ISO 9001 Assignment

Product Realization in ISO 9001 : 2008

International Organization for Standardization (ISO) states that product realization includes: Product and service provision; product control and service provision, validating the process of service provision and production, traceability and identification, property of customer, preservation of product; purchasing process, purchasing, information of purchasing. verification of purchasing product; design and development planning, design and development inputs, design and development review, designs and development outputs, design and development verification, verification of development and design, validation of design and development, control of changes in design and development. Planning of product; processes related to customer, determination of requirements and related to the product; control of devices for monitoring and measuring. (Cobbett et al 2005).

ISO 9001 : 2008 requires department to perform the roles in planning product realizations, Recap of ISO 9001 requirements in planning of product realization are planning and developing the process required for product realization and keeping the consistency of the planning, and documentation should be done in an suitable form, i.e. confirming the names of the plant and determine how best to cultivate or procedure or collect the materials of the plant. Determination if the planning is appropriate i.e. determining the key physio-chemical features of the material and establish the parameters. Here we need product requirement and quality objectives, need for document, process and resources. Validation, verification measurements monitoring, test activities and inspection i.e. establish and determine a good dosage from based on the findings that are confirmed and the legal requirement of the customers for the prospective products, procedure for the product acceptance. Record are required as evidence that the resulting product And the process meet the requirements. The industry pharmaceuticals would establish after determining a suitable dosage form based on confirmed findings and legal customer requirements for the prospective products then registration dossier to be finalized by PTRMD with other departments assistance majorly MCQC.

ISO 9001 Process

As per ISO 9001 : 2008 department role in customer related process there are three QMS processes or requirements under sub close 7.2. It should entail. 1).the requirement connected to the product: customer requirement should be determined, like if it is decided that given medicine should be powder, tablet or capsule others will feature in the a head task, regulatory and statutory requirements needed to the product, not specified for given product though needed for intended or specified use that is known and any requirement that is considered necessary should be given. 2) The industry pharmaceuticals should review the requirement above, the product requirement should be reviewed before supplying the product to the targeted customers for the purpose of ensuring the exact definition of the product requirement, maintaining any subsequent follow up action and the review result, ensuring its ability of meeting the requirements, when the given requirements have not been documented, before any acceptance they must be confirmed, if there is any change in the requirements of the product, ensure amendment of the relevant documents and the personnel who are relevant, are informed of the requirements changes. In situation like, if the report from TL to the CEO gives support for further action on given procedure the CEO will give direction for the TL to proceed with customer-related processes as per sub-clause 7.2. (3) customer communication; the department should be a well implemented and determined for communication with the customers on inquiries, information of the product, handling of the order plus the amendments, feedback of the customer plus the complains made by the customers. (ISO 9001). For instance the team may or may not be reconstituted but the new incoming directions of the given medical research may call for a wide range of expertise from the various units or may be from outside of the team. 4) customer communication is determining and implementing proper ways of communicating with the customers for the purpose of product information, contracts, inquiries or handling of orders including amendments, feedback of the customer plus the complains of the customer.

Role of industry pharmacy department in development and design process as per ISO 9001 : 2008.Recap of ISO 9001 requirements in respect of development and design processes. The roles are: 1) Design and development planning, the team should plan and have control of the design of the product and development for determination of the; stages of development and design consist of verification, appropriate view, and the validation activities for every given stage. The industry pharmacy should produce the highest customer friendly and legal acceptable form of dosage, authority and responsibility for the development and the design, managing the interfaces between the groups that are involved for ensuring effective and clear responsibility assignment, update as appropriate the output planning during the development and the design, the development and design may involve any unit or department depending with the situation. 2) Design and the development input; designing the requirement of the product maintain record and the inputs. The industry pharmacy would strive to provide animal facilities and come up with the most appropriate study model. Applicable legal requirements, and the applicable information derived from the same design, essential requirements for the development and design, review of the input for adequacy, resolving of ambiguous, incomplete or requirements that conflict. The industry pharmacy should strive in providing the highly efficient and economic procedure for the raw materials qualification and the finished product. 3) design and the development output; the output of the design and the development should be documented in a way that they are suitable for verification against the input to the process, and the output should; provide purchasing information service and products, meet the requirements of the design and development, reference or contain the criteria of product acceptance, define the essential characteristics for proper and safe use, the products should be approved before their release, like the industry pharmacy would study design for trials in clinical rest with the CEO office who may utilize expertise from in or outside.

Industry pharmacy role in the development design and processes as per ISO 9001 : 2008. There are 7 QMS processes or requirements under 7.3 (Magaji et al 2012). should be within; development and design review, where the team should perform systematic design review and development at the appropriate stages in accordance with the arrangements that was planned in evaluating the ability of the given results, to requirements as the design review and development are important in discovering the efficient and economic procedures within the industry pharmacy department concerned with the development and design, identifying problems and stating the necessary actions, the result of the reviews should be maintained and do follow up actions subsequently . 2) Development and design verification in accordance with the planned arrangements, the team should conduct verification for ensuring the input requirements are met by the output, and put in maintenance. The result of the verification and continuous follow-ups, for instance the industry pharmacy should give most efficient and economic procedures for qualifying the given raw materials and the end product. 3) Control of design and development changes; identifying changes of the design and development and maintaining the records, verify, validate and review the given changes and make appropriate approval before they are implemented, i.e. when the given products or services fail to pick up as it was planned they have to be re-designed. Evaluating the changes in form of their effects on constituent parts and products already delivered, put in records of the changes result and continuous follow up actions.

Industry pharmacy role in purchasing processes as per ISO 9001 : 2008 which is associated with: 1) purchasing process, the industry pharmacy should ensure that purchased products fulfill their its specified purchase needs in consideration of the type of the products on subsequent process of realization or final product (Magaji et al 2012) i.e. even if there is central purchasing unit supplier department and administration responsible with special and general purchases the criteria for the latter in product realization are furnished by industry pharmacy. Select and evaluate suppliers upon their ability to make supply in accordance with the requirements, establish the procedure of selection (Pharmaceutical, Inc.), re-evaluation and evaluation, and Keep the result of evaluation and subsequent follow up actions. Like the industry pharmacy should provide or source the procedure for the purchase starting materials plus other goods and reagents. 2) Purchasing information requirements to ensure that information of purchase contains the information describing the product to be purchased plus the requirements. Product approval processes, equipment and procedure.

Ensure the quality of being sufficient of the given requirements before making communications to the supplier, and the various department or units should be responsible in verifying purchased items supplied to them. 3) Verification of purchase product is to implement and establish the inspections or other necessary activities for confirming that the products purchased meet the indicated requirement of purchase i.e. Units or departments are responsible for verification of items purchased to them. Should be responsible if the customers or the organization proposes for product verification at the location of supplier they should give the intended verification arrangement and the method of releasing the product in the information for purchase.

Recap of ISO 9001 requirements, there are 5 QMS requirements and processes under sub-clause 7.5 (Megaji et al) the processes are: 1) control of service provision and production. Services provision should be planned and control should be carried out in controlled condition to be applicable. In industry pharmacy every department can provide different data such as taxonomic data and the department can provide highly specialized services as chemical synthesis and forensic analysis, efficacy or toxicity data or data of comparative effect of non-economic or economic species or the antimicrobial potential of a given herb. The information of given product characteristic should be available. Necessary instruction for work should be available i.e. the department responsible should put into writing dossier for registering and regulatory agency of medicine. Suitable equipment should be used. Measuring and monitoring equipment should be available. Monitoring and measuring activities should be implemented. Implementation of delivery, product release and activities of post-delivery. 2) Validation of process for service provision and production, it entail validating service provision or any production in which continuous measurement or monitoring may not verify the given output. This validation consist of processes in which deficiencies may turn out apparent only after service delivery or product use. Through validation, it demonstrates the ability of the process to achieve the planned outcomes. Arrangement of validation should be established including applicable; equipment approval personal qualification, records requirements approval and process review criteria, using defined procedure and methods and re-validation i.e. where herbal medicines and pharmaceuticals needs to pass a battery of test like disintegration test (Capsules and tablets) and before being approved identification.

ISO 9001
ISO 9001

Industry pharmacy roles in production and service provision as per ISO 9001 : 2008. The recap of ISO requirements there are 5 QMS requirement process under sub-clause 7.5 (Megaji et al 2012), in respect of service provision and production process are: 1) identification and traceability; where appropriate identify the product using best means during the product realization, the key role of the department should be to help establish or propose probable route of production to be done on pilot scale since in chemical medicine production, several in-process quality procedures control are needed.

The department should identify the status of the product with respect measurement and monitoring requirements throughout the product realization it requires that the industry pharmacy should be able to make identification of the product by using appropriate means throughout product realization. Traceability requires that, maintain records and have control of product unique identification as this process is important for regulatory processes and product realization. This are essential strategies that will help in tracing a given problem to their various sources hence every department must take great care with property of customer which are under their control.

2) Customer property; the industry pharmacy should exercise care with any property of the customer while it is still being used or under the control of the department, customer property should be verified, identified, safeguarded and be protected. Any damaged, lost, or unsuitable customer property should be recorded and be reported, this an essential approach for addressing regulatory concerns and accountability concerns which are associated with given pharmacologic agents like poisons and narcotics.

Product preservation should be done during the internal processes and delivery to the required destination for the purpose of maintaining the requirements conformity since applicable preservation consist of handling, identification, packaging, storage and protection i.e. product status should be identified with respect to measurements and monitoring requirements, the departments are required to have defined reference active crude extract, market substance which is defined.

Industry pharmacy department’s role in control of the measuring and monitoring equipment as per ISO: 2008 recap of ISO 9001 requirements, some of the equipment’s in need of re-calibration and calibration are: volumetric wires, refractometers, gravimetric instruments, photometers, electronic devices and various electronic equipment’s.

Summary

The recap of ISO 9001 requirements in respect of monitoring and measuring equipment’s processes include. 1) Control of monitoring and measuring equipment’s the department is to determine the measurement and monitoring to be made and the needed equipment for production of product conformity evidence. like the practise of standard’s needs, all units and departments to do calibration to their equipment’s as it is described by procedures for operating and in performing this other control measure needed assessing and recording prior result validity if the method or equipment are observed to conform to the requirements, verification and calibration result records should be maintained, re-confirm or confirm the ability of any software or the used programmes for measurements or monitoring before its initial usage.

2) Control and use measuring and monitoring devices for ensuring that capability of the measurements is consistent with measurements and monitoring requirements, and ensure for the validity of the result in situations where it is necessary; the equipment’s should be calibrated to international or national standards, verify or calibrate the equipment’s for measuring prior to use or at specified intervals, the equipment’s should be safeguarded from improper adjustments, they should be re-adjusted or adjusted as necessary, they should be protected from deterioration and damages.

3) The validity of prior results should be assessed and recorded to find if the device conforms to requirements, in ensuring the result validity the department would; verify or calibrate the measuring equipment’s at prior to use or at specific intervals, equipment’s to be safeguarded from improper adjustments and damages, do the necessary adjustments and re-adjustments, record the equipment’s appropriate basis and do the identification of the equipment’s for measurements for determining their calibration status. 4) Conforming the software used ability for measuring and monitoring for the application that is intended before its initial use.

In conclusion accompany that certifies the level of ISO 9001 : 2008 has got numerous advantages compared to the others, since the companies outsourcing sponsors and customers will also benefit from this .It will help the company to assure their customers that they will meet their needs for product development, product design, servicing, installation and product developments beside meeting the needs of cGMP requirements. (Pharmaceutical, Inc.) And compliance to ISO standards is normally voluntarily though many pharmaceutical companies view it to be hard because of the added level of quality system oversight that that FDA current good manufacturing practises.

References

Quality and Compliance – Pharmaceuticals, Inc.

ISO Survey 2009 (cited 2014 November 11)

Corbett CJ, Montes-Sancho M J, Kirsch DA (2005). The Financial Impact of ISO 9000 certification in The United States. An Empirical Analysis. Management Science 2005.

Grba Magaji, et al (2012). Production realization and Service Provision in Herbal Drug Research and Development According to ISO 9001. Journal of Pharmaceutical and Scientific Innovation.

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Financial Reporting Ratio Analysis

Financial Reporting and Ratio Analysis Essay

Ratio Analysis – Part One

Ratio Analysis And Financial Reporting – According to IAS 7 net cash flow from operating activities can be calculated using either of two methods; direct method and indirect method. The direct method shows operating cash receipts and operating cash payments; including cash receipts from customers, cash payments to and on behalf of employees, cash payments to suppliers; all resulting in the net cash flow from operating activities. The indirect method begins with profit before tax and adjusts for non-cash charges and credits such as depreciation and for the movement in working capital items.

In simpler terms, the direct method looks at all actual cash transactions, while with the indirect method you look at the balance sheet items in relation to the previous year to find the cash inflow and outflows from operating activities while adjusting for non-cash charges and credits such as depreciation and goodwill revaluation rather than look at specific transactions.

The main advantage of the direct method is that it shows the operating cash receipts and payments, this specific knowledge of the sources of these cash receipts and for what purposes cash payments were made is especially useful when trying to forecast future cash flows. The preference of IAS 7 is that the direct method be used but does not require it. The main benefit of the indirect method is that it shows the difference between reported profits and net cash flow from operating profits.

There are differing views among national standard setters as well as within the business community. The main issue of disagreement being whether in all cases the benefit to the user outweighed the costs to the company of providing this type of reporting. The ASB in the UK has generally held the indirect method to be preferable, and has only encouraged the use of the direct method when the possible benefit of the users outweighs the cost of providing it in the new revised version of FRS 1.

This is different to the general view of the IASC as well as the FASB in the USA who hold the view that the direct method is preferable. I’m of the opinion that this difference will result in companies giving greater consideration to which method suits them best considering the relevant costs rather than just relying on the advice of a particular standards board; which I think is a positive effect.

David Alexander and Simon Archer the authors of National Accounting/financial reporting standards guide 2013 are of the view that this issue should be viewed from the perspective of the user rather than the prepared and therefore the most beneficial method is the direct method. In an article released by the Institute of Certified Public Accountants in Ireland (CPA) discussing international standards, the CPA expressed the view that most Irish companies are unlikely to adopt the direct method as it requires the segregation of VAT from cash receipts and payments during the year. This is likely to be expensive due to system changes as the accounting programmes are designed to identify VAT at the point of sale or purchase, rather than at the point of cash receipts or payments.

Cash From Operating Activity
2013
£0
Cash received from customers (W1) 30071
Cash paid to suppliers and employees (W2) -18886
Other cash operating expenses (W3) -6033
cash generated from the operations 5152
interest paid -126
tax paid -823
Net cash from operating activities 4203
proceeds on disposal of property, plant & equipment 3
interest received 8
acquisition of property, plant & equipment -2641
Net cash used in investing activities -2630
proceeds from the issuing of share capital 0
repayment of borrowings -400
payment of finance lease liabilities 0
dividends paid -1634
Net cash used in financing activities -2034
Net (decrease)/increase in cash and cash equivalents -897
cash and cash equivalents at 1 January 432
Effect of exchange rate fluctuations on cash held 136
Cash and cash equivalents at 31 December -329
**workings are included in the appendix

Below I would like to provide a summary of Zotefoams Plc.s financial position and operating performance and in doing so analyse the liquidity, profitability, efficiency and gearing of the company.

From looking at the five year trading report it is clear to see that Zotefoams Plc has managed to steadily increase turnover from £25.2m in 2011 to £30.1m in 2013 that is an increase of £4.9m which is a 16.27% over two years. Also operating profit (excluding exceptional items) has increased from £1.6m in 2011 to £2.8m in 2013; that is an increase of £1.2m or 42.86% rise over two years. Furthermore, earnings per share (excluding exception items) has risen from 3.2 in 2011 to 5.4 in 2013, that is an increase of 2.2 which is a rise of 41% over two years.

In this discussion I have only considered figures excluding the impact of exceptional items as I believe these figures give a clearer view of its true performance and help forecast for the future more accurately, this is a company that is still at a very early stage of its development and hence is likely to have exceptional items more often now than in the future. A figure that should be taken in to consideration is the profit after tax, in 2011 it was £1.2m, in 2012 it was £2.4m, and then £1.2m in 2013, this does not shown a pattern of a down turn as the great increase in 2012 was caused by an exceptional item, this can be further understood by looking at the profit before tax (excluding exceptional items) whish was £1.3m in 2011, then £1.8m in 2012 and finally £2.7m in 2013; this clearly shows a pattern of strong growth over the last three years. Below, I have done ratio analysis in the areas of liquidity, profitability, efficiency and gearing to illustrate better the company’s performance in these areas.

Profitability Ratios

Return on Capital Employed (ROCE)

Year Result
2012 9.52%
2013 5.41%

ROCE shows the company’s net profit before interest and tax in relation to total capital invested as a percentage. Generally a decrease in the ROCE percentage from one year to the next could signify various internal or external factors affecting their business, externally a more difficult economic climate for the company which could be caused by a general down turn in the industry or fierce competition, internally it is usually due to poor utilization of its total assets by those entrusted to run the company, either way it is the duty of the management to utilize the assets of the company to gain maximum profits.

The ROCE has decreased from 9.52% in 2012 to 5.41% in 2013, this is a very major decrease, this would normally lead one to think that the management have severely underutilized the assets of the company showing a poor performance on their part, but on closer inspection it is clear that the results have been skewed as the 9.52% figure for 2012 is largely inflated, as the PBIT of £3.472m was inflated by £1.499m of exceptional items (reduction in administration costs) in the profit calculation, and a decrease in profits in 2013 of £1.074m due to exceptional items (increase in administration costs), had these exceptional items not been considered in calculating the ROCE it would have shown a strong increase between 2012 and 2013.

Gross Profit Margin Ratio

Year Result
2012 22.65%
2013 25.94%

Ratio analysis – The gross profit margin ratio shows the gross profit as a percentage of its sales revenue. This shows that it has increased from 22.65% to 25.94%, this is a positive increase of 3.29% from 2012 to 2013.

Net Profit Margin Ratio

Year Result
2012 11.75%
2013 5.32%

The net profit margin shows the net profit before tax as a percentage of its sales revenue. It has decreased from 11.75% in 2012 to 5.32% in 2013; that is a decrease of 6.43%. This would normally be a serious issue to consider, but as explained previously the results have been skewed due to negative exceptional items in 2013 and positive exceptional items in 2012, had these items not been considered in this calculation it would have shown a positive increase.

Liquidity Ratios

Current Ratio

Year Result
2012 2.412949
2013 2.1780673

The current ratio is one of the best measures of liquidity. It is generally accepted that a ratio of 2:1 is a strong position to be able to meet the company’s short term liability responsibilities; the higher the ratio is; the more liquidity the company has, making it more likely to be able to cover its short term liabilities. Although it has decreased from 2.41:1 in 2012 to 2.18:1 in 2013, it is still over the accepted 2:1 ratio, therefore there is no reason for investors or the company to fear liquidity problems.

Quick Asset Ratio

Year Result
2012 1.51
2013 1.36

Conventional it is held; the most ideal quick assets ratio equals 1. In 2013 and 2012 the quick asset ratio was comfortably over 1, although it has decreased to some extent. It is not good to have too high a current ratio analysis or quick assets ratio, as this would signify the under-utilization of the company assets.

Efficiency Ratios

Debtors Collection Period (DCP)

Year Result
2012 80.658803
2013 74.853421

The debtors’ collection period ratio analysis shows the average amount of time taken to collect debts from credit sales. In 2012 it is at 80.7 days which has decreased to 74.9 days in 2013, these positive results show that the DCP has significantly decreased from the previous year signifying an improvement in efficiency, this supports the view that its credit control system has functioned more efficiently.

Stock Holding Period (SHP)

Year Result
2012 66.337569
2013 62.071483

The stock holding period ratio analysis shows the average amount of time stock is held before being sold, it has decreased from 66.3 days in 2012 to 62.1 days in 2013, again it shows a improvement in efficiency showing that the company’s stock control systems are running more efficiently than the previous year.

Gearing Ratio

Year Result
2012 35.32%
2013 31.02%

Gearing is calculated to show what proportion of a company’s total capital is provided by loans capital as opposed to equity. The greater the proportion of total capital is provided by loans the greater the vulnerability to a down turn in profits.  This is because the interest on a loan must be paid regardless of the company making a profit.

33.3% gearing is conventionally accepted as medium/high gearing, although this does vary from industry to industry. The gearing ratio of 35.32% in 2012 is not considerably high, this has decreased to 31.02% for 2013; it has been brought down firmly in to the area conventionally accepted as medium gearing thus decreasing the company’s gearing vulnerability to a down turn in profits meaning it is not considered to be a high risk investment.

Ratio Analysis – Part Two

Ratio analysis in the areas of liquidity, profitability, efficiency and gearing are very important when trying to understand the financial position of a company, all of the data required for calculating these ratios are taken from the balance sheet and income statement.

The balance sheet statement summarizes the value of total assets and liabilities, as well as owners’ equity at a specific date. The balance sheet gives the user a good understanding of the company’s value as you can see what it owns and owes. The balance only provides a snapshot of this information on the date of reporting as the items in the balance sheet could change the next day, furthermore the balance sheet can be manipulated in various ways such as incorrectly valuing assets such as work in progress inventory or incorrectly valuing buildings, plant and machinery.

It is not straight forward how all items in a balance sheet are calculated. There are many ways that firms try to hide debt by not recording it on the balance sheet such as the well documented case of Enron who were keeping debts off the balance sheet by offloading the debt to special purpose entities (SPEs). It is important to any investor to know that the company they are buying a share into actually owns tangible assets (less liability) that back up the value of the company’s shares; this reduces the risk of the investment.

Beyond risk to investment capital; the investor will look at profitability as this is the objective behind making an investment, for this purpose the income statement is very useful; as it shows net profit for the previous year as well as a breakdown of how this was calculated including figures for revenue, cost of sales and expenses etc.

Analysis of previous income statements and the five year trading summary will help the user to get a good understanding of how well the company has been performing in the past. The income statement can also be manipulated, such as the abuse of one time charges in the income statement when the usage of one time charges is misused to result in reported profits being lower than expected in one year, and then be seen to dramatically increase the next year, resulting in share prices rising allowing managers and related individuals to cash in on shares purchased at a lower price the previous year.

The cash flow statement shows all cash and cash equivalents entering and leaving the company for the reporting period. It allows investors to see how money is being spent and where it is coming from. It is generally held to be one of the more reliable financial statements as it is less open to manipulation as it deals with simpler and clearly tangible accounting items. Given this there are still ways to manipulate it such as dishonesty in accounts payable by counting cheques in the mail as cash in hand rather than money paid out or the choice of making payments late on purpose.

Efforts have been made by the introduction of further legislation and tightening of regulatory frameworks as well as implementation of further standards; such as international auditing standards (IASs); to counter act these problems namely the Sarbanes Oxley act 2002 in the USA and similar provisions in the UK.

By providing all three financial statements the user will be able to gain a good understanding of the company’s financial position and profitability; each of them provides different useful information. Furthermore it is more difficult to manipulate one financial statement and not result in contradictions with the others. The cash flow statement helps to back up the balance sheet and income statement. Reporting based on international reporting standards are very important, as it means that prepares of reports must treat accounting items as set out by international standards leading to more reliable and comparable financial statements for the user.

Due to international auditing standards one would expect that auditors will find the cases where manipulation and fraud has taken place; which gives the investor more confidence in the financial statements that he must rely upon to make decisions. I would still advise any potential adviser to fully read all reports and notes beyond just the three financial statements.

In this section I will discuss how Zotefoams Plc provides segmented information under IAS 14 and how this will change upon the adoption of IFRS 8 as well as consider the relevance of this information to the company’s current and potential investors.

I would like to begin by explaining IAS 14 and segment reporting. Companies often carry on several types of business or operate in many different geographical locations, with varying opportunities of growth at different levels of risk relative to the geographical location or type of business. It is very difficult for a reader of financial reports to make judgement about the nature of different activities carried out by a company or what impact each activity has on the financial situation of a company unless some segmented analysis of the financial statements are provided.

Segmented reporting is required to help the users of financial statement to more thoroughly understand the past activities of the company and thus make a more informed assessment of the company’s future prospects; as well as be aware what impact will occur on the company if there are significant changes in components of the company. All of this helps to assess better the risks and potential returns for the investor.

IAS 14 was set out to standardize segmented financial reporting by companies. IAS 14 only applies to publicly quoted companies or those that are about to be. Zotefoams Plc is a publicly quoted company and therefore should comply with the provisions of IAS 14. IAS 14 does encourage non-publicly quoted companies to report segmented information, and if they do they should comply with its provisions.

According to IAS 14 a company should report on business and geographical segments showing the groupings of products and services provided by each company segment as well as the composition of the geographical segments. One type of segmentation can be deemed as primary; chosen from either business or geographical, the second should be regarded as secondary. This is usually decided based on the company’s internal management and organisational structures as well as the internal financial reporting system for management. Geographical or business segments can be judged to be reportable when the majority of its sales revenue is gained through sales to customers who are external, plus also:

  • The revenue is 10% or above of total revenue of total segments
  • Its profit or loss is 10% or more of the combined total of profits or losses
  • It assets are 19% or above of total assets of the company (combined total of all segments)

Other segments should be reported if the total external revenue from segments that have been deemed reportable does not reach 75% of total company revenue; more segments should be recognized until 75% of the total consolidated revenue is shown as reportable segments. The following is to be disclosed for each primary reportable segment:

  • Revenue, sales to external customers and inter-segment sales disclosed separately, the basis of price setting should be disclosed for inter-segment sales.
  • Profits before interest and tax for continuing operations and discontinuing operations should be disclosed separately
  • Carrying amount of segment assets
  • Segment liabilities
  • Cost applicable to the period for acquiring  property, plant and equipment as well as intangibles;
  • Depreciation and amortization charges, as well as other significant non-cash expenses or otherwise cash flows from operating, investing and financial activities in line with IAS 7 cash flow statements.

Each secondary segment should disclose:

  • Revenue, disclosing separately how much is external sales and how much to other segments
  • Segment assets total
  • Cost applicable to reporting period for purchasing  property, plant and equipment as well as intangibles

Zotefoams primary segment reporting is reported by business area, the company sells two main types of foam which are Polyolefin and HPP. All of the above disclosures listed above for the primary reportable segment are made in the annual report. Furthermore, the revenue from external customers, segment assets; as well as capital expenditure (on property, plant and equipment as well as intangibles) are reported in the annual report for the secondary segment report which is done by geographical location which is separated in to: UK, Europe, North America and the rest of the world.

All segment reporting is in accordance with IAS 14. HPP is a new product, it can be seen that the HPP segment is making a loss, this is expected as R&D is likely to cause expense to outstrip revenue at such an early stage, you can see from the segment report that the Polyolefin segment is making strong profits, this would not have been clear if segmental reporting was not provided.

I will try to only discuss the differences between IAS 14 and IFRS 8 that are relevant to Zoatfoams plc. IFRS 8 has affected three main areas of segment reporting, they are; the identification of segments, the measurement of segment information and disclosure.

In terms of identification of segments; IFRS 8 states that segments that sell primarily or exclusively to other operating segments of the company can still be deemed an operating segment if it is operated that way. This is different to IAS 14 which reduced reportable segments to be segments which gain most of their sales revenue from customers who are external, IAS 14 doesn’t oblige that the separate levels of a vertically-integrated company be deemed to be separate entities.

I do not believe this will have much effect on Zotefoams Plc as they do not do any inter-segment trade, nor could it be said that from their company structure that it is a vertically-integrated company with separate entities in such a vertical chain to be deemed as separate operating activities.

IFRS 8 requires that the information reported on each segment should be the same information that is provided to the chief decision maker for the activity of allocating resources to that segment and assessing its performance. This may mean for Zotefoams Plc that they may be required to provide more segmental information depending on their internal reporting practices.

Ratio analysis – A major difference between IFRS 8 and IAS 14 is that IFRS 8 requires an explanation of how profit or loss, assets and liabilities are measured for each operating segment, rather than define revenue, expense, result, assets and liabilities for each operating segment. This results in companies having more control over what is included in segment profit and loss in line with their own internal reporting practices. As companies are given greater choice over disclosure this could put investors at greater risk as there will be more room for manipulation of information.

Interest revenue and interest expense must be reported for each of the reportable segments separately if they are used to calculate segment profit or loss unless the majority of the segments revenue is earned by interest resulting in the chief operating decision maker making decisions to allocate resources or judging the performance of the segment based on information mainly on interest revenue.

The aim behind revising IAS 1 was to make it easier for users to be able to understand and compare financial statements and forms of key ratio analysis. Financial information that goes in to financial statements are to be aggregated on the basis of shared characteristics, as well as introducing a statement of comprehensive income. This is being done so that it is more visible to see the impact on the company’s equity resulting from transactions between the company and its owners in that capacity; such as share repurchases, separately from the impact caused by transactions between the company and non-owners such as third parties.

Comprehensive income can be displayed in either a single statement or be separated in to two statements including a income statement and a statement of comprehensive income statement. The ICAEW as well as the ACCA have both disagreed on giving the choice between the two as they believe it will lead to confusion amongst users making comparability more difficult. The ACCA also disagrees with the decision to change the name of the balance sheet to statement of financial position on the grounds that the definition of the balance sheet is well known; they feel this change will only result in more confusion especially when preparers are not obliged to use the new title which will result in some prepares taking it up and others not; making comparison more confusing for users.

The ACCA are also of the view that the decision to include a statement of financial position at the beginning of the reporting period is not needed and will again lead to further confusion; this information if needed could easily be looked up in the previous year’s report.

These changes are not likely to have a major impact on Zotefoams other than the effort required to make these new changes, as the changes have not been made to change how accounting items are treated but rather the changes have just been put in place to affect how some information is displayed as the change in name of the balance sheet, the choice in display of comprehensive income statements and the inclusion of the balance sheet from the beginning of the reporting period, these changes just provide the information to users in a way that it is easier for them to understand the financial position of the company. In the 2013 report a statement of recognized income and expense (SoRIE) was included, by 2009 when the IAS 1 revisions must be implemented; the annual report will have to include a statement of changes in equity in an addition to the SoRIE or choose to combine them into a single statement. This additional information already exists in the annual report in the notes section.

Ratio Analysis
Ratio Analysis

References

ACCA 2.5 Financial Reporting (international stream) Study Text (2012), FTC – Ratio Analysis

David Alexander and Simon Archer, Miller International Accounting/Financial Reporting Standards Guide (2013), CCH

Barry Elliott and Jamie Elliott, Financial Accounting and Reporting: 11th Edition (2013), Financial Times/ Prentice Hall

Company Law, Jerry DeFreitas, 5th edition (2013), Castlevale Handbooks

Zotefoams Plc, Annual report (2013) Technical summary: IAS 7 Cash flow statements Deloitte, IAS Plus, (December 2013)

IASB, press release, (6 September 2013)

Appendix

Ratio Analysis

1. Profitability Ratio
a) Return on capital employed
ROCE= PBIT *100%
Equity+   Long Term Loans
Year Workings RESULT
2012 3472/(25622+9050)*100% 9.52%
2013 1762/(24838+7704)*100% 5.41%
b) Gross profit margin
GP   MARGIN= Gross   profit *100%
Sales   revenue
Year Workings RESULT
2012 6335/27975*100% 22.65%
2013 7795/30052*100% 25.94%
c) Net profit margin
NP MARGIN= PBT *100%
Sales revenue
Year Workings RESULT
2012 3288/27975*100% 11.75%
2013 1599/30052*100% 5.32%
2. Liquidity Ratio
a) Current ratio
Current ratio= Current   assets
Current   liabilities
Year Workings RESULT
2012 10547/4371 2.412949
2013 10030/4605 2.1780673
b) Quick assets ratio
 Quick assets ratio= Current assets less stocks
Current liabilities
Year Workings RESULT
2012 (10547-3933)/4371 1.51
2013 (10030-3785)/4605 1.36
3. Efficiency Ratio
a) Debtor collection period
 DCP= Average trade debtors *365
Credit sales
Year Workings RESULT
2012 6182/27975*365 80.658803
2013 6163/30052*365 74.853421
b) Stock holding period
 SHP= Average stock *365
Cost of sales
Year Workings RESULT
2012 3933/21640*365 66.337569
2013 3785/22257*365 62.071483
4. Gearing Ratio
 Gearing= Total liability-Current liability *100%
Capital employed
Year Workings RESULT
2012 (13421-4371)/25622 35.32%
2013 (12309-4605)/24838 31.02%
 Cash from operating activities
(W1) Cash received from customers £000 £000
opening trade receivables 6182
SALES 30052
36234
less closing trade receivables -6163
cash receipts 30071
(W2) Cash paid to supplier and   employees £000 £000
opening trade payables -3273
Purchases:
cost of sales 22257
closing inventory 3785
less opening inventory -3933 22109
less closing trade payables 3487
less depreciation 3437
net cash paid to suppliers and employees 18886
(W3) Other cash operating expenses
Distribution cost 2117
Administration expense 3916
6033
Notes: All figures for workings are taken from the
balance sheet, income statement and cash flow statement

Did you find any useful knowledge relating to Financial Reporting and Ratio Analysis in this post? What are the key facts that grabbed your attention? Let us know in the comments. Thank you.

Ratio Analysis Relevant Posts

Project Management Constraints

View Finance Dissertation Topics Here

Contemporary HRM Essay

Human Resources Management Contemporary HRM Essay

This is a human resource assessment based on Contemporary HRM and The Olympic Delivery Authority which is in charge of putting in place the necessary infrastructure for the London Olympic 2012. The assessment is based on four learning outcomes namely: investigate the traditional view of personnel management and the new approach of human resource management; evaluate the procedures and practices used for recruiting and selecting suitable employees; establish the effectiveness of principles and procedures for monitoring and rewarding the employee, and; explore rights and procedures on exit from an organization. A clear difference is put between the traditional personnel management and the contemporary human resource management. This assessment entails assuming the role of ODA Human Resource Director and responding to tasks common to this undertaking. It is clear that line managers are very instrumental in attaining human resource objectives and overall organizational objectives. Some of the motivations such as salary increments, bonuses, recognition among others play a crucial role in employee performance. The method of financial and non-financial rewards is based on the Motivation- Hygiene Theory by Herzberg which is utilized in ODA. Factors which determine employee performance in ODA include educations, skills and experience and professional qualifications. The strategy for monitoring organizational performance is designed as well as ODA’ exit strategy is stated. Overall human resource management as exemplified in ODA is very instrumental to organizational success.

Personnel Management and Contemporary HRM

As the HR Director of ODA you are to explain to the public the differences between traditional view of personnel management and contemporary human resource management. Examine critically the evolution and changing context in which HRM have operated in the past and now.

Some authors argue that there is a disparity between the contemporary human resource management and the traditional personnel management (Golding, 2010, p. 64; Paauwe, 2009, p. 115). They argue that these two fields can be used interchangeably and have no disparities in meaning and implication. Among those who ascribe to the notion that there is a difference between the two fields, their assumptions and theories are rather philosophical. The subject of personnel management has to do with the more administrative issues such as payroll in line with employment law and dealing with the associated tasks. On the other hand, human resource management encompasses the management of the workforce as one of the core resources which is instrumental a firm’s achievement.

When the disparity between the fields is acknowledged, HRM is regarded as being much wider in scope compared to personnel management because it entails and enhances personnel management functions while striving to form and nurture employees for the success of the organization. The major aim of HRM is to empower employees to attain their maximum efficiency levels (Golding, 2010, p. 87).

It is also worthwhile noting that personnel management can encompass administrative functions which are both routine and traditional. It is best referred to as being reactive and creating an enabling ground for the handling of concerns and demands presented in the workplace. On the other hand, human resource management entails the continuous strategies to administer and nurture a firm’s personnel department. In essence, with HRM, all the organization managers are engaged in one way or another and the main aim is to have the persons in charge of different departments nurture the necessary skills to deal the personnel related duties.

When it comes to motivations, personnel management is aimed at encouraging employees through rewards, salaries and bonuses. From the traditional point of view of personnel management, the contentment of employees is the ideal motive to enhance work performance (Golding, 20, p. 99).

There has been an evolution and changing context of Contemporary HRM from the past and now. Contemporary HRM models seem to indicate that the role of human resources have been shifting as firms strive to their human resource function to be more tactical and leaner. Authors such as Truss et al (2002, p. 41); Katz and Kahn, (1978, p. 163); and Struss et al, (1963, p. 25), argue that humans resources are playing a “strategic” tactical role based on the idea that the employees with the human resource departments are in a position to put into effect some judgment over the tasks and can deliberately alter or influence that role. Katz and Kahn (1978, p. 171) role-set theory, the duties performed by employees are socially developed through the attitudes and thinking of the role-set members. These have in essence shaped organizations behaviour and the general functions of human resource departments.

As a human resource expert, explain to the current staff of ODA your roles and activities as the HR director.

As an HR director in ODA, my roles and activities will encompass the following

Employee Recruitment

This is one of my most fundamental roles in ODA. This is because, this duty ensures that the organization chooses the most capable and skillful persons from a pool of applicants. This role entails the assessment of the capability and competency of applicants with regard to the needs of ODA. By effectively performing this function, ODA will realize increased value and attain its organizational aims and objectives (Golding, 2010, p. 33).

Enhancement of Employee Compensation Packages

Motivating employees is one of my core functions in ODA. This can be attained through rewards, bonuses particularly to the employees who are excelling in their line of duty. The department will be assessing the employees from time to time and those who are seen as having exceeded their expectations are rewarded accordingly. As an HR director, I motivate employees through awards, holiday offers, salary increases, equities just to mention a few.

ODA Organization Planning

I am delegated with the duty of ensuring that, to together with the Human Resource Department, I plan for ODA future actions which will engage people. And one crucial aspect for this planning is the ODA employees. It’s fundamental that I ensure that the employees are sufficient to enhance ODA’s value. My role also entails planning for ODA future aims and objectives with regard to staff and making clear these goals to all employees and this important because it makes all persons to work towards a common goal in one direction (Golding, 2010, p. 28).

Evaluate the role and responsibilities that line managers played to manage people at work as strategic partners to HR Director.

Through the devolution of role and responsibilities to the line managers, they were accorded the chance to participate in daily employee management while I concentrated on the attainment and better alignment of ODA processes and systems with organizational goals. Dave Ulrich (1997; 2005) came up with new functions for the line managers when he described them as “business partners” and “shared services”. Line managers were delegated with roles and held responsible for the distribution and budgeting of resources and other employee administration issues in essence playing a more essential function in human resource management. They are very handy in employee development since they are working side-by-side with the employees and therefore their responses are more appropriate and timely (Whittaker and Marchington, 2003, p. 251).

There is increasing need to delegate more duties to the management of line managers such as the development of training tasks, budgeting and the dissemination of mentoring functions. In ODA, I found out that the line managers are crucial drivers of strategic change when accorded the duty of effecting human resources strategies in their line of operation. Line manager were more than glad in being delegated with human resource responsibilities because according to them, it add difference and braves them to work. The engagements of line managers enhanced my transformation as the HR Director in terms of approach towards human resources, relations and change. Increased use of line managers brought about enhanced workplace conditions because they have a better understanding of the range and involvements required.

Contemporary HRM
Contemporary HRM

Recruitment and Selection of Suitable Employees

Explain in analytical terms to the members of staff, human resource planning process for ODA in connection with London 2012 Olympics, the information needed and the various steps involved in the planning process for the actualization of its tasks.

In a nutshell, the human resource planning process for ODA entails identifying the position the organization has to fill what is referred to as personnel planning. We have to develop a structured process, forecast the personnel needs, do ratio and trend analysis and forecast human resource demand.

Design of the HR Management System for ODA

The main and fundamental issue involved in the human resource planning as far as ODA is concerned is to ensure that there is an appropriate system in place to manage the London 2012 Olympics. The design of the human resource management systems is to assist handle the human resources and align them to ODA’ goals. This system will manage the human resource procedures, guidelines, and strategies, tracking the changing human resource inclinations such as implementing more supple practices, outsourcing and technology changes.

Review ODA’s financial, operational and strategic plans to establish their effect on HR planning

This will entail periodic reviews of ODA’s strategic plans and should be in line with its vision, values and culture. The HR managers are to determine the both the long-term and short term requirements within the context of the tactical plan and direction established by ODA. As it plans, the HR planning should put into consideration the total ODA budget assigned for HR spending.

Determine the types and number of vacancies needed in every functional area in the course of ODA’s plan

Analysis of entity jobs should consists of analyzing job, abilities, responsibilities, equipment needed, knowledge and duties. These will include among other things, collecting information on the dynamics in the operating settings which might result in the reduction in HR budgets and programs. On the other hand, supply analysis need to investigate, current recruitment, adjustments, and attrition.

Identify the precise needs for each vacancy in the vacancy description

The job descriptions need to be carried out after the job analyses have been done. The descriptions should detail the responsibilities and duties and also the skills and knowledge required to perform the specific functions.

ODA’s Environmental Analysis

It is the second step and will entail the comprehension of HR planning process within the perspective of HR management. There is need as the HR director, to understand both the external and internal ODA environments with the information on the external environment encompassing among other things such as industry, technology, economy, and the labour regulations in UK, availability of employees and distribution of labour. Some of the internal data which is necessary with regard to ODA will encompass the prevailing status of ODA’s human resources, long and short-term strategies and plans for ODA.

Projecting HR Demand

The objective here is to establish the type and number of employees required in ODA’s future. Of course forecasting will entail the present and past events and also encompass future ODA’s objectives. As the HR Director for ODA, I use bottom up forecasting to anticipate future HR needs by collecting the various human resource needs from ODA’s units.

Planning and Reconciliation

This entails the building up of action plans that are informed by the collected data, investigations and available options. The main point here is that the process should be acknowledged by ODA’s top management and staff. The plans should be the main concern of the HR department and the main players and detractors identified. These plans may encompass management and training development plan, appraisal plan and HR supply plan.

Discuss how the HR planning process of ODA would affect the structured process of the organisation compared to that of LOCOG.

An effective human resource planning process will have major ramifications for ODA and LOCOG in general. This is because; it will influence the whole organization through the preparation of employees to attain the overall objectives not only for ODA but also for LOCOG in general. Without proper HR planning process, ODA and LOCOG will be ill prepared to handle the Olympics in 2012 making it a critical component of the whole process.

Evaluate interview as a technique of selecting staff into the organisation and discuss the other possible alternative selection methods available for ODA.

An interview is an avenue which is aimed at collecting the information from the prospective employee through oral responses. It can also be utilized to make useful predictions about the future selection of employees in an organization based on the oral and written responses. It is most accepted employee selection approach being utilized in many organizations to this day making it a valuable tool for management. As the ODA HR Director, I will utilize the interview to assess the required personnel to deliver London Olympics come 2012. It involves the following processes.

Step 1

This entails writing down the job description details alongside the associated duties and responsibilities, required abilities, knowledge and other pertinent qualifications.

Step 2

This will encompass recognizing the vacancy main duties and to attain this it is important to grade every job based on its significance to the achievement of the organization and the duration required to perform these duties.

Step 3

The third step will involve the creation of interview questions with regard to the definite duties in a manner that the most crucial duties will attract more questions.

Step 4

It is necessary that good descriptive answers be developed besides a 5-point-scale with appropriate answers based on the ratings.

Step 5

At this stage, an interview panel is put in place and the interviews carried out. Structured situational interviews are preferred to sequential ones.

Besides carrying out the structured interviews, ODA has the choice of adopting the college recruiting approach or employing the services of On Demand Recruiting Services. With college recruitment, ODA HR department dispatches representatives to the universities to carry out applicant screening while with ODRS, ODA is able to benefit from the services of short terms applicant recruitment agencies to run its project.

Explain in clear terms to your staff how the selection that has been done so far and those you still intend to do could be considered as practices and procedures in the selection process ‘best practice’ in comparative terms to LOCOG. Using your understanding of the legal frameworks guiding recruitment and selection in the United Kingdom.

The selection and recruitment process so far espouses some of the best practices within the UK legal framework with special reference to LOCOG because; we applied anti-discrimination and equal opportunity legislation. Guided by this, we ensured that during the interview process we did not base employment on the personal characteristics of the prospective employees such as disability, country of origin, age, religion, sex, and marital status (Direct.gov.uk, 2010). Therefore, the reason for rejecting any would be employee was solely based on the ODA’s job description requirements. According to the UK law, after categorizing a selection of applicants, then ODA need to apply a selection approach to determine the final employees such as competence, skills, capability and experience. We adopted this subjective approach to the selection and recruitment and it was applied without favor to all the applicants, and this shall continue to the basis for selection and recruitment at ODA in future exercises

Principles and Procedures for Monitoring and Rewarding Employees

Explain ODA’s job evaluation process and then, lists and explain factors that determine employees’ pay.

 Job evaluation is the systematic evaluation of jobs to establish the value of one job as measured against another. ODA’s job evaluation process has five steps as stated below:

Step 1

At this stage, a job description is done, and if the position is currently held by ODA’s employees, then she will also have to review it and append his/her sign as well.

Step 2

The HR manager reviews the job description and if he/she agrees, then the duties and requirements are approved and append his/her signature. Otherwise, it is returned to the line manager for changes.

Step 3

This is the review stage whereby the HR reviews the job description in consultation with the line manager before presentation to the Job Evaluation Committee as stated in the succeeding step. The HR is to make sure that there is balance and uniformity in the descriptions by the doing changes for format and clearness. And if any changes are done, then it returned to the line manager for signature.

Step 4

The Job Evaluation Committee is appointed by the ODA Human Resource Director and has representation of from all the ODA organization. This committee ensures that there is fairness in all jobs by utilizing the consistent and determined approach for evaluation and review.

Step 5

ODA Human Resource Director reviews and confirms the titles and job evaluations as per the counsel and suggestions of the committee. There is also an appeals system in place should any employee of ODA feel that due process was not followed or rather some information was not considered.

Factors which determine employee pay include:

Education, Skills and Experience

Employees earning will commensurate with their level of education, skills and experience

Piecework Plans

ODA’s pay is determined by a number of items based on each employee’s per unit time such as per day or working hours. By this approach, an employee per hour or per day rate is determined for every unit of production.

Merit Pay

This is based on the employee individual performance especially after evaluation has been conducted and is not the same as bonus.

Professional Qualifications

Employees who possess exceptional professional qualifications are able to apply their knowledge in attaining ODA’s objectives and therefore, these professions attract special incentive pays from ODA.

Classify the varieties of reward systems as discussed in class and critically explain their impact on employees’ performance at ODA.

Individual Employment Rewards

This encompasses the incentives for the professional employees, merit pay incentives and piecework plans.

  • Piecework plan encourages ODA employees to work extra hours and enhance the attainment of organization’s objectives. That implies that the more an employee increases their man hours and production per unit time, the more their pay
  • Professional employees’ incentives are aimed at encouraging the employees to undertake special courses which are related to their line of duty and this in essence attracts increased skilled manpower to ODA. By doing so, the employees are rewarded generously with an incentive pay.

Recognition Based Awards

These are a form of non-financial rewards and will often include things such as approval, “thank you” messages and praise for a job well done.

Group Incentive Plans

This plan encourages team work among the ODA employees because by working together, they are able to achieve and surpass the set target and are compensated for these efforts accordingly.

ODA Organization Plan

This is an organization wide approach by ODA and may encompass sharing the proceeds after attaining the organizational objectives.

Incentives for Executives and Managers

These include the short term incentives such as stocks ownership plans, annual bonus besides other long term incentives. With the adoption of relevant motivational theory, explain how the HRs can be affected as a result of linking the theory and reward system in the organisation.

The most appropriate motivation theory for ODA is Motivation- Hygiene Theory by Herzberg. The Motivation-Hygiene Theory was advanced by Fredrick Herzberg, an American Psychologist. This theory is also referred to as Two-factor theory. Maslow’s thoughts influenced Herzberg definition of the working environment through the study of working motivation. His aim of research was to determine the work conditions and situations which were experienced negatively and positively by the workers; the drivers of work satisfaction (Ryan & Deci, 2007, p. 58). His study revealed that the employees were influenced by twin factors: “the motivator” and “hygiene factors”.

When the motivator factor is fulfilled it leads to satisfaction and the hygiene factors lead to dissatisfaction if they are not met (Cooper, 1999, p. 390). According to Herzberg, financial rewards such as money are a hygiene factor that will create dissatisfaction when it is not received in the appropriate quantities, though it is not encapsulated as the only positive motivator and satisfier (Rotenstan, 2007, p. 412). According to him, salary gives a favorable but short term feeling but the motivators causes lasting satisfaction (Armstrong, 2003; Wiley, 2003, p. 48). And by ODA adopting various financial reward mechanisms such as incentive plans, it has really motivated. The motivators which bring about satisfaction are factors include recognition, success, and sense of contribution, being challenged, independence, trust, responsibility, independence, and career development from ODA. The hygiene factors are necessary to ensure that the employee does not become dissatisfied (Findlay, Dawson & Sparks, 2006, p. 65). Workers are not engaged in their duties to cause higher motivation but a lack of it may generate dissatisfaction. The typical hygiene factors include: salary, company policies, status, working conditions and administration (Armstrong, 2003, p. 73).

As the HR Director, discuss the diverse ways by which the event organisers of London Olympic 2012 will device strategy at monitoring performance.

Typically Olympic events are onetime events and therefore, they hire short term staff in areas such technology, accounting and performance of the Olympics. It becomes more difficult to monitor the performance of staff when it is big and ensure accountable in such a scenario. However, with the assistance of internal auditors, even organizers are able to deal with non-compliance and material errors. It is therefore necessary that the event organizer higher auditors with diverse expertise in various auditing facets and there is need to invest in quality control processes and performance planning.

Exit from the Organisation

Discuss in clear terms what the exit procedures at the London 2012 are and compare it with what entails in another organisation. Based on your findings, can these procedures be seen or adjudged as best practices?

ODA has outlined an exit strategy which has been remitted to DCMS stating how the parks and the venues will be relinquished to OPLC. OPLC is communicating with the ODA over the exit strategy after which could see the title given to LDA after the Olympics. With regard to this, ODA has already put final touches to the post-game exit strategy alongside the responsibilities and the budget for the same with OPLC (ODA, 2009).

Under this exit strategy, ODA is also supposed to provide maintenance for the landscape till the official handover in 2014. The tunnel assets are also to be relinquished to the power companies who are charged with the future upkeep and running of the assets. ODA is also required to remove the temporal footbridges and highway bridges, elimination of transitory perimeter wall field (ODA, 2009).

Lastly, you are to consider the selection criteria the organisation would adopt in declaring an employee redundant and explain it to your audience.

According to Direct.gov.uk (2010), ODA has put in place an employee redundancy policy whereby the employees prior to the exit, will be given a one month notice ahead of their expected end of employment. The statutory redundancy policy for ODA will encompass:

  • Not less than a week’s notice for employees who are expected to serve from one month to two years
  • A notice of one week for every single year for ODA employees working for two to twelve years.

Conclusion

This human resource assessment investigated four main learning outcomes of: investigates the traditional view of personnel management and the new approach of human resource management; evaluating the procedures and practices used for recruiting and selecting suitable employees; establishing the effectiveness of principles and procedures for monitoring and rewarding the employee, and; explored rights and procedures on exit from an organization. It began by explaining the difference between personnel management and human resource management. It was found that there is indeed difference between the two fields in that personnel management deals with the administrative functions while human resource management is concerned with the formation of ongoing strategies to administer organizational personnel. Some of the roles of HR Director include employee recruitment, enhancement of employee compensation packages, and organizational planning.

The roles played by line managers are indisputable. HR directors and managers delegate duties and responsibilities to the line managers who are regarded as “business partners”. Line managers are given duties and held responsible for the distribution and budgeting of resources and other administrative issues. The process of recruitment and selection of suitable employees entails the design of HR management system for ODA, review of ODA’s financial operational and strategic plans, determining the types and types of vacancies needed in every functional area and identification of precise needs for each vacancy.

The interview is most preferred mode of selecting ODA staff. But besides carrying out the structured interviews, ODA has the choice of using ODRS services and college recruitment approaches. The selection and recruitment of employees is line with UK employment and LOCOG law. Among the factors which determine employee include piecework education, skills and experience besides the professional experience they hold.

References

Armstrong, M. (2003) Managing Reward Systems and Contemporary HRM, New York: New York University

Direct.gov.uk, (2010) Employment terms and conditions and terms. Contemporary HRM Direct.

Findlay, A. Dawson, J. & Sparks, L. (2006). Employment in the American Superstores: Findings from the project and Contemporary HRM. Working Paper 8705, Institute of Retail Studies, Starling

Golding, N., (2010) “Strategic Human Resource Management Contemporary HRM” in Beardwell, J. and

Claydon, T. (2010) Human Resource Management A Contemporary HRM Approach, FT Prentice Hall

Katz, D. and Kahn, R. L. (1978), The Social Psychology of Organizations and Contemporary HRM, 2nd edition, New York: Wiley

McGrane, T.L (1995) Olympic auditing. Internal Auditor – Contemporary HRM

ODA ( 2009) Contemporary HRM Programme Delivery Baseline Report

Paauwe, J. (2009), ‘HRM and Performance: Achievement, Methodological Issues and Prospects’ Journal of Management Studies, 46 (1):

Rotenstan, H. (2007) Contemporary HRM – Prediction of the job satisfaction from the characteristics of personal work goals. Journal of Organizational Behaviour, I 9 (4), 409-430

Ryan & Deci (2007) Self Determination and Intrinsic motivation in Human behaviour – Contemporary HRM. New York: Plenum

Strauss, A., Schatzman, L., Ehrlich, D., Bucher, R. and Sabshin, M. (1963) ‘The hospital and its negotiated order’. In Friedson, E. (Ed.) The Hospital in Modern Society, New York: Macmillan

Truss, C., Gratton, L., Hope-Hailey, V., Stiles, P. and Zaleska, J. (2002), ‘Paying the piper: choice and constraint in changing HR functional roles Contemporary HRM, Human Resource Management Journal, 12 (2): 39-63.

Ulrich, D. (2005) The HR Value Proposition, Boston: Harvard Business School.

Whittaker, S. & Marchington, M. (2003) “Devolving HR Responsibility to the Line: Threat, Opportunity or Partnership?”, Employee Relations Contemporary HRM, Vol. 25, No. 3, p. 245-261.

Wiley, C. (2003) Non-financial rewards and employee motivation Contemporary HRM. University of Tennessee: Chattanooga

Do you have any interesting facts about Contemporary HRM and how it is deployed at your organisation? We are interested to know, feel free to comment below. Thank you.

View HRM Dissertation Topics Here

Strategic HR Roadmap

Strategic HR Roadmap – Toyota

Bohlander (2006) when analyzing the development of the manufacturing system at Toyota, interprets it through the formation of peculiar organizational capabilities at three levels: manufacturing routines, learning routines and evolutionary learning. In them, the decisions also appear implicitly; especially in learning routines, considered as a specific organizational ability of Toyota to perform troubleshooting cycles more competitively than its competitors consider. Bohlander (2006), a former Toyota executive in Canada, has approached more of the operative question with the publication of his experience and reading of how Toyota plans and deploys its values to the rest of the organization (Bohlander, 2006).

Discussion – Strategic HR Roadmap

The HRM is the administrative process applied to increase and preservation of effort, practice, health, knowledge, skills, etc., of the members of the structure, the benefit of a subject, of the organization and the country in general. Similarly, we can say that through the process of helping employees achieve a level of performance and quality of personal and social behavior that meets your personal needs and expectations (Boudreau et al, 2003).

The HRM is to plan, organize, and develop everything related to promoting the efficient performance of staff making up a structure. The Human Resource Management in an organization representing the medium that allows people to collaborate on it and reach directly or indirectly with work related individual objectives. Managing Human Resources means conquer and keep people and members of an organization, in an atmosphere of harmonious, positive, and supportive work. Represents all those things that make staff to remain in the organization. The objectives of the Human Resource Management derived from the objectives of the organization (Jackson et al, 2011).

Strategic HR Roadmap

The prime HR functions are:

  • Create, maintain, and develop a set of people with skills, motivation, and satisfaction sufficient to achieve the objectives of the organization.
  • Establish, maintain, and cherish organizational conditions that allow the implementation, development and the satisfaction of the people and the achievement of individual goals.
  • Achieve efficiency and effectiveness of human resources (Strategic HR Roadmap)

The Human Resources Management performs the integral management in different functions from the beginning to the end of an employment relationship as:

  • Recruit and select staff with the selected profile
  • Training and coaching
  • Evaluating job performance
  • Describe the responsibilities that define each position in the organization
  • Develop programs, workshops, courses, etc., and any other programs that vallan commensurate with the growth and improvement of the insights of staff.
  • Promote leadership development
  • Provide counseling to employees based on maintaining a harmonious environment together.
  • Resolve conflicts and problems that cause the staff
  • Inform employees either through newsletters, meetings, memos or via mails, policies, and procedures of human resources.
  • Oversee the management of test programs
  • Develop a personal framework based on competencies
  • Evaluate the Strategic HR Roadmap
  • Endorse the variety of jobs as a form or via a company’s success in different markets.

Toyota Strategic Planning

In recent years, the search for efficiency and cost savings has led many organizations to implement processes of implementation of methodologies and tools like Lean, Kaizen, 5 S`s, Six Sigma. Furthermore they are effective, often have not yielded the expected results, not going linked to a process of transformation of people. This model, applied to leadership, will enable the deployment of Lean in the company sustainability and with guaranteed success.

The Strategic HR Roadmap. Toyota continues to re-validate, year after year, his position as one of the first global companies investing in R & D. Toyota Motor Manufacturing France SAS (TMMF) was established in 1998 in Valenciennes (France), near the border with Belgium, as the second Toyota manufacturing base in Europe. Production began in January 2001 and since then has applied TMMF slogan ‘Green, clean and adjusted’ to reduce the environmental impact, based on the Toyota Production System, which seeks to eliminate muda, mura and muri (disposal practices generating waste, irregularities and unreasonable requirements). These are key features of the Strategic HR Roadmap at Toyota.

HR Efficiency

One of the basic concepts of Toyota is that the quality must be part of the process of production. This concept, known under the name of Jidoka, guarantee that problems have no impact on the chain from one job to another. Its principle is to stop work when a problem arises, in order to avoid the production of defective items (MacDuffie et al, 2011).

The Jidoka is also used when a team member encounters a problem in your workplace. The rest of the team has a responsibility to correct the problem. Failure to do so could indicate a problem pulling a Andon cord, which makes the number of jobs in the panel optical control lights, so that the team leader deal with the problem while the chain keeps moving.

Strategic HR Roadmap
Strategic HR Roadmap

If the team leader fails to fix the problem, the chain stops at the fixed position following the end of a process. After solving the problem, the chain restarts. Jidoka can also refer to the use of integrated security to prevent human or mechanical error. In this empirical study, Strategic Human Resource Management stands as precedent Balanced Scorecard model. The aim of this study is to examine the relationship between Strategic Human Resource Management implemented in organizations with the three perspectives (customers, finances and processes) of the Balanced Scorecard.

Another perspective of the BSC is the customer. Modern organizations have to identify market segments, existing and potential customers, and then select the niches you want to compete. In this sense, should have a set of core indicators both client (increase, acquisition, satisfaction and profitability) and market share, and product / service must also be assessed the intrinsic attributes and their expectations, and prestigious image thereof.

The final perspective of BSC is critical to getting the previous three. It is the prospect of learning and personal growth. The BSC makes explicit reference to the importance of human resources in achieving business goals. This perspective touches on three key aspects. On one hand, it seeks to enhance the capabilities of employees, improvement ideas should come from employees who are close to the processes and customers. Otherwise, organizations must acquire information systems towards employees regarding their satisfaction, retention, and performance. Members of an organization must be motivated, should be free to make decisions and act (empowerment), and should have a consistency in its objectives. To evaluate the parameters of the BSC we built a scale called BSC-14 (Boada and Gil, 2007a).

Toyota Decision Making Policy

The decision-making process in the lean production model appears as a factor scarcely studied. The elements that make up the decision-making process appear marginally when discussing factors such as just in time, partnerships with suppliers, product development and the built-in quality in the process. Regarding the way, authors who, within each content are concerned with structure it analytically, with greater or lesser wealth of details, setting the process in phases and describing it now in order to explanatory goals, sometimes taking in view prescriptive actions (MacDuffie et al, 2011). On the other hand, there are those that shape the content focusing more on the context of the aspects involved in the process, exposing the structure or system that supports it, and wait for results (Strategic HR Roadmap). If we understand that everyone living in society participate in each moment a certain level of organization, Simon’s contribution was fundamental to inaugurate the decision studies with broader perspectives and next of social life and its complexity.

Conclusion

The decision-making appears as an unexplored factor in the work of diffusion of lean production model in which Toyota is the recognized worldwide as a pioneer in creating a production system focused on continuous improvement of productivity and quality indicators. Thus, even in works that are more recent that recognize the model of lean production as a broader model, organizational or business, clear link elements with the decision structure arise identified over the design elements aimed at troubleshooting.

References

Bohlander, G., & Snell, S. (2006). Managing human resources – Strategic HR Roadmap. Cengage Learning.

Boudreau, J., Hopp, W., McClain, J. O., & Thomas, L. J. (2003). On the interface between operations and human resources management – Strategic HR Roadmap. Manufacturing & Service Operations Management5(3), 179-202.

Jackson, S., Schuler, R., & Werner, S. (2011). Managing human resources – Strategic HR Roadmap. Cengage Learning.

MacDuffie, J. P., & Krafcik, J. (1992). Integrating technology and human resources for high-performance manufacturing: Evidence from the international auto industry. Strategic HR Roadmap and Transforming organizations, 209-226.

Yeung, A. K., & Berman, B. (1997). Strategic HR Roadmap – Adding value through human resources: Reorienting human resource measurement to drive business performance.

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Effective Team and Performance Management

Effective Team and Performance Management

This article is intended to evaluate the case study on Electron Corporation and highlights main key points pertaining to team building as well as enhancing the effectiveness of team productivity, established team environment and performance. Building of teams and effectiveness of team performance can be derived from various primary attributes (Zaccaro & Klimoski, in press). Teams are firstly needed to successfully contribute their individual efforts because their certain needs and responsibilities will form the basis of the collective success of the team. Secondly, since teams need to operate in complicated and ever changing organizational environments, they need to tackle multiple organizational team characteristics such as conflicting agendas, load of greater information, swift changes in the situations as well as enhanced dynamic changes (Zaccaro, Rittman & Marks 2001).

A small overview of the company includes; Electron is a small manufacturing organization established in 1997 in North of England. It manufactures components for telecommunication division. It employs 150 people along with 90 people in the manufacturing division. It was originally a department of a huge telecommunication organization and the Electron’s team bought the component manufacturing section as a portion of an outsourcing plan presented by the parent company in 2007. Electron has acquired both full time and part-time employees. In 1990s, its management realized that the company was striving for increasing competition and innovation in the industry. So in order to enhance their competition in the market, they have found the need of a more proficient and effective production procedures while emphasizing on enhancing organization’s culture, customer services, improved performance and responsibility and loyalty towards teamwork.

However, the subsequent sections of the assignment involve literature review which will cover the benefits and dysfunctions of teamwork. The Tuckman’s (1965) model of team building is also been employed in relation to the case study which demonstrates how teams must be efficiently formed. Whereas, the last sections will demonstrate the conclusion of the study as well recommendations on how to enhance the team performance more effectively and the steps that need to be taken for creating a subtle team environment.

Literature Review

The use of teams seems to provide several advantages; they may not be the most appropriate tactic for all types of organizations and not all of the organizations face similar and all challenges imposed by the teams. The influence of teamwork (both optimistic and pessimistic) is dependent upon several features such as company’s culture and environment, efficiency of team leadership, company’s efforts etc. Primarily, a team can be described as a small group of people along with a set of performance objectives, who are responsible to a common goal and the attitude they carry themselves mutually responsible (Katzenbach & Smith 1993). This definition explains that organizational teams should be of a manageable size and all of the team members should be accountable to achieve the shared team objectives. Moreover, all of the team members should be mutually responsible towards their activities and the results of those activities.

The Enticement of Working with Teams

The power of team work roots from several factors particularly when teams are employed. Various researchers demonstrated that teams are increasingly being employed as a response to ever increasingly global marketing competition (Heap 1996; Roufaiel & Meissner 1995; Sundstrom, De Meuse & Futrell 1990). Because of this increase in competition, it is also viewed that catering niche markets is also a growing concern. Since, electron emphasizes on enhancing organization’s culture, customer services and improved productivity; as a result, Electron manufacturers not only need to compete on cost but also strive to compete on innovation by establishing distinctive goods and services that could not be countered by the other rivals in the market. However, this will originate a problem where the company is not supposed to rely on mass production as well as economies of scale in the industry.

Most organizations still believe that working with teams is the only answer to this problem (just as Electron did). In their view teams are the source to optimize company’s innovation as employees have increased self-sufficiency, increased involvement and autonomy for making decisions (Harvey, Millet & Smith 1998). The employees no longer need to be guided about what is required to be done. In fact, they are provided with the objectives or develop objectives along with their team leader and then give autonomy to choose the best way in order to accomplish those objectives. Additionally, organizational innovation can also be optimized if teams are able to provide other enticements to the organization the situation in which they operate.

For instance, firstly, teams can optimally utilize human resources since they permit companies to achieve access to a person’s knowledge and capabilities (IRS Employment Review 1995). Albeit, the enhanced intricacy of the companies means that not all the managers know everything regarding each and every facet of the company’s operations. In this circumstance, it is important to utilize knowledge and capabilities of the employees/teams. Secondly, teams can be utilized to optimize company’s learning as employees are capable to design best strategies being suited to their work objectives (Wageman 1997). Thirdly, Teams are also capable to enhance individual’s performance levels and his/her efficiency, thereby establishing a synergy (Katzenbach & Smith 1993). Finally, team work is greatly associated with various numbers of objectives, tasks and additional accountability for each member of the team, which in turn resulted in enhanced job satisfaction, employee motivation and more work commitment. This will also result in lower employee turnover and absenteeism, thus, decreasing company’s costs and enhancing company’s knowledge base (Kirkman & Shapiro 1997).

Dysfunctions or Challenges Accompanied Teamwork

The employment of teams is primarily a change to an organization as well as a developmental procedure. Thus, teams can be easily affected to any challenge that might emerge during an organizational change. Particularly, resistance among employees may occur when they are needed to work along with other employees who are unfamiliar to them. In this way, teams are more likely to have broken established social relationships. This has already done in the Electron when huge number of new employees was hired and was integrated into one of the Electron’s teams. Those workers were new to their team’s values and consensus where they exerted greater challenge to the already existed relationships among the older employees.

In accordance to Bettenhausen (1991), one way to cope this problem is by forming teams. Building of teams will enhance group productivity by enhancing communication, minimizing conflicts and establishing greater bonds and commitment among all the working team members. Resistance among employee can also occur as a result of other factors. For instance, teamwork may need job enlargement where each team member is required to perform his/her conventional role along with his/her team role (IRS Employment Review 1995). In this circumstance, it is essential to minimize their certain responsibilities or to change the structure of their rewards or compensation.

Besides job enlargement, team work is also coherent with autonomy, ownership and additional commitments. Managers frequently perceive that employees must participate in decision making instead of simply being directed of what needs to be done. However, this might be true for certain situations but not for all situations. This will, in turn, may resulted in employee job dissatisfaction, increased employee turnover and/or reduced work productivity. The similar case is also viewed in Electron, when it hired new employees on temporary basis and let the managers to decide who must be hired on as full-time employee. Those workers initially were also unfamiliar with the team procedures and were expected by the managers to know the team’s values and conform and act accordingly to their team’s norms. Teams at Electron started exerting their concertive control over the new individuals which as a result new employees began controlling themselves and those norms and values become rationalized rules for the new members. There is no simple solution for catering such problem; however, training or changing positions can be probable within the company.

Other associated problems with “empowered teams” originate when there is a lack of trust in the team when they are no longer trusted enough to participate in decision making. This will result in teams and organizations losing full potential to accomplish their desired objectives. The situations in which teams are needed to seek consent before executing any idea or timeliness, ownership is likely to reduce. Organizational innovation will also decrease as teams are compelled to suggest ideas that will be likely to accept (Nahavandi & Aranda 1994). Moreover, team members may also perceive that their management is paying insincere respect to their proposed ideas of teamwork which will certainly result in reduced employee morale.

It is also viewed that when teams are involved in making decisions, they take more time than the system they reinstate. This is also needed where team coordination is required and where team members are independent. This issue can be partly cope by the formation of the team, but this also requires continuous training and development of groups teams. Such kind of training can be specifically appropriate for the new hired staff as there may be no established procedures for them to follow. Also, for effective teams, there must be strong coordination among them (Harvey, Millet & Smith 1998). Similarly, the lack of participation in decision making and coordination among employees for building of more strengthened team culture is seen in Electron’s eight teams (red, blue, white, green, silver, aqua, purple and yellow). This is due the fact that the older and long tenured employees have tried to impose strict concertive rules and procedures to conform to the group norms.

In case of organizational environmental changes and developmental initiatives, culture of the organization and environment must also be considered. It must not be perceived that the objectives and values of the individuals are similar to those of their management or congruent even across the entire organization. The attitude of individuals towards teams will demonstrate the success of those teams. If teams need to be executed more successfully, the extension of already existed values must be there (Carr 1992). Therefore, Electron when working with teams also demand shift in attitudes that a company may turn to it when it wants to accomplish a cultural shift, for instance, when it becomes more quality or customer oriented (IRS Employment Review 1995).

Five Team Development Phases as Proposed by Bruce Tuckman

This model as proposed by Bruce Tuckman (1965) tends to highlight and guides the areas where teams can be successful and/or become failure to achieve desired team goals. For forty years, Tuckman’s classical model of team development delivers ease and new perceptions to managers to either charge to run a team or attempt to function within a team while assuring each member that they are not alone and that the uneasiness is a normal part of the team journey towards an efficient and pleasant unit. Tuckman speculates that these stages are essential and unavoidable. In order for the Electron teams to grow, to face the hurdles, to cope up with the problems, to search for solutions, to organize work and to deliver desired outcomes; these five phases can be elaborated as follows.

Phase One: Forming

In this first phase of team building, Electron teams must be formed. Where the attitude of the individual is driven by the desires which are likely to be accepted by the other individuals and prevent any controversy or conflict. Solemn problems and attitudes are prevented and people are required to concentrate on their busy work routines. Individual members also try to gather knowledge regarding each other, regarding the scope of the task and how to reach it. This phase is considered to be an easy stage but prevention of controversies and conflicts mean that not much objective is actually accomplished. The teams will together meet and learn about various opportunities and confront and then agree on objectives and start to tackle the tasks and objectives. Members of the team will quite behave autonomously.

Each team member must concentrate on his/her team leader by accepting the leader’s guidance and authority while maintaining a respectful distant association with other individuals. At this phase, the leader must open two way communications and be ready to reply any of the queries that may come on his/her way; limitations, potency and vulnerabilities must also be tested including those related to the leader.

Phase Two: Storming

Each Electron group then will enter into the next stage where different ideas for competition are considered. The teams address distinct issues such as what kind of problems they need to solve, how they must function autonomously as well as mutually with each other and which leadership model they must accept to follow. Each team member will have the privilege to confront others’ ideas and perceptions. In most cases storming is solved more quickly while in others, most of the teams never leave this phase (this depends on the maturity of the team). Most team members concentrate on the ins and outs to dodge the problems. This second phase is essential for the teams to grow which could be controversial, distasteful and often excruciating to the team members who are opposed to the conflicts. Tolerance of each team member must also be emphasized because without patience, teams will likely to fail.

This stage can be proved destructive for the teams if they are permitted to go out of control. Managers/supervisors of the teams might be more accessible but need to be directive in their professional and decision making attitudes. The teams therefore, will solve the problems and differences and contribute more comfortably with one another. In this way, they cannot be judged and can share their stand points and ideas easily with each other.

Phase Three: Norming

At this phase of team building, Electron managers will set one objective and one mutual plan for the team to accomplish. Some of the members will be motivated to give up their certain ideas in order for the team to effectively function. At this phase, each team member feels his/her commitment to the team and has the aspiration to work towards the success of the team’s objectives.

Phase Four: Performing

It is probable for certain teams to reach to this stage. The high performing teams can be able to work as one unit as they able to identify best approaches to get their job done mutually, comfortably and without irrelevant controversy or the requirement of any external management because they become motivated and knowledgeable by this stage. When the members of the Electron teams are now skilled, independent and experienced, they can tackle the process of decision making without the burden of any supervision (however, supervisors are also directive and participative at this stage but team make more appropriate decisions). The Electron teams must pass through this stage several times because of the global and organizational dynamic changes.

Phase Five: Adjourning (and Transforming)

This stage involves un-forming the groups which sometimes create a sense of loss often feel by the team members. This stage will include ‘dissolution’ which leads to the end of the Electron team members’ roles and responsibilities, the accomplishment of objectives and minimization of reliance. This procedure can be traumatic specifically when the dissolution is not planned. Thus, team members must be acknowledged at this phase that at the successful achievement of the productivity levels and outcomes, teams will be dissolved and that new teams will emerge for new targets.

Conclusion

In order to execute and sustain teams to operate effectively within the organization, sufficient organizational changes are required to be considered as well as various issues required to be catered. Those changes not only influence team members but also the responsibilities and commitments of the supervisors and managers, the organizational framework, work procedures and techniques and employees’ social bonds. That’s why due to the dynamic environmental changes, Electron manufacturers also face multiple challenges which occur as a result of teams’ implementation. However, it is also evident that in case of teams’ implementation, various organizations will not opt for going back to their prior organizational frameworks (IRS Employment Review 1995). Consequently, it is also seen that teams, in spite of the emerging challenges, are capable enough to offer several advantages to firms in the long run.

In case of Electron manufacturers, new hired team members were unknown of the team’s values, norms and consensus that proved greater challenge to the already existed relationships among the older employees. Moreover, managers were also expecting that each new member must be familiar with the procedures and norms of the groups to act accordingly and conform themselves to those groups. However, besides the implementation of their concertive procedures and motivating employees (by providing them rewards), Electron teams still lacking certain key aspects which formed the basis of a strengthened team. Such as two way communication, participation of employees in decision making, lack of trust among team members, sharing of opinions and ideas among each other to resolve any critical issue regarding production and enhancement of work performances and employees’ morale.

Thus, as a result of this, Bruce Tuckman’s (1965) model of team building is employed in the context of Electron manufacturers. According to his model, teams are to be developed step by step by ensuring performance effectiveness in each team building phase. This model consists of five stages i.e. forming, storming, norming, performing and adjourning. This can be concluded as Electron must forge its eight teams in a manner such that each individual must know his/her accountability, change his/her attitude according to the organizational culture so that teams will effectively function with minimum conflicts and controversies (forming). Second, teams must be encouraged to share their wide scope ideas and opinions and can confront the other’s ideas for making better decisions and improved productivity (storming).

Third, Electron managers must establish one objective and direct the team to mutually accomplish the objective which enhances the members’ sense of responsibility towards the team success (norming). Forth, when Electron’s team members become more experienced and capable enough, they will be able to make decisions without any supervisor which in turn, gives employees more autonomy, understanding of each other’s roles, increase employee social relationships, enhance their morale as well as enhance work productivity (performing). Finally, when the production target is successfully achieved, teams will be terminated at the final stage so that new teams will be developed to achieve new production targets with the passage of time and make the organization subtle to dynamic industrial changes with the help of new teams’ formation.

Recommendations

Following are some of the recommendations that can be further considered for making organizational teams more strengthened and intensified.

  • In accordance to Tuckman’s strength deployment inventory (SDI) model, employees must be nurtured with the help of managers without directing rewards in return. They must be motivated to enhance their self-worth by accomplishing tasks and other significant orders.
  • Fulk, Bell & Bodie (2011) also employed Tuckman’s five stages of team development to enhance team performance. According to them, the first stage ‘forming’ must also involve hiring and selecting right individuals at the right time who also possess the qualities of solving critical problems, controversies, communication gaps, decision making, setting of plans and goals and organizing tasks within teams.
  • At the second stage ‘storming’, managers must anticipate to unexpected events that are likely to lead the whole team to the conflicts which are likely to arise as a result of differences in opinions, styles of working and priorities. The managers must be vigilant to take all those conflicts into consideration and encourage teams to take appropriate and productive actions towards mitigating those conflicts.
  • The third stage ‘norming’ must involve working with teams with specific as well challenging goals and those goals must be present in writing. Here team performance can be enhanced if teams revisit their initial goals, clarification of the goals and the commitments towards those goals.
  • At the fourth stage ‘performing’, managers must monitor their teams ‘objectives and their feedback on a regular basis in order to enhance teamwork. That feedback must be timely basis as well as concrete to be acted upon.
  • At the final stage ‘adjourning’ the team members instead of felling a sense of loss, team members must be expected to enjoy their success resulted in successful completion of the task.

Bibliography

Bettenhausen, K.L. (1991) ‘Five Years of Group Research: What Have We Learned and What Needs to be Addressed’, Journal of Management, vol. 17, no. 2, pp. 345-381.

Carr, C. (1992) ‘Planning Priorities for Empowered Teams’, Journal of Business Strategy, vol. 13, no. 5, p. 43-47.

Fulk, H.K. (2011) Team Management by Objectives: Enhancing Developing Teams’ Performance. Journal of Management Policy and Practice, 12(3), 17-26.

Heap, N. (1996) ‘Building the Organisational Team’, Industrial and Commercial Training, vol. 28, no. 3, pp.3-7.

IRS Employment Review (1995) ‘Key Issues in Effective Teamworking’, no. 592, pp. 5-16.

Katzenbach, J.R. & Smith, D.K. 1993, The Wisdom of Teams, McKinsey & Company, New York.

Kirkman, B.L. & Shapiro, D.L. (1997) ‘The Impact of Cultural Values on Employee Resistance to Teams: Toward a Model of Globalised Self-Managing Work Team Effectiveness’, Academy of Management Review, vol. 22, no. 3, pp. 730-757.

Nahavandi, A. & Aranda, E. (1994) ‘Restructuring Teams for the Re-engineering Organization’, Academy of Management Executive, vol. 8. no. 4, pp. 58-68.

Performance Coaching Training (2010) Bruce Tuckman’s Forming, Storming, Norming & Performing Team Development Model.

Roufaiel, N.S. & Meissner, M. (1995) ‘Self-Managing Teams: A Pipeline to Quality and Technology Management, Benchmarking for Quality, vol. 2, no. 1, pp. 21-37.

Sundstrom, E., De Meuse, K.P. & Futrell, D. (1990) ‘Work Teams: Applications and Effectiveness’, American Psychologist, vol. 45, no. 2, pp. 120-133.

Teambuilding Solutions (2011) Strength Deployment Inventory (SDI).

Wageman, R. (1997) ‘Critical Success Factors for Creating Superb Self-managing Teams, Organisational Dynamics, vol. 26, no. 1, pp. 49-60.

Zaccaro, S. J, Rittman, A.L & Marks, M.A (2001) Team Leadership. The Leadership Quarterly, 12, 451-483.

Appendix A

Performance Management
Performance Management
Effective Team
Effective Team

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