ACCA P5 – Advanced Peformance Management Exam Technique Steve Willis PwC’s Academy

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Topics

Why the low pass rates? Qualities of a good P5 answer How to demonstrate these qualities

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Why the low pass rates?

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P5 Pass rates

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20%

25%

30%

35%

40%

Dec 13 Jun-14 Dec-14 Jun-15 Sep-15 Dec-15

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What’s the problem? Some reasons…

•  Misunderstanding the objective of P5 it’s not just, “F5 with a bit more thrown in.”

•  It might look easy at first glance “Balanced scorecard; BCG; maximax, maximin… I know

all of this from previous papers”

•  Not answering the question “Evaluate the performance report” does not mean “evaluate the company’s performance!”

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Resitters: what will you do differently this time?

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Qualities of a good answer

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The examiner says…

Give a big picture view Provide valuable advice Ask yourself: does your answer help the organization?

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How do I achieve this?

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Big picture view

Can you turn data into information, and then evaluate performance? Do you see the link between KPIs in a performance report and a company’s mission or strategy? Link different areas of the syllabus? Different papers?

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Provide valuable advice

“What’s measured gets done” Imagine you are a management consultant Textbook answers will get 20-30%

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Does your answer help the organization?

Are you linking to the scenario? Are you giving: •  Advice? •  Recommendations? •  Evaluation? Would the company hire you based on your answer?

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Demonstrate these qualities

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Good professional-level writing

1 idea = 1 mark 1 mark = 1 short paragraph Use headings and subheadings Use short, concise sentences and paragraphs Give space between paragraphs Write in the active voice Aim for 2-4 sentences per paragraph Link as much as possible to the scenario

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Example 1: Bluefin School, D11

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Reading and planning

What is the verb? Object? Is there a specific theory asked for? If not, can I apply one? How much time do you have? Create a rough paragraph structure before you begin!

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Answer plan

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Deliver a good answer: exam technique

5 marks: aim for 5 clear ideas This means 5 short paragraphs Give the marker a clear paragraph structure Plan before you write How will you link to the scenario?

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Answer overview

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Paragraph 1

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Paragraph 2

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Example 2: Herman and Swan December 2012

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Compound requirement! Break it down

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Answer overview

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Paragraph 1

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Example 3: Graviton December 13

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Classic P5 Requirement

“Evaluate the performance measurement system” Make sure you can do a good job on this regularly examined

requirement!

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Big Picture View

We see a performance ‘dashboard’ for the board of directors that: •  Has some good aspects, e.g. financial and supply chain covered; external environment is covered •  But is not linked to all the CSFs of the business •  Is not covering some strategic problem areas

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Provide valuable advice

What’s good about the dashboard? What are the problems with the dashboard? How will you fix it?

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Does your answer help the organization?

You get what you measure! What needs to be measured? How will you measure it?

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Exam technique: reading and planning time

Recognize this classic requirement and be ready to answer the question! 15 marks is a lot of writing—what are you going to say? Don’t give an unstructured, unlinked list of short sentences and fragments… •  The report needs more sections •  The report needs more non-financial KPIs like quality and customer satisfaction •  The financial section is good, it has sales and profit

Avoid this generic shopping list approach!

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A good answer will consider things like…

Who are the users of the report? What level are they at? what are the CSFs of the organization? How do they compete? What information do they need? What info is provided? Anything you like about the report? What are the problems How you will improve the structure? how you will improve the content?

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15 Marks! You need a plan

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Overview

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Summary of features

Clear structure Short paragraphs Simple sentence structures Linking as much to the scenario as possible Big-picture view Giving valuable advice Trying to help the firm

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Paragraph Structures

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Structure 1

Point

Explain

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Structure 3

What?

So what?

Now what? Slide 38

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Structure 2

Calculate

Comment

Discuss Slide 39

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Calculate – comment – discuss 1 Revenue per park dropped 15% over 5 years (w1) This is a bad sign. Cundy doesn’t have her pricing right, or maybe they aren’t investing in new rides. Instead of investing in new parks maybe they should invest in new rides. BCG grid analysis might help here—which parks are the dogs to close?

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Calculate – comment – discuss 2 Profit per park dropped 40% over 3 years This is another worrying sign. Costs are not dropping as fast as revenues. They should have transformed more fixed costs to variable when they saw this trend. Maybe they need to improve cost control as well.

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Professional Marks

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Professional marks

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Objective

Impress the examiner! Professional marks can make the difference between a pass

and a fail!

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Format

Make your document look like a report Of course, you don’t have enough time to create a real report, but: •  Give it a great ‘cover page’ •  Include an executive summary and/or introduction •  Make your answer stand out here You have 4 marks, use the time •  But remember: format is not the only thing the marker is looking at

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Style

Tone set from the opening Use professional language, avoid academic style Use linking words Use short paragraphs, avoid bullet point “shopping lists” Link to the scenario by mentioning the people, company, and industry

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Structure

Verbs determine the section headings Use the objects of the verbs, or any model (e.g. balanced scorecard), to drive the subsections of the report Group ideas together Make sure there is a logical order to your paragraph structure

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Clarity

Use headings as signposts Short, succinct sentences Use the active voice, simple tenses

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Final thoughts

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Re-sitters, things to do differently:

ACCA Resources Study less, practice more! Mock exam Mind map answers from the recent past exams—how will you link each paragraph to the scenario? Reverse engineer the model answers Practice writing pieces of many questions Read news, do a little real world research

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Look at real-world examples of the P5 topics!

Kolmog D13:

“Evaluate the current strategic performance report…”

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International Hotel Groups Report

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“Explain the Balanced Scorecard approach and recommend suitable KPIs….”

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From the Novatis AGM Proxy Statement…

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Look…EVA J

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Evaluate a management style…

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Toyota “From Factory to Forecourt” Video

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Study less, practice more!

Develop these skills:

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One

Evaluate the external or internal environment using any of the appropriate tools (PESTEL, 5 Forces, gap analysis, benchmarking, BCG, etc…) Link to bigger picture: Make sure you can make valuable recommendations to the company based on the outcome of your assessment, and recommend KPIs for monitoring the environment.

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Two

Identify and place KPIs inside any of the performance management frameworks (Scorecard, Prism, 3-Es, Etc…) Link to bigger picture: Remember: ‘What’s measured gets done.’ Suggest KPIs that are linked to objectives, CSFs, and initiatives (like ‘defects per million’ if there is a quality initiative in the story).

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Three

Evaluate a performance report Link to bigger picture: Make sure you understand the purpose of the report, the user, the level of decision making, info needed, etc.., before you start evaluating.

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Four

Quickly transform data into information and assess performance Link to bigger picture: Make sure you are comparing like with like (e.g. companies of similar size or structure). If not tell the marker the problem is, e.g. comparing a private and a public hospital. Choose KPIs linked to the company’s objective and strategy.

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Five

Calculate and then assess divisional performance using ROI, RI, and EVA, plus transfer pricing Link to bigger picture: Make sure you focus on performance management problems like goal incongruence, unfair appraisal, too much focus on Financial KPIs, or uncontrollable KPIs

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Summary

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To wrap up…

P5 is a challenging exam, don’t underestimate it Give the examiner what he is looking for •  Big picture view •  Provide valuable advice •  Does your answer help the organization?

With good exam technique and enough preparation you can pass!

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LiveOnline Courses

•  Weekends in February •  Focus on exam technique and question practice •  Includes online materials

live.online@cz.pwc.com

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