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TitlePerformance Management at Vitality Health Enterprises
Tags Employment Salary Performance Appraisal Goal Setting
File Size516.1 KB
Total Pages7
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Page 4

2336 – Human Resources’ Management
S1.T2 – 2015/16


would result in high salary regardless of overall performance. As a result, it was difficult to identify

and reward top performers or terminate low performers and hence, the low turnover

experienced by the firm was among productive scientists and product engineers and even led

some employees to leave the company.

So, we are able to conclude that this system was not suitable and proper for a company like

Vitality and that, in fact, it was not paying the staff according to their performance.

3. What are the features of the new system?

In order to solve the problems that were already mentioned, in June of 2009 a new performance

management system was implemented by PMET with the purpose of identifying in a more

accurate way the high-performing employees, as well as the low-performers. This way, they

would be able to allocate rewards in a better way and, consequently, retain and attract top talent

and incentivise low performers to put a bigger effort in their tasks, motivating improved

performance throughout the company. The new features of this new method implemented


 Shift from an absolute ranking system to a relative one. In the first one, the employee is

evaluated based on his own performance in respect to objective criteria, without any kind of

comparison with other workers. On the other hand, relative method consists in rating

employees with respect to one another, comparing their performance with that of employees

in similar positions and roles.

 Institution of a forced distribution model of performance ranking that consists on a rating

system that requires the managers to evaluate each individual, and rank them into one of

five categories (Top Achiever; Achiever; Low Achiever; Unacceptable; Not Rated), each one

constrained to meet a certain target in terms of percentage of employees. This forced the

managers to differentiate employees based on their performance and, having fewer

categories than the previous system, should make it easier to determine in which category

the employee fits in and should bring disciplined rigor to the management process. This

system can be controversial due to the competition it creates, which may increase stress

levels and result in an unpleasant working atmosphere. Furthermore, it heightens the focus

on individual performance and does little for team building, which should be highly

encouraged in this kind of corporate environment. As a further matter, this classification can

be counter-productive if there is not an active talk between the employee and the evaluator,

giving concrete feedback about what to do next year to get a better ranking. Moreover,

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