Vitality Health

Problem Statement

In a high growth and highly successful phase of organizational life cycle, Vitality Health Enterprise faced two main challenges:

1. High employee turnover among the most talented research scientists due to a performance evaluation system that was ineffective.

2. The recent spate of successful innovations of the company might make its employees complacent, making it lose its competitive edge.

Without the expertise of the highly talented research scientists, Vitality could not remain a competitive market player which was the main concern of the top management.

Environment

External-

* Cut throat competition in the personal care sector with market share determined largely by product innovation and development.

* Growth in the company’s revenue for six straight quarters.

Internal-

* Increasing employee turnover among the highly talented research scientists.

* Signs of complacency and discontent among a few employees over issues like missed product launches.

* Growing nature of the company would require a higher number of employees- to be employed /promoted, which would require proper identification of performers and non-performers.

Implications: The high growth, highly competitive environment meant that the means of gaining a sustained competitive advantage was through its pool of highly talented research scientists. As such, it was extremely important to measure their performance and compensate them correctly to ensure continued loyalty and career development opportunities.

CEO

* Focused on operational discipline.

*

What did not work in the old system?

* The old system contained 13 rating levels which made them susceptible to the mangers’ biases. The managers often tended to give homogeneous ratings, as is evident from the data provided in exhibit 2, to maintain the feeling of equality among the employees. Though faulty, the system highlights the managers’ dilemma in trying to achieve a balance...