Student Resource - Case Studies

PERFORMANCE MANAGEMENT CASE STUDIES
Contents
1. Introducing performance management at Acme
2. Performance management at Barsetshire County Council
3. Increasing the engagement of engineers at Framley Engineering
4. The performance review meeting at French and Reynolds
5. Learning about performance management at Gamages
6. Developing a performance culture at the Harding Trust
7. Developing performance management at Help the Children
8. Dealing with under-performers at Polymers UK
9. Using competencies at the Thames Building Society
10. Performance management problems at Towers Pharmaceuticals
11. Improving performance at White Knight
12. Performance management problems at Zenith Systems
Performance Management Case Studies 2
1. Introducing performance management at Acme
The case
Acme Bakeries Ltd operates 135 bakeries throughout England, Scotland and Wales. It
has been formed fairly recently by the parent company, a long-established milling
company, by the acquisition of bakery firms, some quite large and powerful and with their
own ways of managing their businesses. They are grouped into six regions, each
controlled by a regional director whose staff includes a regional sales manager, a
regional accountant and a regional production manager. One of the regions the most
sophisticated one has a regional HR manager. The bakeries employ on average 100
staff. Each of them is run by a general manager whose team consists of a production
manager, a sales manager, an accountant and an engineer.
The group board consists of a chairman, a chief executive and directors of
finance, marketing and production. A senior management team consisting of the board
and the six regional managers coordinates the development and implementation of
business strategy and deals with major group-wide issues. A new chief executive has
just been appointed from outside the industry and he has brought with him his former
group HR advisor as HR director. She too has had no experience of the bakery
business.
A recent development encouraged by the chief executive as advised by the HR
director has been to appoint a regional HR manager in four of the five regions that did
not have one. They are mainly concerned with industrial relations (unions are recognized
for both the production and sales staff in the bakeries) and dealing with people
management problems. Only one has had any experience in the industry. The director of
the fifth region didnt see the point of the idea and has resisted it. The five regional HR
managers, with the encouragement of the HR director, are trying, with varying degrees
of success, to standardize HR policies and practices in their regions. Only two of the
largest bakeries have an HR manager.
The regions have a great deal of autonomy, and regional directors and senior
regional staff often resist proposals from the centre that do not fit in with their traditional
way of doing things. They may eventually have to conform but they often do so with bad
grace. The prevailing management style in the group is autocratic. The culture is
aggressive and entrepreneurial. There are no women general managers and only a few
female departmental managers.
This resource is part of a range offered free to academics and/or students using
Armstrongs Handbook of Performance Management, 4th edition, as part of their
course. For more academic resources and other FREE material, please visit
www.koganpage.com/resources and then click on Academic Resources.
The HR director is concerned with national union negotiations, terms and

conditions for senior managers, and encouraging various learning and development
activities in the regions and for the group. However, she also has a brief to review HR
policies and practices throughout the group. She has carried out a survey with the help
of the regional HR managers and established that with one exception (the region that
has had an HR manager for some time), there is not even a rudimentary appraisal
scheme, let alone a sophisticated performance management system. And the one
example of an appraisal scheme is pretty basic. It has also been made clear that there
are some serious deficiencies amongst the bakery general and departmental managers
that need to be remedied by development programmes, the use of capability procedures
and, if the worst comes to the worst, dismissal. But there is no evidence to support any
actions that might be taken.
The conclusion the HR director came to was that a performance management
system was required for managers and other senior staff. This would tie in with the chief
executives belief that it was necessary to create a high-performance culture throughout
the group. The HR director had no difficulty in persuading him that she should go ahead
and make recommendations to the senior management team of which she had become
a member.
The task
As HR director:
1. Define the approach to performance management you would like to see developed.
2. Decide how you are going to undertake the development and implementation of the
performance management system, taking into account the context and
circumstances described above.
3. Make out the business case for the approach you propose to be presented to the
senior management team.
2. Performance management at Barsetshire County Council
The case
The director of HR at Barsetshire County Council has drafted a position paper for the
chief executive to issue about the factors to be taken into account in launching a new
people strategy. The paper was based on extensive discussions with the chief executive,
members of the councils cabinet and other interested parties, including trade union
representatives and members of the HR function. As amended slightly by the chief
executive, a summary of this is set out below.
The people strategy statement

We see the people strategy as central to the delivery of effective and improving services.
We also accept the need for fundamental changes to the way we work and how we work
together and with others.
We need to change the organizations culture, the way we do things round here.
This will require not only changing the way we work but also our behaviours and
attitudes. We believe we must become an organization that attracts, supports, enables
and retains people who are talented, risk taking, innovative and creative. To do this we
must break away from our fairly traditional people management practices of the past and
become a sharper, more flexible and resilient organization.
We know the broad challenges for us over the next five years are going to be:
Increasing demands on services through growing customer expectations.
Changing roles of the County Council arising from the Local Government Act.
Working more effectively with other public services.
Delivering services through a range of public and private sector organizations.
Resources will get tighter and we will have to do more with less.
Our discussions have established that our organizational culture and HR systems
contain the following principal features:
While we have made some progress on working together across directorates and
professional areas, we still work predominantly within professional constraints
and to defined job descriptions. We often fall back on professional job
demarcation and still rely on detailed job descriptions rather than on flexible role
profiles.
We have competent operational middle managers but many have yet to acquire
leadership skills.
Our people still rely on their managers for training and development opportunities
rather than seeking them for themselves.
We have a performance appraisal scheme but it is not working particularly well
and needs to be replaced by a more comprehensive and focused performance
management system.
We remain cautious about tackling under-performance.
We have a modern salary progression scheme that allows employees to be
rewarded for exceptional performance and that is a step in the right direction, but
pay remains our main method of motivating people.
Communication between the council and its staff is still very traditional, with
messages and information coming from the top down.
We find it particularly difficult to align the objectives of individual members of staff
with corporate objectives.
We believe that these current ways of working do not encourage the behaviours
and approaches we need to change the way we work and often form barriers to
innovation, creativity and flexibility.
The statement by the chief executive has been discussed thoroughly, and she has now
asked the director of HR to draft a second position paper that briefly describes the
approach recommended to developing a people strategy as a basis for further
discussion. Both the chief executive and the director of HR believe that an important part
in the strategy can be played by a performance management system. The HR Director
has therefore asked the head of learning and development to prepare recommendations
on the approach that should be adopted.
The task
As head of learning and development, prepare recommendations covering:
1. How a performance management system could play an important part in helping to
develop a performance culture.
2. How such a system could deal with the issues raised in the initial position paper.
3. Any problems that might be met in introducing a new system and how they could be
overcome.
3. Increasing the engagement of engineers at Framley

Engineering
The case
Framley Engineering designs, develops, manufactures and sells high-quality specialized
electronic goods using technology that has been created in-house. Approximately 70 per
cent of the companys operating revenue is derived from worldwide export markets and
this enables it to survive any recession in the UK. The company is a first-mover in its
field; it is not an imitator. Given its relatively small size relative to other global firms,
Framley has adopted a niche strategy, marketing to certain groups interested in the
unique products it offers.
Because of the companys commitment to innovation, management has placed
strategic importance on the employment of R&D engineers as the drivers of new
products. Speed to market is vital to ensure that the firm can be the first to release new
products. R&D engineers are vital in this process. There are 57 engineers out of the total
of 520 employees.
The director of engineering was generally satisfied with the performance and
commitment of his engineers but felt that there was still scope to improve their levels of
engagement. He asked the head of HR to advise him on how the conventional
performance appraisal scheme could be developed to provide more focused support to
the achievement of business objectives by ensuring that the people driving the
performance of the company, ie the engineers, could become even more engaged than
they already were.
The existing performance appraisal scheme involved setting objectives and
reviewing performance against them at an annual appraisal meeting. There was no
formal performance and development agreement, and the scheme tended to focus on
the performance rating that was used to inform performance pay decisions.
The task
As head of HR:
1. Review how the performance appraisal system could be modified to increase the
engagement of engineers and help drive the business forward.
2. Consider the extent to which the scheme should focus on engineers as distinct from
other members of staff.
3. Prepare proposals on how any changes might be developed.
4. Assess any potential problems in implementing the proposals and how they might be
overcome.
4. The performance review meeting at French and Reynolds
Performance management role-playing exercise
Brief for practice leader
You are Hilary Thomas, practice leader of the HR consultancy division of French and
Reynolds, a major international firm of accountants and management consultants. You
are due to conduct the annual performance review meeting with Alex Wright, an HR
consultant who joined your team 12 months ago. Alex has had eight years good HR
experience and is well qualified, with a degree in history from Manchester University and
an MA in human resource management from DeMontfort University, plus chartered
membership of the CIPD. A role profile for a consultant is set out at the end of this brief.
Alex attended the standard one-week consultancy skills course, but because of
your other commitments has not been given the amount of guidance and help you would
have liked to provide and has therefore been thrown into the deep end. You know that
the two practice leaders (John Cox and Jim Standing), under whom Alex worked before
joining a team managed by you, have also been too busy to provide much help.
In spite of this lack of guidance Alex has on the whole settled down well although
there have been problems, including some difficulties in working with clients and on
interdisciplinary teams, and with below standard report writing skills. Alex has been
working for you on a major interdisciplinary assignment and you had to point out on two
occasions, which you noted, that more cooperation was needed with the client and other
team members accountants and IT specialists and that the HR aspects of the project
should not be tackled as a separate entity. You were also somewhat dissatisfied with the
quality of Alexs report writing, which needed quite a lot of re-drafting. On the other hand,
Alex has shown a fair degree of analytical ability and creativity.
Alex has taken part in two shortish (six or eight weeks) assignments run by John
Cox and Jim Standing, and in one case the end of assignment report confirmed what
you had established in the long and ongoing current assignment that you are managing
and on which, because of previous experience, Alex is a key member of the team.
The standard end of assignment reports on Alex produced by the practice
leaders of the two assignments and your own interim report on the current assignment
are set out below.
Competency heading* Assessment by:**

John Cox Jim Standing Hilary Thomas
Results orientation 3 3 3
Client focus 3 2 3
Influence and persuasion 2 3 3
Written communication 1 2 1
Oral communication 2 3 2
Team orientation 1 3 2
Problem-solving 3 3 3
Technical skills 4 4 4
Interpersonal skills 1 2 3
Creativity 2 3 2
* headings defined in the role profile at the end of this brief

** assessment scale:
4 = excellent 3 = good 2 = acceptable 1 = barely acceptable 0 = unacceptable
Clearly there were a number of problems with the first assignment, and you took this up
with John Cox. He simply said that, although bright enough, Alex couldnt really cope
with the challenge of working on an interdisciplinary and business-orientated team and
was poor at written communications.
Alex will have seen the first two assignment reports but not yours.
Your task is now to plan and conduct the performance review meeting, which
should last up to one hour. You will need to go through Alexs performance, referring to
the assessments made by the other practice leaders and your own assessment. You will
want to get Alexs reactions to his experience so far and his views about the future. You
think that Alex is potentially a good consultant and that the initial problems will easily be
overcome with more guidance and help from you than has been provided so far.
A role profile for a management consultant including competency requirements is
set out below.
Role profile: management consultant
Overall purpose
To provide advice to clients with which they are completely satisfied and which leads to
measurable improvements in their business and repeat business for the firm.
Main activities
1. Analyse client requirements and determine the most appropriate consultancy
approach to meet these.
2. Prepare and deliver proposals and presentations to clients in order to sell
consultancy assignments.
3. Conduct assignments as a member of a consultancy team, analysing and
diagnosing requirements, issues and problems, and developing solutions and
proposals in conjunction with clients.
4. Prepare and present reports to clients, with clear and actionable
recommendations that flow from the analysis and diagnosis.
5. Provide assistance as required to clients in implementing recommendations.
6. Maintain records of consultancy assignments.
7. Keep up to date with developments in field to ensure that advice represents
current good practice.
Competency requirements
Competency heading Summary definition

Results orientation The desire to get things done well and the ability to set
and meet challenging goals, create own measures of
excellence and constantly seek ways of improving
performance.
Client focus The capacity to understand the business needs and
priorities of clients and ensure that their needs and
expectations are met or exceeded.
Influence and persuasion The ability to convince others to agree on or to take a
course of action.
Written communication The ability to communicate clearly in written proposals
and reports.
Oral communication The ability to communicate clearly in meetings,
presentations etc.
Team orientation The ability to work cooperatively and flexibly with other
members of the team with a full understanding of the
role to be played as a team member.
Problem solving The capacity to analyse situations, diagnose problems,
identify the key issues, establish and evaluate
alternative courses of action and produce a logical,
practical and acceptable solution.
Technical skills Possession of the knowledge, understanding and
expertise required to carry out the work effectively.
Creativity The ability to originate new practices, concepts and
ideas.
Interpersonal skills The ability to create and maintain open and
constructive relationships with others, to respond
helpfully to their requests and to be sensitive to their
needs.
Brief for management consultant

You are Alex Wright, a management consultant in the HR practice of French and
Reynolds, a major international firm of accountants and management consultants. Your
practice leader, Hilary Thomas, has informed you that your annual performance review
meeting will take place shortly.
You have had eight years good experience as an HR assistant and then an HR
business partner in a large financial institution in the City. You have a 2.1 degree in
history from Manchester University and an MA in human resource management from
DeMontfort University, plus chartered membership of the CIPD. You joined French and
Reynolds as an HR consultant 12 months ago. A role profile for a consultant is set out at
the end of this brief.
Your experience so far has been mixed. You had a brief (one-week) course in
consultancy skills six weeks after you joined, which was quite helpful but which you felt
was rather superficial on such aspects as client relationships and report writing. You
were flung into the deep end on your first assignment under an IT practice leader (John
Cox) who did not understand the contribution you could make and spent little time with
you. Your second assignment, with Jim Standing as practice leader, was better but
during this period you again saw little of him and felt neglected. Things are better with
your current assignment. Your practice leader (Hilary Thomas) has spent more time with
you but has pointed out on two occasions that better cooperation was needed with other
team members. You have also had problems in drafting reports in accordance with the
rather rigid guidelines of French and Reynolds, and you had to do quite a lot of re-
drafting. You have never had problems in report writing before but you recognize that
you may not have had to conform previously to the high and somewhat restrictive
standards expected by French and Reynolds.
The assessments made by the practice leaders on your first two assignments are
set out below. You have not yet discussed your performance on the current assignment
with your own practice leader. A role profile for a management consultant is set out at the
end of this brief.
Competency* Assessment**
John Cox Jim Standing
Results orientation 3 3
Client focus 1 2
Influence and persuasion 3 3
Written communication 1 2
Oral communication 2 3
Team orientation 1 3
Problem solving 1 3
Technical skills 4 4
Interpersonal skills 1 2
Creativity 2 3
* defined in the role profile at the end of this brief

** assessment scale:
4 = excellent 3 = good 2 = acceptable 1 = barely acceptable 0 = unacceptable
Clearly there were a number of problems with the first assignment but you feel that these
arose because you had received inadequate training and guidance. This applies to
report writing but you feel that you are learning fast to accommodate yourself to the
French and Reynolds requirements. You simply dont understand or accept the criticism
that your team orientation and interpersonal skills are inadequate. You have never had
problems before. You can only attribute the poor ratings on your first assignment to the
fact that you were never assimilated into the team properly by John Cox, while the other
team members were entirely preoccupied with their own concerns.
Overall, you have very mixed feelings about your time with French and Reynolds.
You have enjoyed the challenge of consultancy and you find the present assignment
stimulating. But you are highly critical of the way you were treated initially and this has
soured the relationship. You would like to continue but you may need some persuading.
You know that your old firm would take you back tomorrow in a more senior position.
Role profile: management consultant
Overall purpose
To provide advice to clients with which they are completely satisfied and which leads to
measurable improvements in their business and repeat business for the firm.
Main activities
1. Analyse client requirements and determine most appropriate consultancy
approach to meet these.
2. Prepare and deliver proposals and presentations to clients in order to sell
consultancy assignments.
3. Conduct assignments as a member of a consultancy team, analysing and
diagnosing requirements, issues and problems, and developing solutions and
proposals in conjunction with clients.
4. Prepare and present reports to clients, with clear and actionable
recommendations that flow from the analysis and diagnosis.
5. Provide assistance as required to clients in implementing recommendations.
6. Maintain records of consultancy assignments.
7. Keep up to date with developments in field to ensure that advice represents
current good practice.
Competency heading Summary definition

Results orientation The desire to get things done well and the ability to set
and meet challenging goals, create own measures of
excellence and constantly seek ways of improving
performance.
Client focus The capacity to understand the business needs and
priorities of clients and ensure that their needs and
expectations are met or exceeded.
Influence and persuasion The ability to convince others to agree on or to take a
course of action.
Written communication The ability to communicate clearly in written proposals
and reports.
Oral communication The ability to communicate clearly in meetings,
presentations, etc.
Team orientation The ability to work cooperatively and flexibly with other
members of the team, with a full understanding of the
role to be played as a team member.
Problem solving The capacity to analyse situations, diagnose problems,
identify the key issues, establish and evaluate
alternative courses of action and produce a logical,
practical and acceptable solution.
Technical skills Possession of the knowledge, understanding and
expertise required to carry out the work effectively.
Creativity The ability to originate new practices, concepts and
ideas.
Interpersonal skills The ability to create and maintain open and constructive
relationships with others, to respond helpfully to their
requests and to be sensitive to their needs.
5. Learning about performance management at Gamages
The case
Gamages is a long-established department store in Oxford Street. After a period of
decline, it was turned round a few years ago under the leadership of a dynamic and
charismatic new chief executive whose aim was to make it a customer-driven
organization. A creative approach to people management played a key part in the
corporate renewal programme. Particular attention was paid to the leadership skills of
line managers. The role of sales associates was redefined, with much more attention
being given to their customer service skills. As the chief executive said: We sell high-
quality merchandise at above average prices; our customers therefore demand high
levels of service. As the value statement of the store emphasized, customers want great
choice, good value and service excellence.
Regular surveys had shown that levels of staff engagement and commitment had
risen steadily in the last four years and the rate of labour turnover had decreased. It was
noted that commitment levels were significantly higher amongst those staff who had
been with the store for three years or more. A revised performance management
process had been introduced two years ago and this also indicated that the ratings and
assessments of potential were higher for staff with three or more years service.
Gamages is now opening a large new store in Birmingham that will have about
22 new managers and team leaders. Effective performance management is regarded as
an essential component in creating a successful enterprise. Close attention will have to
be given to the training of the managers and team leaders. The scheme in the London
store had been introduced with great care but there was room for improvement, and it
was decided that a fresh start should be made in Birmingham.
The task
You are the head of learning and development at Gamages and have been asked to
prepare recommendations on the guidance and training in performance management
process and skills that the managers and team leaders in the new store will require. This
involves:
1. Setting out the learning objectives.
2. Advising on the learning events and processes required to achieve those objectives.
3. Making recommendations on how the effectiveness of the performance management

system should be evaluated.
6. Developing a performance culture at the Harding Trust
The case
The Harding Trust is a not-for-profit organization established 10 years ago that arranges
employment for people with disabilities. The names of those ready for employment are
supplied by local authorities or disability charities, and case officers of the Harding Trust
find jobs for them with local employers. The case officers monitor the progress of those
they place for a number of months to ensure that they are settling down. The Trust
enters into contracts with local authorities and other organizations to provide these
services, and these contracts are the major source of finance, although there is some
income from appeals and legacies. The contracts department is responsible for
identifying potential contracts, responding to requests for help from authorities,
negotiating contracts and ensuring that they run smoothly. There is a small fundraising
department but the majority of the 450 staff are case workers and their managers who
work throughout England and Wales from district offices.
The Harding Trust is part of what is sometimes called in the charity world the
contract culture. It is in effect competing for contracts with other organizations such as
Remploy and the Shaw Trust. The chief executive has often said that the Trust is not a
business but has to be business-like. The chairman of the trustees, a businessman
himself, says that the Trust is a business like any other business and must be managed
as such if it is to survive and thrive.
Although the trustees are not supposed to get involved in day-to-day
management, they are concerned with policy and the chairman believes that the Trust is
under-performing. After an extensive programme of visits and discussions he is
convinced that it is necessary to develop a high-performance culture. He has therefore
asked the director of the Trust to prepare recommendations for the trustees.
The Trust director works with the director of contracts to examine ways in which
operational systems could be improved, but has asked the director of HR to investigate
what can be done as far as people management activities are concerned. After initial
consideration, she suggests that there are four main areas that should be reviewed to
see how their contribution to developing a performance culture could be improved.
These are:
Learning and development on the whole this is working well under the guidance
of the head of learning and development.
Talent management again, the head of learning and development has made
considerable progress in introducing a talent management programme.
Performance management there is a long-established performance appraisal
scheme but it is not particularly effective (line managers and staff are equally
unenthusiastic about the rather bureaucratic system).
Contingent pay at present pay progression within grades is solely through a
pay spine related to length of service; the notion of performance pay has been
mooted (and is supported by the chairman of the trustees), but the director of the
Trust and the majority of the senior managers are dubious about how well it
would fit the Harding Trust culture and whether it would in fact make any impact
on performance.
Following a discussion with the director and the chairman, it was agreed that the review
should concentrate initially on: 1) developing a performance management system to
replace the existing appraisal scheme; 2) considering the case for or against introducing
a performance or contribution-related pay scheme.
The existing performance appraisal scheme has the following features:
Objectives are set at the beginning of each year.
An annual performance review takes place to compare results with objectives.
Performance is rated by the manager on a five-point scale.
Recommendations are made on any training needs.
A four-page form is completed by the manager, reviewed by his or her manager,
and then sent to the HR department to be filed.
Anecdotal evidence suggests that managers are reluctant to appraise and that staff are
generally more demotivated than motivated by the process, which they perceive to be
overly judgemental. The training recommendations are not very helpful and ratings tend
to cluster around the central point. Mangers generally lack coaching and feedback skills.
A member of the HR department quoted a textbook that described performance
appraisal as being too often a dishonest annual ritual and said that this description
summed up the situation at the Harding Trust very well.
The task
As the director of HR, prepare a paper to be submitted to the trustees that sets out:
1. What needs to be done to develop a performance culture.
2. The role of a performance management system in this process.
3. The business case for introducing a new performance management system.
7. Developing performance management at Help the Children
The case
Help the Children is a national charity that promotes the well-being of children, providing
support, advice and services and addressing the needs of those who are disadvantaged.
It conducts a considerable amount of case work in association with social service
departments to deal with problems involving children.
Its headquarters is in Camberwell, south-east London, where there are 220 staff
dealing with policy, fundraising, control of regional operations, finance, HR and
administration. There are six regions in England and Wales, each controlled by a
regional director and staffed by care workers who deal with cases and provide various
kinds of childrens services. The regions employ 380 staff, including team leaders, care
supervisors and administrators. The charity recognizes a trade union and about 65 per
cent of staff are union members. Relationships between the charity and the union are
generally good, although they have soured a little recently following an efficiency
programme that led to some dismissals and redundancies. The leading union
representative is a long-serving care work supervisor who is generally reasonable but
can take a strong line when roused.
The charity had a performance appraisal scheme up to two years ago, but this
has been allowed to decay and is largely ineffective, lacking support from line managers
and the trade union. A new director of HR has been appointed and has persuaded the
chief executive that it needs to be replaced with a best practice (her words)
performance management system.
A working party has been set up consisting of the HR director (in the chair), a
regional manager, the director of fundraising, the HR manager (regional operations), the
chief accountant at headquarters, the leading union representative and two other union
colleagues, and two non-union staff members (an accounts team leader and an
administrative assistant). An external consultant specializing in performance
management was retained to advise the working party.
At the initial meeting of the working party the consultant was asked to outline a
best practice performance management system. She tactfully rejected the idea that
there was any such thing as universal best practice, and emphasized that whatever was
done must fit the context and culture of the organization. However, she did say that there
were a number of typical good practices that the working party might like to consider and
adapt to the circumstances and requirements of Help the Children. These included a
performance and development agreement between the manager and the individual,
setting out agreed objectives and competency requirements and a performance
development plan. It would also establish processes to ensure that performance was
managed and developed throughout the year, using feedback and coaching as required,
along with an annual review and assessment meeting that provided scope for further
feedback and a dialogue about development needs. A choice could be made on whether
or not there should be some form of rating of performance.
A discussion then took place on what was needed at Help the Children. The
following comments were made by the more vocal members of the working party:
The regional director said that he saw no point at all in having a formal
performance management system. In his region and all the others, there were
regular supervisory meetings at which team leaders reviewed the cases
conducted by individual care workers and discussed how they were performing.
That was quite sufficient.
The HR manager said that these supervisory meetings did not go far enough. For
example, they did not include any formal discussions of development needs.
The director of fundraising said that she already set her fundraisers targets and
reviewed their performance against them. Wasnt that enough?
The HR director pointed out that while in both the regional and fundraising
activities, development of some members of staff might be covered up to a point
by existing procedures, this left out many support and administrative staff.
The chief accountant said that he was already managing the performance of his
staff effectively and saw no benefit in the time-wasting business of conducting
performance reviews.
The leading trade union representative questioned the charitys motives in
wanting to introduce this scheme. He thought that it was intended simply to
create excuses to discipline staff by collecting and using evidence from
performance assessments against them.
A trade union representative said that her experience of the old system meant
that she did not trust managers to make fair assessments.
A member of staff said that the old scheme clearly showed that managers hated
conducting appraisals and werent very good at it anyhow. She came out of her
meetings thoroughly demotivated.
Another member of staff agreed. He was not convinced that the old scheme was
supported by managers, and doubted that a new scheme would be any different.
The HR manager said that she was opposed to any form of ratings, which in her
experience elsewhere were inevitably subjective and inconsistent. The whole
performance review meeting could be dominated by the fact that it would end
with a rating, thus severely limiting the forward-looking and developmental focus
of the meeting, which was all-important. She strongly objected to any form of
forced distribution. Her doubts were echoed by the trade union representatives.
After the meeting, the HR director, somewhat chastened, talked to the consultant and
asked her to produce a report that set out how a performance management system
might be developed and introduced that dealt with the objections made by the working
party members.
The task
As the management consultant:
1. Define the objectives of a performance management system that would fit the needs
of Help the Children.
2. Set out the main features of the scheme and why they are necessary, dealing with
any points raised at the meeting that would affect the scheme.
3. Prepare recommendations on how such a scheme could be developed and
introduced so that the problems raised at the meeting could be overcome.
8. Dealing with under-performers at Polymers UK
The case
International Polymers is a US corporation (the original centre for research and
development) with subsidiaries in a number of countries, including the UK. Its value
targets are to:
achieve outstanding financial performance;
achieve customer satisfaction via innovation;
be a role model in the community;
be the best specialty chemical company to work for.
The UK company (Polymers UK Ltd) has been in existence for three years. The
company was established as the base for the European marketing and manufacturing
activities of the parent company. It has taken over responsibility for the further
development of the three products with which it is concerned: Mycellene (liquid crystal
technology), Oledine (electrically conductive polymers) and Therlastene (thermoplastic
elastomers).
Polymers UK is located in Southwell and has just over 650 staff R&D,
manufacturing, marketing and administrative.
The performance management system for staff is based on the parent companys
scheme with some variations; for example there is no forced distribution of ratings. It
involves agreeing objectives, defining competency requirements and reviewing
performance at an annual meeting, although it is emphasized that performance
management is a continuous process, not a once-a-year event. The performance review
involves rating staff on a four-point scale (A, B, C and D in descending order of merit).
The rating informs performance pay decisions. The distribution of ratings at the last
review was A = 6 per cent, B = 66 per cent, C = 26 per cent and D = 2 per cent. With the
exception of this central tendency in the ratings, the system works reasonably well. The
company has a disciplinary procedure but there is no capability procedure. Managers
have been trained in carrying out their performance management duties, and this has
included a brief session on dealing with under-performers.
Polymers is having to contend with stiff competition in the midst of an economic
downturn. It has not been performing too well recently in terms of sales or productivity.
The parent company is not happy and is concerned that not enough is being done to
deal with the under-performers. It has adopted forced distribution and a hank and yank
system: that is, dismissing those employees who are assessed in the lowest category.
The chief executive is certain that managers are not dealing with under-
performers very well, if at all, as the distribution of ratings and the total absence of
disciplinary action for incapability seems to indicate. He is convinced from his contacts
with managers that there are a number of examples of under-performance and he wants
something done about it that will satisfy the parent company. He therefore asks the head
of HR to prepare recommendations on what action should be taken.
The task
As head of HR, prepare a brief report to your chief executive containing:
1. An analysis of the factors that should be taken into account.
2. A diagnosis of the causes of any problems.
3. Arguments for and against forced distribution and hank and yank.
4. Recommendations on the action to be taken.
9. Using competencies at the Thames Building Society
The case
The Thames Building Society has a head office in Oxford that contains the operations,
marketing, product development, corporate planning, finance, IT, HR and legal functions.
The Societys 180 branches are divided among four regions, each controlled by a
regional director who reports to the operations director. Regional offices are small but
they include a regional HR manager who reports to the head of HR in the centre.
Regional HR managers are mainly concerned with recruitment and dealing with
employment issues, which have to be referred to them by branch managers. Training
and pay administration is handled by head office, which has just over 500 staff. There
are about 1,800 staff in the branch network.
There is a well-established performance appraisal scheme, which is in effect an
updated management-by-objectives system: in other words, performance is judged
against the achievement of objectives, which are quantified as far as possible.
The head of HR believes that the scheme should be modified to cover the
assessment of levels of competency as well as objectives. A competency framework
does exist that is used for learning and development and recruitment purposes. She
asks the head of learning and development to advise her on what could be done.
The task
As head of learning and development, prepare a report covering:
1. The advantages of working with a competency framework in a performance
management system.
2. Any problems that might be met in developing and introducing competencies into the
system.
3. How those problems might be overcome.
10. Performance management problems at Towers

Pharmaceuticals
Towers Pharmaceuticals UK is based in Farnborough and is a subsidiary of a US parent
company. Towers manufactures under licence a range of drugs developed in the United
States. There are 400 employees carrying out technical (laboratory), manufacturing,
sales, distribution and administrative duties. A performance appraisal system developed
in the United States was introduced two years ago.
The stated aims of the system were to:
promote strategic alignment and respond to business needs;
facilitate clear communication and understanding of objectives;
ensure that levels of performance were assessed regularly to determine areas for
improvement and identify under-performers;
reinforce high-performance attitudes.
The system runs over the calendar year as follows:
The companys overall budget is set in January; from this the most senior
managers objectives are established and are then cascaded down to managers.
Objectives for individuals are set by their managers once a year.
Between November and January a review meeting takes place at which staff are
appraised by their line manager on how well they have achieved their objectives
and rated on a scale of one to five.
The manager completes an appraisal form that is sent to the HR department.
No managers or other members of staff were consulted on the system, which was
imported as a whole from the parent company. They were issued with a handbook
prepared in the States that described the scheme, and most managers, but not their
staff, attended a half-day course on how they should operate it.
At the end of the second year an outside consultant was asked to analyse the
impact of the scheme. She conducted a number of focus groups and came to the stark
conclusion that it wasnt working well at all, primarily because line managers were not
interested in doing it, or were not capable of doing it, or both. She reported the following
typical comments from staff:
Some managers do the job fairly well; others just do the job to get it over.
Line managers are used to being told what to do, and we are trying to move
away from that and give them free rein. They cant actually deal with that, they
cant cope with that.
Youve just done your job ordinarily and you dont think twice about it. You dont
need praise.
My team leader doesnt know us. And he marks us down on things. But he
doesnt speak to anyone on the section. So how can he mark you personally
when he doesnt know you?
I know what my job is but I couldnt tell you what my objectives are.
I dont think anyone here could really link their objectives to the critical success
factors.
If anything goes wrong in my area, its always not: How shall we fix it? but: Who
did it?
How does it work for me? Not very well.
I dont think anything new comes up at the appraisal. Youre further away from
the occasion and the discussion is more diluted. There shouldnt be that many
surprises. You should be aware of whats happened. Appraisals are just a
formality.
Initially I thought it was a worthwhile exercise but I now think its just total
repetition. I know before I go in what conversation Im going to have.
The task
You are the HR manager and have been asked to:
1. Assess how this negative situation came about.
2. Make proposals on how the problems with line managers might be overcome.
3. Consider any changes to the present system that might be required.
11. Improving performance at White Knight
The case
White Knight is a well-established mail order catalogue company with its headquarters
and main distribution centre in Crawley. There is a call centre in Brighton where there is
a relatively good pool of labour, especially out of season when the centre has to recruit
large quantities of temporary staff to handle the pre-Christmas peak. The function of the
call centre is to receive and process customer orders and to deal with customer
enquiries and complaints. Order fulfilment activities take place in Crawley. The approach
adopted by the company to customer service is named QED: Quality and Efficiency
Driven.
Business is good and, on the whole, getting better. There have, however, been
some problems with the performance of the call centre. This is measured by a range of
metrics, the most important ones being service levels in terms of the time within which
callers are answered, the duration of calls (average talk time) and the proportion of
customers who hang up because they are tired of waiting for a response. In addition,
some calls are monitored by quality assurance, and interactive voice response (IVR)
software is used to obtain customer feedback at the end of a sample of calls. Standards
are set for the three main metrics: for example, 80 per cent of calls to be answered
within 20 seconds, average talk time no more than two minutes, no more than 3 per cent
of customers hanging up.
The call centre is not meeting these targets on average, service levels are
running at less than 70 per cent, average talk time is nearly three minutes and about 6
per cent of customers are hanging up. Customer satisfaction levels are declining.
Something has to be done. The director of operations asked the recently appointed head
of HR for his advice. The latter briefed the HR business partner, who had also just joined
the organization and was responsible for the call centre and distribution (previously
without specific HR support), to look into the problem and suggest solutions.
The HR business partner established the following facts:
The call centre employed 250 permanent full-time agents working shifts, 60
permanent part-time agents, also on shifts, and in the busy seasons such as pre-
Christmas up to 200 temporary agents, most of them part-time.
The centre relied on the permanent staff to maintain the standards and to mentor
the temporary staff in an informal and largely unstructured way.
Rates of pay were comparable with similar jobs in Brighton.

All employees were on a flat rate; there were no provisions for relating pay to
service, performance or skill.
Although there were outline job descriptions for agents, no attempt had been
made to produce a specification of the competencies and personal
characteristics that would be most suited to the work.
It was evident from conversations with managers and team leaders, and from an
employee-engagement survey conducted by the HR business partner, that the
quality of leadership was inadequate.
The task
As the HR business partner:
1. Carry out a diagnosis of the problems based on the above analysis.
2. Consider the various approaches available to improve performance.
3. Prepare recommendations on a performance improvement strategy and how it
should be implemented.
12. Performance management problems at Zenith Systems
The case
Zenith Systems Ltd provides hardware and software services customized to clients
requirements. The company is based in Glasgow and has six departments: information
systems, services, specialized support staff, marketing, finance and HR. The company
has grown very rapidly since it was established three years ago, initially with the close
guidance and support of its parent firm. There are 660 employees, most of them
recruited during the last two years. The nature of the business means that employees
have to be technically adept and highly flexible in response to specifications of what their
clients want. They work in project teams that can vary in membership, forming and
disbanding as projects require.
The strategic goals of the business are to achieve sustained growth by the
development and marketing of innovative systems and the provision of ever-improving
levels of service to clients. The nature of the business clearly indicates that competitive
success can only be achieved and sustained by developing and maintaining a human
capital advantage. A high-performance work system (HPWS) has been introduced, and
priority has been given to the introduction of rigorous recruitment and selection
procedures, extensive and relevant learning and development activities, incentive pay
systems and performance management processes. A considerable amount of work has
also been done on developing a human capital management (HCM) approach.
The chief executive recently retired and a successor has been appointed from
within the company. The HR director, who has always got on well with the new chief
executive, thought that this presented him with an opportunity to do something about the
performance management process. This had been introduced some time earlier and was
a fundamental part of the HPWS, but the HR director did not think it was working very
well.
The primary objective of performance management at Zenith was defined as
being to improve business performance by raising each individuals effectiveness. It
was defined for staff as follows:
Performance management is a continuous cycle of discussions between you

and your manager to plan and review your work and your development. By
sharing with your manager the responsibility for managing your work,
performance management is designed to encourage you and help you increase

your capabilities. Performance management helps people both individually and
in teams to grow their skills, improve their performance continuously and be
rewarded fairly and according to business performance. It also therefore helps
to strengthen and grow the business.
The HR director got his learning and development manager to carry out an investigation
into how performance management was working. After a number of discussions with
managers and staff, she confirmed that it was not working very well. Some managers
were good at it and keen to use it as part of their normal process of management. The
majority, however, were not particularly interested and regarded it as a chore, so that if
they did it at all, they did not do it very well. She reviewed the way it was introduced and
found that a detailed and well-written booklet had been produced giving guidance on the
process to all concerned, and all managers and team leaders had been given one days
training in performance management skills.
She analysed the ratings given by managers in each department on a five-point
scale, from E (the lowest for unacceptable performance) to A (for exceptional
performance). She found that they were very skewed to the higher levels 11 per cent
were A, 74 per cent were B (highly effective performance),12 per cent were C
(acceptable performance), 2 per cent were D (improvable performance), and 1 per cent
were E. She also analysed the distribution of ratings in each department and
established that there were considerable variations as shown in the table below.
Departments Rating percentages

A B C D E
Information systems 12 80 7 1 0
Services 10 70 15 4 1
Specialized support staff 9 60 24 6 1
Marketing 15 60 18 5 2
Finance 5 65 20 8 2
HR 5 40 55 0 0
Finally, and as a matter of interest, she looked at the ratings given to personal assistants
and secretaries and to short-term contract staff. The former were overwhelmingly rated
highly 30 per cent A, 65 per cent B and 5 per cent C (no D or E ratings). On the other
hand, short-term contract staff were rated considerably below the others 2 per cent A,
45 per cent B, 41 per cent C, 7 per cent D and 5 per cent E. It appeared on the face of it
at least that there was quite a lot of favouritism around.
The learning and development manager reported her findings to the HR director,
who decided that this had to be taken up with the board. His recommendation that a
survey of staff views about performance management should be conducted was agreed.
Meetings with managers in each department were then held to explain why the survey
was being carried out and the form it would take. The survey identified departments and
occupations (manager, team leader, systems analyst etc) but the names of individuals or
their managers were not disclosed. The survey was completed by 72 per cent of the staff
with a slightly higher proportion of managers and team leaders (81 per cent) and a
slightly lower proportion of short-term contract workers (64 per cent). It was not felt that
these variations seriously affected any conclusions that might emerge from the survey.
The results of the survey in terms of the percentage of all staff responding to each of the
opinion headings are summarized below.
The task
As learning and development manager, prepare a paper for the HR director setting out:
1. Your conclusions on the implications of the analyses.
2. What needs to be done to overcome any problems they revealed.
3. Any difficulties that might be met in making changes and how they could be
overcome.
Please indicate with a tick the extent to which you agree or disagree with the following statements about
performance management as it applies to you personally
Statement Strongly Slightly Slightly Strongly

agree agree disagree disagree
Assessments of my performance are fair 25 55 12 8
I am not satisfied with the way in which my 18 43 27 12

manager/team leader conducts my performance
review
I feel motivated after a review meeting 8 60 26 6
I do not understand how my manager/team 22 31 29 18

leader decides on my performance rating
I get useful feedback from my performance 16 41 37 12

management review
My manager/team leader seems simply to be 19 27 45 9

going through the motions at my performance
review
The performance process used in the company 9 41 37 14

works well
Managers and team leaders give higher ratings 2 12 24 62

to people they like
The objectives agreed with my manager/team 28 56 10 6

leader are realistic and achievable
I do not feel that I am given an adequate 16 41 25 18

opportunity to have my say in performance
review meetings
Performance management helps me to develop 13 41 36 10

my skills and potential
Performance management clarifies what I am 17 35 34 14

expected to achieve

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PERFORMANCE MANAGEMENT CASE STUDIES

1. Introducing performance management at Acme

The HR director is concerned with national union negotiations, terms and

2. Performance management at Barsetshire County Council

The people strategy statement

3. Increasing the engagement of engineers at Framley

4. The performance review meeting at French and Reynolds

Performance management role-playing exercise

Brief for practice leader

Competency heading* Assessment by:**

* headings defined in the role profile at the end of this brief

Role profile: management consultant

Competency heading Summary definition

Brief for management consultant

* defined in the role profile at the end of this brief

Role profile: management consultant

Competency heading Summary definition

5. Learning about performance management at Gamages

3. Making recommendations on how the effectiveness of the performance management

6. Developing a performance culture at the Harding Trust

3. The business case for introducing a new performance management system.

7. Developing performance management at Help the Children

8. Dealing with under-performers at Polymers UK

9. Using competencies at the Thames Building Society

10. Performance management problems at Towers

11. Improving performance at White Knight

Rates of pay were comparable with similar jobs in Brighton.

12. Performance management problems at Zenith Systems

Performance management is a continuous cycle of discussions between you

performance management is designed to encourage you and help you increase

Departments Rating percentages

Statement Strongly Slightly Slightly Strongly

Assessments of my performance are fair 25 55 12 8

I am not satisfied with the way in which my 18 43 27 12

I feel motivated after a review meeting 8 60 26 6

I do not understand how my manager/team 22 31 29 18

I get useful feedback from my performance 16 41 37 12

My manager/team leader seems simply to be 19 27 45 9

The performance process used in the company 9 41 37 14

Managers and team leaders give higher ratings 2 12 24 62

The objectives agreed with my manager/team 28 56 10 6

I do not feel that I am given an adequate 16 41 25 18

Performance management helps me to develop 13 41 36 10

Performance management clarifies what I am 17 35 34 14

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