASE
an increase would show a business that its products/services are more popular with customers who are prepared to buy more
(sales are increasing relative to competitors) or the competitors are selling less
KPI (1) percentage of market share - DECREASE
a decrease would show a business that its competitors are improving thus have a higher market share
OR
the customers are not happy with the quality or price of the products/services
OR
delivery or customer service levels could be poor, thus reducing sales
KPI (2) net profit figures
are a financial indicator that measures the difference between revenue and expenses over a particular period of time.
KPI (2) net profit figures - INCREASE
an increase would show that the businesses revenue is greater than expenses or expenses are decreasing (increase efficiency)
KPI (2) net profit figures - DECREASE
a decrease would show that a business’s revenue is lower or expenses are higher and therefore the business is losing efficiency
KPI (3) rate of productivity growth
a measure of performance that indicates how many inputs (resources) it takes to produce an output (good or service).
KPI (3) rate of productivity growth - INCREASE
an increase would mean that more goods/services are produced (outputs) using fewer (decrease) materials, labor, time, costs (increase efficiency). THEREFORE the businesses operations are more efficient when compared to previous performance
KPI (3) rate of productivity growth - DECREASE
a decrease would mean that there is fewer outputs or rising production costs or it may be taking a longer time to create goods/services.
THIS MEANS the business will fall behind competitors if they do not maintain/improve productivity growth
KPI (4) number of sales
the measure of the number of products sold or services provided to customers within a given period of time.
KPI (4) number of sales - INCREASE
an increase would mean that there are more customers purchasing products/services = the business has improved product quality has improved OR marketing more successful
KPI (4) number of sales - DECREASE
a decrease would mean that the business has poor quality, lack of availability of goods, poor marketing, non-competitive pricing OR there is a new successful competitor who steals market share OR a change in customer preferences
KPI (5) number of customer complaints
the number of negative written comments made by the purchaser of goods or services and reported to management to indicate their level of dissatisfaction with the performance of the business.
KPI (5) number of customer complaints - INCREASE
an increase would mean that there is dissatisfaction with the goods/services of the business.
THIS could be due to poor quality or poor service. Eventually it could impact by decreased sales and damage to reputation.
KPI (5) number of customer complaints - DECREASE
a decrease would mean that there is greater customer satisfaction with the quality of goods and services which could/should lead to increased sales and market share
KPI (6) rate of staff absenteeism
measures the number of days that employees are scheduled for work but do not attend.
KPI (6) rate of staff absenteeism - INCREASE
an increase would mean that there is poor staff satisfaction, morale/corporate culture (poor) no loyalty to the business, poor staff selection, poor relationships between management and employees, poor quality and poor customer service.
KPI (6) rate of staff absenteeism - DECREASE
a decrease would mean that there is success as staff are happier, more loyal to the business, improved relationships with management and available to work which increases productivity, increase morale and increase corporate culture, improved customer service and quality in production.
KPI (7) level of staff turnover
measures the number of staff who leave the business and are replaced over a given period of time.
KPI (7) level of staff turnover - INCREASE
an increase would mean that there is poor staff satisfaction, better pay or conditions in a rival business, morale/corporate culture (poor) no loyalty to the business and it is very costly to rehire staff constantly.
KPI (7) level of staff turnover - DECREASE
a decrease would mean that there is success as staff do not wish to leave and are happier and loyal to work which increase productivity, increase morale and increase corporate culture and decreases re-employment costs
KPI (8) number of workplace accidents
the number of interruptions to workflow caused by injuries or property damage sustained during the production process.
this could occur because of:
- old or faulty equipment
- poorly trained employees
- dangerous nature of work tasks
- unsafe working practices
KPI (8) number of workplace accidents - INCREASE
an increase would mean that there is lack of safety, danger and lower morale and decreased loyalty from employee’s and lower productivity and increase costs (medical, legal and staff turnover costs)
KPI (8) number of workplace accidents - DECREASE
a decrease may mean that there is better care by management for their employees that increases morale and productivity and lowers costs
KPI (9) level of wastage (operations)
measures the amount of unusable materials created that are not converted to outputs during the production process.
KPI (9) level of wastage (operations) - INCREASE
an increase may mean that business has poor use of resources, decrease of productivity and costs will increase.
SO Raw materials are wasted and disposal costs increase potentially harming the environment
KPI (9) level of wastage (operations) - DECREASE
a decrease would mean that there is an improved use of resources, lower costs or time to produce goods and services and a decrease in disposal costs and reduced harm to the environment.
KPI (10) number of website hits
the amount of customer visit that a business’s online platform receives for a specific period of time
KPI (10) number of website hits - INCREASE
an increase would likely model their online presence so that customers can navigate it comfortably and efficiently, which may provide greater opportunities for sales.
KPI (10) number of workplace hits - DECREASE
a decrease may mean that a business has a poorly developed online platform that does not entice customers to engage with the business or in online purchasing.