Performance Improvement and Management in Health and Social Care

This document discusses performance improvement and management in the health and social care sector. It explores strategic planning models, such as benchmarking, and the usefulness of DuPont analysis and ratio analysis. The document also evaluates the benefits and limitations of these approaches and provides recommendations for business growth.

Performance improvement and
management in health and social
care

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
Strategic planning model.............................................................................................................3
TASK 2............................................................................................................................................6
a. Usefulness of DuPont analysis................................................................................................6
b. Ratio analysis..........................................................................................................................8
TASK 3..........................................................................................................................................10
Critically evaluating the use of multi- dimensional and non- financial models of the
performance management.........................................................................................................10
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
Performance improvement and management is useful in attaining the better performance
and growth associated with the underlying business problem within the health care. This study is
also critically evaluate the benefits and limitations related with the strategic planning model with
appropriate set of recommendation for the business growth. Furthermore, this study also
evaluates the various ratios using the financial statements of the company. This study will
highlight on the critically evaluating the use of multi- dimensional models and and non- financial
models associated with the performance management. BME Luxury Care Home is considered to
be as a registered business within the England which assist in providing person centred care
services to the people within a home like environment.
TASK 1
Strategic planning model
There are various types of strategic planning tools that can be implemented by the
organization for the purpose of business growth and expansion in care sector in England. The
two most widely used methods are stated below.
Benchmarking
This is the most popular strategic tool which are being utilized by the organization for the
purpose of evaluating their performance with the other business organization in the industry. It
takes into consideration products, processes for the comparison and the comparison is done with
the companies which is best in the industry (Horseman, 018). Under this, certain type of standard
is set based on which the performance is evaluated. These standards are known as benchmarking.
It is mainly used for gaining competitive insight and is also useful in collecting relevant
information based on the performance. There are two types of benchmarking, which are, internal
benchmarking, external benchmarking. In internal benchmarking, the comparison is carried out
among the teams and individuals within the same organization. External benchmarking refers to
the process of comparison of the business performance with other company peers.
Advantages:
Implementing creative ideas: The benchmarking helps the business entity in finding out
the key features and after finding it, the organization can compare the same with its competitors.
In case there is any gap and filling is required, then the management starts implementing certain
creative ideas for reducing the gap.

Increased competitions: While doing business, there are times when business faces tough
competition and that competition provides assistance to the company in maintaining its position
in an effective way in terms of its success rate. Therefore, benchmarking helps in increasing the
healthy competition.
Developing improvements: Benchmarking is basically a comparison which helps in
identifying the areas of improvement in the various business activities (Ramón, Ruiz and Sirvent,
2018). This helps the company in developing those improvements for the growth of the
company.
Identifies essential activities: The major advantage of benchmarking is that it helps in
identifying their own essential business activities which can help in improving the organizational
profits. Thus, benchmarking is very crucial for all business organizations which helps in
delivering value effectively.
Increased performance: Since, the benchmarking identifies all the important and
relevant features and essentials of the organization along with the needs and wants. This assists
the management in increasing the performance level.
Disadvantages:
Stabilized standards: After finding out the areas of improvement, the organizations
incorporates ideas with the aim of improving their productivity and this leads to stabilizing their
standards in respect to only one aspect irrespective of its course of action.
Insufficient information: There are times when businesses use different techniques for
gathering the information which leads to insufficient information about the organization which
may lead to tremendous losses to the business.
Increased dependency: Companies think that benchmarking helps in improving their
company position but one thing that companies forget that compared company has been at top
because of their hard work. Therefore, the company is highly dependent upon the other company
for implementing strategies that made that company successful.
Key performance indicators
KPIs is the performance measuring tool that helps the management in effectively
monitoring and tracking the progress and growth of the company (Kylili, Fokaides and Jimenez,
2016). It highlights the areas where the task or activity requires improvement. Under this,
realistic and achievable goals are being set which makes it easy for the employees to achieve it.

Advantages:
Measurable results: The main purpose of KPI is to monitor the progress and its provides
result in the form of numbers and statistics which helps in understanding which part of the task
requires more focus.
Alignment: For large organization having large number of staffs, it becomes difficult to
track the performance of each, thus, KPI provides support to everyone to stay aligned with the
set goals as it makes the outcome accessible for everyone who is being involved in the project.
Rewards: KPI provides an equal opportunity and chance to the employees to prove their
performance and also helps the managers to look at the rewards accordingly. It also helps the
employees to keep a track of their performance and work on improving themselves.
Future Strategies: Tracking progress using this approach will assist the managers in
redesigning the business strategies which is based on the previous performance (Banu, 2018). As
the KPIs helps the management in understanding everyone's capabilities and the performance
and productivity level, which provides assistance in making or setting future plans and goals.
Disadvantages:
Decrease in Quality: It is mainly focused on attaining the short term goals, this results
into letting employees lose focus in meeting with the quality of work. Goal setting tends to
getting metrics more weightage than the authenticity of the work.
Short-term Oriented: The KPIs helps in attaining the short term goals of the which can
turn out to be disadvantageous for achieving the long term goals.
Standardization: The goal is result oriented which might put pressure over the employees
leading to decrease in the level of creativity among the employees. Employees are aligned with
the older working methods which helps in achieving the goals quickly. Thus, it discourages the
employees in implementing innovative approaches.
Loyalty: KPIs only indicates the progress levels, therefore, it becomes difficult to track
the quality of the work done which in turn might affect the loyalty among the clients and the
organization. This will have a negative impact over the organization which may result into losing
the clients and weakening of bond with them.
Recommendation
Benchmarking is the common practice which is useful in the establishment of the
baseline and defining the best practice. It is useful for identifying the improvement opportunities

and is significant in the creation of the competitive environment. Integration of the
benchmarking strategic planning model leads to higher growth for the business (Bevan, Evans,
and Nuti, 2018). Moreover, when the management and the directors of the company integrates
the benchmarking process then it leads to the generation of the valuables set of data and is also
useful in encouraging the new idea and practices within the company. This eventually leads to
better decision making by understanding the key relevant aspects of the study. The
benchmarking is one of the key significant measure which is useful in overcoming the
complacency. Drilling down the performance gaps is useful in evaluating the key areas for
improvement. It is significant in developing the standard set of procedure and the metrics to
carry out the specific business operations and process (Rivenbark, Roenigk, and Fasiello, 2017).
The benchmarking is a prominent approach because it helps in enabling the culture and mindset
with the continuous improvement within the operational performance and productivity. The
benchmarking is referred to as one of the prominent measure which helps in evaluating the gap
when compared with the key standards of the study. This is an effective recommendable measure
because it discovers the best performance within the specific company. Benchmarking is an
appropriate practice which is useful in comparing the business process and significant
performance metrics which helps the industry in beating the best from the key competitors. It is
beneficial for the directors and managers of the company to gain independent perspective about
how the company has been performing when compared with the key competitors. Benchmarking
is useful for the management team and directors of the company because it is useful in
monitoring the performance of the company and managing change. The director of the company
set the performance expectations and helps in developing the standardized set of procedure and
metrics which in turn are considered to be necessary for meeting the needs and expectations of
the customers (Kuhlmann, and Bogumil, 2018). Benchmarking is a significant procedure because
it helps in enabling the culture and mindset for the continuous improvement. Benchmarking
helps in the identification of the areas which helps in examining the gaps between the standards
and also results in the improvement within the performance standards.
TASK 2
a. Usefulness of DuPont analysis
The Du Pont analysis is used by the business for evaluating the parts of the company's
return on equity. This model helps the shareholders or investors in determining what financial

activities are leading to the change in the company's return on equity. It is useful for the
shareholders in determining the segment contributing to the overall ROE. This is a reliable
indicator of the performance of the business (Saus–Sala and et.al, 2020). The Du Pont analysis is
a very important technique as it includes different drivers of return on equity. This allows the
investors of the company in focusing on the key metrics of financial analysis and performance
measurement individually which helps in identifying the strength and weaknesses of the
company. It is mainly the breakdown of ROE as stated below.
Return on Equity = Net Profit Margin x Asset Turnover Ratio x Financial Leverage
= (Net Income / Sales) x (Sales / Total Assets) x (Total Assets / Total Equity)
Net profit 57881
Total revenue 3269404
Total Assets 2502992
Shareholder's Equity 357842
Total margin ratio Net income/sales 1.77%
Total asset turnover Sales/Total assets 1.31
Equity multiplier Total assets/Shareholder's equity 6.99
Return on equity (ROE) Net income/shareholder's Equity 16.18%
There are three components of it and a detailed analysis of its is given below.
Total margin ratio: It is the profitability ratio It is derived by net profit divided by total
revenue of the organization. The major purpose is to maintain the healthy profit margin and
identify the ways for increasing the growth and reducing the expenses, or increasing the prices
each having an impact over the ROE. The net profit margin of the company is 1.77% while that
of industry is 3.5% which is very low and this indicates that the company is not effective in
generating greater amount of profits with respect to its sales which might be because of increase
in cost or decrease in the revenue of the BME Luxury Care Home.
Total asset turnover ratio: This ratio is used for analysing the efficiency of the business
in utilizing its assets. This ratio varies from industry to industry but is useful in doing
comparative analysis among the companies within the same industry. If the asset turnover ratio is

high it is favourable for the return on equity. The asset turnover ratio of BME Luxury Care
Home is 1.31 while that of industry is 1.5. there is a minor difference, thus, the company should
work on effectively managing its assets in generating revenue.
Equity Multiplier: It states about the usage of debt for financing the business. The
purpose is to determine the risk the company is facing. BME Luxury Care Home has equity
multiplier of 6.99 in contrast to industry figure of 2.5 which is much higher and indicates that the
company is at very risky situation as financial leverage is very high.
Return on equity: The purpose of this ratio is to know how effectively company is
utilizing its shareholders money in generating profits. The ROE of industry is 13.1% while of
BME Luxury Care Home is 16.18% which shows that company is effectively managing its
shareholders or investors money.
b. Ratio analysis
Computation of financial ratios
Net income 57881
Total Assets 2502992
Return on assets (ROA) Net income/Total assets 2.31%
Current assets 608992
Current liabilities 445150
Current ratio Current assets/current liabilities 1.37
Cash on hand 105737
Operating expenses 89048
Non-cash expenses 85000
Days cash on hand
Cash on hand/((operating expenses-non-cash
expenses)/365) 221.74
Average accounts receivable 215600
Sales 3269404
Average collection period Accounts receivables/sales * 365 24.07

Total debt 2145150
Total Assets 2502992
Debt ratio Total debt/total assets 85.70%
Total debt 2145150
Total equity 357842
Debt-to-equity ratio Total debt/total equity 5.99
Net sales 3269404
Total fixed assets 1894000
Fixed asset turnover ratio Total sales/Fixed assets 1.73
Return on assets: This ratio measures how the business entity is utilizing its assets for
the purpose of generating higher earnings. Higher the ratio more favourable it is for the
company. The ROA of the company is 2.31% which is lower than the industry ratio of 5.2%
thus, company should monitor and identify the cause of lower ratio so that measures can be taken
to improve it.
Current ratio: This ratio assist in evaluating the liquidity position of the business for
paying back its short term liabilities (Norman, 2018). The current ratio of the company is 1.37
which is low in comparison to the industry ratio of 2. this indicates that company is having less
liquid assets with respect to other companies in the industry.
Days cash on hand: It means ideally for how any days company is having cash on hand
to pay out its operating expenditure with the current cash available. As per industry, the ratio is
22 days while that of company is 221.74 days which is very high and means that company has
kept its cash idle.
Average collection period: This ratio indicates how quickly the company is able to
recover the due amount from its debtors. The average collection period of BME Luxury Care
Home is 24.04 days while that of industry is 19 days which depicts that company is effective in
collecting remaining amount.

Debt ratio: It measures the financial leverage with respect to total assets (Alexander,
2018). The debt ratio of company is 85.70% in contrast to industry ratio of 69%. Higher ratio
indicates unstable and risky business situation.
Debt-to-equity ratio: It indicates proportion of debt in capital structure of the company.
The ratio is 5.99 which is higher than 2.5 of industry ratio means that the company is highly
levered firm Thus, company should reduce the ratio which results into lowering the financial
burden.
Fixed asset turnover ratio: This indicates how efficiently the business is using its fixed
assets which results into generating greater sales. Higher the ratio better it is for the company.
The ratio of company is 1.73 which is higher than 1.4 of industry. Thus, company is optimum
utilizing its fixed assets.
TASK 3
Critically evaluating the use of multi- dimensional and non- financial models of the performance
management.
Non- financial models are referred to as the quantitative measure which has been used to
effectively reflect on the progress and success of the organization in association with specified
business goals and objectives of the company. These are considered to be as the fairly easy and is
useful in collecting and effectively analysing the measures which tends to lag key indicators. The
non- financial measures are crucial because it is useful in evaluating the competitive strength,
profitability and long term key strategic goals (Dimitropoulos, Kosmas and Douvis, 2017).
Complying with the non- financial models helps in attaining the competitive strength,
profitability and long term strategic goals of the company. It is useful in evaluating the objectives
which tends to put greater emphasis on the innovation, employee satisfaction and quality. It is
useful in evaluating the short term and long term performance against the accounting yardsticks.
Non- financial models are considered to be as the better indicators related with the future
performance. It is useful in maximizing the financial and non- financial measures associated with
the company. Non- financial models is useful in increasing the loyalty and the key revenues
associated with the existing customers. It is prominent to provide the forward looking options
between the missing link, financial and beneficial activities. There are key non- financial
measures such as retention rate, customer satisfaction index, conversion rate, net promoter score,
product defect measure, overdue project percentage, on- time rate, efficiency measures, Key

performance indicators, benchmarking, balanced scorecard, employee productivity rate, internal
promotion rate, etc. are the key performance measurement which is useful in evaluating the
performance of the company and attaining the key goals and objectives.
Multidimensional performance models are referred to as the effective key frameworks
which is useful in using the performance measurement information from varied dimensions or
areas which is useful in creating corporate strategy. It is also significant in allocating and
prioritizing the key resources and assist managers in the decision making process. This way it is
useful in changing the current policies and also directing in order to meet the key performance
goals of the BME Luxury Care Home. Multidimensional performance models are usually based
on the specific strategy of the company. It is significant in evaluating the range of non- financial
measure. It is a flexible model and can be changed over a specific period of time whenever there
is a need for change. It is useful for the BME Luxury Care Home because it has been
significantly intended to attain continuous improvement and high degree of satisfaction among
the employees (Anjomshoaeand et.al., 2017). On the other hand, the traditional performance
measurement tends to mainly focus on carrying out financial performance measurement which is
useful in measuring capital efficiency and the key profitability of the company. This measures
ignores the key relevant factors related with the customer satisfaction, innovation, morale of the
employees and effectiveness of the business process.
Balanced scorecard is referred to as one of the key strategic performance management
metrics which is useful in identifying and also improving the range of internal business functions
which leads to exceptional results and outcomes for the business. Balanced scorecard are
significant because it helps in measuring and relatively providing the feedback to the
organization. It is prominent in gaining quantitative results for the executives and the managers
which helps in gathering and also interpreting the information which are useful for the effective
decision making within the organization. The key benefits which in turn are mainly linked with
the effective strategic planning. The balanced scorecard is significant as it helps in mapping the
key initiatives and projects related with the company. It is useful in the better alignment of the
projects and it helps in ensuring the companies that they are appropriately measuring which is
prominent for the business (Ndevu, and Muller, 2018). The balanced scorecard is useful in
improving the performance reporting and results in better organizational alignment which helps
in ensuring that all the support functions and business units are working together in order to

attain the common goal of the BME Luxury Care Home. The Balanced scorecard is significant in
improving the communication strategy and execution process which helps in helps in engaging
the employees and external stakeholders of the company towards attainment of the performance
goals. The balanced scorecard is one of the key significant measure which helps in improving,
identifying and also controlling the various set of business functions which are necessary for
attaining the best possible resulting outcomes. It is very useful in measuring the four key aspects
which are associated with the business which mainly includes business process, learning and
growth, finance and customers. The balanced scorecard is one of the prominent performance
management matrix which tends to identify the factors and hinders the performance of the
business (Mehralian, and et.al., 2017). It is useful in outlining the key strategic changes which
has been tracked by the future scorecards. The performance of the BME Luxury Care Home can
be significantly measured at the organization level by effectively sharing the key results with the
team, supervisors, managers and employees. The information is needed because it is useful in
aligning the organizational goals and employee performance plans.
The integration of the financial and non- financial performance measure which are
properly linked with the strategic implementation plan is useful for the management team of the
BME Luxury Care Home to effectively taking decisions which are significant for the welfare of
the organization (Park, Lee and Chae, 2017). The balanced scorecard is highly significant
because it helps in determining the effectiveness of the organization and taking necessary
corrective action when necessary. The balanced scorecard is useful for the management team
because it evaluates the satisfaction level of the customers by taking into consideration price,
quality and availability of the products and services. The balanced scorecard is useful for the
management team because it evaluates how the business process and functions has been carried
out by analysing any sort of bottlenecks, shortages and waste within the company. The key
financial data such as expenditures, income and sales are also appropriately analysed (Nørreklit,
Kure, and Trenca, 2018). It helps in the management of the company to take key relevant
decisions by examining the various key financial metrics such as budget variance, income targets
and key financial ratios. Learning and growth within the organization has been analysed
effectively by complete investigation associated with the training and knowledge. The balanced
scorecard is significant as it helps in taking necessary corrective action and improve the decision
making process of the company.

The non- financial performance indicators is one of key relevance importance for the
decision making process. It is useful in yielding interesting results. It is highly significant in
effectively allocating the resources which has been required to carry out the business operations
in a reliable and appropriate manner (Non-financial Performance Measures: What Works and What
Doesn’t, 2000). The non- financial performance indicators is useful in better decision making
procedure and it also helps in evaluating the performance of the company. It is useful in the
development of the customer relationship, high degree of satisfaction among the employees,
cycle time, operations of the business and supply chain management of the organization. The
balanced scorecard is important and crucial for the BME Luxury Care Home which is useful in
providing a powerful model which helps in evaluating the cause and effect relationship between
the various forces. It is useful in evaluating the individual performance (Dimitropoulos, Kosmas
and Douvis, 2017). It helps in translating the key vision which is significant in attaining the goals
and strategies related with the BME Luxury Care Home. It is useful the management team in
aligning the key financial activities by prioritizing the decision making process and results in
better allocation. It is useful in enabling which initiatives are necessary for attaining the goals of
the organization. However, the non-financial matrix is useful in meeting the supply chain of the
organization and indulge in the attainment of the common performance goal associated with the
business. It is useful in evaluating the key achievements of the organization, development of the
strategy and compensating the managers. It is highly significant in addressing the long term
strategy and act as a key indicator of the future financial performance (Park, Lee and Chae,
2017). The balanced scorecard is significant in aligning all the activities of the varied
department. It is useful in improving the business functions and leads to the better decision
making. Hence, it is useful in providing the significant strategic map which helps the
management team of the BME Luxury Care Home to examine the cause and effect relationship
and take necessary actions at the time of decision making process.
CONCLUSION
It can be summed up from above that strategic planning tools like benchmarking and KPI
can be used by the organization for achieving the growth. For the care sector is recommended to
use benchmarking model. Based on the Du Pont analysis, the major factor affecting the
company's ROE is its margin and asset turnover ratio which is very low. ROA, current ratio, debt
ratio and debt to equity ratio are the point of concern for the company, therefore, effective steps

are required to be taken. Also, the use of balanced scorecard will help the organization in
effectively managing the performance.

REFERENCES
Books and Journals
Alexander, J., 2018. Financial planning & analysis and performance management. John Wiley
& Sons.
Anjomshoae, A and et.al., 2017. Toward a dynamic balanced scorecard model for humanitarian
relief organizations’ performance management. Journal of Humanitarian Logistics and
Supply Chain Management.
Banu, G. S., 2018. Measuring innovation using key performance indicators. Procedia
Manufacturing. 22. pp.906-911.
Bevan, G., Evans, A. and Nuti, S., 2018. Reputations count: why benchmarking performance is
improving health care across the world. Health Economics, Policy and Law.
Dimitropoulos, P., Kosmas, I. and Douvis, I., 2017. Implementing the balanced scorecard in a
local government sport organization. International Journal of Productivity and
Performance Management.
Horseman, N., 2018. Benchmarking and rankings. Higher Education Strategy and Planning: A
Professional Guide. pp.228-246.
Kuhlmann, S. and Bogumil, J., 2018. Performance measurement and benchmarking as “reflexive
institutions” for local governments. International Journal of Public Sector Management.
Kylili, A., Fokaides, P. A. and Jimenez, P. A. L., 2016. Key Performance Indicators (KPIs)
approach in buildings renovation for the sustainability of the built environment: A
review. Renewable and Sustainable Energy Reviews. 56. pp.906-915.
Mehralian, G and et.al., 2017. TQM and organizational performance using the balanced
scorecard approach. International Journal of Productivity and Performance
Management.
Ndevu, Z.J. and Muller, K., 2018. Operationalising performance management in local
government: The use of the balanced scorecard. SA Journal of Human Resource
Management.16(1). pp.1-11.
Norman, P. M., 2018. An exercise to integrate strategic and financial analysis. Management
Teaching Review. 3(3). pp.252-264.
Nørreklit, H., Kure, N. and Trenca, M., 2018. Balanced Scorecard. The International
Encyclopedia of Strategic Communication, pp.1-6.
Park, S., Lee, H. and Chae, S.W., 2017. Rethinking balanced scorecard (BSC) measures:
formative versus reflective measurement models. International Journal of Productivity
and Performance Management.
Ramón, N., Ruiz, J. L. and Sirvent, I., 2018. Two-step benchmarking: Setting more realistically
achievable targets in DEA. Expert Systems with Applications. 92. pp.124-131.
Rivenbark, W.C., Roenigk, D.J. and Fasiello, R., 2017. Twenty years of benchmarking in North
Carolina: Lessons learned from comparison of performance statistics as
benchmarks. Public administration quarterly, pp.130-148.
Saus–Sala, E. and et.al, 2020. Compositional DuPont Analysis. A Visual Tool for Strategic
Financial Performance Assessment.
Online
Non-financial Performance Measures: What Works and What Doesn’t. 2000. [ONLINE]. Available
through:<https://knowledge.wharton.upenn.edu/article/non-financial-performance-measures-
what-works-and-what-doesnt/>