1. Read the case carefully.

2. Identify the gap(s) between the actual situation and the expected outcomes. Can HR strategy

supports business strategy to achieve its purposes? You may make assumptions in your write-

up given limited information available from the case.

3. Discuss with your groupmates about the following questions:

a. What problems do you see in the performance appraisal system and accompanying merit pay system? Did any of these problems contribute to the people problems John had with his two employees in the performance review process?

b. What might John have done differently in the early communications process to improve later performance review sessions?

c. Should Billy Ray have quit? Why? Should John have accepted his return? What other action might Billy Ray have taken that could have been hurtful to the company?

d. Was Elizabeth treated fairly? Should initiative be a performance dimension? What other action might she take? Could she make a case that she was discriminated against? What defense, if any, might the company have?

Performance Appraisal at American Energy Development The case is extracted from Newman, J.M. \& Gerhart, B. (2020). Compensation (12" ed.). NY: McGraw-Hill. The purpose of this group assignment is to test your understanding of what you have learnt from Week 1 to Week 4 and test your ability to apply what you have learnt from this course to analyze different business situations and give the relevant recommendations with justifications. Instructions: 1. Read the case carefully. 2. Identify the gap(s) between the actual situation and the expected outcomes. Can HR strategy supports business strategy to achieve its purposes? You may make assumptions in your writeup given limited information available from the case. 3. Discuss with your groupmates about the following questions: a. What problems do you see in the performance appraisal system and accompanying merit pay system? Did any of these problems contribute to the people problems John had with his two employees in the performance review process? b. What might John have done differently in the early communications process to improve later performance review sessions? c. Should Billy Ray have quit? Why? Should John have accepted his return? What other action might Billy Ray have taken that could have been hurtful to the company? d. Was Elizabeth treated fairly? Should initiative be a performance dimension? What other action might she take? Could she make a case that she was discriminated against? What defense, if any, might the company have? 4. Requirements: Deadline: No later than 18 Feb (Sat) 23:59pm. a. Submit the paper on Group basis, i.e. each group submits one copy only b. Word format with no more than 3 pages excluding the cover page c. Provide a reference list at the end of your document, if applicable d. Times New Roman, 1.5 line spacing, 12-point font, 1-inch margin e. Appropriate headings and sub-headings f. The document will be subjected to Turnitin check for similarity and suspected plagiarism American Energy Development (AED) drills for oll using both vertical and horizontal (ffacking") diling procedures. Financing for these operations in Pennsylvanla and Texas comes largely through limited partnerships. The company identifes investors who become limited partners sharing in any successful drilling operations for the wells they have partialy funded. The founder of AED, Ron Robertson, recently passed away. His son John Robertson took over as CEO in 2014 and is steering a much mote aggresstve land acquisition strateqy (for deiling wells) than was advocated by his fathec. Two hundred milion doliars was raised last year to purchase land in Texas. Indeed, much of the operation is shiting to Texas and away from Pennsytwania because Texas has more lenient environmental laws governing fracking. Sbceen months ago, slix new employees were hired to help kickstart the Texas operation. Additionally, seven employees were voluntariy relocated to Daltas-Fort Worth (DFW) from the Buffalo, NY, headquarters. John Robertson also relocated to DFW as a sign of his commitment to this new facility. Don Weich, chief operating oflicer and president, remains behind in Buffalo to nun that operation. Present John Robertson is a transplant from the aggressive, fast-moving trenches of Wall Street. where as a broker he was weaned on tough performance appraisals and an incentive system that richly rewarded success stories and quickly discarded poor performers. He wants to instill a cuture exactly like that in the DFW office. When he hired the sax new key empioyees sbateen months ago, his early discussions with them included the fact that fallure would not be accepted. No one was enttied to a job, and it must be earned each day. Of the skx new employees, two stand out for different reasons. Billy Ray Jenson Billy Ray is a petroleum engineer with 30 years' experience after graduating from the University of Texas petroleum engineering program. He was hired in as senior engineer at a base wage of $216,000, a figure that matched the market rate. Market rate is a difficuit tigure to determine in Texas these days. More than 100,000 employees have been terminated in one of the worst downturns in the gas and oll economy in recent decedes. Billy Ray is very gratefut to get a job with a very competalve salary. He also is eligble for a 3 percent bonus on any wels that "hit" if he is the engineer of record for that feld. As per agreement with Jahn Robertson, Billy Ray will get his first full performance review in two weeks. Elizabeth Andrews Elizabeth atso is a petroleum engineer. She has fourteen years' experience and is paid $165,000 with the same bonus arrangement as other petroleum engineers. Elizabeth is very bright and brimming over with initiative. 5 She has made severat suggestions for driling procedures using a holographic technology that has reduced the number of diy wells by tf percent. The Performance Appraisal System John Robertson told the new employees when they were hired that they would be evaluated by him based on his perceptions of their performance. About one year ago he provided a performance appraisal form that had four performance dimensions rated on a five.point scale. He aiso communicated base pay increases that would be associated with each rating The factors and merit increases are as follows: Teamwokc: Someone who wokk well weth felow team playens and values thek efforts and contribubens as nuch as hsher own Productirty: Amount of essigned work conpleted in an agreed upon time frame Guiaify. Elmination of errors and absence of complaintis Hard Working show up on lime and works more hours than expected. John Robertson clearly has his dad's DNA. He purposely chose general performance dimensions because he believes the oil business is fast-changing and demands people who are willing to work with a great deal of ambiguity. He doesn't want to be tied down to specific performance dimensions that employees can then use to "lawyer up" on him if they belleve they didn't get a fair shake. He gave average or good ratings to most of his employees. Two employees, though, are causing him some problems. He likes to link ratings to performance. He's inclined to give Billy Ray Jenson a very good rating, and this would be associated with an 8 percent increase. John is reluctant to give Billy Ray this large an increase because he feels he overpaid the Petroleum Engineer to begin with. After all, there are hundreds of people who could fill his job in Texas, and all of them he believes would work for less. He can't rate Billy Ray Very Good and only give him a 3 percent increase. The merit pay guide is known to all employees. John has decided, therefore, to rate Billy Ray only Average. Billy Ray was great on the teamwork and hardworking dimensions. No question. So John has decided he'll downgrade Billy Ray on productivity and quality. Billy Ray has some promising wells that look like they might dellver, and he is right on target with the number of wells sunk in a one-year time frame. But none of the wells have produced yet. So John figures he can rate Billy Ray lower on that. John also has decided to rate Billy Ray lower on quality. There aren't any hard and fast measures of quality, so John can justify whatever he wants to get an overall rating of average. John has a different issue with Elizabeth Andrews. She is hard-drlving and aggressive. She shows great initiative, but he has had many complaints from other engineers that she isn't a team player. They ask her for help using her holographic technology, claiming it will help them decide whether a well is worth pursuing. For the most part she turns these requests down, claiming that she is too busy exploring her own wells. She suggests that the others take the same online class at UT Dallas to learn to use holographic technology. On other dimensions Elizabeth is quite good. She works as hard as Billy Ray. has two wells that are producing already, far better than the industry standard for one year, and there have been no quality problems that he knows of. John is inclined to give Elizabeth an average rating because of complaints from other workers. The guys Just don't think she is a team player. John's Action John gives both workers an average rating. In the performance review Billy Ray takes the news and feedback stoically. However, six days later he tenders his letter of resignation, effective in one week. Two days after that, though, in a very bizarre move, he asks to have the resignation revoked and return to his job. John accepts his change of heart and continues Billy Ray as an employee. Elizabeth is far more confrontational. She maintains that she was indeed a good team player, and that others were taking advantage of her so much that she didn't have time to do her own job. She asserts that she took an online course on her own time and at her own Initiative, and that others could do that too. Plus, she says, in response to his rating of her on the quantity dimension, she has two producing wells in only one year's time. That is a phenomenal record, she maintains, and certainly better than any of the other petro engineers John hired for the new office. This statement is accurate. Elizabeth says nothing else during the meeting but leaves the office unhappy, perhaps unhappy enough to do something about it