Trial a reward-based remuneration system

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Reference no: EM133745293 , Length: word count:1000

Business Performance

Assessment 1

Case study

Ananda Tropic Collections Pty Ltd

Ananda Tropic Collections Pty Ltd (ATC) is an Australian company that operates a fashion retail and wholesale business based in Brisbane. You are a Chartered Accountant at a small accounting firm which recently took on ATC as a client.

ATC has been assigned to your client list, leaving you responsible for all its accounting and advice needs. ATC's year end is 31 December, and all amounts are presented in Australian dollars.

Key performance indicators (KPIs)

Madison would like to implement KPIs to help translate organisational objectives into quantifiable performance measures for ATC employees. Madison has drafted the following KPIs for Joshua, who has agreed with her decision to measure the effectiveness of his work through KPIs:
All inventory credits processed within two business days of receiving the weekly defect report.
Inventory accuracy rate of at least 95% when reconciled to physical inventory.
Marketing expenditure per $ of sales revenue less than 15% per quarter.
Trade income increasing 2% per quarter.

Reward-based remuneration

In addition to using KPIs, Madison wants to trial a reward-based remuneration system that would pay Joshua a bonus for achieving targets. If successful, a similar system will be implemented for Deidre. They agree to select one KPI on which he would be paid a bonus.

Currently, ATC only has a 2% conversion rate for customers currently visiting ATC's website using Shopify's e- commerce platform. This means that, for every 100 visitors to the platform, only 2 people make a purchase. After some negotiation, they determine the following KPI as an appropriate measure on which the bonus will be paid:

conversion rate (percentage of website visitors who make a purchase) to increase to 4% by end of September 2024.

Reference no: EM133745293

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