The CEO of an organization and an external consultant collaborated to implement a new performance management system. The CEO announced the implementation of a forced distribution performance management system, where employees were classified into various categories. A global HR team was put in place to design and implement the new system. The first task for the design team was to build a business case of the new system by showing that if the new organizational strategy was carried down to team goals or objectives and team goals or objectives were translated into individual goals, then business goals would be met.

The program was initially rolled out as a year-round people management system that would raise the bar on performance management at the company by aligning individual performance objectives with organizational goals and focusing on the development of all employees. The desired outcomes of the new system included raising the performance level of all employees, identifying and retaining top talent, and identifying low performers and improving their performance. The firm also wanted the performance expectations for all employees to be clear.

The design team received the support of senior leadership by communicating that the performance management system was the future of the firm and encouraging all senior leaders to ensure that those reporting directly to them understood the process and accepted it. They also encouraged senior leaders to use the system with all of their direct subordinates and to demand and utilize output from the new system.

The company's global performance management cycle consisted of the following processes: goal cascading and team building, performance planning, development planning, ongoing discussions and updates between managers and employees, and annual performance summary. Training resources were made available on the company's intranet for managers and individual contributors, including access to all necessary forms.

After the transition into the new system, part of the training associated with the performance management system revolved around the idea that the development planning phase of the system was the joint year-round responsibility of managers and employees. Employees receiving a 3, the lowest rating, had a specified time period to improve their performance. If their performance improved, they were released from the plan, but they were not eligible for stock options or salary increases. If performance did not improve after the second period, they could take a severance package and leave the company, or they could start on a performance improvement plan with more rigorous expectations and timelines than the original action plan.

The company planned to continue reinforcing the needed cultural change to support forced distribution ratings and monitor for and correct any unproductive practices and implement corrective policies and practices.
1. What is your overall impression on the degree of overlap between the company’s system
and the ideal system performance management system?
(Suggested points: 5)
2. What are the specific features of the system implemented at the company that correspond
to what was described in the chapter as ideal characteristics? Which of the ideal
characteristics are missing? For which of the ideal characteristics do we need additional
information to evaluate whether they are part of the system at the company?
(Suggested points: 5)
3. Based on the description of the system at the company, what do you anticipate will be
some advantages and positive outcomes resulting from the implementation of the system?
(Suggested points: 7)
4. What do you anticipate will be some disadvantages and negative outcomes resulting from
the implementation of the system?
(Suggested points: 7)