Case Study: Team-Based Rewards for the State of Georgia

In 2001 the state of Georgia’s Department of Human Resources (DHR) updated its performance management
system. The performance management process is used for all employees who are to receive performance
evaluations. The following outlines the basic process of this system

Manager training. Prior to utilizing the system, all managers receive training on how the system works and
how to implement each phase of the system. Performance planning. This is the first step of the performance
management system process and is used to create the employee’s performance plan. Developing a
performance plan involves identifying job and individual responsibilities and performance expectations. It is
the primary responsibility of the manager to develop this plan using input from the employee that he or she
may want included in the performance plan.

Performance coaching. Coaching is the key supervisory activity during a performance period. It involves
ongoing communication, both formal and informal, that motivates employees by letting them know where
they stand in meeting expectations and carrying out responsibilities. The three steps to performance coaching
are (1) observing performance; (2) providing regular performance feedback, based on information gathered
through personal observation, team input, and input from the employee; and (3) documenting performance.

Performance evaluation. This phase culminates with a meeting of the evaluating supervisor and the employee
to rate performance and discuss appropriate salary increases and developmental planning for the employee.
Performance development. Supervisors should discuss performance development with each employee. A
developmental plan must be developed for each employee who is rated “does not meet expectations” or
“needs improvement” in the area of Employment Terms and Conditions. The structured approach of the
developmental plan has three objectives: (1) to enhance employee strengths, (2) to decrease employee areas
that need improvements, and (3) to meet organizational and team needs.
Salary increases. Salary increases are awarded annually to each eligible employee. To be eligible for a
performance- based salary increase, employees must:
• Receive an overall rating for Job and Individual Responsibilities of at least “met expectations.”
• Receive an overall rating for Terms and Conditions of Employment of at least “needs improvement.”
• Salary increases for each evaluation period for employees who “met or exceeded expectations” are restricted
to the following guidelines:
An overall rating of “met expectations” will receive a standard increase, based on the amount identified
for the evaluation period.
• An overall rating of “exceeded expectations” will receive a standard increase as noted above, along with a
lump sum identified for the evaluation period.
• Each year, a specified amount of money is set aside for salary increases. Because funds are limited, the
salary increase amounts may be reduced if the department exceeds the allocated funds. If the salary increase
amounts must be reduced, the reduction percentage will be the same for all employees.

• Unless otherwise authorized, employees at or above pay grade are not eligible for a performance-based
salary increase, and employees who are near the pay grade maximum will be granted an increase to the pay
grade maximum only.

Linking Performance Management to Strategy at Procter & Gamble

Consider the following description of a firm-wide strategy pursued by Procter & Gamble, Procter & Gamble
(P&G), the world’s largest consumer products company, follows a fairly unique strategy: P&G appeals to the
heart and cares about human needs. In other words, P&G attempts to touch and improve the lives of its
consumers all over the world. As an example, take the razor-and-blade innovation pioneered by Gillette’s
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Himalaya team, which focuses on India but is a global group based partly in Boston, USA. The team received
information about how men in India shave: about half of them use barbershops and barbers usually break
double-sided blades in two and used them repeatedly, which crates unsanitary conditions. With the strategic
goal of improving the lives of its customers, the team created a razor-and-blade innovation that simplified
the essential features of the shaving done in barbershops. The products were a success in terms of improving
both the human condition and profitability. As a second example, consider a situation in P&G Brazil, where
P&G feared a shutdown due to decreased business volume. Low-income consumers were the fastest growing
segment of the population, but P&G’s global premium products were too expensive for this market segment.
Local P&G teams decided to live with families, scrutinized every P&G process in an attempt to reduce costs,
and ended up creating an innovative products line they dubbed “basico” (for “essential” in Portuguese). The
team members felt that they were doing good for the world, not just making money for the corporation.
Demand immediately outpaced supply when the first “basico” products were launched, which included
women’s hygiene, diapers, and greener laundry detergent. The company quickly captured market share
through small neighborhood shops and premium products were lifted. The business in Brazil became a
profitable global growth model, and not just for emerging countries. As a consequence, “Tide Basic” was
recently introduced in the United States.

In sum, P&G’s strategy inspires employees to add their hearts to their heads and aims at finding creative
solutions when purpose-inspired opportunities and commercial considerations seem to collide.

Case Study. Implementing a Performance Management Communication Plan at Accounting, Inc.

Accounting, Inc. is a consulting and accounting firm headquartered in Amsterdam, the Netherlands. Recently,
Accounting, Inc. implemented a performance management system. The first step in the implementation of
the new system was the development of a set of core competencies that would be used to evaluate most
employees regardless of function or level. In addition, each employee was evaluated using more job-specific
performance dimensions.

As the first step in the communication plan, the employees received individual e-mail messages asking them
to define what the core competencies meant to them and to give descriptions and examples of how each of
the core competencies played out in their specific positions. Next, the company held meetings, handed out
frequently asked questions (FAQs) sheets, and placed posters around the company detailing how the core
competencies were related to the organization’s strategic priorities and how performance scores would be
related to monetary rewards. In these communications, Accounting, Inc. detailed how the performance
system worked, how the raters were chosen, how performance feedback was used, and other details about the
system. The information also outlined the benefits employees could expect from the new system as well as
employees’ responsibilities regarding the system.

Please evaluate Accounting, Inc.’s communication plan. Specifically,

Case Study: Choosing a Performance Measurement Approach at Paychex, Inc.

The following job description is for an account executive at Paychex, Inc. Paychex, Inc., is a leading national
provider of payroll, human resources, and benefits outsourcing solutions for small- to medium-sized
businesses. Paychex is headquartered in Rochester, New York, but the company has more than 100 offices
and serves hundreds of thousands of clients nationwide. Because account executives often make sales calls
individually, their managers do not always directly observe their performance. Furthermore, managers are
also responsible for sales in their markets and for staying up to date on payroll laws. However, account
executives are responsible for training new account executives and networking in the industries in which they
sell products. For example, if an account manager is responsible for retail companies, then that account
executive is expected to attend.

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retail trade shows and professional meetings to identify potential clients and to stay current with the issues
facing the retail industry.

ACCOUNT EXECUTIVE JOB RESPONSIBILITIES:

o Performing client needs analysis to ensure that the major market services product can meet a
client’s requirements and expectations.
o Establishing clients on the host processing system.
Acting as primary contact for the client during the conversion process.
o Supporting clients during the first few payrolls.
o Completing the required documentation to turn the client over to customer service for ongoing
support.
o Scheduling and making client calls and, when necessary, supporting sales representatives in
o presales efforts.
o Keeping abreast of the major market services system and software changes, major changes
o and trends in the PC industry, and changes in wage and tax law.

Behavior approach to measuring performance is most appropriate when.

the link between behaviors and results is not obvious.
outcomes occur in the distant future.
poor results are due to causes beyond the performer’s control.

Results approach to measuring performance is most appropriate when.

workers are skilled in the necessary behaviors.
behaviors and results are obviously related.
results show consistent improvement over time.
there are many ways to do the job right.

Case Study: Deliberate Practice Makes Perfect

Ricardo is an associate financial analyst in a large financial consulting firm. He works in the emerging
markets division developing low-cost products for the Southeast Asia region. He was selected for this position
because of his wide range of skills, relevant experience, and analytical abilities.

During his time at the firm, he has worked on a variety of projects and has become well respected among his
peers. He is satisfied with his job and with his progress so far, but he strives to work on more challenging
projects, wants to make a greater impact, and seeks a leadership-centered role. Ricardo has a strong drive and
eventually hopes to get a position at the highest levels of the organization.

In recent years, the firm has remained stable but has struggled with growth. The recent economic downturn
changed the financial landscape and is requiring new and innovative solutions to common issues such as
reducing and calculating risk. As a result, the firm decided to launch a company-
wide competition for the best risk assessment model to motivate all of its employees to work on solving this
issue. After several rounds of assessment and interviews, the top two finalists will be invited to present their
ideas to the CEO who will make the final decision regarding the winner of the competition. The winning
team will receive a substantial cash prize alongside significant prestige.

Ricardo sees this as the perfect chance to impress his colleagues and supervisors and to establish himself as
a top performer. This competition presents the ideal circumstances for him to not only prove himself but also
really shine. He and his team are incredibly excited about this opportunity and have been working tirelessly
on this project. Ricardo’s strong math and finance background help him come up with a

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comprehensive and complex algorithm that seems to be surprisingly effective in predicting risk. Each member
contributes to different aspects of the project and together they create a strong proposal that they believe is
worthy of winning the competition.

Ricardo emerges as leader of the group due to his detailed knowledge and understanding of its proposed
model. He is excellent at motivating and guiding his small team, but he gets very nervous in formal situations
and speaking in public, which questions his ability to influence people. He knows that part of the selection
process will involve presenting his team’s idea to different departments and important stakeholders and that
he will be expected to take the lead during these presentations. He also knows that the key to passing through
each round of the selection process will be to get people on board with their idea and convincing them of its
potential.

You are Ricardo’s manager, and he comes to you for advice and guidance about the current situation. You
believe that he is one of the brightest employees in the company and that he has the potential to become the
most successful as well. However, he will need to overcome his fear of public speaking and develop his
presentation skills to win this competition and reach his goals. Ricardo is committed to improvement and to
becoming a top performer, and he understands that this will require a considerable amount of time and
dedication. However, he hasn’t heard of the concept of deliberate practice and is unsure of how to get the
most value out of the time he dedicates to improving his
performance.

Case Study. Not All Teams Are Created Equal

Public Service Works is a large public service organization. The company’s performance management
system reflects the focus placed on results, the need for creativity and imagination, and the need for
continuous improvement. Under its current framework, the system links individual performance with that
of the team or department as well as the organization. Therefore,

Department business plan goals link to the business plan and business priorities.

Performance goals and measures grow out of a department’s business plan.

Employee performance measures align with those of the organization.

The department, teams, and individuals are rewarded and recognized on the basis of these measures.

The organization’s team structure consists primarily of work or service teams, which align with the
company’s departments. Because of the close relationship with local government entities, however, the
organization also utilizes network teams that focus on government regulatory needs as they relate to public
service providers and project teams that are assembled on an as-needed basis to work on various projects
that come from the network teams.

The elements of the current performance management system are as follows:

Organizational performance. Organizational performance measurement is a continuous process conducted

to assess the department’s performance efficiency, effectiveness, and client satisfaction—in relation to the
vision and business plan.

The steps in the process include the following:

1. Business plan goals and strategies. Identify the desired outcomes that the organization is seeking to
achieve and outline how the goals will be realized.

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2. Human resources department plan. Outline the key strategies the department will undertake to address
identified human resources (HR) issues to meet its business plan, within the context of the vision, values,
government business plan, and the HR plan.

3. Performance measures. Identify specific criteria that will be used to monitor progress toward the goals.

4. Targets. Describe specific performance levels that will be used to achieve the desired outcome.

5. Learning supports. Identify practices, policies, and initiatives that provide incentive and encouragement
to employees to develop new skills, knowledge, and abilities.
Employee performance. Employee performance can be enhanced through a continuous and interactive
process to help departments and teams achieve business goals and to help employees continually improve.

The steps in the process include the following:

1. Performance plans. Link employee performance to that of the organization and identify and set measures
for desired outcomes.

2. Orientation. Provide information for employees regarding their new jobs and the organization to enhance
understanding and effectiveness.

3. Learning and developmental plans. Identify competency development required for employees to carry
out the performance plan.

4. Performance coaching. Provide ongoing performance feedback and assistance to employees from
managers, supervisors, and other key individuals.

5. Performance assessment. Provide a summary of feedback received throughout the performance period,
analyze what employees have achieved relative to the desired outcomes set out in their performance and
learning plans, and handle the subject of performance pay increases.

Public Service Works’ current performance recognition (pay) plan supports and reinforces the desired
performance for both the organization and the employee as follows:

Performance pays. This compensation for employee’s links pays with individual performance. It consists
of a market-driven base pay and a market-driven increase system that provides the ability to address cost
of living increases and a bonus based on achievement of department, individual, and team goals.

Special programs. The company also has two recognition programs for outstanding performance: (1)
Award of Excellence, which can be applied for and awarded to team leaders, and (2) Executive Excellence
cognition, which is a unique program that recognizes teams that achieve measurable enhancements in the
service they provide. Each of these programs requires an application process, and the award is determined
by a committee.

Consider the performance management process as it is applied in implementing team-based

systems. Then, please answer the following questions:

CASE STUDY : Performance Management at Network Solutions, Inc.

Network Solutions, Inc.,* is a worldwide leader in hardware, software, and services essential to computer
networking. Until recently, Network Solutions, Inc., used more than 50 different systems to measure
performance within the company, many employees did not receive a review, fewer than 5% of all employees
received the lowest category of rating, and there was no recognition program in place to reward high

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achievers. Overall, it was recognized that performance problems were not being addressed, and tough
pressure from competitors was increasing the costs of managing human performance ineffectively. In
addition, quality initiatives were driving change in several areas of the business, and Network Solutions
decided that these initiatives should also apply to “people quality.” Finally, Network Solutions wanted to
improve its ability to meet its organizational goals and realized that one way of doing this would be to ensure
that they were linked to each employee’s goals.

Given this situation, in 2001, Network Solutions’ CEO announced that he wanted to implement a forced
distribution performance management system in which a set percentage of employees were classified in each
of several categories (e.g., a rating of 1 to the top 20% of performers; a rating of 2 to the middle 70% of
performers; and a rating of 3 to the bottom 10% of performers). A global cross-divisional HR team was put
in place to design and implement the new system. The first task for the design team was to build a business
case of the new system by showing that if organizational strategy was carried down to team contributions
and team contributions were translated into individual goals, then business goals would be met. Initially the
program was rolled out as a year-round people management system that would raise the bar on performance
management at Network Solutions by aligning individual performance objectives with organizational goals
by focusing on the development of all employees. The desired outcomes of the new system included raising
the performance level of all employees, identifying and retaining top talent, and identifying low performers
and improving their performance. Network Solutions also wanted the performance expectations for all
employees to be clear.

Before implementing the program, the design team received the support of senior leadership by
communicating that the performance management system was the future of Network Solutions and by
encouraging all senior leaders to ensure that those reporting directly to them understood the process and
accepted it. In addition, they encouraged senior leaders to use the system with all of their direct subordinates
and to demand and utilize output from the new system. Next, the design team encouraged the senior leaders
to stop the development and use of any other performance management system and explained the need for
standardization of performance management across all divisions. Finally, the team asked senior leaders to
promote the new program by involving employees in training of talent management and by assessing any
needs in their divisions that would not be addressed by the new system. The Network Solutions global
performance management cycle consisted of the following process:

1. Goal cascading and team building

2. Performance planning
3. Development planning
4. Ongoing discussions and updates between managers and employees
5. Annual performance summary

Training resources were made available on Network Solutions’ intranet for managers and individual
contributors, including access to all necessary forms. In addition to the training available on the intranet, 1-
to 2-hour conference calls took place before each phase of the program was begun.

Today, part of the training associated with the performance management system revolves around the idea
that the development planning phase of the system is the joint year-round responsibility of managers and
employees. Managers are responsible for scheduling meetings, guiding employees on preparing for meetings
and finalizing all development plans. Individual contributors are responsible for documenting the
developmental plans. Both managers and employees are responsible for preparing for the meeting, filling out
the development planning preparation forms, and attending the meeting.

With forced distribution systems, there is a set number of employees that have to fall into set rating
classifications. As noted, in the Network Solutions system employees are given a rating of 1, 2, or 3.
Individual ratings are determined by the execution of annual objectives and job requirements as well as by a

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comparison rating of others at a similar level at Network Solutions. Employees receiving a 3, the lowest
rating, have a specified time to improve their performance.

If their performance does improve, then they are released from the plan, but they are not eligible for stock
options or salary increases. If performance does not improve, they can take a severance package and leave
the company or they can start on a performance improvement plan, which has more rigorous expectations
and timelines than did the original action plan. If performance does not improve after the second period, they
are terminated without a severance package. Individuals with a rating of 2 receive average to high salary
increases, stock options, and bonuses. Individuals receiving the highest rating of 1 receive the highest salary
increases, stock options, and bonuses. These individuals are also treated as “high potential” employees and
given extra development opportunities by their managers. The company also makes significant efforts to
retain all individuals who receive a rating of 1.

Looking to the future, Network Solutions plans to continue reinforcing the needed cultural change to support
forced distribution ratings. HR Centers of Expertise of Network Solutions continue to educate employees
about the system to ensure that they understand that Network Solutions still rewards good performance: they
are just measuring it in a different way than in the past. There is also a plan to monitor for and correct any
unproductive practices and implement correcting policies and practices. To do this, Network Solutions plans
on continued checks with all stakeholders to ensure that the performance management system is serving its
intended purpose.

Consider Network Solutions’ performance management system considering what we discussed as an ideal
system. Then Answer following questions.

Case Study: Team Performance Management at Bose

Bose Corporation is an organization that specializes in audio equipment that meets virtually any audio
challenge. Bose Corporation's audio technologies can be found in home stereos, stadiums, the Sistine
Chapel, and even the U.S. space program. Bose Corporation was founded in 1964, is headquartered in
Framingham, Massachusetts, and has employees around the globe.

Many Bose employees work in a variety of teams. Three different types of teams within Bose are work
teams, project teams, and network teams. The work teams found within Bose are teams responsible for the
production of audio equipment. These teams are long-term and are typically focused on producing a certain
type of audio equipment. Project teams within Bose are responsible for the research and development of
innovative audio equipment. Typically, these teams are focused on the development of a specific type of
equipment (e.g., new home entertainment speakers). Network teams arise in the instances where team
members are spread across the globe. A specific example of a network team within Bose is a team that is
designing a new audio system for Ferrari. Within this team there are members located at Bose's
headquarters, at Ferrari's plant location in Italy, and at one of Bose's production factories in Japan. The
members at these various locations rarely meet face-to-face but are frequently in communication.

Recently, Bose's executive team has been interested in implementing a new team-based performance
management program for these different teams, and they have asked you to help them. You have explained
to them the six key principles of a proper performance management plan, but now Bose's executive team
is specifically interested in knowing how these six key principles will have to differ across its three different
types of teams. The reason why the executive team is interested in this is that they would like to establish
a main performance management framework that can work across the different types of teams.