Reference no: EM132268011

ASSIGNMENT BRIEF Handy Homes are a private family owned limited company. They provide residential care for elderly or infirm people. Their residents are either privately funded or funded by local authorities. The company is run by the Handy family and was created in 2005. The managing director is Charlotte Handy and she is the eldest of the five Handy family members and likes to know everything that is happening and likes to be in control of all decisions. All the other family members ask Charlottes’ permission before they make any decisions. Originally the company had five residential homes that were all run by a member of the family. Over the last three years the company has expanded and added another 15 homes. They have identified that their offer fills a niche part of the market and have an ambitious expansion programme over the next few years to add on another 20 homes. This will mean that their business will change from a ‘small to medium’ enterprise to a large company. This will have several implications on how they run and control their business. The largest revenue cost for the company is the labour charges. Each home must be staffed by various carers. As this is a large cost it is important that it is controlled and that the expenditure does not exceed the budgeted amount. The homes can house around 30 residents. The Handy family believe the homes are not large enough to warrant a manager to be permanently onsite to control activities. The homes are not nursing homes so there is no requirement for any qualified nursing staff. As soon as a resident needs nursing care they are transferred to another provider. They also provide respite care so they often have residents coming and staying for two or three weeks whilst their family or home carers have a break. The ethos of the homes are that they are small enough to feel like “home” and large enough for residents to have regular company and to avoid being lonely. Staff are on site at all time to help with meals and daily activities. At no time are the residents left unsupervised. The average staff numbers for each home is as follows: Three team leaders, four senior care assistants, nine care assistants, one activities co-ordinator, two cooks, five kitchen assistants, one head housekeeper and four cleaners. There are always three members of care staff on duty, five at busy times plus two waking members of staff during the night. There is a member of the management team on call every day all day but is not always within travelling distance of the home. The current system is based on the staff sending in the hours they have worked to Harriet Handy who looks after the administration of the company. Quite often the late arrival of a new resident incurs overtime fees for staff and they regularly send in their timesheets late. This often happens as the transportation from hospital is delayed. Harriet struggles to reconcile the hours worked to the budgeted hours. Harriet often has to phone the homes to check the numbers and confirm the data is correct and several times it has been over stated and the staff are claiming for more hours than they have worked. There is an ethos within the staff that some of the overtime is “guaranteed” and that they are entitled to it whether or not they have actually worked those extra hours. This is not a problem in the homes where the five family members work however it is becoming an issue in other homes. Charlotte has been investigating the profitability and performance of the homes. The current weekly rate ranges between approximately £620 to £800 for long stays and £680 - £900 for respite care for up to three weeks. The rates vary depending on whether they are funded by the local authority or privately with the local authority often achieving the cheaper rate. There are usually two rooms that have respite care residents throughout the year. The team leaders, senior care assistants and care assistants have been claiming an average of 50% of their salary in overtime. Overheads are £250,000 per home and direct costs are £125,000.

Required: 1. Critically evaluate the management control systems that are currently in place at Handy Homes. Discuss the changes that Handy Homes will need to make in order to retain control over their organisation as it grows. Specifically discuss the issues that small companies have when expanding to be large organisations. Evaluate the control types and the tightness of the controls with reference to the optimum balance of control and autonomy imposed on employees. Support your answer with the relevant control theory.