Performance Management at Vitality Health Case free essay sample

In order to perform the job requirements an individual must exhibit a number of different skills and talents. For example, the person who fills the position must do the following: * Decide whether the research has commercial application * Move patent applications forward * Consult with management on corporate strategy * Teach, manage, and assist subordinate researchers * Develop top-notch scientific research In order to be successful in performing the aforementioned duties, the applicant must have high level research skills, interpersonal skills, leadership skills, management skills, organizational skills, marketing skills, time management skills, technical scientific knowledge, etc. Task Identity- 7 Justification: In order to successfully fill this job, an individual must understand each of the necessary tasks in performing a given project. An individual must be able to see their own projects from start to finish and the ability to identify specific tasks is essential to do so. Task Significance 6 Justification: Vitality expects their researcher to have an impact science. We will write a custom essay sample on Performance Management at Vitality Health Case or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page The researcher can do so by producing high-quality scientific literature and presenting at conferences for scientific literature. Vitality expects the scientific contributions of the researcher to be worthy of receiving patents. The contributions of the research can have a large impact on people, on women specifically. As we know, cosmetic products are important to many women. Also, nutritional supplements can help to improve an individual’s overall health. As a result, research breakthroughs at Vitality can have a large and lasting impact. Autonomy 6 Justification: Overall, the scientist at Vitality seems to have complete freedom over the projects that he/she wishes to take on. The project must meet the following requirements: aligns with corporate strategy, receives management’s approval and has commercial applications. Feedback Scores 4 Justification: Currently, evaluations are conducted once a year. It may be desirable to conduct evaluations more frequently. Also, there is some question as to the appropriateness of managers’ ratings. Some feel that they are timid in their ratings in order to avoid conflict. It has been reported that managers are telling the employees they received one rating, while officially giving them another, or by rotating the good ratings to different employees each year. MPS = (6 + 7 + 6)/3 * 6 * 4 = 152 2. Both the equity and expectancy theories of motivation can be used to illustrate why scientist turnover at Vitality Health was primarily occurring among the more productive scientists under the old performance management system. Equity Theory: Equity theory helps us to understand why the scientist turnover at Vitality Health was primarily associated with the more productive scientists leaving for better job opportunities. If applying the equity theory of motivation, a scientist at Vitality Health would determine the fairness of what he/she is receiving relative to what he/she is putting in, compared to others. For example, Vitality Health used a rating system consisting of 13 different rating levels. However, managers were guilty of abusing the system. They were afraid to offend employees. As a result, scientists ended up with rather homogenous ratings regardless of their actual performance. In other words, regardless of top-performing scientists’ input (performance), their performance ratings (output) were similar to the performance ratings of the low-performing scientists. Furthermore, these performance ratings were used to determine merit-based wage increases. Therefore, even though actual performance was different between low and top performers, due to similar performance ratings, merit-based wage increases were similar. Consequently, top-performing scientists felt that they were treated poorly in relation to their contribution. The inequity felt by high-performing scientist helps to explain the turnover of such scientists at Vitality Health. Expectancy Theory: Salaries tended to be 7%-8% higher at Vitality Health than the competition. However, the pay model was focused on a flat salary. Therefore, there were little to no provisions for bonuses or alternative forms of compensation. The expectancy theory of motivation is related in a few ways. When applying the expectancy theory, scientists at Vitality Health would ask themselves three questions. First, â€Å"Will my effort lead to high performance? † Scientists had complete control over their effort. As a result, it is probably safe to say that greater effort would lead to greater performance for a scientist. Second, â€Å"Will performance lead to outcomes? † In other words, will increased performance lead to higher compensation or higher performance ratings? In the case of scientists at Vitality Health, based on the homogenous performance ratings and flat-salary pay model, it is unlikely that higher performance would lead to either of these outcomes. The third and final questions scientists would ask themselves is, â€Å"Do I find the outcomes desirable? † Do the high-performing scientists want to be rated the same as their low-performing counterparts? Do they want to be compensated similarly? If money were an outcome, is that the compensation I desire for my effort and performance? Although, scientists can control their effort, and thereby control their performance, the fact that performance leads to unfavorable and undesirable outcomes illustrates why scientist turnover at Vitality Health was primarily occurring among high-performing scientists. 3. Old SystemNew System A-E system, managers didn’t want to offend employees, so they only gave B and C ratings| The rating levels are limited to four options so all the levels are used and comparison is more visible| Job Evaluation Points for compensation, with a value multiple, based on job position| Uses metrics to rate employees efforts and achievements instead of just job description| Percentage pay raise is based on where they currently stand in industry pay grade. People paid above industry average get smaller percent raise than equivalent performance by someone who is paid below industry average. Employees are compared to one another rather than to preset industry standards, or compared to arbitrary grade marks| No provision for bonuses, flat rates across the table, but all were at 7-8% over competition| Forces managers to rank their employees above or below each other| | Compensation is now not only cash based, but equity is involved| | Performance-based compensation| The biggest difference seems to be that the old system would only correctly compensate someone for their efforts the first time they produce well. After that, their compensation increases at a slower rate than peers regardless of their effectiveness. Even though people were paid 7-8% over the industry averages, the structure of the compensation made people feel undervalued and eventually led many to devalue the marginal contribution to the company. The new system is an attempt to focus the pay on performance measurements and eliminate free-riding by underperforming employees. By increasing the correlation of performance to compensation, the marginal efforts of an employee becomes more valuable to them. If the MPS for Ramp;D scientists were 160, the new performance management system would encourage more productivity. A high MPS means a specific skill set with a large amount of task identity. As such, the system that is more focused on rewarding achievements rather than job title would promote more focused effort from scientists. Also, it would be difficult to compare the scientists to the industry because of their abstract job description. If the MPS for Ramp;D scientists were 60, the old performance management system would encourage more productivity. If the position scored lower in task identity and autonomy, and thus merited a lower MPS, a system based on job position rather than performance would be more appropriate. The recommended changes to improve the effectiveness of the performance management system * Make performance reviews quarterly rather than annually. This will increase the usefulness of them and take out the pressure of having them tied so closely to compensation benefits. * Under the new rating categories, the â€Å"achiever† ranking is too full of employees with a select few above and a pitiful few below. This does not fix the previous issue of all of the rankings of employees being grouped together. One alternative, is to rank the employees as individuals, AND as teams. This way they feel mutually responsible for a positive outcome and nobody takes it personally if a poor rating is received. * It appears one of the main complaints against the new system is that it is too comparative from employee to employee. One solution is to set up job goals/achievements that are objective that each employee must achieve in order to obtain their salary. Then, they may set extra goals to reach for if they desire further compensation in bonus format. This would ensure that compensation is based on each individual’s effort, rather than how they compare to other employees. 5. Effective goals that Ramp;D managers could set for Ramp;D scientists: * Increase personal annual breakthroughs by 20 percent in the next year. * Publish two articles, annually, in noteworthy scientific journals or present at two noteworthy scientific conferences. This will improve the personal skills of the Ramp;D scientist, and promote the name and research of Vitality Health in the public sphere. * Improve at least two existing products annually such that the products achieve a 15% sales increase within 3 months of the improvement. * Participate in the development of patents, and successfully receive one patent each year.