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Vitality Health Enterprises hired a new CEO, Beth Williams, in 2008 to address stagnation from the global financial crisis. Williams organized a commission to evaluate the company's performance management system. The commission found issues with the previous 13-level rating system, which failed to clearly differentiate top and average performers. As a result, a new system was implemented that rated employees comparatively based on their individual performance. The new system incorporated short and long-term equity bonuses to incentivize management. A follow-up survey found that over half of employees preferred the new system.
Vitality Health Enterprises hired a new CEO, Beth Williams, in 2008 to address stagnation from the global financial crisis. Williams organized a commission to evaluate the company's performance management system. The commission found issues with the previous 13-level rating system, which failed to clearly differentiate top and average performers. As a result, a new system was implemented that rated employees comparatively based on their individual performance. The new system incorporated short and long-term equity bonuses to incentivize management. A follow-up survey found that over half of employees preferred the new system.
Vitality Health Enterprises hired a new CEO, Beth Williams, in 2008 to address stagnation from the global financial crisis. Williams organized a commission to evaluate the company's performance management system. The commission found issues with the previous 13-level rating system, which failed to clearly differentiate top and average performers. As a result, a new system was implemented that rated employees comparatively based on their individual performance. The new system incorporated short and long-term equity bonuses to incentivize management. A follow-up survey found that over half of employees preferred the new system.
Case study: Performance Management at Vitality health Enterprises, Inc.
Vitality Health Enterprises in brief:
Vitality enterprise was founded in 1987 in Ames Iowa by Hikaru “Fred” Kikuchi. Vitality started with importing products from Japan and marketing them. Vitality established its own manufacturing facility in Ames in 1989 Vitality combined with several leading pharmacies in 1994 Vitality went global in 1995 In 1997, Vitality changed its name to Vitality health Enterprise and it became public. By 2007, more than 5500 employees in HQ worked for Vitality health Enterprise and around 1500 employees worked in global offices. Due to the global crisis in 2008 Vitality health Enterprise bought relative stagnation to company’s growth. So, Beth Williams was hired as the new CEO of Vitality health Enterprise. Working off the Fat: Beth Williams organized a commission to evaluate the performance of all employees except from sales and executive employees. Vitality health Enterprise has 13 several rating levels starting by A+ to E which leads to way for managerial abuses. PMET studied evaluations and rewards system using internal & external benchmarking, focus groups and employee interviews. PMET discovered that many managers, gave almost everyone C or a B, provided D or A ratings, and rarely give Es. Result: A homogenous ratings that failed to sharply distinguish active (performers) from passive (non-performers). Top performers felt slighted and undervalued financially. The firm started a new rating system where employees were now rated with respect to one another by differentiating among employees on the basis of performance. However, there is fifth category, Not Rated, for employees who were too new to the company or their position to receive an accurate rating. Job evaluation points- pay policy associated with the position o Technical Knowledge o Problem solving-skills o Level of accountability Pay policy line= Base salary + (Job evaluation points* Increase per point) Individual salaries were further adapted by a comparative ratio or ‘compa-ratio” based on individual performance in the company. Individual salaries increase with rise in merit and falls whenever salary-line formula is moved upward Compensation was adjusted by the new program. The new plan incorporated a system of performance-related short and long-term equity bonuses, this will allow for limited stock options to upper levels of management and directors as an incentive to successfully implement the new PMS. PMET2 compared performance rankings data for early 2009 and early 2011 and found a shift in distribution of rankings. Surveyed to know the response of employees: 54%- preferred new system 31%- preferred old system 15%- indifferent Managers felt more difficult to discuss performance with their team member because the yearly review process was tied s closely with merit increases Terjemahan Studi kasus: Manajemen Kinerja di Vitality health Enterprises, Inc. Singkatnya Vitality Health Enterprises: • Perusahaan vitalitas didirikan pada 1987 di Ames Iowa oleh Hikaru “Fred” Kikuchi. • Vitalitas dimulai dengan mengimpor produk dari Jepang dan memasarkannya. • Vitalitas mendirikan fasilitas manufaktur sendiri di Ames pada tahun 1989 • Vitalitas dikombinasikan dengan beberapa apotek terkemuka pada tahun 1994 • Vitalitas mengglobal pada 1995 • Pada tahun 1997, Vitality mengubah namanya menjadi Vitality Health Enterprise dan menjadi publik. • Pada 2007, lebih dari 5500 karyawan di HQ bekerja untuk Vitality Health Enterprise dan sekitar 1500 karyawan bekerja di kantor global. • Karena krisis global pada 2008, Vitality Health Enterprise membeli stagnasi relatif terhadap pertumbuhan perusahaan. Jadi, Beth Williams dipekerjakan sebagai CEO baru Perusahaan Kesehatan Vitalitas. Bekerja dari Lemak: • Beth Williams mengorganisasi komisi untuk mengevaluasi kinerja semua karyawan kecuali dari karyawan penjualan dan eksekutif. • Kesehatan Vitalitas Perusahaan memiliki 13 beberapa tingkat peringkat mulai dari A + hingga E yang mengarah ke jalan bagi pelanggaran manajerial. • PMET mempelajari evaluasi dan sistem penghargaan menggunakan tolok ukur internal & eksternal, kelompok fokus dan wawancara karyawan. • PMET menemukan bahwa banyak manajer, memberi hampir semua orang C atau B, memberikan peringkat D atau A, dan jarang memberi Es. Hasil: Peringkat homogen yang gagal membedakan tajam aktif (pemain) dari pasif (bukan pemain). Performa top merasa diremehkan dan undervalued secara finansial. Perusahaan memulai sistem peringkat baru di mana karyawan sekarang dinilai satu sama lain dengan membedakan karyawan berdasarkan kinerja. Namun, ada kategori kelima, Tidak Dinilai, untuk karyawan yang terlalu baru untuk perusahaan atau posisi mereka untuk menerima peringkat yang akurat. Poin evaluasi pekerjaan - kebijakan pembayaran yang terkait dengan posisi tersebut o Pengetahuan Teknis o Keterampilan pemecahan masalah o Tingkat akuntabilitas Garis kebijakan pembayaran = Gaji pokok + (Poin evaluasi pekerjaan * Peningkatan per poin) Gaji individu selanjutnya diadaptasi oleh rasio komparatif atau "rasio-kompas" berdasarkan kinerja individu di perusahaan. Gaji individu meningkat dengan naiknya prestasi dan turun setiap kali formula garis gaji digerakkan ke atas Kompensasi disesuaikan dengan program baru. Rencana baru menggabungkan sistem bonus ekuitas jangka pendek dan jangka panjang yang terkait dengan kinerja, ini akan memungkinkan untuk opsi saham terbatas untuk manajemen tingkat atas dan direktur sebagai insentif untuk berhasil menerapkan PMS baru. PMET2 membandingkan data peringkat kinerja untuk awal 2009 dan awal 2011 dan menemukan pergeseran dalam distribusi peringkat. • Disurvei untuk mengetahui respons karyawan: 54% - sistem baru yang disukai 31% - sistem lama yang disukai 15% - acuh tak acuh Manajer merasa lebih sulit untuk membahas kinerja dengan anggota tim mereka karena proses peninjauan tahunan terkait erat dengan peningkatan prestasi