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DFS

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Sophie Watson

on 1 May 2014

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Transcript of DFS

Business Performance Management
Ross MacDonald, Rachel Thompson, Sophie Watson, Chloe Wallace and Andy Unwin.

Logistics and SCM
Accounting
Marketing
DFS
Aim to reduce pay bill by 10% within the next year
Current Pay Bill
Co- Managing Directors (25% bonus) £300,000
Other Directors (15% bonus) £184,000
Managers £237,500
Supervisors £125,000
Operatives £780,000
Total = £1,626,500
Pension Contribution £162,650

Complete Pay Bill £1,789,150
Proposed New Bill
Reduction in directors bonuses
- (to be based on half individual performance and half operational profits)
Saves £20,000
Co- Managing Directors (20% Bonus) £288,000
Other Directors (10% Bonus) £176,000

Reduction of Manager and Supervisors wage brackets.
(pay will increase with performance reviews)
Saves £25,000
Managers (£30,000-£60,000) Av £40,000 - £225,000
Supervisors (£15000-£30000) Av £22,500 - £112,500

Reduction of Operatives hours
(40 hours to standard of 37.5)
saves £48,750
Operatives £731,250
Total = £1,532,750

Reduction of pension contribution
(now at 5%)
saves £86,012.50

Pension Contribution £76,637.50

Complete Pay Bill = £1,609,387.50

Developing a Performance Management System for DFS
Key points to be considered
Any change can not be too drastic
Motivation and Empowerment of staff
Strategic / Aligned / Integrated workforce
Customers
Performance (KPIs)
CIPD reports stated that 49% of the private sector would prefer their wages to be based on their individual performance
Reward System for DFS
(Fraser, 2007)
Balance Score Card
References
Human Resource Management
Extrinsic Reward Theory's:
Equity Theory
- suggests that reward satisfaction stems from making employee reward outcomes commensurate with individual inputs
Expectancy Theory
- holds that an incentive is likely to motivate higher work effort if employees see the promised reward
Goal Setting Theory
- suggests that employees will be motivated more strongly by performance targets that are specific and challenging and by feedback that is precise.
(Slideshare.net, 2014)
Performance Measures
Directors and Management

Supervisors and Operatives
- KPIs
Organisation efficiency/performance Appraisals
Turnover Training Completion
Appraisals (management) Meeting of objectives e.g. amount of deliveries made
Meeting of objectives Service Feedback

de Silva, S. (2014). AN INTRODUCTION TO PERFORMANCE AND SKILL-BASED PAY SYSTEMS (pp. 5,6). INTERNATIONAL LABOUR ORGANISATION ORGANISATIONS.

Fraser, R. (2007). Developing an effective performance management system (pp. 2,5,6). Coventry: HouseMark.

Heidrich, J. Oivo, M. Jedlitschka, A. (2013). Product Focused Software Process Improvement. Springer: London.

Hofstede, G. (1968) The Game of Budget Control (Royal VanGorcum, Assen).

Hopwood, A. (1974). Accounting and Human Behaviour (Haymarket, London)

Information Highway Group (2004). RFID Technology. Retrieved 22 April 2014, from http://www.ihg.net/java/X@cgi=lateral.rfid.VentajaVsBarras.pattern.html

Investopedia (2014). Logistics. Retrieved 22 April 2014, from http://www.investopedia.com/terms/l/logistics.asp

Mindtools.com,. (2014). Herzberg's Motivators and Hygiene Factors: Learn How to Motivate Your Team. Retrieved 25 April 2014, from http://www.mindtools.com/pages/article/newTMM_74.htm

Mindtools.com,. (2014). Theory X and Theory Y: Understanding Team Member Motivation. Retrieved 25 April 2014, from http://www.mindtools.com/pages/article/newLDR_74.htm

- Rolstadas, A. (1994). Performance Management: A business process benchmarking approach. Chapman & Hall: London.

Slideshare.net,. (2014). Expectancy Theory, Goal Setting and Designing Jobs that Motivate. Retrieved 25 April 2014, from http://www.slideshare.net/mozahadilen/expectacy-goal-setting-job-design-theories

Violino, B. (2005). What is RFID?, RFID Journal, Page 1. Retrieved from http://www.rfidjournal.com/articles/view?1339


Issues or potential problems
Appraisals
Feedback
Organisation climate (Fairness)
Economical climate

Herzberg & McGregor
X&Y Theory
Motivation and Hygiene
(Mindtools.com, 2014)
Relationships between achievement of objectives and rewards.

Directors and Management Supervisors and Operatives
- Mainly long term goals - Mainly short term goals
- objectives met sufficiently (performance bonus evaluated) - High performers receive recognition, responsibilities, gifts.
- Appraisal objectives for management - Appraisals (twice a year, track performance,)
- Extra Holidays - Training Completion (merit sale options)
DFS Reward System
Currently DFS are ordering their goods through Sopco, their sister company. Sopco then processes DFS’s orders to suppliers through its own order-placing system. The upstream
manufacturers however deliver their goods directly to DFS but still issue all invoices to Sopco to charge them for the deliveries. This means that both money and order information flows from DFS to Sopco and then onto various manufacturers. However DFS are having problems promoting improved performance in their supply chain.

There are of course many ways in which DFS could promote improved performance in their supply chain.

Firstly, DFS need to improve information flows in their supply chain. This will allow them to find it easier to predict when their orders will arrive as they are having a big problem with this at the moment.

Secondly, DFS need to improve ordering policies. By doing so DFS will be able to find out accurate delivery dates, effectively plan and be much more organized.

Finally, DFS need to improve their logistics which will help again improve planning, implementation and coordination of the organisation.

Efficiency of Delivery: GPS Trackers – Analyse – Quantitative Measurement – Hard Metric
Brand Image: Portrayed Brand – Questionnaire – Analyse
Brand Awareness: Survey – Analyse – Re think strategy/packaging
Loyalty: – Loyalty Cards – Surveys - Reward
Customer Satisfaction :– Qualitative – Soft Metric – Record Phone calls

Marketing KPI’s for DFS
Evaluation of Budgeting Performance

2 theories of using budgetary information in the evaluation of managerial performance; Hopwood and Hofstede.

DFS is currently leaning towards the Budget Constrained Lifestyle

They should work towards the Profit Conscious Style of evaluation (Hopwood, 1974)

If the target gets harder the performance gets worse (Hofstede, 1968)

Several issues faced by DFS within its budgeting process:

Increasing overhead costs

Keeping the company’s costs under control

DFS budgeting approach; currently Incremental Budgeting – change to ZBB

ZBB must justify each pound they spend

Co-Managing Directors are displeased with the managers
Balance Scorecard
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