1.1
Business Planning: Business planning is the process of constructing a formal statement of a set of business goals, the reasons they are believed attainable, and the plan for reaching those goals. It should also contain background information about the organization or team attempting to reach those goals.
Crimson: CHCs Business Plan is based on excellence in very specific market segments it serves throughout Asia Pacific and primarily Australia. Our Business Plan details every aspect of our business on its website: www. EducationClub.com.au
Strategic Planning: Strategic planning is an organization's process of defining its strategy, or direction, and making decisions on allocating its resources to pursue this strategy. In order to determine the direction of the organization, it is necessary to understand its current position and the possible avenues through which it can pursue a particular course of action. Generally, strategic planning deals with at least one of three key questions:
1. "Where do we wish to go?"2. "How do we intend to get there?"3. "How do we improve to excel as we proceed?"
Crimson: CHCs mission is to be the best hospitality and MICE provider in all the segments of market it targets. Their mission is to serve limited segments but serve them well. Their strategies are lined up with this very mission. Market penetration, Process Efficiency, Staff Training and Education are all such strategies in CHCs portfolio.
Operational Planning: Operational planning is the process of linking strategic goals and objectives to tactical goals and objectives. It describes milestones, conditions for success and explains how, or what portion of, a strategic plan will be put into operation during a given operational period, in the case of commercial application, a fiscal year or another given budgetary term.
An operational plan is the basis for, and justification of an annual operating budget request. Therefore, a five-year strategic plan would typically require five operational plans funded by five operating budgets.
1.2
CHCs mission, vision and goals all have to face in the same direction. All these must collaborate and coordinate with others to attain the final vision of the company. Crimson defines the following as:MissionOur mission is to deliver genuine and trustworthy hospitality by making a difference in the lives of the people we touch every day, including our associates, guests and owners.
VisionOur vision is to be the most preferred brand in each customer segment that we serve for our associates, guests and owners.
ValuesWe aim to foster a common purpose and culture within the Crimson family through shared core values of mutual respect, intellectual honesty and integrity, humility, fun, creativity and innovation.
My decision to opt for the Italian Restaurant is perfectly aligned with the above three. The new establishment is going to be the uptown venue to see and to be seen. It will be a place through which we will fulfill our mission to deliver nothing but excellent service. This also helps us build stronger community ties, goodwill and market value. All three are critical ingredients to our attainment of our vision. And finally, whatever we do, our values guide us. Thus, I see the restaurant as an outstanding opportunity to establish in the market as a premium fine dining venue.
1.3
A key priority for the CHCs project development is to build employee and stakeholder confidence. We are committed to achieving this by ensuring our initiatives are recurring and consulting regularly with stakeholders and our employees.The initiatives include: Ongoing identification of our key internal and external stakeholders Continued development of a stakeholder mapping so all areas can identify and categorise stakeholders and communicate with them effectively Consulting with key stakeholder groups in relation to our overall approach and performance Application of government and international good practice to the operational and managerial environment Review the scope and performance of our current formal structures Develop systems to monitor and measure the effectiveness of our stakeholder engagement.
Focusing on the high-power/high-interest stakeholders first and the low-interest/low-power stakeholders last, we will devise a practical plan that communicates with people as effectively as possible and that communicates the right amount of information in a way that neither under nor over-communicates.
Think through what we need to do to keep our best supporters engaged and on-board. We will have to work out how to win over or neutralize the opposition of skeptics. Where we need the active support of people who are not currently interested in what we are doing, we will have to think about how we can engage them and raise their level of interest.
Also, we will consider how what we are doing will affect our stakeholders. Where appropriate, we will let people know as early as possible of any difficult issues that may arise, and discuss with them how we can minimize or manage any impact.
1.4
It is important that sufficient and convincing homework is done before a heavy investment is made creating a product, which is bound to fail in the market. One of the most important tasks in evaluating the economic viability of a niche market is determining the size of the market. If the market is too small, there will not be enough sales available to cover start-up, capital, and operating costs. Conversely, if the market potential looks quite large, it is not a niche market and direct competition in the form of commodity markets will likely prevail, unless a competitive edge that others cannot replicate can be created.
The population of the total trade area is now estimated to be 462,000, which is a 4.6% increase over the same time period. Looking forward, Claritas projects the population of the total trade area to increase further to 642,000 million (0.98%) while that of thesecondary trade area is expected to become 540,000 million (1.69%) by the year 2015.
The median effectivebuying income (EBI) or disposable income after federal taxes in the Sector 10 Metropolitan Area is currently estimated to be $43,800. Throughout the entire metropolitan area it is estimated that 20.4% of the 1.925 million households have an effective buying income under $35,000 annually while 42.0% of households have yearly EBI in excess of $50,000.Income levels, whether on a per capita, or per household basis, indicate the economic level of the residents of the trade area. Median household income, when combined with the number of households, is a major determinant of an area's retail sales potential. According to Claritas, the total trade area of The Sector 10 has an estimated household income of $70,025, which is more than that of the region as a whole. Focusing on the smaller primary trade area, the current estimated household income is $74,742, reflective of the high incomes in neighboring areas such as GigaMetro and MegaMetro.2011 Estimated Sales Potential20 Km Radius40 Km RadiusTotal Area
Households551,0391,476,8252,027,864
Times: % earning over $35,00072.6%68.2%69.4%
Equals: Potential Visits400,0541,007,1951,407,249
Times: Ratio of Interested Holds50.0%25.0%32.1%
Equals: Net Potential Visits200,027251,799451,826
Times: Average Visits per Year1.50.751.08
Equals: Net Yearly Visits300,040188,849488,889
Times: Average Spending Allowance$100$100$100
Equals: Sales Potential$30,004,073$18,884,900$48,888,973
Market Research Results:
LUNCH 195 lunches per day (on average), 12 months per year Typical lunches per year (in full year) is 70,200 $10.50 per person averageDINNER 195 dinners per day (June, July, August) 130 dinners per day (remainder of year) Typical dinners per year (in full year) is 52,650 $20.00 per person averageBased on the current prices in therestaurant market,Deliziosohas the potential ofhigh net worth byyear fourand that is based on very conservative estimates andunder-inflated projections. With good management,a tremendous revenue growthis expected. The equity for each investor will be based on his or her investment.
1.5
Vision should not be a stand-alone item. It works in conjunction with the other parts of the business plan. The forward step is to form a goal-vision connection to introduce goals into the planning model. It is common to treat vision and goals as separate units without a relationship. This goal-vision disconnect is frequently found in planning. A team develops a vision and somewhere later in the agenda the team develops a set of goals.
To effectively convert vision into daily objectives and goals, the management has to bear full responsibility and the team should believe in managements vision. There are several ways in which we will be able to set performance targets in our new restaurant and also manage and monitor employee performance.
We have over past few years specialized in defining KPIs for our employees and contractors. KPIs will be developed by senior members of the management in appropriate consultation with stakeholders. Stakeholders are involved at different levels within the company and thus, different functions and processes require different KPIs in consultation with relevant stakeholders. Some of the KPIs would include:
1. Project to be completed by Nov 15, 2013.2. Restaurant to establish a Weekly Base of at least 250 guests.3. Revenues should progress at an increment of 3.5% per annum4. Salaries and Wages must not exceed 18% of the total revenue.5. Our wastage should be less that 2.5% over a period of 6 months.
1.6
Our start-up costsare mostly expensed equipment, furniture, painting, reconstruction, rent, start-up labor, liquor license, six months operating cash, and legal and consulting costs associated with openingthe restaurant. These are the start-up requirements to the best of our knowledge and experience in the industry. Our bidding conference fixes prices with typed bids and solidifies costs. A number of items are self-explanatory.
Start-up Funding
Start-up Expenses to Fund$315,431
Start-up Assets to Fund$63,878
Total Funding Required$379,309
Assets
Non-cash Assets from Start-up$23,878
Cash Requirements from Start-up$40,000
Additional Cash Raised$0
Cash Balance on Starting Date$40,000
Total Assets$63,878
Liabilities and Capital
Liabilities
Current Borrowing$0
Long-term Liabilities$0
Accounts Payable (Outstanding Bills)$0
Other Current Liabilities (interest-free)$0
Total Liabilities$0
Capital
Planned Investment
Owner Equity$30,009
Investor$349,300
Additional Investment Requirement$0
Total Planned Investment$379,309
Loss at Start-up (Start-up Expenses)($315,431)
Total Capital$63,878
Total Capital and Liabilities$63,878
Total Funding $379,309
1.7
CHC will need to file for a Restaurant Licence in order to legally operate a liquor selling premises anywhere within the country. A restaurant licence authorises the consumption of liquor and the sale of liquor for consumption on the premises at any time with or ancillary to a genuine meal. The Liquor Licensing Act 1997 defines a meal as a genuine meal eaten while seated at a table.
A restaurant licence also authorises the following:Supply of liquor without a meal
A condition that allows the sale of liquor for consumptoion by a patron seated at a table or attending a function where food is provided. This condition allows a person to consume liquor while not consuming a meal.
BYO with meals
A person may bring liquor onto the licensed premises with the consent of the licensee to consume with or ancillary to a meal provided by the licensee on the licensed premises. The person can then take the unconsumed portion of that liquor from the premises when they leave.
Trading HoursA restaurant licence allows the licensee to trade at any time, provided the sale and consumption of liquor occurs with or ancillary to a meal.However, in some cases trading hours may be restricted by a condition on the licence. Trading hours are usually subject to local council consents so it is advisable to check with our local council.
Other AuthorisationsAn applicant for a restaurant licence or an existing licence holder may apply to the Liquor and Gambling Commissioner for any of the consents listed below:1. Extended Trading Authorisation (ETA)If a licensee wishes to trade (without a meal) between midnight and 5 am Monday to Saturday, or between 8 am or 11 am or 8 pm and midnight on a Sunday, or between midnight and 2 am on Christmas Day, the licensee may apply for an Extended Trading Authorisation. This authorisation can not operate on Good Friday, the day after Good Friday or the day after Christmas Day. 2. Entertainment ConsentIf a licensee intends to provide entertainment on the licensed premises, the licensee must apply for an Entertainment Consent. An Entertainment Consent will only be granted for a restaurant licence provided the licensee can show that entertainment is ancillary to the primary business, being the supply of meals. 3. Extension of Trading AreaIf a licensee intends to trade in an area adjacent to the licensed prmises, then a Extension of Trading Area authorisation is required for example drinking and/or dining on the footpath adjacent to the premises.
1.8
VisionTo be the best name in hospitality in Asia Pacific
Mission To create an environment where ladies and gentlemen can serve ladies and gentlemen for their ordinary to discerning needs
Values Do the Right thing Show We Care Celebrate the Difference Work Better Together Aim Higher
Keys to Success Quality Presentation Service Knowledge
StrengthsWeaknesses
Strong Management Team Experienced Staff Trustworthy suppliers Poor communication with some keyholders Seasonal Cycle demands a dynamic system
ThreatsOpportunities
Marketing Fails Poor Customer Service consistently. Consumer expects more than that can be offered. Untouched market of new booming singles and couples are nearby.
Implementation Step 1: Identify key business processes and functions Step 2: Identify what business stands for and what business is meant to be Step 3: Record all this information into a single report Step 4: Such gathering of facts and figures supported by assumptions and figures is a Business Plan Step 5: Once written, it is implemented through daily procedures, timed controls and direct management involvement.
1Develop and Implement a Business Plan AssignmentPESTEL Factors
PoliticalEducationalSocialTechnologicalEconomicalLegal
Government policies Government term and change Trading policies Funding, grants and initiatives Lobbying and pressure groups Wars, terrorism and conflicts Elections and political trends Internal political issues Inter-country relationships Local commissioning processes Corruption Bureaucracy
Local economy Taxation Inflation Interest Economy trends Seasonality issues Industry growth Import/export ratios International trade International exchange rates Demographics Media views of the industry Work ethic Brand, company, technology image Lifestyle trends Cultural Taboos Consumer attitudes and opinions Consumer buying patterns Ethical issues Consumer role models Major events and influences Buying access and trends Advertising and publicity
Emerging technologies Maturity of technology Technology legislation Research and Innovation Information and communications Competitor technology development Intellectual property issues Environmental regulations Ecological regulations Reduction of carbon footprint Sustainability Impact of adverse weather Current legislation Future legislation International legislation Regulatory bodies and processes Employment law Consumer protection Health and safety regulations Money laundering regulations Tax regulations Competitive regulations Industry-specific regulations
2.1
It is crucially important to stakeholders that organizations are well led and know what they want to be famous for. At its core is having strong organizational vision and direction, and having the confidence to make decisions to follow this through. It is quite undoubted that those organizations that rate best among their stakeholders are those with the greatest clarity of purpose stakeholders want to know what an organization is doing to add value to them.
Based on the same thought principle we at CHC have sworn in to be proactive in our approach to keep our stakeholders informed and satisfied. Just as with customer satisfaction, stakeholder perceptions while influenced by communications have to be built on a solid base. An organization that is clear about its objectives and successfully meets them will be recognized as such by stakeholders. Communication and stakeholder involvement are not always easy since there may be a wide variety of organizations, people, perspectives, and concerns involved. Be ready to assume the responsibilities as well as the benefits that come with increased involvement:
Have a clear understanding of objectives Design a reasonable timeline Be prepared to pay for the best assistance, including an independent, third-party facilitator Be prepared to work together towards open communication with stakeholders Envision and work toward mutually beneficial outcomes Accept that in some circumstances even the best communication process will fail to achieve consensus.
Below is a list of variety of tools that can be used for communicating with stakeholders, internally and externally:
Corporate & Site Reports Surveys Sustainable Development Agreements Website Presentations Voluntary Agreements Pamphlets/Brochures/Newsletter Personal Contact Displays/Posters Site Visits/Open Days Advertising Press Releases Public Meetings Letters Stakeholder Interviews Announcement Signs on Site Focus Groups Community Responsible Plan Briefings Incident Report Immediate Response Statement Response Case Study/Working Paper Media Interviews Education and Training Materials Surveys
2.2
Human resource required to carry out the business will be allocated through our resources plan. Our resources plan should include documentation of what has to be marshaled to support our operational and organizational plans. One purpose of a taking a systemic look at resources is to glean every edge we can develop to make our business plan fully operational. The company-level resources plan is developed in conjunction with the other parts of the business plan during the planning conference. A few resources that our plan must address are:
Staffing levels Information requirements Facilities Technology Dollars Time Relationships with Business Partners and other companies Market Image Leadership
Some of these elements are hard-core mechanical things the resource planner must consider. Others may be new to the planner and are sometimes overlooked as resources.
How many people will it take to carry out our operational plan? How many are required to achieve our strategic plan? These are two basic, critical questions to ask when considering the personnel required to support our business plan. It is called staffing levels because it considers how many bodies are required to fill out our organizational structure. The people who work for CHC are one of our most important resources. They, not our product, will be the key to our organization in the future.
Any city, town or region has many potential sources of skilled labour.Apprenticeships and traineeships are the most obvious means of developing skilled staff. Traditionally, most apprentices come straight from school so a good first step is to establish contact with schools and career advisers.Another untapped source of labour is under-employment people. Frequently these are people who would like to work more hours. As an employer, we need to offer part-time or casual work opportunities so that these people can fit more than one job into their schedule.
2.3
At CHC we have developed a new approach to addressing our Performance Management needs. The following process outlines six key steps in the cycle and how we must focus on the system itself if we want better results from our employees:Evaluate our current performance appraisal process. Look at what type of feedback we are providing to our employees. Determine if there is anything we need to change or add to the evaluation itself. We may decide to build on what we already have or to develop a new system altogether.Identify organizational goals. Performance management systems help rally staff members around our organization's goals because they help staff know how they are to be involved in reaching that goal. Take the time to clarify what our goals are for the next year as a company.
Identify processes or procedures that could be simplified or done more effectively. Declare our sales goals for the next year or new products we would like to develop. Share our hope for better communication between departments and staff members.
Set performance expectations. As we sit down with each employee, clearly lay out our expectations for them.
Acknowledge what they are already doing well. Use this to encourage them. Share some weaknesses that we have observed in them and in their work habits, and how overcoming those would help their performance in the company. Identify specific things we would like them to accomplish over the next year, or whatever time frame works best for we. Prioritize these so the staff member knows which is most important and make sure to give them a deadline for each task.
Monitor and develop their performance throughout the year. As employees begin to work on their performance, keep an eye on how they are doing. If they appear to be struggling to meet performance expectations, talk with them and see if we can offer any support or coaching.
Evaluate their performance. At each performance review, let the employee know how they are doing. It is often helpful to assign a numeric value on a scale, rating the employee from "not meeting expectations" to "meets expectations" to "exceed expectations."
Provide feedback on their performance. Be as specific as possible, noting key examples of when they demonstrated a certain quality. Talk about the consequences or rewards of their performance. Let them know if they are on probation, are getting a raise in pay, changes in vacation days, or any other relevant action. Discuss any problems they may be having. Listen to their concerns or worries as we talk through potential solutions.
Set new performance expectations for the next year. Some items may be the same. However, since these are also based on organizational goals, we will need to re-examine our goals for the upcoming year.
There are four key steps in a performance measurement framework the strategic objectives of the organization are converted into desired standards of performance, metrics are developed to compare the desired performance with the actual achieved standards, gaps are identified, and improvement actions initiated. These steps are continuously implemented and reviewed:Understand Performance LevelsEstablish Measurement MetricsImplement and ReviewInitiate ImprovementEstablish Key Goals
2.4
Break-even AnalysisBreak-even Analysis
Monthly Revenue Break-even$46,455
Assumptions:
Average Percent Variable Cost33%
Estimated Monthly Fixed Cost$31,125
Profit and Loss StatementProfit and Loss
Year 1Year 2Year 3
Sales$943,882$1,085,465$1,248,285
Direct Cost of Sales$311,481$358,203$411,934
Other$0$0$0
Total Cost of Sales$311,481$358,203$411,934
Gross Margin$632,401$727,262$836,351
Gross Margin %67.00%67.00%67.00%
Expenses
Payroll$236,592$301,512$307,512
Sales and Marketing and Other Expenses$55,897$75,564$85,291
Depreciation$0$0$0
Leased equipment$2,004$2,004$2,004
Professional fees accounting$2,004$2,400$3,000
Professional fees legal$2,004$2,400$3,000
Licenses and permits$996$1,152$1,320
Office Supplies$2,004$3,200$4,800
Postage$996$2,300$3,300
Utilities$20,004$21,996$22,992
Insurance$15,000$18,000$21,600
Rent$36,000$36,000$36,000
Payroll Taxes$0$0$0
Other$0$0$0
Total Operating Expenses$373,501$466,528$490,819
Profit Before Interest and Taxes$258,900$260,734$345,532
EBITDA$258,900$260,734$345,532
Interest Expense$13,139$11,532$9,747
Taxes Incurred$84,637$87,220$116,125
Net Profit$161,123$161,981$219,659
Net Profit/Sales17.07%14.92%17.60%
Balance Sheet
Year 1Year 2Year 3
Assets
Current Assets
Cash$222,186$367,268$540,938
Other Current Assets$0$0$0
Total Current Assets$222,186$367,268$540,938
Long-term Assets
Long-term Assets$0$0$0
Accumulated Depreciation$0$0$0
Total Long-term Assets$0$0$0
Total Assets$222,186$367,268$540,938
Liabilities and CapitalYear 1Year 2Year 3
Current Liabilities
Accounts Payable$21,213$51,121$59,270
Current Borrowing$0$0$0
Other Current Liabilities$0$0$0
Subtotal Current Liabilities$21,213$51,121$59,270
Long-term Liabilities$177,050$152,443$126,055
Total Liabilities$198,263$203,564$185,325
Paid-in Capital$185,000$185,000$185,000
Retained Earnings($322,200)($183,277)($49,046)
Earnings$161,123$161,981$219,659
Total Capital$23,923$163,704$355,613
Total Liabilities and Capital$222,186$367,268$540,938
Net Worth$23,923$163,704$355,613
2.5
To produce high quality products in an increasingly competitive marketplace, the ability to efficiently discover, track, and correct incidents or failures found during product development, testing, and operations is crucial.A failure reporting, analysis and corrective action system (FRACAS) is a system, sometimes carried out using software, that provides a process for reporting, classifying, analyzing failures, and planning corrective actions in response to those failures. It is typically used in a business environment to collect data, record and analyze system failures.A FRACAS, or Failure Reporting, Analysis, and Corrective Action System, is a closed loop system used to improve the reliability of a product, service, process, or software application. The closed loop in a FRACAS refers to the systematic manner in which every issue that is reported is addressed, ensuring that no failure or incident is missed. The need for a FRACAS spans all industries and classifications, including hardware, software, process management, and services in both government and commercial sectors. Software-based FRACAS processes offer the added benefit of built-in analytical capabilities, allowing organizations to track key system metrics that include Failure Rate, MTBF, MTTR, Availability, Cost, and user-defined calculations, among many others. Built-in reporting and graphing features mean these metrics to can be trended with regards to time, severity, and many other factors. In addition, the effectiveness of the FRACAS itself can be monitored by tracking the overall improvement of the system as a result of the FRACAS.
Record the Failures or Incidents: Using a database management system and an established procedure, critical data associated with each failure or incident is recorded, and the process is initiated Analyze the Reported Failures or Incidents: Using the same database management system into which the failure or incident data was entered, established procedures are used to determine and record the root cause of the failure or incident Identify Necessary Corrective Action: Using the same database management system to track its development, implementation, and result, a corrective action plan must be developed and implemented to reduce or eliminate the reoccurrence of the failure or incident Review and Verify the Corrective Action: The effectiveness of the corrective action must be reviewed and recorded, using the same database management system, and the incident closed out per established proceduresNo one attempts a business anticipating failure, however sometimes ventures do not fulfill their promise.
We at CHC are committed to our concept and its viability.In the event that our venture cannot achieveprofitability and retire the encumbrances; we will first attempt to sell the operation and use the proceeds to clear all outstanding balances. If we are unable to sell the operation for sufficient proceeds we will forced to default whereby the NAB loan will be in senior standing. Any further outstanding balances will be borne by the investors on a weighted percentage basis of the total amounts due in bankruptcy proceedings.
3.1
The question is simple: Did the company hit the plan it established? If yes, the organizational performance is acceptable. If the answer is no, then excuses are not acceptable. If a company fails, then the president must be responsible and should answer to the board of directors for his or her failure to provide appropriate leadership and managership of the organization and its plan. It is that simple.
Managers are held accountable for their teams using the same command responsibility concept. The vice president is held accountable for making the sales figures or the research and development vice president is responsible and accountable for bringing new products in on schedule. Vice presidents answer to the president in the same fashion as the president answers to the board of directorsno excuses. Their appropriate bosses likewise hold other team leaders such as plant managers accountable.
We know from research that clear objectives with effective measures can improve performance by over 30%. So that we can have effective measures we need to monitor performance against the objectives. The key to effective monitoring performance is to identify a range of methods so we can then choose the method thats easiest to apply and most effective. Lets begin with the easy part monitoring performance against quantifiable objectives.
Monitor staff performance against quantifiable objectivesMethods: Sales reports Deadlines met Error reports Accuracy reports Documents Proposals Plans Budget forecasts Widgets producedThese tend to be the monitoring methods many managers are comfortable with because theyre about what the staff member does. Its not too difficult to see if the staff member is submitting accurate work or achieving a sales target and these are great monitoring methods for the quantity, quality and time elements of the jobWhere difficulties arise is when these are the only monitoring methods a manager uses because most jobs arent just about the what, theyre also about how the staff member does their job. Such as how the staff member: Works as a team member Works with customers Deals with problems Deals with change and so onIn summary, the staff members behavioursWhen managers only monitor the what of the job they only monitor staff performance for part of the job (and sometimes a relatively small part). If managers only monitor staff performance for part of the job then, usually, that is the only part that the staff member will feel its worth focusing on (no surprise there then!) What managers need to do isMonitor staff performance against behavioural objectivesHere are three ways to monitor behaviours Observation: Observation is about the manager taking a planned approach to watching their staff member in action. The idea is that the manager plans to observe the specific behaviours that they have described as performance objectives. For example, if the manager has agreed that one of the performance objectives for team work is contributing to team meetings then those are the specific behaviours they will plan to observe. Its about the manager:
Looking at the performance objectives they have agreed that relate to behavioural elements of the job and then Planning how they will observe those behaviours e.g. Paying particular attention to the staff members behaviour in the next team meeting
Report back: Report back is about the staff member reporting back to the manager on their performance. This is a really useful technique where the staff member is responsible for evidencing their performance against the objectives the manager has agreed with them A good example would be if the manager had an agreed a performance objective for effective time management which included takes action to manage interruptions. Then the staff member would simply report back to the manager with some examples of when they had taken action to manage interruptions
Feedback: Feedback is about the manager getting feedback from people on the staff members performance. This could be from: Customers Suppliers Team members Other departmentsIts important that managers only look for feedback:a) As agreed between the manager and the staff member andb) Described in the performance objectivesFor example, an objective related to Client Servicing is Client feedback reflects a high level of satisfaction . This is the feedback the manager and / or the staff member would focus on collectingHow to Monitor Staff Performance against Objectives A Key PrincipleThe wider the range of methods the manager uses, the more effective the monitoring will be because using a range of methods means they will gain a more balanced view of the staff members performanceThis means managers can then give their staff the type of performance feedback that staff tell us they want more of, because they find it constructive and motivational, and which improves performanceAnd of course we know what gets measured gets done and its impossible to measure without monitoring!
3.2
An effective performance measurement system helps to drive an organization towards the achievement of its strategic goals and is the basis for management decision making. Key areas of focus (Strategic Success Factors) are defined to identify areas where a company must be ahead of its competitors to achieve competitive advantage and Key Performance Indicators measure the achievement of strategy implementation.
A strategy should be cascaded down an organisation to measure its achievement at both enterprise-wide and business unit levels and to define a decision-making framework and to motivate management and employees.
Among the most frequently encountered issues in corporate performance measurement at CHC is:
Finance-dominated approach, focused on budget variance analysis Lack of support for business decision making Lagging result measures. Historical view of the business Lack of clarity and consistency in management reporting procedures, responsibilities, data sources, number and contents of reports Inaccurate and untimely management reporting Excessive manual efforts in the reporting process that create an administrative burden. Performance measurement not linked to strategic goals Insufficient control over corporate strategy execution.
KPIs are critical metrics that measure actual performance against predefined goals and objectives. There are typically two types of key performance indicators. The first measures real-time performance or predicts future results. These are helpful in ensuring that critical objectives aren't missed. The second type of KPI measures results of past activity. These indicators are like a report card to see how we did in a particular area.
Crafting sound KPIs is more of an art than a science. Although there are guidelines for creating effective KPIs (see sidebar), they do not guarantee success. A KPI team may spend months collecting requirements, standardizing definitions and rules, prioritizing KPIs and soliciting feedback in short, following all the rules for solid KPI development but still fail. In fact, the danger is that KPI teams will shoot for perfection and fall prey to analysis paralysis. In reality, KPI teams can only get 80 percent of the way to an effective set of KPIs; the last 20 percent comes from deploying the KPIs, seeing how they impact behavior and performance, and then adjusting them accordingly.Metrics used in performance dashboards are typically called key performance indicators because they measure how well the organization or individual performs against predefined goals and targets. There are two major types of KPIs: leading and lagging indicators. Leading indicators measure activities that have a significant effect on future performance, whereas lagging indicators, such as most financial KPIs, measure the output of past activity.Leading indicators are powerful measures to include in a performance dashboard but are sometimes difficult to define. They measure key drivers of business value and are harbingers of future outcomes. To do this, leading indicators either measure activity in its current state (i.e., number of sales meetings today) or in a future state (i.e., number of sales meetings scheduled for the next two weeks), the latter being more powerful because it gives individuals and their managers more time to influence the outcome.
At CHC KPIs must adhere to the new 10-point rule in order to be a valid KPI. A valid KPI should:
1. Reflect Strategic Value Drivers2. Defined by Executives3. Cascade throughout an Organization4. Be based on Corporate Standards5. Be based on Valid Data6. Be Easy to Comprehend7. Always Relevant8. Provide Context9. Empower Users10. Lead to Positive Action
3.3
Establishing effective performance management systems can have significant benefits for our business, as it can lead to happier, more motivated and better performing employees. Reviewing, refining and implementing performance management systems are ways of helping achieve these significant benefits.
Underperformance or poor performance can be exhibited in the following ways: Unsatisfactory work performance, that is, a failure to perform the duties of the position or to perform them to the standard required Non-compliance with workplace policies, rules or procedures Unacceptable behaviour in the workplace Disruptive or negative behaviour that impacts on co-workers.Underperformance is not the same as misconduct. Misconduct is very serious behaviour such as theft or assault which may warrant instant dismissal. In cases of misconduct employers should seek specific advice about how to proceed before taking any action.
There are many reasons why an employee may perform poorly. Some of the common reasons include: An employee doesnt know what is expected because goals and/or standards or workplace policies and consequences are not clear (or have not been set) Interpersonal differences There is a mismatch between an employees capabilities and the job they are required to undertake, or the employee does not have the knowledge or skills to do the job expected of them An employee does not know whether they are doing a good job because there is no counselling orfeedback on their performance Lack of personal motivation, low morale in the workplace and/or poor work environment Personal issues such as family stress, physical and/ormental health problems or problems with drugs or alcohol Cultural misunderstandings Workplace bullying.Underperformance should be dealt with promptly and appropriately by an employer, as employees are often unaware they are not performing well and so are unlikely to change their performance. Best practice employers understand that issues that are not addressed promptly also have the potential to become more serious over time. This can have a negative effect on the business as a whole as it can affect the productivity and performance of the entireworkplace.
A clear system for managing underperformance is good for both a business and its employees. Best practice employers are aware that ineffective performance management can dramatically reduce thelevel of performance in a workplace. Employees that perform well can lose motivation if they have to carry the burden of poor performing colleagues. Also, most employees who are not performing well would like toimprove. Negative attitudes to performance management, or a lack of credibility with the process, can be an indication of an inadequate performance management system. A consistent approach to performance management provides opportunities to address problems and generate effective solutions. A successful performance management process is one that supports the workplace culture and is accepted and valued by employees.Here is an easy to follow step by step guide to managing underperformance.Step 1 Identify the problemIt is important to understand the key drivers of performance or underperformance within the workforce.It is also important to correctly and specifically identify the problem. Some common reasons for underperformance are identified later in this guide. Step 2 Assess and analyse the problemWe should determine: How serious the problem is How long the problem has existed, and How wide the gap is between what is expected and what is being delivered.Once the problem has been identified and assessed, we should organise a meeting with the employee to discuss the problem. We should let the employee know the purpose of the meeting in advance so they can adequately prepare for the meeting.The employee should be allowed to bring a support person of their choice or a union representative to the meeting. Employers working at best practice will inform the employee that they can bring a support person as a matter of process. Step 3 Meet with the employee to discuss the problemIt is important that the meeting takes place in private and in an environment that is comfortable and non-threatening, away from distractions and interruptions.We should begin by holding a discussion with the employee to explain the problem in specific terms. From this conversation, the employee should be able to clearly understand: What the problem is Why it is a problem How it impacts on the workplace, and Why there is a concern.We should discuss the outcomes they wish to achieve from the meeting. The meeting should be an open discussion and the employee should have an opportunity to have their point of view heard and duly considered. We should listen to the explanation of why the problem has occurred or to any other comments the employee makes.When having this type of meeting, it may be useful in facilitating discussion to refer to recent positive things that the employee has done to show them that we also recognise and appreciate their strengths.Key points for employers to remember when holding the meeting are to: Talk about the issue and not the person Explore the reasons why there is an issue Clarify details Stay relaxed and encouraging, and Summarise to check our understanding of the situation.And, when discussing shortfalls in any area, it is important to check that the employee: Is aware that it is a task that is required of them Has been shown what is required, and Understands the gap between what is happening and what is required.Step 4 Jointly devise a solutionWhere possible, it is important that a solution is jointly devised with the employee. An employee who has contributed to the solution will be more likely to accept and act on it. When working out a solution, we should: Explore ideas by asking open questions Emphasise common ground Keep the discussion on track Focus on positive possibilities, and Offer assistance, such as further training, mentoring,flexible work practices or redefining rolesand expectations.A clear plan of action should be developed with the employee to implement the solution. This can be in the form of a performance agreement or action plan. Aperformance agreement or action plan can: Reflect an understanding of performance expectations and what is to be achieved over the specified time period (performance improvement milestones) Clarify roles and responsibilities of the employee Include strategies for training and career development Include timeframes for improvement (these may vary depending on the issue and needs of the business, however it is important to give an employee adequate time to improve their performance) Reinforce the value and worth of the role beingperformed. A date should be set for another meeting with the employee to review progress and discuss the employees performance against the agreed action plan. We should keep a written record of all discussions relating to underperformance in case furtheraction is required. Generally, it may also be used asevidence if legal action is taken about the matter.Step 5 Monitor performanceWe should monitor the employees performance and continue to provide feedback and encouragement.A meeting to review and discuss the employees performance should be held even if there is no longer an issue. This enables both parties to acknowledge that the issue has been resolved. We should provide both positive and negative feedback to the employee and should work with the employee to ensure that performance improvements are sustained.More serious action may need to be taken if the employees performance does not improve including further counselling, issuing formal warnings and ultimately if the issue cannot be resolved, termination ofemployment.
Termination of Employment
If an employees performance does not improve to an acceptable standard, termination of their employment may be an option. Employers cannot dismiss their employees in circumstances that are harsh, unjust or unreasonable. What is harsh, unjust or unreasonable will depend on the circumstances of each case. However, it is important to be fair to employees particularly when it comes to termination of employment. They should be given reasons for dismissal and an opportunity to respond to those reasons.Importantly, employers with fewer than 15 employees (based on a simple headcount) will be covered by special dismissal arrangements, which are different to those that apply to larger businesses. The special arrangements that apply to employers with fewer than 15 employees are: Employees will need to have worked for the business for 12 months in order to be eligible to make a claim for unfair dismissal, and If a small business employer strictly follows the small business fair dismissal code and the dismissal of their employee is not harsh, unjust or unreasonable, then the dismissal will be deemed to be fair. It is best practice to follow the code and fill out the small business fair dismissal code checklist at the time an employee is dismissed and we should keep the checklist with our records as it will assist us if an employee makes an unfair dismissal claim.
3.4
By moving beyond basic employee evaluation, job assessment and performance management we can strategically improve employee engagement, development and more. CHC has developed this five-step process that can significantly help us improve our performance management strategies.
1. Provide employees the opportunity to assess themselves. At the same time a manager or supervisor completes a performance appraisal, give the employee an evaluation form and have them complete a copy as well. While you may think that an employee will gloss over his own weaknesses, the opposite is more often the case. People are typically harder and more critical of themselves than others are. Getting their input on their own performance can open up lines of communication and allow the manager to more easily discuss the differences in opinion and perception between the two assessments.2. Gather information from a variety of sources. Rather than getting feedback and input only from the employees direct supervisor, ask those who interact with the employee to evaluate his performance as well. This might include customers or clients, coworkers, other departmental and executive level managers, team members, or anyone else who regularly communicates or collaborates with the employee and can provide information on his strengths and weaknesses.3. Help employees to understand how their performance ties into the companys overall vision. By letting an employee see the big picture, reminding her often of the companys mission statement, and clarifying how her contribution helps to fulfill the goals and strategies of the business, you give an employee a sense of purpose in her work. That makes it much more likely she will perform her job as well as she can.4. Provide continuing opportunities for employee development and advancement. Using the performance evaluation as a door to open discussion about the employees advancement and training needs allows you to determine areas that need improvement and help the employee work toward increasing his skill and knowledge. Online training courses that specifically address the recognized deficiencies can get the employee back on track and moving toward increased efficiency and effectiveness.5. Employee evaluations offer a strategic means for rewarding employee performance. Ensuring that employee performance evaluations are directly linked to compensation and employee rewards provides a fair system for monitoring pay raises and company bonuses. Such a system can help motivate employees to perform well, knowing that their future income depends on it.
Effective performance management can be dramatically improved by implementing these simple strategies and communicating their importance to every employee prior to annual evaluations.
4.1
Benchmarking
Benchmarking is a systematic process of searching for and encouraging the introduction of best practice. The three main forms of benchmarking are:
(1) Results benchmarking (comparing performance within and between organisations using performance indicators of effectiveness and efficiency); (2) Process benchmarking (analysing systems, activities and tasks that turn inputs and outputs into outcomes); and (3) Setting best practice standards (establishing goals and standards to which organisations can aspire).
Benchmarking typically involves a number of steps. Whatever the chosen approach or focus, the steps usually include:
Deciding why, when, and what to benchmark Analysing plans and performance (reviewing objectives and identifying performance indicators and own performance) Establishing benchmarking partners Obtaining performance data and analysing differences in performance Identifying best practice and the most useful improvements Implementing improvements in practice Assessing improvements and re-benchmarking
4.2
You have four basic approaches to preparing your business plan:(1) Prepare it yourself the old fashioned way. This means scouring websites and reading books to learn how to prepare a business plan.(2) Prepare it yourself using business plan software. Most software packages cost less than $100. They guide you through the process by asking you a series of questions about your business.(3) Hire an inexpensive business plan consultant to write the plan for you. Caveat emptor. You get what you pay for.(4) Hire an excellent business plan consultant to write the plan for you. If you do your homework, you get what you pay for.The advantages and disadvantages of each of these methods are as follows:ADVANTAGESDISADVANTAGESCOMMENTS
Do it yourself It costs relatively little (the price of a few books).Very expensive in terms of your time, especially if you do not have a strong business and financial background (you can count on 300-500 hours in most cases).This is probably most appropriate for an Idea Business Plan or an Operating Business Plan that will not be shown to investors.
Many free outlines can be found on the web.Mistakes can be very costly, especially if you are seeking equity funding (you only get one shot with most investors).
It can be a great way to think through the many issues facing a young venture.If you're not a good writer, you'll have to find a good editor.
It will force you to learn about subjects that fall outside of your core expertise, whether it is finance, marketing, sales, management, product planning, competitor analysis, or whatever.If you're not adept with accounting and finance, creating a financial forecast that is free of errors will be extremely difficult.
ADVANTAGESDISADVANTAGESCOMMENTS
Do it yourself WITH softwareRelatively inexpensive.Most software packages are not very flexible.This option may be appropriate if you plan to start a low-tech business like a restaurant or a store and are seeking bank or possibly even angel funding.
Some software comes with sample business plans for many industries that you can use as a starting point.The result looks "cookie cutter."However, you should be very wary about using this plan for VC or corporate investors, since a poorly written business plan will blow the only chance you have.
The rigid structure makes sure that you don't leave out anything important.You still have to write all of the text yourself, so if you're not a good writer, you'll have to find a good editor.
Still quite time consuming, although less so than doing it without software.
ADVANTAGESDISADVANTAGESCOMMENTS
Hire an INEXPENSIVE business plan consultantRelatively inexpensive (under $5,000, and sometimes even under $1,000).Most mass produce business plans using business planning software. They ask you a series of canned questions, fill in the blanks in the software, and send you the results with little or no value-added consulting. You are essentially paying them to type your responses into the software for you.Same comments as above. If you are lucky, you may find one of the few inexpensive consultants who produce reasonably good results. But do you really want to rely on luck as a strategy?
Saves you time.Many are part-timers who have never started a business themselves.
Quick turnaround times.More often than not, the business plan will require a complete rewrite if you plan to seek equity funding.
ADVANTAGESDISADVANTAGESCOMMENTS
Hire an EXCELLENT business plan consultantThe best consultants have written many plans that have raised capital, and they understand what investors want to seeFairly expensive (usually well over $10,000).If you are preparing an Equity Funding Plan and you have never written a funded plan before, you should give this option serious consideration.
You can save literally hundreds of hours. This is time you can spend building your business: team, product, intellectual property, customer base, distribution channels, etc.It can be difficult to distinguish between the excellent and the average business plan consultant (hint: look at their track records).Even if you know how to write a plan, you should be devoting your time to building your business.
They can generate value-added ideas in all areas, and can help you position your company for success.The business plan is often the only basis a potential investor has to decide whether or not to invite you to their office for that all-important first meeting. If you need medical attention, you hire a good doctor. If you need a contract, you hire a good lawyer. If a business plan is critical to your success, why wouldn't you hire the best consultant you can find?
They provide an objective outside perspective, and will challenge your assumptions.
They perform independent market and competitor research.
