Case Analysis 'Verve Ideal Medicates'

1. Evaluate the performance management systems used by Verve Ideal Medicates.

Currently, a lot of companies are utilizing competency models as a basis for their performance management systems. Such models accent cognizance, capacities, capabilities and other features, which are believed to be the most determinative for obtaining positive organizational results. Thus, performance management is an implement, which helps to enhance performance and assists in decision making in companies (Shields 2007). In fact, the analysis of Verve Ideal Medicates demonstrates that the company has two different performance management systems. The second system applied in 2011 is not accepted by the major part of employees and senior managers (which actually stands for 78 percent). Due to this fact, the system is practically infirm in its application. The evaluation clearly demonstrates that the current performance management system does not help in enhancing the quality of company’s services.

In 2009, Verve Ideal Medicates understood that if it was going to become a more successful and competitive global company, it would require a coherent performance management system. It appeared to be a system, which made employees responsible for their actions and provided an incentive for strong employee performance by offering observantly created compensation packages, incorporating salaries, bonuses, and equity opportunities in the form of options. This new performance management system had to be implemented in an unspecified trial period, as a surprising change in global sales and a weak dollar stimulated an international economic increase and brought revenues to record levels. Nevertheless, Verve Ideal Medicates decided to review the 2009 performance management system, as it was not sure whether it produced planned results and helped to define top performers in order to apportion financial rewards in an appropriate way and keep the best employees in the company. In fact, the evaluation of the 2009 performance management system demonstrates that the comparison of performance data obtained in early 2009 and in early 2011 shows an explicit alternation in the distribution of rankings. However, survey questionnaires given to all Verve Ideal Medicates employees, being elicit evaluations of the 2009 system, can really show the inner atmosphere in the workplace. Responses to the employee surveys portrayed that merely over a half of the company’s workers preferred the 2009 system (54 percent), while approximately a third supported the 2011 system (31 percent), with the remainder being indifferent to the two systems (15 percent). Thus, the process of conducting surveys involving focus groups with employees and managers demonstrates that the new performance management system has serious drawbacks. Managers believe that the 2011 system has made it more complicated to dispute performance problems with employees because the annual review procedure is closely connected with increases in incentives. Since the company has introduced an added burden of compensation, managers believe that employees have become more defending and watchful, and less open to coaching. Managers are also worried, as a number of workers are not interested in performing duties outside the job description because these responsibilities are less likely to be rewarded. Moreover, a number of managers are reluctant to spend the required time and efforts on implementing the system effectively because they believe it to be an under-rewarded task, which merely detracts them from their other, more important duties. Moreover, the evaluation demonstrates that even a failing department still has a number of ‘Top Achiever’ rankings. In fact, the most common practice for managers is to automatically assign a ‘Not Rated’ ranking to any employee who has been in a group for less than a year, regardless of his or her actual performance. These operations allow managers to save higher rankings for their veteran employees. In addition, there is another problem that a number of managers continue submitting uniform rankings, rather than following new guidelines, which actually forces HR to change the rankings to fit the distribution curve. In effect, managers avoid differentiating their employees and leave the process up to people who are less familiar with individual situations. Alternatively, managers typically submit rankings that fit the curve but then lie and tell that their employees perform successfully. It practically means that they play in two teams according to the rules of a new system ranking game, simultaneously saving their employees. Some managers do this to avoid comparatively unrewarded time and efforts of performing effective reviews, but some do it merely to avoid angering their teams. Instead of defining a top talent, these managers simply try to sustain uniform rankings over time, ensuring that no employee is left behind or identified and rewarded as a top performer.

 

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Thus, it becomes obvious that the 2009 system had more benefits. The system did not allow promoting someone with small rewards. The new system demonstrates that the Verve Ideal Medicates will face problems in the future if it continues getting rid of people who do not perform well, as it will have to start to discharge those who are solid performers but just not as good as others. It may cause a major morale problem. The new system possesses another problem connected with the labels, which causes significant issues among the staff people. It seems to be highly demotivating for people performing extremely well.

2. How might the forced distribution system introduced by Lannister be adapted to respond to the feedback identified from interviews, focus groups and survey questionnaires?

The practice of managing employee performance demonstrates that the forced distribution system (ranking) stands for an antitoxin against the issues of a fake rating and the inability to demarcate, as it helps in making the performance management procedure fair. Thus, the implementation of a forced ranking plan guarantees that managers will be able to differentiate a talent.

In fact, conventional performance evaluation systems allow managers to enhance grading and confer superior merits to all employees, but a forced distribution system helps to ensure that distribution necessities will be met (Shields 2007). However, this works only when the system is designed properly and implemented efficiently (Shields 2007). It is the only method when a forced ranking system can present data, which conventional performance evaluation systems cannot provide. However, determining a demarcation combined with merits is not the main cause why companies decide to utilize forced ranking systems (Shields 2007). The creation of a forced distribution system stimulates companies to originate and demonstrate criteria, which are necessary for their prosperity. The discussion of criteria frequently ignites essential, even fierce debates concerning precisely what criteria and factors should be. Moreover, simple cognizance of the criteria, which senior executives use to assess talent workers, has caused plausibility that company members will change their conduct in order to show more of the traits, which will lead to prosperity (Shields 2007, p. 161). However, in the case of Verve Ideal Medicates, labels stand for a serious problem. The company has to get rid of them focusing on a fair ranking of people. It can become an antidote for significant problems arising between line-level employees and high-level executives. Despite the fact that the division is performed extremely well in meeting its financial goals, the majority of higher ratings are given to line-level workers. Labels do not involve any extra rewards for the staff people who perform just as well. On the flipside, more staff people get higher ratings during a bad year. The company’s performance evaluation in 2010 demonstrated that a lot of employees performed superbly, but the company and managers could not give those ratings, which reflected these results, as senior managers also did well. Therefore, a forced distribution system is inappropriate for the current case. One of the groups demonstrated the best annual results, but because of the performance of the rest, higher ratings were “used up.” The current forced ranking does not make it possible to reward people in the situation mentioned above, where they deserve it, but are excluded from higher ratings because there are many others performing their duties well. People are not judged on basis of the quality of tasks they perform but considering the performance of others.

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Nevertheless, there is a significant cause for the use of forced rankings in Verve Ideal Medicates. This tactics has been implemented because the executive leadership team does not accredit leaders to manage performance. However, since the current forced ranking system does not work properly, it can be adapted. Firstly, it may be important to include an analysis of the way in which leaders evaluate and reward employees. In fact, written reviews and feedbacks can be provided to the reviewing manager, who will be responsible for enhancing the performance and putting the rank practically (Shields 2007). Since managers working with people do not want to turn into ‘bad guys’, genuine rating should be performed by an indifferent person (meaning a reviewing manager). Moreover, steps that the leading manager should take in evaluating the employees, as well as development plans, should be discussed with the reviewing manager, providing enhancements to these plans. The cycle of responsibility will become stronger because of the appropriateness of forced rankings (Shields 2007). Moreover, Verve Ideal Medicates should also enhance this forced distribution system by performing ranking of managers. Each review of individual performance should become as significant as the review of business performance. The information about management performance is highly beneficial, and leadership teams are supposed to evaluate the talent in a proper way. Such behind-the-scenes procedures can be highly effective, as they challenge the ratings and analyze the strengths and weaknesses of managers precisely (Shields 2007). The current situation demonstrates that the performance metrics does not work due to the fact that an individual implementing the performance management system does not receive an impartial, useful feedback regarding his or her work. It practically means that the employee is not motivated to perform the current and future job duties appropriately (Shields 2007). 

Thus, Verve Ideal Medicates should not return to the previous system, which has been actually easier (that is why the majority of employees like it), as it merely has concentrated on team building and not the overall business performance. The previous system will not bring about a lasting result. The current situation demonstrates that the company should take account of managerial performance, as it can seriously enhance the rest of employees’ performance.

3. If you were made responsible for the performance management system, what changes would you make?

The new system applied by the company is definitely a step in the right direction. Nevertheless, forced ranking is unlikely to sustain a culture of high trust and a high level of involvement. Therefore, it has a high propensity for causing a breach of psychological conduct. The forced distribution system demonstrates that despite the fact that an individual employee may meet all of the stated criteria for an A grade, only a restricted percentage of people can be awarded such a grade and may be forced down to B. Thus, the system should be enhanced and changed with time.

Generally speaking, forced distribution performance management systems should not be employed for a long time, as they may undermine trust and the sense of distributive justice (Shields 2007, p. 161). Thus, the company requires calibration. In fact, calibration is an eye-to-eye procedure, in which managers who observe and control analogous groups revise and analyze one another’s employee performance grades (Shields 2007). The current case demonstrates that the company’s managers have issues in being objective in regards with their employees. They understand that the percentage of people who can be awarded the best ratings is limited, while the majority of employees may deserve such rating. Thus, the Verve Ideal Medicates needs to appoint a reviewing manager for each group, who will not cooperate with employees and be objective or organize such “rater dependability” meetings, where supervisors can discuss each of their employee’s performance grades and causes standing behind such an evaluation (Shields 2007). The process of calibration sessions can become highly useful in catching the ‘easy raters’ and ‘tough raters’ and assisting them in evaluating their employees more fairly (Shields 2007). Moreover, the current system of forced ratings depends on the management of one group. Employees are demotivated, as, for instance, the ‘Achiever’ category merely covers too many people. It does not help in demonstrating who is at the high end or at the low one. On the one hand, managers do not want to lose their employees. On the other hand, employees do not see individual progress. They require a 360-degree feedback. Rather than depending on one manager, who is supposed to analyze and evaluate person’s performance, it is much better to experiment and ask each employee with to become included in the process of ranking and evaluation (Shields 2007). Nevertheless, it is highly important to remember that such evaluations should be performed anonymously, as people will become subjective and write good evaluations to those, who have written excellent feedbacks to them. A leading manager should control the process and even ask people to understand their reasons for a particular evaluation, especially when the manager doubts their objectiveness. It is a major idea behind a 360-degree feedback, as this technique helps to gather information about individual performance from numerous stakeholders, including team/group members, clients and undeviating accounts (Shields 2007, p. 149). Moreover, if the technique of 360-degree feedback is performed properly, it allows all team/group members to succeed in major spheres, which may restrict their career promotion or practically provoke significant conflicts within a group (Shields 2007). The company can also utilize a peer reviewing strategy. In accordance with the term, such type of reviews requires colleagues to make remarks concerning each other’s performance. The facts demonstrate that colleagues typically know much more about the strengths and weaknesses of their peers than the leading managers (Shields 2007, p. 145). Thus, when the company legally allows employees to review each other, it becomes possible to receive significantly beneficial information, which should be shared with the overall company’s management. Afterwards, employees will require management to be objective and cooperate with employees in order to shape objectives and the minimum desired results (Shields 2007). Thus, it allows managers to evaluate the personnel on the basis of their capability to obtain desired outcomes. The advantage of such procedure lies in the fact that it provides the employees with a possibility to take part in objective planning vigorously.

The current situation in Verve Ideal Medicates demonstrates that the present performance management system can become highly beneficial for the company, but it still requires several serious amendments. The firm can actually utilize numerous other programs, which can seriously balance and enhance the current forced distribution system. Currently, the forced ranking system causes professional culture shock to the personnel. People are not interested in cooperation and helping each other, especially those employees, to whom they are graded against. Moreover, those managers, who have been working with a team/group for a long period of time, find it difficult to stay objective. Thus, despite the fact that Verve Ideal Medicates requires employees to be responsible for their performance, the overall procedure can be slightly changed. The company should support free and honest feedbacks among its workers at all levels. It should also use a suitable and appropriate mechanism for discovering and rewarding talents. Finally, only after implementing the previous steps, Verve Ideal Medicates should use a specific compensation procedure, which has to be grounded on performance and reward high-performing employees more than substandard ones. The previous performance management system is believed to be better only because it has been easier and employees got used to it. Each company requires changes in order to develop, be emulative and sustain its best performers. The current system is beneficial and can become practically ideal after several minor changes. It is definitely a step in the right direction.