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Human Resource Objectives

Targets pursued by the HR function or department of a business.

Labour Productivity

Measures the output of a firm in relation to the number of employees it has.

Quality

The extent to which a product meets customer needs and expectations.

Employee Engagement

Describes the connection between a business's employees and its mission, goals, and objectives.

Employee Involvement

Exists in a business in which people are able to have an impact on decisions and actions that affect their working lives.

Training

This is a process whereby an employee gains job-related skills and knowledge.

Talent Development

Refers to the development and guidance of outstanding or star employees who have the potential to make a major contribution to an organisation's performance and success.

Diversity

In an employment context, refers to recognising the differences between individual employees and also the differences that may exist between different groups of employees.

Human Resource Management

The design, implementation and maintenance of strategies to manage people for optimum business performance

HR Objective

A specific goal or target relating to the management and performance of human resources in a business. The achievement of these targets should assist the business in achieving its overall corporate objectives.

Human Resource Objectives

These are goals or targets that a business's HR department seeks to achieve. These targets should assist the business in meeting its overall corporate objectives.

Debt factoring

Companies buy the debt from a business and offer immediate cash.

Debt factoring (pros & cons)

Raising cash quickly, without the hassle of chasing payments and reduces the risk of bad debts, but only 90-95% of the debt will now be paid.

Overdraft

Allows the business to draw out more money than in the account to an agreed limit

Overdraft (pros & cons)

Flexible and quick and easy to arrange, but fees can be high and can be removed at short notice.

Retained profits

Using the businesses own profits to reinvest back in to the business

Retained profits (pros & cons)

No interest or repayments need to be paid and cash is available quickly, but this source of finance can be limited if the business makes little or no profit.

Share capital

This is the issuing of shares to raise finance

Share capital (pros & cons)

No interest and don’t have to pay this back, but will have to sacrifice shares and can lose some control.

Bank Loan

A loan is a sum of money lent for a fixed period of time, repaid over an agreed schedule

Bank Loan (pros & cons)

Interest rate is fixed and the loan is guaranteed cash and the lender doesn’t have a say on how the business is run, but pay interest and may be secured against personal assets

Venture Capital

A professional investor who invests in high growth, high risk businesses in return for shares and a high return.

Venture Capital (pros & cons)

Large sums of money (£250,000+) and no interest paid, but may have to sacrifice shares of the business and they will expect return on their investment

Crowdfunding

This involves attracting investment from a large number of speculative investors many of whom may invest relatively small amounts.

Crowdfunding (pros & cons)

Offers the ability to raise finance from a large number of investors and no interest is paid, but partial loss of ownership and no guarantee that the crowd fund will attract sufficient investment

Internal sources of finance

Ones which come from the owners of or from within the business.

External sources of finance

Ones which come from outside of the business.

Short-term finance

Finance needed for a limited period of time, normally less than one year.

Long-term finance

Those sources of fiancé that are needed over a longer period of time, usually over a year.

Fixed costs

Costs that do not vary with the level of output, for example rent.

Breakeven point

The point where a firm’s total costs are equal to total revenue.

Break-Even Point

The point where total revenue equals total costs.

Contribution

The difference between sales revenue and variable costs of production.

Contribution per unit

Difference between the selling price of one unit and the variable cost of producing one unit.

Total Contribution

Contribution per unit multiplied by the number of units sold.

Break-even level of output

The level of output or the number of customers where total revenue equals total costs.

Margin of safety

The amount by which the existing level of output is greater than the break-even point.

Break-even output

Fixed Costs divided by Contribution per unit

Contribution per unit

Sales Revenue per unit minus Variable Cost per unit

Total Contribution

Contribution Per Unit x Qty Sold

Total Contributions

Sales revenue – VC

Profit

Total contributions – FC

Break-Even Point Formula

Fixed Costs/(Selling Price - Variable Costs)

Fixed Costs

These MUST be paid even if no items are sold: Rent, Managers Salaries, Insurance, Rates

Variable Costs

These are only paid as items are made/sold: Raw Materials, Wages, Power (for machines)

Contribution pu

Selling Price pu – Variable Costs pu

Break-Even

Fixed Costs / Contribution Per Unit

Cadbury’s Fingers Break-Even

£1,200,000 / (£2.79-£1.25)

Dizzee Rascal Break-Even

(£5,250,000 - £4,000,00) / £8

Total contribution

Contribution per toy x number of toys = £59 x 4000 = £236 000

Profit calculation

total contributions minus fixed costs = profit

MARGIN OF SAFETY

The difference between the break- even level of output and the actual level of output.

Budget

A financial plan that forecasts revenue from sales and expected costs over a time period.

Cash Flow Forecast

Shows the movement of cash in and out of a business over a time period.

Variance Analysis

Shows the comparison between the Budgeted figure and the Actual figure achieved.

Budgets

Financial targets for the future covering revenue (income) and expenditure (outgoings) over a certain time period

Expenditure budget

A fixed sum of money to be spent in a given time period by a department or business.

Budget holder

A person who is accountable for seeing that a budget is kept to.

Income budget

The sales revenue target for a department or the whole business.

Delegated budget

Giving some control in the setting and spending of budgets to departments or individuals.

Profit budget

The target profit for the business over a given time period – this is created by combining the Expenditure and Income budgets.

Monitoring budgets

Keeping a check on progress towards achieving targets during the budget period.

Income Budget

Revenue budgets

Expenditure Budgets

Cost Budgets that set spending limits for a business and separate departments or individuals within a business (budget holders).

Profit Budget

Provide clear goals and targets that motivate people to perform well but also allow monitoring of performance against actual profits made and combination of the Income and Expenditure Budgets.

Favourable Variance

When the Actual figure is better than the Budgeted figure.

Adverse Variance

When the Actual figure is worse than the Budgeted figure.

Cash Flow

The movement of cash into and out of a business over a period of time.

Cash Flow Forecasts

Prepared in advance and usually over 3, 6, 9, or 12 months to help identify possible financial problems.

Cash Flow

The total cash payments (inflows) into a business minus the total cash payments (outflows).

Liquidation

Turning assets into cash.

Insolvent

When a business cannot meet its short-term debts.

Cash Inflows

Payments received by a business, such as from customers or a loan.

Cash Outflows

Payments made by a business, such as those to suppliers and workers.

Debtors

Customers who have bought products on credit and agreed to pay at a future date.

Credit Sales

Value of goods sold to customers who do not pay cash immediately.

Cash Flow Forecast

An estimate of a firm's future cash inflows and outflows.

Net Monthly Cash Flow

The estimated difference between monthly cash inflows and outflows.

Opening Balance

Cash held by the business at the start of the month.

Closing Balance

Cash held at the end of the month, which becomes the next month's opening balance.

Matching Supply to Demand

Matching production output to meet customer demands, avoiding both shortages and excess capacity.

Outsourcing

Using external providers for certain business functions or services.

Temporary Staff

Employees hired for a specific period, useful for managing fluctuating demand.

Part-Time Staff

Employees who work fewer hours than full-time staff, often used to cover peak periods.

Inventory Control Charts

Charts used to visually represent and analyze inventory levels over time to inform inventory management decisions.

Lead Time

The time between placing an order and receiving it.

Re-order Level

The inventory level at which a new order should be placed.

Buffer Level of Inventory

Extra inventory held to guard against fluctuations in demand or supply.

Re-order Quantities

The quantity of inventory ordered each time an order is placed.

Inventory

A business's inventory or stock of goods, including materials, work-in-progress, and finished goods.

ISO 9000

Standards ensuring products meet specific quality requirements.

Reliability of Delivery

Dependability and consistency in delivering products or services.

Ethical Considerations

Considerations related to ethical practices in the supply chain.

Supply Chain

The network of all entities involved in producing and distributing a product or service.

Supply Chain

All providers of resources (money, people, finance, machinery, equipment) at different stages of the operations process.

Outsourcing

Using an outside supplier for some of its goods and services.

Quality

Measured by the extent to which an operation meets its customer requirements; a quality good or service is one that is 'fit for purpose'.

Quality Assurance

A system of agreeing and meeting quality standards at each stage of production to ensure customer satisfaction.

Quality Control

Based on inspection of the product or a sample of products.

Quality product

A product that meets customer expectations and is therefore fit for purpose.