Details

Case

SPRING FORWARD OR FALL BACK: ISSUES IN NEW APPRAISAL SYSTEM

Muhammad Abdur Rahman Malik

INDUSTRY : Printing

AREA : HRM/OB

ORGANIZATION : Prin Line Limited

LENGTH : 9

LUMS No : 05-787-2019-1

PUBLICATION YEAR : 2019

KEYWORDS:

Appraisal, Compensation, forced curve, Change Management, Organisational Justice.

DESCRIPTION:

Several organisations have implemented and several others are currently implementing changes in their performance management systems. The shift in policies guiding these changes have been from subjective to objective, from absolute to relative, from low to high transparency and from little differentiation among employees to high differentiation . These changes are considered to be beneficial for organisations, as systems based on these practices are believed to motivate employees to put in more effort. Most of the existing cases in HRM literature that have captured these changes have done so from the perspective of organisations and systems. This case intended to describe such a change from the perspective of a star employee, who considered himself to be better off before the changes were implemented. Thus, the case is based primarily on the perceptions of that employee, and not on objective data. Amir, the printing incharge at Print Line Limited (PL), one of the largest printing and packaging firms in Pakistan, has been a star performer throughout his six-year career at PL. The appraisal system at PL was not linked with the compensation system, which in turn was very subjective and based on managers’ discretion. Salary increase and promotion decisions were based on the general impression of employees, resulting in inconsistencies across business units and favouritism. Sara, the HR manager at PL, convinced the top management to revise the performance management systems. The new appraisal system was much more objective and was strongly linked with the compensation system, which in turn was based on a pre-defined forced curve. During the first year after these changes, Amir set quite ambitious KPIs for himself and failed to achieve them due to factors outside his control. This placed Amir in the bottom-most category of employees resulting in no salary increase or a yearly bonus for him. He became visibly disturbed, but unsure about his future course of action. Sara was also thinking about whether to continue with the new system or to revert to some elements of the old system.

LEARNING OBJECTIVES:

• To highlight the problems/challenges related to design and implementation of appraisal systems • To enable students to identify conditions conducive to developing a strong pay-performance relationship • To enable students to understand the importance of SMART goals • To highlight the challenges of change management • To highlight the importance (for HR managers) of looking at things from others’ perspective

SUBJECTS COVERED:

Human Resource Management, Appraisal System upgrade