Third Case
Question 1.
Vitality’s old Performance Management System presented some problems that were affecting some of its most talented employees. The analysis of those problems as well as the identification of their root causes will allow us to make a reflection about the company’s previous Performance Management System in the following paragraphs. Firstly, the old system was prone to central tendency error. It had 13 rating levels and lacked a described evaluation criteria. As one can understand, if the rating scale is large and the different levels are not sufficiently explained, the evaluators will be more likely to evaluate less accurately. In the case, one can read that managers gave almost to everyone a B or a C, provided few A or D ratings. This is a problem because it shows that the managers do not take the performance and evaluation system as a serious and fundamental tool, which consequently affects employees who are not able to receive valuable feedback on their performance. In our opinion this problem has two main root causes. The first one is that managers do not want to upset employees and the sense of teamwork and egalitarianism, so they give medium ratings to everyone. They might believe that a medium grading does not affect neither positively nor negatively employees’ performance. We believe that the other cause could be the lack of clarity in the rating levels description. The fact that the grading system is not clear for managers hampers a precise evaluation of all employees. Second, in addition to the lack of evaluation criteria, there is a problem of absence of assessment of the attributes of specific jobs and consequent alignment with the company’s strategic goals. There are no clear job descriptions, so besides not knowing well how managers should evaluate, they also do not know individual or team goals that should be