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De La Salle University - Manila

Master of Business Administration



A Case Study on Eckel Industries
In Partial Fulfilment of the Requirements
in Human Resource Management with Organizational Behavior (HRM535M)

Submitted By:
Austria, Kristofferson
Cua, Raymond Gerald
Reyes, Bernadette
Vital, Jhona Jane

Submitted To:
Dr. Mary Margaret Que
A Case Study on Eckel Industries 2

Summary / Synthesis
Eckel Industries is a one-plant company that has about 2,000 employees. The case
focused on the concerns of a small group of managers from different departments towards the
performance management process within the firm. They also discussed how they interpret and
execute performance appraisal to suit their needs. These can be summarized as follows:
It is subjective. The scales are subject to each managers interpretations, and the scores
may depend on his/her relationship with the report.
The scores may also be adjusted to the point where it doesnt reflect the actual
performance of the employee. The reasons presented are to motivate or discourage, to
conform with the reward that the manager think the employee deserves, to reflect the
employees potential.
They only recall 15% of the employees performance and tend to value the most recent
ones.
Point of View
In this case study, we will take the point of view of the Vice President of Human
Resources, who is responsible for setting the correct process in performance management to
ensure that they are executed in a manner that is fair, and aligned with the companys goals.
Statement of the Problem
We have identified the problem by undergoing first the gap analysis, in Table 1.
Table 1
Ideal Actual
Managers have a good understanding of the
performance management process and how it
ties up with the goals of the organization

Managers dread the performance
management process and only do it because
it is part of their job description.
Performance criteria are properly defined. Performance criteria are not properly
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Employees have a common understanding of
what is required by each performance criteria.

defined which causes confusion and
inconsistencies on how employees are rated.
Performance appraisal is objective and reflects
the true performance of the employee.
Performance appraisal politics are prevalent.


Performance appraisal techniques should be
constantly evaluated to avoid rating errors and
ensure reliability and validity of ratings.
No proper feedback as the managers who
have stayed long in the firm (12 years) still
are dreading the performance appraisal of
their employees.

Managers are aware of the importance of
performance appraisal in all areas and its
impact not just on the employees but on the
whole unit/organization.
Managers look at performance appraisal as a
tool to manipulate actual performance rating
of employees.
To summarize, the problem in this case is What should Eckel Industries do to implement
a fair and sustainable performance management process?
Statement of Objectives
The context and purpose of this study aims to elaborate the objectives and eventually
what influenced the recommendation are as follows:
Reduce and eventually eliminate the practice of performance appraisal politics within the
organization.
o It is important for an organization to achieve validity and reliability in the
performance management process. Performance appraisal politics creates an
illusion of employee engagement to those who benefited from it. However, over
time, employees might expect the same treatment and not be motivated to perform
their best. On the other side, those who did not benefit from appraisal politics will
certainly lose trust on the process which will have a negative impact on their
performance.
Achieve common understanding among employees regarding the performance
management process of the organization.
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o When an entire organization has a common understanding of the performance
management process, managers are able to execute the various phases of the
process more smoothly. It also allows the organization to better align employee
expectations with the organizations goals.
Retain the organizations top performers.
o Attrition is unavoidable, in fact, a certain rate of attrition is healthy because it
provides opportunities for high performing employees to move up the corporate
ladder and allows the organization to take in new talent. However, when an
organization loses its top performers, higher costs are incurred to train new
people, replace the lost productivity, and keep the remaining employees
motivated.
Reduce surprises to employees during performance feedback.
o Because performance ratings are normally tied to an organizations reward
system, employees often times react negatively to receiving a poor rating
especially when it came as a surprise to them. It is therefore important for an
organization to have the proper process in place to ensure that employees are
aware of how they are performing even before the official rating is provided to
them.
o Proper performance appraisal will also address the employees weaknesses, thus
improving their performance in the future.
Avoid accusations of unfair performance management practice from employees which
could lead to legal implications for the organization.
o Lack of a proper and fair performance management process and poor
implementation of it could result to disgruntled employees which could cause a
domino effect within the organization. The organizations reputation as an
employer could also suffer making it difficult for them to attract quality
employees. Depending on the degree of injustice and unfairness, the organization
could also be sued for discrimination and unjust dismissal.


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Areas of Consideration
The group used the SWOT Analysis to flesh out the things that needs to be considered in
the case.
Strengths:
The managers have sufficient knowledge on the business because of their tenure
in the company. Thus, they have the ability to correctly determine what a good
performance is in terms of job skills.
The company benefits from bringing in fresh blood to the organization (like Tom)
as he questions the current practices in Eckel (politics of performance appraisal in
Eckel Industries).
A performance appraisal method is already in place (graphic rating scales).
Weaknesses:
There is a lack of consistency in the managers understanding of how
performance appraisal should be done.
There is a lack of enforcement, by the HR of Eckel Industries of the proper
performance management process, as the managers were able to do the
performance appraisal as they wish.
There is a lack of proper feedback between managers and employees as the
performance appraisals are not objectively conducted.
There is an improper allocation of the budget for rewards because of the skewed
performance appraisal methods. The current practice may be subject to legal
complaints from their employees.
There may be a lack of corrective action to address the weaknesses and gaps of
some of the employees because of the biases.


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Opportunities:
The growing technology is continuously making it easier for managers to ensure
alignment in goals and improve performance management.
The science of performance management is continuously evolving, which can be
used by the company to identify which model fits the nature of their business
more. Other companies are constantly building their best practices, which Eckel
can learn from.
The growing market of skilled managers can be leveraged to hire more
experienced ones that will do performance management more effectively.
Compare performance management of Eckel with the industrys best practices to
fill in the gaps and to have a better performance management model.
Threats:
The growth of other companies in terms of their performance management may
seem attractive to employees who become victims of performance appraisal
politics.
Alternative Courses of Action
The alternative courses of action are formulated in consideration of the objectives of the
case to solve the problem statement. Each ACA is verified using the pros and cons to check the
ethical position and for moral decision making.
ACA 1: Maintain status quo
Pros
No changes in the current practices, therefore no undue attention will be called
on which will make the company look like it is operating properly.
Cost savings as the performance management method will not be reviewed /
altered, which may bring in costs.
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The managers will just continue with their current approaches on performance
management and no effort will be spent for any process adjustment.
Cons
The politics in performance appraisal will not be addressed.
The unfair and unjust practices of the managers during performance appraisal
will persist, affecting not only the employees but the whole company as well.
The employees development will not be properly addressed due to incorrect
recognition or non-recognition, depending on the personal opinion of the
manager.
ACA 2: Conduct an extensive review of the performance management process,
make significant changes to it as necessary and cascade the changes to the whole
organization (management, managers, and employees).
Pros:
This will address the gap in the performance management method in Eckel
Industries.
The employees will feel better as they know that they are properly
evaluated. They will also perform better because they know that the performance
appraisal will not involve any politics (no favoritism, etc.).
The company will be more efficient as proper feedback will be provided to the
employees. The good performance of the employees will be rewarded. The
weaknesses of the employees (job performance, person skills, etc.) will also be
addressed. Merit increases and promotions will be given to those who actually
deserve it. The personal / career development of the employees will also be
properly addressed as these are the usual topics discussed during a proper
performance appraisal and feedback discussion.
The managers will be more knowledgeable of the performance management
process and will help them to become better managers.
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The company will save on costs by allocating the rewards only to where it is due.
The managers will not feel that performance appraisal is a dreadful
responsibility. Instead, they will feel that it is a privilege and an important
responsibility, which can help their subordinates to achieve career and personal
development and improvement.
Cons:
Additional costs from the review of the process and any additional programs,
techniques, software which will be employed to improve the performance
management process in Eckel Industries.
Employees who previously received lower ratings (even if these have been
objectively made) might feel animosity towards their managers.
The managers might resist the changes that the HR will impose.
ACA 3: Require all managers to undergo mandatory training on performance
management process
Pros:
This will provide all the managers the same perspective on performance
management and its implications when not properly executed.
Provide managers the importance of proper performance appraisal and the effect
on the company.
Cons:
The managers may feel hostile and not willfully agree to this, because this might
imply that they are not doing proper performance appraisals.
This ACA will not address the possible issues in the current performance
management method done in the company. The current performance
management system will not be reviewed and evaluated.
Additional costs will be incurred from the training.
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ACA 4: Replace managers who engage in appraisal politics
Pros:
New managers will not have any bias towards the employees because there has
been no history of relationship (less familiarity with personal issues, etc.)
Might improve the performance appraisal culture in the company by removing
those who have engaged in performance appraisal politics.
Cons:
Hiring of new managers will be costly to the organization
Might encounter legal concerns when replacing the current managers on the basis
of appraisal politics as the company might have a difficulty in proving that the
existing managers engage in performance appraisal politics.
The existing employees might feel degraded because of the sudden change in
their managers which will affect their job performances.
The new managers may, later on, also engage in performance appraisal
politics. This ACA is like a band aid solution and does not address the
performance appraisal concern. The company should integrate in its core values
the proper performance management.
Recommendation
The decision criteria and weights provide the important areas to consider in choosing the
best solution for the case. Each criterion is assigned of weights depending on the level of its
importance in the organization.
1. Sustainability of the performance management method
Weight: 30%
Definition: Performance management centers on ensuring that activities in the
organization are aligned with the company goals and good governance. This
criterion also focuses on how management is able to retain its top performers
while maintaining a healthy attrition rate.
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Rationale: A good performance management method directs work towards
common goals, provides a clear understanding of job expectations, presents
regular feedback about performance, offers advices for improving performance
and sets rewards for good performance (Financial Services Authority, 2013)
2. Leadership style, people development, and company culture
Weight: 20%
Definition: This criterion focuses on how the management handles all areas in the
organization such as setting goals and employee motivation towards achieving the
companys goals, the quality of relationship between the employers / managers
and employees, the openness in communication, honesty in providing accurate
and constructive feedback, and the effectiveness of teamwork (the results or the
job done by the manager and his or her subordinates).
Rationale: An effective leadership style controls the flow of the business and
directs the organization into its mission and vision. It is important that a leader be
professional enough to handle activities such as evaluation so as not to distort the
actual idea/event. Relationship among members of an organization reflects the
culture of the business. It is important to monitor the level of relationship to
avoid conflict of interest, and other unethical practices.
3. Employee and employer protection
Weight: 20%
Definition: This criterion emphasizes the right of employers and employees to be
protected from biases, discrimination, unfair treatment and false accusations.
Along with that, the organizations ability to protect itself from legal issues is also
an important factor.
Rationale: Employee protection invokes the right of the employees for respect,
fair judgment and guard from actions of managers/employers. Employer
protection from legal issues is also an important factor because not only is it
costly to defend a lawsuit, it also negatively impacts an employers reputation and
prevents it from entirely focusing on moving the business forward.
4. Cost of implementation
Weight: 15%
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Definition: This criterion focuses on the cost associated to implementation of an
ACA.
Rationale: In every organization, cost is an important consideration because
financial success is and will continue to be one of the main goals of most
organizations. Even for non-profit organizations, cost plays an important role
because a companys funds needs to be properly allocated in order for it to
achieve its objectives.
5. Reputation
Weight: 15%
Definition: This criterion focuses on the overall image of a certain unit/company
to the people.
Rationale: Reputation plays a very important role in the success of a business - it
can either make or break a unit/organization. It is important that the firm not only
maintain a good financial standing but also an excellent repute in terms of
employee development and performance evaluation.
Evaluation of the Alternative Courses of Action
Table 2 below summarizes the scores that the group awarded for each alternative.
Table 2
Decision Criteria % ACA 1 ACA 2 ACA 3 ACA 4
Sustainability of the performance
management method.
30% 10% 25% 20% 17%
Leadership style, people development, and
company culture.
20% 5% 17% 10% 13%
Employee and employer protection 20% 5% 17% 15% 10%
Cost of implementation 15% 15% 5% 8% 5%
Reputation 15% 5% 15% 8% 5%
TOTAL 100% 40% 79% 61% 50%
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Sustaining and developing the business operations of the organization which is currently
in a challenge of having a strategic performance management process is the concern of this
case. This inspired the proposed ACAs and after thorough evaluation of the criteria resulted to
the best solution. The table shows that ACA 2, wherein the organization will conduct an
extensive review of the performance management process, make significant changes to it as
necessary and cascade the changes to the whole organization, got the highest score among the
four proposed action.
ACA 2 garnered the highest total score among the four alternative courses of action. The
group recommends that the organization conduct an extensive review of the performance
management process, make significant changes to it as necessary and cascade the changes to the
whole organization.
ACA 2 was graded a score of 25/30 under the criterion Sustainability of the performance
management method primarily because doing an extensive review and modifying the existing
performance management process will allow management to better align its organizational goals
with each employees objectives. Management would be able to use lessons learned as well as
feedback from employees on the existing performance management process and use those as
inputs in coming up with a centralized and better structured one. For example, managers could
be required to document the performance of their staff on a monthly or quarterly basis, or the
organization can implement a 360-degree feedback process. Both should help reduce the issue of
managers recalling only 15% of an employees performance for an entire review period.
ACA 2 was graded a score 17/20 under the criterion Leadership style, people
development, and company culture because the ACA provides an opportunity for the
organization to create an environment that supports people development. For example, upper
management could require all managers or performance evaluators to conduct a regular
checkpoint meeting with each of their staff as a venue to provide formal feedback about the
staffs performance. This will not only reduce surprises on the employees part during
performance rating communication because they would already have an idea about their current
standing but it will also give the employees opportunity to work on their areas for development.
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Having great teamwork and genuine concern for the career development and advancement of
employees is a great culture to have in any organization.
ACA 2 was graded a score 17/20 under the criterion Employee and employer
protection because it allows the organization to change their existing practice to protect
themselves from legal liability due to employee complaints on the fairness of the performance
management process. Without proper training though, significantly changing the process might
not be enough as certain evaluators might have a different understanding of how the process
works so the same unethical practice presently in effect might still persist. But when consistently
implemented across the organization, the performance management process is a great way for an
organization to show their employees that everyone will be treated, evaluated, and rewarded
fairly for their contributions.
ACA 2 was graded a score of 5/15 mainly because it will require the organization to incur
a considerable amount of cost and spend a significant amount of time and effort to accomplish.
While it might be such a huge undertaking, the investment would definitely be worth it if it
enables the organization to better fulfill its vision.
ACA 2 was graded a score of 15/15 primarily because the ACA is a great way for the
organization to show their employees that they do genuinely care and prioritize the development
of their people. An employee who feels that they are being duly rewarded for their hard work
will have more motivation to do much better. A motivated employee would result to better
performance and productivity which could then lead to better financial results for the
organization. Theres no better way for an organization to enhance their reputation than to have
their own people say great things about it.
The group believes that ACA 2 provides the best way for Eckel Industries to address the
many issues that they are facing with their existing performance management practice. Because
ACA 2 requires such a major undertaking, Eckel Industries may opt to divide the implementation
into phases starting with the highest priority issue of performance appraisal politics as a short
term goal. The long term goal is to have a performance management process that is able to
satisfy the various objectives enumerated under Statement of Objectives above.
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Implementation
Table 3 below shows the different barriers that the group is foreseeing with the
implementation, and how they can be addressed.
Table 3
Constraints / Barriers Addressing the Barriers
Management: Efficient performance
management in the organization might not be a
priority as the company was able to tolerate the
fine-tuning in the performance appraisals over
the years. The top management may not be
willing to incur expenses to review the current
process and on top of that, they might not be
willing to provide budget for the significant
changes to the whole organization.
The management should understand the need
for the companys goals to be aligned with
performance management as its employees
are the key to the achievement of the
company goals. A cost-benefit analysis
should be presented to them to highlight that
aligning performance management with
companys goals, and reducing (and
eventually removing) personal biases in
performance appraisal will more than offset
the additional costs that will be incurred in
reviewing and changing the performance
management process. This will strengthen
the case of this endeavor, and create better
chances of getting their support.

Managers: The managers have already an
existing perspective on performance appraisal
and how it is done in the company. They have
allowed fine-tunings and are often subjective in
doing their appraisals of their
subordinates. Their notion on performance
appraisal and performance management, in
general, might be difficult to alter, especially that
they have practiced their own kind of personal
performance management over the years.
Once the review has been made, the
company should provide the managers a
clear view and better understanding of the
companys performance management
process and how these affect their teams
output, efficiency, and development. The
relevance of proper performance
management should be emphasized to the
managers so they will be aware that the fine-
tunings that they do should not be
practiced. Regular touchpoints between the
managers and HR/top management should
also take place to ensure that the managers
follow the prescribed performance
management process of the firm.

Employees: Some employees might have
received better performance appraisals from their
managers due to the current practices in Eckel
The scheme to review and to perform the
corresponding corrective action on the
companys performance management
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Industries. These employees might not willingly
participate in the changes in the performance
management and may lead to collusion with
other employees or managers and still adhere to
the current performance appraisal practices.
process will give a clear message to the
employees that the management takes this
initiative seriously. The HR should also be
able to effectively communicate to all the
employees the advantages of proper
performance management, which affects not
only the organization but the employees
development as well. Persistent
communication and feedback should always
be performed to monitor the progress of the
changes in performance management. If
certain collusions still happen, employees
should have a confidential means to report
them to the head of the HR department.

Action Plan:
1. Conduct discussion with managers and evaluators about their experience with the
existing performance management process to understand their challenges and struggles
with it. The top priority issues to be addressed should also be identified.
Task Owner: HR
Timeline: After upper management buy-in has been received for implementation
of ACA 2
Resource Requirement: Managers who conduct performance management
2. Conduct focus group discussions with employees to gather their feedback about the
performance management process.
Task Owner: HR
Timeline: After upper management buy-in has been received for implementation
of ACA 2
Resource Requirement: Employees who have previously been evaluated
3. Assuming that the existing process needs to be overhauled, review the various
performance management approaches and determine one that best fits the needs and
culture of the organization. If necessary, a hybrid implementation of a known approach
may be done.
Task Owner: HR
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Timeline: Upon completion of discussions with evaluators and employees.
Resource Requirement: Results of the focus group discussions, and research
materials on performance management models
4. Explore the possibility of using technology to enhance the application of performance
management.
Task Owner: HR
Timeline: Upon determination of the changes the existing performance
management process.
Resource Requirement: IT Department
5. Document changes to the performance management process or if a new approach is to be
implemented, create and document guidelines for evaluators to follow in executing the
various phases of performance management.
Task Owner: HR
Timeline: Upon determination of the performance management model
Resource Requirement: Current performance management documentation
6. Define the schedule of the performance cycle.
Task Owner: HR
Timeline: After the guidelines have been completed.
Resource Requirement: New or Updated performance management
documentation, and top managements input in terms of timeline
7. Roll-out the new performance management process to the entire organization.
Task Owner: HR
Timeline: After the successful testing of the new performance management tool
Resource Requirement: Results of the testing
8. Conduct checkpoint meetings with employees to ensure that they understand the process
Task Owner: Managers
Timeline: After the updated performance management process has been rolled-
out.
Resource Requirement: Personal experiences of the employees
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9. Conduct feedback session on the new performance management process and conduct
calibration meetings to reduce errors and increase reliability and accuracy of the process
Task Owner: HR, Managers, Employees
Timeline: Quarterly
Resource Requirement: Personal experiences of everyone involved in the new
performance management process
Learning Points
It is difficult to avoid involving personal biases and opinions while doing performance
appraisals. However, a clear, specific and centralized performance management method will
help address these concerns. Continuous feedback and monitoring should be in place to ensure
that the reliability and accuracy of the performance appraisal results are reviewed regularly. This
will also provide improvement in the companys performance management system. Performance
management involves several phases that should be applied continuously throughout the entire
performance period. It does not start and end with the performance appraisal process. When
performance management is done right, employees should be aware of how their objectives and
the organizations expectations from are aligned with the goals of the organization. When an
employee is provided regular and timely feedback, there wouldnt be any surprises during the
performance rating communication because they would understand how they were evaluated and
were given useful inputs on their successes and areas for development. The performance
management system should be aligned with the managements plans and the companys goals.
References
Noe, R., Hollenbeck, J., Gerhart, B., & Wright, P. (2009). Performance Management. Human
resource management: Gaining competitive advantage (pp. 338-387). New York, NY:
McGraw-Hill.

Financial Services Authority. Employee Handbook. The importance of Performance
Management (2013, March). Retrieved September 29, 2013, from
www.fsa.usda.gov/Internet/FSA_File/perf_mgmt_09_email1.pdf