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Presentation Overview
● Vitality Health Enterprises Inc.
● Implementation Issues
● Recommendations
● Additional Considerations
● Conclusion
Vitality Health Enterprises Inc.
Outer beauty can only be achieved as inner harmony is reached.-Ancestral Sayings
Vitality Health Enterprises Inc.
Rapid Growth: 1991-2007● 1989- Private Manufacturing Facility● 1994- Distribution Agreement● 1995- Launch Into Global Markets● 1997- Acquisition of HerbaPure● 2007- 7,000 Employees
Growth Stagnation: 2008
Beth Williams as CEO: 2008
Vitality Health Enterprises Inc.
James Hoffman Begins: 2009
New Business Strategy: 2009
New PMS: June 2009 (Developed in 4 Weeks)
Evaluation of PMS: December 2011
Product R&D Increase: 2011
Purpose of Performance Management:
Strategic Decisions Based on PurposeHow frequently should we do reviews? How formal is our system?▪ Are formal annual reviews conducive to the purpose?
Should we use reviews for administration or development?▪ How are goals being established? Cascading goals?
Are we rewarding for what we want the org to accomplish?▪ Innovation is a strategic goal, is it encouraged?
Who will conduct the appraisal?▪ Management is an obvious choice, is a strategic choice?
Implementation Issues
▪ Lack of Strategic Decisions
▪ Implementation Issues▪ Poor Initial Rollout▪ Low Rating Accuracy▪ Use of Forced Distribution▪ Lack of Manager Accountability
Implementation Issues: Initial Rollout
▪ Company-wide notification of immediate PM change
▪ Backlash
▪ No time for feedback
▪ Only briefing in the form of a guidebook
Implementation Issues: Low Rating Accuracy
▪ Refusal to submit accurate ratings
▪ Previously: Everyone gets B or C from the 13 rating levels (A to E)
▪ Currently: Rotating rankings
▪ Fear of offering feedback
▪ The “not-rated” option
Implementation Issues: Lack of Manager Accountability
▪ Lack of management training
▪ Lack of management rating
▪ No reward system in place for performance
Recommendations
Adjustments to the
Performance
Management
System
Implementation of
System
Incentivize Management
Create Rewards
through Stock
Options
(London and Smither, 2002), (Weatherly, 2004), (Kerr, 1995), (Gatewood, Field, & Barrick, 2010), (Curtis, 2005), (Gorman, 2009)
Recommendations
Adjustments to the
Performance
Management
System
Implementation
of System
Incentivize Management
Create Rewards
through Stock
Options
▪ Use of BARS and structured criteria
▪ Based on job analysis
▪ Separate development and merit appraisals
▪ Reward for innovation
(London and Smither, 2002), (Weatherly, 2004), (Kerr, 1995), (Gatewood, Field, & Barrick, 2010)
Recommendations
Adjustments to
the Performance
Management
System
Implementation of
System
Incentivize Management
Create Rewards
through Stock
Options
▪ Strategic process to guide change
▪ Can be used to gain buy-in, implement successfully
▪ Training for proper use of system
▪ Train managers in usage of BARS
▪ FOR Training
(Gatewood, Field, & Barrick, 2010), (Curtis, 2005), (Gorman, 2009), (Burke, 2014)
Recommendations
▪ Implement assessment of management reviews▪ Use of multiple sources
▪ Accountability & reward for accuracy▪ Current system rewards skewing
▪ Culture supporting management▪ Improve attitude toward delivering
feedback
▪ Strategic Manager Involvement
(Kerr, 1995), (Gatewood, Field, & Barrick, 2010), (Curtis, 2005), (Gorman, 2009)
Adjustments to
the Performance
Management
System
Implementation
of System
Incentivize Management
Create Rewards
through Stock
Options
Recommendations
Adjustments to
the Performance
Management
System
Implementation
of System
Incentivize Management
Create Rewards
through Stock
Options
▪ Should be offered in all levels of the company
▪ Can be appreciated in lower levels too
▪ Stock options as rewards can create buy-in and loyalty
▪ Employees become invested
(Milkovich, Newman, & Gerhart, 2013)
Management Training
Readjustment of the
Merit System
Costs and Benefits
Is PM the Right Solution?
Additional Considerations
Additional Considerations
▪ Complementary to training on ‘use’
▪ Address the issue of not valuing feedback
▪ Teach how to have “tough conversations”
Readjustment of the Merit System
Management Training
Is PM the Right Solution?
Costs and Benefits
Additional Considerations
▪ Current system is unsustainable
▪ 7-8% higher than competitors
▪ Considered unfair
▪ Not particularly easy to grasp
Management Training
Readjustment of the
Merit System
Is PM the Right Solution?
Costs and Benefits
Additional Considerations
▪ Costs▪ Additional training▪ Change management efforts▪ Uncertainty about the future
▪ Benefits▪ Encourages performance▪ Retain top performers▪ Avoid decline stage
Management Training
Costs and Benefits
Is PM the Right Solution?
Readjustment of the Merit System
Additional Considerations
▪ Alternatives:
▪ Culture realignment
▪ Training alone
▪ Changing manager selection strategy
Management Training
Is PM the Right Solution?
Costs and Benefits
Readjustment of the Merit System