BSBMGT402A – Implement operational plan 3

BSBMGT402A IMPLEMENT OPERATIONAL PLANPRESENTATION 3

3.1 MONITOR PERFORMANCE SYSTEMS AND PROCESSES

Improvement in the organisation cannot occur unless there is a way of measuring performance and gathering feedback.


In order to monitor performance systems and processes in your workplace you will need planning and organising skills.

These skills will enable you to:

•Plan ahead and manage your time.

•Organise your own work.

•Monitor performance, tasks and people in a logical, effective way.

•Ensure that outcomes are achieved as planned.


Your organisational and time management skills will also enable you to:

• Sequence processes and activities.

• Run formal and informal meetings.

• Meet timelines.

• Ensure all relevant information and documents are completed and filed in an appropriate manner.

3.1.1 ASSESS PROFIT/PRODUCTIVITY PLANS AND TARGETS

Performance measures can be categorised into two basic groups:

• Those that relate to results, such as competitiveness or financial performance.

• Those that relate to the determinants of the results, such as quality, flexibility, resource utilisation and innovation.

3.1.1 ASSESS PROFIT/PRODUCTIVITY PLANS AND TARGETSMeasures of the operational plan usually take in 5 fundamental, but overlapping, areas:

3.1.2 PROFIT

• Gross profit – calculated by deducting the cost of sales of a business from its sales revenue.

• Operating profit – involves calculating the gross profit, then deducting overhead expenses.

• Pre-tax profit – calculated by deducting the non-operating expenses from the operating profit and adding the non-operating revenues.

• Net profit – the profit that remains after tax.

Generally, the profit of a business is the difference between its revenues and its costs. It is important to consider these main types of profit:

3.1.2 PROFIT

Profit margin ratios formulate these four types of profit. The ratios are typically converted into percentages. This makes them easier to understand. The following are examples of profit margin ratios:

3.1.2 PROFIT

Return on Assets (ROA) ratios can be used to compare performance from year to year. It is calculated by:

3.1.2 PROFIT

The denominator is the average total assets employed during the year.

Profitability ratios measure the profitability that the organisation is able to generate as well as the return it provides on its physical facilities and the funds it generates.

Return ratios are net profit ratios, while margin ratios compare gross profit, operating profit, pre-tax profit and net profit to revenue.

3.1.3 PRODUCTIVITY

There are many productivity measures that an organisation can measure. These include:

• How well the organisation utilises new knowledge.

• Whether the organisation is working at an economy-of-scale level.

• Employee/worker motivation levels.

• Levels of absenteeism and staff turnover.

• How resource allocation is used to maximise organisational goals.

• The quality of the organisation’s management.

3.1.3 PRODUCTIVITY

Productivity can be measured as a ratio. It compares what is produced and what is used to produce it, or outputs divided by inputs.

3.1.3.1 MEASURING INPUTS

Inputs can be classified into 4 types:

• Labour.

• Materials.

• Capital.

• Energy.


Each input can be used as a partial measure of productivity, depending on circumstance. For example:


Outputs and inputs can be measured in physical units, values or both. A unit of output is the physical count of something and its value at base cost.

Numbers and units used must be weighed against inflation and the difficulty of the output.

Some labour tasks are more time intensive than others and this needs to be accounted for.

3.1.3.1 MEASURING OUTPUTS

An output is a physical entity. In order to measure it, it must be countable uniformly over time and a direct result of identifiable activities.

3.1.3.3 MEASURING PRODUCTIVITY

However, productivity measurement will provide a tool to assess the efficiency and effectiveness of the company, to forecast investment requirements, and to estimate the impact of cost increases or technological advances.

Measuring productivity is time consuming and demanding as inputs and outputs must be defined, appropriate formulas developed, worksheets for keeping count printed, data collected, and calculations made.

3.2 ANALYSE FINACIAL INFORMATION TO MONITOR PROFIT AND PRODUCTIVITY

Reviewing financial information such as a budget is a useful tool to monitor profit and productivity.

3.2.1 BUDGET

A budget is a plan to:

• Control your finances.

• Ensure you can continue to fund your current commitments.

• Enable you to make confident financial

decisions and meet your objectives.

• Ensure you have enough money for your future projects.

3.2.1 BUDGET

Your budget can serve as:

• An indicator of the costs and revenues linked to each of your activities.

• A way of providing information and supporting management decisions.

• A means of monitoring and controlling your business.

3.2.1 BUDGET

To use you budget effectively you will need to review and revise it regularly. Using current budgets enables you to manage your cash flow and identify what could be achieved within the next budget period.

There are 2 main areas to consider when reviewing your budget:

•Income.

•Expenditure.

3.2.1.1 INCOME

Each month you should review your actual income with your sales budget. To do this, you should:

•Analyse the reasons for any shortfall.

•Consider the reasons for any particularly high turnovers.

•Compare the timing of your income with your projections.

Analysing this information will help you set future budgets more accurately and allow you to take actions where needed.

3.2.1.2 EXPENDITURE

Any discrepancies should be investigated and reported.

You will also need to review your actual expenditure regularly. This will help you to predict future costs with greater accuracy.

You should:• Look at any fixed costs that differed from your budget. • Check that your variable costs were in line with your budget. • Analyse any reasons for changes between turnover and costs. • Analyse differences in the timing of your expenditures.

3.3 IDENTIFY AND ACT ON UNSATISFACTORY PERFORMANCE

Performance management is a set of activities that assess if goals and objectives are being met.

3.3.1 MANAGING PERFORMANCE

There are several ways to manage performance. It can be achieved by:

• Setting clear performance expectations.

• Providing fair and accurate feedback.

• Helping to solve everyday problems.

Performance management is a process and should not be confined to annual performance appraisals – it needs to be managed every day.

3.3.2 UNSATISFACTORY PERFORMANCE

• What is the specific nature of the unsatisfactory performance?

• Has the staff member worked at the required standard in the past?

• Is there a mismatch between the capabilities of the employee/worker and the responsibilities of the position?

• Is the performance situation temporary?

Inevitably there will be staff performance that is unsatisfactory and/or requires improvement. In dealing with unsatisfactory performance it is vital to identify the cause. You should ask questions such as:


Both the employee/worker and the manager need to:

• Be clear about the expected level of performance or behaviour and identify what would meet performance standards.

• Establish goals and timeframes that are achievable.

• Ensure there are specific coaching supports, resources and feedback.


If informal attempts to address unsatisfactory performance fail, leaders have an obligation to implement formal procedures.

The following principles apply when addressing unsatisfactory performance.

3.3.2.1 TIMELINESS

Unsatisfactory performance must be addressed as soon as possible.

If the behaviour is not addressed quickly it is seen as condoned by management.

3.3.2.2 NATURAL JUSTICE

The rule of natural justice should be followed. Essentially, leaders should follow these basic rules known as:

• The hearing rule, requiring that a decision-maker must give a person whose interests may be affected the chance to be heard.

• The bias rule, requiring that the decision-maker be free from bias and consider the situation objectively.

• The no evidence rule, meaning that the decision must be made on logical evidence.

3.3.2.3 PROCEDURAL FAIRNESS

The process leading to the decision must be fair and adhere to all company policies and procedures. It is also important that any relevant regulations or legislation are taken into consideration.

3.4 SUPPORT COLLEAGUES IN THE USE OF RESOURCES

Leaders are required to encourage teams and individuals to use resources in a way that is safe, economical and efficient. This can be achieved through:

• Supervision.

• Mentoring.

• Coaching.

Supervision involves overseeing the work of teams or individuals.

3.4.1 MENTORING

Mentoring involves a personal development relationship between a person with less skills or knowledge in the use of the resources working with a more experienced person.

The focus of mentoring is on changing behaviour.

3.4.1 MENTORINGTechniques commonly used by businesses for mentoring are:

AccompanyingMaking a commitment in a caring way, involving learning alongside the learner.

SowingExplaining things to the learner that may not make sense at first, but will become apparent to the learner when the situation arises.

CatalysingPlunging the learner into change, provoking a different way of thinking, a change in identity or re-ordering values.

ShowingMaking something understandable by using your own behaviour to demonstrate a skill or explain something.

HarvestingCreating awareness of what has been learned by asking questions and getting the learner to draw conclusions.

3.4.2 COACHING

The following are some tips for effective coaching:

• Ask permission to establish the boundaries of the relationship between the coach and the learner.

• The coach is not in control; they should influence the learner through their knowledge, effective communication techniques and relationship with the learner rather than making decisions for them.

Coaching involves supporting an individual or team through the process of achieving a specific result.

3.4.2 COACHING

• Be knowledgeable, as the learner will seek information when they are most uncertain. Enhance their abilities by asking for their opinion. If you don’t know the answer, admit that you don’t know, check and find out.

• Help the learner develop their own solutions by providing options and recommending resources. Give your opinion and discuss what you would do, but allow the learner to make up their own mind.

3.4.2 COACHING

• Use effective communication skills, including listening to the specific needs of the learner and what the learner is not saying verbally.

• Be an educator, as your goal is to make the learner self-sufficient by giving them the tools they need to complete the tasks on their own.

• The techniques you use should depend on the needs of the learner. Remember that each learner will have his or her own unique learning style. You need to adapt your coaching or mentoring to suit them.

3.5 PRESENT RECOMMENDATIONS FOR VARIATIONS TO OPERATIONAL PLANS

During your monitoring of the operational plan you will come across variances between what is planned and what actually occurs.

3.5.1 VARIATIONS TO THE OPERATIONAL PLAN

Materials variances may include the usage and amounts used or the cost prices. These variances may occur as a result of defects or rejects due to:

• Poor quality materials.

• Poor quality tools.

• Poor workmanship.

• Loss or theft.

3.5.1 VARIATIONS TO THE OPERATIONAL PLAN

Price variances usually result from changed supplier prices or change of suppliers.

Labour variances can occur when more hours are required to produce or deliver a service than expected. Wages increases or increases in overtime may also result in variances to the cost of labour.

Overhead costs variances can occur as a result of increased use of variable items from reworks, poor workmanship or poor work practices.

3.5.2 REPORTING ON VARIATIONS

Depending on the type of variance, it will need to be reported to one of the following:

• Other affected work groups or teams and groups designated in workplace policies and procedures.

• Those who have the authority to make decisions and/or recommendations about operations such as workplace supervisors or other managers.

Variances need to be reported and records kept.

3.5.2 REPORTING ON VARIATIONS

Whatever types of variances are experienced, they will need to be addressed.

You will need to determine the cause of the variance.

You may also need to make recommendations for changes to the senior management team, other affected teams or financial controllers.

3.6 IMPLEMENT PERFORMANCE SYSTEMS, PROCEDURES AND RECORDS

In monitoring your operational plan and implementing the various procedures and systems, you will need to keep records of your progress. You will also need to report on these results.

To do this you will need the literacy skills to access and use workplace information as well as to read and review a range of documentation and records.

3.6.1 USING INFORMATION AND KEEPING PERFORMANCE RECORDS

When reading these documents, try:

•Scanning through them first to get a rough idea of what they are about.

•Reading summaries or plain English versions if they are available.

•Using headings as a guide.

•Using the internet to attempt to put the information into context.

•Removing distractions such as noise or interruptions when you are reading.

Organisational documents and records can be challenging to read and understand. They are often lengthy and consist of complex figures and information.


Your organisation may have databases or other information management systems to track performance records. You will need to be familiar with these.

Performance records may include:

•Performance improvement plans.

•Performance management plans.

•Revised budgets.

•Financial records.

•Data supporting key performance indicators.


• Records of variances.

• Proposals for changes.

• Records from consultative processes.

• Individual and team performance appraisals.

• Complaints.

• Suggestions for improvement.

3.6.2 INTERNAL AND EXTERNAL REPORTING

You will most likely be required to prepare and submit both internal and external reports on the performance of your operational plan.

3.6.2 INTERNAL AND EXTERNAL REPORTING

When preparing these reports you should:

•Keep them short.

•Remember who you are writing them for and tailor the information to meet their needs.

•Pay attention to your grammar and make sure the information is clear.

•Proofread them.

•Format them carefully and use tables or graphs to sum up key data.

• Present the most important information first and the least important information at the bottom of the report.

• Include any significant risks and explain how you are dealing with them.

• Include a brief status summary.

3.6.2.1 INTERNAL REPORTS

When reporting internally, you need to consider:

• Your organisation’s reporting procedures.

• The comprehensiveness and structure of your report.

• Time needed to take actions to correct performance issues.

• Difficulties that may arise in solving performance issues.

3.6.2.2 EXTERNAL REPORTS

When reporting externally, you need to consider:

• The performance objectives and key performance indicators.

• How well objectives were met and reasons for any targets that were not met.

• A balanced view of the performance.

• An honest explanation of successes and failures.

• The significance of your performance measures.

3.6.2.2 EXTERNAL REPORTS

• Trends, problems and progress.

• Any relevant statutory reporting requirements.

When reporting on performance, consider who you are reporting to and the purpose of reporting.

This will help you present your information in a suitable manner.

BSBMGT402A – Implement operational plan 3

Education

Transcript of BSBMGT402A – Implement operational plan 3