Title: Implementing a PM SystemSome key members of an organization and an external consultant worked together to thoroughlycommunicate and actually implement a new performance management system. As one of thefirst steps to implement performance management, the CEO announced that he wanted toimplement a forced distribution performance management system in which a set percentage ofemployees would be classified into each of several categories (e.g., a rating of 1 to the top 20percent of performers; a rating of 2 to the middle 70 percent of performers; and a rating of 3 tothe bottom 10 percent of performers). A global HR team was put in place to design andimplement the new system. The first task for the design team was to build a business case of thenew system by showing that if the new organizational strategy was carried down to team goals orobjectives and team goals or objectives were translated into individual goals, then business goalswould be met. Initially, the program was rolled out as a year-round people management systemthat would raise the bar on performance management at the company by aligning individualperformance objectives with organizational goals and by focusing on the development of allemployees. The desired outcomes of the new system included raising the performance level ofall employees, identifying and retaining top talent, and identifying low performers and improvingtheir performance. The firm also wanted the performance expectations for all employees to beclear.The design team received the support of senior leadership by communicating that theperformance management system was the future of the firm and by encouraging all seniorleaders to ensure that those reporting directly to them understood the process and also acceptedit. In addition, the design team encouraged senior leaders to use the system with all of their directsubordinates and to demand and utilize output from the new system. The team also explained theneed for standardization of performance management across all divisions. Finally, the teamasked senior leaders to promote the new program by involving employees in the training of talentmanagement and by assessing any needs in their divisions that would not be addressed by thenew system. The company's global performance management cycle consisted of the followingprocess:1. Goal cascading and team building2. Performance planning3. Development planning4. Ongoing discussions and updates between managers and employees5. Annual performance summary Training resources were made available on the company's intranet for managers and individualcontributors, including access to all necessary forms. In addition to the training available on theintranet, one-to two-hour conference calls took place before each phase of the program began.After the transition into the new system, part of the training associated with the performancemanagement system revolved around the idea that the development planning phase of the systemwas the joint year-round responsibility of managers and employees. Managers were responsiblefor scheduling meetings, guiding employees on preparing for meetings, and finalizing alldevelopment plans. Individual contributors were responsible for documenting the developmentalplans. Both managers and employees were responsible for preparing for the meeting, filling outthe development planning preparation forms, and attending the meeting.With forced distribution systems, there were a fixed number of employees that had to fall intoeach rating classification. As noted, in the company system, employees were given a rating of 1,2, or 3. Individual ratings were determined by the execution of annual objectives and jobrequirements as well as through a comparison rating of others within a similar level at thecompany. Employees receiving a 3, the lowest rating, had a specified time period to improvetheir performance. If their performance improved, then they were released from the plan, butthey were not eligible for stock options or salary increases. If performance did not improve, theycould take a severance package and leave the company, or they could start on a performanceimprovement plan, which had more rigorous expectations and timelines than did the originalaction plan. If performance did not improve after the second period, they were terminatedwithout a severance package. Individuals with a rating of 2 received average to high salaryincreases, stock options, and bonuses. Individuals receiving the highest rating of 1 received thehighest salary increases, stock options, and bonuses. These individuals were also treated as "highpotential" employees and given extra development opportunities by their managers. Thecompany also made significant efforts to retain all individuals who received a rating of 1.Looking to the future, the company planned to continue reinforcing the needed cultural change tosupport forced distribution ratings. HR Centers of Expertise within the company continued toeducate employees about the system to ensure that they understood that the company stillrewarded good performance; they were just measuring it in a different way than in the past.There was also a plan to monitor for and correct any unproductive practices and implementcorrective policies and practices. To do this, the company planned on continued checks with allstakeholders to ensure that the performance management system was serving its intendedpurpose.Now that the new performance management system was implemented, the consultant decided toevaluate the system to see if and how further implementation of the performance managementwas needed. To do so, the consultant considered the following four questions that deal withcharacteristics of an ideal performance management system discussed in the chapter. Putyourself in the shoes of the consultant, and provide answers to these four questions:1. What is your overall impression on the degree of overlap between the company's systemand the ideal system performance management system?

Question

Title: Implementing a PM SystemSome key members of an organization and an external consultant worked together to thoroughlycommunicate and actually implement a new performance management system. As one of thefirst steps to implement performance management, the CEO announced that he wanted toimplement a forced distribution performance management system in which a set percentage ofemployees would be classified into each of several categories (e.g., a rating of 1 to the top 20percent of performers; a rating of 2 to the middle 70 percent of performers; and a rating of 3 tothe bottom 10 percent of performers). A global HR team was put in place to design andimplement the new system. The first task for the design team was to build a business case of thenew system by showing that if the new organizational strategy was carried down to team goals orobjectives and team goals or objectives were translated into individual goals, then business goalswould be met. Initially, the program was rolled out as a year-round people management systemthat would raise the bar on performance management at the company by aligning individualperformance objectives with organizational goals and by focusing on the development of allemployees. The desired outcomes of the new system included raising the performance level ofall employees, identifying and retaining top talent, and identifying low performers and improvingtheir performance. The firm also wanted the performance expectations for all employees to beclear.The design team received the support of senior leadership by communicating that theperformance management system was the future of the firm and by encouraging all seniorleaders to ensure that those reporting directly to them understood the process and also acceptedit. In addition, the design team encouraged senior leaders to use the system with all of their directsubordinates and to demand and utilize output from the new system. The team also explained theneed for standardization of performance management across all divisions. Finally, the teamasked senior leaders to promote the new program by involving employees in the training of talentmanagement and by assessing any needs in their divisions that would not be addressed by thenew system. The company's global performance management cycle consisted of the followingprocess:1. Goal cascading and team building2. Performance planning3. Development planning4. Ongoing discussions and updates between managers and employees5. Annual performance summary Training resources were made available on the company's intranet for managers and individualcontributors, including access to all necessary forms. In addition to the training available on theintranet, one-to two-hour conference calls took place before each phase of the program began.After the transition into the new system, part of the training associated with the performancemanagement system revolved around the idea that the development planning phase of the systemwas the joint year-round responsibility of managers and employees. Managers were responsiblefor scheduling meetings, guiding employees on preparing for meetings, and finalizing alldevelopment plans. Individual contributors were responsible for documenting the developmentalplans. Both managers and employees were responsible for preparing for the meeting, filling outthe development planning preparation forms, and attending the meeting.With forced distribution systems, there were a fixed number of employees that had to fall intoeach rating classification. As noted, in the company system, employees were given a rating of 1,2, or 3. Individual ratings were determined by the execution of annual objectives and jobrequirements as well as through a comparison rating of others within a similar level at thecompany. Employees receiving a 3, the lowest rating, had a specified time period to improvetheir performance. If their performance improved, then they were released from the plan, butthey were not eligible for stock options or salary increases. If performance did not improve, theycould take a severance package and leave the company, or they could start on a performanceimprovement plan, which had more rigorous expectations and timelines than did the originalaction plan. If performance did not improve after the second period, they were terminatedwithout a severance package. Individuals with a rating of 2 received average to high salaryincreases, stock options, and bonuses. Individuals receiving the highest rating of 1 received thehighest salary increases, stock options, and bonuses. These individuals were also treated as &#34;highpotential&#34; employees and given extra development opportunities by their managers. Thecompany also made significant efforts to retain all individuals who received a rating of 1.Looking to the future, the company planned to continue reinforcing the needed cultural change tosupport forced distribution ratings. HR Centers of Expertise within the company continued toeducate employees about the system to ensure that they understood that the company stillrewarded good performance; they were just measuring it in a different way than in the past.There was also a plan to monitor for and correct any unproductive practices and implementcorrective policies and practices. To do this, the company planned on continued checks with allstakeholders to ensure that the performance management system was serving its intendedpurpose.Now that the new performance management system was implemented, the consultant decided toevaluate the system to see if and how further implementation of the performance managementwas needed. To do so, the consultant considered the following four questions that deal withcharacteristics of an ideal performance management system discussed in the chapter. Putyourself in the shoes of the consultant, and provide answers to these four questions:1. What is your overall impression on the degree of overlap between the company's systemand the ideal system performance management system?

Accepted Answer

Performance management is a critical component of any organization's strategy to maximize its human…

1. What is your overall impression on the degree of overlap between the company's system and the ideal system performance management system?