From: James Hoffman, VP Human Resources, Vitality Health Enterprises Inc.

To: Beth Williams, CEO Vitality Health Enterprises Inc.

Case: Performance Management at Vitality Health Enterprises Inc.
Date: February 1, 2018
Beth,
As we hoped, the performance management system we had in place for the last two years
has addressed some of our previous problems like similar ratings for performers and non-
performers and inefficient salary calculations and performance based raises. However,
the new system has also brought its own share of problems. The first of which is the
forced distribution model. This model is forcing managers to rate employees against each
other and is betting team members against each other instead of for each other. Even the
members of a top performing team have team members with low scores while a low
performing team had highly ranked performers. Although the system distributes
performance within the group, it is not able to tie it together with the whole (ranks only
performance within the team and not performance as an individual in the company). One
big issue that was pointed out was that people were not being rated against the job and its
requirements but rather against their own team members. Another problem that was
brought up was that managers are struggling to discuss performance with the employees
because the yearly review process is so closely tied to performance based raises. This
cannot be good for the company if employees are resistant to coaching and managers are
shying away from giving them feedback.
To address these issues, I would like to suggest changing our current forced distribution
method of evaluation. Firstly we employ a behavioral approach and in particular the
behavioral observation scale (BOS). You mentioned that you wanted to improve job
performance by assessing the attributes of specific jobs and how they align with
Vitality’s strategic goals (Bingham and Beer, pg. 5). Although there is an attribute
approach, it has several drawbacks like not aligning with the company’s strategy and
including vague performance standards (Noe, Pg. 337). The behavioral approach on the
other hand is able to do both, evaluate based on the behaviors necessary for the job as
well as align well with the company’s strategic goals (Noe, pg. 342). The BOS in
particular evaluates on a large number (almost double when compared to BARS) of
behaviors that reflect behaviors of effective performers (Noe, pg.339). This will more
accurately help us understand, based on behaviors, who is performing well. Another
advantage of BOS is that the raters are asked to rate the frequency with which the
employee exhibits the behaviors (Noe, pg.339). This will especially address the problem
we have with raters judging based on performance just before evaluation. And an overall
comparison of the behavioral approach shows that employees and raters alike prefer the
BOS over the BARS (Noe, pg.339). We have previously had problems with
dissatisfaction over evaluation methods from both managers and employees. By
employing this method we can increase the 46% of employees who did not particularly
like the previous system (Bingham and Beer, pg. 7).
Secondly, we should provide mandatory training for managers on how to evaluate
employees using the new model. By training the raters we can increase the reliability and
validity of the ratings (raters can overcome the fear of disappointing the employee) and
reduce errors in the evaluation (Noe, pg.359). Vitality should also start reviewing its
employees on a quarterly basis rather than an annual basis to ease managers of their
concern of merit based raises so close in time to the evaluations. Although the merit
based raises will still continue to be evaluated at the end of the year, the reviews should
happen every quarter. This will give the employees a chance to improve their
performances throughout the year and also give the managers a chance to rate an
employee on overall performance throughout the year.
 References

Noe, R. A. (2017). Human resource management: gaining a competitive advantage (10th

ed.). Dubuque: McGraw-Hill Education.

Bingham, J. & Beer, M., (2012). Performance Management at Vitality Health

Enterprises Inc. HBS No. 9-913-501. Boston, MA: Harvard Business School

Publishing