Performance Management at Network Solutions Inc - Assignment Example

Running head: Performance management Name: University/College: Course: Lecturer: Date: Executive summary The paper focuses on the performance management system that has been employed by Network Solutions Inc. The company chose to employ a standardized system as it previously had over 50 ways of managing its staff performance that proved to be unfruitful. As it is a global company, the new system was adopted by all branches worldwide. The company implemented the new system that ranked its employees into three groups with regard to their work performance. The high and average performers were given a salary increase, stock options and bonuses while the low performers were given the option of leaving the company with benefits, or they could stay and undergo a performance training evaluation that was even more demanding than the one that was used to first evaluate them. The main aim of the paper then is to evaluate the new system with one that may be considered ideal. It will compare the characteristics of New Solutions with that of the ideal system, seeking to find points that are present in their system with those that are absent. It will additionally look at the advantages and disadvantages of the new adoption by New Solutions, seeking to find ways in which the system has excelled and which parts need to be worked on to ensure efficiency is maximized. Contents Contents 3 1.1.Introduction 4 1.2.Background 4 1.3.Aim 5 1.4.Scope 6 1.4.1. How Network Solutions’ system overlaps with an ideal management system 6 1.4.2.Similarities and differences between an ideal system and the one employed by Network Solutions Inc. 7 1.4.3.Advantages and positive outcomes from the implementation of the system. 10 1.4.4.Disadvantages and negative outcomes from the implementation of the system 11 1.5.Conclusion 13 1.1. Introduction Employee performance is an important aspect of any business or organization. In fact, employee performance is what will determine whether or not a company performs well, and even with the good performance, whether it will make optimum profit and maintain that level of performance. Performance management helps companies determine how the people they have diligently employed into their organization are performing. It is essential for an organization as it gives the employees feedback on how well they are doing their work. In addition, managers are able to identify the development plans of their subordinates, and help them to synchronize these with those of the company. However, there are many different ways in which companies can manage their employees’ performance. While not all companies can fit into one model, there is such as a thing as an ideal model (Schiff, 2006:1-2). 1.2. Background In their effort to get the performance management system that fit the company’s needs and will help them get the most out of their employees, Network Solutions Inc chose a model that they deemed fit to fulfill the needs of the company. As the organization is a world leader in software, hardware and services related to computer networking, it is prudent to imagine that they have several subsidiaries and branches throughout the world. Consequently, these reforms were translated to all divisions in the company. The reforms included having a forced distribution performance management system where all employees were classed in different groups. The high performers, who constitute 20% of all employees, were rated as 1. Average performers constituting the bulk of the employees that is 70% were number 2, while low performers, translating to the remaining 10% were rated as number 3. The system chosen by the company to manage their employee performance included activities such as goal cascading, team building, performance planning, development planning, ongoing discussions and updates between managers and employees and annual performance summary. These activities, they believed would help them achieve their goals, and get the best out of their employees. In addition, high and average achievers were rewarded by hefty bonuses, salary increments and stock options. Those who fall in the lower category are given the option of either getting their severance pay or being let go off by the company. Alternatively, they could agree to undergo a performance improvement plan where the activities and expectations are rigorous than the previous action plan. If their performance improves, they are taken off the plan. However, if that is not the case, their services are terminated without a severance pay. 1.3. Aim The system chosen by Network Solutions Inc. raises several questions. The aim of the paper then is to answer the presented questions. For example how does this system overlap with an ideal performance management system? Additionally, what features of the system implemented by Network Solutions correspond to the ideal characteristics, which ones are missing and which ideal characteristics need additional information in order to be sure that they are present in the system used by Network Solutions? Third, what are some advantages and positive outcomes of the system in use by the company? Finally, what disadvantages and negative outcomes will the implementation of the system result into? 1.4. Scope 1.4.1. How Network Solutions’ system overlaps with an ideal management system Ronald (2010) states that performance management systems are important in ensuring efficiency and constancy in the workplace. This is regardless of whether the method employed by the company is electronic or human means. However, each company needs to modify its performance management systems to suit its precise requirements. Network Solutions used to have almost fifty different modes of performance management systems in all its branches and subsidiaries. The result of this disorganization was that many employees did not receive reviews. Moreover, many of those who were typical high performers never received recognition for their high performance. This must have resulted in a situation where they lost the aspiration to perform well, as they were neither informed of their performance, not were they rewarded. Ronald K carries on by stating that for a company to say that it is evaluating its employees, and this is regardless of the system it prefers to use, the evaluation method must be consistent during its work. This is to say that the company must not change the strictness of the evaluation criteria depending on whatever whim comes along the concerned managers. The decision by the CEO to standardize the company’s management system was a welcome move therefore as it sought to ensure that not only were all employees evaluated, but they were evaluated under the same general rules and guidelines. This ensured that they were able to base employee performance against each other and decide who was doing their work as they were supposed to, and who was not. This helped them to reward the high achievers. As with all other performance systems, the one chosen by Network Solutions provided crucial data to the company regarding employee performance. It enabled them to be aware of who was performing and who was not. This helped them come up with strategies that enabled them to improve employee performance. Those who were not up to per were given the chance to improve, or leave the company all together. This went a long way in helping the company to cut costs. This in essence, is one of the main reasons for installing a system in place that helps to manage employee performance. Performance managing systems should help the company to synchronize their goals with those of the employees. This is what the new system in the company helped the company to do. This, it accomplished by cascading their goals to the employees. Additionally, regular updates between managers and their subordinates saw to it that the goals were reiterated; ensuring that both the managers and their subordinates did not forget exactly what was required of them in their obligations to the company (Grote, 2006). 1.4.2. Similarities and differences between an ideal system and the one employed by Network Solutions Inc. According to Ronald (2010), an ideal system is standardized. As stated above, standardization is where a specifically set criterion is used to evaluate the performance of the employees. This is regardless of the department or country works in. The system should be uniform, and all employees should be evaluated using the same precise criteria. This standardization should be done with regards to the goals that the company has set. That is, what does it want to achieve in two months, a year, two or five years? What have the employees, in their individual capacity, done to achieve these goals? Network Solutions has clearly standardized its evaluation system. As noted above, the company previously had averagely fifty different systems of evaluation. However, changes were enacted, and all employees, regardless of country or department were rated in the same way. This fact made in easier for the company to note those who were not performing, and put together a plan to help them improve in their performance. Performance management systems should be valid and concise. That is they should evaluate only the details that are relevant to a particular individual. For example, a person who is a sales representative should not be evaluated on how well they balanced the company’s accounts. This is to say that despite the fact that the system’s evaluations should be standardized, they should consider the fact that the employees work in different departments and thus are proficient in different areas (Grote, 2010). Network Solutions Inc’s system has stuck to this characteristic. This is because the individual ratings of the employees are determined by how well they executed the annual objectives and the job requirements. This means that the evaluation is tailored to meet the differences that their work entails. The evaluation system should be conducted in a legal manner. The company should ensure that during the evaluation, they do not violate the rights of any of the employees. Doing this the right way will reduce liability in case any of the employees is fired and they decide to sue for wrongful dismissal. This is an important characteristic that should be conducted with the aid of a lawyer or the company attorney. This is a characteristic that seems to be missing from the characteristics of the company’s chosen system of evaluation. As the company is global, it will be easy to assume that in deed they must have consulted with their attorneys before putting the new system in place. However, as we have not been informed about whether or not they did this, it is prudent to state that this is an ideal characteristic that is missing from the company’s system of evaluation. An ideal system should be correctable. This is to say that it should be open to change just in case management realizes that what they have on their hands is not achieving the results they expected it to. The importance of this characteristic is that as no one system is perfect, amendments are necessary to address the changing needs of the company. What it does is to assess the needs of the company that have not been addressed by the system. This, they hope, will help them to correct the policies that are not achieving what they were set out for. This will help them come up with a system that will be tailored to suit the company’s needs. The Network Solutions’ system identifies effective and ineffective performance of its employees. It does this by observing whether the employees have executed annual objectives with regard to their job requirement. In addition, their performance is determined by how other employees working at a similar level are performing. They are then classed into three groups that are rewarded according to how well they performed. An ideal system should be open in its undertakings. That is, the employees must be made aware of how they are being evaluated and at what level they will be considered high, average or low performers. This means that the employees do not have to feel that the process is unfair or that it favors other employees. Network Solutions employed this characteristic when it passed the buck for informing the employees about the system to the senior leaders. This way, all employees have access to all information they need form their leaders or from the intranet. They know what is regarded as good performance and what is not, meaning that they are able to work hard to achieve what they need to. Finally, an ideal performance management system is one that is reliable. This is to say that the system can be counted on to give real results all the time without being partial to specific people, job groups or branches. Reliability goes hand in hand with standardization. If a system is standardized, it will most likely be reliable. The company’s system can be said to be reliable as it has been in use for a while, and always, the employees have been classified into three groups depending on their performance. This means that they have always been able to identify who is a keeper in the company, and who needs more work to ensure that they are effective in their performance. The system can therefore be said to have produced the results it was supposed to. 1.4.3. Advantages and positive outcomes from the implementation of the system. The implementation of the system by Network Solutions will have a lot of positive outcomes and advantages. First of all, the way the system has been structured ensures that the employees are evaluated with regard to how well they internalize the company’s goals, and work on them. This is called goal cascading, and is an advantage of the system that has been employed (Farkit, 2009). Employees become a part of the company when it comes to its goals. Consequently, they are able to accomplish the goals that the company has set out, which improve performance. Another advantage of the system is that as employees are evaluated, high and low performers are differentiated. This knowledge can help the company reward their highly performing employees. The fact that their efforts are recognized and appreciated is motivational. It makes them work even harder for the company and themselves, and as they feel better about their performance, they are able to give their all. The company is then able to find ways in which it can retain these high performers. They are able to come up with polices that will be attractive to them and will be an incentive for them to stay rather than seek for greener pastures with other companies. During the evaluation, low achievers are noted. This is helpful to the company in that they can find ways in which they can help their low performing employees to improve their performance. This will help to save costs in the long run for the company in addition to making them better employees. When employees are informed of their performance, they are aware of what areas they need to work on. This means that they can put in an extra effort to work on the areas they know they are weak in. Additionally, individuals are encouraged to develop their talents in the areas they are good at. They learn how to interact with others, but it also encourages them to be themselves and give the best they can at their jobs. 1.4.4. Disadvantages and negative outcomes from the implementation of the system While the system has many advantages that will help both the company and employees grow, it has some glaring disadvantages that can not be ignored. First of all, the system encourages individualism, and gives less importance to team work. Rewards in the company are based on employee performance. If one does their work to a level that is set aside by the company, they are liable to getting rewards form the company. Failure to work to the level that is required by the company may get one dismissed. This improves performance, yes, but it encourages employees to look out for their own interest. They will more likely want to work alone in order to get all the credit they can from their work. Working as a steam means that the entire team gets the recognition, or the leader of the team is the one recognized. Consequently, working as an individual means that they do not have to share any benefits or praise that they might get out of their hard work. They might find it harder to share ideas with other people, instead keeping their ideas to themselves in order to get all the credit for the ideas, and the rewards that come from it. The system rates the employees in three categories. This means that a specific number of employees have to be in a particular group. They then have to work really hard not only to get in a particular group, but to maintain their position. Failure to do this might mean dismissal for the employees. This creates a workplace culture that is highly competitive. Employees will always know that they are easily dispensable and as such, they can never be sure whether they will make the 90% cut or not. Competition in the workplace is good, but too much of it breeds discontentment and distrust between the employees. The resultant stress form the competition in the work place may lead to some getting illnesses that could have been avoided had there been culture that was conducive for relaxation once in a while. Stress can lead to mental breakdown, and as the employees have to be always on toes in their work, they can have no balance between their work and their personal lives. Though the company seeks to retain its top brains, and will invest heavily to ensure that they stay there, they should note that money is not the only thing that will make people stay with a particular organization. Workplace culture has to be conducive in order for them to stay. Some, even though they are high achievers, might not be able to withstand the oppressive environment that the company will undoubtedly turn to. They might thus decide to move to another company that might pay less, but where they will be able to grow and work together with their workmates. Companies that employ systems like Network Solutions’ might find that employee turnover is extremely high. They might go there to work, get the money and experience, but after a short while, the pressure to perform might prove to be too high for them. They might thus end up losing the very top brains that they might be aspiring to retain. 1.5. Conclusion Though the advantages of the system might be many, the company should not disregard the disadvantages as they might just be the reasons why employees will leave the company for those that care about their personal welfare, and not just how much they are able to make for the company. This means that they should be concerned about their performance at work, but should additionally give them time and space especially, when it comes to balancing between their work and personal lives. Any company that seeks to have high performing employees who will stay loyal to the company will do well to remember this fact, even as they seek to make more profit. References Farkit, Judith (2009). Goal cascading. Retrieved from http://goal-cascading.hr.toolbox/ Grote, Dick (2006). Employee Performance Appraisal — an Ideal System. Retrieved from http://searchwarp.com/category273.htm Grote, Dick (2010). Employee Performance Appraisal — 5 Steps for the Ideal Assessment Form Retrieved from http://www.buzzle.com/articles/employee-performance-appraisal.htm Ronald, K (2010). Characteristics of an ideal performance management system. Retrieved from http://www.e-how.com/list_6361838_characteristics-ideal-performance-management-sytem.html Schiff, Craig (2006). The ideal performance management solution: coming soon? Information Management Magazine, November: 1-2. Read More