Performance Improvement and Management in Health & Social Care - Desklib
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This project report covers the memorandum for the internal directors along with the pros and cons of two strategic planning models, usefulness of Du Pont analysis to shareholders, and interpretation of ratios along with brief explanation on purpose of each formula with calculation and comparison with industry average.
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HRM5002D Performance Improvement and Management in Health & Social Care Case Study Assessment
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Contents INTRODUCTION...........................................................................................................................4 TASK...............................................................................................................................................4 Question No 1.........................................................................................................................4 Question No 2.........................................................................................................................8 Question No 3.......................................................................................................................13 CONCLUSION..............................................................................................................................17 REFERENCES..............................................................................................................................18
INTRODUCTION Performance management may be defined as a strategic tool that can be sued in evaluating the performance of employee’s work. The main aim of this technique is to provide an environment inwhichemployeescanperformtheirdutiesinamosteffectiveandefficientmanner. Performance management is based on health and social care in this project report. It helps in achieving the goals in areas such as patient centred care, cost and data management and accountability. The main purpose of management accounting is to ensure that the resources which are provided, the recognition that is deserved to be motivated and the accountability regarding the expectations. This project report is based on Arden Mountain Nursing Home, an American owned registered home that is operating in England. The vision of nursing home is to achieve the highest possible level of person centred care but in a home like environment. This project report will cover the memorandum for the internal directors along with the pros and cons oftwostrategicplanningmodels(Keding,2021).Inadditiontothatitwillcoverthe recommendation and evaluate the usefulness of Du Pont analysis and its calculation. Finally, it will cover the use of financial and multidimensional models of performance management for the preparation of discussion with management team. TASK Question No 1 Memorandum •Date. •To. •From. •Subject: Strategic Planning tools Performance management– The term performance management may be defined as the tool or technique that is used by the managers to evaluate and analyse the overall performance of its employees(Bhattacharyya,2020).Itisafourstepframeworkwhichincludesplanning,
monitoring, reviewing and rewarding. It streamlines the employee’s performance along with its efforts in order to match the set goals effectively and efficiently. It acts a bridge between manager and employee and creates communication system that will contribute in accomplishing the organisational objectives. Strategic Planning– It may be defined as the process by which a leader defines the future vision and identify the goals and objectives. It involves a sequence of series activities in which the goals are realized so that company can reach to them in an effective and efficient manner. This concept mainly focuses on the integrating various departmentsofArdenMountainNursingHomesuchasfinance,marketingand accounting so that it can achieve its goals. It consists of three steps; strategy formulation, implementation and evaluation. Following are the types of strategic planning(Khalid, and et.al., 2019). Tactical Planning– It may be referred as the short range planning that emphasis on the current operations of various parts of organisation. It is used by manager is in outlining the various parts of organisation that are needed to be done for the organisation in order to be successful at some point or in future with less than one year. This will help the Arden Mountain nursing home to achieve its short term goals that are having the tenure of one or less than one year. Operational Planning– It is the process of linking or aligning the strategic goals and objectives with tactical goals and objectives. It involves the milestones and explain what portion of strategic plan should be put so that it will attain the objectives. It enables the manager of Nursing home to take decision regarding the strategic planning. Controlling of mission and vision Mission –The mission of the Arden Mountain Nursing home is to serve long term care for adults and wants to expand its five more facilities in United Kingdom. Vision –The vision is to achieve the highest level of person centred in a home like environment. The controlling of mission and vision is totally depending on the strategic planning that the management has formulated. It is directly affected by the planning. If the planning is not formulated in an effective manner then, it could not attain its mission and vision. The
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manager should effectively communicate with its subordinates and ensures that all the functions that are carried out in the organisation are according to predetermined plans or not, if the outcomes are favourable then no course of action is required but in case of negative outcomes,itisneededtobetakecorrectivemeasuresthatwillimprovetheoverall performance of the company. Arden Mountain nursing home should formulate its strategies and make it align with its functions so that it can be on the way to achieve its objectives. It is the responsibility of the manager to monitor and evaluate performance of its employees so that they can be attentive towards the attainment of goals. Performance tool for Arden Care Home Balance Scorecard –It may be defined as the strategic management performance metric that enables the companies to identify and improve their internal operational in order to help external outcomes. It analyses the past performance and based on that it provides the companies with feedback so that how they can make better decision (Kober and Northcott, 2021). Advantages Brings structure to business strategy –Every business organisation has different departments and they have their own way to measure their performance. It is the common place to measure the organisation performance. It aligns the business structure to strategy. Makes communication easier –It becomes easier for the department and its individuals to understand when everyone speaking in the same language. It helps the Adren care home to streamline the performance management system that makes easier for the organisation to perform the strategic functions. Facilitates better alignment –It enables the member of the company to align their objectives at different levels of the company. Disadvantages Must be tailored to the organisation –In some cases, it is much time consuming and needs to be customised in order to get fit in the organisational structure. Every business has unique. It may be complicated –It needs some time and needed dedication to understand as there are various resources that becomes complex to understand.
Required lots of data –It requires lots of data to be obtained and it becomes tedious and may get in the way of doing work. SWOT analysis It may be referred as the tool or framework that can be used to assess the strengths and weaknesses of an organisation. It emphasis on development of strategic thinking and enables the managers to focus on strengths so that it can build opportunities. Strengths and weaknesses are internal of company whereas opportunities and threats are external to company. Advantages Application neutrality –This analysis is conducted by specifying the objective and conducting the internal and external factors that are either favourable or unfavourable in objective’s achievement. This approach remains same whether it supports strategic planning or opportunity analysis (Moroz, 2019). Multi-level analysis –It is a multi-level analysis model that it determines the strengths of each level or department and enables the manager in making effective decision. Simplicity –It does not involve any technical skill as it can be performed by anyone who is having relevant knowledge about the business and its operations. Disadvantages No Weighting factors –It does not provide any mechanism to rank the significance of one factor to another. So its becomes difficult to determine the impact of one factor’s on its objectives. Ambiguity –It is a one dimensional model thathelps in assessing the strength, weakness, opportunity and threat. As each attribute appears to be have one influence on the problem that is being analysed. Subjective analysis –It is important that the business goals are to be realistic and reliable and in terms of comparable data. The data collection of SWOT is entail with a subjective process and may be biased as it was collected by the individual and have participated in brainstorming session.
Recommendation From the above two strategic planning models the Arden should opt the balance scorecard method s it will help in improving the overall performance of the company and assess the department where it is lacking. This will enable the manager in taking effective decision as it will contribute in accomplishing the mission and objectives of the nursing home. It is the detailed analysis of company’s performance and provides with the way to accomplish the objectives. It enables in defining the overall performance of the nursing home and the area where it lacks such as in finance or in marketing department. By evaluating the performance, it helps in improving the overall productivity of the employees. This will contribute in attaining the organisational goals in an effective and efficient manner (Clarke, 2019). Question No 2 a) Usefulness of Du Pont analysis to shareholders along with explanation on purpose of each formula discussed below: Usefulness of Du Pont Analysis to shareholders: DuPontanalysisistheframeworkwhichisusedtoanalysisthefundamental performance of the business entity.It is considered to be the useful technique which is used to fester multiple drivers of return on equity. The decomposition of ROE allows the investor to focus on the important metrics relating to financial performance so that strength and weakness can be identified (Bunea, Corbos and Popescu, 2019). The formula of calculation Du Pont analysis is Net income / Revenue. This analysis would support the investor and stakeholders of the entity to determine that what financial activities are supporting the most to the changes made in the ROE. The Component of Du Pont analysis are being net profit margin, asset turnover ratio and financial leverage. Explanation on purpose of each formula along with calculations and interpretation comparing industry average:
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Total Margin: Total margin examines the revenue of the business as compare to its expenses. The total margin ratio considers the revenue from all the sources which makes it differentfromoperatingmarginratioswhichonlyconsidersrevenuefrom operation of the business (Uyar, and et.al., 2021). The formula for calculating the total margin explained below: = (Excess revenue over expenses / Total revenue) * 100 = (£3269404 – 3180356 / 3269404) * 100 = (89048 / 3269404) * 100 = 2.72 % Industry’s total margin has been 3.50 % Interpretation: The margin of Arden mountain nursing home has been adverse compare to the industry which needs to be improved by the company as it shows that they are underperforming in terms of achieving the target revenue or their operating expenses are beyond the budget they have set for the financial year. Asset Turnover Ratio: The purpose of asset turnover ratio is to measure the sales value of the business relative to value of the assets (Fleming and George, 2021). The purpose of this ratio is to measure the effectiveness and efficiency of the organisation to generate revenue with the help of assets employed by him. The formula for assets turnover has been mentioned under: = (Net Sales / Average total Assets) * 100 = (£3269404 / 2502992) * 100 = 1.31 times Industry asset turnover ratio is 1.50 times Interpretation: The performance of the nursing home has been less as compare to turnover ratio of industry which indicates they they are not effectively utilising the assets in the business in an efficient manner. Due to which their performance in terms of industry is adverse which needs to be monitored and improvised accordingly.
Equity Multiplier: The purpose of equity multiplier is to identify the risk which is situated in capital structure of the organisation in the form of equity and debt that how much assets of the business is financed by equity other than debt component (Thomas and Rabiyathul Basariya, 2019). The formula of equity multiplier has been: = (Total Assets / Shareholders equity) = (2502992 / 357842) = 6.99 times The industry equity multiplier has been 2.50 times Interpretation: The equity portion of the company is higher which is 6.99 times as compares to industry which is 2.50 times that shows that entity has employed funds from equity more as compare to debt. The risk carried out by nursing home will be lower when compared to other competitors. Return on Equity: The purpose of return on equity it to find out the amount of money which is left with the organisation after the payment of dividend to the shareholders which includes both payment made to equity and debt holders. The return on equity will be calculated as under: = (Net income / Shareholders equity) = (57881 / 357842) = 16.18 % The industry’s return on equity has been 13.10% Interpretation: The nursing home has been performing well as compare to industry which is 3.08% better and it shows that they are utilising their workfare and assets in the right direction. It is also helpful for the company to better their position in the market against their competitors as well.
b) Interpretation of ratios along with brief explanation on purpose of each formula with calculation and comparison with industry average: Return on assets: Its purpose is to indicate that how well the business investments generates value for their stakeholders. The formula for calculating the same is as under: = (Net income / Average total assets * 100) = (£57881 / 2502992 * 100) = 2.31% Interpretation: Industry ratio has been 5.20% and nursing home ratio is 2.31% which shows that they are not utilising their assets in fruitful manner and need to improve the same for better growth. Current Ratio: The purpose of current ratio is to evaluate that whether the entity is able to repay its current liability from the assets they are holding (Cammett and Sasmaz, 2021). The formula for the same is: = (Current Assets / Current Liability) = (608992 / 445150) = 1.37 times Interpretation:The nursing home ratio is lower by industry by .63 times which shows that their current assets are not being adequate enough to repay their current liabilities. Cash in hand days: The purpose is to check that for how much days the business will continue to pay their operating expenses from the cash they had in hand. The formula is as under: = (Daily cost of operation exc. depreciation / Cash and cash equivalent) = 3180356 / 105737 = 30 Days Interpretation: Industry average has been 22 days and nursing home has 30 days’ cash in hand period which shows that their positioning in meeting out their operational cost. Average collection period:
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The purpose is to ensure that how much time the business required to collect their sums from their debtors. The formula is = (Receivables / Total Sales * 365 days) = 215600 / 3269404 * 365 = 24 Days Interpretation: Industry ratio has been 19 days which is better as compare to company’s which is more than 5 days by industry standards which indicate that their funds are being blocked for higher period and it may affect directly their working capital cycle. Debt ratio: The purpose is to judge the risk in the capital structure of the business. The formula for calculating the same is: = Debt / Equity = 1700000 / 357842 = 4.75 times Interpretation: The debt equity ratio of nursing home is higher which increase the risk percentage in their capital structure and their fixed cost in terms of interest will increased when compared to industry which is 2.50 times. Fixed asset turnover ratio: The purpose is to check that whether the assets employed in the company are being effectively utilised that contributes towards the sales (Luk, 2020). The formula of asset turnover ratio is = (Net sales / Total Assets) = (3269404 / 2502992) = 1.31 times Interpretation: The turnover ratio of industry and company is almost same and it shows that they are meeting the industry standard in utilising their fixed capital invested in the business.
Question No 3 Criticallyevaluatethe use of non-financialand multidimensionalmodelsof performance management Performance management is very important field of business administration which is often overlooked in the grand scheme of management which is rapidly changing as businesses are realizing at a rapid pace that streamlining the productivity of their workforce is a crucial element to ensure their continued success in the market. Every firm which has serious aspirations to succeed in their target market and have robust operative efficiency on a daily basis have an ambitious vision along with robust missions which guide the way it undertakes activities and schedules routinely. By the help of performance management models, a business can align the working and thought processes of their workplace towards the achievement of the broad company vision and missions which not only builds their performance but helps in instilling a positive work culture in the company. Performance management has two broad aspects which govern the systemic frameworks to be established under it along with the different purposes which is primarily fulfilled under it which are listed herein. Financial models– These tools and techniques of performance management are geared towards monetary business operations and elements which are primarily used to define and evaluate the performance of the business and its assets along with the financial criteria of employee engagement such as salary analysis and compensation package designing. Tools such as balance sheets, financial statements and accounting documents are often used to not only study the current business performance but also help analyse the current state of revenue and profit generation along with robustness of assets currently held by the business. The various benefits which the workforce of a business is subjected to is also planned using models and frameworks of performance management as the bonus that is to be regarded to employees or their commission on performance is calculated using complex numeric metrics using systems of performance appraisal and HR management.
Non-financial models– Apart from strictly focusing on the financial aspects of a business, performance management is also responsible for playing key roles in the broad field of human resource management along with helping in the overall process of employee engagement. Performance management is closely related to non-financial aspects of the company as it helps measure variables which are usually overlooked in the favour of financial metrics such as the level of customer satisfaction that the company is able to provide in the target market, the level of brand penetration and new leads that is managing to convert into sales and the current brand perception that it enjoys among the general masses. The non-financial models of performance management are very important for its survival as in the modern business landscape, the external environment has becoming increasingly disruptive and simply focusing on sales and revenue generation is no longer a sustainable business model. Among numerous non-financial models, some are widely sued and have multidimensional roles as they not only help in processes such as performance appraisal but also help in effective human resource practices, some examples being balanced scorecard and performance pyramid. Balance score card is considered as a strategic management performance metrics which is used to identify and improve several internal business practices and their resulting external outcomes. Balanced scorecards are very common among the companies within UK as they used it to measure and provide the feedback to organisation (Glinskaya,and et. al., 2022). Business can use their internal version of balanced scorecards to analyse their customer services. There are various benefits of using balanced scorecards as it allow the organisation to pool together data and information into a single report rather than to deal with the multiple tools. There are various advantages and disadvantage of balanced scorecards which are mentioned below: Bring structure to the business strategy-In organisation different department may have different way to measure the performance and what they consider to be significant in the term of metrics. Therefore, with the balanced scorecards, different departmental and leader can still individualize their performance measurement, but it false in set structured
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which can be understood across the workplace. It give common place to everyone at workplace to measuring the success (Moores and et. al., 2022). Connecttheindividualemployeetotheorganisationalobjectives-Balanced scorecards help the workers “keep their eyes in prize” so to speak in the term of objectives. Individual employee may find it aid their own performance when workers can see a greater purpose behind the object vies and goals they are aiming to hit. Improved measurement and reporting-Making the performance easier to measure depict the value of Balanced scorecards. The specific business goals and key indicators can be classified using balanced scorecards. It also help the organisation to design a more effective reports and other metrics dashboard.With the help of it key objectives and concern can be resolved quickly. When there are many benefits of implementing balanced scorecards system at workplace, then there are also certain potential disadvantage and roadblocks to balanced scorecards which are mentioned below: Must be tailored to the organisation-Balanced scorecards is expected to provide a model from which to work from, nevertheless, it will still need to be customized to all organisation using that system. It can take up more time and while the examples are helpful, then they cannot copied exactly due to unique needs of all business. Require a lot of the data-Mostly the Balanced scorecards require team members and manger to report the information that means logging the data. Many organisation do not like it as they did it very tedious and, it can get in way of doing the required work to meet goals. Itcangetcomplicated-Balancedscorecardstaketimeanddedicationfor understanding. There are the countless case studies and resources to read from and it is very easy to get bogged down with several different ways utilizing this method (Zhang and Meng, 2022). Whenitcomestonon-financialandmultidimensionalmodelsofperformance management, the role of performance pyramid cannot be understated as this model’s basis is built on the fact that simply focusing on financial parameters of a company cannot help in the measurement and eventual optimization of its business operations in the target market. This
pyramid model developed by Lynch and cross focuses on two major parts which are integral to a firm’s success and the standards of performance management which is inculcated in its daily operations which are external effectiveness and internal efficiency. The latter is predominantly financial in nature while the former advocates the fact that non-financial parameters are equally important in the field of performance management (Aman and Seuring, 2021). This model argues that in order to structure a firm’s basic market goals and objectives, there must first be the existence of a solid corporate vision which helps guide the future actions of the firm in a holistic manner. Arden Mountain nursing home’s corporate vision which belongs atop this model is the one where it strives to be in five more locations across UK while committing to provide excellent in long term adult care on a global level. This vision according to the pyramid will not happen and cannot be properly measured by the standards of performance management unless it is met by dual focus on both financial and non-financial parameters which are listed just below the corporate vision (Korneta, 2018). The external effectiveness of a firm drives important factors such as goodwill which has a direct effect on the way it is perceived by both the customers and the media in the industry along with the brand strength and perception which can only happen when a business focuses on business operating systems which are primarily based on non-financial factors (Perera and Perera, 2019). According to the pyramid, the way in which the goods and services of the firm satisfy the target market, the flexibility of the business to adapt to tough conditions and the
overall productivity are major non-financial factors. The operating systems mentioned in this model are further explained with the help of departmental factors which their success depends upon. The quality of healthcare that Arden Mountain will give to the elderly and sick will transfer directly to the customer satisfaction, the time taken to deliver the care and the eventual waste activities and procedures will have a direct effect on the firm’s flexibility and productivity. In order to make its vision come true, Arden Mountain should focus on this model to understand the areas of non-financial operations which it needs to focus on. CONCLUSION The above report went into detail regarding important processes of human resource management and business administration such as strategic management tools, use of financial analysis and ratios along with various non-financial models of performance management to evaluate the productivity, viability and current financial robustness of healthcare companies. These companies were analysed using strategic tools such as SWOT analysis and balanced scorecards and their financial performance was duly analysed using financial ratios along with their interpretation such as Debt-to-equity ratio. The report was concluded with an overview on the non-financial and multidimensional models of performance management with main focus on balanced scorecards and performance pyramid.
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