Case Studies

Case studies exploring fascinating additional case studies from the author demonstrating HRM in practice around the world. From the internal vs. external candidate debate to employer branding abroad, learn how companies of all sizes approach different aspects of HRM.

  • Conducting Performance Appraisals at National Office Supplies

You have recently been appointed as HR advisor for National Office Supplies, a provider of stationery and office furniture for businesses throughout the UK. Whilst based at their headquarters in Hertfordshire, part of your role is to visit the regional sales offices and to audit their HR processes and practices. The company has experienced sound levels of growth in recent years and has experienced growth in turnover of one-third in the last three years. Prior to your appointment, the HR manager worked alone, aside from an administrative assistant, involved primarily in advising regional managers on recruitment and selection, conducting induction and ensuring that the company’s policies (such as health and safety and equal opportunities) comply with legislation. Typically, she would only visit regional offices to attend disciplinary or grievance meetings. Whilst the company has broad guidelines on how each department is managed, the general attitude among senior management at HQ has been that as long as each office is performing adequately, they are happy not to intervene or get too involved at regional level unless directly asked to do so. However, following the recent growth of the firm from a relatively small, tight-knit organisation to a larger, more bureaucratic company, the senior managers are keen to introduce a ‘performance culture’ into the firm and to formalise and standardise its key HR processes.

You have been asked to visit all the regional offices to observe their performance appraisals (PAs) being conducted as the basis for writing a set of guidelines that can be circulated to all regional sales managers as ‘best practice’. The current guidelines simply state that performance appraisals should be conducted at least annually. Regional managers are provided with a pro forma which they are advised to use to prepare for and record the appraisal. This is downloaded from the Internet by the HR administrator. Each year, regional managers are given a sum of money to distribute to their teams in recognition of performance but how managers do this is left to their discretion. Given the sound financial performance of the firm in the previous year, managers have been given £3000 this year to pay as bonuses, although this can rise or fall depending on how well the company as a whole has done over the previous year.

The South West Regional Office

Alex Scally is the regional sales manager for the south west, running from the foot of Cornwall in the west to Bournemouth in the east and Gloucester in the north. She is a gregarious, extrovert character who is very hard to dislike. She runs her office in a very informal manner and is well liked by her team. A chat with one of her team suggests that she is very good at ‘putting an arm around your shoulder if things aren’t going so well’ and for being fulsome with her praise when things do go well. Like her management style, her appraisals are best described as an informal chat. She encourages her team members to do much of the talking, outlining things they think they’ve done well and that they excel at and ways they could improve their sales. The mood is typically relaxed, upbeat and positive. Alex doesn’t write anything down and appears to have no paperwork to refer to during the appraisal. Alex takes the view that appraisals are ‘no big deal’, downplaying their significance partly because she doesn’t want them turned into a focus for criticism or praise. She views appraisals simply as an opportunity to reinforce things that were done well and to ‘gee up’ the team. Although there are no formal plans for future action agreed at the meeting, she takes the view that all other things being equal, if people do better than the previous year then they are performing well. Alex tells you that she makes decisions about bonuses based on gut instinct, not by referring to ‘facts and figures which don’t show the full picture’. Matt Berninger, who the manager refers to as the most natural salesman she has ever come across (partly because, in Alex’s words, he can ‘talk the talk’), has scooped the lion’s share. Examining the way that the region is divided up between the team, this salesman also happens to have the ‘patch’ that includes Bristol. She says of her decision-making process that ‘usually most of the team are happy with their share, some are just pleased to get anything. Anyway, even if they don’t like it, then it’ll just make them work harder next time’.

The Southern Regional Office

Daniel Rossen is the regional sales manager in the southern area, stretching between Bournemouth, Brighton and Reading. Daniel is an altogether different character to Alex. He is reserved and fastidious in his work and well respected among his colleagues, although one team member comments that ‘he keeps himself to himself’. Daniel views the appraisal process as the focal point on the HR calendar and plans meticulously for each appraisal, collecting and collating performance data that he has recorded and reviewing the year’s performance against the agreed objectives set in the previous appraisal. Having sat in on Daniel’s appraisals (a process he was none too happy about), you note that they largely represent a series of questions fired by Daniel at the appraisee, many of which require simply a one-word answer which the manager records by ticking a box on a pro forma that he has prepared himself. The questions asked of the team members focus on areas for improvement, typically by asking appraisees about why, for example, they failed to obtain or have lost a particular contract. Daniel takes the view that performance can only be improved if previously made mistakes are avoided in future. Reflective of the significance attached to appraisals by Daniel, appraisees seem to be nervous, uptight and defensive, frequently having to justify their activities over the year. Daniel makes his decision over the allocation of bonuses partly on the basis of the number of ticks in the ‘right’ box, along with a consideration of volume of sales generated, although he is keen to stress that he seeks to reward his team not only on the basis of total sales but also on the context and way that those sales have been achieved. This year, the highest bonus was paid to the salesman who in the week running up to his appraisal secured a large order for office furniture. The lowest bonus was paid to Kim Gordon who was on maternity leave for the last three months and who was unable to attend an appraisal. Daniel is keen to stress to you, however, that he makes a point of clearly communicating his decision to employees so that they know he is being fair, but admits to ensuring that everyone gets something, just to keep morale up.

Task

Before you visit the remaining regional offices, you have decided to set out some guidelines based on what you have witnessed at the Southern and South West offices, on the basis of which to assess the way that appraisals are conducted. The intention is to develop these guidelines so that they can be circulated to managers to help them conduct more effective appraisals. You decide to start this process by identifying areas of good and bad practice in the two offices.

Performance management at Marie Stopes International*

Marie Stopes International (MSI) is one of the largest family planning organisations in the world, delivering contraception, safe abortion, and mother and baby care in 42 countries, often working with the poorest and most vulnerable people in the world.

MSI describes its culture as ‘more commercial than a lot of people would expect – It’s driven, it’s professional, and it’s a faster pace than a normal NGO or charity’. Describing itself as a “social enterprise” – a commercial business that is driven to address need through its success’, MSI stresses a ‘progressive and collaborative work environment’ a workforce of ‘passionate, focused, intelligent, high-achieving, talented individuals’.

            MSI’s core values are:

  • Mission-driven
  • Customer-focused
  • Results-orientated
  • Pioneering
  • Sustainable
  • People-centred

            To support the corporate ‘vision’ encompassed in these values, in 2009, MSI introduced a new performance management system to replace a system deemed dysfunctional and which was widely disliked across the organization. This new system – Performance Plus – was initially rolled out in the UK, where MSI has 350 team members across the country, but has subsequently been adopted across many of its international offices to the extent that the process is now well embedded and has become part of the wider organisation’s culture.

Performance Plus is based around a compulsory end-of-year review for all employees, as well as a mid-year review designed to provide employees with an opportunity to discuss their development and career. Employees are asked to set no more than six objectives, agreed with their manager, to be assessed at their year-end review as either ‘achieved’, ‘partially achieved’ or ‘not achieved’. However, in acknowledgement that performance is not always encapsulated within the six agreed objectives, managers are also advised to make a note of any other employee achievements during the year.

Reflecting the importance of both ‘how’ employees achieve their objectives as well as ‘what’ they have achieved, employees are also assessed on how they have demonstrated in the course of their work a range of behaviours that underpin the core values of MSI. To this end, MSI introduced a competency framework identifying 13 ‘team member’ behaviours and 11 core ‘leadership’ behaviours. Employees are expected to identify incidences of how they demonstrated these behaviours but also to be reflective about where they have failed to do so.

Team member behaviours

Leadership Behaviours

Driven

Leading Self

Motivated
  • Develop yourself

Responsive
  • Be accountable; take ownership

Working efficiently
  • Be resilient

Initiative
  • Be a compelling and influential communicator

Commitment

Leading Others

Accountable
  • Insist on excellent

Innovative
  • Lead with authenticity, integrity and empathy

Embracing change
  • Develop others; strengthen, nourish and nurture future talent

Sharing information

Leading MSI

Focusing on learning
  • Focus on customers

Effective communications
  • Consistently deliver world-class performance and results

Team player
  • Be a visionary
 

The performance review also considers information on performance collected through an automated system 360-degree feedback collected from a range of colleagues and direct reports (agreed between manager and team member) to help the recipient identify what they are doing well and should continue to do and what they need to do more of or less of. Again, questions are linked to the behaviours set out in the competency framework.

Based on the assessment against both objectives and behaviours, managers are asked to consider what the team member’s main achievements have been and what has gone particularly well during the review period. Managers must also consider what could have gone better, what has been particularly challenging or difficult, and the skills and abilities that have been developed in the previous year. Considering all of the evidence collated during the review period, and upon reviewing the rating definitions, managers must identify an appropriate indicator of the individual’s overall performance. The ratings are: ‘exceptional’, ‘commendable’, ‘successful’ or ‘improvement required’. MSI expects 10 per cent of employees to fall into the ‘exceptional’ rating; 30 per cent into ‘commendable’; 50 per cent into ‘successful’; and 10 per cent into ‘improvement required’.

Managers are asked to calibrate performance ratings across their team to ensure there is consistency in application of the ratings, both for fairness and equity but also so that reward is commensurate with levels of performance’. Any individual who disagrees with the rating can raise the issue using the organisation’s formal grievance procedure.

Reflecting the view of performance management as a continuous process, rather than one of periodic review, MSI expects managers to hold regular one-to-ones with their employees. Employees are also encouraged to arrange mid-year review with a focus on development and career progression. In 2012, MSI introduced a new talent management framework to be incorporated into its performance management system. The mid-year review provides managers with an opportunity to assess individual potential against the organisation’s ‘potential model’ that measures aspiration, commitment, engagement and performance track record. This assessment informs the employee’s development plan and is also collated centrally to inform talent management activities by classifying employees into a range of groups from ‘under-performer’ (low potential and low performance) to ‘exceptional potential’ (high on both measures).

Performance management at Adidas Group*

The Adidas Group ‘strives to be the global leader in the sporting goods industry with brands built on a passion for sports and a sporting lifestyle’. To this end, the group places emphasis on ‘creating a work environment that stimulates innovation, team spirit, engagement and achievement… by unlocking the talent of our workforce, we bring to life our company’s strategy and drive business results’.

Informing an ‘employer of choice’ approach to people management is a set of core values: Performance, Passion, Integrity and Diversity. This approach reflects recognition that to fulfill the ambition of becoming market leader ‘depends on the potential, dedication, knowledge and performance of our employees and the excellence of our leaders’.

The global performance management system in place at Adidas Group is called ‘The Score’ was rolled out in 2013 and represents ‘the cornerstone of our performance culture’ with the aim of facilitating open and honest feedback on performance and growth opportunities. In its first year, over 91 per cent of eligible employees completed their year-end appraisals. Employees receive regular feedback based on individual business targets, job tasks and further expectations in line with the key principles regarding the way employees are expected to work with the company.

Building on defined development goals, we offer and support employees with targeted development activities both on and off the job that ‘seek to build on their strengths, grow their skills and help them to overcome individual challenges’. Overall, the firm claims that ‘our highest priority is to match individual employee aspirations with our organisational needs’.

Managing performance at Beach House Software

Beach House Software develops computer software for the entertainment industry, including that used in film animation and to create computer-generated images. Beach House was one of the early pioneers in the industry and is still highly regarded both as a provider of innovative new products and as an employer. However, as the demands of film and programme makers grow and competition in the market intensifies, Beach House has begun to see its market share and its reputation in the industry diminish. Broadly speaking, new business for Beach House is generated in two ways. First, it provides custom software designed to the specification of customers. This is typically through the modification of existing products. Second, it develops new, improved and occasionally ground-breaking products which it seeks to establish as industry standards. The former tend to be the company’s ‘bread and butter’, providing the majority of its revenue. The latter, however, is how the company develops prestige in the industry but it provides much more sporadic return for the company. The last significant ‘breakthrough’ product it produced was three years ago and, as a result, the company has seen its competitive edge gradually erode over this time.

As an employer, Beach House typifies the ‘collegiate’ approach to people management that is common in the ICT industry. The company employs 35 workers, approximately two-thirds of whom are directly involved in the core activity of software development. There are two vaguely defined work groups: the first producing customized products to customer specification (locally known as the ‘tweakers’); the second, developing new products from scratch (who refer to themselves as the ‘A Team’). A development manager has oversight of the two work groups but they are largely self-managed. Both groups of workers are highly skilled, possess scarce skills and knowledge and tend to have similar educational backgrounds. Working styles, however, differ between the two departments. New product developers typically work independently on their own ideas, occasionally sharing their work informally or jointly problem-solving. In the past, however, where new ideas have shown potential, much of the team becomes involved in development and share in bonus payments for successfully taking the product to market, although the originator typically takes a greater share of the bonus pot. In the custom product team, knowledge and ideas are shared more widely and workers collaborate extensively, partly out of necessity in order to get the job done. Reflecting this, working patterns are also distinct. Workers in the new product team are very relaxed about timekeeping, often starting late in the morning and working late into the night, although there is no real way of knowing individual working hours. They also make extensive use of the company’s chill-out rooms, often playing pool or videogames for long stretches of time. In contrast, the custom team keeps relatively regular hours and makes more limited use of recreation facilities. This reflects the fact that their work is constrained by tight deadlines. At present, all developers, regardless of the team to which they belong, are paid on the same salary scale and salary tends to reflect length of service.

Despite the laissez-faire management style and the relaxed approach to work at Beach House, rivalry between the two groups has intensified over recent months and usually collaborative working between the groups, previously characterized by a fluid exchange of ideas, has begun to disappear. The ‘tweakers’ have become increasingly dissatisfied with the ‘A Team’, both over their failure to make any substantial breakthroughs in new products over the past few years and resentful of the fact that senior managers appear to treat the ‘A team’ with ‘kid gloves’ and give them preferential treatment despite this failure, particularly the MD and finance director, neither of whom have any substantial technical expertise in the area of software design. They feel that their contribution to the business is largely taken for granted, despite them providing 100 per cent of revenue over recent years.

The development manager has some sympathy with the perception of the ‘tweakers’, yet recognizes the potential of the new product team to make a huge impact on company performance through the development of a single innovation; without such innovation, the demand for custom products would soon begin to decline. He also recognizes that successful new products that make it from development to market are difficult and time-consuming to create.

Task

Senior managers have expressed concern about the lack of new product ideas that have come out of the development team and, subsequently, about the long-term viability of the company. As an HR consultant, they have asked you to design a performance management system for workers in this department.