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Firm Performance and Expenses on Employees - A Comparative Analysis between Metcash Group and Woolworths Group

Table of Contents

1.Executive summary

2.Introduction

2.1 Professional requirements

2.2 Aim

2.3 Research Questions

3.Literature review

3.1 Human resource management in organization

3.2 Job satisfaction and employee performance

3.3 Employee expenses and financial performance

4.Research Plan

4.1 Data collection

4.2 Data Analysis

4.3 Hypotheses

5. Conclusion

6.Gantt chart

7.References

8.Appendix

1. Executive summary

In this report, the research proposal of the comparative analysis between the Metcash Group and Woolworths Group has been done, based on the relationship between the expenses on employees and financial performance. The aim and research questions for the research have been developed. The significance of the research has also been identified. Furthermore, the literature on the research topic where human resource management in organisation, job satisfaction and employee performance and employee expenses and financial performance have been analysed. In addition, the research plan has been developed, where the data collection plan, data analysis method and the developed hypotheses have been explained in relation to the research. Finally, the report has been concluded with the Gantt Chart which shows the feasibility of the research.

2. Introduction

Job satisfaction is a significant factor affecting human resource management in a company and factors which affect job satisfaction are the individual characteristics, group relationships outside the job, and the specific job factors. The personal factors which affect the job satisfaction level are sex, age, education level, and the time of the job. Furthermore, the other job factors are the type of work, skills an employee has, occupational status and the responsibilities. Moreover, factors like wages, job security, benefits, working conditions, and opportunities for promotion. The job satisfaction in a company can be measured on the basis of the job description index, the satisfaction survey, satisfaction questionnaire, or the face scales (Mishra, 2013). However, the job satisfaction level can be determined by the expenses by the company on the employees, which directly affects the financial performance, as those factors determine the job satisfaction level, which thereby affects the financial performance of the company (Ouedraogo amp Leclerc, 2013).

2.1 Professional requirements

This research is significant for my profession, as the research is based on human resource management. Furthermore, by analyzing the impact of the employee expenses on the financial performances in two different companies, it can be determined that whether the quantitative initiatives to improve the employee performance and job satisfaction has on a significant effect on their production and thereby on the financial performance of the company or not.

2.2 Aim

The aim of this research is to determine the impact of the expenses on the employees on the financial performance of Metcash Group and Woolworths Group and compare the results.

2.3 Research Questions

Research Question 1 Is the impact of employee benefit expenses on the gross profit margin is greater in Metcash Group when compared to Woolworths Group
Research Question 2 Is the impact of employee benefit expenses on return on equity is greater in Metcash Group, when compared to Woolworths Group

3. Literature review

3.1 Human resource management in organization

According to the research of Burma (2014), human resource management is required for maintaining the primary quality and efficiency at work. This is one of the most significant strategies of the company for the competition. The research also reports that the companies who invest in human resource management and make an attempt to create the working conditions are the organizations which achieve success. However, the research of Schroeder (2012) contradicts the research of Burma (2014) and reports that for maintaining efficiency at work, sustainable initiatives are required and the human resource management is not contributing towards the sustainable development and they are not centrally involved in addressing the issues related to the sustainable development. Furthermore, the research of Parameswari amp Yugandhar (2015) supports the research of Burma (2014) and concludes that human resource management is one of the most significant parts of the organization and the strategic role of the human resource is to ensure the higher output from the employees, so that the returns in the organization can improve.

The research results of Mwaniki amp Gathenya (2015) reports that the human resource department is an important corporate asset and the department is focused towards increasing the productivity of the employees, as also concluded by the research of Parameswari amp Yugandhar (2015). Furthermore, the research evaluated the relationship between the department and the organizational performance and deduced that with the improvement in the efforts of the department, there is a continuous increase in the organizational performance (Mwaniki amp Gathenya, 2015). The roles of the department which effects the organizational performance are the payroll and benefits for the employees, the employee benefit schemes, hierarchical position of the departments, internal policies for the employees, legislation that support the implementation of the HRM and unionization of the workers (Bradl amp Pohler, 2010).

3.2 Job satisfaction and employee performance

The research of Saranya (2014) supported the research of Mwaniki amp Gathenya (2015) and reported that the job satisfaction is one of the most complex issues that has been faced by the managers these days. In addition, the research reports that the job satisfaction has an impact on the motivation level of the employees, which affect their productivity level, furthermore, this result in positively affecting the performance of the business organization. The research of Inuwa (2016) has been supported by the research of Saranya (2014) and reported that there is a positive and significant relationship between the job satisfaction level and the employees performance. The research of Ouedraogo amp Leclerc (2013) also supported the research of Saranya (2014) and Ouedraogo amp Leclerc (2013) and reported that factors which result in job satisfaction are the job situation, organizational culture, vision and governance structure, organizational strategy and job situation. However, the research of Ouedraogo amp Leclerc (2013) also reported that the remuneration and the employee benefits do not have a significant effect on the job satisfaction level of employees.
3.3 Employee expenses and financial performance research of Asri (2017) deduced that the human resource department has a significant effect on the financial performance of the organization. The research reports that with the increase in the number of the employees in the organization, there is a decrease in the financial performance, however, if the expenditure by the department is done on the education and training of employees, then the relationship is significant and positive. In addition to this, the research of Ekere amp Amah (2014) while contradicting the research of Ouedraogo amp Leclerc (2013) and supporting the research of Saranya (2014) reported that when there are low employee benefits and high stress, the job satisfaction is low, which result in poor organizational performance. However, the research of Obasan (2012) supports the research of Ekere amp Amah (2014) and contradicts the research of Ouedraogo amp Leclerc (2013) while reporting that there is a significant relationship between the compensation strategy and the overall organizational benefits and it is an important factor for attracting, retaining and motivating employees.

4. Research Plan

4.1 Data collection

In order to establish a relationship between the employee benefits expenses and financial performance of Metcash Group and Woolworths Group and then compare the results, the data has been collected from the annual report of the companies and the Morning Star Website. Morning Star is a trusted website for the collection of financial data of different companies. The data has been collected for 10 years from 2009 to 2018. The financial performance of both the companies is evaluated on the basis of two variables, gross profit margin and return on equity. The financial data of the Metcash Group and the Woolworths Group has been collected from the Morning Star Website,
Metcash Group https//www.morningstar.com/stocks/XASX/MTS/quote.html (Appendix A)
Woolworths Group https//www.morningstar.com/stocks/XASX/WOW/quote.html (Appendix B)
The data on the employee benefits expenses is collected from the annual reports of the company. The variable for evaluating the employee benefits expenses is employee expenses.
Metcash Group https//www.metcash.com/investor-centre/annual-reports/ (Appendix A)
Woolworths Group https//www.woolworthsgroup.com.au/page/investors/our-performance/reports/Reports/Annual_Reports (Appendix B)

4.2 Data Analysis

To determine the impact of the expenses on employees on the financial performance of Metcash Group and Woolworths Group the regression analysis has been conducted. The data will be analyzed in MS-Excel, where 4 different regression equations will be developed. The dependent variables will be returned on equity and gross profit margin of both the organizations and the independent variable is employee expenses in both the organizations.
Equation 1
Return on equity of Metcash Group b0b1(employee expenses in Metcash Group)Equation 2
Return on equity of Woolworths group b0b1(employee expenses in Woolworths Group )Equation 3
Gross profit margin of Metcash Group b0b1(employee expenses in Metcash Group)Equation 4

Gross profit margin of Woolworths Group b0b1(employee expenses in Woolworths Group)After the regression analysis results, the results will be compared on the basis of the hypothesis developed. The regression result of the impact of the employee expenses on the gross profit margin in the Metcash group and Woolworths Group will be compared. Furthermore, the regression results of the impact of the employee expenses on the Return on Equity in Metcash Group and Woolworths Group will be evaluated.

4.3 HypothesesHypothesis 1

Null hypothesis There is no significant difference while evaluating the impact of employee expenses on the gross profit margin in Metcash Group and Woolworths Group.
Alternative hypothesis There is a significant difference while evaluating the impact of employee expenses on the gross profit margin in Metcash Group and Woolworths Group.

Hypothesis 2
Null hypothesis There is no significant difference while evaluating the impact of employee expenses on the return on equity in Metcash Group and Woolworths Group.
Alternative hypothesis There is a significant difference while evaluating the impact of employee expenses on the return on equity in Metcash Group and Woolworths Group.

Conclusion

In conclusion of the above report, it can be inferred that the aim of the research is to determine the impact of the expenses on the employees on the financial performance of Metcash Group and Woolworths Group and compare the results. While evaluating the literature, it was identified that there are researches which supports and also contradicts the significant and positive relationship between the expenses on employee and firm performance. The literature also related the firm performance with the human resource department initiatives and the job satisfaction of employees. For the results, the data will be collected on the employee expenses by the companies from the annual report for 10 years and the financial performance of the companies will be analyzed based on the return on equity and gross profit margin.

Gantt chart

The following table provides the timeline for conducting the proposed research
Activities Start date End date Number of days
Selection of research topic 8/03/2019 10/03/2019 2 days
Data sources 11/03/2019 12/03/2019 2 days
Project Plan 13/03/2019 14/03/2019 2 days
Retrieval of Journal articles 15/03/2019 16/03/2019 2 days
Literature review 17/03/2019 19/03/2019 3 days
Research plan 20/03/2019 21/03/2019 2 days
Complete research proposal 22/03/2019 23/03/2019 2 days
Review of research proposal 24/03/2019 24/03/2019 1 day
Submission of research proposal 25/03/2019 25/03/2019 1 day
Data collection 26/03/2019 30/03/2019 5 days
Data analysis 31/03/2019 8/04/2019 9 days
Final report draft 9/04/2019 17/04/2019 9 days
Incorporation of feedback and final report 18/04/2019 1/05/2019 14 days
Review of final report 2/05/2019 5/05/2019 4 days
Final report submission 6/05/2019 6/05/2019 day

References

Asri,M. (2017). Effect of human resources on financial performance of the Islamic Bank in Indonesia. IOSR Journal of Business and Management, 19(12), 32-35.
Brandl, J., amp Pohler, D. (2010). The human resource department's role and conditions affect their development explanations from Austrian CEOs.Human Resource Management,49(6), 1025-1046. Burma, Z. A. (2014). Human resource management and its importance for todays organizations.International Journal of Education and Social Science,1(2), 85-94.
Ekere, A. U., amp Amah, E. (2014). Staff Benefits and Organizational Performance. A study of Private Hospitals in Rivers State, Nigeria.IOSR journal of business and management,16(2), 24-28. Inuwa, M. (2016). Job satisfaction and employee performance An Empirical Approach.The Millennium University Journal,1(1), 90.
Mishra, P. K. (2013). Job satisfaction.IOSR Journal of humanities and social science,14(5), 45-54.
Mwaniki, R., amp Gathenya, J. (2015). Role of human resource management functions on organizational performance with reference to Kenya power amp lighting company Nairobi west region.International Journal of Academic Research in Business and Social Sciences,1(5), 432-448. Obasan, K. A. (2012). Effect of compensation strategy on corporate performance Evidence from Nigerian firms.Research Journal of Finance and Accounting,3(7), 37-44.
Ouedraogo, A., amp Leclerc, A. (2013). JOB SATISFACTION AND ORGANIZATIONAL PERFORMANCE EVIDENCE FROM CANADIAN CREDIT UNION.Journal of Organizational Culture, Communications amp Conflict,17(1). Parameswari, B. N., amp Yugandhar, V. (2015). The role of human resource management in organizations.International Journal of Engineering Technology, Management, and Applied Sciences,3(7), 58-63.
Saranya, K. (2014). Influence of Job Satisfaction on Employees PerformanceA general Perspective.International Journal on Global Business Management and Research,2(2). Schroeder, H. (2012). The importance of human resource management in strategic sustainability An art and science perspective.Journal of Environmental Sustainability,2(2), 4.

Appendix

8.1 Appendix: A (Metcash Limited)Years Gross profit margin Return on equity Expenses for employee benefit in million
2009 9.39 16.09 416.6
2010 9.4 17.54 430.3
2011 9.52 17.93 452.1
2012 9.54 6.83 453.3
2013 9.39 14.31 485.7
2014 9.32 10.56 507.6
2015 9.26 -28.09 553.1
2016 8.34 17.25 564.6
2017 8.75 11.5 605.4
2018 8.91 -9.94 646.9

8.2 Appendix: B (Woolworths Group)
Years Gross profit margin Returns on equity Expenses for employees benefits in million
2009 25.60 28.67 5724.3
2010 26.06 28.10 5969.9
2011 25.96 28.01 6099.2
2012 26.42 23.02 6419
2013 26.86 26.25 7001.6
2014 27.03 25.43 7239.8
2015 27.15 20.35 7046.7
2016 26.77 -12.79 7669.7
2017 28.61 17.04 7924
2018 29.03 17.23 8214
 

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