From: James Hoffman, VP Human Resources, Vitality Health Enterprises Inc.
To: Beth Williams, CEO Vitality Health Enterprises Inc.
Case: Performance Management at Vitality Health Enterprises Inc. Date: February 1, 2018 Beth, As we hoped, the performance management system we had in place for the last two years has addressed some of our previous problems like similar ratings for performers and non- performers and inefficient salary calculations and performance based raises. However, the new system has also brought its own share of problems. The first of which is the forced distribution model. This model is forcing managers to rate employees against each other and is betting team members against each other instead of for each other. Even the members of a top performing team have team members with low scores while a low performing team had highly ranked performers. Although the system distributes performance within the group, it is not able to tie it together with the whole (ranks only performance within the team and not performance as an individual in the company). One big issue that was pointed out was that people were not being rated against the job and its requirements but rather against their own team members. Another problem that was brought up was that managers are struggling to discuss performance with the employees because the yearly review process is so closely tied to performance based raises. This cannot be good for the company if employees are resistant to coaching and managers are shying away from giving them feedback. To address these issues, I would like to suggest changing our current forced distribution method of evaluation. Firstly we employ a behavioral approach and in particular the behavioral observation scale (BOS). You mentioned that you wanted to improve job performance by assessing the attributes of specific jobs and how they align with Vitality’s strategic goals (Bingham and Beer, pg. 5). Although there is an attribute approach, it has several drawbacks like not aligning with the company’s strategy and including vague performance standards (Noe, Pg. 337). The behavioral approach on the other hand is able to do both, evaluate based on the behaviors necessary for the job as well as align well with the company’s strategic goals (Noe, pg. 342). The BOS in particular evaluates on a large number (almost double when compared to BARS) of behaviors that reflect behaviors of effective performers (Noe, pg.339). This will more accurately help us understand, based on behaviors, who is performing well. Another advantage of BOS is that the raters are asked to rate the frequency with which the employee exhibits the behaviors (Noe, pg.339). This will especially address the problem we have with raters judging based on performance just before evaluation. And an overall comparison of the behavioral approach shows that employees and raters alike prefer the BOS over the BARS (Noe, pg.339). We have previously had problems with dissatisfaction over evaluation methods from both managers and employees. By employing this method we can increase the 46% of employees who did not particularly like the previous system (Bingham and Beer, pg. 7). Secondly, we should provide mandatory training for managers on how to evaluate employees using the new model. By training the raters we can increase the reliability and validity of the ratings (raters can overcome the fear of disappointing the employee) and reduce errors in the evaluation (Noe, pg.359). Vitality should also start reviewing its employees on a quarterly basis rather than an annual basis to ease managers of their concern of merit based raises so close in time to the evaluations. Although the merit based raises will still continue to be evaluated at the end of the year, the reviews should happen every quarter. This will give the employees a chance to improve their performances throughout the year and also give the managers a chance to rate an employee on overall performance throughout the year. References
Noe, R. A. (2017). Human resource management: gaining a competitive advantage (10th
ed.). Dubuque: McGraw-Hill Education.
Bingham, J. & Beer, M., (2012). Performance Management at Vitality Health
Enterprises Inc. HBS No. 9-913-501. Boston, MA: Harvard Business School