p5任務(wù)制2.0網(wǎng)課-知識(shí)模塊內(nèi)容新增講義點(diǎn)擊右側(cè)9.-building blocks june2017q

1、01Darg servi serviServi(DS), a listed company, provides facilities management (FM)where it manage on behalf of its cch activities as cleaning, security, catering and buildingnts. Cnts can outsource to DS a single activity or oftenoutsource all of these aspects in a full service contract.The mis deve

2、loTh Dargof DS is to give the shareholders maainable, profitable growth bythe best talent to provide world-class serviwithum efficiency.have asked the chief executive officer (CEO) to review the effectiveness of s systems for performance measurement and management. She hasturned to you to beghis pro

3、s by considering the strategic performancedashboard of DS. She happd the most recent exle in Appendix 1.01She wants a report to th performance reporting at DS.which will cover three aspects of strategic, it should address whether the current set of keyperformance indicators (KPIs) measure the achiev

4、ement of the misby showinghow each one links to all or part of the mis. She does not want suggestions of newindicators. Second, taking each of the current indicatorsurn she wants theamptions underlying the calculation of the indicators examined. There has been asuggestion madehe presst DS is produci

5、ng a biased set of results aimed tomislead the markets. This would then artifilly boost the share price and so boost thevalue of the senior managements share holdings. Third, the report should evaluatethe othresenional aspects of the dashboard against best practice.The idea of employee share ownersh

6、ip has always been at the heart of DS remuneration schemes. Its aim is to support an entrepreneurial culture and is a keydifferentiatorhe market for new employees. The current reward system grantsshares based on the appraisal of the individual by the line manager against vaguecategoriech as leadersh

7、ip and entrepreneurship. The results of this scheme havebeent only about 5% of staff received theirumsibonus in previousyears and half of them received no bonus at all. Increasingly, this has led to the staffignoring the reward scheme and describing it as only for theses favourite people.01In respon

8、se to this, thhave been discussing methods ofysing andimproving the rewards system at DS. One non-executive director suggested usingFitzgerald and Moons building block m. The CEO was asked to consider this as aproject separate from the ies of performance measurement mentioned above. Shewill select s

9、uitable indicators from the dimens burrently needs you to expla his context and how theoth dimenwhat is meant by results and determinantss link to standards ands. Finally, she bevest there are two typesof reward scheme whiight suit DS and wants an evaluation of their relativestrengths and weaknesses

10、. The scheme details are given in Appendix 2.01Required:Write a report to th(i) Evaluate the links bet Appendix 1 and its misto:n the current key performance indicators at DS in. (8 marks)(ii) Assess the amptions and definitions usedhe calculation of the current set ofkey performance indicators in A

11、ppendix 1. (12 marks)(iii) Evaluate the other aspects of reporting Appendix 1. (8 marks)he DS performance dashboard given at(iv) Explain how the building block mworks as required by the CEO. (6 marks)(v) Assess the two reward schemes given in Appendix 2. (12 marks)Profesal marks will be awarded for

12、the format, style and structure of the discusof your answer. (4 marks)0101Kefinitions and notesCleaning, security, catering and building servi contracts.No commentary is provided as the CEO talks th each board meeting.headings are for single servicethrough the dashboard at3. Secured revenue is long-

13、term recurring revenue. This is the percentage of budgetedrevenue which is already contracted. The budget is often not completed until wellothe year as it is a complex pros. In 2016, the original budget showed revenue of$1,565m with the final budget signed otof Q1 showing $1,460m.The secured (contra

14、cted) revenue for the period was $1,285m. The accounts show a year end revenue of $1,542m.4. Management retention is the percentage of managers who were still employed throughout the whole year. The figure only includes those employees on full-time contracts (about 65% of all managers).015. Order bo

15、ok is the total cash value of future contracted revenue. DS has contractswhich run up to 10 yearso the future.6. Operating profit margin. This excludes exceptional itemch as the reanisationof the catering business which cost $55m in 2016, where revenue was $245m.7.anic revenue growth is calculated b

16、y using the total revenue figure as reported he accounts. It includes net acquisitions which brought in revenue of $48m in 2016.8. Return on capital employed (ROCE). Capital employed is total assets less currentliabilities from the sement of finanlition.01Appendix 2The CEO is considerin scheme.o sch

17、emes, one based on the current scheme and a newScheme 1 (based on the current scheme)The reward system grants shares in DS based on the appraisal of the individual by the line manager against vague categories (leadership and entrepreneurship). The linemanagers have been informedt their bonus willurn

18、 be partly dependent on howwell they perform this appraisal. The expecion will bet as a result, 20% of staffwill receive theirumsibonus and 20% will receive no bonus.Scheme 2 (the new one)Under scheme 2, employees are to be derived from the strategic indicatorsdepending on the employees area of resp

19、onsibility. The senior management (with help from line management where appropriate) will cascade down the strategicindicators to the relevant operational or tactical level fort employee.There will be fives set by senior and line management in consulion and theemployee will then get up to 50% on top

20、 of their basic salary as a bonus (10percentage pos for each of thes achieved).01(i) Linking the misto the current KPIsThe missement can be brokeno several parts. The principal aim is maainable,profitable growth which i providing world-class servipported by three further goals: develo; and being eff

21、icient.the best talent;The KPIs are linked to elements of this sement as follows: Operating profit margin shows also as a margin, Linkage with Mist Linkage with Mis theanisation is profitable and it indicates efficiency in cost control. Secured revenue indicates the amount of revenue which is contra

22、cted and so has greaterlikelihood of being earned. Linkage with Mis Contracts give an indication ofmaainability though here onlyhe short term. Linkage with Mis Management retention links to the need for best talent though itdoes not measure the develooft talent. Linkage with Mis Order book shows the

23、 maainabilityo the future of the businessthough it does not show the average length of the contracts. Linkage with Misanic revenue growth shows historic grownd may indicatewhat the management are capable ofo the future.01 Linkage with Mis the capital base of DS. ROCE demonstrates the efficiency of p

24、rofit-generation fromNone of the measures are external, looking at the competitive environment and so it isnotsible to indicate if DS has world-class servi.01(ii) Amptions underlying the current KPI calculations【為什么要去做amption Amption去寫(xiě)的方向：是否了數(shù)據(jù)；如何了數(shù)據(jù)】 Every KPI will involve some amptions in its calc

25、ulations. The aim of thissection is to highlight how each indicator could be manipulated to show a betticturesot the business can avoid thishe future and the subsequent bad imageportrayedhe investing community.Operating profit marginOperating profit margin is a standard performance measure and the o

26、nly area which can be questioned is the categorization of costs below this line,的嫌疑？】for exle, the movement of operating costso【如何產(chǎn)生了exceptional costs below this line in order to artifi【如果調(diào)整之后會(huì)得到什么結(jié)果？】If the $55m relly inflate this indicator.anisation cost was included inoverall operating profit whi

27、ch was $91m (=59% of $1,542m) then the business would show an operating margin of 23%. The catering business would show a loss of $39m.【計(jì)算方式：total profit margin = 5.9%，total revenue = 1542，total operating profit =5.9%*1542=91m，after deducting reanization cost = 91-55=36m，operating profitmargin = 36/

28、1542=2.3%】【Catering business: Operating profit =245m*6.5%=16m，Revised operating profit = 16-55=39m】01Secured revenueSecured revenue represents long-term recurring revenue streams.的嫌疑？ 可能提前簽約了很多contract，但是可能是虛【如何產(chǎn)生了故意提升收益，因?yàn)椴⒉皇撬械膕ecured revenue收益都實(shí)現(xiàn)了，還有蠻大差距的】 A goodpicture will show a high percentag

29、e of secured revenue but will be below 100% sotmanagement can indicatet budgets are being exceeded. It is worryingtthe budget is completed well after the year start as this may indicate such manipulation.【如果調(diào)整之后會(huì)得到什么結(jié)果？】 If the original budgeted revenue figure is used then the secured revenue for 20

30、16 was 82%.【Revised secured revenue percentage = 1285/1565】01Management retention的嫌疑？ 考慮的員工數(shù)量太少，一些part-time員工沒(méi)有納入考量】【如何產(chǎn)生了Management retention only includes retention of employees on full-time contracts which at 65% of all managers excludes a material number.Poor treatment (and thus retention) of pa

31、rt-time managers is therefore ignored.This may be a particular ie for managers with young children who often takeadvantage of such contracts.Order book的嫌疑？ 由于十年的時(shí)間，貨幣時(shí)間價(jià)值比較重要】 Order【如何產(chǎn)生了book is a total value figure but is this the cash or present value figure? By choosingcash value of the contract,

32、 this will give a much larger figuren the discountedpresent value, espelly where some revenues will not be received for 10 years.01anic revenue growth的嫌疑？anic growth本身不應(yīng)該包括收購(gòu)的影響的，但是它放【如何產(chǎn)生了anic revenue growth is calculated by using the total revenue figure ashe accounts.進(jìn)去了】reportedThe main pure of

33、singanic ist it is growth from withheanisation asit stands and so acquisitions should be ignored.【調(diào)整的結(jié)果】 The current figure would fall from 72% overall to a less impressive 39%.【2015年收入：1542/1.072=1438m；調(diào)整過(guò)后的48=1494m，增長(zhǎng)率=56/1438=3.9%】anic revenue in 2016 = 1542-Return on capital employed (ROCE).的嫌疑？

34、 可能缺乏對(duì)于無(wú)形資產(chǎn)的考慮，且ROCE更適合生產(chǎn)類(lèi)【如何產(chǎn)生了型企業(yè)】Capital employed is being calculated using the sement of finanlitionfigures whiay exclude manyangible assets. Ach it may overemphasise thetangible capital base which is not as important in a service businesch as DS. Thefocus on this measure can lead to suboptimal

35、decis.01(iii) Evaluation of the strategic performance dashboardThe current information used by this both finanl and non-finanlallowing differenements of the misto be measured.However, none of the measures are external, looking at the competitiveenvironment and so it is notsible to indicate if DS has

36、 world-class servi.Also, the measures do not focus on shareholder concerns although the missement indicatest they are the principal stakeholders.【Suggestion】Other measuresROCE mighve been expected giventpriority, such as EPS or dividend per share.No breakdown of ROCE is provided for each businenit,

37、this may be due to thelack of availability of capital employed figures for the units but it does seem an odd inconsistency since ROCE is the best KPI provided for shareholder use.No revenue figures are given and as most figures are ratios it is not gauge the absolute scale of the business.sible toIt

38、 is particularly surprisingt an absolute profit measure is not included on thedashboard given the importance of profitable growth to shareholders.01Generally, there is a lack of external figures to allow benarking or theassessment of the competitive【Suggestion】ition of DS.The breakdown of resultso b

39、usiness sectors will helphe judgement ofperformance of the managers of those units but they may not be comparable, forexle, comparing building serviand security, it seemst building serviis growing more raAlso, it may bely but with weaker margins.t the employment market is different betn each sector

40、and sono comparison of management retention figures is sensible.Again, it may be helpful to provide either an external benark through industryaverages or an indicators.ernal one through a historic trend for these sector specificThe report does have good qualities as it is brief and clearly presented

41、.The use of ratios makes for easy understanding.01(iv) The building block mThe mtakes the important step of distinguishing withhe dimens ofperformance betn what is the desirede (results) and what are the driversof those results (determinants). It then highlights the need to measure both withheperfor

42、mance reporting systems of ananisation.The standards are thelevel for the specific measures chosen for eachdimenappropriate to an employees performance.Employees must take ownership so they need to be persuaded to accept theand be motivated by thes.s must be achievable and so challenge the employee

43、without being viewedas imsible to achieve and so be demotivating. For exle, they must take the control of theaccount of external market conditions which will beemployee, but this can be managed by benarking against an industry average.s must be fair, for exle, different businesses within DS must bem

44、easured against their sector (catering, security, etc).01(v) Assessment of the proed reward schemesAs this already considering using the building block m, it is appropriate tooutline the main criteriaRewards must behe mfor reward schemes. clear,t is, understood by the managers;motivating,controllabl

45、e,t is, of value to the employee; andt is, related to their area of responsibility.01Scheme 1The scheme has the benefit an equity share in DS.t it continues with the sucsful policy of offeringIt continues to utilize the knowledge of the line manager in performing the appraisal.Itempts to address a problem of the current scheme which ist the breadth ofthe categories gives the line manager scope to continue to show favouritism to specific employees. This is addressed as the bonus for line management will be affected by their appraisal according to performance on this new scheme an