CASE STUDY

PERFORMANCE MANAGEMENT SYSTEM

You are really busy in your job, but you just got an important request from the organization's Chief

Executive Officer to conduct an audit of the company's current performance appraisal system. By far

the most problematic and volatile issue at your company has been salary increases and promotions.

Because the company promotes from within, comparisons generally have to be made across employees

in different departments. To combat arguments of subjectively and bias in the decision making on raises

and promotions, your company links these rewards to objective performance measurements. Most

specifically, rather than using the subjective ratings of employee's performance by their supervisors

ongoing accounts of sales results are maintained for each employee through the use of the HRIS. Based

on this sales information, each department manager assigns the employees in their department to one

of the following five categories.

Superior $/$ top $10$ percent

Very Good $/$ next $20$ percent

Good $/$ middle $40$ percent

Fair $/$ lower $20$ percent

Poor $/$ lowest $10$ percent

Administrative decisions $($regarding pay and promotions, etc.$)$ are then made across departments using

these ratings that people receive in this forced distribution. Additionally, to provide feedback to the

employees concerning their relative performance, data on sales are updated daily on the HRIS and are

posted in the break room. It is hoped that the feedback is motivating to employees. In addition, the

posting of the sales data provides that there will be no surprises for the employee when the semi$-$annual

performance appraisal interviews come around. It is interesting to note that since the performance

appraisal system has been implemented, there has been no formal complaints registered regarding the

performance appraisal system or salary and promotion decisions. However, sales managers themselves

have mentioned that they do not feel as comfortable now that they are required to assign employees to

the "fair" and "poor" categories. Overall, the CEO has tried to create a top$-$rate personnel system in

their company. Despite their efforts, management fears that there are some personnel issues that may

be contributing to the loss of sales for the company. Again, the poor economy is a favourite excuse for

the decline in sales, but there is more to it than that. Human resources policies may also be contributing

to it as well. For example, there have been many recent complaints that employees have not been as

patient or courteous with customers as they should be$.$ This was best summarized by the manager who

said $"$My people are beating up the clientele to make a sale the very opposite of what training program

trains them to do$."$ This lack of customer service is frustrating since the training program has been

proven to be effective in the past.

Additionally, there seems to be great deal of competition within departments that is hurting a team

effort. Although intergroup rivalries between departments have always been viewed as healthy and

normal, the lack of cohesiveness within each department is seen as a problem.

Q$1.$Identify and describe atleast three strenghts of the PMS$.$ Why are they strenght.

Q$2.$ Identify three weekness of the PMS$.$ What are some of the consequences caused by these weeknesses.

Q$3.$ What changes would you recommend for the appraisal system