Managing People and Performance in Organization(MPPO)

Gopal P Mahapatra
E S Srinivas
Vasanthi Srinivasan
Pearl Malhotra
1
MANAGING PERFORMANCE
Why is Managing Performance important?

• Organizations exist for a purpose and create strategies to

translate the purpose in to reality
• When executing strategy there are multiple objectives that
they have to straddle : profitability, innovation, customer
satisfaction, employee engagement
• These multiple objectives help the organization to exist in
perpetuity and the objectives are translated in to
departmental, team and individual objectives.
• With this background, let us look at the case
What can we say about Rainbarrell as an organization?

• Healthy and successful company

– Two quarters of not so good performance (industry wide phenomenon)
– Struggling to adjust compared to competitors
– Randall : an inspiring leader focused on innovation
– Mission : Customer service as a value
– Organizational culture: idea driven, collegial, community oriented (sales to
former employees)
– Organization became lax… needed some focus on tightening its belt
(budget integrity low, ideas received funding, lacks discipline) “Fat and
Happy” (potential for greatness, Ferrari engine that needed an expert
mechanic)
What actions did Hiram undertake?

• Reduction in labour cost

– exiting poor performers through severance packages
– Forcible headcount reduction of 10% across the board with no
financial assistance
• Higher productivity in call centre
– New targets
– Monitoring and peer pressure
– “Wall of Shame”
What actions did Hiram take?

• Increase in on time shipments

– Lack of clarity on what “on time” and “shipped meant” within the
organization
– Using an objective measure –shipped is leaving the company property; on
time is promise made
• Commission on sales to employees
– Current and retired employees to buy products at discount
– Sales people earned commission on full price (straightforward rules and
simple reward system: reduced it to actual price)
– Earlier a complex system consisting of sales, mentoring, prospecting new
clients and keeping the account information current were used. All of this
was subjective.
Hiram’s Intended consequences

• Reduce cost
• Increase productivity
• Make all performance metrics objective
• Keep it simple
• Focus is on money
Unintended consequences

• Negativity in R&D department

• Bean counting rather than creativity – filing patents but commercialization
• Breakthrough product but no budget
• Complaints from current and retired employees –shabby treatment while
placing orders
• Managers fired low level people and protected at higher levels.
• Sales people dissatisfied with the territories and no mentoring
• Shipping not done and employees avoiding responding to customers
• Morale decline
What are the other aspects that we need to look at?

• CEO oversight and governance weak– no common and shared

understanding of what is performance?
• No coordination between the senior management team
• No interdependencies across the actions taken by Hiram
• Communication of goals, expectations of the metrics changes?
• Role of consultants?
What should Rainbarrel do now?

• Immediate damage control by identifying high performing leaders to drive the appropriate
performance culture.
• Management team needs to define clearly the strategic goals for the organization that align
with its culture – both short term and long term
• Two key questions to ask: what do we want employees to do differently to support the
business? Why aren’t they already doing it?
• Seek inputs from employees on ways to reach the goals.
• Communicate the expectations of the organization at different levels
• Align and cascade goal across levels
• Free up budgets with some discretion to managers.
• Hold managers accountable for the goals. Provide support and assistance to do the same.
• Go beyond pay for performance and look at recognition like praise, appreciation
How does
11
a Performance Management System look?

Organisationa
l
objectives

Departmental/team
objectives

Individual
Goals and competencies

Setting of
performance standards

Monitoring and Assessment

Career
Developmen Reward planning
t
Components of Performance Management
Rewards &
recognition
How do rewards & recognition work?

How are people motivated? How do organisations motivate

their employees?
Motivation
Compensation

Recognition
Motivating Work
environment
Employees

Career
development
CHALLENGES IN COMPENSATION DESIGN

• Emphasis on individual or team

• Emphasis on monetary and non monetary
• Emphasis on current and deferred
• Emphasis on global to particular (cafeteria)
• Emphasize short term or long term
• Emphasis on performance or potential
• Emphasis on fixed or variable component