Case Study #$1(15\%)$

In Search of a New Performance Management System at CubeBox

Just before the onset of the COVID$-19$ pandemic in $2019,$ CubeBox, a software development company in London, Ontario, decided that its current performance management system was not meeting its expectations. CubeBox operates out of $3$ locations in the London downtown area and has $135$ employees providing services to small and medium$-$sized companies across Southwestern Ontario.

The existing system had the following components:

The review was done once a year

Managers set goals for the employees

The employee had to develop written documents outlining accomplishments

The manager reviewed the employee$$s accomplishments, made an assessment, and assigned a rating from $1$ to $5,$ with $5$ being $$superior$$ and $1$being unsatisfactory.$$

Low ratings on either hard or soft skills were treated by training

Pay adjustments were tied to the rating

While this approach had been in use for a number of years, the company received incessant complaints from both employees and managers, and it is just no longer feasible to maintain the status quo. Employees felt $$dumped on$\text{'}$ by the once$-$in$-$a$-$year review and were particularly concerned that Managers were not providing enough clarity about how their accomplishments deviated from corporate goals. In short, many employees complained that there were not even sure what the managers wanted from them or how their accomplishments were being measured. For example, goals and standards, which the managers tend to use interchangeably at the beginning of the period, become distinct terms during the assessment. These perceived ambiguities were becoming a major source of tension between managers and employees during the annual performance feedback meeting. In a recent employee engagement survey, the issue of the company$$s performance management was severely criticized.

Meanwhile, it was the norm for managers to give only corrective feedback on a quarterly basis during the performance period, and were surprised that employees perceived this as criticism of character rather than the work. This misplaced perception made managers unenthusiastic about providing ongoing feedback. Also, managers felt helpless about what they could reward for superior performance. The perception was that budget, not performance, drives pay. And as a result, everyone got the same pay adjustment. However, this practice has lowered employee morale and engagement, and management fears for the worse if no action is taken to create a new performance management system.

Questions:

What are the key problems in the current performance management system?

What recommendations do you have for a new performance management system?

How might the new system impact employee engagement and human capital development at CubeBox?