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With the outline above, a company starting out in the United States should not be encouraged to engage in cost reductions that could dramatically lower employee moral. With this said, B&T Consulting recommends that H2O implement a freeze on hiring and the implantation of job…
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Key Strategic Performance Management and Key Strategic Budgeting Module in support of the H2O Executive Leadership Team B&T Consulting Bonnie Buis-Sereth & Teri Craft
April 1, 2012
Table of Contents
5.0 Key Strategic Performance Management Module 3
5.1 Overview of Performance Management Philosophies 3
5.2 Analysis of Best Practices - Theory 5
5.3 Analysis of Best Practices – Applied 7
5.4 Recommendation Performance Management Program for H2O 9
6.0 Key Strategic Budgeting Module 11
6.1 Components/Elements in an HR Budget 11
6.2 Cost Reduction Strategies 15
6.3 Recommendations for Addressing Budget Costs 17
With the outline above, a company starting out in the United States should not be encouraged to engage in cost reductions that could dramatically lower employee moral. With this said, B&T Consulting recommends that H2O implement a freeze on hiring and the implantation of job rotating. 19
6.4 Summary of HR Department Budgeting Challenges 19
6.5 Recent Practices from United States’ Organizations 20
References 23

5.0 Key Strategic Performance Management Module
5.1 Overview of Performance Management Philosophies
According to Levensaler (2008), “performance management is an organizational process, which entails creating a favorable environment for employees to perform their jobs to the best of their abilities” (p. 3). Performance management captures almost all aspects of human resource management which include employees’ development, compensation, rewards, and work benefits, job definition and design, and development of organizational culture. From a scientific perspective, performance management is a continuous process, which starts from the time an employee start working in an organization until the time when the employee exits the organization.
Performance management is one of the things that H2O should consider placing great emphasis on as it prepares to expand its operations to the US. This is because performance management would help the company to align its HR initiatives with the US practices. That is, satisfying the needs of its human resources while ensuring that the abilities of the employees are directed towards achievement of the company’s objectives. Levensaler explains (20008) that “this is possible because performance management enables an organization to analyze how well its employees are performing on an individual basis” (p. 11). This entails analyzing how well an employee is performing in his/her current responsibilities based on the achieved results. Performance management also allows an organization to develop improvement plan. An improvement plan enables an employee to improve his/her performance, as well as prepare for future responsibilities.
Furthermore, performance management would help H2O to promote cohesion between subordinates and their supervisors. Good subordinates-supervisors relationships have a positive impact not only on employees’ performance, but also in employees’ morale. In addition, performance management helps organizations to determine employees’ performance rewards which are rewarding employees depending on their abilities and achievements. Therefore, for H2O to be able to align its HR initiatives with the US practices, it should ensure that its performance management initiatives achieve the aforementioned objectives.
Moreover, performance management is based on a number of philosophies, which H2O should also aim to achieve in order to successfully align its HR initiatives with the US practices. According to Bacal, a renowned HR consultant and author of Performance Management, philosophies of performance management include “maintenance of constant communication, problem solving, no blames, and no surprises” (Bacal, 1998, p. 165). The philosophy of constant communication holds that communication between all members of the organization should be done throughout. Things such as monthly employees-supervisors, or employees-management meetings should not exist. Communication should be continuous. Bacal (1998) also explains that “the rationale for this philosophy is; constant communication creates workplace environment, which inspire greater efficiency from both managers and employees” (p.165).
Problem solving philosophy advocates looking for solutions as soon as a problem arises. It implies that problems should not be allowed to pile-up. In addition, problems should not be temporary solved. An organization should always look for permanent solutions to problems. One of the Bacal statements (1998) is “no blame philosophy of performance management entails creating a workplace environment where no ‘blame games’ exist” (Bacal, 1998, p. 166). That is, instead of managers or supervisors spending a lot of time looking for individuals who are responsible for problems whenever they arise, they should focus their efforts towards prevention of occurrence of such problems or finding permanent solutions to such problems. ‘Blame game’ diverts employees, supervisors, and managers’ attention from their jobs. This has a negative effect on their performance.
Bacal (1998) also states that “all organizational members should always know the what, when, how, and where of organizational happenings” (p.167). The rationale of this philosophy is that when all organizational members are aware of all the undertakings of their organization, they are able to set their work, as well as personal objectives while considering those undertakings. This way, employees are able to focus their efforts towards achievement of the larger organizational objectives. For H2O to be able to align its HR initiatives to the United State’s practices, it should emulate these philosophies.
5.2 Analysis of Best Practices - Theory
There has been an abundance of performance management philosophies that companies can chose to implement. The most common is for a company to have a performance appraisal. A performance appraisal is “a periodic assessment of an employee’s performance, usually completed by her or his immediate supervisor and reviewed, at times, by others in the company” (Bennett-Alexander & Hartman, 2009, p. 820). Some of these performance appraisals include management by objective (MBO), ranking format, rating format, essay, and behaviorally anchored rating scales (BARS). An evaluation of these performance appraisals is shown in Appendix A.
The ranking format is the simplest, fastest, easiest to understand, and least expensive performance appraisal technique that ranks employees from highest to lowest in performance. Straight ranking, alternation ranking, and paired-comparison ranking are the three methods of ranking employees (See Appendix B). In straight ranking “employees are ranked relative to each other” (Milkovich, Newman, & Gerhart, 2011, p. 362). In alternation ranking the employees that are the best and worst performers are selected and shown in the ranking. Afterward, the remaining employees are filled in as to who is the next best/worst performer until the ranking is complete. In paired-comparison ranking, people rank the employees in pairs. The employee that has the most pairs.
A rating performance appraisal requires the rater to evaluate each employee on absolute measurement scales that indicate varying levels of performance. Behaviorally anchored rating scales (BARS) are an attempt to reduce the subjectivity of a standard rating scale by anchoring the scales to concrete work behaviors. This provides raters a common definition for performance dimensions. In management by objective (MBO) performance objects are set and agreed upon by the rater/team leader and employee at the beginning of the performance period. The employee’s actual performance is then reviewed at the end of the performance period to determine if the employee has met the specific performance objectives (Milkovich, Newman, & Gerhart, 2011, p. 363-367).
When completing these performance appraisals, managers and employees want these to easily be accessible. Technology has evolved, therefore performance appraisals should not need to be written manually. Employees and managers should be able to access the performance appraisals at any time. This performance appraisal should also be user friendly and can be easily revised. Therefore one of the best practices is for these types of processes be on the computer and accessible. The points below are what SuccessFactors, Inc. (2007) outlines:
More relevant reviews – writing and goal management tools help managers deliver meaningful, accurate reviews so employees understand their performance against goals.
Richer, more meaningful feedback – built-in writing tools ensure consistency between managers, and deliver a deeper level of feedback.
Stronger, more relevant coaching – managers receive specific, actionable suggestions for coaching employees through a range of issues.
Employees need to know how they are doing as it relates to their company’s objectives and goals. Performance appraisals can outline the points and address these issues. It can detail out exactly how, what, and when things need to take place that the employee is responsible that will affect the company. If everything is laid out beforehand, employees will learn to trust their company, and will not be blindsided by constructive criticism on their appraisal. Therefore, their performance appraisal needs to be aligned with the company’s objectives. If this is to happen, employees and managers will need to be knowledgeable with the company’s objectives and goals. If all this is completed, the companies as well as the employees are successful.
5.3 Analysis of Best Practices – Applied
Mojave Creative is an advertising company that wanted employees to focus on the overall company’s objectives. As mentioned previously, companies want to ensure that their employees know the company’s objectives and goals.
They [Mojave Creative] needed a consistent, objective performance review process employees would trust. In 2006, Mojave made the critical decision to automate their goal management process leveraging software that provides every employee with visibility into how their day-to- day efforts deliver on key business objectives. Within one year, Mojave saw improved teamwork toward reaching company goals – in particular, meeting an aggressive growth goal of increasing revenues by 5% (SuccessFactors Inc., 2007, p. 3)
Nittany Embroidery is a screen printing and embroidery company. The company is located in State College, Pennsylvania. The article by Cindy Waxer (2008) indicates at first the CEO of the company did not have any method or process on how to complete employees’ performance evaluations. The article details that the CEO provided performance evaluations based on “Post-it notes, hazy memories, and self-promoting testimonials from the employees” (Waxer, 2008).
Facing the costly impact of turnover . . . this company needed processes to better engage employees in order to increase job satisfaction and retention. By automating performance management, Nittany Embroidery now delivers more consistent and useful reviews, the first step toward improving employee satisfaction and increasing retention. In addition, employees are proactively helping the company identify areas for improvement and drive a more successful business (SuccessFactores, Inc., 2007, p. 4)
All employees of Nittany Embroidery have access to the system the company uses for performance management. Employees have access to their goals and the system also shows status of progression of these goals (Wax, 2008).
Each goal is worth a certain number of points, as are peer reviews and managerial appraisals. At review time, the points help determine the raise and bonus the employee gets. SuccessFactors does the math, based on the total number of points and the budget available. Employers can tweak the system to give, say, less weight to peer reviews (Wax, 2008).
The type of system Nittany Embroidery implemented is excellent for smaller companies. The article by Wax (2008) indicates that they still have not hired a human resource specialist thus it saves them this salary. The system also has allowed the CEO to reduce her time she does job coaching, therefore she can focus on other things in things regarding the company.
Shutterfly is an online photo service company. Customers can upload photographs, videos, etc. to store them, print them, make changes to them, etc.
As the leader in a cutthroat industry – web-based photo-sharing – Shutterfly wanted to build a corporate culture that would reward – and keep – the top performers who help them maintain their competitive edge. After implementing an automated performance management system, Shutterfly has built a compensation structure directly tired to employees achieving specific goals, and tracked by performance objectives. Not only are the right people being compensated for a job well done, but employees and managers alike have expressed wide satisfaction with their system (SuccessFactors, Inc., 2008).
5.4 Recommendation Performance Management Program for H2O
Performance management program ensures that the daily activities of the employees are aligned with and they promote the goals of the organization. Bacal (2012) explains that “the organization should understand that the employees benefit when they are given regular feedback on the performance of the organization and provided with opportunity to develop and improve their performance.” H2O should have the capability to embrace the performance as a culture. If the organization does not have this capability the performance management program is most likely going to be a compliance activity instead of adding value to the organization and the employees individually (Bacal, 2012). H2O should make sure that all the employees have skills, competencies and behaviors which allow them to understand and make use of the performance management program.
Setting and aligning goals is the first phase of performance management program. It is important that H2O employees clearly understand the expectations of the job so that they can perform their tasks according to the best of their abilities. They need to know what they are expected to do and the goals should be aligned with the goals of the organization. Goals should be viewed from two perspectives the first is evaluating the goals that were previously established and the second is setting goals for the next year.
The second phase that H20 should do is to have continuous review and feedbacks. Bacal (2012), states it is important to perform regular feedback and reviews on the performance of the employee. By having these regular reviews will help to update the goals of the employees and have development plan if it is necessary. Feedback information should be constructive because if it is not constructive it will have no effect on the behavior. H2O should consider train the managers about the motivation factors therefore during the feedback process they can make sure that they phrase the terms and development plans according to the terms of the employee’s motivation.
The next phase is reviewing of the results whereby H20 employees and managers should review and discuss results and outcomes of the information that has been got all through the year (Bacal, 2012). It is important that performance appraisal be based on the accountability of a personas this will give a direct like to the job of the employee. Performance rating should be done using a known formula and in order to avoid bias feedback should be obtained from many sources. H20 should allocate sufficient resources so that users can be trained regularly and sufficient time should be allocated for evaluation.
The last but not least recommendation is enabling technology. In order for H20 to have a great benefit in performance management program it is important to use a suitable technology tool. According to Bacal (2012) online performance management tool provide tangible benefit to the organization. This includes the ability to make sure that the development plans are in line with the already set objectives and make sure that there is direct correlation between the two hence giving the employees the opportunity to grow.
To conclude, performance management is critical tool in any organization. The main purpose is to facilitate the communication between manager and employee. H2O should follow the above recommendations in order to achieve their goals and have a successful operation in the United States.
6.0 Key Strategic Budgeting Module
6.1 Components/Elements in an HR Budget
The key purpose of budgeting in an organization like H2O is to ensure that management of the human resources is more effective. Through proper management of the resources, then recruitment of the staff members, their compensation and retention is defined. In addition, the geographical recruitment process is put into consideration; hence staff members are paid accordingly.
A budget is a document that is used by an organization to focus on its future income and expenditures. According to the Society for Human Resources Management (2008), “budgeting on the other hand is the systematic collection of data and information.” From a human resource perspective, the data needed in the budgeting process includes data on number of employees needed in the new company in the United States, projections on possible increases in costs in that country, data on the rate of turn-over expected, the programs planned in the United States and data on possible changes in government policy, the strategy of the business as well as the laws and regulations that may impact costs on the department. The human resource budget will include items such as; compensation and benefits, recruitment and placement, training and development, employee and labor relations, health, safety and risk management.
Compensation and Benefits
According to Lalli, (2012) “compensation and Benefits are meant to encourage and motivate the staff members to enhance their skills.” During budgeting a Human Resources Manager should consider an amount that can be used to reward the staff members in an equitable and competitive manner.” Here, payroll costs, life insurance for the employees, overtime, and costs incurred during communication, health, dental and vision costs for the employees as well as the salaries to be paid to the company’s employees in the U.S are factored. According to the Society for Human Resources Management (2008), the following are the costs that H20 should consider:
•Employee salaries
•Payroll costs
•Overtime
•Incentive compensation
•Health, dental, vision
•Life insurance
•Short- and long-term disability insurance/funding
•Pension/401(k)/profit sharing
•Cafeteria plan administration
•Telecommuting expenses
•Survey reports
Recruitment and Placement
Recruitment and placements purpose is to select the right people for a specific job description. Lalli (2012) suggested that the budget in this sector should be done considering the main objectives and strategies that are in line with the organizational needs. H2O should consider the following costs; recruitment and advertising, costs related to recruitment travel in the United States, printing costs (application forms and recruiting brochures), system costs to track the applicants as well as the costs for developing and maintaining the human resource website. According to the Society for Human Resources Management (2008), these are the following costs H20 should consider regarding recruitment and placement:
Recruitment advertising
Agency fees
Temporary help
Employee referral program
Skills testing
Drug testing
Background checks
Recruitment-related travel
College recruitment giveaways
Printing costs--applications, recruiting brochures
Web development/maintenance
Applicant tracking system costs
Training and Development
In any organization there should be an allowance in the budget that accommodates empowerment of the staff by allowing for career advancement. This enables members of staff to be more competitive and responsible. The organization therefore should include in its budget materials to support the staff in pursuing their careers. Training may involve coaching staff members in the areas where they may enhance their skills. Therefore, budgeting for what the staff may need during training is essential. Budget allocations may include transport, the materials needed and the pay for the person in charge of training (Shim, Siegel, & Shim, 2012). The costs incurred by the human resource department during this stage include; travel costs of acquiring certificates after the training, salaries for the trainers, food and beverage costs taken during the training as well as costs incurred in buying supplies (books, pens) for employees who will attend the training. According to the Society for Human Resources Management (2008) the following are the costs the H2O Company will have to consider:
External programs
Registration fees
Travel expenses
Certification exam costs
Internal programs
Consulting fees/trainers salary
Program materials
Food and beverages
Supplies for attendees
Audiovisual rentals
Employee and Labor Relations
According to the Society for Human Resources Management (2012) explains “the term ‘labor relations’ is a broad concept that can refer generally to any dealings between management and employees concerning the terms and conditions of employment. Labor relations include employees, employers and unions legally protected activities; unfair labor and management practices; union-organizing activities; union recognition and representation elections; collective bargaining; and union contract administration.” Employee and labor relation costs can be broken down into; costs related to the labor relations (attorneys and consultants), costs incurred during recognition programs by the organization, fees for employment of an attorney, as well as costs of awarding excellent services done by the employees. According to the Society for Human Resources Management (2008), these are the costs H2O should consider:
•Recognition program
•Service awards
•Attitude survey administration
•Performance appraisal software
•Attendance incentives
•Employment attorney fees
•Outplacement expenses
•Suggestion program awards
•Labor relations expenses (attorneys, consultants)
•Diversity management program administration
Health, Safety and Risk Management
According to the Society for Human Resources Management (2012) explains that “the Safety and Security Discipline deals with both enterprise and employee safety and security. It includes the organization’s efforts to prevent and/or mitigate loss, risks to or from personnel, threats to its physical assets, damage to its technology and intellectual property, or risks of any other kind arising from all elements surrounding the work environment.” Here, the costs incurred include; costs of ensuring there is a fitness facility for the employees, costs incurred in the training of staffs on safety issues, training of the employees on how to avoid the workplace violence as well as costs of making aware the employees of the dangers of smoking in the workplace. According to the Society for Human Resources Management (2008), the following are the costs the H2O Company should consider:
Employee assistance program
Smoking cessation
Fitness facilities
Safety training/promotion
Workplace violence prevention/training
Revenues
The components of the Human Resources should be incorporated in any budget for effective functioning of any company. The H2O will be successful in all their extension services if they incorporate these elements into their systems of management.
6.2 Cost Reduction Strategies
For any organization, budgeting is an important aspect of human resources. In the case of H2O, the main intent of the organization is to cut down in the struggle to establish a global presence. This is to say, that like other multinationals, H2O is struggling to balance between the persistent pressures to manage talent needs in a sour economy. According to the Society for the Human Resources Management (2008), this task is not an easy given that it requires the careful picking of cost reduction strategies. The company will have to first consider the careful assessment of the different roles, responsibilities, and contributions of employees combined with the importance attached to them in terms of organization’s strategic focus and growth. In this section of the paper let us discussion cost reduction strategies that will be essential for H2O Company which is in need of establishing a global presence while still observing talent in relation to the organization’s strategic goals and objectives.
For some organizations, picking up on the traditional way of cost reduction through salary freezes and no salary increments for the executives would have been the best option. For the, H2O image may be one consideration that may require them to adhere to cost reduction strategy that consider employee retention based on talent (Society, 2008). In terms of employee recruitment and placement, the right persons to work for the required work positions in the new location can be selected from the 3,000 employees present in the company now, with just a few experts to be hired, and other services outsourced. Through outsourcing services in the new location, the company can decide to have services that are periodical or for a certain time. However there are some outsourcing companies who can provide services for an extended period of time at a lower cost to the company.
Another way to reduce the costs of training would be to have the company consider hiring experts or persons with great experience with software development. In so doing, the company will reduce high training fees while retaining talent, expertise, culture and its image as one of the leaders in the software developing companies in Germany. While managing a small team of new experts, it will also be easy to have pay increment for all other experts obtained from the available employees hence providing them with motivation. In the case of the training budget, very little costs will be incurred in enhancing the skills of the members.
Since the company is well established in Germany, the present attorney for the organization can be extended to offer services to the employees in the new location. Additionally, the company can decide to extend the role of the consultant to renowned human resource service companies in the United States to ensure that the cost of hiring consultants in both the United States and Germany is not duplicated especially where their services are occasionally required. Advertising costs can be reduced by ensuring that recruitment advertising is done online with few supplements of advertisements in the other media. This would reduce the costs while ensuring that information on recruitment gets to the largest number of applicants.
By hiring expertise, the company will ensure that it mitigates risks, losses and other kinds of elements that may be of risk to the smooth running of the business. Also given that most employees will be from within the organization and who well understand and are aware of its culture, it means that there will be little training to have the employees understand and avoid any form of workplace violence due to the already established relationships between them.
6.3 Recommendations for Addressing Budget Costs
There are many things H2O could opt to partake in to help to reduce budget costs needing to reduce their head count. These options include cross train employees or job rotation, salary reduction, benefit reductions, benefits shift, hiring freeze, outsourcing, etc. Although the last two options may reduce employee morale, if necessary, H2O can opt to choose that option. However let us discuss some of these in further details.
Employees’ benefits and salaries are one of the biggest expenses for many companies. They should be reviewed regularly to ensure wages, benefits, and even positions are still relevant to the company. This could ultimately lead to some benefits not being offered or/and some wages being reduced. For example H2O could opt to not offer eye car under the company’s benefits, H2O could opt to not distribute salary increases, and/or H2O could opt to put a freeze on salary increases.
Another option is to start having employees pay more of the cost for their benefits. For example, instead of a company paying 90% of medical expenses with the employees paying 10%, the employees would pay 15 – 25% of medical expenses. Or H2O could opt to remove certain specific medical procedures to employee’s benefit package. For example, H2O could opt to remove paying for prescription drug programs, child and wellness checkups, or limiting the amount of child and wellness checks, etc. If these options are taken management will need to ensure that communications to employees are effective. This means that employees know exactly why these options are being chosen and that are questions and concerns are addressed in a timely manner. This also means that employees comprehend and understand the communication.
H2O could opt to partake in a hiring freeze. This means that they will not hire new employees into the company. This would cut down the cost of training an employee. If this option is chosen, H2O could continuously reduce more costs by cross training employees or having employees partake in job rotation. Table 1 shown below provides insight on the characteristics of an effective job rotating system. Job rotation is “the process of systematically moving a single individual from one job to another over the course of time. The job assignments may be in various functional areas of the company or movement may be between jobs in a single functional area or department” (Noe, Hollenbeck, & Gerhart, 2008, p. 739). By H2O opting to partake in job rotation it will allow employees to have more knowledge about the company and its functions.
Table 1: Characteristics of Effective Job Rotation Systems
1
Job rotation is used to develop skills as well as give employees experience needed for managerial positions.
2
Employees understand specific skills that will be developed by rotation.
3
Job rotation is used for all levels and types of employees.
4
Job rotation is linked with the career management process so employees know the development needs addressed by each job assignment.
5
Benefits of rotation are maximized and costs are minimized through managing timing of rotations to reduce workload costs and helping employees understand job rotation’s role in their development plans.
6
All employees have equal opportunities for job rotation of their demographic group.
(Noe, Hollenbeck, & Gerhart, 2008, p. 421)
With the outline above, a company starting out in the United States should not be encouraged to engage in cost reductions that could dramatically lower employee moral. With this said, B&T Consulting recommends that H2O implement a freeze on hiring and the implantation of job rotating.
6.4 Summary of HR Department Budgeting Challenges
When any company tries to reduce costs there will be some challenges. These challenges can come from the actual employees causing low empowerment which leads the company to lose money. Or these challenges can come from the company not knowing how to tackle on planning a budget.
“Perhaps the most important issue in benefits management is the challenge of providing quality medical benefits while controlling costs” therefore, H2O should be aware that is it hard to tackle (Noe, Hollenbeck, & Gerhart, 2008, p. 601). H2O does not want to reduce benefits so much that employees begin to have low morale. H2O needs to ensure that they know that when they reduce benefits and salaries they are not only affecting their employees, they are affecting the employees’ families also.
When reducing these aspects H2O should also consider what this does to the company as far as remaining competitive. Employees want to ensure that they are with a sound, safe, and stable company. Employees want to ensure they are with the company that is going to do the most for them and that there is not a company elsewhere that has a better compensation package. Therefore, when considering which avenues to cut costs, H2O should ensure that they are still remaining competitive as it relates to other companies in the industry and in the surrounding areas. This will also help to ensure the company attracts top talent to the company and retains their top talent already in the company.
Another challenge that H2O should know is that when implementing a hiring freeze and incorporating job rotation, employees may become weary after some time. This is because they may become tired or drained from doing various jobs in the company. When this takes place, employees may become less productive which may cost the company money. H2O should be sure to closely monitor employees and communicate frequently with them as this may lead to decreased moral in the company.
6.5 Recent Practices from United States’ Organizations
A budget is a tool of management that provides for the proper distribution of collective revenue of the company. It gives a clear picture of what should be invested where and what should be cut down. This includes the human capital in the various departments, physical location of the premise and the financial aspect. By stipulating a well laid out budget, the company will be better placed to make wise decisions. As stated by Blayney (2003), the concept of budget varies depending on a multitude of factors. However, it goes without saying that suitable records should be made and maintained for the purposes of review. In the end, there will be stability and consistency of running the business since there is a reference point. Lack of a budget is detrimental in the progress of a company since things are done blindly with no guidance.
This was illustrated by a company called CWO BPO. The latter had challenges with its budget since they spent a lot of money in the employment process. They had lost valuable employees through natural causes and replacement was proving to be impossible. The net worth of most employees could not be accounted for and yet they were involved in daily team building activities. It was discovered that the costs that had been involved in running all these extracurricular were not accounted for. All they needed was a change in their budgeting process. Just like marketing, budgeting requires strategies (Remenyi, 1991, p. 148). From this illustration, it is clear that H20 Company should have a clearly laid out plan on their recruitment process. The latter is usually a very expensive affair but if not monitored, could affect the company’s revenue.
The best-practice companies have a strong corporate culture that incorporates organizational strategic planning. This process is enhanced in the design framework of planning, budgeting and forecasting processes. An analysis of the latter reveals certain ties in culture, strategy and management profiles giving way to high performance companies. Three US-based companies were in focus according to studies conducted by Andrew Campbell in his ‘Harvard Business Review’ article. There is a quote, ‘One size does not fit all’ (50). This tries to elaborate on the practice of ‘copying’ from other organizational structures and taking them as your own also called external benchmarking. In contrast, a company should exercise an internal evaluation to establish what works for them.
Campbell draws examples from Emerson Electric, Dow Chemical and Granada. A plastic and chemicals company, Dow Chemicals takes into account the idea of cost reduction in the course of operation. The target is profit maximization while taking into consideration the cost of capital. The management team is made to evaluate decisions concerning creation of new markets, expanding operations and price reactions and how these factors may lead to losses. For that case, managers are advised to improve processing costing (Storey, 2009, p. 341).
Granada is a hotel involved in entertainment that is also aims at upgrading profits (Storey, 2009, p. 341). The essence of any business is to attain profitability. This is what forms the essence of the mission of the Grenada hotel. Their CEO, Char les Allen, is on a mission to drive his employees to excellence. In achieving the targeted growth of the hotel, it is imperative to mind employee’s welfare. He does this by a relaxed approach to selling and devising high unreachable goals. The model incorporated by the hotel’s management enables it to integrate all these factors without compromising on the aspect of profitability of the business. On the other hand, Emerson Electric focuses on gradual increases on profits. Their CEO, Chuck Knight, is a dictator. He grills his subordinates during planning processes and may become agitated. This in turn forces his management team to create plans around their bosses’ expectations, but Knight is the ultimatum in the final plan decisions. Campbell states, “Knight’s ability to argue with his subordinates without undermining their authority is the key to getting them to change their plans (46).” For this company the method works for them. It is therefore important for the H20 Company to re-evaluate their status quo before borrowing practices from other companies.
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Waxer, C. (2008). HR Software saves time and cash. Retrieved April 6, 2012 from http://money.cnn.com/2008/07/14/smallbusiness/tech_edge_talent.fsb/index.htm.
Appendix A
An Evaluation of Performance Appraisal Formats
 
Employee Development
Criterion
Administration Criterion
Personnel
Research
Criterion
Economic
Criterion
Validity
Criterion
Ranking
Poor - ranks typically based on overall performance, with little thought given to feedback on specific performance dimensions.
Poor - comparisons of ranks across work units to determine merit raises are meaningless. Other administrative actions similarly hindered.
Average - validation studies can be completed with rankings of performance.
Good - inexpensive source of performance data. Easy to develop and use in small organizations in small units.
Average - good reliability but poor on rating errors, especially halo.
Standard
rating scales
Average - general problem areas identified. Some information on extent of developmental need is available, but no feedback on necessary behaviors/outcomes.
Average - ratings valuable for merit increase decisions and others. Not easily defended if contested.
Average - validation studies can be completed, but level of measurement contamination unknown.
Good - inexpensive to develop and easy to use.
Average - content validity is suspect. Rating errors and reliability are average.
Behaviorally
anchored
rating scales
Good - extent of problem and behavioral needs are identified.
Good - BARS good for making administrative decisions. Useful for legal defense because job - relevant.
Good - validation studies can be completed and measurement problems on BARS less than many other criterion measures.
Average - expensive to develop but easy to use.
Good - high content validity. Some evident of interrater reliability and reduced rating errors.
Management by objectives
Excellent - extent of problem and outcome deficiencies are identified.
Poor - MBO not suited to merit income decisions. Level of completion and difficulty of objectives hard to compare across employees.
Poor - nonstandard objectives across employees and no overall measures of performance make validity studies difficult.
Poor - expensive to develop and time-consuming to use.
Excellent - high content validity. Low rating errors.
Essay
Unknown - depends on guidelines or inclusions in essay as developed by organizations or supervisors.
Poor - essays not comparable across different employees considered for merit or other administrative actions.
Poor - no quantitative indices to compare performance against employee test scores in validation studies.
Average - easy to develop but time consuming to use.
Unknown - unstructured format makes studies of essay method difficult.
Milkovich, Newman, & Gerhart, 2011, p. 368
Appendix B
Straight Ranking Method
Rank
 
 
 
Employees Name
Best
 
 
1. ___________________
Next Best
 
 
2. ___________________
Next Best
 
 
3. ___________________
Etc.
 
 
 
 
 
 
 
 
 
 
 
Alternative Ranking
Rank
 
 
 
Employees Name
Best performer
 
 
1. ___________________
Next Best
 
 
2. ___________________
Next Best
 
 
3. ___________________
Etc.
 
 
 
4. ___________________
Next Worse
 
 
3. ___________________
Next Worse
 
 
2. ___________________
Worst performer
 
 
1. ___________________
 
 
 
 
 
 
Paired Comparison Ranking Method
 
John
Pete
Sam
Tom
Ranked Higher
Bill
X
X
X
X
4
John
 
X
X
X
3
Pete
 
 
X
X
2
Sam
 
 
 
X
1
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