Business Simulation - Performance of Sleek Motors Company - Assignment Example

Business simulation: performance review report for Sleek Motors Company [Course coordinator] [Unit] [Due Date] [Student Name] Introduction Sleek Motors Company is a car manufacturing company that was established in 2009. It was established based on increasing demand for vehicles in the transportation industry. It is aimed at gaining a significant market share in the European car market as well as other parts of the world. The company aimed at achieving a 30% market share in a five year period since it was launched. In the third year of its operation, it aim was to attain a $ 22,000,000 in sales. In addition it borrowed a short term loan of $ 159, 000 where by the end of third year since operation, half of this loan would be repayable. The company’s strategic intents that differentiates its market offering include; operational excellence, product leadership, and customer intimacy. This business simulation involves the performance review report of the Sleek Motors Company based on its initial goals set in the business plan. It also provides recommendations for the next five years of the operations of the organisation. Sales, profit and profit margin Since the launching of the company, its sales have increased to a value of $21,010,000 in the third year of its operation. Based on the company goals of attaining $21,000,000 in this year, the company is doing well in regard to profitability since the increase in sales is also reflected in its net profit dollars. For the period of three years, the company has also attained a profit margin of 15% with also a rise in net profit during these years. With good net margin as well as the concurrent increase in net profits, it is also true that majority of other parts of this business will also fall into place. In addition, this will be reflected by increase in return on equity and assets. It is worth also nothing that the cash position of this company will even improve over time. In general, due to good work in profitability area that Sleek Motors Company has achieved, the outcome will be the company’s overall financial health (Anthony, Perrewe & Kacmar 1999) Debts With improvement in net profitability, the company has been able to repay almost a ($ 82,000) half of its short term borrowed debt ($159,000) as per its set goals in the business plan during the launching of the company. Thus, being able to improve its profitability with no borrowing of money is an indication of the company’s efficient use of debts and a competitive advantage (Kleiman 2000) Challenges However, the company is also facing several challenges in its operations. The main challenge is competition where major sources of competition result from branding, pricing and imports. There has been increase in the number of imported vehicles for the last year which has led to the proliferation of cheaper foreign vehicles. This in turn will be reflected in reduction of prices or improvement of the quality of our vehicles in order to overcome this challenge in the following years. This means that the challenges may lead to reduction in sales as well as the net profits in the next years. These challenges will also lead to the following; new product development in order to maintain or increase our market share, research and development and incorporation of more skills in order to ensure efficiency and effectiveness in manufacturing. Another challenge is that the existing skilled employees are approaching retirement thus, the need for more employees with wide range of skills (Mathis & Jackson 2000). Due to advancement in technology as well as fashion, the manufactured vehicles are beginning to have a limited life cycle. Thus, in order to maintain the loyalty of our customers and create longer term growth, we need to have a continuous manufacturing of new models of vehicles. This is because the higher rate at which we will successfully develop new vehicles and bring them into the market, the more we will be distinguished from our competitors. The company has also a challenge of retirement of skilled employees which means that in the next years, we may lack consistency in manufacturing our intended vehicles efficiently and effectively. Thus, based on these challenges, we need to effectively manage our workforce and other resources in order to maintain our competitive advantage as well as profits (Rice 1996). Human resource management From the role of a human resource manager, it was clear that the integration of the company’s goals to the performance management system was not effective. It is worth noting that effective integration of goals into the process of performance management is the best way of maximizing the productivity of this company. Achievement of this will be significant in addressing the majority of challenges previously mentioned. However, the company managed to integrate the safety goals only into the performance management system. For instance, the safety goals were set at the corporate level then cascaded into the teams and individuals. Thus, the environment and health and safety goals were managed successfully. The performance management system lacked proper link between the organisational goals and individual goals. There was also no proficiency in the accountability of the manager for the employee’s attainment of goals. There was a gap created between the managers and employees because they reinforced the performance goals on large scale rather than individual basis. Thus, the managers motivated the teams and individuals while focusing on general achievement of goals but on the other hand, they failed to make the process the easiest possible which is achieved by focusing on individual performance goals (Werther & Davis 1993). Another major challenge in the performance management process was relying on manual processes, for instance data capture by manual appraisal forms or spreadsheet which took a lot of effort and time to ensure easy organisation, accuracy and access for those who may require it. If it was easier for relevant data to be accessed, recorded and restored, the managers would be more engaged to the process of performance management. This would lead to more time between the supervisor and employees during the operations on the shop floor, thus providing more real time feedback which is very critical in both performance and engagement. This does not apply in this company as more time in used in filling out manual forms (Cawley, Keeping & Levy 1998). Development and engagement is still a major problem that might affect the future of this company. Though the company is currently performing well, there may be problems in future due to lack of adequate skills. This is because the employees with wide range of skills are retiring as the workforce ages, but there is no development of more skills to replace the retirees. This firm requires a range of skills that is sufficient to fulfil the demands of the customers and develop new products in consistence with the advancement in technology. In order to address this, immediate reaction was required in order to measure the performance of the employees based on development in order to perform in future at higher levels rather than the current performance only. This led to creation of a framework for competency which acted as a link between development and performance. Translation of data on performance into competency profile such as cognitive ability, behaviours and skills allowed the company to make decision especially on the basis of succession and development. Management of competency became the initial step in ensuring that employees with wide range of skills will be left in case of retirement. This serves as a better way of maintaining the competitive advantage of this company (Tripathi 1991). Recommendations Although the company is currently at a better condition, it may be facing a set of challenges in the near future. It needs to works towards driving revenue growth, streamlining operations to improve manufacturing operations and to improve compliance. Performance management is the best way to tackle these challenges and there are a number of areas that the company requires to catch up in the next five years. 1. Integrating the goals of employees with the company goals This will be achieved through employee engagement. This involves active participation of the employee in aligning individual goals, priorities and desires organisational needs in order to deliver the required results. The most powerful and effective way of employee engagement in this company is ensuring that each employee have very clear individual goals, knows the organisational goals and the employee’s impact on these goals. They will also be offered an opportunity of being recognised for achievement of these goals. This will maintain the top performers in the company and also lead to more innovative skills for development of new and competitive vehicles (Agunis & Pierce 2008). The integration of goal and improvement in performance may also be achieved by call each employee to identify and set two areas that he or she wants to improve on, and set a specific time-period they will require to achieve the set objectives. This will be followed by frequent evaluation on progress of the employee by the manager and determination of the actions for success through meetings that discuss the feedback. Five years after this initiative’s adoption, the revenue of the company will have improved by a significant amount (Cawley, Keeping & Levy 1998). 2. Automation of manual processes Use of manual forms for data capture has been identified as a main challenge due to consumption of time that would be important between the manager and employee for feedback. In addition, given that this is a modern and a rapidly developing company; manual processes will lead to inaccuracies as well as inconsistent and ineffective products. Thus, automated process will lead to more time for frequent discussions on feedback, easy capture of KPI metrics. This will make the performance management system a major part of how the company business is done and to be adhered to by all stakeholders. Thus, ease of use, reporting capability, and the ability of the system to accommodate specific competencies will be very crucial factors of effective evaluation of the performance management system of an employee. This is reflected by improvement in productivity as well as an increase in profitability (Ivancevich 1998). 3. Drive engagement and development through performance The success of the company will be based on linking performance, engagement and development, a factor that lacks in this company’s performance management system. With a robust strategy of performance management it will be easier to identify the gaps. On the other hand, goals will put into consideration the development activities in order to close gaps. The ability to identify and set individual’s meaningful goals that reinforce individual’s contribution to the company is based on the improvement of engagement. In addition this will led to improvement of a wide range of skills, building commitment to the company, retention of skilled individuals and top performers and preparation to contribute to company’s next level of advancement. Thus, linking performance, engagement and development increases the competitive advantage of the company (Aguinis & Kraiger 2009). Conclusion Based on the sales, profit and profit margin Sleek Motors Company is currently performing well due to increase in sales, profit and profit margin as compared with previous years. In addition, the company is able to repay its short term loan according to the set goals. Thus, the company is generally performing well. However, there are several future challenges that result from an ineffective performance management system. These challenges include; failure to align individual performance goals with the company goals, use of manual processes which affects the discussion between the employee and manger in regard to the feedback. Inaccuracies due to manual process are a major drawback to the success of such a company that requires accuracy to gain a competitive advantage. All these factors affect the performance management system which is the key to the success of the company. Thus, although it is currently not affecting the success of the company, it is expected to cause a significant impact on the following years if not corrected. The problems associated with these include; decrease in sales, market share, profit and loss of the business to competitors. Thus, it is recommended that these challenges are addressed in order to close the gaps existing in the integration of the company goals with individual performance goals, to link performance, engagement and development. References Aguinis, H & Kraiger, K 2009, Benefits of training and development for individuals and teams, organisations, and society, Annual Review of Psychology, 60, 451-474. Agunis, H & Pierce, CA 2008, Enhancing the relevance of organisational behaviour by embracing performance management research, Journal of Organisational Behaviour, 29, 139-145. Anthony, WP, Perrewe, PL & Kacmar, KM 1999, Human Resource Management: A Strategic Approach, 3 ed, Fort Worth: Brace College Publishers. Cawley, BD, Keeping, LM, & Levy, PE 1998, Participation in the performance appraisal process and employee reactions: A metal analytic review of field investigations, Journal of Applied Psychology, 83, 615-633 Ivancevich, JM 1998, Human Resource Management, Boston: Irwin MaGraw-Hill. Kleiman, LS 2000, Human Resource Management: A Managerial Tool for Competitive Advantage, Cincinnati: SouthWestern College Publishing Mathis, RL & Jackson, JH 2000, Human Resources Management, 9th ed, cincinnati, Ohio: South-Western College Publishing Rice B 1996, Performance Review: The Job Nobody Likes, In Ferris, GR and Buckley, M.R. (eds.), Human Resources Management, 3 ed, New Jersey: Prentice-Hall. Tripathi P C 1991. Personnel Management & Industrial Relations, Sultan Chand and Sons, New Delhi Werther, BW, & Davis, K 1993, Human Resources and Personnel Management, 4ed, New York: McGraw- Hill Book Company. Appendix 1: Sleek Motors income statement data Appendix 2: Sleek Motors balance sheet Read More