BSBMGT517
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© CAC Page Sequence: Page 1 of 75
BSBMGT517 Manage
Operational Plan
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BSBMGT517 - Manage operational plan
Author: John Bailey
Copyright
Text copyright © 2009, 2010 by John N Bailey.
Illustration, layout and design copyright © 2009, 2010 by John N Bailey.
Under Australia’s Copyright Act 1968 (the Act), except for any fair dealing for the purposes of study, research, criticism or review, no part of this book may be reproduced, stored in a retrieval system, or transmitted in any form or by any means without prior written permission from John N Bailey. All inquiries should be directed in the first instance to the publisher at the address below.
Copying for Education Purposes
The Act allows a maximum of one chapter or 10% of this book, whichever is the greater, to be copied by an education institution for its educational purposes provided that that educational institution (or the body that administers it) has given a remuneration notice to JNB Publications.
Disclaimer
All reasonable efforts have been made to ensure the quality and accuracy of this publication. JNB Publications assumes no responsibility for any errors or omissions and no warranties are made with regard to this publication. Neither JNB Publications nor any authorized distributors shall be held responsible for any direct, incidental or consequential damages resulting from the use of this publication.
Published in Australia by:
JNB Publications
PO Box, 268,
Macarthur Square NSW 2560 Australia.
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BSBMGT517 - Manage operational plan
Contents
Contents
1.1 Research, analyse and document resource requirements and develop an operational plan in consultation with relevant personnel, colleagues and specialist resource managers. .................. 15
1.2 Develop and/or implement consultation processes as an integral part of the operational planning process............................................................................................................................... 32
1.3 Ensure details of the operational plan include the development of key performance indicators to measure organisational performance. .......................................................................................... 37
1.4 Develop and implement contingency plans at appropriate stages of operational planning. 40
1.5 Ensure the development and presentation of proposals for resource requirements is supported by a variety of information sources and seek specialist advice as required. .................................... 43
1.6 Obtain approval for plan from relevant parties and ensure understanding among work team involved ........................................................................................................................................... 44
2.1 Develop and implement strategies to ensure that employees are recruited and/or inducted within the organisation’s human resources management policies and practices. ............................ 49
2.2 Develop and implement strategies to ensure that physical resources and services are acquired in accordance with the organisation’s policies, practices and procedures. ...................................... 53
3.1 Develop, monitor and review performance systems and processes to assess progress in achieving profit and productivity plans and targets. ........................................................................ 56
3.2 Analyse and interpret budget and actual financial information to monitor and review profit and productivity performance. ......................................................................................................... 59
3.3 Identify areas of under-performance, recommend solutions, and take prompt action to rectify the situation. ..................................................................................................................................... 61
3.4 Plan and implement systems to ensure that mentoring and coaching are provided to support individuals and teams to effectively, economically and safely use resources. ................................ 65
3.5 Negotiate recommendations for variations to operational plans and gain approval from designated persons/ groups. ............................................................................................................. 68
3.6 Develop and implement systems to ensure that procedures and records associated with documenting performance are managed in accordance with organisational requirements. ............. 70
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BSBMGT517 - Manage operational plan
Description:
This unit describes the performance outcomes, skills and knowledge required to develop and monitor implementation of the operational plan to provide efficient and effective workplace practices within the organisation's productivity and profitability plans. Management at a strategic level requires systems and procedures to be developed and implemented to facilitate the organisation's operational plan. No licensing, legislative, regulatory or certification requirements apply to this unit at the time of endorsement.
Employability Skills:
This unit contains employability skills.
Application of Unit:
This unit applies to people who manage the work of others and operate within the parameters of a broader strategic and/or business plan. The task of the manager at this level is to develop and implement an operational plan to ensure that the objectives and strategies outlined in the strategic and/or business plan are met by work teams. However in some larger organisations operational plans may be developed by a strategic planning unit.
At this level work will normally be carried out within complex and diverse methods and procedures, which require the exercise of considerable discretion and judgement, using a range of problem solving and decision making strategies.
Introduction
As a worker, a trainee or a future worker you want to enjoy your work and become known as a valuable team member. This unit of competency will help you acquire the knowledge and skills to work effectively as an individual and in groups. It will give you the basis to contribute to the goals of the organisation which employs you.
It is essential that you begin your training by becoming familiar with the industry standards to which organisations must conform.
This unit of competency introduces you to some of the key issues and responsibilities of workers and organisations in this area. The unit also provides you with opportunities to develop the competencies necessary for employees to operate as team members.
This Learning Guide covers:
• Develop operational plan.
• Plan and manage resource acquisition.
• Monitor and review operational performance.
Learning Program
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As you progress through this unit you will develop skills in locating and understanding an organisations policies and procedures. You will build up a sound knowledge of the industry standards within which organisations must operate. You should also become more aware of the effect that your own skills in dealing with people has on your success, or otherwise, in the workplace.
Knowledge of your skills and capabilities will help you make informed choices about your further study and career options.
Additional Learning Support
To obtain additional support you may:
• Search for other resources in the Learning Resource Centres of your learning institution. You may find books, journals, videos and other materials which provide extra information for topics in this unit.
• Search in your local library. Most libraries keep information about government departments and other organisations, services and programs.
• Contact information services such as Infolink, Equal Opportunity Commission, and Commissioner of Workplace Agreements. Union organisations, and public relations and information services provided by various government departments. Many of these services are listed in the telephone directory.
• Contact your local shire or council office. Many councils have a community development or welfare officer as well as an information and referral service.
• Contact the relevant facilitator by telephone, mail or facsimile.
Facilitation
Your training organisation will provide you with a flexible learning facilitator. Your facilitator will play an active role in supporting your learning, will make regular contact with you and if you have face to face access, should arrange to see you at least once. After you have enrolled your facilitator will contact you by telephone or letter as soon as possible to let you know:
• How and when to make contact
• What you need to do to complete this unit of study
• What support will be provided.
Here are some of the things your facilitator can do to make your study easier.
• Give you a clear visual timetable of events for the semester or term in which you are enrolled, including any deadlines for assessments.
• Check that you know how to access library facilities and services.
• Conduct small ‘interest groups’ for some of the topics.
• Use ‘action sheets’ and website updates to remind you about tasks you need to complete.
• Set up a ‘chat line”. If you have access to telephone conferencing or video conferencing, your facilitator can use these for specific topics or discussion sessions.
• Circulate a newsletter to keep you informed of events, topics and resources of interest to you.
• Keep in touch with you by telephone or email during your studies.
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Flexible Learning
Studying to become a competent worker and learning about current issues in this area, is an interesting and exciting thing to do. You will establish relationships with other candidates, fellow workers and clients. You will also learn about your own ideas, attitudes and values. You will also have fun – most of the time.
At other times, study can seem overwhelming and impossibly demanding, particularly when you have an assignment to do and you aren’t sure how to tackle it…..and your family and friends want you to spend time with them……and a movie you want to watch is on television….and…. Sometimes being a candidate can be hard.
Here are some ideas to help you through the hard times. To study effectively, you need space, resources and time.
Space
Try to set up a place at home or at work where:
• You can keep your study materials
• You can be reasonably quiet and free from interruptions, and
• You can be reasonably comfortable, with good lighting, seating and a flat surface for writing.
If it is impossible for you to set up a study space, perhaps you could use your local library. You will not be able to store your study materials there, but you will have quiet, a desk and chair, and easy access to the other facilities.
Study Resources
The most basic resources you will need are:
• a chair
• a desk or table
• a reading lamp or good light
• a folder or file to keep your notes and study materials together
• materials to record information (pen and paper or notebooks, or a computer and printer)
• reference materials, including a dictionary
Do not forget that other people can be valuable study resources. Your fellow workers, work supervisor, other candidates, your flexible learning facilitator, your local librarian, and workers in this area can also help you.
Time
It is important to plan your study time. Work out a time that suits you and plan around it. Most people find that studying in short, concentrated blocks of time (an hour or two) at regular intervals (daily, every second day, once a week) is more effective than trying to cram a lot of learning into a whole day. You need time to “digest” the information in one section before you move on to the next, and everyone needs regular breaks from study to avoid overload. Be realistic in allocating time for study. Look at what is required for the unit and look at your other commitments.
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Make up a study timetable and stick to it. Build in “deadlines” and set yourself goals for completing study tasks. Allow time for reading and completing activities. Remember that it is the quality of the time you spend studying rather than the quantity that is important.
Study Strategies
Different people have different learning ‘styles’. Some people learn best by listening or repeating things out loud. Some learn best by doing, some by reading and making notes. Assess your own learning style, and try to identify any barriers to learning which might affect you. Are you easily distracted? Are you afraid you will fail? Are you taking study too seriously? Not seriously enough? Do you have supportive friends and family? Here are some ideas for effective study strategies.
Make notes. This often helps you to remember new or unfamiliar information. Do not worry about spelling or neatness, as long as you can read your own notes. Keep your notes with the rest of your study materials and add to them as you go. Use pictures and diagrams if this helps.
Underline key words when you are reading the materials in this learning guide. (Do not underline things in other people’s books). This also helps you to remember important points.
Talk to other people (fellow workers, fellow candidates, friends, family, your facilitator) about what you are learning. As well as helping you to clarify and understand new ideas, talking also gives you a chance to find out extra information and to get fresh ideas and different points of view.
Using this learning guide:
A learning guide is just that, a guide to help you learn. A learning guide is not a text book. Your learning guide will
• describe the skills you need to demonstrate to achieve competency for this unit
• provide information and knowledge to help you develop your skills
• provide you with structured learning activities to help you absorb the knowledge and information and practice your skills
• direct you to other sources of additional knowledge and information about topics for this unit.
The Icon Key
Key Points
Explains the actions taken by a competent person.
Example
Illustrates the concept or competency by providing examples.
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Chart
Provides images that represent data symbolically. They are used to present complex information and numerical data in a simple, compact format.
Intended Outcomes or Objectives
Statements of intended outcomes or objectives are descriptions of the work that will be done.
Assessment
Strategies with which information will be collected in order to validate each intended outcome or objective.
How to get the most out of your learning guide
1. Read through the information in the learning guide carefully. Make sure you understand the material.
Some sections are quite long and cover complex ideas and information. If you come across anything you do not understand:
• talk to your facilitator
• research the area using the books and materials listed under Resources
• discuss the issue with other people (your workplace supervisor, fellow workers, fellow candidates)
• try to relate the information presented in this learning guide to your own experience and to what you already know.
Ask yourself questions as you go: For example “Have I seen this happening anywhere?” “Could this apply to me?” “What if….?” This will help you to make sense of new material and to build on your existing knowledge.
2. Talk to people about your study.
Talking is a great way to reinforce what you are learning.
3. Make notes.
Additional research, reading and note taking.
If you are using the additional references and resources suggested in the learning guide to take your knowledge a step further, there are a few simple things to keep in mind to make this kind of research easier.
Always make a note of the author’s name, the title of the book or article, the edition, when it was published, where it was published, and the name of the publisher. If you are taking notes about specific ideas or information, you
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will need to put the page number as well. This is called the reference information. You will need this for some assessment tasks and it will help you to find the book again if needed.
Keep your notes short and to the point. Relate your notes to the material in your learning guide. Put things into your own words. This will give you a better understanding of the material.
Start off with a question you want answered when you are exploring additional resource materials. This will structure your reading and save you time.
BSBMGT515A - Manage operational plan
Element Performance Criteria
1. Develop operational plan.
1.1 Research, analyse and document resource requirements and
develop an operational plan in consultation with relevant
personnel, colleagues and specialist resource managers.
1.2 Develop and/or implement consultation processes as an integral
part of the operational planning process.
1.3 Ensure details of the operational plan include the development of
key performance indicators to measure organisational
performance.
1.4 Develop and implement contingency plans at appropriate stages
of operational planning.
1.5 Ensure the development and presentation of proposals for
resource requirements is supported by a variety of information
sources and seek specialist advice as required.
1.6 Obtain approval for plan from relevant parties and ensure
understanding among work teams involved.
2. Plan and manage resource acquisition.
2.1 Develop and implement strategies to ensure that employees are
recruited and/or inducted within the organisation’s human
resources management policies and practices.
2.2 Develop and implement strategies to ensure that physical
resources and services are acquired in accordance with the
organisation’s policies, practices and procedures.
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BSBMGT515A - Manage operational plan
Element Performance Criteria
3. Monitor and review operational performance.
3.1 Develop, monitor and review performance systems and processes
to assess progress in achieving profit and productivity plans and
targets.
3.2 Analyse and interpret budget and actual financial information to
monitor and review profit and productivity performance.
3.3 Identify areas of underperformance, recommend solutions, and
take prompt action to rectify the situation.
3.4 Plan and implement systems to ensure that mentoring and
coaching are provided to support individuals and teams to
effectively, economically and safely use resources.
3.5 Negotiate recommendations for variations to operational plans and
gain approval from designated persons/ groups.
3.6 Develop and implement systems to ensure that procedures and
records associated with documenting performance are managed in
accordance with organisational requirements.
Skills and Knowledge
Required Skills
• literacy skills to access and use workplace information and to write a succinct and practical plan
• technology skills to use software to produce and monitor the plan against performance indicators
• planning and organisational skills
• coaching skills to work with people with poor performance
• numeracy skills to allocate and manage financial resources.
Required Knowledge
• models and methods for operational plans
• budgeting processes
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• alternative approaches to improving resource usage and eliminating resource inefficiencies and waste.
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Range Statement The range statement relates to the unit of competency as a whole. It allows for different
work environments and situations that may affect performance. Bold italicised wording, if
used in the performance criteria, is detailed below. Essential operating conditions that
may be present with training and assessment (depending on the work situation, needs of
the candidate, accessibility of the item, and local industry and regional contexts) may also
be included.
Resource requirements
may include: • goods and services to be purchased and ordered
• human, physical and financial resources - both current and projected
• stock requirements and requisitions
Relevant personnel,
colleagues and
specialist resource
managers may include:
• employees at the same level or more senior managers
• managers
• occupational health and safety committee/s and other people with specialist responsibilities
• supervisors
• union or employee representatives
Consultation processes
may refer to: • email/intranet communications, newsletters or other
processes and devices which ensure that all employees have the opportunity to contribute to team and individual operational plans
• mechanisms used to provide feedback to the work team in relation to outcomes of consultation
• meetings, interviews, brainstorming sessions
Operational plans may
also be termed: • action plans
• annual plans
• management plans
• tactical plans
Key performance
indicators may refer to: • measures for monitoring or evaluating the efficiency or
effectiveness of a system which may be used to
demonstrate accountability and to identify areas for
improvements
Contingency plans may
include:
• contracting out or outsourcing human resources and
other functions or tasks
• diversification of outcomes
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• finding cheaper or lower quality raw materials and
consumables
• increasing sales or production
• recycling and re-using
• rental, hire purchase or alternative means of
procurement of required materials, equipment and
stock
• restructuring of organisation to reduce labour costs
• risk identification, assessment and management
processes
• seeking further funding
• strategies for reducing costs, wastage, stock or
consumables
• succession planning
Organisation's
policies, practices and
procedures may
include:
•
•
organisational culture organisational guidelines
which govern and prescribe operational functions,
such as the acquisition and management of
human and physical resources
• Standard Operating Procedures
• undocumented practices in line with organisational
operations
Designated
persons/groups may
include:
•
•
groups designated in workplace policies and
procedures managers or supervisors whose roles
and
responsibilities include decision making on
operations
• other stakeholders such as Board members
• other work groups or teams whose work will be
affected by recommendations for variations
Evidence Guide
The evidence guide provides advice on assessment and must be read in conjunction
with the performance criteria, required skills and knowledge, range statement and the
Assessment Guidelines for the Training Package.
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Critical aspects for
assessment and evidence
required to demonstrate
competency in this unit
Evidence of the following is essential:
• development of an operational plan with details of how it will be implemented and monitored
• knowledge of models and methods for operational
plans.
Context of and specific
resources for assessment Assessment must ensure:
• access to appropriate documentation and resources
normally used in the workplace.
Method of assessment A range of assessment methods should be used to assess practical skills and knowledge. The following examples are appropriate for this unit:
• direct questioning combined with review of portfolios of evidence and third party workplace reports of onthe-job performance by the candidate
• oral or written questioning to assess knowledge of budgeting processes
• review of operational plan, key performance indicators and contingency plans
• evaluation of employee recruitment and induction strategies
• evaluation of processes implemented to acquire
physical resources and services.
Guidance information for
assessment Holistic assessment with other units relevant to the industry sector, workplace and job role is recommended, for example:
• other units from the Diploma of Management.
1. Develop operational plan.
1.1 Research, analyse and document resource requirements and develop an operational plan in consultation with relevant personnel, colleagues and specialist resource managers.
1.2 Develop and/or implement integral part of the operational planning process. consultation processes as an
Ensure details of the operational plan include the
1.3 development of key performance indicators to measure organisational performance.
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1.4 Develop and implement stages of operational planning. contingency plans at appropriate
Ensure the development and presentation of proposals for
1.5 resource requirements is supported by a variety of information sources and seek specialist advice as required.
1.6 Obtain approval for plan from relevant parties and ensure understanding among work teams involved.
1.1 Research, analyse and document resource requirements and develop
an operational plan in consultation with relevant personnel, colleagues and specialist resource managers.
What Is an Operational Plan?
Along with Action and Monitoring Plans the Operational Plan is the third part of a completed Strategic Plan. It defines how you will operate in practice to implement your action and monitoring plans – what your capacity needs are, how you will engage resources, how you will deal with risks, and how you will ensure sustainability of the project’s achievements.
An Operational Plan does not normally exist as one single standalone plan; rather the key components are integrated with the other parts of an overall Strategic Plan.
Figure 1: Standards Process.
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The key components of a complete Operational Plan include analyses or discussions of:
• Human and Other Capacity Requirements – The human capacity and skills required to implement your project, and your current and potential sources of these resources. Also, other capacity needs required to implement your project (such as internal systems, management structures, engaged partners and specialist resource managers, and a supportive legal framework).
• Financial Requirements – The funding required to implement your project, your current and potential sources of these funds, and your most critical resource and funding gaps.
• Risk Assessment and Mitigation Strategy – What risks exist and how they can be addressed.
• Estimate of Project Lifespan, Sustainability, and Exit Strategy – How long your project will last, when and how you will exit your project (if feasible to do so), and how you will ensure sustainability of your project’s achievements.
Your Strategic Plan may only be considered complete when these components have been defined, at least in broad terms. As the project moves into Implementation, several of these components are then defined in more detail and tested in reality. Thus the Operational Plan provides a critical bridge between the Action and Monitoring Plans and
Implementation of those plans.
The level of detail and formality of your Operational Plan will vary depending on the size and complexity of your project or program. Small projects may only briefly touch on each of these topics before moving on to implementation. Large, complex programs should be able to provide evidence that they have addressed each of the components of an Operational Plan. The larger the program, the more extensive and formal the treatment of each component should be.
An operational business plan customarily has a number of major elements or sections. Each of these elements serves a particular purpose in the overall presentation of your plan. The following table identifies and briefly describes each of the documents or document categories that would make up your plan. They are presented in the order in which they usually appear in the plan. You must not feel constrained to follow this exact format if another way presents itself as being more amenable to the essence of your organisation.
Figure 2: The Components of a Written Operational P lan
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The relative mix of
products and service to be offered can also affect the content of a plan. Issues relating to inventory, production, storage and the like become less significant as the product/service mix moves towards a purely service business. For example, a business that relies on the services of many professional employees would provide substantial details about acquiring and retaining these vital workers. In any event, it pays to at least mention all the major issues, even the ones that are relatively less significant to your particular business. Someone who reads your plan will be more confident about your assessment of the situation if you identify such issues and resolve them, even if you just summarise these issues. For example, if you plan to work alone and perform all services personally, you might note that you anticipate no need to hire employees or engage independent contractors if the plan succeeds at the levels projected in the plan. Any questions that are raised should be addressed somewhere in your document.
General format and presentation Remember that the operational plan is a
clearly recognisable type of document,
and your audience will have some
expectations with respect to style and
contents. Just as your teachers in school
expected you to conform to certain
standards, the people who will look at
your operational plan will have certain
expectations
Cover page and table of contents They indentify your plan and make it
easy for readers to find and examine
particular documents.
Business background This is the section that provides
company-specific information,
describing the business organisation,
history, and the product or service the
business will provide.
Action plans This is where you detail how operational
and management issues will be
resolved, including contingency
planning.
Financial projections This is another extremely important
section. Your projections (and historical
financial information, if you have it)
demonstrate how the business can be
expected to do financially if the
operational plan’s assumptions are
sound.
Appendix This is the place to present supporting
documents, statistical analysis, product
marketing materials, resumes of key
employees, etc.
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Why Is an Operational Plan Important?
An Operational Plan ensures you can successfully implement your Action and Monitoring plans by getting your team to:
• Prepare your project to raise funds, being clear about how you will get the resources and arming you with a convincing plan to review with existing and potential donors.
• Use resources efficiently, to help allocate scarce resources to the most critical gaps and needs.
• Clearly define your capacity gaps and most critical resource requirements.
• Reduce risks where possible, and prepare contingency plans where necessary.
• Think about the long term future of the project, including how you will ensure sustainability of your project’s targets and impacts.
When to Design Your Operational Plan
In practice, it is important to consider implementation and operational issues as you go through all the earlier steps in the planning process.
Every project has a delicate balance between what is desired (in your vision, strategies and intended results) and what you can realistically do with the resources you have. It is important that you do not limit your vision or planning based on perceived limits to resources, but on the other hand it is equally
important you do not plan for something that is completely impossible to implement.
For example, as you define your project team in, you are beginning to consider your project’s capacity requirements, including human, financial and other resources. As you develop your strategies and activities and monitoring plans, your team should be actively considering what technical skills and other capacities you need to implement these activities and tasks.
Here are two approaches that may help you get this balance right:
• Develop a rough first version of your Strategic Plan early in the project, using the Concept Form (An example of this is in Figure 3 following). Use this to gain feedback on whether your project appears to be both ambitious and achievable, and to get buy-in from senior management and other potential stakeholders.
• In Steps 1 and 2 of the Standards process (Define and Design) (Figure 1), involve one or more staff or partners who are experienced in operations and implementation. Ask them to help ensure the project maintains a sense of realism as the design develops.
Figure 3: WWF Network Initiative Concept Form
1
WWF Network Initiative Concept Form (A)
NETWORK INITIATIVE TITLE (Inspiring,
and correct in terms of what the initiative
is about, sensitive and meaningful to the
external context)
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2. Compelling and Relevant Vision and Scope. What is this program for? What do you plan to achieve, where, and by
when? How is this program relevant to external (and internal) evolving agendas (e.g. Millennium Ecosystem Assessment,
CBD, MDG Goals, and 2degree Climate Change threshold and IPCC Report as well as the Living Planet Index and
Consumption/Production Footprint trends)? Why is this a compelling program to undertake?
3. Transformational Strategy and Sustained Result(s). What action will be taken under this program to work towards
the vision? Briefly describe this transformational strategy (and any related strategic activities) and its estimated
transformational potential as well as how impact would be sustained? Briefly describe the main results to be delivered and
show how they link to the vision (e.g. with a simple Results Chain)
4. Network Concerted Action: Leadership, Program Team and Accountability. What are the current leadership and
team and governance situation and who is currently accountable? What changes would be required for successful
implementation of a Network Initiative? What parts of the Network are likely to be necessary for optimal performance and in
what capacity (e.g. global implementers, local implementers, technical expertise, provision of fund, host of the program)?
Who should be the key people accountable in WWF? Is there a business champion to support the program?2
1 This concept form should be a maximum of 5 pages.
2 “Business Champion”. It is helpful to identify an individual, or sometimes a small steering group, to whom the program leader will turn for advice and support. This person may in fact have initiated or commissioned the program. He/ she will often be the program leader’s line manager.
5. Human resource capacity. Are there major implications for human resource capacity in WWF? What additional
human resources might be needed internally? What type of capacity building and or training programs might be necessary
for implementation? What type of support would be needed and for how long? Who might be involved that have not
traditionally been engaged in programs?
NAME OF Network Initiative CONCEPT FACILITATOR AND CONTRIBUTOR(s)
DATE
SUMMARY – What does this Network Initiative definition recommend?
a. New Program or major
up scaling of a current
program
b. Continuation of
program – little change to
strategy, but major
change to operation
c. Continuation of
program – major change
in strategy; little change in
operation
d. Continuation of
program- major change to
strategy and operation
1. Brief Background. Set the context. What problems and/ or opportunities are creating the need for this program
concept? (Where applicable, include results of previous evaluations or learning from other projects/programs).
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6. Stakeholders and Partners. List key stakeholders who have an interest in the success or failure of the program
(mostly external- though internal if over and above those listed in No.4). Where applicable, state the implementing
partner(s) and describe WWF’s prior experience of them.
7. Next Steps. State the next steps for this program (assuming the concept is approved) e.g. a formal program
development phase- who would need to be involved; gathering of specific key information; learning from other
projects/programs; or detailed planning and implementation.
ADDITIONAL OPTIONAL INFORMATION:
8. Goals, Objectives and Monitoring. Propose goals (impact-oriented) and objectives (outcome-oriented) in line with the
vision (these may be draft only and subject to change). How will progress towards the goals and objectives be measured
(propose 1-3 key indicators)?
9. Risks and Assumptions. What are the (internal and external) risks associated with the program and the chosen
transformational strategy? What steps would you suggest to minimise risk? What key assumptions must hold true for this
strategy to work?
10. Alternative Strategy Choices. What alternative strategies have you considered? Why do you think the chosen
transformational strategy is the most appropriate (you may choose to describe the chosen strategy in more detail)?
11. RESOURCES REQUIRED
Financial Resources (estimate how much CHF would this require)
FY08 Budget
FY09 FY10 FY11 FY12 TOTAL
Current Financial Commitment (if
applicable and from whom)- add row(s) if
necessary
CHF
Additional Financial Commitment required
Total Finance required
How to Design Your Operational Plan
The following sections describe how to develop the different components of a complete Operational Plan. It is worth noting that there are strong links between the four components described here, and even some overlaps. You may find it easier to address them in a different order than is presented here. You may also wish to address multiple steps at the same time, or at the time you are working on other steps.
The four components of an operational plan involve:
1. Human and Other Capacity Requirements
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2. Financial Requirements
3. Risk Assessment and Mitigation Strategy
4. Estimate of Project Lifespan, Sustainability, and Exit Strategy
An Operational Plan should be developed with the involvement of appropriate staff and partners. Although your core project team members will take the lead in many areas, they will require strong support, often involving staff from different parts of the organisation. For example:
• A Project Administrator or Finance (F&A) Officer should be involved in defining financial requirements
• Human Resource and/or F&A staff should be involved in assessing HR and capacity needs
• HR, IT or Operations staff should be engaged in discussions of processes, procedures and systems (e.g. accounting software, technology infrastructure) capacity needs
Efficient operational planning and implementation requires continuous and open collaboration between the core project team and these other staff.
Human and Other Capacity Requirements
The first step of an Operational Plan is to conduct a broad analysis of the human and other capacities required to implement your project – and current and potential sources of resources and partners to help fill capacity needs. This analysis should build on earlier work that would be done in setting up a project team.
We need to define the initial team composition and operations What
Are Team Composition and Operations?
A project or program is ultimately designed and implemented by a specific group of individuals who comprise your project/program team.1 Over the life of your project, there are many different potential roles that you will need to fill on your team:
• Initial Project Team – The specific people who initially conceive of and initiate the project. They may or may not go on to form the core project team.
• Designated Project Leader/Manager – Although leadership responsibilities are often shared between team members, normally one individual is appointed as the overall project leader. Specific roles that the leader often plays include managing the performance of other team members, relations with key stakeholders, and the process of going through the project cycle.
• Core Project Team – A small group of people (typically 3-8 people) who are ultimately responsible for designing and managing a project.
• Full Project Team – The complete group of people involved in designing, implementing, monitoring, and learning from a project. This group can include managers, stakeholders, researchers, and other key
1 The term Project is used throughout this document as shorthand for Project/ Program. The guidance applies equally to projects and programs.
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implementers. You need to have a wide range of skills on your project team.
• Project Advisors – People who are not on the project team, but to whom the team members can turn for honest feedback and counsel and who can champion your cause.
• Project Stakeholders – Individuals, groups, or institutions who have a vested interest in the natural resources of the project area and/or who potentially will be affected by project activities and have something to gain or lose if conditions change or stay the same. Just because someone is a stakeholder does not mean that you will want them on your project team. But if they are a key stakeholder, you also cannot ignore them in your analyses of the situation. Cultivation of key stakeholders can be a long process itself that may have to begin well before your process gets underway.
• Process Facilitator – A process facilitator is a person who can help the project team through the planning process. A process facilitator is typically part of the initial and/or the core team. A good facilitator understands the key elements of the process, has good facilitation skills, and can keep your team from getting too bogged down in any one part of the process. This person does not need to be a “professional” facilitator, but should be someone who is intimately familiar with applying the planning process to “real-world” conservation problems.
Some of these roles such as the need to appoint a leader and have core project team members, are important for all projects. However, projects and programs vary enormously in scale and complexity. Clearly you need to take this into account in deciding who to involve in the team. Staff will possess some but possibly not all of the required knowledge, skills and experience. You may need to involve “outside” expertise such as consultants or academic institutions. In addition it may be important to involve key partners with whom you may expect to collaborate in future. This can help you to build ownership or buy-in for the project. It is worth bearing in mind that such partners (especially external partners) may have different priority issues in mind, and you may need to take extra time to define and design the project.
In addition to determining who is on your project team, it is also important to determine how the members of the team will work together. Specific team operations that need to be agreed on include what the team is setting out to do, what team members will do, how team members will work together and make decisions, a rough timeline for project activities, who else needs to be informed or involved, and what resources are required to move through the project cycle. It is important to write this down in the form of a project charter or concept form. At this early stage you can only provide a “rough sketch” of the design; you will not have all the information required to fully define the project, but you can at least clarify what you do and don’t know.
Why Is Defining Team Composition and Operations Important?
Although conservation focuses on biodiversity, it is fundamentally a human endeavour. To this end, the most important resources for any conservation project are the people who will be involved in designing and implementing it. It is the commitment and skills that these people bring that will ultimately determine if your conservation planning process will result in the development of effective strategies that will truly be implemented and evaluated over time. If you set off with the right people, structures and processes involved in the project, you should be able to move the project forward quickly and efficiently, and
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you have a good chance of being ultimately successful. Conversely if any of these aspects is lacking, your project is likely to be ineffective and/ or inefficient.
One of the key principles of adaptive management is that the people who will ultimately be responsible for implementing a project must also be involved in designing and monitoring it. If project managers don’t intimately understand the assumptions that have gone into a project plan, chances are they will not be able to effectively implement the plan – or to successfully adapt it and change it over time. Another key principle is that having project team members with different skills, knowledge, and experience will generally lead to a more creative and resilient project. Project team members collectively need to have knowledge of the area (both its ecology and human context), ample conservation experience, and an ability to think strategically. A final principle is that although it is important to have continuity, project teams also need to grow and change over time as conditions change, the project matures, and as people’s careers evolve.
When to Define Team Composition and Operations
You need to define your initial project team right at the start of the project. This team should then relatively quickly identify the core and/or full project teams. Of course the composition of the project team may change as you move through the management cycle. It is often very helpful to maintain continuity in terms of the project leader and some key team members, but this is not always appropriate. The key is to recognize and make use of existing skills and experience to ensure that the project moves forward with the best available knowledge. Below some symptoms of effective and ineffective teamwork which may help a project team consider how it is doing and whether any changes are needed are shown. Remember that it can take some time for an effective team to develop, so you may need to be a little patient!
Figure 4: Effective and Ineffective teams
You also need to make sure you account for any other resources and enabling conditions required to implement your project (such as community support, leadership, and a supportive legal framework). Some of these needs will probably be raised in your analyses of Risk and Sustainability (see below).
For smaller projects, you can use the following list of questions to evaluate capacity needs, although this is not intended as an exhaustive list:
Project Team Skills
• Do you have enough people with the science, policy, technical, process, fund raising or communications skills required to implement the activities in your strategic plan? If not, how will you get them?
• To recruit any new staff or consultants required, how long will it take, how much will it cost and who needs to be involved?
• Will the implementing staff require enhanced or new skills? How will these skills be built, over what time frame and at what cost?
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Partners and Wider Institutions
• How much extra work will be required of partner organisations? Do they have enough people with the required skills, knowledge and time? Do they have adequate resources to engage on this project, and have they planned and budgeted accordingly?
• Do you have the necessary wider institutional engagement and infrastructure for longer-term sustainability, or can this be built?
• Does your core team have the ability to monitor partners’ activities and impacts?
Project/Program Team Management and Governance
• Do you need to make any adjustments to the procedures that you worked out? In particular, have you worked out reporting lines, how and when you meet/communicate, how you share information, how you make decisions, and levels of authority for spending money?
Office Systems and Support Functions
• How much extra work will be required of the following areas of operation, or will there be needs for recruitment, training or additional funding for any of these? - Finance and Administration, and Operations - Fundraising and Communications - IT - Human Resources - Science,
Policy and Technical Support - Project or Program Management Support
Financial Requirements
At this stage of your project or program, your team should carry out a general assessment of the financial requirements of implementing your plan over the expected lifetime of the project. This can be a fairly simple estimate for smaller, shorter term projects. For longer term, complex programs, a more comprehensive financial estimate is recommended. Both are described in this section.
In general, this estimate should be a high level (not too detailed) evaluation of your current and potential sources of income, the estimated costs of your action and monitoring activities, and any projected financial resource gaps. You should also consider
Effective Teams Ineffective teams
• Clear objectives • Falling performance levels
• Good decision
making processes • Low levels of motivation
• Clear roles, responsibilities and
leadership • Poor communication
• Leadership roles are shared • Poor or slow decision-
making
• Trust, cooperation, support and
constructive conflict
• Confusion about
responsibilities
• Individual and
mutual
accountability for performance
results • Role and territory conflicts
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long term expenditure and funding needs, particularly for larger projects and programs where the scope of your strategies may be far beyond your current capacity, and you envision the need to scale up, raise more funds, and engage more partners in order to carry out the work.
When estimating expenditure, you should include both direct project expenditures such as staff, research, monitoring and other resources required, and indirect project expenditures such as office management and administration.
A. Simplified project financial needs estimate or model:
For most projects, you may develop a simple table or “model” in Excel that shows estimated project income, project expenditures, and your project’s balance and funding gaps (if any). The following is a very simplified example of a five-year financial estimate.
The level of detail in this estimate will depend on the size and complexity of your project as well as where you are in the project cycle. For example, early on in your project design you may wish to have high-level estimates of the costs of major activities. Once you are in the implementation mode you will have to develop more precise budgets.
In addition, your team may wish to estimate two or three scenarios in relation to your projected income and expenditures (e.g. – expected, bestcase and worst-case). You should consider how you will respond to these scenarios, especially the worst-case scenario. For example, which activities will you prioritise as the most important to implement and which will you delay?
Figure 5: Simplified Project Financial Needs Estimate or Model
Summary Budget (All Values in xxxx Currency)
Budget FY
2006
Budget FY
2007
Budget FY
2008
Budget FY
2009
Budget FY
2010
TOTAL
A - Secured Income (Grants, Donations, User Fees, Other):
Donor W
Donor X
Source Y
Total Income:
B - Budgeted Expenditures:
Action Plan
Strategy/Activity 1
Strategy/Activity 2
Strategy/Activity 3 etc.
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Monitoring Plan
Activity 1
Activity 2 etc.
Management Expenditures
Other Indirect Expenditures (if any)
Total Expenditures:
C - Balance (A - B):
Balance of funds to raise to cover budgeted expenditures
B. Large program financial needs estimate or model:
For financial estimates of larger and more complex (multi-partner, multidonor, and/or multi-country) programs, your financial needs estimate or model will by nature become more complex. As you prepare to implement larger programs, it is useful to develop “higher-level” extrapolated income and expenditure projections to forecast future financial conditions and needs. These models are used to estimate the full expenditures of your action plan,
monitoring plan, other program-wide expenditures such as management, and any expenditure associated with building capacity, mitigating risks, and monitoring performance and results.
This comprehensive financial model is used to estimate funding needs and gaps over the full time frame of a large program (5-10 years or longer) and can be structured according to any important dimension of the program such as strategies, partners, or key geographic areas. The model allows you to establish coherent income targets for the entire program, and provides your team with the full context and clear, supportable goals for securing funding and engaging additional partners in your program.
As you move to later steps in the project cycle financial models can also serve as program management tools. By evaluating expenditure and income information and by changing key assumptions, the model can demonstrate how financial and operational changes affect long term funding and partner needs. Aggregate expenditure, income and priorities in the model can guide high-level program budgeting and resource allocation decisions.
A financial model provides activity and financial data that can serve as key performance indicators (KPIs) for tracking your program’s progress over time. For example, you can compare estimated expenditures for activities within the model to actual implementation expenditures. Another potential use is to track activity progress by comparing planned versus completed units of activity over time.
Most financial models are built by estimating expenditures for all activities, working from the lists of activities derived from your Action Plan. After developing your work plan, you could make your model more accurate by
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using your lists of tasks to help you estimate expenditures. Doing so, however, would take more time so you should consider what level of precision is useful for your project.
A financial model for a larger scale project should also reflect expenditures for ongoing operations, one-time capital or start-up expenditures, monitoring, research, and management. The financial model may also include estimates of all current or expected income. Finally, a financial model for a large program should be able to provide a gap analysis of income over expenditures, and possibly even the ability to carry out sensitivity analysis or scenario analysis for key financial conditions.
Figure 6: Steps and considerations in building a financial model
1) Preconditions
• Determine your conservation strategies and activities and make sure the financial model will reflect them;
• Identify who will build and who will maintain (“own”) the financial model;
• Clarify the roles of any partners in the model (e.g., building the model, contributing resources that should be reflected in the model, which partner activities will be included in the model)
2) General Considerations
• Identify key parameters (dimensions) of the model such as geographic regions, strategies, partners or timing;
• Identify assumptions and variables such as expenditure drivers, rate of spending, inflation, or foreign exchange;
• Determine priorities for strategies, activities, geographic areas, or other parameters;
• Determine the time horizon for model (5-year, 10-year or longer).
3) Specific Considerations and Model Details
• Address how expenditure data will be projected (phased) across the time horizon of the model;
• Identify which expenditures are one-time (and/or capital expenditures) and which are recurring;
• Incorporate program-wide expenditures such as management, monitoring, and communications;
• Determine one-time or recurring income sources and categories the model will use;
• Develop a gap analysis or scenario projection tool within the model to evaluate gaps.
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Risk Assessment and Mitigation Strategy
As you develop your Operational Plan you should assess the risks to your project and what you can do to mitigate them. Risks are conditions under which the project/program is expected to function, but which can cause problems. Projects often have no direct control over these conditions. High risks
are those that, when not overcome, are likely to stop the project from achieving its goals and objectives.
A comprehensive risk assessment identifies and ranks project risks. A risk assessment process takes about 2-3 hours to carry out, and will help your team identify and understand risks, agree on the seriousness of those risks, rank them, and decide what (if anything) to do to address them. A risk mitigation strategy is a plan to address risks that your team has identified. Your team should develop mitigation strategies for any high risk. Timely risk mitigation allows your team to anticipate risks in advance and hence avoid a major impact on your project.
The steps in the risk assessment and mitigation process include:
A. Identify Risks – Your project team should go through a formal exercise to identify specific risks related to your project. It is important to define each risk using concise and unambiguous language.
The number and relative severity of certain risks may increase with the size of your program. Some risks are essentially internal to the project (within your team’s control, at least to some extent) and others are external (outside your team’s control). A large, multi-country program for example, may have greater external political risks due to government instability or disruptive cross border relations, and greater internal risks due to network and management issues.
B. Rank Risks – The next step is to individually rank each risk according to its likelihood, and the severity of its potential effect on the project. The risk assessment template should help your team to rank each risk on a 1-4 scale across at least two criteria:
Likelihood of Risk Occurring
4 = Very Likely – Almost certain to occur over the life of the project (or a 10 year period, whichever is shorter)
3 = Likely – Probably will occur during a 10-year period
2 = Unlikely – Probably will NOT occur during a 10-year period
1 = Very Unlikely – Almost certain NOT to occur during a 10-year period
Severity of Risk
4 = Very High – Would prevent goals and objectives from being achieved
3 = High – Would cause significant problems or delays in objectives being achieved
2 = Medium – Would cause relatively minor problems or delays in objectives being achieved
1 = Low – Would probably not affect project implementation
C. Determine Final Raking of Risks, and Develop Risk Mitigation Strategies – Add the ratings for steps 1 and 2 for each individual risk and
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then determine whether each individual risk is high, medium, or low using these thresholds, and then respond as follows:
6-8 = High Risk – You should have a detailed mitigation strategy, and perhaps consider modifying your goals and objectives
4-5 = Medium Risk – You should have a clearly defined mitigation strategy
2-3 = Low Risk – No mitigation strategy required (or a very basic strategy at most)
For risks that are essentially internal (e.g. capacity, leadership, partners) you should focus on taking action to reduce the risk. For risks that are external to the project (e.g. political, economic) your response will more likely be to develop contingency plans and monitor the risks. You should then assign responsibilities among your staff and/or partners for carrying out each mitigation strategy and for monitoring each risk as necessary. Mitigation actions for high risks may be large enough to be included in the budget.
You can use the Risk Assessment and Mitigation Template to document and track each risk, ranking and mitigation strategy. It is important that your team ensures that your risk mitigation strategies are clear and manageable with the resources available to your project.
Estimate of Project Lifespan, Sustainability, and Exit Strategy
Finally, one of the most important (yet sometimes most forgotten) tasks of the design step is to think about the long term future of the project in terms of:
• Sustainability of the project – A project can be said to be sustainable when it continues to deliver conservation results indefinitely after most or all external support has been removed.
• Estimated Project Lifespan – The period of time over which your team expects to carry out all activities under the Action Plan and achieve the project’s intended results. Your initial action plan may represent a first phase of your project. You should be clear about whether you expect further phases and what the timing of those phases will be.
• Exit Strategy – The process by which an organisation can systematically and responsibly pull out of supporting and/or managing a project, either concluding the work successfully or handing management or funding over to another organisation.
In looking at the long-term plans for your project, it is particularly important to clarify expectations with partners, stakeholders, and your own staff. Getting projects up and running successfully is quite a challenge, but exiting from a project or parts of it can be even harder. Few projects seem to have implemented exit strategies and reliable experience is scarce. The basic steps required to develop an exit strategy are described here.
A. Examine Factors Ensuring Sustainability – The following table lists some of the most important factors that help ensure sustainability (note some of these may not be relevant to your particular project). You need to consider to what extent you Action Plan, Capacity Assessment and Financial Plan already address these factors and identify what needs more attention, either now or in the design stage or later on as the project
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develops. By systematically following steps it will be found that many of the factors would be addressed. (Figure )
Figure 7: Sustainability Factor
Sustainability Factor Questions for Consideration
Local Situation /
Grounding in Reality
Has a thorough Situation Analysis been
carried out?
Biodiversity and
Ecological Processes
Will you be able to measure the condition of
the biodiversity that you plan to affect?
Policy and Legislative
Environment
Is there sufficient policy and legislative
support by the partners/institutions/ other
authorities involved?
Economic Forces
Do you understand the impact of trade and market forces on the project (local, national, international, global)?
Is the project economically viable?
Financial Resources
Will the financial resources needed to
maintain operations after the project be
available (infrastructure, equipment,
staffing, etc.)?
Institutional,
Community and
Individual Capacity
Will the government, communities or other
partners involved in project implementation
have the necessary capacity to manage
ongoing activities and monitoring?
Appropriate
Technology and
Methodologies
Will local staff and communities be able to
use the methods, equipment and
infrastructure and maintain them after the
end of the project?
Stakeholders’ Priorities
Do you know the priorities of stakeholders?
Are you addressing them or acknowledging
them in some way?
Participation and Partners
What is the project’s strategy for
encouraging involvement and ownership of
different stakeholders?
Socio-cultural Issues and
Gender
Do the project strategies, including any
proposed changes to people’s behaviour,
take into account cultural traditions,
religious beliefs and social practices? Will
sufficient ownership of project strategies by
local communities be assured?
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B. Define Who Will Continue the Activities –To exit successfully, key stakeholders with influence over the factors that affect the program need to take ownership. The development of effective partnerships with such influential groups or institutions is therefore critical; within this partnership, common goals and objectives need to be agreed. The project team may during the lifetime of the project deliberately limit itself to playing the role of a facilitator, encouraging the major stakeholders to play the principal implementation roles.
C. Estimate Lifespan and Define Exit Strategy – It is important to set expectations with all partners regarding how long you anticipate the project will last and what will happen when it ends. An estimate of the lifespan is important, but at the same time it is important to base any actual decision about exit on clear criteria rather than rigidly fixing the time for an exit.
Based on your analysis of factors for sustainability, your project team and key partners should define the end state that you would want to see in order to be able to exit. This may mean more than the achievement of your goals and objectives as such; it may also mean that certain supporting conditions have to be in place for those achievements to last, based on the most important sustainability factors.
For example, a fully functional watershed committee may require full levels of participation and clear decision-making structures in order to be sustainable. It is then useful to map out how this end state will be achieved. Often it can be useful to define the long-term future of a project in phases. For example the project team may continue to play a role after the first phase ends, but its role may change (e.g., it may focus on different activities or transition from an. implementer to a facilitator).
Furthermore, projects usually need to differentiate their exit strategies by each major activity or group of activities. Some activities may be effectively completed within a short time while others may be long-term. As the project develops, the team should define:
• Which activities can/ should stop completely? Exits will typically be appropriate for activities that completely achieve their objectives and need no further attention from project team or partners OR activities that are unlikely to ever achieve their objectives.
• Which activities will be continued by a partner? The project team should consider how the effectiveness of such work is monitored.
• Which activities will be continued by the project team? Reasons may include a requirement for particular expertise or that the criteria for exit have still not been met and the team’s involvement is seen as critical.
D. Making An Exit – As an exit scenario develops, it is important to maintain positive relationships with partners and key stakeholders. In particular, it is important to:
• Signal intentions in advance
• Formally communicate decisions when they are known
• Discuss implications of an exit, including expectations for each main
Equity
Will organisations and individuals involved
in the project (or living in the project area)
benefit fairly?
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Activity
• Allow time for scale down of activities, as appropriate
1.2 Develop and/or implement consultation processes as an integral part of the operational planning process.
The operational plan is an essential component to a business plan and it tells how you going to get your product/service out to market. That is, how you are going to get your product out of the production stage to the doorstep of you target customer.
An operational plan may seem mundane but it will outline some very important answers to such fundamental questions such as:
• Who is doing what?
• What are the day to day activities?
• How will the suppliers and vendors be used?
• Who are the suppliers?
• What are the labour requirements?
• What are the sources of raw materials?
Why is this section so important? First off, it will outline to the stakeholder how you are going to carry out the delivery of your product or service. What's the use of having a product or service if you don't have a way to get it from the development stage to the consumer’s home?
A business plan reviewer gives this section a lot of weight because they want know what you and your employees are doing to get your product/ service out to market.
These activities may seem like the kind of details that take care of themselves but these are fundamental and critical for your business success. Why? This is where you translate theory into the...
Real World
It is important that you understand why this section is important. It's because you are now dealing with practice and not theory.
You see, there's a far greater chance that a business will fail because fundamentals aren't handled properly than because the basic business concept is faulty.
The fundamentals being the core of your business such as the operations. You must not assume that the operations are going to take care of
themselves.
You need to know the importance of a well thought out operational plan and place considerable weight on this section since it can mean the success or failure of a business.
As an internal planning document, the plan should be a detailed, in-depth operational plan. This will give the entrepreneur an opportunity to work out many potential problems on paper prior to commencing operations.
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However, if you are using your plan to potentially leverage additional funds, remember not to get too complicated. Understand that the reader wants to know that you have worked out your operations and how your product or service fits into the “big picture”.
Don't leave your reader sitting there scratching their heads trying to figure out every detail. Keep it simple and remember, you want to convey to your reviewer that you have everything under control.
If you are planning to present your plan to a third party reviewer, ask yourself these two questions:
1. Will the reviewer understand the content?
2. How important is the content to the overall understanding and appreciation of the business plan?
The relative importance of an operational plan will depend on the nature of the business. A production facility will probably require significant attention to operational issues.
On the other hand, most retail businesses and some service businesses will probably have less operational complexity. However, don't get the impression that an operational plan is not needed because it is.
What Should An Operations Plan Cover?
I'd like to point out that an operational plan should be specific to your business. Not all businesses require the same level of complexity when it comes to the operational plan. The topics that I cover here will not all apply to your particular business.
In your own plan, you do not necessarily need to address each topic. Rather, limit your operations section to those issues that are needed and considered essential to the nature and success of your business.
If your business is a manufacturing business in which product distribution is often a major difficulty, you may want to include a couple of paragraphs clarifying your company's approach to improve this difficulty. However, if your business is a retail operation, distribution may not be a problem and you might not have to discuss it.
On the other hand, if you business is an operation that develops or relies on a lot of new technology, you need to explain those aspects thoroughly. You need to explain who will be using that technology and what the implications are.
Basically, you want to explain to your reader how you are going to deliver your product. What are you and/or your employees going to be doing on a daily basis from the time you open up to time you close. This is what your reader wants to know.
Some issues often addressed in an operational plan include:
• Production or manufacturing
• Facilities
• Inventory
• Distribution
• Maintenance and service - Order fulfillment and customer service Production or Manufacturing
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Every manufacturing business has a production process - the way it goes about fabricating a raw or component material and creating an item with greater usefulness or desirability. However, even if your business is a service or retail operation, you have to use a method of “producing” something of value for your customers.
Integral to the overall understanding of a production oriented business is an appreciation of how the company will manufacture its products. One straight forward way of conveying such information is to examine this activity in terms of resources, processes, and output.
Resources may be characterized as those elements the firm must utilize in an effort to manufacture a desired product. Typically, these include manufacturing facilities, machinery, equipment, materials and related assets, and labour. Depending on their relative importance, attention might be focused on each of these elements.
In the case of a production facility, it is important to discuss the process by which a company will manufacture its products. This usually involves some description of the plant, equipment, material, and labour requirements.
What techniques and processes are going to be used in combining these resources, such as assembly lines and robotics; and the capability of the business in terms of production rates, critical constraints such as productive capacity, or quality assurance programs.
The operational plan might include a profile of the facility, that will be used, including comments regarding size, location, and related specifications - clearance, loading docks, and proximity to other outlets such as railways and airports.
There should be some comment as to the nature of the machinery and equipment being used or acquired. Also, sources of raw materials or components availability, price volatility, and key supplier relationships are often worth mentioning.
The number one question being asked here is how you are going to implement the techniques and processes to get your product out the door. What sort of machinery are you going to be using and who's going to be using it?
Take the time to evaluate your production process and assess the plan to see if you can enhance efficiencies and improve the quality of the finished product.
In doing so, you may find little gaps here and there that may serve impede the bottom line - profit. Look at the various stages involved in creating your product or service, can these stages be shortened?
Remember, you must use your judgement in deciding how much detail should be offered in the operational plan. Just remember that you want to convey to your reader that you have covered all of your bases when it comes to production.
Here are some points you may want to consider when putting your operational plan together: Capacity
Capacity is the measure of how much work your facilities, labour force, and equipment can handle. Does your production process have the capacity to keep orders up? Do you have too much capacity? Not enough capacity?
Productivity
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Productivity measures how long and how many people it requires to produce your product or service. If you can produce more goods in less time, you can improve the bottom line from every dollar spent on equipment and operating costs such as salaries and rent.
Labour
What kinds of and how many employees do you require to produce your product or service? How are you going to use them? Are you going to be using seasonal workers? Full time? Casual?
Quality Assurance
How are you going to keep consistent and maintain the same standards with each product or service? Such activities include regular inspections throughout the production process, occasional testing or sampling of goods.
Facilities
In business, the location of your facilities can prove a critical factor for your success. If your business is going require a large outlay of capital assets at the onset, you will need to make sure the facilities are adequate and are positioned properly.
What's the use of setting up a manufacturing facility in a rural setting with no transportation mechanisms? You will need to decide how you are going to get your product to your consumer and position your facility that will be both cost effective and efficient.
When evaluating your facilities, examine those aspects most important for your particular business. Do you need to be close to certain transportation facilities? Do you need to be close to key suppliers? Do you need to be downtown?
Keep these points in mind when you are completing your operational plan for facilities:
Location
Include the location of company headquarters, retail store (s), branch offices, additional plants, and others. Describe the size and how each will be allocated. Mention why you are located at your particular location and the
benefits associated with it.
Describe access to parking and transportation; air, rail, and surface shipping access, and loading docks, warehouse, and other facilities.
Improvements
What improvements are needed to get the building in working condition and how much will it cost to fix it up.
Lease/Rent
Are you leasing? This is very important and make sure you understand all aspects of the lease. You don't want to be stuck in a 5 year lease if your business fails after the first year (I've seen this happen - a few times). Can you sublet? What restrictions are in the lease? Can you get out early if things go sour?
Maintenance
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What are the operational costs associated with the building? Include the cost of gas, water and electricity. What are the costs for janitorial, trash removal and other operational costs?
Inventory
Different businesses will have different inventory requirements. Of course, a large retail operation will have much more inventory than an engineering consultant so remember to use those points that apply to your business.
Most of the retail operations I deal with overlook the importance of inventory management. An effective inventory management process can make all the difference in the world when it comes to making a huge profit.
On the other hand, a poor inventory management plan can take you right out of business - I've seen it happen. What happens if you sink a large portion of your operations budget to your inventory and have no way of monitoring the process? Disaster.
How much money you have tied up in supplies or finished product sitting in your warehouse makes a direct impact on your bottom line. Every box of raw material is not just taking up space, it's costing your hard cash and it's money sitting around - losing value. What about too little inventory?
If you don't have sufficient inventory, you occasionally can't make the sale. Every business dreads the possibility of receiving large orders but can't seem to fill them because of the lack of inventory.
How do you keep inventory on a level and consistent basis? Develop systems that increases the flow of information from the sales point to the production and purchasing units. The most important thing to remember is to know how your sales are going - At all times.
Distribution
Here's some advice if you rely on goods or materials for your business; Keep up a good relationship with your suppliers. You see, most businesses will experience different levels of difficulties at different parts of the year.
So it's important to work at developing excellent relationships with your suppliers and distributors; You want them to feel that you are in a partnership together so that they will try to do everything possible to meet your needs.
Believe me, there will be a time when this relationship will be invaluable to your business.
It's also important that you try not to be too dependent on just one supplier or distributor. The reason? Your business' financial future will be too vulnerable if they fail you. Imagine a supplier going under who is your only supplier during your peak season. Always have backups.
Use suppliers that understand the needs of your business. Look for companies that can deliver on time, and have excellent customer service. Don't make the mistake of using a supplier based on price alone.
Select suppliers with whom you can communicate well; make certain they understand your specifications and can consistently meet your standards. Maintenance and Service - Order Fulfillment And Customer Service
In some instances, it is important for a company to define the services and support it will provide. Specifically, the plan should address the level of support a company will provide after a customer has purchased a product or service. This is particularly important in the case of new or technical product.
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The service and support of a company's goods are often critical to the business's success. As a consequence, they often merit attention in the business plan. The need to include such a description is dependent on the nature of the company's products. Some goods are sufficiently simple or inexpensive not to need service and support.
In other cases, such as technical or new products, support may be necessary if a customer is to use and maintain properly the company's products. A company can benefit in two ways from providing quality customer service.
First, a company can preserve and enhance its reputation and its relationship with customers by providing guidance and support after a sale. This support may range from simply providing an operating manual to having a staff of service people on call, ready to address customer problems.
Second, this activity may prove to be an additional source of revenue. This is the value of a lifetime customer. By keeping in touch with your customer on a regular basis and providing them with quality information and special deals, you give them a reason to trust you. People only buy from people they trust.
Customers are constantly demanding better and better service. The expect to get what they want, when they want it, and to be treated graciously and fairly in the process.
So, it's your job to make certain customers have little reason for complaints. Build sufficient flexibility into your policies so that you can easily handle unusual or difficult requests.
Also look at your order fulfillment process. Often, orders are not communicated clearly or quickly to the processing department, and valuable time is lost due to inadequate internal communication. Assess the methods by which you prepare goods for shipping and deliver good to customers.
Careful planning in the operational area can bring you meaningful rewards. Analysing the day to day operations of your business will pay off in the form of increased profits as you find ways to reduce costs and improve productivity.
1.3 Ensure details of the operational plan include the development of key performance indicators to measure organisational performance.
Key Performance Indicators, also known as KPI or Key Success Indicators (KSI), help an Organisation define and measure progress toward Organisational goals.
Once an Organisation has analyzed its mission, identified all its stakeholders, and defined its goals, it needs a way to measure progress toward those goals. Key Performance Indicators are those measurements. What Are
Key Performance Indicators (KPI)
Key Performance Indicators are quantifiable measurements, agreed to beforehand, that reflect the critical success factors of an Organisation. They will differ depending on the
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Organisation. A business may have as one of its Key Performance Indicators the percentage of its income that comes from return customers. A school may focus its Key Performance Indicators on graduation rates of its students. A Customer Service Department may have as one of its Key Performance Indicators, in line with overall company KPIs, percentage of customer calls answered in the first minute. A Key Performance Indicator for a social service Organisation might be number of clients assisted during the year.
Whatever Key Performance Indicators are selected, they must reflect the Organisation's goals, they must be key to its success, and they must be quantifiable (measurable). Key Performance Indicators usually are longterm considerations. The definition of what they are and how they are measured do not change often. The goals for a particular Key Performance Indicator may change as the Organisation's goals change, or as it gets closer to achieving a goal.
Key Performance Indicators Reflect the Organisational Goals
An Organisation that has as one of its goals "to be the most profitable company in our industry" will have Key Performance Indicators that measure profit and related fiscal measures. "Pre-tax Profit" and "Shareholder Equity" will be among them. However, "Percent of Profit
Contributed to Community Causes" probably will not be one of its Key Performance Indicators. On the other hand, a school is not concerned with
making a profit, so its Key Performance Indicators will be different. KPIs like "Graduation Rate" and "Success In Finding Employment After Graduation", though different, accurately reflect the schools mission and goals.
Key Performance Indicators Must Be Quantifiable
If a Key Performance Indicator is going to be of any value, there must be a way to accurately define and measure it. "Generate More Repeat Customers" is useless as a KPI without some way to distinguish between new and repeat customers. "Be The Most Popular Company" won't work as a KPI because there is no way to measure the company's popularity or compare it to others.
It is also important to define the Key Performance Indicators and stay with the same definition from year to year. For a KPI of "Increase Sales", you need to address considerations like whether to measure by units sold or by dollar value of sales. Will returns be deducted from sales in the month of the sale or
the month of the return? Will sales be recorded for the KPI at list price or at the actual sales price?
You also need to set targets for each Key Performance Indicator. A company goal to be the employer of choice might include a KPI of "Turnover Rate". After the Key Performance Indicator has been defined as "the number of voluntary resignations and terminations for performance, divided by the total number of employees at the beginning of the period" and a way to measure it has been set up by collecting the information in an HRIS (Human Resources Information System), the target has to be established. "Reduce turnover by five percent per year" is a clear target that everyone will understand and be able to take specific action to accomplish.
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Key Performance Indicators Must be Key to Organisational Success
Many things are measurable. That does not make them key to the organisation's success. In selecting Key Performance Indicators, it is critical to limit them to those factors that are essential to the organisation reaching its goals. It is also important to keep the number of Key Performance Indicators small just to keep everyone's attention focused on achieving the same KPIs.
That is not to say, for instance, that a company will have only three or four total KPIs in total. Rather there will be three or four Key Performance Indicators for the company and all the units within it will have three, four, or five KPIs that support the overall company goals and can be "rolled up" into them.
If a company Key Performance Indicator is "Increased Customer
Satisfaction", that KPI will be focused differently in different departments.
The Manufacturing Department may have a KPI of "Number of Units Rejected by Quality Inspection", while the Sales Department has a KPI of "Minutes a Customer Is on Hold before a Sales Rep Answers". Success by the Sales and Manufacturing Departments in meeting their respective departmental Key Performance Indicators will help the company meet its overall KPI.
Good Key Performance Indicators vs. Bad
Bad:
Title of KPI: Increase Sales
Defined: Change in Sales volume from month to month
Measured: Total of Sales by Region for all region
Target: Increase each month
What's missing? Does this measure increases in sales volume by dollars or units? If by dollars, does it measure list price or sales price? Are returns considered and if so do they appear as an adjustment to the KPI for the month of the sale or are they counted in the month the return happens? How do we make sure each sales office's volume numbers are counted in one region, i.e. that none are skipped or double counted? How much, by percentage or dollars or units, do we want to increase sales volumes each month? (Note: Some of these questions may be answered by standard company procedures.)
Good:
Title of KPI: Employee Turnover
Defined: The total of the number of employees who resign for whatever reason, plus the number of employees terminated for performance reasons, and that total divided by the number of employees at the beginning of the year.
What Do I Do With Key
Performance Indicators?
Employees lost due to Reductions in Force (RIF) will not be
included in this calculation.
Measured: The HRIS contains records of each employee. The
separation section lists reason and date of separation for
each employee. Monthly or when requested by the Vice
President, the HRIS group will query the database and
provide Department Heads with Turnover Reports. HRIS will
post graphs of each report on the Intranet.
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Once you have good Key Performance Indicators defined, ones that reflect your organisation's goals, one that you can measure, what do you do with them? You use Key Performance Indicators as a performance management tool, but also as a carrot. KPIs give everyone in the organisation a clear picture of what is important, of what they need to make happen. You use that to manage performance. You make sure that everything the people in your organisation do is focused on meeting or exceeding those Key Performance Indicators. You also use the KPIs as a carrot. Post the KPIs everywhere: in the lunch room, on the walls of every conference room, on the company intranet, even on the company web site for some of them. Show what the target for each KPI is and show the progress toward that target for each of them. People will be motivated to reach those KPI targets.
1.4 Develop and implement contingency plans at appropriate stages of operational planning.
Contingency Planning
Fires, floods, tornadoes – these are the things we often connect with contingency planning. But what if your entire sales force gets sick with food poisoning at your annual sales conference? Or, your payroll clerk simply calls in sick on payroll day? These things can all cause confusion and disorder if you haven't prepared for them properly. Contingency planning is a key part of this preparation.
As you see, contingency planning is not just about major disasters. On a smaller scale, it's about preparing for events such as the loss of data, people, customers, and suppliers, and other disruptive unknowns. That's why it's important to make contingency planning a normal part of your everyday
business operations.
Target: Reduce Employee Turnover by 5% per year.
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Risk Assessment
The need for contingency planning emerges from a thorough analysis of the risks that your organisation faces. It's also useful in thinking about new and ongoing projects: what happens when 'Plan A' doesn't go as expected? Sometimes Plan A simply means 'business as usual.' Other times, with more sophisticated risk management plans, Plan A is your first response to deal with an identified risk – and when Plan A doesn't work, you use your contingency plan.
Use these principles in your risk assessment process:
Address all business-critical operations – No matter where your contingency planning starts, a good plan identifies critical business functions, and it outlines a way to minimize losses.
Identify risks
The first part of an effective risk analysis is to identify the various risks that your business may face. What has the potential to significantly disrupt or harm your project or business operations? The end result of a risk analysis is usually a huge list of potential threats. If you try to produce a contingency plan for each, you may be overwhelmed. This is why you must prioritize.
Prioritizing risks
One of the greatest challenges of contingency planning is making sure you don't plan too much. You need a careful balance between over preparation for something that may never happen, and adequate preparation so that you can respond quickly and effectively to a crisis situation when necessary.
Risk Impact/Probability Charts help you find this balance. With these, you analyze the impact of each risk, and you assign a likelihood of it occurring. Then it's easier to determine which risks require the expense and effort of risk mitigation. Business processes that are essential to long-term survival – like maintaining cash flow, staff support, and market share – are typically at the top of the list.
Note that contingency planning isn't the only action that emerges as a result of risk analysis – you can manage risk by using existing assets more effectively or by investing in new resources or services that help you manage it (such as insurance). Also, if a risk is particularly unlikely to materialize, you may decide to do nothing about it, and manage around it if the situation arises.
Contingency Planning Challenges
You should be aware of a few common obstacles as you begin your contingency planning process:
• People are often poorly motivated to develop a strong ‘Plan B’ because they have too much of an emotional investment in the ‘Plan A’ they want to deliver. Stress that Plan B should be properly thought-through.
• There’s usually a low probability of a crisis occurring, so people often don’t feel a sense of urgency to create a contingency plan, meaning that it gets stuck at the bottom of their To Do Lists. Unfortunately, this may mean that contingency planning ends up as a task that never gets done.
• Organisational politics can interfere with prioritizing risk, because many people may want to be seen as an essential part of recovery efforts. If you
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include all key business managers in the risk assessment and prioritization process, this may help you reach agreement.
Developing the Plan
Remember these guidelines when it's time to prepare your contingency plan:
• Your main goal is to maintain business operations – Look closely at what you need to do to deliver a minimum level of service and functionality.
• Define time periods – What must be done during the first hour of the plan being implemented? The first day? The first week? If you break down the plan, you're less likely to leave out important details.
• Identify the trigger – What specifically will cause you to implement the contingency plan? Decide which actions you'll take, and when. Determine who is in charge at each stage and what type of reporting process they must follow.
• Keep the plan simple – You don't know who will read and implement the plan when it's needed, so use clear and plain language.
• Consider related resource restrictions – Will your organisation be able to function the same way if you have to implement Plan B, or will Plan B necessarily reduce capabilities?
• Identify everyone's needs – Have people throughout the company identify what they must have, at a minimum, to continue operations.
• Define 'success' – What will you need to do to return to 'business as usual'?
• Include contingency plans in standard operating procedures – Make sure you provide initial training on the plan, and keep everyone up-todate on changes.
• Manage your risks – Look for opportunities to reduce risk, wherever possible. This may help you reduce, or even eliminate, the need for full contingency plans in certain areas.
• Identify operational inefficiencies – Provide a standard to document your planning process, and find opportunities for performance improvement.
Maintaining the Plan
After you prepare the contingency plan, you need to do several things to keep it practical and relevant - don't just create a document and file it away. As your business changes, you'll need to review and update these plans accordingly.
Here are some key steps in the contingency plan maintenance process:
• Communicate the plan to everyone in the organisation.
• Inform people of their roles and responsibilities related to the plan.
• Provide necessary training for people to fulfill these roles and responsibilities.
• Conduct disaster drills where practical.
• Assess the results of training and drills, and make any necessary changes.
• Review the plan on a regular basis, especially if there are relevant technological, operational, and personnel changes.
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• Distribute revised plans throughout the company, and make sure the old plan is discarded.
• Audit the plan periodically:
• Reassess the risks to the business.
• Analyze efforts to control risk by comparing actual performance to the performance level described in the contingency plan.
• Recommend and make changes, if necessary.
Key Points
Contingency planning is ignored in many companies. Day-to-day operations are demanding, and the probability of a significant business disruption is small, so it's hard to make time to prepare a good plan. However, if you're proactive in the short term, you'll help ensure a quicker and more effective recovery from an operational setback in the long term, and you may save your organisation from failure in the event that risks materialize.
A contingency planning process also helps you gain significant insight into the risks your organisation faces. This enables you to develop an effective
planning strategy that will immediately add value to the business. Contingency planning requires an investment of time and resources, but if you fail to do it – or if you do it poorly – the costs could be significant if a disaster happens
1.5 Ensure the development and presentation of proposals for resource requirements is supported by a variety of information sources and seek specialist advice as required.
Managing Human Resources
Previously we have mainly considered the management of financial and information resources within an operational context. Another type of resources, and possibly the most important, is human resources, or the people who work within an organisation to achieve its goals and objectives. Managing human resources is an important part of overall operational planning. For instance, if the business plans to boost production it will also need to have enough extra employees to meet the new production targets. This section will briefly examine
how human resources can be obtained, selected and inducted and the resulting implications for resource planning.
Recruitment
Recruitment is all about gathering a suitable pool of job applicants for a particular job vacancy. Recruitment is inviting people to apply for a position. It includes all stages, up to, and including the interview. The aim of recruitment is to attract staff suited to organisational needs. Failure to correctly match the person and the job often results in the individual leaving and the necessity to repeat the recruitment exercise. There are a number of sources of job applicants and several are listed below.
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Internal sources of staff
Often staff from other sections in a business are encouraged to apply for vacant positions within the organisation. The advantage of this is that the new employee already knows many of the policies and procedures of the business and needs less training in technical and cultural aspects of the organisation's operations. Another advantage is that the business is seen to offer advancement opportunities for staff and an internal career pathway. This means that the employee does not have to look outside of the business for a promotion or competency development.
Internal advertising
Notice boards and staff bulletins provide an opportunity to advertise vacant positions not only to existing staff but also to their friends and family. Although friends and family are outsiders to the business they do at least have some personal connection with the organisation and word of mouth is a very cheap way of advertising.
External advertising
Other sources of advertising include newspapers, industry magazines, web sites and publications.
Employment agencies
There are a large number of public and privately funded agencies that are able to source qualified job applicants. The advantage of engaging an agency is that they are able to screen job applicants so that they only refer candidates that are more likely to meet the needs of the business. In some cases the cost of such services may also be covered by public funding.
1.6 Obtain approval for plan from relevant parties and ensure understanding among work team involved
No organisation has unlimited resources. There will be always be cost restrictions that limit the resources available to an organisation. However cost restriction is not the sole reason why resources may not be available. Physical resources used by an organisation may not be readily available because of limited supplies and or suppliers. There may be limited numbers of skilled people with the required competencies available to work in an organisation. The location of an organisation may impact on the ready availability of resources.
The processes used by an organisation may be unique to the organisation thereby making resources required to support those processes difficult to secure.
Resources available should be used to provide the optimum outcome for an organisation. All organisations will have potential projects and activities that will compete for organisation resources. Decisions on the use of resources should reflect the organisation's priorities rather than individual whims.
There may be particular requirements with which a proposal for resources must comply. These may include that the use of organisational resources results in a positive cash flow for the organisation; that is, the cash generated from the sale of a product or services is greater than the cash expended for the resources. It could be that the required resources contribute to a major project of the organisation and thus the potential profit from the project will need to be assessed before resources will be committed.
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There will be many alternative proposals for use of scarce organisational resources. Or it may be that an organisation is unsure of whether the expenditure of resources on an organisation project or activity gives any benefit to the organisation. There are many financial techniques that could be used to determine the possible outcome of a request for resources. However one technique that can be readily used is known as cost-benefit analysis. Where there are competing uses for resources or an organisation is unsure which use of resources will provide the highest positive benefit to the organisation, a comparison of the benefits and costs associated with use of the resources for each project provides a guide to selection of the most appropriate use of resources.
Cost versus benefits
Cost-benefit analysis can be used to determine the difference in the financial benefits offered by alternative uses of scarce organisational resources. There are a variety of approaches to review the costs and benefits of a project or activity.
One approach to cost-benefit analysis is the use the benefit-cost ratio where benefits are divided by costs to give a ratio of benefit to one. Where resources are sought, the ratio is calculated as follows:
Benefit-cost ratio = B/l + O
Where
B = the benefit that flows from the use of resources
I = the initial investment in the project or organisational activity
O = the operating cost of a project or organisational activity.
As a rule, if the benefit-cost ratio is more than one then the use of the organisation's resources is acceptable. Where there may be competing uses for scarce resources then comparisons of the alternative uses of the resources would need to be made.
The following are two competing projects. There are only sufficient organisational resources to undertake one of the two proposed projects:
Project 1
Expected return/benefit from the project = $150,000.
Initial investment in the project or organisational activity = $80,000.
Operating cost of the project = $20,000.
Project 2
Financial return/benefit from the project = $110,000.
Initial investment in the project or organisational activity = $70,000.
Operating cost of the project = $30,000.
The benefit-cost ratios for these projects are as follows:
Project 1
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B/C = 150,000/80,000 + 20,000
This simplifies to
B/C = 150,000 100,000 B/C = 1.5
Project 2
B/C = 110,000/70,000 + 30,000
This simplifies to
B/C = 110,000 100,000 B/C = 1.1
Both projects have a ratio above one. However, Project 1 shows a greater benefit from the use of available resources. It would normally be the preferred use of the resources because it has the higher benefit-cost ratio.
Another approach that can be used to determine the costs versus benefits is to review the relationship between cost volume and profit in relation to activities of the organisation. The basic process for review of cost volume and profit analysis is the calculation of the break-even point. This is the level of activity at which costs expended equal revenue. There is no profit and no loss.
The break-even point requires several key pieces of information:
• The price we charge our customer for each product we sell or service we provide,
The total fixed costs of the organisation or the project; that is, the costs that are fixed against a level of activity or a period of time such as rent or the
purchase cost of machinery.
The variable costs; that is the direct costs of making a product or supplying a service. We only incur variable costs if an activity occurs. Examples of variable costs include labour costs and material costs.
For our purpose let us assume:
• the price charged to a customer is $20 per unit sold
• variable costs are $5 per unit
• fixed costs are $150,000.
Step 1
The first step in break-even analysis is to determine how much of each sale contributes towards paying for the organisation's fixed costs. This is the contribution margin. This is calculated as follows:
Sales price less variable cost per sale gives contribution margin:
20 – 5 = 15
Step 2
We now divide the contribution margin into our fixed cost to establish the break-even point:
150,000/15 = 10,000 units
With this information we can review whether this project, sale of products or provision of services is appropriate. For instance, are we sure we can achieve this level of sales? Will our customers pay the price we will charge
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them? Will the variable costs change over time resulting in more resources being used to reach break-even point?
By having this information we can see the level of activity we need to achieve to cover all our costs. We might compare our calculations with calculations for alternative products and/or services that might be provided to determine whether there are better uses for our resources; that is, products that require less resources to be expended to reach break-even point. We might also look at whether a lift in prices paid by our customers is possible. In this case a larger profit will be earned by the organisation because of a lower break- even point and therefore less costs, and hence less resources, will be expended
The benefit-cost ratio is often used by public sector organisations. Public sector organisations may want to express benefits as against costs in simple terms that are easily understood by the community. They may also include financial benefits that might flow into the community as a whole such as additional spending in the community through jobs created by a new project as well as direct profits that may flow from a project.
Proposals for use of resources
Each proposal regardless of its purpose should: add value to an organisation, comply with organisational purposes, contribute to meeting strategic objectives, and fit with organisational policies. Proposals for use of resources should emphasise the efficiency and effectiveness of the usage of operating resources. Any proposal should meet any legal requirements in relation to the behaviour of an organisation. Though some proposals for use of resources may be considered informally by an organisation many organisational proposals need to be formalised and presented in writing for
consideration. Proposals for additional resources will generally need to be approved by the management.
For a proposal to be successful it should be well organised and be able to persuade the manager whom is to make the decision to agree to the proposal. Though each proposal may be different the following are some general headings that might be used in relation to a proposal for resources:
• title for the request - usually related to seeking resources for an organisation project or activity
• purpose of the request - such as seeking resources to perform an activity
• introduction and background information - including any issues and problems
• reason for the request - for example, for the commencement of a new project or activity, or cost overruns due to unexpected circumstances
• proposed outcome of the request for resources
• relationship of the request to the organisation's objectives
• nature of the resources, required costs, and options available to acquire resources
• method of acquisition of resources and scheduling of the use of the requested resources
• possible consequences if the request is not granted
• any risks to the organisation in using the resources
• detailed timing of the use of the resources
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• conclusion - including reiteration of the importance of the request including key points that are likely to influence the manager who is to make the decision
• attachment of graphs, tables, etc as required.
Though proposals for use of resources may be based on financial outcomes, the quantitative benefits (those benefits that can generally be measured in dollar terms) may be good reasons for proposing the use of resources that also provides qualitative benefits to the organisation.
These are benefits that do not immediately result in a positive financial outcome to the organisation but they add value to the name of an organisation. Examples could be the use of resources to support a community activity which may have long-term benefits in terms of community support for an organisation. This could result in increased custom at a later time and/or community support when an organisation may want to make an alteration to its premises or its activities.
Reflection
• How might you link the operational goal you have listed and the resources used to meet that goal with the satisfaction of organisational goals?
• How might you resolve issues in terms of the source of resources - whether they are human or physical - if your manager proposes an alternative source of resources that you do not wish to access?
• How would you ensure that the approving manager is acquainted with the work carried out in your section - particularly if the manager is unaware of
the technical aspects of the work - and fully understands the importance of your proposal?
• How do you ensure you get assistance and support from your manager in presenting your case for additional resources when they are required?
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2. Plan and manage resource acquisition.
2.1 Develop and implement strategies to ensure that employees are recruited and/or inducted within the organisation’s human resources management policies and practices.
Develop and implement strategies to ensure that physical
2.2 resources and services are acquired in accordance with the organisation’s policies, practices and procedures.
2.1 Develop and implement strategies to ensure that employees are recruited and/or inducted within the organisation’s human resources management policies and practices.
Job analysis
Staff you employ must be competent to carry out the tasks required of them. You need to have a clear idea of what you require from your staff. This is why you need to have prepared a job analysis and job specification. What are the most important tasks of the job, and therefore, what skills and experience are required?
Job analysis not only breaks a job down into its component tasks, but also lets you understand its fundamental purpose, the responsibilities involved,
and its relationship to other jobs. Job analysis should also document accountability and reporting channels; that is, where the job lies in the chain of command. The following shows how job analysis relates to other parts of recruitment and selection.
Job analysis
• Job title
• Duties and responsibilities
• Relationships
• Working conditions
Job specifications
• Qualifications
• Experience
• Skills
• Knowledge
• Abilities
• Personality
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This is an important step in the selection process. Use the information you have collected to decide which criteria the successful applicant must have before beginning the job, which criteria would assist the applicant but which are not necessarily crucial to success, and which criteria can be learned on the job. These criteria are going to assist you in screening, designing employment tests (if you feel that is necessary), designing interview questions and making your final decision. You should feel happy that you have reduced the tasks to an objective and measurable tool.
Your decisions on employment of staff must be made only on the job criteria and objective personal specifications, such as qualifications and previous experience. You are looking for the best person for the job, regardless of sex, race or religion. You must have objective evidence for both accepting and rejecting candidates for the job.
Recruitment
Interviewing is the most commonly used selection tool worldwide, and Australia is no exception. Interviews are more reliable and valid as a tool for selecting staff if trained interviewers use a structured and consistent format to conduct them.
The whole selection process can be thought of as a series of filters. The initial contact with applicants is the beginning of the filters. A quick 'courtesy' interview is often a way of weeding out the most obviously unsuitable
candidates, while still giving a good impression of the organisation. Owners or supervisors, instead of a member of the personnel section, can carry out these interviews. The diagram below shows how applicants are sifted at each step of the process, starting with 100 applications and ending with one.
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For some professional and technical jobs, organisations use professional recruiting organisations. Although this seems an expensive way to recruit, it can save organisations time and use of their own resources - so it may not be as expensive as it first looks. Many of the more reputable firms offer a 'guarantee'; that is, if the new employee leaves within a certain length of time, usually six to 12 months, then the company will recruit someone else for free or return the original fee. Recruiting organisations are particularly useful when recruiting at executive or specialist levels.
If the definition of an interview is 'a conversation with a purpose' then we conduct interviews all the time. Every time we talk to others and try to gather information, seek agreement, or involve others in our purposes we are interviewing. However, interviews are effective only when we have a clear knowledge of our purpose and convey this to the other person(s) involved.
All interviews have an implied purpose, but truly effective interviewers make this purpose explicit. For example, the objectives of a performance appraisal interview will normally be to:
• collect information assessing job performance
• collect information on performance standards
• discuss comparison between job performance and performance standards.
The objectives of the interview must be clear in everyone's mind before the interview starts. The first step when planning an interview must be to set measurable, achievable and realistic objectives that can be accomplished during the interview.
Induction
The process of introducing new employees to an organisation is called induction. An induction program is a formal process that introduces employees to the workplace and familiarises them with their jobs, work group and the organisation. It provides new employees with an understanding of their role in the organisation and the performance standards required in their new job. Normally, induction is designed to make a new employee aware of their place within the organisation ... making them a part of the organisation.
Induction starts in the recruitment process. When you advertise for staff you must tell the truth about the job and the organisation. Many people leave jobs because they were given unrealistic expectations of the job and/or the organisation by advertisements and interviewers. You are not trying to scare off potential applicants, but you are trying to tell them the truth about the organisation.
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Reflection
• Would you have the same requirements for each team leader?
• Do the interpersonal and teamwork requirements for the team leaders you manage differ greatly from specifications for similar positions in other parts of the organisation?
• What areas are most important for you to cover when interviewing potential new staff?
• Have you allocated sufficient time for the applicant's concerns?
• How can you best make an applicant feel comfortable?
• Did you receive appropriate information on the organisation and your role in the organisation as part of your induction process?
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2.2 Develop and implement strategies to ensure that physical resources and services are acquired in accordance with the organisation’s policies, practices and procedures.
Knowing your required inputs
The achievement of operational plans is dependent upon managers being able to bring together the right mix of inputs. These physical inputs are essential to an organisation being able to meet its required goals. Some inputs are consumed while others are used in the production process. Sources of raw materials must be found and contracts negotiated with delivery dates that will meet production needs.
The cost-effectiveness of all products and services that make up the inputs to an organisation, plus the activities that are directed to providing customer
service and quality output, must be regularly monitored. Failure to do so can add to costs or reduce the competitive advantage of a business.
The emphasis everywhere is on increasing productivity, which means achieving desired plans at the lowest possible cost. This means that attention must be given to the efficient sourcing and use of inputs. Examples of physical resource inputs to a business could include:
• labour of managers, other employees, contractors, accountants and management consultants
• raw materials, such as sheet steel and paper
• finished goods, such as packaging and empty bottles.
Sourcing physical resources
Many of the physical resources required for undertaking organisational activities may be acquired from outside the organisation. However, it is important to recognise that some suppliers of goods and services will work within your organisation. There may be a mix of resources supplied by an internal source and an external source.
For example, sub-components for an engine can be manufactured in the engine factory or bought from another company. Similarly, computer services can be provided 'in-house' or contracted out to a service bureau. An essential
service such as payroll can be run on a computer in the accounts department of your company or done by a specialist pay processing company using records provided by a clerk in your office.
The choice of whether to have goods or services provided by internal or external suppliers will be influenced by factors such as the following:
• Cost: All other things being equal lower input costs increase profitability.
• Customer service: Providing excellent customer service is now acknowledged as important in every progressive organisation. Finding suppliers capable of providing you with high quality inputs at the required point in time can increase productivity.
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• Quality standards: Suppliers must be able to meet specifications.
• Risk: Replacing an in-house production process with an outside supplier may reduce costs, but because of long supply lines it may increase the chance of supplies not being available when required.
• Control: Managers have more control over the work done by employees than by outside suppliers.
• Continuity of service: There is always a risk of an external supplier deciding to discontinue a service or a production run. Creating an internal supply may eliminate such a risk.
Specialisation means that many inputs are produced far more cheaply and competently by large organisations. No significant car manufacturer since the time of Henry Ford has wanted to own a steel mill in order to cast engine blocks. The job is best left to steel companies with huge investments and expertise in steel production.
At the other extreme, mail-order companies may want the production and updating of mailing lists to be an in-house activity to ensure that competitors do not have access to them.
Some managers may see the contracting out of many activities as a threat to the stability of their organisation. Others may believe that as many inputs as possible should come from external suppliers so that they can concentrate on core activities. There is no correct answer to the question of what is the correct or ideal mix of internal and external sources of supply.
Regardless of how physical resources are acquired there will be procedures to follow and people whose approval you will need to secure resources. You may find there are restrictions in relation to your delegation in respect to purchasing. You may need to obtain approval from appropriate managers to purchase beyond a certain limit. There may be organisations with which your organisation does not wish to trade because of past experiences. There may be quality requirements that need to be met that limit your selection of suppliers. Your organisation may have preferred customer status with another organisation that offers them discounts, prompt delivery, etc. It will be important to ensure that any procurement of physical resources is in line with organisational practices and policies. Where applicable; appropriate organisational personnel may need to be consulted in relation to purchases to be made.
Decisions on the in-house production of resources or the outsourcing of resource supply nearly always revolve around cost considerations. One important consideration that has been discussed by consultants and practising managers is the structure of organisations. Many argue that organisations should change in at least the following ways:
• They should be flatter than in the past: Simply put, this means there should be fewer levels of management between the chief executive and non-supervisory, or operational, personnel. This has usually been done through the elimination of middle management jobs and the delegation of more decision-making authority to teams of workers. This can result in lower level employees being given responsibility for negotiations with suppliers over inputs and many other tasks previously done by middle managers. It should be noted that 'de-layering' organisations in many cases has not resulted in the anticipated rise in profits.
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• Only core activities should be undertaken: The idea here is that all other work should be subcontracted or outsourced to other companies. This means that more inputs are external and that employees will be more involved in negotiations and dealings with external suppliers.
The philosophy described in the second point above suggests that, say, oil companies and retailers should not employ truck drivers. Instead, transport activities should be contracted out to companies operating trucking fleets. Drivers and other people directly involved in transportation could have career paths in such companies, as people with trucking expertise would fill almost all senior positions in the hierarchy. Similarly, it is argued, office cleaners could develop a career when employed by a large cleaning contractor and become senior managers in a cleaning contracting business. Such jobs would be dead-end jobs for people employed as cleaners in the bank and school environment.
Organisations that attempt to subcontract all those functions that do not offer employees a career path will have a smaller workforce and be more dependent on external providers of goods and services.
Reflection
• One way of improving productivity is to find cheaper inputs than those currently being used. Can you name cheaper substitutes for the inputs you identified above?
• To what extent are the physical inputs to your organisation influenced by the technology used?
• Is quality of supply more important than cost?
• Is continuity of supply and on-time delivery more important than cost?
3. Monitor and review operational performance.
3.1 Develop, monitor and review performance systems and processes to assess progress in achieving profit and productivity plans and targets.
Analyse and interpret budget and actual financial
3.2 information to monitor and review profit and productivity performance.
3.3 Identify areas of under-performance, recommend solutions, and take prompt action to rectify the situation.
Plan and implement systems to ensure that mentoring
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3.4 and coaching are provided to support individuals anteams to
effectively, economically and safely use d resources.
Negotiate recommendations for variations to operational
3.5 plans and gain approval from designated persons/ groups.
Develop and implement systems to ensure that
3.6 procedures and records associated with documenting performance are managed in accordance with
organisational requirements.
3.1 Develop, monitor and review performance systems and processes to
assess progress in achieving profit and productivity plans and targets.
Performance monitoring
We need to monitor activities to ensure that plans are achieved. If aircraft pilots were unable to monitor their ground speed and direction, which varies greatly from air speed and direction, aircraft would seldom reach their destination at all, let alone arrive at their scheduled times. Anyone who has flown interstate or internationally has heard pilots inform passengers of the time to the minute when they will arrive at the terminal even though they are still over 1000 kilometres away. This achievement results from well-informed planning with constant monitoring of key performance indicators and appropriate action.
Planning and control are often seen as the two sides of the one coin. Planning is looking into the future and expressing intent about the use of resources and the achievement of objectives and performance or control measures. Control involves monitoring, reviewing and evaluating performance to assess if goals and objectives are progressively being met, and applying corrective action to maintain the planned goal path.
At the organisational level, management needs to establish and exercise control over the behaviour and actions of employees and to predict performance and results. The management control process checks that things are happening as they were meant to happen and that the
organisation's goals are being met.
Control is part of the ongoing management cycle - planning, organising, leading and controlling with constant attention to ultimate goal achievement.
The control process consists of:
• establishing performance standards and criteria
• measuring the progressive performance of the activity
• comparing actual performance measured against the standard expected
• taking corrective action following performance measurement.
Through the control process, the manager can adjust activities to make sure goals are achieved.
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The monitoring process
The performance monitoring process consists of three main steps:
1. Establish areas where monitoring is needed: Part of planning is the establishment of goals and targets. They establish what you are trying to achieve. The concept of key result areas helps to establish objectives to monitor your performance. These key areas will relate to anything that is important to your department's or organisation's effectiveness. Each goal needs to be specific, measurable, achievable, relevant and traceable.
2. Compare actual performance with desired results: Your goals and performance targets should be written in terms such as:
time
frequency
percentag
es.
Like your goals, the things you monitor should also be specific, measurable, attainable, relevant and traceable. Once you know precisely where you are going, monitoring becomes a simple matter of comparing expected with actual, and taking any necessary action to keep you, or put you back, on track. In all performance, some amount of variation will occur. Monitoring is deciding whether you need to take corrective action or not, and if needed, what action to take.
3. Take action as necessary: If you find actual performance is not meeting your desired performance, you will need to take some sort of action. The type of action you take will depend on the variation between your objectives and your current position.
Statistical information or other data collected from monitoring activities needs to be:
• Accurate: The information must be accurate and reveal the facts needed for appropriate action.
• Timely: Information must be available in sufficient time for corrective action, where required, to be implemented.
• Economic: The cost of gathering the information to be monitored must be less than the savings it ensures.
• Easily understood: The information must be understood by those it affects and those who will take action on it, and it must be presented in a form that is useful for decision-making.
• Specific to needs: Any monitoring that is done must be appropriate to the needs of the individuals and the organisation and acceptable to those who are affected by it.
Reflection
• Why are these activities important to the organisation’s sustainability?
• How would the frequency be determined with which these activities are monitored?
• Why are these systems or processes critical to the organisation’s sustainability?
• Does the organisation have a procedure for reviewing its processes and systems from time-to-time to determine whether the level of monitoring needs adjusting?
• Are the systems within the team led by people you manage which require constant monitoring?
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3.2 Analyse and interpret budget and actual financial information to monitor and review profit and productivity performance.
Financial information
As the primary purpose of every business is to make a profit, organisations apply financial controls to monitor all aspects of progress. The most common controls are activity budgets or cost-centred budgets. Actual expenditure reports or financial statements for the activity or cost centre are analysed and compared to budgets to identify variances, their causes and corrective actions that may need to be taken.
Budget reports are used to collate information on planned performance so as to compare it to what actually happened in a set period. For example, a company budgeted to sell 1500 units in November, but only sold 900, or a production unit budgeted to spend $2000 on materials, but actually spent $3000.
Frontline managers and team leaders need to read budget reports to find out if activities are in line with budget. There will be different operational areas to be managed in different sections of the organisation. Teams and/or sections may need to consider cost control and/or revenue generation. A production area of an organisation will concentrate on containing costs, whereas a sales area will concentrate on earning revenue.
Monitoring and control of costs
Financial controls in many operations areas do not focus on the profit or loss of the operations of a team or section but on how well costs are managed and controlled. It is essential to monitor costs and to ensure costs are within budget expectations.
Cost centres
Cost centres are useful for identifying and collecting costs for a certain function or activity. Costs can be allocated to the centre where they are the responsibility of one frontline manager and team.
Cost centres can be equally well established in private or public sector enterprises and are associated with the concept of responsibility accounting. This is where the manager is held
responsible for the operations and costs incurred in his or her area of responsibility.
A cost centre could be a department, a section or activity centre, a machine or a group of machines, and sometimes even an individual. A cost centre is where associated costs can be grouped together and then related to the activities of the centre so that performance can be measured.
Benefits of cost centres include the following:
• They allow costs to be collected and allocated more easily, particularly with the use of codes where each cost centre has its own code and as costs occur they are coded according to the cost centre involved.
• They allow us to look at the costs associated with different sections or activities and their revenue where applicable and contributions to costs and profits.
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• Frontline managers and their teams are informed about cost and revenue performance on factors over which they have control and which provide the basis for analysis and action to improve performance.
• Senior management can undertake cost-benefit analysis of all cost centres to assess their role in overall performance and make decisions that may include closing sections and subcontracting work out.
• In some cases cost centres can be used to simulate competitive market conditions by getting one cost centre to tender to another cost centre for its work, and seek outside tenders, so that each cost centre operates like a small business.
Responsibility accounting
The primary objective of responsibility accounting is to fairly assess the performance of individuals and teams by only charging them with resource costs for which they are responsible and where they can exercise control or seek to improve their performance.
When cost centres are correctly used, they provide a sound basis for decision-making and actions by the frontline manager and team, and can be positively motivational at the same time. This is because the team is responsible for the management of costs in its centre and can see when this is improving its efficiency.
If the cost centre concept is incorrectly used (in that the identification and allocation of costs is incorrect, unjustifiable or unfair) it not only makes for poor decisions but also de-motivates staff.
Budgets may be based on the best assumptions but things do not always go according to plan. We may have budgeted for the purchase of a house, but unexpected events such as an increase in interest rates may result in unanticipated payments or illness may reduce the income we earn to meet payments.
It is important to review the ongoing performance of a task or activities against the planned budget to determine whether performance requirements have been met. A problem may exist which continually prevents us from meeting our plan. We need to focus on any variances between actual and planned outcomes so we can adjust our performance to ensure it is in line with the plan and that corrective action is taken where appropriate. In some situations, we may have to revisit our plan and the supporting budget because we may have failed to take into account an unanticipated event.
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3.3 Identify areas of under-performance, recommend solutions, and take prompt action to rectify the situation.
Performance and standards for resources
Part of any control process is to identify where performance is not in line with required standards. Standards of performance will be required for each activity in the workplace. If you have to control something, which may be materials used, product quality, machine output, time taken for a job, or individual or whole team performance, it is useful to have a standard against which to measure your performance.
When controlling resource costs you need to first determine what the target costs should be and then control processes or activities to achieve or do better
than the targets. Where your actual outcomes differ from the targets, you will have variances. For example, you had a target or standard cost of $5.00 and the actual cost was $6.00, giving a negative variance of $1.00 or 20%. Where the variances are negative you should examine them, discover the real causes and decide on corrective actions you should take to achieve the targets. Where variances are positive you should look at what you have done well and try to apply the knowledge elsewhere.
A standard has two basic elements:
• performance element
• cost element.
Together these give us a standard cost for any given activity whether producing a product or providing a service. For example, you might have a standard usage of stainless steel in a product of 2.5 kilograms at $10.00 per kilogram. You could use 2.7 kilograms, a negative variance in usage, or the price could go to $11.00 per kilogram, a negative price variance. Standards cover direct materials, direct labour and operating overheads, and you measure your actual costs against the relevant standard.
In setting your standards for the cost and use of resources you can develop and use ideal standards or realistic standards.
• Ideal standards are based on perfect working conditions, which are only attainable if there are no inefficiencies and everything goes absolutely to plan.
• Realistic standards are attainable, allowing for some inefficiencies or contingencies (sometimes termed 'slack') that will almost certainly occur. Realistic standards are those most likely to motivate your work team, and be achieved consistently.
If you achieve your performance and cost standards it means that the profits you projected or budgeted for will be achieved providing you reach your sales activity levels. If not, then your profits will be reduced.
Some work standards measure effectiveness or actually getting the job done. Others measure efficiency or the most efficient use of resources to get the job done. You should be aiming to achieve both. For example, a bricklayer will be expected not only to lay a high number of bricks, but also to have laid the bricks properly so that there is no need for rework to be carried out. It is also important to set standards over which the person or team responsible for achieving them has control. For example, sales
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representatives cannot control the purchase cost or lease charge for their vehicles but they can control operating costs.
A good approach is to set standards in cooperation with the responsible individuals or team so they are agreed on and accepted as realistic and attainable.
Variations in performance in use of resources
There may be many areas of an organisation's operations where variance between planned performance and actual performance is measured and analysed. It may be that sales targets are not met in terms of the units sold or services provided, or in the value of sales required. It could be that profit levels are not met. When discussing performance in relation to resource use there is generally concern in relation to the cost and use of materials and labour. It is important to look at the areas of variance in the costs of
materials, labour and overheads.
Variance in materials
There are two reasons you could have the variance in materials used, one being the usage or amount used and the other the cost price. However, there could be a number of causes for the variances, and while some are under the control of the work team, others may not be.
Direct material usage variances could result from defects and rejects caused by:
• poor-quality materials
• poor-quality tools • poor workmanship
• loss through damage or pilfering.
Price variances would normally result from changed supplier prices and may often be out of direct control. It may be necessary to negotiate longterm pricing contracts or change suppliers as long as there is no negative effect on the quality of materials supplied to reduce costs.
Variance in labour
Direct labour variances could result from more hours being used to make a product or deliver a service than expected. Increased costs could also result from an increase in wage rates.
The causes of additional hours being used include:
• poor-quality materials needing more work on defects or rework if there are rejects
• poor-quality tools slowing the work process
• poor workmanship or work practices
• machine breakdown
• materials hold-up resulting in idle time
• power failures. The increased wage rate could result from wage increases or from the need to do overtime to make up for lost time.
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Variance in variable overheads
Overheads are those costs that are required to keep an organisation operating but are not directly attributed to production of goods and services. This would include maintenance of machinery and rental of floor space.
The change in variable overheads could result from increased usage of the variable overhead items from reworks, poor workmanship or poor work practices; each of which could use more consumable items or result in more electricity being used.
It is evident from the above that while some costs are controllable, other costs may be generated by other departments such as purchasing, maintenance or transport. It is also evident that materials, labour and variable overhead costs and variances are often connected. For example, poor materials influence material costs, labour usage and variable overheads.
The frontline manager will need to address the causes which could, for example, require training, new work practices, negotiation with other departments and the provision of quality assurance from suppliers.
Dealing with poor work performance
People do not work at their peak performance all the time. Doctors make mistakes. The builders of the Challenger space shuttle, which burst into flames after being airborne less than one minute, made a mistake. Doctors and engineers can cause harm through poor work performance. The consequence of poor work performance is not always as crucial as that of an emergency rescue worker or a triage nurse. However, poor work performance, at the very least, lets the work team down. It may mean the team does not meet its required level of performance, and that effective working relationships are impaired.
All steps might be taken to ensure that work performance is at an optimal level, however, there still may be situations where an employee performs poorly over a period. As mentioned earlier, trust is built on competent work performance. If someone within your team is performing poorly, the group/team will lose confidence in that person and trust will decline.
It may be necessary to conduct a formal review of an individual's work performance. The process undertaken in reviewing work performance needs to be in line with organisational processes. Most processes involve counselling, the requirement to undergo further training, and finally, a formal interview with the person whose work performance is being reviewed. Three major steps in undertaking an 'improving work performance session' are:
1. Prepare for the interview.
2. Conduct the interview.
3. Follow up the process.
In preparing for the interview, you should ensure the purpose of the interview is clear. Know exactly what you expect. This will require you to know personal details of the employee, his or her work performance (accurately and specifically stated) and the standard of work required (again, specific in quantity and quality). From this information, you can state the level/importance of the poor performance.
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Other factors important in the preparation step are to check the employee's history for factors that may have some bearing on the situation and ensure the interview is conducted in private.
Every organisation should have a process for conducting performance or work improvement interviews. While each has minor variations, the following is a list of the issues that are generally covered in these interviews:
1. Describe the behaviour and its importance.
2. Be specific in time, cost and performance.
3. Ask the employee for an explanation and listen with empathy.
4. Ask the employee for ideas on how he or she can assist. Write them down. This gains agreement to solutions to the 'problem'. It reaffirms that you value the employee.
5. Offer appropriate assistance such as retraining or closer supervision.
6. Agree on action including improvement targets on scheduled dates.
7. Thank him or her, and agree on follow-up date/s.
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3.4 Plan and implement systems to ensure that mentoring and coaching are provided to support individuals and teams to effectively, economically and safely use resources.
The need to work together
The use of semi-autonomous teams where teams are responsible and accountable for the outcomes they are to achieve means that team members must work together effectively. Team members are required to work together such that each team member passes on information and is involved in the skill development of other team members so that the team achieves best practice.
People can work together effectively and help each other in various ways, for instance as 'buddies', 'mentors' and 'coaches'. A buddy is a peer of the new starter, someone of approximately the same job classification and same status
in the organisation. The buddy is an equal. A mentor is a person higher up in the organisation's hierarchy, usually an employee's supervisor or manager. A coach, like the coach of a sporting team, is a trainer. The coach may be a co-worker, but one who is trained in training, and who concentrates on instructing the new starter in certain skills and assisting him or her to practise those skills.
Buddies
Buddy systems are becoming more popular in organisations as a low-cost and highly effective method of introducing and socialising new staff. The crucial step is picking the correct buddy. When selecting a buddy for the new starter, choose an employee who is friendly and patient, with a good record of one-to- one training. Training skills seem to improve the induction process, and the buddy can take on training in job skills as well as a social role.
The perfect buddy would have been with the organisation one to two years in a similar job as the new starter. This time span is long enough to have a good understanding of the systems and politics of the organisation, but not so long that the buddy has forgotten being new. The buddy should have a friendly and welcoming behaviour and good communication skills. The buddy is just that: a friend, rather than a supervisor, who understands and has solved the difficulties of being someone who is new to a team or someone who needs some assistance with developing skills and/or knowledge to work as an effective member of a team.
Mentors
The buddy system provides a flexible and effective system for new employees. Mentors provide a similar service for existing employees and play their part in succession and career planning, both before and after promotion. Mentors play a part in grooming employees for promotion, and then in introducing them to new systems and people after promotion.
A mentor is defined as 'an experienced and trusted adviser or guide; a teacher, a tutor' (The New Shorter Oxford English Dictionary, 1993). Mentors perform
a valuable service, selecting employees with potential and delegating tasks and duties to train them for greater levels of responsibility.
If a mentoring program is properly conducted and uses guidelines similar to selection and succession planning, it can be a useful training tool. Mentors should be selected for the knowledge and skills they can train others in, and their charges should be selected from likely promotion candidates. Mentoring allows those who are managing resources to promote best practice in resource management. Other team members, the team leader
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or higher level managers who can pass on valuable information, knowledge and skills may mentor people.
Coaches
All individuals need to undertake training from time-to-time to ensure they are up-to-date with new processes, practices and procedures. Training may occur off the job but more usually training occurs on the job. The training may take the form of individual and/or group coaching. A team leader or a higher level manager could equally undertake the coaching. The person who provides the coaching support will be technically up-todate and have the skills to impart information/knowledge and help to other people that will allow them to develop new skills. The coach will concentrate on certain skills and
assist those they are coaching to learn new skills and procedures or to acquire new knowledge.
Supervisors
Where an individual does not meet workplace requirements the supervisor of that individual is obliged to give more time to that person. It may be that more time is required to ensure a person meets the standards required by an organisation. Supervisors are responsible for their staff. Where a staff member may not be performing at the required level there may be a waste of resources or the possibility of injury to another staff member or to a member of the public. A supervisor has a responsibility to ensure that each staff member is operating at optimal capacity.
Whether you are using a buddy system, mentoring or coaching, or off-thejob training, development can be seen in two specific categories:
General development
This may include areas such as organisational knowledge, general information in regard to current requirements and information concerning possible future industry or organisational changes.
General development activities should be available to all new employees and to existing employees where there might be updates in organisational responsibilities. Provision of such training could be through industry organisations. It could take the form of a general staff development activity that the assessed person attends.
Specific development
This may relate to specific aspects of the job carried out. It would involve specific requirements that would enhance performance.
Specific development activities could be offered on the job or off the job depending on the nature of what is to be learned. Safe working practices within the organisation and approved working practice are examples of one form of specific training.
For staff members to perform at their best and to maximise their contribution to an organisation they may need to be empowered. Though this is a much over-used word 'empowerment' occurs when staff are allowed to take responsibility for what they do. Some writers have referred to empowerment as being the process of allowing people to feel that they own their jobs, or are allowed to behave as though they owned the business.
Empowerment recognises that the person at the coalface is the one best able to judge what will satisfy the needs and expectations of customers.
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This is particularly the case where counter staff have to deal with difficult customers and difficult situations.
For example, an airline ground and cabin crew should be free to offer customers some compensation for the inconvenience caused by unforeseen delays. A car rental clerk should feel able to upgrade the car given to a customer, to replace one that has broken down through no fault of the customer. This may make the customer feel compensated for the inconvenience they have suffered. The extent of empowerment should be known by all parties, and determined by the skills and knowledge and the positioning of the organisation in the business.
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3.5 Negotiate recommendations for variations to operational plans and gain approval from designated persons/ groups.
Changing interlocking plans
The chief executive officer (CEO) and senior management are involved with planning where the organisation will be in five to 10 years' time. They make strategic, long- term plans. These strategic plans relate to the overall operation of the company. An example of a strategy would be to improve the quality of the products and services so that they are better than those of the competition.
Once the strategic plans have been established, individual departments or work units set their own operational plans and the action plans to achieve them. Department objectives are necessarily more specific and short term, usually
for one year or less, and include targets and measures so that performance towards achieving goals can be measured.
Goals for individuals within a department are much more specific and can be set on a monthly, weekly or daily basis. Every employee should have clear, specific goals and action plans for achieving individual and work unit goals.
However, it may be necessary to change the direction of the organisation. At a strategic level there may be changes in the products and services to be delivered by the organisation. The market may change or the management and/or owners of an organisation may shift the direction of an organisation. Some of the reasons an organisation might change direction include:
• changes to customer requirements
• changes on the international scene with a new process being developed for producing and/or delivering products or services which might render existing products and services obsolete
• new legislation that necessitates a different approach to producing products and services and/or abandoning the provision of existing products and services, which may now be illegal and/or uneconomical
• changes in currency values which may result in a process being more or less cost-effective in the international market
• community pressure to change the way an organisation conducts its business.
As the strategic direction of an organisation changes so also do the operational plans of an organisation. Each operational plan should reflect and contribute to the strategic imperatives of an organisation.
Ensuring that new plans are in line with organisational requirements
If an organisation is to change direction, the plans of operating units need to reflect those changes. The objectives at the top of an organisation should impact on the objectives of work groups further down the organisation. The concept of management by objectives is a practice built on each plan at every level feeding into and contributing to the meeting of plans at a higher level.
If plans are to change at the operational level they need to be in line with organisational requirements. Each new plan needs to be documented and
signed off by the appropriate manager to ensure that the organisation's strategic direction is being followed and organisational goals are going to be achieved.
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Each proposed new plan or variation on an existing plan needs to be agreed with, and approved by, an appropriate manager. A plan at the strategic level of an organisation involves organisation-wide decisions. The owners of an organisation must sign off new or revised strategic plans. Whether it is a small business or a large public company -such as Coles Myer where the owners (the shareholders) elect representatives (the board) to approve changes in direction of an organisation - the strategic level managers are accountable to the organisation's owners.
Changes in tactical level plans need to be signed off by strategic level managers. Changes in operational plans should be signed off the by tactical level managers.
All the way up the line revised plans must contribute to meeting the goals of an organisation. Plans that do not ultimately contribute to an organisation's purpose being fulfilled and the achievement of the goals of an organisation are usually working against an organisation.
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3.6 Develop and implement systems to ensure that procedures and records associated with documenting performance are managed in accordance with organisational requirements.
Identifying appropriate processes, procedures and systems
For there to be effective control on operational plans, records need to be kept. These records will show the effectiveness of systems and processes and will reveal areas of operations where some immediate improvement is needed. To determine the various steps that are required, each organisation can look to the supply chain of the organisation to determine what records need to be kept and what processes and systems need to be in place to ensure the team, section or organisation is operating effectively.
The supply chain of an organisation is the 'pipeline' through which a product travels. It starts with decisions on the appropriate products to be produced to match organisational resources and expertise. It continues with the specification of appropriate raw materials and other inputs to be purchased through to the receipt of the final product by the end users and an assessment of the level of customer satisfaction with the product. The various steps in the supply chain help identify the various aspects of organisational operations that need to be controlled and the various processes, procedures and systems that are impacted by that step in the supply chain.
The supply chain concerns the purchase and use of inputs bought for organisational processes, and actively involves suppliers in ensuring the organisation is supplied with what it requires at the appropriate time. It continues with the selection of transportation such that delivery of inputs will occur at the appropriate time. The processes and systems of the organisation will monitor the delivery of resources and determine appropriate timeframes for that delivery.
The supply chain finishes with the transportation of the finished product to the end user. As well as suppliers and transporters, people who can affect the smooth and effective management of an organisation's supply chain include purchasing and supply staff and distributors of products where product is sold to a distributor rather than a retailer or the final end user. Contractors who act within the requirements of the organisation and any other people such as sales agents, who may be acting on the organisation's behalf, can also have an impact on the success of the supply chain in meeting customers' needs. There will be processes, procedures and systems in place to manage and control the work of contractors to ensure that work meets the organisation's standards.
In looking at the supply chain we can see the link between the organisational system and the environment. Each organisation is a system.
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There are environmental impacts that may occur because of an organisation’s system of converting inputs into outputs
Below is a figure that explains this process Figure
10:
Inputs to an
organisation Processes Positive outputs
Negative
environmental
outputs
• Materials
• Ideas
• People
• Money
• Equipment and possibly some elements of
the
environment
such as: a.
water
b. air
c. land
Business
processes which
turn inputs into
outputs
• Products Services Profits
• Satisfied
customers
• Garbage
• Run-offs into the drainage system
• Pollution into
the air
• Possible
reduction in
available
resources
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Key steps in the organisation's activities
The following are some of the key steps that you might expect to find in the supply chain of most organisations. In each step, a record has been nominated which may need to be kept to monitor performance of that step. Every organisation is different.
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Course Unit: BSBMGT515A – Manage operational plan
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