TOPIC: MANAGE BUSINESS OPERATIONAL PLANS

This unit Manage Business Operational Plan covers the skills and knowledge required to
develop and monitor the implementation of a business operational plan. Success in doing
so would help foster efficient and effective workplace practices resulting from properly
managed operational plans.
This unit applies to those who manage the work of others and operate within the
parameters of a broader strategic and/or business plan.
This Learner Resource is broken up into three elements. These include:
1. Establish operational plan

2. Manage resource acquisition

3. Monitor and review operational performance

At the end of this training, you will be asked to complete an assessment pack for this unit
of competency. You will need to access a supervisor, a manager, or your assessor who
can observe you perform project or workplace tasks and verify your competency or
performance.
On competent completion of the assessment, you must have demonstrated skills and
knowledge required to manage business operational plans.
The key to a successfully executed task is a properly established plan. Thus, the first
element in managing your business operational plan is establishing this plan. Doing so
would involve multiple steps as well as various people. Moreover, the development of
your plan requires the consideration of several factors to ensure that your plan is as well-
made as it can be.
This chapter delves into the details of this process, further dividing it into four sub-
chapters that serve as the steps of this stage. First, you must research, analyse and
document your resource requirements. After this, you will develop your operational plan.
This will be done by consulting with and seeking approval from your relevant
stakeholders.
Once you have accomplished these tasks, you will then develop contingencies for your
operational plan. Finally, you will need to explain the plan you develop to the relevant
work teams.
1.1 Research, Analyse and Document Resource Requirements
An Operational Plan (OP) is a detailed plan that provides a clear picture of how a team
would contribute to the achievement of the organisation’s strategic goals. Before you look
into the process of establishing this plan, you must first look into the different resource
requirements involved in its creation and differentiate it from other types of plans.
1.1.1 Business Planning
Business planning attempts to bring a new idea to fruition within an organisation. Such a
plan needs to be divided up into sections which would allow the business managers to
understand what you are trying to accomplish and the direction that you will take to get
there. You will find an example on the simulated business Bounce Fitness website under
the Documents tab.
Two plans involved in business planning are the strategic plan and the operational plan. A
strategic plan is responsible for setting the direction of an organisation. Through this plan,
goals and objectives are devised, and the strategies in achieving these are identified.
Likewise, this plan takes into account the goals and priorities of the stakeholders. By its
very nature, this plan does not cover the day-to-day tasks and activities involved in
running the organisation but merely serves as a general guide for management.
The objectives presented in the strategic plan – strategic objectives – are essentially the
long- term organisational goals which help transform the organisation's mission statement
from a broad vision to specific and feasible plans and projects. Strategic objectives set
benchmarks for success. They are designed to be measurable and realistic manifestations
of the organisation's mission statement. Usually, strategic objectives are developed as part
of an organisation's two- to four-year plan. These objectives also guide management in
decision-making.
On the other hand, an operational plan presents highly detailed information that directs
employees in performing the day-to-day tasks and activities necessary in running the
organisation. It presents information that both the management and staff can and should
frequently refer to as they carry out their daily work. There are four key pieces of
information that can be found in your operational plan. These are:

What Who
The strategies and/or tasks The people responsible for each
that must be undertaken strategy and/or task

When How much

The timelines during which the The financial resources to be
strategies and/or tasks must be allocated for the completion of
completed each strategy and/or task

Like strategic objectives, operational objectives set benchmarks for success. However,
operational objects do so on a daily, weekly, or monthly basis. Operational objectives,
which are also referred to as tactical objectives, are specifically designed to break
down a strategic goal into workable tasks that organisational members can perform.
For instance, a strategic goal of a 30 per cent increase in revenue would require the
completion of several operational objectives, such as the development and execution
of an effective advertising strategy.
Just like strategic objectives, operational objectives must be specific, measurable,
attainable, relevant and time bound. The most significant difference between the two
lies in the timeframe. While operational objectives are short-term goals that have a
narrow focus, strategic objectives are long-term goals and are too broad to be used for
daily operations. Despite this key difference, however, they are closely related and
must be jointly used.
An organisation is unlikely to achieve a strategic objective if it fails to translate it into
workable operational objectives effectively. Likewise, operational objectives will not
be cohesive if they are not aligned with the strategic objectives. In other words,
strategic objectives only become functional when they are translated into operational
objectives, and operational objectives only become effective when they are designed
to serve a strategic objective.

1.1.1 Operational Plan Models and Methods

Your operation plan concerns the specific procedures and processes that happen from
the lowest level of the organisation. Given their detailed nature and broad usage, it is
important to note the different operational plan models you can employ.
 Single-use Plans
As suggested by their name, these plans are intended to be used only once.
Single-use plans involve activities that won't be repeated and have an
expiration date.
Some examples of single-use plans include:
o Creating a monthly budget
o Developing an advertisement to boost product sales for the quarter
 Ongoing Plans
Plans that are designed for long-term use and built to withstand the test of time
are called ongoing plans. Unlike single-use plans, these plans are intended to
be used repeatedly. As such, ongoing plans are not fixed and would undergo
changes when necessary.
Some examples of ongoing plans include:
o Outlining an employee's annual performance goals
o Setting your department’s annual sales goals
Likewise, there are key methods that you must remember to employ in the creation of
your operational plan. These include:
 Project Evaluation Review Technique (PERT)
This method involves the use of charts and tools to visually represent the
projected timeline of a project. PERT analyses the overall timeframe of a
 given project and goes into all its elements, identifying the time it would take
to complete specific tasks. The main advantage of employing this method is
that it allows for variations in planning.
 Critical Path Method (CPM)
This method considers the most crucial tasks in a given project that need to be
performed for the project to be considered successful. It specifically considers
the order in which tasks must be done and uses this information to determine
the duration of the project. It focuses on the longest sequence of tasks in a
given project – your critical path. This method enables you to plan sufficiently
for the projected duration of your project and consider what you ought to do
should there be delays.

1.1.2 Resource Requirements

There are three types of resources that should be considered when establishing an
operational plan – human resources, physical resources, and services.
 Physical Resources
Physical resources are any resource that you can buy, feel and touch. To
account for these, make a list of everything that you need and try to make a list
of the costs of each. This can allow you to account for how much the
production processes are likely to cost. The major types of resources, along
with their associated costs, are as follows:
Major Types of Physical Resources

Res Description
our
ce
Rent; rates; service costs (heating, lighting, cleaning,
Premises
security) and structural alterations

Costs of purchase, hire or lease; insurance, running

Equipme
costs (service, repair)
nt
Costs of purchase, hire or lease; insurance, road tax;
Vehicles
running costs (service, repair)

Costs of purchase, cost of storage (any special

Raw
requirements for refrigeration or hazardous substances)
Materials
 Human Resources
Aside from the physical resources, you must also account for the cost of the
people that exist within the organisation. You will be spending money on
 wages, salaries and other forms of remuneration – this may, in fact, be a huge
part of your budgetary expenses. Even acquiring new employees can be a
significant expense; you need to account for the costs of recruiting such as:
o Advertising in newspapers and other media
o The time and organisation associated with recruitment
o The cost of running interviews and associated testing
o Insurance
Each of these costs may be significant when you are introducing new
processes, which may require new staff, into a business. Try to be as accurate
as you can with any costing that you make. Look back on previous processes
of recruitment and selection and attempt to determine how much they cost
you.
 Services
Along with physical and human resources, services are the third type of
resource requirement you must account for. This type of resources may be
overlooked because most organisations source all their services internally (i.e.
through in-house staff). However, outsourcing, which is the process of
entrusting certain functions and processes to individuals from outside the
company, is also a common practice that has proven to be effective and
efficient. Some of the most commonly outsourced services include:
o Customer service and phone support
o Bookkeeping and accounting
o Tax filing and preparation
o Payroll processing
o Social media management
o Creative work (e.g. content writing, digital marketing campaigns)
o Computer programming, web design and optimisation
o Research and development
o Event management
o Human resources, hiring, training
o Engineering (e.g. architectural, electrical, structural or mechanical)
o Manufacturing and production
o Legal services
o Healthcare services
o Cleaning services
 o Security
Your organisation may not require all these services listed above. However,
these must be considered in your operational plan as necessary.

1.1.3 Other Considerations in Creating an Operational Plan

Along with your resource requirements, there are several other considerations you
must make in creating your operational plan. Keeping these in mind will ensure the
feasibility of your OP.

Capital
Now that you have an indication of the resources that you may need to make your
plan a reality, it is time to determine exactly how much money you will need and how
you might fund it. Financing the plan can be accomplished in several ways, so you
need to look at the types of costs that make up your budget.
First, consider your fixed costs. This is the cost of actually acquiring the new
equipment that you will need to make the plan happen. What land, buildings and
machinery might you need? Then you need to consider those variable costs that allow
you to actually put the plan into action on an ongoing basis. This might include
wages, power, rent, telephone and any other working expense. These need to be
covered by your initial financing until such a time that the organisation begins to pay
its own way.
Your budget should be broken down into monthly or quarterly periods, which allow
you to step back and look at how different times of the year may affect your expenses.
Winter, for example, may require extra power for heating in the factory or shop.
Training expenses are likely to be greatest during the first month or two, and after
that, will reduce significantly.
Forecast the amount of money you expect to bring in monthly and compare this to
your expenses. If you are not expecting to make a profit, this is capital that will need
to be funded in some way to get the operation off the ground.
When you are preparing a new plan, you may want to paint as rosy a picture as you
possibly can. You want people to say, ‘that looks great, let’s do it!’ However, from a
business planning point of view, this can be a recipe for disaster. If you overpromise
and underdeliver, you are going to be left wanting or needing more resources to
actually get the plan back on track.
This means that it is better to be realistic about where you expect costs to be rather
than promise too much and find yourself short of essential resources during the
crucial initial months. Use your resources wisely and ensure that you have enough, so
you do not find yourself seeking more.
Budget
A budget is a statement that represents estimated income and expenditure during a
specific time period in the future. In an organisation, budgets are used to forecast the
revenues and expenses based on set business goals. Given that such goals may
change, budgets are usually compiled and re-evaluated periodically, and they undergo
adjustments as necessary.
Essentially, the budget serves as management’s quantitative expression of
organisational plans for an upcoming time period. You will find that different levels
of the organisation are involved in preparing budgets. However, it is the master
budget that serves as the overall financial plan for a specific time period. Within the
master budget, there are two budgets necessary in operational planning. These are:
 Operating budget – the planned sales and operating sales of an organisation
 Financial budget – financing plans (e.g. borrowing, leasing, cash management)
If properly formulated, your budget can serve as a planning and control system of
your organisation. This is because the budget documents both the goals and
performance objectives of your organisation in financial terms. Through the
implementation of your budget, your plans would then be utilised and monitored
accordingly. For instance, the implementation of your annual budget would set your
yearly plans and goals. To determine your relative success in achieving your set goals,
your monthly reports would compare the budgeted results with the actual results you
have come up with.
Budgeting is concerned with two major functions of management, namely planning
and controlling. Your budget is a document that formalises your plan. However, as
seen above, its use does not end once it has been formulated. Your budget is
implemented periodically and is an effective means of controlling operations.
Relating to the example in the previous paragraph, if a monthly report finds that the
actual results during a month are not at par with budgeted results, management is
likely to further investigate the situation and take the corrective actions necessary in
controlling operations.

Timeframes
In developing an operational plan, two timeframes must be considered – current and
projected (i.e. what will be needed in the future for a given period).
When you are writing an operational plan, it is important to consider several factors
regarding your business. You might look at financial performance, market
environment, inventory, the product mix that you are offering, and more. The
products and services being offered are of particular importance to most plans.
Businesses exist to sell products or services, so it is critical that you outline the way
that an operational plan will impact how products or services are offered. A plan may
involve new products being introduced, old products being discontinued or even the
mix of products on offer being altered. If any of these are present in your plan, you
need to examine the impact that they will have on the plan’s introduction.
 You also need to convey information on each major issue that you foresee within the
plan. The users of your plan want to know that you have carefully considered the
implications of the plan and how they may impact on how the market perceives your
products and services. It is, therefore, extremely important that you can demonstrate
that you have considered these. Think about things such as personnel needs,
resourcing requirements, changes to machinery, the need to employ contractors, and
more. The more that you can detail to your end-user about the performance of your
organisation and the way that the plan will impact on this performance, the more
favourable the plan as a whole will seem.

1.2 Develop Operational Plan in Consultation with, and with Approval from,
Relevant Stakeholders
Every organisation exists to create value for its stakeholders. To effectively determine
what value is necessary, an organisation’s management must understand the needs, wants,
and expectations of their stakeholders. Consultation is a process that enables management
to effectively do this. In the process of developing your plan, it is therefore important to
have a fundamental grasp of not only the content of your plan but also the process of
consulting with your stakeholders in developing these.

1.2.1 Drafting the Operational Plan

An operational plan should exist for the same length of time as the strategic plan but
should be reviewed regularly to make sure progress is being made towards achieving
the objectives. If necessary, priorities can be revised.
The actual design and order of your plan may vary significantly from this, depending
on the actual work that needs to be undertaken. In fact, in some organisations, they
can be called ‘action plans,’ ‘annual plans,’ ‘management plans,’ or, as mentioned
previously, ‘tactical plans.’
Additionally, your organisation may have a format of its own that they require you to
use. If this is the case, you must comply. The business world can be a tremendously
complex environment. When you consider that this environment is further
complicated by continuous legislative change, the challenges of constructing,
implementing and appropriately managing a plan over time cannot be understated.
Seeking the advice of specialists can provide the knowledge and expertise that will
assist you on the path to achievement.
Most organisations require that approval is gained before plans can be implemented.
This approval may come from management teams, the board of directors or council.
Organisations would also need to report to external authorities such as various
regulatory or government agencies; for example, such as the Australian Taxation
Office.
 Parts of an Operational Plan
Usually, a standard operational plan would include:

Strategies

• How will the objectives in the strategic plan be achieved?

Actions

• What are the key actions that need to be undertaken (in detail) to achieve each
strategy?
• These should be prioritised to give an indication of which actions need to be
completed at which stage of the plan.
O Timeframes
• What are the due dates for each action?

Resources

• What are the financial, material and human resource implications for the
organisation?

O Responsibility

• Who is responsible for completing the actions?

O Performance indicators

• How will you know if you have successfully completed each action?

O Risk management

• Whatis the possibility that elements of the plan will be unsuccessful? How can
you manage this?
O Communication plan
• How will the plan be communicated to ensure maximum benefit?
O Review of plan

• How do you ensure that the plan remains current and will be monitored for
progress?
Key Performance Indicators

Key performance indicators (KPIs) are an important element in your operational plan.
KPIs are tools that are used to provide a quantitative measure of performance against
predefined targets. They represent the critical factors that must be met for a project to
be considered successful. The actual measures that you use may vary significantly
from organisation to organisation, but there are some key measures which are
commonly used, such as:
 Achievement of a certain level of sales
 Achievement of a certain level of customer satisfaction
 Achievement of a specific rate of return
Your KPIs need to be an accurate reflection of your organisation’s mission and vision.
Without this alignment, you may find that you are unable to conclusively show that
your plan is actually working in the interests of the organisation as a whole. In terms
of timeframe, KPIs are not one- shot or short-term; they are generally medium to long
term in nature. They need to align with organisational goals, be measurable and
consistent, and have an element of being time-based. Let’s look at each of these
statements in a little more detail:
 Align with Organisational Goals
Think about the overall organisational goals carefully. If your organisation has
an overall goal of becoming a socially equitable organisation, you may have
measures that examine charitable contributions reaching 5% of profit or
environmental performance measures. An organisation whose principal focus
is on being highly profitable will need measures of after-tax profit and
shareholder equity. A non-profit will have different goals and indicators than a
for-profit organisation. The KPIs must be relevant to the work the organisation
is undertaking.
 Are Measurable
The value in any KPI is its ability to show you where you are working well
and where problems exist. This can only be done by ensuring that each
measure selected is quantifiable and can actually be measured in some way.
Saying that you want to be the most popular organisation in Australia is a lofty
goal, but one which is not able to be easily quantified. Adding an actual
measure such as ‘To have 95% of people in Australia recognise our logo’ is a
goal that can be measured through survey methods.
 Are Consistent
KPIs must also be consistent. You cannot change the way you define profit
from ‘before- tax profit’ to ‘after-tax profit’ on a whim as this will make a
huge difference when it comes to comparing your results from year to year.
KPIs should change as little as possible from one period to the next. Any
change should be minor; if you are continually moving the bar, the
organisation will have difficulty in actually reaching it, as all the plans behind
the KPI will have to change to meet the new goals.
 Are Time-Based
 Your KPIs must integrate the significant timeframes into their formation.
These would include the long-term ones which concern overall goals and the
short-term ones which are more project-based. There is no point in coming up
with KPIs if these are not bound by time. If you do not have set deadlines for
meeting your targets, you cannot effectively measure them. Therefore, you
must give great consideration to time and factor it in as you write your KPIs.

Aside from setting KPIs that are SMART, you may also like to note alternative
approaches for writing effective KPIs. These include:

CLEAR FAST
Your KPIs should be: Your KPIs should be:

• Collaborative – encourage • Frequently discussed – should

cooperation and teamwork stay relevant and not stagnant
• Limited - specific and achievable • Ambitious – difficult but not
within a set timeframe impossible to achieve,
• Emotional - aligned with passions encourages you to aim high
• Specific – detailed, concisely
• Appreciable – can be broken
written
down and allocated
• Transparent – visible to and
• Refinable – open to modifcation
openly shared with others
as necessary

After having developed an effective set of KPIs for your organisation – ones that align
with organisational goals and are measurable, consistent and time-based – you can
begin the process of measuring and evaluating your overall performance. The KPIs
give both the employees and management within your organisation clear guidance
regarding where you are headed and what you ought to do to be successful. They
should be displayed prominently so that all staff are kept abreast of what they need to
do to achieve the organisational objectives. This allows you to ensure that everything
your team does is focused on meeting or exceeding those KPIs.

1.2.2 Recruitment and Induction Strategies

Two processes central to human resource management, recruitment and induction,
ought to be outlined in your operational plan. It is vital that your plan has set
guidelines on how you intend to recruit and induct employees, and you use these to
check if your current processes are indeed at par with the standards you have set.
Employee Recruitment
Much has changed in terms of the methods of recruiting and hiring employees.
Likewise, the strategies you must employ to ensure that you hire the best and most fit
people have evolved. Of these, here are a number that you ought to consider:
 Your employer brand
One of the most fundamental methods of ensuring that you attract excellent
applicants is ensuring that you have a compelling and attractive brand. Before
you even begin to recruit new employees, ensure that you know what your
company stands for and what makes it stand out. Highlight and bank on these.
Among all the recruitment strategies, this is the most difficult and expensive
one. It costs a great deal of money to improve and maintain excellent company
branding. However, there is a great return on investment for this.
 Insights and data
The technological advancements of today have empowered people to be more
data- driven, and this is something you can use to your advantage during your
recruitment process. Use application tracking systems to track metrics such as
application completion rate, candidate response rate, qualified candidate rate,
cost and time per hire to understand and analyse your potential candidates.
Moreover, focus on the insights you find and use these to improve your
processes.
 Innovation
In relation to the last strategy, it is important to be open to innovation in all
aspects, including recruitment. For instance, some organisations have replaced
the commonplace full recruitment process with simplified versions by
skipping the CVs and proceeding with tests. This skill-based approach saves
time and resources while still remaining relevant and at par with set policies
and regulations.
 Job postings
There are many ways to strategically improve your job postings. For one,
ensure that you are maximising your available platforms. Look into niche job
boards where you can more specifically target the kind of candidates you want
to attract. You should also ensure that the postings themselves are well-
written, concise, and compelling. Make it easy to read, in line with your brand,
and interesting for your potential candidates. Provide just the right amount of
information to pique their interest without overburdening them.
 Passive candidates
Passive candidates are those people who may not be presently seeking jobs but
have the skills and experiences that you seek. Instead of keeping them at bay,
make it a point to engage with them. They may not apply for your company
right now, but they may eventually reach out to you and seek work. Likewise,
you may never know if they would want to leave their current jobs for your
company and are just looking for the right opportunity to do so.
 Employee referral
Seeking new employees through your present employees may prove to be an
effective recruitment strategy. This banks on the fact that your employees
themselves are living, breathing brand ambassadors who know and understand
your company from the inside out. Moreover, your employees would know
their peers well enough to acknowledge if they would be a good fit for your
company. Setting up an employee referral policy that includes bonuses for
your employees may be a great way to encourage your employees to make
referrals.
 Interviews
Interviews are a central aspect of your recruitment process that must
constantly be improved. Too often, candidates who liked both the role and
organisation that they applied for would not continue with their application if
they did not particularly enjoy their interview experience. To avoid this, train
your interviewers to speak with confidence and engage potential applicants.
Likewise, ensure that the questions involved in your interview are all
meaningful and avoid cookie-cutter ones.
 Past applicants and employees
Reaching out to past applicants and employees may be a strategy not often
considered. However, there may be times when your most ideal candidate
failed to make the cut for circumstances that neither of you could’ve
controlled. Instead of closing your doors completely, open yourself up to the
idea of reaching out to past applicants who fit the criteria but simply didn’t
make the cut before or had other reasons for declining an offer in your
company as well as past employees who left the company in good terms and
has likely enhanced their professional experience since they left. Among your
potential applicants, these are most likely to pass your standards. Moreover,
their background with your company will enable easier hiring and induction.
1.2.3 Determining Your Relevant Stakeholders
In the process of consulting with your stakeholders, you must first determine
who you must reach out to. Consultation should include all relevant personnel,
namely:
Colleagues
Specialist resource managers
Employees at the same level
More senior managers and other managers
Work health and safety committee/s
Other people with specialist responsibilities
Supervisors
Union or employee representatives
Among these stakeholders, the first two merit further discussion. Your
colleagues consist of your workmates. Of all the people listed above, these are
likely to be most relevant to you because they will be the ones who would be
most affected by your operational plan. The plan you develop would likely
affect their daily work life. On the other hand, specialist resource managers are
trained specialists with knowledge and expertise in seeking resources. They
will be the ones you reach out to as you acquire resource requirements for
your operational plan.
1.2.4 Determining Communication Channels
Consultation is an active process in which management engages with its
stakeholders through various communication channels. These channels
include:
Focus groups – selected stakeholders would be invited to attend a meeting or
a series of meetings to discuss relevant matters.
Invitation to send a written response – stakeholders would be invited to
submit their comments and suggestions in writing.
Informal meetings – during social gatherings, management would mingle
with stakeholders and seek out their insights.
Open meetings – stakeholders would be invited to attend an open meeting
(i.e. a meeting that is open to all) to discuss relevant matters.
 Surveys – stakeholders would be asked to complete a survey (i.e. in
writing or online).
Email/intranet communications, newsletters, or other processes and devices
that would provide employees with the opportunity to contribute to both team
and individual operational plans
Mechanisms that could be used to give feedback to the work team in relation
to outcomes of the consultation
Interviews, brainstorming sessions
1.2.5 Escalation Points
In any undertaking, there will always be problems and issues that would arise.
When these occur in the process of developing your operational plan, the
necessity for escalation may emerge. By definition, escalation is the process of
bringing up an issue to a higher authority. It is a proactive risk communication
technique that seeks quick resolution by reaching out to the necessary persons
atop the hierarchy.
For the most part, escalation is perceived negatively, and this is mostly
because of the potential backlash it can have on the person who escalates an
issue. However, it may be necessary, especially when an issue is taking too
long to be resolved and the delay this causes ends up affecting other activities
in the project. Some scenarios when it is most necessary to escalate an issue
include:
Unclear decision-making
At times, the decision-making process may not be clear. This would especially
be apparent when there is an overlap in the decisions that need to be made.
During these moments, it is best to escalate your concern to your supervisors
or higher-ups.
Unbreakable silos
The silo mentality refers to the unwillingness to cooperate with other teams
outside one's own. This can be a barrier to achieving results when you need to
collaborate with people outside your team, but they refuse to. When this
happens, it is best to reach out to these people's direct supervisor or line
management.
Uncontrollable changes
There would be times when a stakeholder would demand changes that are too
difficult or too many to handle. When this happens, you may be not only
overwhelmed but also unable to keep up, realistically speaking. As such, it is
best to escalate this concern to your bosses so they themselves can speak to
your stakeholders.
 Unrealistic expectations
Similar to the situation above, sometimes your stakeholders may be expecting
more than you can ever hope to deliver. If you are unable to manage their
expectations yourself, it may be time to escalate this problem to your bosses so
they can do so themselves.
Unmanageable politics
Politics is inevitable in every project and organisation. When you are
fortunate, this won't impact you negatively and would work to your advantage.
However, at times, the power play may directly impede the progress of your
project. Escalating this kind of issue may be tricky because you might end up
surrounded by people who are on the same side. In such situations, you must
tread carefully. Reach out to your supervisor and ensure that in your
escalation, you present and stick to the facts.
1.2.6 Presenting Your Plan
To enable your stakeholders to understand key issues and how these should
impact on the organisation, a presentation of your plan is necessary. This
provides an opportunity for feedback and adjustments before final submission.
During your presentation, verbal agreement or ‘agreement in principle’ can
often be reached; this would then be subject to adjustments. It is important to
remember that both style and substance are important in gaining approval. As
such, the way in which you present your plan may greatly affect its likelihood
to be approved.
Operational plans must be formally signed off by people with the delegated
authority. Signed copies should then be kept on file as formal records and be
provided to the parties responsible for implementing the plan.
1.3 Develop Contingencies for Operational Plan
No matter how foolproof you think your plan is, there will always be
circumstances you cannot completely avoid or prepare for. To address these, it
is important to develop contingency plans.
Planning is all about looking at what you want to happen and making sure that
it does. No matter how well you make your plan, there will always be issues
that crop up that will take you off track and things that you need to work on to
make sure that you achieve all your goals. Since a plan involves matters that
have not happened yet, they also include areas where you have had to assume
certain information. What if the assumptions you based your plan on never
eventuate? What do you do then? What if the bank doesn’t give you a loan?
What if interest rates rise too quickly? What if your factory burns down? What
if ...?
Contingency planning is all about asking, ‘What if?’ It’s about considering
what could potentially happen and evaluating the risk of it occurring.
Moreover, it’s about exploring possible consequences should the worst
happen, and using this knowledge as a way of planning around such events
should they occur.
Let’s look at an example. You ask the bank to lend you money to allow you to
put your plan into action. Your calculations show that an interest rate of 6.5%
would let you make a profit and at 7% you could still break even. What would
you do if the interest rate the bank charges increases to 9%? What impact
would this have and how would you work around it?
Contingencies occur all the time in business; it is the planning you do to get
around the situation that is most crucial. Consider your SWOT (strengths,
weaknesses, opportunities and threats) analysis and look at the weaknesses
and the threats in particular. These will show you where contingencies might
occur. A major new business opening up in your market is a threat which you
may need to write a contingency plan around – how will you react to this
situation? Add heavy promotion? Reduce prices on key lines?
Financial contingency problems can be added into your financial statements
by adding relevant comments or by having a set of financial figures that reflect
the lowest possible figures as well as the most likely. Your discussion and
action plans within your business planning documents could also reflect this
information. You might, for example, add comments to your staffing sections
about certain situations and how you would react in them. You might say that
if the market changes, you may need an extra two staff members to achieve
your desired results and comment on the financial implications of such a
situation.
Contingency planning is useful, but often, you cannot look at everything.
There are so many things that could go wrong, and you need to consider:
The things that are most likely to happen
The things that could potentially have the highest level of impact on the plan
as a whole.
1.4 Explain Plan to Relevant Work Teams
Now that you have established your plan, it is of vital importance that you
explain this plan to the people it would be of use to. Specifically, relevant
work teams would need to understand the plan so they can effectively employ
it.
The fact is that there is no one set way of explaining an operational plan. This
is because different people have different levels of understanding and concern
for your plan. However, calling for a meeting to present your plan to relevant
work teams would be an effective method of explaining your plan to them. In
doing so, there are steps that you can follow. These are:
1.Schedule the meeting
Formalise your meeting by sending out invitations to the relevant attendees.
This can be done via email, but you can also mention it verbally or make
physical posts about it in your announcement boards. During this step, you
would also need to make logistical arrangements for the meeting and prepare
the necessary materials for your presentation.
Remember to give attendees enough time to prepare for the meeting, and don't
simply announce it once the meeting is drawing near. Moreover, it would aid
you to know who would be present so that you can note how you would
present your information in such a way that everyone would understand.
2.Establish your background and provide conceptual tools
Once you are in the meeting, remember not to immediately start by explaining
the actual plan. Instead, begin with establishing the background and context
necessary for understanding the purpose of your operational plan. Likewise,
provide basic knowledge that is necessary for understanding your plan.
Highlight key terms and provide clear definitions for these. It is important to
first build a steady foundation to ensure that everyone is on the same page.
3.Compare and contrast, describe your plan
As you delve into the meat of the meeting, remember to properly contextualise
your discussion and make it digestible for your audiences. Use past plans as a
reference point for explaining the current plan, making comparisons and
analogies as necessary. Highlight changes and the reasons for this. Moreover,
make sure the employees can recognise why this operational plan is essential
and, if applicable, preferred or superior to others.
4.Connect your audience to the plan
As you continue to explain your plan, ensure that you are able to help
employees connect with it. In essence, this means they should be able to
understand the relevance of the plan to them. Shape your presentation in such
a way that it speaks directly to your audience. For instance, you can note how
they were involved in the process of building this plan (i.e. consultations) and
highlight how their contributions are reflected in the final output. It is
important that they recognise how the operational plan has personal value to
them as this would make them more likely to welcome the plan with open
arms and make good use of it.
5. Allow your audience to ask questions
During or after the meeting, encourage your work teams to make inquiries and
give comments about the plan. Keep in mind that how you respond to the
questions you receive will make an impact on them. Given this, it is best to
plan for the questions and concerns that may arise during the meeting
beforehand. Think through these and try to develop concise and honest
responses to each of them. By preparing in advance, you will eliminate your
anxiety and boost your confidence in the plan.
6.Provide supplementary materials to reinforce your plan
Give your relevant work teams the necessary materials that would help them
better understand your operational plan. For instance, you can provide
handouts that outline the contents of your plan before the meeting begins so
they can refer to these throughout the meeting. Moreover, you can continue
giving supplementary materials after the meeting. Examples of this would be
regular emails, guides, posters, wallpapers and screensavers, and employee
reviews that are relevant to the plan. This is to remind employees of the
operational plan and to ensure that they do not simply forget about it once the
meeting has concluded.
2. Manage Resource Acquisition

Now that you have gone through the basics of your operational plan, you can move
on to the next step. Resources are an important part of your organisation, and you
need to be sure that the resources you have are being acquired and managed
properly.
This chapter delves into the details of how you manage your resource acquisition.
The process is further broken down into three sub-chapters that serve as key steps of
this stage. First, you must confirm that employees are recruited and inducted
according to the organisation’s human resources management policies, practices and
procedures.
After this, you must likewise confirm that your physical resources and services are
acquired according to the organisation’s policies, practices and procedures. Finally,
you will need to identify and incorporate requirements for intellectual property rights
and responsibilities in recruitment and acquisition of resources and services.
2.1 Confirm that Employees are Recruited and Inducted According to the
Organisation’s Human Resources Management Policies, Practices and Procedures

The most important resource of any organisation is its people. Given this, it is vital to
ensure that your employees are properly managed in accordance with the rules set in
place. These rules refer to the various policies, practices and procedures that guide the
organisation and its operations. In the context of human resource management, the
policies, practices and procedures serve as the basis of how you handle your
employees. It is especially important to note the policies, practices and procedures
relating to recruitment and induction as these are fundamental to the strategies you
have in your operational plan.

2.1.1 Policies and Procedures

Policies are made by organisations to ensure that members and stakeholders act
responsibly and make rational and well-informed decisions. These help an
organisation remain consistent in its approach to decision-making and problem-
solving across the organisation’s locations (if applicable). For staff members and
stakeholders to understand their responsibilities in the organisation, it is crucial that
policies and procedures are both adopted and clearly communicated to everyone.

On the other hand, procedures are meant to assist employees in implementing policies.
If policies are rules that tell you what ought to be done, procedures are the logical
steps that tell you how you ought to enact or implement these policies.

Recruitment and Induction

The policies and procedures in place for recruiting and inducting employees are both
internal and external in nature. There are laws in place to ensure that employees are
properly sourced and treated, and there are also company-based policies that delve into
the specifics of your hiring processes.

Your recruitment and induction policies and procedures should be clear and concisely
written. This will serve as your basis for the procedures and strategies you have in
your operational plan. Although there is no clear-cut formula for writing your policies
and procedures, some things you may want to check and ensure the presence of in
your policies include:

 Purpose and Scope

Your policies must clearly identify your purpose for hiring employees. This must be
aligned with your vision, mission, and goals. Moreover, the scope of your recruitment
and induction must be established to ensure that all the subsequent efforts you make
remain relevant and necessary. Having a clear and well-written policy that establishes
both purpose and scope will enable you to have procedures that are also clear, well-
written and relevant.

 Guidelines

Policies must define the guidelines that must be kept in mind as you recruit and induct
your employees. These will serve as the foundation for your procedures. The
guidelines should cover your considerations for hiring a new employee, an overview
of your process for acquiring and training the employee, and the general flow of
approval for your processes. Your subsequent procedures should likewise be detailed
versions of your policies that delve into the details of your processes.

 Non-bias and Merit

In relation to your selection and hiring guidelines, you must ensure that the guidelines
you put in place are fair and unbiased. You should not exclude otherwise viable
candidates on the basis of sex, gender, race, religion, etc. You should instead focus on
the merit of your candidates and seek out the right candidates instead of merely trying
to fill a position.

Workplace Harassment, Victimisation, and Bullying

In this regard, a discussion on workplace harassment, victimisation, and bullying is in

order. Workplace harassment, victimisation, and bullying refer to the abuses or
misuses of power which are characterised by aggressive behaviour or actions that
humiliate, intimidate, and/or undermine an individual or group. Such actions may
cause emotional damage, reduce morale, and ultimately cause the loss of trained and
talented employees. They are unacceptable and must not to be tolerated under any
circumstances.

Federal and state anti-discrimination and equal opportunity laws are in place to protect
you from harassment and victimisation, including those due to:
 Age

 Breastfeeding or pregnancy status

 Being a union member (or not)

 Career status

 Disability or impairment

 Gender and gender identity

 Marital status

 Sexual activity

 Sexual orientation

 Physical features (excluding ‘accessories’ like tattoos or piercing)

 Political activity or belief

 Race

 Religious belief

Harassment is behaviour that a person does not want or reciprocate. More specifically,
it refers to behaviour towards an individual or a group of individuals, that may or may
not be based on any of the above attributes. It is repeated behaviour that manifests less
favourable treatment towards a person and is considered both unreasonable and
inappropriate in the workplace. It degrades, embarrasses, or scares the victim under
circumstances wherein a reasonable person would have anticipated the possibility that
the one being targeted would be humiliated, offended, or intimidated by their conduct.

Workplace harassment often involves a misuse of power. It may occur when an

authoritative figure intentionally undermines or destroys the confidence and self-
esteem of an individual or group. Moreover, it can also occur if someone is working in
a ‘hostile’ or intimidating environment.

Harassment may be either subtle or overt. This includes, but is not limited to, the
following:

 Abusive and offensive language, shouting

 Allocation of humiliating or demeaning tasks

 Constant unreasonable criticism regarding work or performance (often about

petty or insignificant matters)

 Deliberate alienation, exclusion, or isolation of a staff member

 Electronic harassment (e.g. through email or SMS)

 Hazing or bastardisation (e.g. harmful or humiliating initiation rituals)

 Inappropriate comments about personal appearance

 Sabotaging a person’s work

 Sarcasm or ridicule

 Setting impossible deadlines with unrealistic expectations of one’s work

 Spreading gossip or false and malicious rumours, intending to harm a person

 Threatening gestures or actual violence

 Confidentiality

It is important to protect the identities and information of your potential and new hires
throughout the process. Even if some applicants end up not being able to make the cut,
you must respect and protect their privacy. Your policies should note this and ensure
that no information is leaked unnecessarily. Moreover, your processes themselves
ought to be secured and kept private. Digital security, which refers to the ways you
ensure that your data and systems are protected from any attacks, intrusions or
unauthorized access at all times, must be a priority concern. You must be fully
equipped with the tools and knowledge that will enable you to safeguard your
information from any external threats.

Employment Conditions

As has been previously mentioned, there are both internal and external considerations
for recruitment and induction policies and procedures. In terms of external
considerations, there is a nationwide system in place that serves to ensure that
employees are fairly treated by their employers from start to end. This system includes
national standards for all employees, legislation and regulations (e.g. occupational
health and safety, pension and payments), and organisations (e.g. Fair Work
Ombudsman and Fair Work Australia. Key points to consider regarding your
employment conditions include:

 Forms of employment

There are different forms of employment with varying levels of flexibility and
stability. The form of employment a person would opt for would be based on what
they and their employer would mutually require. Some common forms of employment
include full- time, part-time, and contract workers.

 Employment standards
By law, all employees in Australia are entitled to terms and conditions that are
outlined by the national employment standards. These include entitlements like weekly
working hours, leaves and requests pertaining to working arrangements.

 Occupational health and safety system

All organisations are required to ensure a safe workplace that meets national
requirements. Moreover, state and territory laws are in place to further delve into
occupational health and safety concerns. Part of your obligation to your new
employees, therefore, is ensuring work health safety and protective equipment as
necessary.

2.1.2 Practices and Best Practices

Practices refer to the systems used in organisations in regular operations. These are the
accepted, normal, and customary ways of engaging in business. On the other hand,
‘best practices’ refers to the human resource systems in place that positively and most
effectively impact the organisation. Some best practices that are relevant to you
include:

 Selective hiring

Your organisation’s hiring practices are a reflection of its mission, vision, and goals.
The most important thing to note in hiring is that you ought to have a level of
selectiveness. This means that you do not simply hire people to fill vacancies. Rather,
you ought to hire the right people who are fit for the job. Every organisation wants to
have the best employees because this builds competitive advantage and ensures that
goals are more effectively and efficiently met.

 Training

Once you have hired the right people, you must ensure that you take care of them. In
this regard, investing resources in training your employees is key. From their
orientation and onboarding, you must ensure that you empower your people to be their
best. Develop relevant skills to ensure that they continue to grow within your
company. Aside from the benefits this will produce on an organisational level, this is
beneficial for your employees on an individual level. Seeing their growth would
inspire them to continuously remain committed to the company and its goals as doing
so enables them to reach their own goals as well.

 Performance-based compensation and bonuses

Fair compensation is important for any employee. If you hire the right people in your
organisation, it is all the more important that you compensate them properly. Provide
above-average compensation for your people to encourage them to stay committed to
their work. In order to ensure that this compensation is not put to waste and that your
people continue to add value to your company, you should set up measures and
indicators of their performance and use these as the basis of the compensation they
receive. This will likewise keep them in check and ensure that they work effectively
and efficiently.

Additionally, if you want to increase the quality of work, it would be beneficial for
you to set up performance-based bonuses. This means that if employees go above and
beyond the minimum expected outcomes, they will be rewarded. This practice would
encourage as well as condition them to work more effectively.

2.2 Confirm that Physical Resources and Services are Acquired According to the
Organisation’s Policies, Practices and Procedures

As with human resources, you must ensure that the acquisition of your physical
resources and services is in line with the policies, practices and procedures in place. In
this regard, two processes merit discussion. These are procurement and purchasing.

2.2.1 Procurement

Procurement is the business function that concerns the research and preparation
necessary before making a purchase. This guides the purchasing process and is
required in all subsequent engagements involved in resource acquisition. Procurement
involves the nitty-gritty details necessary in resource acquisition and includes setting
up contracts and having the authority to engage with the necessary suppliers. Key
aspects of procurement include:

 Category management

This aspect of procurement looks into what you are going to source and what different
kinds of resources you require. These kinds of resources include:

o Direct resources – all materials involved in the creation of your finished

product

o Indirect resources and services – all resources and services necessary for
getting your finished product to the market

o IT services – the systems and software necessary in the creation and

distribution of your product

 Sourcing

This aspect of procurement is concerned about setting up supply, specifically locating

and determining places for acquiring your resource requirements. Most importantly,
the main concern of this aspect of procurement is finding the best quality of supplies
for the least amount of money so as to maximise and efficiently utilise your funds.

 Supplier relationship management

This is the human side of procurement that deals with and engages with people,
specifically suppliers who are necessary for the procurement process. This aspect is
concerned with maintaining and improving relations with suppliers to ensure that your
organisation can consistently and continuously get the best value for its money.

Procurement Process

Like most other processes, there is no one set or fixed process for procurement.
However, each procurement procedure has commonalities and key steps that are
typically followed. These are fundamental to the process and are likewise essential to
note in your operational plan. A typical procurement process would involve the steps
outlined in the figure below.

6. Make
1. Identify the
arrangements for 7. Perform quality
necessary
receiving assurance
goods/services
goods/services

5. Come to an
8. Analyse results
2. Look for suppliers agreement
and margins
(i.e. contract)

3. Request
4. Negotiate with
proposals/
suppliers
quotations

2.2.2 Purchasing

As seen in the standard procurement process shown above, purchasing is indeed a

subset of procurement. While procurement is concerned with making all the necessary
preparations that precede the acquisition of a resource, purchasing is all about actually
executing those plans and acquiring the necessary goods or services. In other words, it is
all about negotiating the deal and making the purchase.

Purchasing is the business function responsible for buying raw materials, parts,
machinery, supplies, and all other goods and services that are used in the production
system – from paper clips to steel bars and industrial robots to computers. Likewise, the
purchasing department is responsible for all machinery, raw materials, supplies and
services used by an organisation. Without the appropriate strategy, purchasing can
become overwhelming, so it is vital to develop a successful purchasing strategy.

The first step in developing a purchasing strategy is to link it to the organisational

objectives. To accomplish this, strategy development must be a formal process. It is
suggested that a formal steering committee identify specific steps, such as market
analysis, milestones and deliverables. The result will be a strategy with well-defined
goals which can then be further developed and implemented with appropriate procedures
and processes.

This strategy of establishing purchasing against organisational goals involves

making sure that every staff member in your organisation is familiar with the way things
need to operate and that they understand how this strategy will bring about benefits for
them. By demonstrating how purchasing strategies are aligned with overall organisational
strategies, employees are in a better position to understand why you are doing what you
are doing and you are more likely to receive support for the strategies. For instance, let’s
say you decide to use a single supplier for all of your office supplies. You can
demonstrate how this will reduce shipping costs and result in more significant discounts
being offered. As you develop purchasing strategies, you need to carefully consider how
they will contribute to organisational objectives.

Types of Purchasing Decisions

Now that you have learned how to develop strategies for purchasing, take a look at the
four major types of purchases that you are likely to make.

1. Small Purchases

This includes any purchase that is made within a department rather than by a purchasing
officer. You will generally pay for these types of purchases using petty cash, and the
purchases will generally be for amounts less than about $100 (or whatever your petty
cash allowance is). It will be up to the individual manager to decide on a supplier, place
the order and manage the process.

2. Regular Purchases

In regular purchases, the buyer in the purchasing department buys goods and services on
behalf of the requesting department. Although the procedures for these various classes of
purchases generally cover getting the products and services to the requesting departments,
the accounting department can pay for the items only after it has been notified by the
requesting department how much of the supplied items are of the requested quality.

3. Large Unique Purchase Methods

One of the key functions of the purchasing department or purchasing officer is building
an interface between the technical specialists in the department or workgroup needing a
resource and the suppliers who could potentially supply it. In these types of purchases,
price is often not the deciding factor in the selection of an appropriate supplier. Instead,
you will look at the ability to deliver quality goods and services on a timely basis and to
meet the unique technological and business needs of your organisation or specific
operational plan.

4. High Volume Continuous Supply Methods

When materials are purchased in high volume to be continuously supplied throughout the
month or year, purchasing officers tend to issue requests for quotations to several
potential suppliers. When a supplier is selected (based on price, quality and ability to
supply at desired levels) a blanket purchase order that covers the materials to be
purchased for the entire year is issued. The authorisation for this level of purchase should
come directly from the need for the materials in the production budget. These are often
prepared months in advance and cover long periods.

Monitor and Review Operational Performance

The final element in managing your business operational plan is monitoring and
reviewing the operational performance that results from its implementation. Like any
other endeavour, the management of your operational plan does not end once it is put in
place. Checks and balances must occur to ensure that your plan is being used
appropriately and is able to meet its set objectives.

3.1 Assess Progress of Operational Plan in Achieving Profit and Productivity Plans
and Targets

Earlier in the process, you established relevant objectives and criteria for acceptable
performance. Your operational plan is concerned above achieving these goals and
objectives. In assessing if these are met, you must begin a review of the system you have,
and from this review determine the system’s effectiveness and whether any improvements
need to be made. In doing so, it is essential to have a fundamental understanding of profit,
productivity plans and targets. These three would indicate your relative success and
progress towards attaining your goals.

Profit is the figure that represents the amount of earnings that exceed your expenses at a
given period. In essence, this is equivalent to your net income. To calculate it, you must
simply subtract all the expenses you’ve had from your gross income.

On the other hand, productivity plan is a type of plan specifically designed to improve
productivity levels. Within an organisation, the strategic plan and the operational plan are
recognised as elements that make up this productivity plan.

Finally, targets are feasible, small-scale goals that are aligned with larger-scale and long-
term goals and objectives of your organisation. Success in reaching targets is what drives
success in your business. Examples of targets would include weekly and/or monthly sales
quotas and quarterly budget targets.

All three concepts are related and play a key role in your operational plan. Targets are
your starting point; they are the objectives you attempt to work towards. Productivity is
process-based; it serves as an indicator of how effectively your resources are being used
in order to achieve your set objectives. Lastly, profit is output-based; they represent the
financial aspect of your objectives which indicates how much you have earned at any
given time period.

3.1.1 Using Key Performance Indicators

As mentioned in the first chapter, key performance indicators (KPIs) are tools that are
used to provide a quantitative measure of performance against predefined targets. In
determining if you have successfully earned profit, maintained productivity, and met your
targets, it is important to have KPIs in place. These three indicators have different
relationships with KPIs, as will be discussed below. Most importantly, being able to
understand and integrate these concepts will help you effectively measure your success in
relation to your overarching goals and objectives set in your operational plan.

Targets and KPIs

Most people would confuse targets and KPIs, using the terms interchangeably. However,
there is a fundamental difference between the two. While KPIs are digestible metrics that
help you understand how well you are performing, targets are the defined small-scale
goals that your KPIs ought to work towards.

Below is an example that illustrates the difference:

Strategic Objective

• Increase employee satisfaction

Key Performance Indicator

• Reduced employee absenteeism

Target

• Reduce employee absenteeism by 20% by December 2020

Profit and KPIs

The most common function of KPIs is to measure and improve productivity and profit.
Using KPIs to determine progress and success in earning profit is beneficial as it
promotes accountability, provides support in decision-making, and helps you gauge the
performance of your employees. Some examples of KPIs relevant to determining
progress in achieving profit include:

Sample KPIs for Profit in Different Industries

Childcare Industry

• Occupancy percentage per month

Construction Industry

• Number of new sales enquiries per month

• Medical Industry
• Patient waiting time (in minutes)

Real Estate Industry

• Market share percentage (in local market)

Productivity and KPIs

Along with profit, productivity is the most common factor KPIs attempt to measure.
There are many facets of productivity that a KPI can measure, but the most important
ones would include:

In measuring your productivity-based KPIs, you can use tracking applications and
software available.

3.1.2 Budgets in relation to Profit and Productivity

One objective of budgeting is to provide a basis for measuring actual performance. Such
is worth doing if action will be taken as a result. In too many an organisation, the
production of results compared to budget is viewed as the end of the process. However, if
no action would be taken on the basis of management accounts, there is little value in
producing them and even less in wasting management time discussing these.

To understand the relevance of budget in relation to both profit and productivity, there are
a number of financial terminologies you ought to understand.

Profit and Loss Budgets

For measuring profit and determining if you are able to meet your profit-related
objectives, the profit and loss budget merits discussion. This type of budget is used to
define and forecast the income and expenses of your business for an upcoming time
period, often the upcoming financial year. It helps you set targets and provides you with
an operational platform.

To create your profit and loss budget, you must align it with your strategic and
operational plans. Moreover, it is advised that you use past profit and loss statements,
figures, and pertinent financial information in ensuring feasibility and accuracy in your
budgeting. Once your budget has been finalised and approved, you must continuously
monitor its usage throughout the set time period. If you have made a budget for the
financial year, check monthly figures and results.

It is essential that you observe the profit-related variances that would emerge. Variances
refer to the differences or changes that would occur in your figures through time. Some
key variances you must note include:

 Revenue Variances

Observe your total revenue and the individual figures that relate to it. Check if some of
these line items generate more revenue than others and determine if the revenue you’ve
generated is more or less than what you had projected.

With this, try to figure out what reasons would cause such a result. Could it be emerging
trends? Is there a need for you to take action? Contextualise this and determine what can
be done to make more profit.

 Cost of Goods Sold Variances

These variances would include labour, material and other project costs that fall under the
‘direct resources’ discussed in Chapter 2.2. Like your revenue variances, you ought to
check if your figures are more or less than what you had projected.

If your expenses were higher than expected, what can be done to lower expenses? If they
were lower, what initiatives or factors did you take that led to this?

 Gross Profit Variances

Gross profit refers to what you have earned for your work. Check if you made more or
less than you projected and try to understand the factors that led up this result. Much like
revenue variances, your figures could indicate emerging trends that you need to consider.
If so, you must act accordingly and adjust your forecasts.

If you earned less than expected, determine the reasons for this and find actionable ways
of correcting or preventing what could have gone wrong. If you earned more, try to
determine what led to this and bank on these factors to continuously increase your
growth. Moreover, don’t forget to celebrate with your team. You deserve it!

 Expense Variances
Finally, expenses concern the costs you have had to allocate for general operations,
administration, marketing, research and development, and the like. Should you find that
you have variances in this category, it is important to determine the nature of this
expense. Was it a one-time expense or is it something you should expect and plan for in
the future? Is it worth the investment, and should you continue to invest in it?

Calculating Productivity

Productivity measures the efficiency of a person, machine or organisation in producing

useful outputs (i.e. goods and services). Along with profit, this is the principal goal of
most any organisation. Moreover, the achievement of such is used to determine the
progress of an operational plan. For you to fully assess the relative success of your plan in
relation to achieving profit, productivity and set targets, it is essential to employ an
integrative approach that involves technical and financial perspectives.

Productivity is usually measured using the following formula:

Productivity = Quantity produced / Amount of resources used

To simplify this even further, you may notice that there are two sides to the productivity
equation – the amount of production and the amount of resources used. Productivity
varies in the amount produced relative to the amount of resources used. The productivity
of each resource can and should be measured.

To determine levels of productivity, you can use measures such as the following:

 Capital – the number of products produced divided by the asset value

 Materials – the number of products produced divided by dollars spent on materials

 Direct labour – the number of products produced divided by direct labour-hours

 Overheads – the number of products produced divided by dollars spent on

overheads

Such measures are not perfect. For example, the measure of materials productivity
includes price. This is generally not desirable, but there is no other practical way to
combine the many different units of measurement for the diverse materials used in
production. Although such measures of productivity have their shortcomings, they do
provide a starting point for tracking productivity so that managers are aware of
productivity trends.

In the past, when labour cost was the predominant cost of production, productivity was
only measured by the output per hour of direct labour. Today, however, there is a need to
look beyond merely direct labour costs and develop a multi-factor perspective. Our view
of productivity must be towards improving the productivity of all the factors of
production – labour, capital, materials and overhead.
The trouble with measuring productivity through output direct labour hours only is that
the productivity of one factor can easily be increased by replacing it with another factor.
For example, if a factory that previously bought castings and machined them in-house
decides to purchase the castings pre-machined, then the company can lay off skilled
workers and sell the machine tools. What happens to productivity? The output will
remain the same, but the number of workers will fall so that labour productivity will
increase. Capital productivity will also increase because the investment will be less, and
production levels will be unchanged. Still, materials productivity will decline because the
value of purchased materials will increase while productivity levels will not change. By
merely looking at one aspect of the productivity equation, therefore, you are getting a
false view of the overall productivity of a business. In order to fully understand the
productivity of the firm in relation to its resource use, you must combine several
productivity measures.

In order to establish whether or not your current production process is operating at its
most efficient for your business, you need to develop review systems against which you
can compare your current performance. Any variances between your ‘ideal’ results and
your ‘actual’ results should be carefully examined to determine the reason.

Earlier in the development process, you examined the need to develop measurable
objectives. It is at the review stage where these measures become increasingly important.
These objectives can be used as a form of ‘ideal result’; that is a result which is closest to
a situation which would be the best you could hope for given the current resources being
used. You may also find it useful to obtain historical data on productivity within your
firm; this may assist in making the objectives you are striving for more realistic. Although
it is impossible to get data from your competitors to use as a means of analysis, you may
be able to obtain industry-wide figures from the trade association which covers your
industry. In essence, these may be useful in establishing how well you compare to similar
companies.

You then use the formula mentioned earlier to determine the actual productivity of your
firm. You may decide to sample productivity at various stages of the production process,
and over a number of different days to get a broader view of current productivity rather
than just a snapshot of the situation at one particular point. Look at conducting regular
reviews of productivity. You may decide to conduct such an analysis once a month, or
even more frequently. The key to remember is that you are gathering actual data on the
productivity of your firm.

The final stage involves comparing the actual results with your desired results and then
evaluating how well you are meeting the current objectives of your organisation in terms
of productivity. You ought to determine the variance using a percentage difference of
where you want the organisation to be on each productivity measure. The higher the
percentage figure obtained, the worse the variance is. There are two types of variance
figure you can obtain, namely positive variances and negative variances.

Positive variance

• Occur when you perform above the level of productivity you have set in your
firm’s objectives
• Generally a positive sign that your production processes are working as they
should but you must ensure that the productivity measure is not masking
other problems

Negative variance

• Indicative of a problem within the production process

• Data must be analysed to establish the cause of the variance. Seek input from
your team members for possible causes and recommendations for
improvement.
3.2 Identify Areas of Under-Performance, Recommend Solutions and Take
Prompt Action and Rectify the Situation

Under-performance is a common and unavoidable issue you will encounter in working

within any team or organisation. To lessen its occurrence and address it, you must have a
fundamental grasp of the concept. This will enable you to recognise it at its roots and
therefore effectively deal with it using tried and tested methods.

For this discussion, the Fair Work Ombudsman website provides sufficient information
on the appropriate management of under-performance issues. As such, passages from the
site will be integrated to enable a more well-informed approach in learning about under-
performance.

3.2.1 Under-Performance Defined Underperformance of the Operational Plan

In terms of your operational plan, under-performance occurs when you are unable to
successfully achieve the operational objectives that have been set. In particular, under-
performance of your operational plan manifests in the failure to:

 Achieve profit

 Execute productivity plans

 Meet targets

Underperformance of Employees

Your employees’ performance is closely related to the performance of your plan.

According to the Fair Work Ombudsman, under-performance or poor performance, is
exhibited in the following ways:
 Unsatisfactory work performance, that is, a failure to perform the duties of the
position or to perform them to the standard required

 Non-compliance with workplace policies, rules or procedures

 Unacceptable behaviour in the workplace

 Disruptive or negative behaviour that impacts on co-workers.

Although closely related, underperformance and misconduct are not the same.
Misconduct refers to serious misbehaviour of employees (e.g. theft, assault). These
behaviours may warrant instant dismissal, so it is best to seek proper advice before taking
definitive action should they occur.

Documenting Performance

Although it seems simple enough, documenting performance proves to be a difficult task.

You may sometimes be tempted to simply base your record on a single memorable
incident which you associate with your employees or on the most recent interactions you
have had with them. However, documenting performance is a serious undertaking that
you must devote time and effort to – no matter how tempting it may be to simply rely on
your memory.

Employee Management

Under-performance issues come in different forms. As such, it is important to explore

various options for improving performance (e.g. use of continuous feedback). Generally
speaking, however, effective management of under-performance can be done with a clear
system in place. In this regard, the Fair Work Ombudsman site puts forth a five-step
guide to dealing with under-performance.

3. Steps in Managing Employee Under-Performance

Identify the problem

Monitor Assess and analyse

performance the problem

Meet with the

Jointly devise a
employee to
solution
discuss the problem
3.2.6 Termination of Employment

In the final step in managing under-performance, termination of employment is

mentioned as a last-ditch option you may use if an employee’s performance does not
improve to an acceptable standard. Once again, the Fair Work Ombudsman’s site
discussion of this will be helpful to note.

As the site suggests, you cannot dismiss your employees in circumstances that are ‘harsh,
unjust or unreasonable’. Remember to be fair to your employees, especially when you are
about to terminate their employment. In this case, you must provide clear reasons for their
termination and a chance for them to respond to these.

3.3 Plan and Implement Relevant Processes for Ongoing Monitoring and
Confirm that Support is Provided for Individuals and Teams

Up to this point, you have thoroughly examined the process of improving your plan. In
the process of doing so, you may find that your employees would need further support in
order to improve their performance. It is, therefore, important that you plan and
implement processes to monitor and support them. There are three strategies that you can
use on an ongoing basis to help employees perform satisfactorily.

3.3.1 Coaching

In the context of the workplace, coaching is about equipping employees with sufficient
knowledge, opportunities and tools necessary for them to develop and become effective.
Many experts in both business and the academe would agree that coaching is a critical
leadership and management competency, and it is invaluable to any organisation.
Employees who undergo coaching better grow and develop themselves, therefore
ensuring the improvement of employee performance.

Coaching takes place in a relatively short timeframe (usually 6 months to a year), and
coaches would have a specific goal for their coachees. However, the relationship may last
longer at times if their set goals would take longer to achieve.

3.3.2 Mentoring

Mentoring is a method that is used to help employees who show promise. However, that
promise is not backed up by performance. This often is due to personal problems as well
as the lack of confidence or motivation.

The mentor is an individual who is more experienced at the job and who can offer a place
to turn to for both guidance and assistance. The mentor is seen as a role model for the
mentee, who is a less-experienced employee that needs support. This support comes in
the form of the knowledge, skills, expertise and advice that the mentor imparts in the
hopes of benefitting both the mentee and the company in the long run.
3.3.3 Training

If a problem is related to lack of knowledge in a specific skill, training becomes an

essential tool. Unlike coaching and mentoring, this strategy is reliant on formal and
technical knowledge that can be taught to or learned by the employees in order to help
them improve their work performance.

Some of the most common and useful examples of training include:

 Formal Instruction

This type of training involves a lecture-style learning method. Trainees would be in a

classroom setting and would be taught by an expert regarding the concepts and processes
that they ought to learn. Given the set-up, trainees are more empowered to ask their
teachers questions and clarify points they don’t understand.

 On-the-job Training

This type of training involves an employee learning how to perform a task by actually
working on it. Trainees will be tasked to do set tasks while receiving help and guidance
from an expert. This form of training is deemed to be advantageous since it allows
trainees to learn from actual experience.

 Simulation

This type of training is quite similar to on the job training. However, instead of actually
asking employees to perform the set tasks, they will be asked to work on tasks similar to
that which they would encounter in the workplace. This form of training may be
especially helpful for those in sales.

 Self-directed Learning

This fourth type of training relies on the trainee to learn about the necessary skills and
tasks by themselves. Companies would simply provide the necessary materials (i.e.
manuals, supplementary videos, training courses). This main advantage of this method is
that it empowers the employee to teach themselves and learn at their own pace.

3.4 Negotiate Recommendations for Variations to Operational Plans and Gain

Approval from Designated Persons

Few projects run exactly according to plan. As such, it is vital to be open to variations to
your operational plans. Procedures and strategies should be established for managing
changes to the original project plan.

These changes may arise from:

 Variations to or refinement of stakeholder or organisational requirements

 The eventuation of risks identified in the project brief

 Project targets being exceeded

 Unforeseen difficulties

Regardless of the reasons for these changes, what is important is that your stakeholders
are involved in the process of managing and dealing with all possible changes to the
operational plan. Just as you have kept your stakeholders engaged from the very
beginning, you must continue to ensure that they are part of any processes that you would
encounter during the implementation of your operational plan.

It is vital that in your process of addressing the changes that arise, your stakeholders play
an active role in making the necessary decisions. Inform them of the need to make
adjustments and encourage them to stay involved in the process of dealing with these.

Making Recommendations

The improvements you decide to make should be recommended based on several reasons.
When negotiating with stakeholders, you should, therefore, keep in mind the following:

 Operational Implications

 Risk

 Feasibility

Gaining Approval

To gain approval from the relevant persons for the recommendations you make, you must
simply recall the process of consultation outlined in section 1.2. In this section, it was
discussed that consultation with relevant stakeholders is something that must be done
before, during, and after your operational plan is made and is put in place.

Given the fact that any recommendations to the OP would be made after it has been put in
place, you must just continue to communicate and consult with the necessary
stakeholders, so they are made aware of the progress, effectivity, and success of your
plan. Likewise, should there be a need to make adjustments, you must clearly explain
why the need for such has arisen so that they may understand and approve the changes
you want to implement.