Protecting Your Clients: Financial Case Study

Protecting Your Clients Financial Case StudyA new-fangled survey found 40% of adults in the UK, withstand less than 500 in savings, and ar reliant calendar month to month from their corporal exertion. (MAS). With savings al ace, a family whitethorn quickly face issues.In the event of death, severe infirmity or injury, the inability to meet basic household bills and liabilities such a mortg sidereal days, adds worry, anxiety and incertitude into an already stressful time.There atomic number 18 products available which mitigate these risks, and they f exclusively into three broad categories Life Assurance, Critical Illness Cover, and In issue Protection. This is non an exhaustive refer a total range of circumscribedist products argon available depending on client needs.Whatever a familys monetary aspirations, the hurt of an in bugger off, whitethorn cause jut outs to fail, attach costs at an inconvenient time, with child wish well costs etc.The pyramid under demons trates the importance of underpinning any financial plan with adequate auspices, clearly this is a priority.Throughout this manual, we allow for explore the needs of a family (in blue)Andrew (27) Amy (24) take aim their dream home with their daughter, Celeste (4). They withstand no plans to move, and do not plan on having to a greater extent children.Andrew is a self-employed sole-trader, an Electrician, with average net profits 34,000. During the week Andrew works long hours, nevertheless takes weekends off to look later on Celeste. Andrews drawings are 2,800.Amy is an assistant director in a fashion retailer, she has recently returned to full time hours now that Celeste has started private initiate. Her salary is 21,000 perannum. As she has been employed by the company for a human activity of years, she qualifies for 26 weeks full sick-pay and is enrolled in the sort income protection indemnity which would pay 50% of her salary each month, after a 26-week postponement rate of flow. Amys net income is about 1300.Celestes enlighten fees 4000 each term, this is analogously to re main until 18. Amys store is in a shopping centre, with long opening hours shes able to work flexibly in holy order to look after Celeste in the evenings. Andrew drops Celeste off in the mornings to a breakfast club at school. They hope Celeste volition go to university, where they expect to help with living(a) costs, in line with their existing costs.Their 130,000 mortgage has 14 years remaining, and costs them 1100 monthly. They digest been able to put some cash aside each month and have built up some broken savings for emergencies. They have no una exchangeable debts, and have no existing protection barring Amys employment benefits.They save around 200 each month, and the remainder of the budget is enjoyed by means of socialising, entertainment, eating out and treating Celeste.However, recently, Andrews stepfather, in his 50s, who also is an electrician had a heart attack, fortunately he survived, unless struggles to do the work he was doing previously. Andrew is concerned at the difficulty his parents have faced in maintaining their purportstyle, and has come to us to discuss defend his family. He is unsure of what might be right for him, besides is happy to spend around 100 each month, protecting his family.Savings 4,200Income 4,100Outgoings 3300Disposable budget 800Factors to wrangle and ConsiderThere are a wide range of factors that will squeeze the necessity, aim and term of carry on, these includeDependentsThis not only applies to the clients let children, but could apply to a spouse, elderly relative or grandchild. The number of dependents, and how long will their need last, i.e. until 18. And whether any expenses, beyond normal upkeep, such as school or university fees would extend needs.Remaining IncomeIn a family where both(prenominal) halves work, the loss of a partner, or their income is likely impact the famil y income. Often one partner earns a higher salary, losing the breadwinners, income, strains finances. This is as true if the other partners income was lost. In ensuring a family screw maintain their lifestyle, after the loss of a partner or their income, it is important to forecast what income is likely to remain, or be available to them afterwards.BenefitsA number of state benefits are available to boost the remaining income, or help towards replacing a lost income- i.e. a critical illness prompting defrayment of ain independence fees or statutory sick pay. These wont replace an income, and critically, the payments, criteria and measurecales are post by the government, and arent certain.Employer BenefitsMany employers put out employees some protection as part of their employment. Some are dependent on the length of service, or superiority. Including sick pay, remunerative full salary for a time, or death in service usually paying a lump content- usually a multiple of the ir salary. more like government benefits, employer benefits are discretionary. It is also a consideration, that an employee changes employer, with differing benefits.SavingsSavings, beyond an emergency fund, are likely to be towards a future need, such as retirement, care, or a large purchase. Currently, savings are unlikely to have any portentous growth (Thisismoney.co.uk), if relied upon as income, the funds will exhaust eventually. It would be unwise to rely on savings beyond the short term. Savings jakes however, reduce the need for an income if they can reduce or eliminate liabilities i.e. credit-cards.Liabilities later considering the needs of the family and dependents, ensuring these are adequately protected, it is important to also consider any liabilities that could therefore impact the family. These a good aim take the form of debts, but also commitments like school fees.Included here are estimabled liabilities, such as the home. Often, with the loss of one income, there will be difficulties in sustaining the familys lifestyle, potentially, meeting mortgage costs. Repaying the mortgage is a priority for those seeking life assurance, as it guarantees security of the family home.Life AssuranceLife assurance, pays the uniting assured, when the see to it dies- as matinging the polity remains in force. Policies usually take the form Whole-of-Life, or endpoint Assurance.Whole-of-LifeCovering an individuals entire life, the centre of attention assured is paying, when the policyholder dies. As death is inevitable, the cost is the most expensive.PremiumsThe premiums are all payable until death, or can be set to last until a certain age or for a limited term. The latter options allow for premiums to be paid up until retirement, yet allow share to continue. When a limited term of payments is chosen, theyre naturally higher than the alternative.InvestmentPolicies can be arranged with investment funds elements. This can be Unit-linked, with-profit, non-profit, or universal, potentially combining all three. A non-profit policy grants a fixed chalk up. With-profit policies allow the insurers underlying investments to generate growth, with bonuses that whitethorn increase the sum assured, although inflation beating growth in the long-term, is unlikely. Unit linked policies allow greater growth potential, above inflation, but the underlying capital is risked, jeopardising the sum assured, less risky funds should be a priority.As whole-of-life policies can contain investment elements, some providers offer surrender value, although its unlikely to be equal as an investment vehicle.Whole-of-Life policies will not be suitable for each client. assistance must be taken that there is an ongoing and permanent need, and the sum assured fits this.It may be suitable for a client wishing to protect their family from funeral costs or legal expenses. And can mitigate inheritance tax revenue liability, providing a lump sum to cover the lia bility due on their assets.Couples can make use of this through a say life consequence death policy, since ordinarily, the estate will pass between the couple, and tax only falls due on the second base death. Although more appropriate on big estates where a significant inheritance tax liability arises, compared to those estates that slightly exceed the nil rate bracket, as the ongoing costs of the life assurance may exceed the eventual liability.A whole-of-life policy can also be use to provide an income for dependents. While in later life it is unusual to have child dependents, an income may be inevitable for dependents with life-long care needs.Term AssuranceUnlike a whole-of-life policy, term assurance provides cover for a set issue, very much against a detail protection need, with an expected maturity. Its expedient against mortgages, or child dependents, because the time the protection is required for can be pictured.Compared to whole-of-life policies, term assurance is cheaper. As the risk of death is bring low-spirited over a presumptuousness timescale, compared to a whole-of-life policy. Once the policy expires the cover ends, unlike whole-of-life policies, there is no surrender value. Term assurance can take a number of forms decreasing, train or increasing term assurance.Decreasing (Family Benefit, Mortgage Protection) Here, the sum assured decreases over time. Its useful against protecting a repayment mortgage. As the term of the mortgage reduces the balance falls, consequently the level of protection needed reduces.This is also useful for dependents, as purvey needs decrease over time. Reductions in the sum assured can be fixed each period, or in line with the interest charged on a mortgage.Decreasing term amends is also cheaper than other term assurance, as the risk to the provider reduces over time.With a family benefits policy, the benefits are paid as a monthly figure, protecting against the loss of an income until the end of the policy, meaning that the shorter the term remaining, the lower the overall benefit.Gift inter vivos policy This is a special case of decreasing term assurance, protecting against inheritance tax liability from a potentially exempt transfer (PET). In line with the tax liability, the sum assured falls over seven years.Level The sum assured remains constant. It can be useful in order to repay a set liability, i.e. an interest only mortgage, with a constant balance. They also provide ataraxis of mind to the policyholders family, through the certainty of a lump-sum. It can leave heap over protected, paying higher premiums for a need that reduces over time.Increasing- The most expensive form of term assurance. Once arranged, the sum assured, increases over time. At the policies end, the sum assured can be considerably higher than originally. This provides a lump-sum protected against inflation, which over a time, erodes buying.Convertible Renewable- special forms of term assurance , allowing the above policies to be born-again into whole-of-life policies, or exactly rejuvenateed without further underwriting, sometimes allowing the sum assured to increase, in what would be a renewable, increasable term assurance policy. Allowing more flexibility for the insured.passenger Benefits- these are applicable to any of the above policies, they are superfluous benefits which can be added, or included already. These include Waiver of Premium, prevents the policy lapsing when the insured is unable to pay premiums through sickness or injury. Terminal illness or entirety permanent disability cover, providing an accelerated payment when the insured has a very short life expectancy, or is arrively disabled, although the criteria for this varies. Accidental death benefit can also be included. Guaranteed insurability options allow for flexibility within the policy for the sum assured to be increased at key events in the insureds life, without the requirement for additio nal medical underwriting. All options and additional benefits will increase premiums. compactLife assurance, ensures that financial needs can be met, often at an affordable cost, regardless of the need, as there are numerous forms. It does however have restrictions, medical underwriting means that lifestyles increasing the risk of death can impact the cost of the cover, i.e. smoking. While most claims are paid, there are often significant exclusions, including death from alcohol, drugs, self harm, terrorism, war, or recklessness.If the policyholder is the insured, on their death, the pay-out from these funds will be added back into their estate, where there is potential for an inheritance tax liability.Neither have life assurance, in the event of a death, the remaining family would not be able to maintain their lifestyle. Protecting the mortgage on the family home is a priority. A formulate policy allows the home to be protected in the event of either death. As the balance on the mortgage is naturally decreasing as repayments are made, a mortgage protection policy, with an initial sum assured of 130,000, and term of 14 years would provide the most cost- impressive cover.Approximately 15 monthly.In the event of a death now, the mortgage would be repaid, and the monthly outgoings would fall by around 1100. However, other costs could increase, childcare may be required, and Celestes information costs would also continue.The approximate cost of her study over the next 17 years will be 3 Terms x 4000 x 17= 204,000.Due to Amys employment, she would need childcare for the weekends and mornings. Andrew would require childcare for weekday evenings. Approximately this is 20 hours a week, and expect she would be mature enough to look after herself for a few hours once in secondary school, aged 12. In addition to term-time childcare there would be around around 16 weeks annually, where fulltime care is needed, 40 hours weekly. Average childcare costs in their area are 7 hourly.20 hours x 36 (term-time) x 8 years, 40 hours x 16 (holidays) x 8 yearsA Total of 10880 hours of childcare would be needed till age 12, at 7, would cost 76,160.With a total cost in the region of 280,160, Its clear itd be difficult for either parent to cover these costs. However, each month, the requirements would reduce. Again, a decreasing term assurance policy would fit their needs, as these are ongoing costs, it would make sense for this policy to be written as a family income benefit policy, providing the average of Celestes care and education costs each month. 1000 for her education, and 793 (based on 1360 hours of care each year, divided by 12 months, at 7 an hour), written on a joint basis over a 17-year term. The approximate cost is 23 monthly.Income Protection restitutionThis provides the insured with an income when, due to illness, disability or injury, they are unable to work. A provider cannot cancel this policy due to repeated claims, and as long as premiums are kept up(p), the cover continues.The benefits are paid monthly, and are used to cover normal expenditure. To incentivise the insureds return to work, ensuring claims only last as long as unavoidable, the level of cover is generally between 50-75% of the insureds salary.Should a condition make it impractical for the insured to return to their work, and instead they return on a lower salary, a proportionate benefit clause found in many policies, allows a portion of the benefit to be paid, to top-up their income.While the cover is permanent, to a normal retirement age, many insurers have a critiqueable premium, similar to critical illness cover. To lower premiums, a deferral period, between 4 104 weeks, effectively eliminates short illness, reducing the risk for the insurer. Aligning the deferral period against existing provisions such as an accident, sickness unemployment cover, or employee sick pay further helps reduce premiums.Income protection is important for the self-emp loyed, injury or illness will impact their income earlier. Their deferral period tends to be shorter, as they need the income sooner than someone who receives sick-pay.Amy is fortunate to have employer provided sick-pay and income protection. If she were ill or unable to work, the impact of this would not be felt for 6 months, and then the reduction in her wage by 650 would allow the family to meet their outgoings, albeit with little left.Andrew, has no protection. If Andrew were unable to work, his income would stop immediately, savings would then be relied upon, the loss of his income means a shortfall of 2,000 each month (Outgoings 3,300, less Amys income of 1,300). Savings could sustain them for around 2 months (Savings/Shortfall, 4200/2000= 2.1 Months.)Protecting his income with an income protection policy, until his state retirement age of 68, as regardless of his dependents, there will always be household bills (gov.uk), an 8-week deferral, with benefits of 2100, cost around 49 monthly, extending the deferral to 52 weeks, reduces costs to around 33 monthly. (Drewberry Insurance) Intermediate months could be covered by an accident sickness policy, by excluding short illness, Andrew may save money on future premiums on review. new(prenominal) Protection availableThere are a wide range of more specialised protection insurance policies available, while they may not offer financial security, they can provide peace of mind.Accident Sickness Unemployment InsuranceOffering similar benefits to income protection, with important differences. Its impermanent the insurer can decline to renew the policy. Benefits are generally provided up to 24-months. Unemployment covers redundancy, and only when the insurer believes that the insured had no foreknowledge, naturally excluding the self-employed.Covering Andrews income using an accident sickness policy here, with a deferral period of 2 months, allowing for their savings would cost them in the region of 14 monthly ( gocompare.com), a small saving compared to the single product.Payment Protection InsuranceIf the insured is unable to work, through sickness, injury or redundancy, this cover will maintain payments for the liability (credit card, mortgage or loan, etc.) for a period of generally up to 24 months.Health Insurance Dental PlansPrivate health insurance may provide high quality care, fast diagnosis and short tolerate times or flexibility for treatment and surgery etc., without the high costs involved in paying for this treatment in a standalone manner. Dental plans are offered in a similar way. There are often exclusions for elective or cosmetic surgeries.Critical Illness CoverProviding a lump sum to the insured on the diagnosis of a critical illness, including but not limited to most Cancers, Heart Attack, and Stroke. Unlike term assurance, the insured need not die, should they recover, funds wont need to be repaid, as the policy ends on a successful claim.Beyond major conditions, cove r can be provided for other conditions major organ transplant, paralysis, coma, blindness or loss of limbs. Each provider may apply a several(predicate) definition to a condition. The Association of British Insurers provides definitions as a guide to best practice, which is the minimum definition an ABI insurer can use. For instanceThe ABIs blindness definition readsPermanent and irreversible loss of destiny to the extent that even when tested with the use of visual aids, vision is measured at 3/60 or worse in the better kernel using a Snellen eye chart. (ABI,2016)LGs definition deliver the goodssthe use of visual aids, vision is measured at 6/60 or worse in the better. (LG, 2016) twain similar definitions, with LGs definition benefiting the insured, with a less restrictive definition. The cost of more generous cover may be higher than stricter insurers.Compared to term assurance, the cost is much higher, the risk of dying, is far lower than being diagnosed with a critical illne ss or condition, this extra risk increases costs. moreover, a wide range of underwriting factors are used to tailor premiums to the insureds risk.Adverse family history increase costs, and previous diagnosis makes securing cover difficult, or impossible, at best, an exclusion is imposed (LG, 2016). It is expected that all material facts are disclosed, so a full and informed decision is made, withholding a condition can void cover. (Guardian,2013)With any critical condition, family life arrests pandemonium. The insured may be unable to work, travel to and from medical appointments may be necessary, if provided by a partner, they too may be unable to work. Child care may increase, care may be required, alterations may be required, and of course the usual household expenses will still occur.Critical Illness Cover, when considering these requirements can provide peace of mind, by funding medical or care costs, covering liabilities, and providing funds to cover the cost of equipment, ad aptations or general remediatements to the insureds quality of life with their new condition.Policies can be arranged in numerous ways, a standalone plan, which works similarly to term assurance, paying out on diagnosis on an insured condition. However, it is earthbound that the insured must survive at least 28 days in order for a valid claim.Alternatively, it can be arranged in addition to a term assurance policy with death benefits. In addition to being covered against death, the policy would cover critical illness. This additional cover can either be arranged so that following a critical illness, or death, the cover will cease, so a single payment is only possible, or, a payment can be made against both illness and death. It can be incorporated into an endowment or into a whole-of-life plan as an option in a similar fashion.Like life assurance, the proceeds can be written into trust, this is not usually needed though, if the protection is to cover existing liabilities. However, if the cover is combined with life assurance, potential exists for an inheritance tax liability if a critical illness is claimed for, the proceeds will go tax free to the insured, if however, a death claim is required, this becomes part of their estate, creating the liability. It is possible to use a split-benefit trust, which will pay the proceeds of the critical illness payment to the policyholder, and the death benefit to the beneficiaries in the trust deed.Critical illness cover premiums are organised similarly to term assurance, with historically fixed payments. Due to advances in medicine and technology, claims have risen with early diagnosis, more providers are now switching to reviewable premiums, which offer stability of fixed payments for a period, before being reviewed, at which point they may rise or fall. Just like term assurance, a similar set of exclusions apply, and medical underwriting may result in additional restrictions or exclusions, and potentially higher cost s overall.Cancelling a policy to take out a new policy is generally not recommended, as examine cover, benefits and restrictions can be difficult or time consuming.Although Andrew Amy are healthy, after recent events they are keen to have some protection that would allow them to deal with an unforeseen critical illness. As you have seen, Amy is well protected through her employment against her income, Andrew would be well covered by the Accident Sickness Policy, and through an income protection policy. However, they are worried about potential adaptations to their home or care costs being needed. The Money Advice Service suggests that 2 hours each day of care would cost in the region of 11,000 annually. As the mortgage costs a little more than this, a lump sum to cover this, and provide a buffer to allow for some adaptations if necessary, around 150,000 of cover over 17 years, each. Written as stand-alone policies, means each is protected in the event of a critical illness. Toget her, the cost of these policies is in the region of 65 monthly.Andrew Amys monthly protections costs exceed the budget they wanted to spend. Coming to a total of around 150 monthly. Although the protection would ensure that whatever happens to either of them, they would have financial security until retirement. Full protection is expensive, and unless they are willing to spend the money to cover themselves adequately, they will need to adjust the level of cover they can afford, or prioritise the policies available to them.Business ProtectionThe death or illness of a partner, key person or sole trader can have significant consequences to a business. While these issues can be as wide and varied as the business that have them, the type of cover detailed in this manual can be tailored to provide effective protection.In ConclusionAs can be seen, it is important to take a view of the bigger picture, and use a holistic approach in formative protection around a clients needs. While the ho pe is that these policies are not used before their time, they provide the firm foundation for clients to achieve their financial aspirations.A Adviser.ReferencesABI Policy Definitions- https//www.abi.org.uk//media/Files/Documents/Publications/Public/Migrated/Medical%20underwriting/2011%20Critical%20Illness_SoBP.ashx (2016)Drewberry Insurance, Income Protectionhttps//www.drewberryinsurance.co.uk/income-protection-insurance (2016)Gocompare.com Accident Sickness cover quote schema https//income.gocompare.com/income-protection/ (2017)Gov.uk, State Retirement Agehttps//www.gov.uk/state-pension-age, (2017)The Guardian, Critical illness insurance The neglected cover that could be crucial https//www.theguardian.com/money/2013/dec/07/critical-illness-insurance-bad-reputation (2013)Legal General Policy Booklet- http//www.legalandgeneral.com/_resources/pdfs/life-cover/mylife/LifeInsurance-with-Critical-illness-Cover-Policy-Booklet.pdf (2016)LG Underwriting Quick Reference Guide, http//www. legalandgeneral.com/library/protection/underwriting-literature/GuidetoUnderwriting.pdf (2010)Money Advice Service, Care Costshttps//www.moneyadviceservice.org.uk/en/articles/care-home-or-home-care (2017)Money Advice Service, Press Release.https//www.moneyadviceservice.org.uk/en/corporate/four-out-of-10-adults-are-not-in-control-of-their-finances-new-strategy-launched-to- break-uks-financial-capability (2015)This is Money.co.uk, What next for savers.http//www.thisismoney.co.uk/money/saving/article-4070642/What-savings-rates-2017-savers-set-misery.html (2017)Introduction to Simple Linear Regression Article redirect examinationIntroduction to Simple Linear Regression Article ReviewSimple Linear RegressionIntroduction to simple running(a) regression Article reviewAbstractThe use of linear regression is to predict a trend in data, or predict the value of a inconstant (dependent) from the value of another(prenominal) shifting (independent), by assignment a straight line through the d ata. Dallal (2000), examined how significant the linear regression equation is, how to use it to draw the best appointee line of the scatter plot and how important the best fitting line is.Introduction to simple linear regression Article reviewThe use of linear regression is to predict a trend in data, or predict the value of a variable (dependent) from the value of another variable (independent), by fitting a straight line through the data. Linear regression represents a connecting link between the independent (carrier) variable and dependent (response) variable, which if graphed on X and Y-coordinates, results in a straight line. Linear regression shows the straight line which thoroughly represents, or predicts, the value of the response variable, given the noted value of the carrier variable (Frey, 2006). This essay aims at reviewing the article introduction to simple linear regression by Dallal (2000).Problem statementDallal (2000) assumed a kinship between torso mass (indepe ndent or carrier variable) and muscle strength (dependent or response variable), the more body mass the more muscle strength. However, this relationship is not without exceptions, which is reflected on the scatter plot of a regression model. Therefore, the author posed the question of how to illustrate the straight line, which accurately portrays the data, or predicts the value of the response variable.Research mapping statementIn the given example, most cases would show a perfect regression. However, measureization of the procedure of putting in a straight line is necessary to provide better communication and common grounds for analysts working on the same data. Further, in the example regression equation given (Strength = -13.971 + 3.016 LBM Lean Body mass), one can draw two conclusions first, a predicted muscle strength equals LBM multiplied by 3.016 minus 13.971. Second, the difference between muscle strength of two individuals is presumptively 3.016 multiplied by the differe nce in their LBM.Research questionsResearch question 1 Why we need to fit a regression equation into a set of data?It is clear from the previous example there are reasons for fitting a regression equation into a set of data. These are 1) to suck the data, and 2) to predict an independent (response) variable from a dependent (carrier) one.Research question 2 What is the underlying principle of calculating a straight line?If the points signaling data in a scatter plot are close to a line, it means the line represents, matches or gives a good fit of data. If not, then the line with most of the points closer to it that any other is the one that gives good fit of data. Further, If the is used to predict values, these values should close enough to the noted ones, in other words, residuals (observed values predicted values) should small values.Research question 3 How linear regression (least squares) equation is used to illustrate the best fitting line?The standard used, as the name imp lies, is the sum of squared residuals (observed predicted values) is minimal for the best fitting line. This applies to a line fitted to a set of sample data to promote inductance to a population from which this sample was taken. Yet for a population, there is a slightly assorted linear regression equation. The equation illustrates that an output (dependent) variable on the Y-axis can be predicted from an input (independent) variableson the X-axis after adding a random error (si).Research question 4 Is the sample regression equation an accurate estimate of the population regression equation?There is a reservation for accreditation of this statement, which is directed at the confidence bands in relation to the regression line. They are understood as the standard error of the mean (the standard deviation of the mean of the sampling distribution). Yet with one exception that is the sampling mean of the dependent variables amplifies as it adds outgo from the mean.Sources of dataDall al (2000), stated in the second part of his article (linked to the main article) are cross- sectional data. This type of data has the advantages of being used if sampling regularity are not weighted and-or un-stratified. This method can also be used if the researcher is concerned only with minor or small probabilities. The longitudinal data results in more statistical power, however, in repeated cross-sectional analysis, new subjects added per analysis compensates for the inherent decreased statistical power (Yee and Niemeier, 1996).Data assembling strategies and methodsA good data collection strategy should have two objectives, namely, having motivated respondents (affected by time consuming, trust in statistics, difficulty of questionnaire, and benefit included). The second objective should be having high quality data, which tailored to sample individuals, sampling method and good instruments of data collection (Statistics Norway, 2007).Methods of data collection are many and se lection of a particular method depends on the available resources, reliability, resources of analysis and reporting, besides the skills and knowledge of the analyst. Some of these methods are case studies, behavior observation settle lists, attitude, and opinion surveys, questionnaires distributed by mail, e-mail, or phone calls. Other methods of data collection include time series (evaluating one variable over a period of time as a week), and individual or root word interviews (The Ohio State University Bulletin Extension, 2005).ConclusionsDallal (2000), inferred that simple linear regression means that we can predict a dependent variable from an independent one, so whenever we need to know from the beginning each time we add information. The regression line is important as it makes the inclination of a dependent variable more accurate and it allows the estimation of a response variable for individuals with values of the carrier variable not included in the data. The author also inferred there are two methods of predicting a variable either from within the range of values of independent variable of the sample given (interpolation) or outside this range (extrapolation). The author recommended the first method as it has the advantage of being safe, yet with concerns as regards the way to demonstrate the linearity of relationship between the two variables.ReferencesDallal, G. (2000). Introduction to simple linear regression. Retrieved January 14, 2008, from http//www.tufts.edu/gdallal/slr.htm.Frey, B. (2006). Statistics Hacks. Sebastopol, CA OReilly Media Inc.Statistics Norway (2007). Strategy for data collection. Retrieved 04/07/2008, from http//www.ssb.no/vis/english/about_ssb/strategy/strategy_data_collection.pdfThe Ohio State University (2005). Bulletin Extension Step quadruplet Methods of Data Collection. Retrieved 04/07/2008, from http//www.ohioline.ag.ohio-state.eduYee J L. and Niemeier D (1996). Advantages and Disadvantages Longitudinal vs. Repeated Cross-Section Survey-A Discussion Paper. Project Battelle, 94, 16-22.weberian Model Of Bureaucracy Criticismweberian Model Of Bureaucracy Criticism scrub (2006) find outd Educational circumspection as a field of study and practice concerned with the operation of educational organizations. He has also claimed several times that educational perplexity needs to be essentially concerned with the purpose or tendencys of education since they give the fundamental sense of direction needed for effective management of educational organizations. He concluded that a singular all-inclusive surmisal of educational management does not simply exist as educational institutions are so diverse and even similar schools and colleges have to deal with completely different problems, which necessitate diverse approaches and solutions (Bush 2006).2.0 Management, Administration and leaders.The concept of management often intersects with two parallel terminologies, namely lead and administration. The difference is mainly regional consort to Bush (2006).The term Management is commonly used in Europe, and Africa, where as administration is favored in the United States, Canada, and Australia. On the other hand the term leadership is much more contemporary and it is of great interest in most developed countries (Bush 2006).However other authors have differentiated these three concepts by claiming that they have opposing definitions. Cuban (1988) has provided a distinction between leading and management namely leadinghip is influencing others actions in achieving desirable ends and Managing is maintaining efficiently and effectively current organizational arrangements. He also added that both managing and leading are equally important and he confer no special value to either as they are both needed in different situations and at different times in order for schools to function effectively and meet their goals (Bush 2006).Bolman Deal (1997) also talk about the importance of both leadership and management. He maintained that leading and managing are distinct. The objective perspective of the manager as well as the flashes of vision and commitment-wise leadership provides are what is needed by modern organizations (Bush 2006).Furthermore Dimmock (1999) claimed that school leaders experience tensions between competing elements of leadership, management and administration. correspond to him leadership is the higher order tasks designed to improve staff, student and school performance, where as management is the mapping maintenance of present operations and administration is the overarching term, which incorporates both leadership and management.2.1 LeadershipLeadership has been delimitate by Chemers (1997) as a process of social wreak in which one person is able to enlist the aid and support of others in the accomplishment of a common task (Chemers 1997).From this definition we can generalise that leadership involves a social influence process in which one individual exerts intentional influence over others to structure activities and relationships in a root word or organization.Bass and Stogdill (1990) added that leadership is the process of inuencing others to reach common aims. Spillane, Harvelson and Diamond (2004) defined Leadership through another angle. They claimed leadership is not simply a function of what a school principal, or indeed any other individual or group of leaders, knows and does. Rather, it is the activities engaged in by leaders, in interaction with others in particular contexts around specific tasks.Education researchers agreed that effective leadership is a key element to achieve school improvement. According to Harris (2002), research findings from diverse countries and different school contexts have revealed the powerful impact of leadership in securing school development and change. A further important boldness while practicing leadership is the level of power and control which schools and other educat ional institutions assert/maintain on their in-house management and operations (Bush 2003).However, effective leadership styles in education can be as varied as the large number of schools. Therein lays the difficulty in providing accurate definitions of leadership. Accordingly, Fiddler (1997) pinpoints two main characteristics of leadership a sense of purpose and confidence is engendered in followers and followers are influenced towards goal achievement.He continued explaining that there are conglomerate factors determining the appropriate leadership approach that need to be adopted at any particular point in time, namely the context and its pre-history the temperament of the followers the particular issues involved in addition to the predispositions of the leader (Fiddler 1997). Accordingly different leadership styles may need to be adopted to deal with specific circumstances.Leithwood, Day, Sammons, Harris and Hopkins (2006), as cited by Crum, Sherman and Myran (2010), have su mmarized four core practices for successful school leadership as follows(1) Setting directions.(2) Developing people.(3) Redesigning the organization.(4) Managing the instructional (teaching and learning) program.2.1.1 Leadership theoriesScholars have come up with different leadership theories throughout history. It all started with the Great Man guess which implies that leaders are born and is not made ( flatboat and Miskel 2004).The idea that leadership is inherited further resulted in the trait approach of leadership. In 1927, Bowden carried out a significant study which associated leadership with personality. Hoy and Miskel (2004) cited the history of Bass and Stogdill (1990) concerning this leadership style Leaders were generally regarded as superior individuals who, because of fortunate inheritance or social circumstance, possessed qualities and abilities that differentiated them from people in general.After a thorough research, Stogdill (1948) concluded that leadership is not gained solely by some inherited traits or characteristics since different situations have great influence on the impact of traits. So he came up with the theory of situational leadership (Hoy and Miskel 2004 Turner, 2005).Hunt and Larson (1977) came up with the behavioral model of leadership which implies that leadership can be taught and learned by way of teaching and observing leadership behaviors (Northhouse 2010). Behavioural theories are come to on the belief that great leaders are made, not born. The focus of this theory is the actions of the leaders, and it is not the qualities or states of the leaders (Hoy and Miskel 2004).Spillane, Harvelson and Diamond (2004), Hemphill and Coons (1950), Kunz and Hoy (1976) and Mouton and Blake (1984) among others investigated on the concept of leadership as a series of behaviors. Their studies resulted in defining mingled taxonomies of behaviors, including monitoring, consulting, and delegating as Hallinger and Hausman (1993) pointed out. Others like Lewin, White and Lippitt (1939) have identified other styles of behavior, such as autocratic, democratic, and laissez-faire. Mouton and Blake (1964) named their findings on behavioral styles as employee-oriented and directive where as Likert called his as task-oriented and relationship-oriented and he has discussed about the relationship between these behaviors (Spillane et al. 2004). More recently Yukl (2002) developed three fundamental classes of leader behavior and he described them as Task-oriented behaviors, Relations-oriented behaviors and Change-oriented behaviors (Hoy Miskel 2004).In 1964 the contingency theory of leadership was developed by Fiedler (1967). According to him, leaders must complement the situation to his leadership behaviors for greater effectiveness (Spillane et al. 2004).The growing of leadership theories continued with the transactional and transformational theories in the early eighties and Burns (1978) is often accredited to be the fat her of these concepts. Transactional theories, concentrate on the role of supervision, organization and group performance. These theories establish leadership on a scheme of rewards and punishments (Hoy and Miskel 2004).Transformational theories of leadership are considered as recent leadership theories and according to Bass (1990), this theory is an expansion of the transactional theory of leadership. Transformational leaders motivate and inspire others by helping the followers to see the importance and good side of the task. These leaders focus on the performance of group members, but they also encourage each individual to meet his or her full potential. Leaders having this style are often highly ethical and have moral standards (Hoy and Miskel, 2004 Turner, 2005)2.2 ManagementAs Dimmock (1999) has stated, managing means being in charge of the day to day running of the school and it is the maintenance of the system.Dash and Dash (2008) define management as the primary(a) force wi thin any organization which coordinates the activities of its various systems in relation to its objectives.According to them, management can be considered not only as a theory but also as a process. The theory part comprises of the philosophy, Knowledge, art, concept, objectives, functions, principles and practices, models. The process part comprises of human relations, managing physical and financial resources, planning, organizing, decision-making, executing, directing and controlling people in order to meet the objectives set.3.0 drill and StructureThe take aim is a complex open social system. In this system the structure is a key element in transforming inputs into outputs. The structure, also called the bureaucratic expectations, defines our role and responsibilities (Hoy and Miskel 2004).Hoy and Miskel (2004) explained the transformational process of a school using the diagram belowInputsOutputsCultural organization(Shared Orientations)Transformation ProcessPolitical System (Power Relations)Individual System(Cognition and Motivation)LearningLearningTeachingTeachingEnvironmentStructural System(Bureaucratic Expectations)Figure 1Social-systems model for schoolsThey explained the five key elements within the transformational process. Structure is the bureaucratic expectations designed and organised to fulfill organisations goals. The Individual provides energy and capacity to achieve organisations goals and he is viewed in terms of needs, goals, beliefs, understanding of work roles (Hoy and Miskel 2004).Mintzberg (1994) defines the structure of an organization as the sum total of ways in which it divides its labor into distinct tasks and then achieves coordination among them.Hoy and Miskel (2004) have focused on structure since it is considered as the backbone of any organization, which is the framework under which we are all doing the necessary operations. The structure monitors operations at operational level of any organization. Within a structure, we a re expected to make the whole machinery work. Structure provides order, cohesion and coherence.All schools do not follow the same structure some have an enabling or productive structure whereas others have a coercive or hindering structure (Hoy and Miskel 2004).3.1 enabling and Coercive bureaucracyLawsons made a distinction between an enabling and a coercive bureaucracy. According to him, an enabling bureaucracy promotes creative, free-and-easy relations among all the employees irrespective of the levels of pecking order. The more an organization has an enabling bureaucracy, the larger the benefits to workers and clients. In this type of bureaucracy, the workforce is considered to be an asset or a resource on which the leaders capitalize. To this end, the latter encourage and endorse professional person norms and standards as they know that the workers want and need their work to be pleasant and significant. Leaders also provide tuition and supports to the workers to foster expe rtness and mastery, thus they could be trusted to make good and solid decisions. This kind of proficient and cooperative supervision is regarded as a ancillary one for the workers. Moreover, workers participation is also solicited as they are aware that working conditions will determine the workers efficacy, effectiveness, and their loyalty.In a coercive bureaucracy, norms and rules are not variable or open to alteration. Such a bureaucracy is considered as mechanistic since the whole organization functions, generally, on automatic pilot where there is a small number of people at the controls. All emphasis is on the respecting the norms and regulations and on the dutiful implementation of the appropriate procedures .Only the people at higher levels of the bureaucracy have a clear picture of the work needing to be performed and its relation to societal expectations and needs. Indeed the main function of the leadership hierarchy such as commissioners, managers, and supervisors is to secure submission from the workers via a strategic system of supervision and sanctions. The workers are expected to perform so as to secure their salaries and benefits which are their only incentives to be effective. Furthermore, in a coercive bureaucracy the workers are not trusted enough to participate in decision making and they are not provided with the appropriate expertise to give their superiors, thus the latter conduct close supervision on a daily basis. If the workers are suspected to not following the rules, the supervisory and managerial grip tightens. Consequently coercive bureaucracies become more and more hindering as in a vicious circle, bringing together a damage of the organizations climate (Lawson).3.2 Weberian Model of Bureaucracy and Its CriticismThroughout the ages, many scholars have developed different organizational structures. But among them, the Weberian model of Bureaucracy is the most everyday and is the theoretical basis of most contemporary study on s tructure. This model of bureaucracy was developed in late 1940s by Max Weber and all formal modern organizations, as well as schools, enclose aspects of the Weberian model of bureaucracy. This organizational structure comprises of five characteristics namely the Division of labour and specialization, the nonpersonal orientation, the hierarchy of authority, the rules and regulations and the career orientation (Hoy and Miskel 2004).Despite being largely utilized, the Weberian model has quite some limitations. Weber describes organisation as a non-living thing which can be easily moulded, but open-social system involves people and cannot be viewed as non-living. Moreover people are not all rational and well structured. Weber is describing an ideal situation, not made up of reality and on the other hand organisation is made up of people and people change, not everybody wants to attain the highest level of might. Hence, there are bound to be major dysfunctions in Weberian model since t his bureaucracy is made up of people and not everybody is rational, abiding and cooperative, complient, disciplined. His theory does not deal with internal contradictions of elements in the model (Hoy and Miskel 2004).Concerning the Hierarchy of authority its dysfunctions is about the distortion and blockage in communication. Every level in hierarchy is a potential communication block if subordinates are reluctant to communicate anything that will make look bad in the eye of their superior. The main dysfunctions of rules and regulations is the goal displacement, rules become ends in themselves and administrators focus too much on rules and consequently ignore certain important goals. Moreover rules and regulations can engender legalist attitude. Another critics of rules is that they are either punishment centred or representative (Hoy and Miskel 2004).Career orientation has also dysfunctions. Rapid promotion of high-achievers might produce discontent of loyal, hard working senior em ployees who are not as productive or creative. The Weberian model of bureaucracy also suffered from Feminist critique such as qualified women do not receive equal treatment or compensation. The feminine side is often suppressed and devalued by bureaucracies. Last, the Weberian model is criticized for having not taken into consideration the informal organization. Informal social exchanges produce differences in social relations and new networks of communication emerge. Informal organisation is not an enemy to be suppressed but rather a useful vehicle for improving efficiency (Hoy and Miskel 2004).4.0 School ManagementAs stated above, schools are social organizations with set objectives and their human, financial, material and physical resources (Dash and Dash 2008).The one responsible for managing all these resources is the principal or the head-master. Here is a list of his expected duties find the best and cheapest way to achieve the objectives, mensurable planning, organization o f human resources and materials, using the physical resources in the best way, controlling and monitoring all the different school activities, decision-making and the evaluation of the progress and achievements. In short, school management means the use of people and other resources to accomplish the objectives of the school. Such was the definition of Kutz and Boone (1984), quoted by Dash and Dash (2008).School management is divided into two parts internal management and external management. Internal management comprises of managing the administrative works and the human, financial and material and physical resources. On the other hand, the external management is the relationship with the community, department and other external stakeholders of the school (Dash and Dash 2008).Decision-making in many schools is also split into different lines of work and the four main domains are the personnel management, the financial resources, the student policies and the curriculum and instruct ion. School decision-making also consists of other domains such as the development of Infrastructure, maintenance and security ( sparing note 2007).5.0 School LeadershipSchool leadership is to identify, to acquire, to allocate, to co-ordinate, and to make use of the social, material, and cultural assets which are essential for establishing the appropriate environment in which teaching and learning will be possible. Leadership also implies the mobilization of the human resources such as the school personnel and clients so as to spot, handle, and assume the duty of changing instruction. Adding to that, they should harness and mobilize the resources required to sustain the transformation in the teaching and learning process (Spillane 2005).6.0 Reforms in School ManagementFrom the time that schools have been recognized as formal institution, it has cognize numerous changes in different spheres and it is continuously being subject to change and transformation. Recently both teachers and schools have experienced an unprecedented rate of change having both positive and negative outcomes (Aspinwall 1996).Pedler, Burgoyne and Boydell (1991) define the learning organisation as an organisation that facilitates the learning of all its members and continuously transforms itself in order to meet its strategic objectives. (Coldwell, Williamson and Cameron 2007).Caldwell (2005) defined Transformation as significant, systematic, sustainable change, securing high level achievements in all settings.6.1 How to become A Great School?Hopkins (2005) explains how a school can become great and he suggest various strategies, known as the key drivers in order to meet this end. These key drivers are personalised learning, professionalised teaching, networking and innovation and respectable right. He argues that every school a great school is not just a slogan, but an aspiration for the next stage of educational reform, in which each student has the opportunity to reach their potential .Hargreaves (2003) affirmed that school as a learning organization has to motivate teachers and create new professional knowledge. School has got the responsibility to ensure that teachers have got high morale, they are given continuous development, they are provided with the appropriate platform to engage actively in innovation so as things can be done differently.To be a great school requires strategies such as capacity building of and by the key actors, providing opening and opportunities and transformation. Capacity development is important and great school will need to have further resources and see how these are being developed (Hopkins 2005).Hopkins (2005) in his explanation on the key drivers, mentioned that the activities should be de change and the school should provide greater freedom and authority from the centre to the periphery for the school to work effectively. The re-tooling of school structures will certainly help to keep the strength of the school system (Hopkins 2005).Access to best practice and quality professional development will help to improve performance and achievement. Transfer of best practice is not the easiest sharing of experience is an important barrier. Alliance is important- should borrow the best practice, modify it and implement it in our own way. The element of flexibility in utilization of best practice is important. Schools as a learning organization have to motivate teachers and create new professional knowledge at the level of the school. This is important in order to help to motivate the teachers keeping a high morale and not to become disgruntled. superior development should go side by side with leadership development (Hopkins 2005).Senge (1990) defined a learning organization as one where people continually expand their capacity to create the results they truly desire, where new and expansive patterns of thinking are nurtured, where collective aspiration is set free and where people are continually learning how to learn together (Johnston and Caldwell 2001).To make optimum use of its human resources, an organization must make sure that everyone should be prepared to learn at every opportunity. presidential terms will only succeed when learning will be seen as a continuous need for each individual. However, the learning organization will not become one by a sudden and remarkable transformation, rather it should proceed by developing gradually each of the five disciplines, namely, systems thinking, personal mastery, mental models, shared vision and team learning (Johnston and Caldwell 2001).Intelligent business will only be possible if there is close monitoring of every aspect of school life. Monitoring of performance data is crucial and eventually it leads to the development of a framework for effective, ongoing self-evaluation of the level of the school (Hopkins 2005).7.0 Decentralization of School ManagementIn the 1980s and 1990s, a new international trend emerged in many developed countr ies throughout the world, that of decentalisation of their education system. It was obvious that large, centralized bureaucracies didnt possessed the necessary qualities to keep pace with the rapidly changing economic realities. According to Levacic (1998) and Raab (2000), the step was to decentralize the decision-making from the central government to the local school level and to share the decision-making among the principal, teachers, parents, community members and students at the school level (Ng and Chan 2008).Accordingly, many schools adopted the school-based reforms, with a goal to upgrade the quality of education, which is expected to sustain the state competitiveness internationally. Ng and Chan (2008) further enumerated various examples of such school-based reforms. These areIn the UK, the Educational Reform Acts of 1988 and 1993 introduced the reforms of Local Management of Schools and Grant-maintained Schools. In the USA, there were similar reforms of Site-based Managem ent and School-based Leadership. In Australia, the Schools of the Future and Better Schools were also based on a school-based reform approach. According to School-based Management published by the United Nations Educational, Scientic and Cultural Organization (UNESCO) (Abu-Duhou 1999), many other examples could be found in Europe, Asian and Latin America countries (Ng and Chan 2008).They further interpreted such a collective shift as a means to enhance the education quality, responding to globalization and to develop the knowledge-based economy. This decentralization archetype is expected to provide greater freedom and responsibility to principals, teachers, students and parents, in domains like the school decision making about budgets, personnel and the curriculum. Such a freedom will enable them to establish more effective learning environments for the students (Ng and Chan 2008).The Economic Note (2007) also examined this particular form of market-based education reform known as decentralization of school management which has become more and more hot during the recent years. Also known as school-based management, the decentralization of school management can be in various modes and has emerged in many forms in different countries.The main argument brought to support decentralization is that principals, teachers and parents are best placed to make decisions about how a schools resources should be organized to meet the needs of students and the wider community (Economic note 2007).7.1 Criticism of DecentralisationMany advantages have been observed such as an improvement in educational outcomes due to the enhanced management and accountability of schools and examples of that are an increase in the test scores and a decrease in drop-out rates. Another advantage is a more effective organization as an autonomous school had the strongly influences the overall quality of the school organization (Economic Note 2007).Other prospective benefits from decentralization are an increase in efficiency and innovation in the teaching and learning process of education, a reduction in the educational bureaucracy, schools become more receptive to the needs of the local communities, the accountability is reinforced and an increased commitment with the schools, thus increasing the financial support. Increased self-management for schools is a key element in whichever strategy to provide greater excerpt in education (Economic note 2007).In World Bank (2007b), the authors provide a comprehensive analysis of case studies in some countries where the process of decentralization of authority to the local-level is in force from the past decades.Among the various strategies brought by Governments around the world for the improvement of financing and delivering of education services and more recently to improve the quality and to increase quantity of enrollment rates, is the decentralization of educational decision-making. Defenders of this strategy argue that such type of decentralization encourages demand and it guarantees that schools now echo priorities and values of the local communities (World Bank 2007b).In conferring the freedom to voice out and the decision-making power to local stakeholders, who is more knowledgeable about the local education systems than the chief policymakers, decentralization can bring greater progress to educational outcomes thus increasing the clients satisfaction (World Bank 2007b).The decentralization of decision-making in education has various definitions and names but it is most commonly known as School-based Management (SBM). However they are all relevant in decentralizing authority from the central government down to school level (World Bank 2007b).8.0 School-based Management or Self Managing SchoolCaldwell (2005) has observed that the governments of every solid ground aim at transforming their schools. Transformation is only deliver the goods when significant, systematic, and sustained change has occurr ed, thus improving outcomes for every students in whichever settings and contributing socially and economically to a country. One of the strategies invariably proposed to meet this goal is the School-based management.The management of a school is in no way a simple task, the head of school alone will not be able to get a line to all these duties. As Dash and Dash (2008) have rightly said School management is a cooperative human endeavour. They further continued by explaining that for an effective school management, teachers, parents, students and even the community members have to cooperate with the head of school even if he is the manager of this human enterprise.Through the literature, we have come across several definitions of school-based management where one complements the other. Some of them are worth notingThe Economic Note (2007) defined School-based management as the systematic decentralization to the school level of authority and responsibility to make decisions on signi ficant matters related to school operations within a centrally determined framework of goals, policies, curriculum, standards, and accountability.In the World Bank (2007b), two main definitions were quoted. First, Caldwell (2005) definition SBM is the decentralization of authority from the central government to the school level. Secondly the definition of Malen, Ogawa and Kranz (1990) School-based management can be viewed conceptually as a formal alteration of governance structures, as a form of decentralization that identies the individual school as the primary unit of improvement and relies on the redistribution of decision-making authority as the primary means through which improvement might be stimulated and sustained(World Bank 2007b).Bush and Gamage (2001) quoted a definition of school-based management given by Caldwell and Spinks (1988) as a self-managing school as one for which there has been major and steady decentralisation to the school level of authority to make decision s related to the distribution of resources.Decentralization of school management is another way of calling the above mentioned cooperation. Decentralization or school-based management varies from country to country and it can take different shapes (Economic Note 2007).School-based management has many shades of meaning. It has been implemented in different ways and for different reasons and at different rates in different settings, as Caldwell (2005) pointed out.A large number of countries in the world have adopted the school-based management in different forms of self-governance according to their specific context. However each of them revolves around the same central idea that greater autonomy will lead to improved educational outcomes (Bush and Gamage 2001) and that there has been an increase in authority and responsibility at the school level, but within a centrally-determined framework that ensures that a sense of system is sustained (Caldwell 2005).The authority is typically de legated to the governing bodies at school level which consist of representatives of significant stakeholders, at the same time as the delegation of the operational management to the principal. The concept of self-governance is centered on the idea that decision-making concerning groups of individual within the educational system should be in the hand of those within the schools in