Profitability of JVA Corporation - Assignment Example

? JVA Corporation AFFILIATION: JVA Corporation Performance Management System (PMS) Strategy for JVA Corporation The proposal for enhancing Performance Management System (PMS) at JVA Corporation incorporates all important factors that are mandatory for allowing easy progression of company in such tough economic turmoil. Overall profitability of JVA Corporation is assessed by reviewing appraisal process, performance management system and compensation packages offered so that appropriate proposal is submitted by Human Resource (HR) department. For every organization, PMS is a vital tool for motivating employees and guiding them about performing in organization so that they can improve their skills and perform their job effectively (One Step, 2010; Virani, 2012). Organizations that lack proper PMS are unable to fulfill their commitments and even compromise on quality of their goods and services which can significantly impact their relationship with their customers (Performance Appraisal, 2011). Likewise, ineffective PMS will not be able to give confidence to employees as they will see that they are not being rewarded for their contributions and they will be unable to develop important skills required for performing their job with zeal and enthusiasm (Armstrong & Baron, 2005). Since economic recession has impacted working of all organizations, it has become important for them to take appropriate measures that will help them in enhancing their performance and cut back costs (Performance Management, 2012). Organizations have to make choices among various options such as close down their operations, cut down salaries of employees, lay off workers and many more; JVA Corporation will have to review its PMS so that it can make the right decision for its business operations and ensure that it is able to generate enough profit for its ongoing survival in the market. Considering the scenario of JVA Corporation, the most ideal strategy is the second one as it will allow it to ensure that people are secured about their jobs that they will not be made redundant. The strategy suggested for implementation by Human Resource Director is that every six months, performance and revenue will be reviewed so that decision about cutting or increasing pay can be effectively made. During these reviewing periods bottom line will be revisited as well. Employees will be motivated that they can get raises in their pay twice a year if they perform well. Implementation plan for PMS Since JVA Corporation has been losing money in the last couple of years due to economic recession, it will have to cut back perks and amenities that are offered to the employees. Before making any adjustments in compensation packages, heads of respective departments will have meeting with their departmental employees so that they convey the changes being made in PMS. Along with modifications in their pay packages, JVA Corporation will be able to save 2-3% of their net income; in order to raise salaries and wages, employees will have to meet demands of enhancing their performance so that they are eligible for pay increases. With this strategy, employees will be affected to a greater extent as they will be suffering from incentives such as pay raises, auto insurance, transportation cost and many more. However, workers’ morale will get boosted as they will realize that the company will not lay off the workers and they will not lose their jobs. JVA Corporation can be affected by implementation of the strategy because some employees might be reluctant to such impositions which will affect their motivation level and they will be discouraged to enhance their productivity; as a result of this, employees might get de-motivated. In order to boost the morale of such employees, HR staff will arrange counseling sessions with them so that they can tell them the reasons of making such changes and help them in developing their potential skills. One point needs to be clarified that strategy implementation is temporary and once recession is over and JVA Corporation is able to earn sufficient profit original PMS will be restored. Likewise, international employees should be part of this change as well because PMS should remain same everywhere. Since recession has been hit worldwide, JVA Corporation must implement this change internationally regardless of employee’s country of origin. If there are different strategies implemented in each country of JVA Corporation’s operations, there are chances that people will get frustrated and motivation level of employees may get declined to a considerable extent. Since JVA Corporation has a 17% lose in income and has to cut perks down to 5% from 8%, it is important for HR to incorporate these factors in compensation packages of employees. Kitchen and fully equipped exercise room will remain closed for all employees; only cafeteria facility will be provided to them so that everyone can eat from one place. Employees will be asked to take responsibility of their personal expenses such as credit cards, gym memberships and home and auto insurance as company will have to share with them and they will be allowed to have these perks when they reach a certain destination in the company. As employees will get pay raises only when they improve their performance, they will work harder to improve their productivity and make vital contributions in its performance. Along with some temporary changes, there will be certain permanent ones such as implementation of restructures additional benefit package plan in which main focus is on cutting of expenses. It is vital for JVA Corporation to revise its benefits packages as they are extraordinarily high and management needs to ensure that there are only adequate number of fringe benefits that will meet basic requirements of workers and employees. Conclusion Hence, second strategy will work well in JVA Corporation as it will continue to reward those employees who will help it in achieving its goals and objectives. With the help of competitive compensation packages, employees will be rewarded for their achievements and PMS will allow every employee to excel in his/her job and avail better opportunities that come with the passage of time. The aim of PMS is to improve employees’ effectiveness by displaying their core behaviors on their jobs and provide them the opportunities of developing important skills for performing their jobs effectively so that they can utilize their competencies to bring all business objectives together. Hence, JVA Corporation will be able to survive in such a competitive environment by getting support from its employees as they will agree on changes being made in the company so that it can face tough times and respond to the aggressive market properly. References Armstrong, M., & Baron, A. (2005). Managing performance: performance management in action. CIPD: London. One Step (2010). Managing Performance: A Practical Guide for Implementing Best Practices. Retrieved October 5, 2012 from https://www.google.com.pk/#hl=en&sclient=psy-ab&q=Performance+Management+System+pdf&oq=Performance+Management+System+pdf&gs_l=hp.3..0l2j0i30j0i5l2j0i5i30l5.35748.49581.2.60347.32.15.1.5.5.9.5157.12727.3-3j7j3j8-1j1.15.0.les%3B..0.0...1c.1.AxYCeQ3Rf3c&psj=1&bav=on.2,or.r_gc.r_pw.r_qf.&fp=7c07ccaba825f18a&biw=1280&bih=685 Performance Appraisal (2011). Performance Appraisal System. Retrieved October 5, 2012 from http://www.hawaii.edu/ohr/download/pasman.pdf Performance Management (2006). Handbook on Performance Management. Retrieved October 5, 2012 from http://www.vm.fi/vm/en/04_publications_and_documents/01_publications/10_governance_and_accountability/20050913Handbo/Handbook.pdf Virani, S.R. (2012). An analytical study of performance appraisal system of the selected Information Technology enabled Services (ITES) Companies. International Journal of Multidisciplinary Research, 2(5), 135-145. Read More