Knowledge and Creativity - British Sky

Reward and appraisal systems are the benefits and achievements that are received by staff members within an organisation for their overall job performance. An effective appraisal and reward system have significant impact on organisational culture, staff morale and engagement levels of employees (White, 2016). It helps in to enhance performance and motivation level of the employees in order to acquire target goals and objectives. This report is based on Marks and Spenser which is a British multinational retailer with its headquarters in London. Organisation specialises in providing high quality of clothing, food and home products to their target customers. The following report is going to cover the effectiveness of reward and appraisal systems in enhancing the productivity of the retailing sector.

MAIN BODY

TASK 3

1. Calculate financial ratio of BSkyB Plc

Gross Profit Margin: It is the profitability ratio which is required to calculate by the organizations in order to identify financial health of the company (Bellos and Tzivanidis, 2017). Also used to identify remaining amount after deducting cost of goods sold from total sales. It is used to denote with percentage to evaluate how much gross profit company generate. Calculation based on BSkyB Plc during the year 2013 or 2014.

Formula:

Gross Profit Margin Ratio = Gross Profit / Net Sales * 100

Calculations:

Above data help the management to evaluate overall operational performance of the company. It clearly mentioned that, GP margin reduces from 40.16 % to 39.51 % due high increase in the sales in comparison to gross profit, that is only £110m. BSkyB Plc unable to cover their manufacturing cost, so managers should focus on minimising operational cost.

Working Notes:

Operating Profit Margin: This ratio used to calculate the actual profit company earn after reducing variable cost of production such as raw material, labour wage etc. This profit is before deducting interest or tax which is also called EBIT (Chuand et.al., 2017). By use of financial information of BSkyB Plc, company evaluate operating profit and its calculation mentioned below:

Formula:

Operating Profit Margin Ratio = Operating Profit / Net Sales * 100

Calculations:

Above results shows that operating profit margin of the company reduces. In 2013, it was 18.38 % and remain at 16.70 % in 2014. Organizational performance reduces due to increase in operating expenses. Management should focus on it and build effective strategies to minimise operational cost of maximise their profit.

Profit Margin Ratio: It is another profitability ratio which is also called net profit ratio and companies will calculate to measure the actual profit business earn to the sales of goods & services (Hasibuan and Syahrial, 2019). It also indicate that how well business expenses managed by the managers. Calculation of this ratio mentioned below:

Formula:

Profit Margin Ratio = Profit for the year or Net Income / Net Sales * 100

Calculation:

It has been analysed that net profit of the company decreases during 2013 to 2014 where profit margin ratio is 13.53 % or 11.33 % respectively. Overall profit of BSkyB Plc reduces because of increasing operational, selling & distribution expenses.

2. Analyse that shareholders of BSkyB plc satisfied with financial performance of the company from 2013 to 2014

Shareholders of the company do not satisfied with overall financial performance of BSkyB Plc because it reduces from 2013 to 2014. With the help of financial analysis, it will be observed that gross profit, operating profit or net profit of company reduces which impact its shareholders as well. In 2014, overall sales of the company increases approx 5.5 % but in result profit of the company reduces.

In order to maintain shareholder's interest in the company, they decided to increase dividend by 7 % that is good decision which is taken by management of BSkyB Plc company. Around 32 % per share decided to pay their shareholders to satisfy them but it is very high because further it will reduces overall profit more.

Manager of BSkyB Plc need to take effective steps in order to increase profitability which is possible through minimising overall cost of production or increase sales. Company also announce to increase number of customer but for this, they need to work on various aspects such their services, marketing, operations etc. As per my point view, shareholders not satisfied with overall performance due to decrease in profit throughout the years.

3. Evaluate some options which recommended to the BSkyB plc to improve profit in financial point of view

There are some strategic recommendations which will help BSkyB plc to improve profit margin of the company which is further helps in attracting shareholders. Some of them mentioned below:

• Remove unprofitable activities that generate cost but not contributing in the business profit (Yüksel, Dinçer and Meral,2019).
• Company already achieve their objectives through increasing 33% customers during the year. But make sure that, they satisfy all of them through providing effective or valuable services which helps in generating revenue.
• Try to increase conversion rate where organization need to convert new lead in the existing customer.
• BSkyB plc should review their current price strategy and make sure to increase their services very frequent through targeting more people.
• Managers should focus on reducing overall direct cost will further show impact on gross margin.
• BSkyB plc should follow benchmarking technique to compare their operational performance with their competitors and identify the weaknesses that required improvement in order to maximise their production as well as profit margin.

TASK 4

Evaluate the effectiveness of reward system and appraisal system in increasing the retention and productivity in retailing sectors.

Retention of employees refers to ability of organisation to maintain its employees. A base salary plays a n important role to encourage an employee to work at optimum level which is required for them to sustain in their job. Success and failure of an organisation is totally dependent on quality of employees found in the organisation. Reward and engagement system is directly linked with employee mention. Reward management is basically a term which is related with factors that satisfy and motivate staff members to expand themselves towards organisation in order to achieve target goals and objectives. It helps an organisation to gain trust of the employees and help them to be committed with the organisation which can stimulate them to retain for a longer duration in the organisation. Most of the organisations like Marks and Spenser rely on rewards and appraisal system for employee retention. As this system helps in to motivate employees to work with their full potential so the system will help in to enhance productivity of the organisation (Azman and Ridwan, 2017).Reward system is concerned with both financial and non -financial rewards such as training, development.

Appraisal and reward system in the retailing sectors are intensive programs which encourage employees engagement and productivity of the organisation by offering increased pay, bonuses, additional time off and other benefits in order to get job done in an appropriate manner. It enhance profitability and productivity coupled with elimination of turnover rate. In context with Marks and Spenser praising and rewarding an employee for a job inspire them to work harder and to be more productive. It will enhance the productivity of overall organisation s all staff members tends to work with their full potential and will perform all tasks and activities in an affective way. Welfare and working conditions of the employees are critical for success of organisation. Rewards and appraisals in any organisation is an achievement of desirable gaols and objectives which eventually leads to productivity of the organisation (Plate and et.al., 2016). Relationship between employers and employees is mutually reciprocal as employers expect their staff members to give their best and employees expect from them to provide them some incentives or motivation during their takes. Employees in retailing sectors are liked to be valued and appreciated for their overall productivity. As workforce of the organisation is a critical stakeholder and contribute for the success of company. To improve productivity, employees do expect some opportunities through which they can get benefits such as safe working conditions, fair pay and a work environment that would not pressurize them.

Role of HR

The HR plays an important role in integrating reward system and appraisal system with in organisation. Thus, Human resource department of Marks and Spenser needs to motivate their employees by offering them opportunities to get rewards and additional pay. It will help to develop a positive and strong relationship with employees and HR manger and help to attain target goals and objectives. The HR plays as intermediator between employees and head of departments. As they are responsible for implementation of this with flexibility. There are some other responsibilities of them which are described below.

• They have role to design the whole process of appraisal system of company. In their roles they follow some considerations from which they can enhance growth. They ensure about role of each employee so that they can create system according to their key features.
• In this, they should design the system in such way that it does not take much time while having simple process so that it can assign to all members. They should present appropriate criteria that represent clear needs of performance.
• Their role includes to provide proper training to employees so that they can effectively take part in process of system (Rusu, Avasilcăi and HuÅ£u, 2016). The system must effective so that it can understand to all employees that can help them to set their goals.
• It is role of HR to change the thinking of employees who does not acknowledge the idea of appraisal and reward system. Their responsibility is to guide managers about providing appraisal to hard working employees so that they does not feel discriminate from company.
• The HR can also give feedback to head department of organisation about employees. After appraisal, it is role of HR to provide appraisal to employees according to selection.
• It is necessary to identify the satisfaction from appraisal of employees so it can be done by HR by taking feedbacks from employees.

CONCLUSION

From the above discussion it has been observed that financial analysis is most effective tool which will helps the organizations to identify financial performance. It further beneficial for the managers to make strategic decisions accordingly.

From the above task it can be concluded that reward and appraisal system plays a vital role in achieving success for the organisation and to motivate their employees to work with their full potential. They are the incentives program which encourage staff members to perform all the activities and task in an efficient manner in order to improve productivity of the organisation. The human resource management plays a vital role as they develop strategies to retain employees in the organisation and to motivate them to acquire target goals and objectives.

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