Effectiveness of Reward and Appraisal System in Enhancing Productivity in Retailing Sector

This report evaluates the effectiveness of reward and appraisal systems in increasing retention and productivity in the retailing sector. It discusses the role of HR in implementing these systems and provides strategic recommendations for improving profit in the financial point of view.

Knowledge and Creativity
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Table of Contents
INTRODUCTION
This case study based on the British Sky Broadcasting Company Plc (BSkyB Plc) which
is satellite television broadcasting company. It was founded in 1990 by Rupert Murdoch and
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they offer their services throughout UK or Ireland. This assessment is about the financial
analysis of the company during 2013 to 2014. Along with this, evaluate that shareholders of the
company are satisfied with financial performance or not.
Reward and appraisal systems are the benefits and achievements that are received by
staff members within an organisation for their overall job performance. An effective appraisal
and reward system have significant impact on organisational culture, staff morale and
engagement levels of employees (White, 2016). It helps in to enhance performance and
motivation level of the employees in order to acquire target goals and objectives. This report is
based on Marks and Spenser which is a British multinational retailer with its headquarters in
London. Organisation specialises in providing high quality of clothing, food and home products
to their target customers. The following report is going to cover effectiveness of reward and
appraisal system in enhancing productivity of retailing sector.
MAIN BODY
TASK 3
1. Calculate financial ratio of BSkyB Plc
Gross Profit Margin: It is the profitability ratio which is required to calculate by the
organizations in order to identify financial health of the company (Bellos and Tzivanidis, 2017).
Also used to identify remaining amount after deducting cost of goods sold from total sales. It is
used to denote with percentage to evaluate how much gross profit company generate. Calculation
based on BSkyB Plc during the year 2013 or 2014.
Formula:
Gross Profit Margin Ratio = Gross Profit / Net Sales * 100
Calculations:
Particulars 2013 ( £'m ) 2014 ( £'m )
Gross Profit 2,906 3,016
Net Sales 7,235 7,632
Gross Profit Margin Ratio 40.16 % 39.51 %
Above data help the management to evaluate overall operational performance of the
company. It clearly mentioned that, GP margin reduces from 40.16 % to 39.51 % due high
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increase in the sales in comparison to gross profit, that is only £110m. BSkyB Plc unable to
cover their manufacturing cost, so managers should focus on minimising operational cost.
Working Notes:
Calculations 2013 ( £'m ) 2014 ( £'m )
Revenue 7,235 7,632
Less: Cost of Goods Sold ( 4,329 ) ( 4,616 )
Gross Profit 2,906 3,016
Operating Profit Margin: This ratio used to calculate the actual profit company earn
after reducing variable cost of production such as raw material, labour wage etc. This profit is
before deducting interest or tax which is also called EBIT (Chuand et.al., 2017). By use of
financial information of BSkyB Plc, company evaluate operating profit and its calculation
mentioned below:
Formula:
Operating Profit Margin Ratio = Operating Profit / Net Sales * 100
Calculations:
Particulars 2013 ( £'m ) 2014 ( £'m )
Operating Profit 1,330 1,275
Net Sales 7,235 7,632
Operating Profit Margin Ratio 18.38 % 16.70 %
Above results shows that operating profit margin of the company reduces. In 2013, it was
18.38 % and remain at 16.70 % in 2014. Organizational performance reduces due to increase in
operating expenses. Management should focus on it and build effective strategies to minimise
operational cost of maximise their profit.
Profit Margin Ratio: It is another profitability ratio which is also called net profit ratio
and companies will calculate to measure the actual profit business earn to the sales of goods &
services (Hasibuan and Syahrial, 2019). It also indicate that how well business expenses
managed by the managers. Calculation of this ratio mentioned below:
Formula:
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Profit Margin Ratio = Profit for the year or Net Income / Net Sales * 100
Calculation:
Particulars 2013 ( £'m ) 2014 ( £'m )
Profit for the year 979 865
Net Sales 7,235 7,632
Profit Margin Ratio 13.53 % 11.33 %
It has been analysed that net profit of the company decreases during 2013 to 2014 where
profit margin ratio is 13.53 % or 11.33 % respectively. Overall profit of BSkyB Plc reduces
because of increasing operational, selling & distribution expenses.
2. Analyse that shareholders of BSkyB plc satisfied with financial performance of the company
from 2013 to 2014
Shareholders of the company do not satisfied with overall financial performance of
BSkyB Plc because it reduces from 2013 to 2014. With the help of financial analysis, it will be
observed that gross profit, operating profit or net profit of company reduces which impact its
shareholders as well. In 2014, overall sales of the company increases approx 5.5 % but in result
profit of the company reduces.
In order to maintain shareholder's interest in the company, they decided to increase
dividend by 7 % that is good decision which is taken by management of BSkyB Plc company.
Around 32 % per share decided to pay their shareholders to satisfy them but it is very high
because further it will reduces overall profit more.
Manager of BSkyB Plc need to take effective steps in order to increase profitability
which is possible through minimising overall cost of production or increase sales. Company also
announce to increase number of customer but for this, they need to work on various aspects such
their services, marketing, operations etc. As per my point view, shareholders not satisfied with
overall performance due to decrease in profit throughout the years.
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3. Evaluate some options which recommended to the BSkyB plc to improve profit in financial
point of view
There are some strategic recommendations which will help BSkyB plc to improve profit
margin of the company which is further helps in attracting shareholders. Some of them
mentioned below:
 Remove unprofitable activities that generate cost but not contributing in the business
profit (Yüksel, Dinçer and Meral,2019).
 Company already achieve their objectives through increasing 33% customers during the
year. But make sure that, they satisfy all of them through providing effective or valuable
services which helps in generating revenue.
 Try to increase conversion rate where organization need to convert new lead in the
existing customer.
 BSkyB plc should review their current price strategy and make sure to increase their
services very frequent through targeting more people.
 Managers should focus on reducing overall direct cost will further show impact on gross
margin.
 BSkyB plc should follow benchmarking technique to compare their operational
performance with their competitors and identify the weaknesses that required
improvement in order to maximise their production as well as profit margin.
TASK 4
Evaluate the effectiveness of reward system and appraisal system in increasing the retention and
productivity in retailing sectors. 416
Retention of employees refers to ability of organisation to maintain its employees. A base
salary plays a n important role to encourage an employee to work at optimum level which is
required for them to sustain in their job. Success and failure of an organisation is totally
dependent on quality of employees found in the organisation. Reward and engagement system is
directly linked with employee mention. Reward management is basically a term which is related
with factors that satisfy and motivate staff members to expand themselves towards organisation
in order to achieve target goals and objectives. It helps an organisation to gain trust of the
employees and help them to be committed with the organisation which can stimulate them to
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retain for a longer duration in the organisation. Most of the organisations like Marks and Spenser
rely on rewards and appraisal system for employee retention. As this system helps in to motivate
employees to work with their full potential so the system will help in to enhance productivity of
the organisation (Azman and Ridwan, 2017).Reward system is concerned with both financial and
non -financial rewards such as training, development.
Appraisal and reward system in the retailing sectors are intensive programs which
encourage employees engagement and productivity of the organisation by offering increased pay,
bonuses, additional time off and other benefits in order to get job done in an appropriate manner.
It enhance profitability and productivity coupled with elimination of turnover rate. In context
with Marks and Spenser praising and rewarding an employee for a job inspire them to work
harder and to be more productive. It will enhance the productivity of overall organisation s all
staff members tends to work with their full potential and will perform all tasks and activities in
an affective way. Welfare and working conditions of the employees are critical for success of
organisation. Rewards and appraisals in any organisation is an achievement of desirable gaols
and objectives which eventually leads to productivity of the organisation (Plate and et.al., 2016).
Relationship between employers and employees is mutually reciprocal as employers expect their
staff members to give their best and employees expect from them to provide them some
incentives or motivation during their takes. Employees in retailing sectors are liked to be valued
and appreciated for their overall productivity. As workforce of the organisation is a critical
stakeholder and contribute for the success of company. To improve productivity, employees do
expect some opportunities through which they can get benefits such as safe working conditions,
fair pay and a work environment that would not pressurize them.
Role of HR
The HR plays an important role in integrating reward system and appraisal system with in
organisation. Thus, Human resource department of Marks and Spenser needs to motivate their
employees by offering them opportunities to get rewards and additional pay. It will help to
develop a positive and strong relationship with employees and HR manger and help to attain
target goals and objectives. The HR plays as intermediator between employees and head of
departments. As they are responsible for implementation of this with flexibility. There are some
other responsibilities of them which are described below.
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 They have role to design the whole process of appraisal system of company. In their roles
they follow some considerations from which they can enhance growth. They ensure about
role of each employee so that they can create system according to their key features.
 In this, they should design the system in such way that it does not take much time while
having simple process so that it can assign to all members. They should present
appropriate criteria that represent clear needs of performance.
 Their role includes to provide proper training to employees so that they can effectively
take part in process of system (Rusu, Avasilcăi and Huţu, 2016). The system must
effective so that it can understand to all employees that can help them to set their goals.
 It is role of HR to change the thinking of employees who does not acknowledge the idea
of appraisal and reward system. Their responsibility is to guide managers about providing
appraisal to hard working employees so that they does not feel discriminate from
company.
 The HR can also give feedback to head department of organisation about employees.
After appraisal, it is role of HR to provide appraisal to employees according to selection.
 It is necessary to identify the satisfaction from appraisal of employees so it can be done
by HR by taking feedbacks from employees.
CONCLUSION
From the above discussion it has been observed that financial analysis is most effective
tool which will helps the organizations to identify financial performance. It further beneficial for
the managers to make strategic decisions accordingly.
From the above task it can be concluded that reward and appraisal system plays a vital
role in achieving success for the organisation and to motivate their employees to work with their
full potential. They are the incentives program which encourage staff members to perform all the
activities and task in an efficient manner in order to improve productivity of the organisation.
The human resource management plays a vital role as they develop strategies to retain employees
in the organisation and to motivate them to acquire target goals and objectives.
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REFERNCES
Books and Journals
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