Performance & Compensation Case Analysis Assignment

Instructions:
 Carefully read the following Case Studies and prepare your answers to the given questions in
adherence to provided word limits and marks
 Relate your answers to the taught concepts provided in the cases
 It is a group assignment and all members will be evaluated as a group
 Two deliverables are required an MS Word report with answers uploaded in BB and MS
Powerpoint presentation only for class discussion
Case Study 01

In early days BROOKLEN TESCO never regard monetary gifts as a motivator and had no bonus
system. BT is a workplace that empowers employees and offers them challenging careers.

When 20 managers asked to pay for performance program tying some percent of their
employees’ pay to their team’s performance to increase productivity and focus employees on
team rather than individual performance, the organization agreed. Managers set a series of
production goals for several teams, and based their members’ pay on three levels of rewards.
Managers believed that 90 percent of the teams could reach Level 1 goals, 50 percent would
reach Level 2, and only 10 to 15 percent could reach the highest Level 3 goals

But the managers were wrong. For the first six months, almost all of the teams reached the two
highest reward levels. Because this required paying employees more than expected, managers
raised the goal levels. This new focus on high performance and rewards led high performing
teams to prevent less experienced workers from joining them. Less employee movement across
teams meant that less knowledge was shared or transferred among employees.

As more workers complained and employees began to focus on doing what they needed to do to
earn the rewards rather than on the many other things that would help the company, managers
tried redesigning the system. Troubles continued to mount for three years until BT scrapped the
entire experiment. When it did, relieved workers threw management a party.

As one expert said, “The BT experience shows the more you focus people on monetary
incentives, the more you use money as a goal and a driver, the more dysfunction you have.
We’ve seen the same thing on Wall Street.”

Questions:

Q1. What do you think were the biggest factors in the failure of the incentive program at BT?
(Word limit 150 words – 02 marks)

Q2. Why might employees prefer to have only fixed pay and no incentive pay if the incentive
pay system meant that they could earn more money? (Word limit 150 words – 02 marks)
Q3. What would you recommend that BT try instead of pay for performance to accomplish its
initial goals of increasing productivity and focusing employees on team rather than individual
performance? (Word limit 150 words – 02 marks)

Case Study 02

A process of performance management is developed in companies to better shape how

employees execute their job responsibilities and complete their work. Ideally, employees should
feel comfortable with this process, believing that the communication occurring between
managers and workers facilitates the completion of important workplace goals. Unfortunately,
many employees become dissatisfied with how their organizations encourage goal-directed
behavior, which can result in poor job attitudes, decreased motivation, and reduced effort on the
job. These negative factors lead some companies to seek alternative ways to design and
implement performance management systems so that employees are encouraged to work hard in
their jobs.

Zenith Mutual Insurance Company (ZMI) is one such company that has actively improved its
performance management approach, and the results have been very encouraging. Employees
were initially dissatisfied with the feedback and goal-setting approaches that were being utilized
to manage job performance, so company leaders decided to involve employees in the redesign
efforts to create a more viable program that would be satisfactory for all the parties involved. An
outside consultant started the process by interviewing top leaders in the company, and focus
groups were used to solicit feedback from various other members of the organization. By
utilizing a more participative and inclusive approach, the company was able to identify the
problems with the current performance management system and generate greater support for the
proposed changes that would ultimately fix these issues. This case illustrates how important
employee participation is in the effective management of human resources, particularly when
developing a viable performance management system.

Several key changes were made to the performance management system based on the feedback
received from managers and employees. In particular, inconsistencies in the administration of the
performance management system, problems with the rating techniques and forms, and various
challenges linking pay to performance were specifically targeted as part of the redesign effort.

Such reflection and self-assessment prompted a number of specific improvements to

management of job performance within the company. Evaluations are now based on narratives,
various metrics of accountability, and job goals. Further, feedback is provided to employees on a
quarterly basis, compensation is more strongly linked to individual effort, and the performance
management system functions in concert with the other elements of human resource
management. The changes made to the performance management processes at ZMI Company
demonstrate how human resource professionals can work with other staff members to create a
system that excites employees and, ultimately, yields greater job performance.

Questions

Q1. Discuss how this case illustrates how greater support for a performance management system can
be developed through employee participation. (Word limit 150 words – 02 marks)

Q2. Identify some of the ways that performance management systems can be improved based on the
experiences at ZMI (Word limit 150 words – 02 marks)