Management Accounting of WealthWise - Essay Example

? Management Accounting 2 of the Table of Contents Answer 2 3 Answer 3 4 Answer 4 7 Reference 11 Answer 2 WealthWise is an Australian company involved in offering insurance and investment services to the customers since 1986. The company was floated by Jeannette Dai, who initiated the business with the intention of contributing to the society through social work, and not just profit maximization. WealthWise offers various retirement plans, investment options, Aged care services, insurance facilities, and superannuation services to its customers. The company got listed to Australian Stock Exchange in the year 2001 (WealthWise, 2013b). The stances of the company such as promotion of environment friendly management, and charitable activities of the company have assisted WealthWise to become popular among its customers. The present CEO of the company, Sylvia Trott had realized that the company is inclining towards past achievements and the employees were not satisfied with this behaviour of the management towards them. So in order to measure the performance of the company, a sustainability approach has been adopted to identify certain key performance indicators of the company, such as: a) Social Indicators, b) Economic Indicators, and c) Financial Indicators. a) Social Indicators: The social indicators of WealthWise are the satisfaction level of the employees, percent of female employees in the top tiers of the management, number of employees recruited, who used to unemployed teenagers, ethical ranking that were given by the customers for the sales staff, and the number of native employees in the company. b) Financial Indicators: The major financial indicators that were considered are the return on investments, insurance premiums, and the net profit of the company. c) Economical Indicators: The economical indicators were the practices, and policies that the company implemented for the local suppliers and the expenses to maintain them, the method of recruiting or hiring the native staffs, and the projects that were developed for the benefit of the public. The mission of WealthWise during its inception was to offer environmental and social benefit to the people along with profit maximization. Further, with the progress and growth of the company, the mission of WealthWise extended to assist the customers in achieving a desired lifestyle through financial planning. Apart from this, employee satisfaction is also important because if the employees were dissatisfied then they cannot satisfy their customers. The philosophy of the company is to reflect financial growth, trust and strength through growing upwards, communicate positively, with energy, so as to achieve its mission (WealthWise, 2013a) In order to achieve the mission by the company, all the major performance indicators have to be considered. The social and the environmental benefit can be provided to the customers and society through assessment of the level of employee satisfaction, issues like gender parity in the top tiers of the company, pay scales, and performance evaluation techniques for the employees (Ladley, 2010). The mission to grow and generate revenue can be achieved by observing the financial indicators of the company, which consist of gross insurance premiums that the company can generate through insurance sales, the return of the company on investment, and the net profit. Apart from this, the economic indicators would provide a view of the effects of policies, practices of WealthWise, relationship with the suppliers, hiring process, etc (Rose, & Hudgins, 2010). Answer 3 Performance indicators are the elements that are assessed to evaluate the performance of the company. The term key performance indicators (KPIs) are used by the companies to scrutinize the success factors of various activities of the company. The KPIs can be quantitative, directional, financial, actionable, and practical. In case of WealthWise few KPIs, such as economical, financial and social, were considered for evaluating the performance and ensuring sustainable growth of the company. However, other indicators such as market penetration, risk and control measures, strategies, and resources can be also considered in deciding the KPIs of the company. The performance of the insurance agents involved in sales activities are also considered as a KPI (Warren, and Reeve, 2006). This would also include the number of plans or policies sold, and the total number of satisfied customers that the company has gained by providing policies to its customers. Even the elements that have been considered in the KPI of WealthWise are not enough to analyze all the facets of sustainability and performance evaluation in the company. The financial indicators would not only be assessing the net profit, insurance premiums and return on investment of the company specifically, but analysis has to be done in a broader sense. This means that both profit and investment performance has to be identified and evaluated. Profit performances include net premium that is earned by the company, and the profit that is generated from the underwriting activities. On the other hand, the investment performance includes funds spend for company assets and for other activities. Further, the elements that need to be evaluated in case of financial indicators are earning per share, sales of the company, return on equity, dividend per share or dividend cover, etc (Respicio, and Burstein, 2012). Apart from the financial indicators, there are several non-financial indicators, which can be segregated into internal and external indicators. The internal indicators would be including market research, training of agents and employees, morale of the employees, pace of processing the proposals, etc, while the external indicators are the increase in the number of policies, satisfaction of the customers, market share of the company, expansion of WealthWise in term of customer base, number of offices or branches, or countries of operations, increasing number of agents, etc. The operational indicators that would assist in determining the internal operational efficiency of WealthWise are number of dropouts, reintegration cases, repudiation cases, dispute or failed cases, time required to settle claims, processing times of forms, etc. Other indicators such as business risks, market analysis, strategies followed by competitors, influences of the regulators, and the new policies of the growing industry also need to be considered because sustainability cannot be achieved without assessing the external environmental factors. All the performance indicators that has been considered would be helpful for the company to analyse its own performance, employees performance and the external environment of the company, but there should be certain indicator to judge the policies of the management for its employees too, so that the ways of increasing employee satisfaction, improving organisational culture, and designing better reward plans can be formulated (Turban, McLean, and Wetherbe, 2007). The long-run performance, as well as the short-run performance of the employees should be considered positively, and accordingly reward structures should be designed to retain employees and motivate them. Customer advocacy, leadership and employee engagement are also the non-financial indicators. There are certain KPIs specifically considered for the insurance companies, which WealthWise can also consider as a deciding factor, such as cycle of application to issuance of the policy. The variation between the time of application and actual issuance of policy would assist in measuring the cycle. The cycle time or period required for policy emission would also be a major indicting factor of operational efficiency. Time required for closing a claim, customer retention, and cross-selling percentage. The size of the company also has significant impact on the profitability indicators of the business. For example, similar size companies are generally compared to analyze the performance, as they tend to provide similar results. Other than this the financial ratios and analysis of the financial statements are also the indicators of financial health of a company. Ratings from credit rating companies are also considered as indicators of performance or financial health of companies. Investors strongly consider the credit rating as KPI (Jellema, 2011). Answer 4 Human Resource is an asset for any company because all the other resources are futile with the participation of human resource, so in order to encourage employees for attaining sustainability, the CEO of WealthWise, Sylvia Trott can utilise the following strategies stated below: a) Explain the key strategies of the organisation for success, and allow the employees to undertake business decisions based on well-researched information, so as to achieve the mission and objectives stated. b) In order to develop the sustainability performance of the firm, the employees should be clarified regarding the environmental and social performance that the company is expecting from them, not only for the benefit of the firm, but also for their individual purpose too. c) The employees should be trained on issues related to sustainability management. d) Fake drills should be organised, such as in case of WealthWise employees should be given real life situations which would be consisting of solving issues related to disputes, or client management (Epstein, 2008). e) Share financial data and information with the employees, so that they get the real picture of the financial status of the organisation and formulate their strategies accordingly. f) Encourage the employees for their smallest achievements by highlighting it department-wise or in branch, so that they get motivated towards achieving better results for themselves and for the company. g) Train employees and teach them to tackle problem situations, deal with clients, and identify solutions of dispute cases, etc (Brebbia, 2012). h) Allow the employees to share the success of the company by offering them a percent of profit, which would be tied to the business metrics. i) Engage the employees by allowing them to solve difficult business problems in the company, so that they get environmentally and socially involved in the organisation. This would lead to sustainability, and assist the management in employee retention. j) Implementing balanced scorecard in the organisation would not only manage and monitor the KPIs ascertained for the company, but also assist the employees in evaluating their own performance, so that the appraisal bar or level is clear to them. k) Open-Book management system can be suggested because it would assist the management of WealthWise to develop a sense of trust and collaboration among the employees, infuse strong sense of security and ownership in the staff, encourage innovative thinking, and keep the employees better informed regarding the status of the company (Doppelt, 2010). l) Involving the employees in the social initiatives taken by WealthWise to educate students, offering voluntary help to old age and young people would assist the management to create an ethical image of the company in the minds of its customers. m) Remuneration, rewards, incentives, or performance appraisal methods, slabs, and guidelines should not be manipulative, and should be similar for all the employees. n) Diversity should be promoted by recruiting employees irrespective of country, class, gender, or creed. In global competition diversified and sophisticated marketing techniques can be helpful in offering competitive advantage to WealthWise. o) Balance in the organisation can be ascertained through training the employees on attaining work-life balance, so that they do not get stressed out and suffer from depression due to work-pressure. p) Being an insurance company, wealthWise offers insurance services, retirement plans, aged plans to its customers. Similarly employees too require occupational safety and health assistance from the company. The company should offer health insurance to the employees and their immediate family members, such as parents, wife or children. Occupational safety would include a safe place to work. q) The CEO, Sylvia Trott must ensure that the communication of information related to WealthWise is regularly done to the stakeholders of the company, which also includes the employees. r) The managers and the top level management must offer informal assistance at the work place for the employees to motivate an ambience of learning and growth. Management development series are intended for the managers, so as to train the managers. s) The feedback of the performances of the employees is clearly explained to them, so that they can judge their own efforts and results too (Broughton, & Thomas, 2012) t) The emotional components should be there because employees are human being s and the sense of attachment, belonging, growth, security, or pride affects an employee and motivates him towards his work. Reference Brebbia, C. A. (2012). Sustainability today. Billerica, MA: WIT Press. Broughton, A. C., & Thomas, J. (2012). Embracing Open-Book Management to Fuel Employee Engagement and Corporate Sustainability. Retrieved from: http://www.kenan-flagler.unc.edu/executive-development/about/~/media/C910D7FE40984DAF8DFD90A37335E452.ashx. Doppelt, B. (2010). Leading change toward sustainability: A change-management guide for business, government and civil society. (2nd ed.). Sheffield: Greenleaf Publishing. Epstein, M. J. (2008). Making sustainability work: best practices in managing and measuring corporate social, environmental, and economic impacts. California: Berrett-Koehler Publishers. Jellema, L. (2011). Oracle Soa Suite 11G HB. New Delhi: Tata McGraw-Hill Education. Ladley, J. (2010). Making enterprise information management (eim) work for business: A guide to understanding information as an asset. Burlington, MA: Morgan Kaufmann. Respicio, A., & Burstein, F. (2012). Fusing decision support systems into the fabric of the context. Amsterdam: IOS Press. Rose, P. S., & Hudgins, S. C. (2010). Bank mgmt & financial services. New Delhi: Tata McGraw-Hill Education. Turban, McLean, & Wetherbe. (2007). Information technology for management: Transforming organizations in the digital economy. New Jersey: John Wiley & Sons. Warren, C. S., & Reeve, J. M. (2006). Financial and managerial accounting. (9th ed.). Connecticut: Cengage Learning. WealthWise. (2013a). Our philosophy: Trust in our experience. Retrieved from: http://www.wealthwise.com.au/about-wealthwise/our-philosophy. WealthWise. (2013b). Financial wisdom. Retrieved from: http://www.wealthwise.com.au/about-wealthwise/financial-wisdom. Read More