Vitality Health Final Paper
VITALITY HEALTH ENTERPRISES, INC.
Performance Management Analysis
October 7, 2014
Vitality Health Enterprises, Inc., a manufacturer and distributor of beauty products, is at risk of losing market share in this highly competitive industry. James Hoffman, the newly appointed Vice President of HR, has been tasked with the evaluation of Vitality’s performance management system, to ensure that it is generating the outcomes Beth Williams, the CEO, is expecting.
ISSUE IDENTIFICATION
After a period of strong revenue growth, Hoffman is concerned that the workforce is becoming complacent. The research and development department is not producing quickly enough, resulting in a growing number of missed product launches. The company has realized a slow but significant turnover of highly talented research scientists, leading Williams and Hoffman to suspect that the performance management system is ineffective.
ISSUE ANALYSIS
Prior to 2009, Vitality was operating an old performance management system that failed to properly incentivize and recognize top performers and did not emphasize employee accountability. As a result, there was a lack of differentiation between top talent, average performers, and poor performers, which frustrated some of the company’s most valuable scientists and engineers. In an effort to keep the peace, managers categorized almost everyone as average performers, and because performance ratings were tied to merit-based wage increases, top talent felt slighted. Vitality used a flawed comparative ratio system to determine wage increases, which often resulted in giving low performers a greater raise percentage. Because high performers were not adequately recognized or compensated for their efforts, the performance management system failed to keep them engaged.
In 2009, Vitality implemented a new performance management system based on forced distribution, which saw an increase in employee buy-in, but a decrease in manager buy-in. Many
Performance Management Analysis
October 7, 2014
Vitality Health Enterprises, Inc., a manufacturer and distributor of beauty products, is at risk of losing market share in this highly competitive industry. James Hoffman, the newly appointed Vice President of HR, has been tasked with the evaluation of Vitality’s performance management system, to ensure that it is generating the outcomes Beth Williams, the CEO, is expecting.
ISSUE IDENTIFICATION
After a period of strong revenue growth, Hoffman is concerned that the workforce is becoming complacent. The research and development department is not producing quickly enough, resulting in a growing number of missed product launches. The company has realized a slow but significant turnover of highly talented research scientists, leading Williams and Hoffman to suspect that the performance management system is ineffective.
ISSUE ANALYSIS
Prior to 2009, Vitality was operating an old performance management system that failed to properly incentivize and recognize top performers and did not emphasize employee accountability. As a result, there was a lack of differentiation between top talent, average performers, and poor performers, which frustrated some of the company’s most valuable scientists and engineers. In an effort to keep the peace, managers categorized almost everyone as average performers, and because performance ratings were tied to merit-based wage increases, top talent felt slighted. Vitality used a flawed comparative ratio system to determine wage increases, which often resulted in giving low performers a greater raise percentage. Because high performers were not adequately recognized or compensated for their efforts, the performance management system failed to keep them engaged.
In 2009, Vitality implemented a new performance management system based on forced distribution, which saw an increase in employee buy-in, but a decrease in manager buy-in. Many
References: Aguinis, H. (2013). Performance Management. Prentice Hall: Upper Saddle, NJ. Roberts, G. E. (2002). Employee Performance Appraisal System Participation: A Technique that Works. Public Personnel Management, 31(3), 333. Pulakos, E. D. (2004). Performance Management: A roadmap for developing, implementing and evaluating performance management systems. Alexandria, VA: SHRM Foundation.