Ananya Mukherjee, E-05

EXECUTIVE SUMMARY OF THE CASE:   

                             
In 2011, Telespazio, a leading company in the aerospace industry, was dealing with the
implementation of its new organizational model, a global matrix structure that the firm had
adopted in 2010 to foster the process of international growth and integration. The challenge for
the HR team was to align the HRM system to the company’s new demands in order to improve
strategic and organizational change. In this scenario, the case study focuses on the enhancement
of the PAT program, the performance appraisal system that Telespazio first introduced in 2005.
The case study is divided into two sections. Part A illustrates the existing performance appraisal
program (what is assessed, who is in charge of the assessment, the steps involved). The first part
of the case ends in April 2011, when the HR team meets to evaluate the strengths and
weaknesses of the system. Part B describes the major revisions that were made to the appraisal
program, and brings a new challenge for the HR team: extending the implementation of the
revised appraisal system worldwide to all of Telespazio’s foreign subsidiaries by the end of
2014. This case study aims to take a look at the complexities involved in the improvement of a
performance appraisal program in a company undergoing an extensive strategic and
organizational change. It focuses on the assessment of employees operating within project-based
and matrix organizations. This is a critical issue, as ineffective evaluation methods can lead to an
ambiguous understanding of employee roles within organizations with a dual line of authority.
This aspect has rarely been examined in case studies. Moreover, the case provides an opportunity
to debate over a common dilemma related to performance appraisal systems: how to ensure
equity and the selectivity of ratings. The case also allows us to look at a critical issue in
Multinational Companies (MNCs): how to harmonize and transfer performance appraisal
systems worldwide.

PART I- The Previous PMS (2011)

In a letter to the employees, Telespazio’s CEO Calro Gualdroni addressed the people as to why
the Performance Management system is such an integral part of the company and specifically
mentioned :

1. Evaluations pertaining to performance should be done before first half of April 2011, that
is 15th of April.

2. Fresh objectives to be documented in consultation with the supervisors should be set and
documented before 30th April, 2011.

They had a ever-increasing boost of and in the overseas market which called for a new matrix
model for the organization.

The characteristics of the model were:

 Double Reporting, both regional and business
  Responsibilities allocated on dual basis- central, local
 Simultaneous business and operations strategies
 Opportunities for enhancing synergies and taking advantage

A major challenge however, in this model, for the HR was the case of dual reporting.

The PMS system was aimed at the following values:

The system was two-folds:

1. To achieve positive results for the organization

2. To promote professional development

The Goals and Objectives were set:

1. To be assessed on facts, figures and from a distance to reduce bias

2. To not just reach targets but reach them correctly
3. Evaluation to take place via a three-rating scale

The scale of evaluation for middle management, professionals, specialists etc:

 Not Achieved
 Achieved
 Exceeded

The scale of evaluation for employees and operators are:

 To be improved
 Outstanding
 Standard

The Competency Management System has :

 Has both organizational and professional skills

 Has separate skills associated with levels