Performance Management at Vitality Health Enterprises, Inc.

Case Write-up

“Performance Management at Vitality Health Enterprises, Inc.”.

1. What were the problems with Vitality’s old Performance Management System? What were the root causes of those problems?

Firstly, old Performance Management System was based on managers rating in 13 different levels from A+ to E. Vitality Health Enterprises used this rating for calculating salaries and performance-based raises. As one can understand, if the rating score is large and the different levels are not sufficiently explained, the evaluators will be more likely to evaluate less accurately. In reality, managers gave almost to everyone a B or a C, provided few A or D ratings. This is a problem because it shows that the managers do not understand performance and evaluation system, they don`t take system as a serious and fundamental tool, which make an affects on employees who are don`t receive valuable feedback on their performance. Also employee’s motivation and frustration decreased, because top performing employees finally get similar grades to other less productive employees. Employees who make higher performance receiving smaller raises than their less productive colleagues. So for workers it is better to don`t do something special, just work.

This problem has two main root causes. The first one is that managers don`t want to upset employees, so they give B and C ratings to everyone. They might believe that a medium grading doesn`t make positive or negative effect on employees performance. Second, there is a problem of absence of assessment of the attributes of specific jobs and consequent alignment with the company’s strategic goals. There are no clear job descriptions, so besides not knowing well how managers should evaluate, they also do not know individual or team goals that should be achieved

2. Is the refused performance management system better than the system it replaced? In what ways? In what wais is it worse?New system have 5-point scale (previous...