Omega Inc.’s New Performance Management System

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Introduction

The success of any company greatly depends on the performance of its employees. Thus, each business has to ensure that its workers are not only qualified but also motivated to deliver high-quality results. In the case of Omega Inc. and its franchise-based workforce, one can see that an effective system for managing, appraising, and rewarding employees are lacking. To improve the situation, the company has to urge its franchised dealers to adopt a new performance management system. This paper aims to examine the ideas and steps of the performance management process and analyze the benefits and pitfalls of the program used by franchised companies. Then, a reward and performance management system will be developed to assist Omega in delivering better customer performance and higher sales.

Performance Management Process

To understand the central points in the performance management process, one has to discuss the history of its modern form briefly. Current models of performance management encourage human resources (HR) to reject the tradition of annual appraisal and develop a system that is flexible and individualized to the aims of the business (Schleicher et al., 2018). According to Armstrong (2017), performance management is defined as a “continuous process of improving performance” (p. 7).

The scholar states that it can be achieved when employees set individual and team objectives that align with the organizations’ strategic goals, and the company creates performance plans to meet them. Moreover, the step of progress review and the commitment to workers’ development are inherent to this philosophy. Therefore, it is apparent that performance management has at least four steps that have to be taken to create a system that corresponds to the company’s needs while continuously improving its employees’ skills.

The stages in the performance management process do not have a definite end, requiring constant adjustment and reassessment. Thus, they can be represented in a cycle which shows the main steps – these activities do not necessarily follow each other in strict order (Figure 1). The first step is taken by the company before the planning begins; the firm has to outline its goals and values. The goals will help in developing concrete objectives and expectations for workers. Values will become the foundation for the employees’ motivation and way of approaching each task. One can also add the step of defining job descriptions, duties, and responsibilities in this preparatory stage.

Performance management cycle.
Figure 1. Performance management cycle.

The first stage of the process is planning – this involves all aims and targets that are developed by managers and employees. Workers need to understand what is expected of their performance. Hence, the business should use SMART (“specific, measurable, achievable, relevant, time-bound”) goals (Bjerke & Renger, 2017). This particular tool is necessary because it allows both the manager and the worker to agree on a specific result that is clear to both parties. After setting goals, managers are advised to create personal development plans for each employee. These include professional development and are designed to inspire growth, commitment, and performance improvement. A developed foundation provided by the company can simplify this process and lead to a list of transparent objectives that workers can follow. The planning state also produces plans for actions that should be taken in the next few months – longer periods of preparing obscure the immediate needs of the company and lower employees’ comprehension (Cappelli & Tavis, 2016). As a result, the team should have a short-term plan for performance with the basis for the assessment of outcomes.

The next stage is acting; this part includes the majority of work-related processes. Employees carry out their respective roles, achieve set goals, and implement the plans that they developed earlier. This is a continuous process that does not stop for planning or assessment. Therefore, goals have to be easily adjustable and flexible if the working process changes in any way. For instance, if an employee reaches their objectives faster than it is stated in the plan, they should receive new tasks. Alternatively, if the firm observes that employees cannot meet their goals in time, the performance aims have to be reevaluated.

To successfully monitor the work process, the third stage – tracking, is implemented. Managers and HR need to document the outcomes of their company’s performance as well as the results of employees’ work. It should be noted that physical or digital copies of all records can significantly help to monitor the changes in performance (Bititci et al., 2016). Tracking should also come in the form of feedback from managers, employees, and customers. The first group should talk to employees regularly, discussing their goals, personal and professional achievements, and potential issues. Workers can notify the management about problems or complaints regarding every aspect of their job. Finally, clients’ feedback is essential in rating satisfaction, customer service, and errors.

The stage of tracking also includes coaching and overcoming obstacles. As workers encounter problems, they may lose their motivation or have no proper knowledge to solve them. According to the performance management process approach, it is the responsibility of managers to provide resources that would help an employee in this situation. Coaching also implies a positive and inspirational approach to performance assessment. Issues should not be viewed as a reason for punishment or conflict. Instead, managers should show their support and encouragement, as positive reinforcement can improve workers’ morale (U.S. Office of Personnel Management [OPM], n.d.). Here, feedback is given to employees by managers, and it is supplemented with strategies for resolution and opportunities for development.

Finally, the last stage in the cycle is reviewing, which uses the information from the previous step for future planning. While managers’ feedback in tracking refers to small problems that arise during the working process, performance review refers to the continuous appraisal of achievements and career goals (OPM, n.d.). In this case, managers need to use formal and informal reporting to see how the workers progress in reaching their professional goals and fulfilling their development plans. This step also involved feedback, as employees must be aware of their successes and pitfalls. Meetings should be held to identify areas that require improvement, discuss future goals, and see if any agreed actions need an adjustment. Finally, it is essential to praise employees and recognize their growth and goals’ attainment.

Performance Management Process at Omega

Analysis

The case study of Omega, Inc. shows that the implementation of a performance management system is an ongoing process that requires increased attention to finding problems and fixing them to achieve goals. First of all, the franchise owners completed the pre-planning stage in which they adopted a mission statement – to provide high-quality customer service – and created job descriptions for sales representatives. Furthermore, this information was based on the analysis that they conducted, investigating the role of employees in their firms and the business at Omega. Comparing their activities to the actions described in the research, one can argue that the preliminary steps taken by the company were sufficient for the development of the cycle.

The next stage is planning, and franchise owners made some steps to individualize the approach to employee’s performance. The mission statement was shared with all workers, and their management discussed how employees’ actions contributed to the company’s success. Here, it is vital to point out that the center of the discussion was the relationship between sales representatives and customers – an element of service that is less transparent in measurement than sales numbers. Next, it is stated that franchisers developed individual performance goals for each employee, focusing on sales quotas.

While the action of goal setting is consistent with the approach of performance management, it is unclear whether these objectives adhered to the SMART strategy. Monthly sales goals can be measured, but their achievement cannot be considered separately from customer service – another vital element of the company’s aims. More than that, employees’ goals did not contain any useful information about achieving sales quotas, which could help make the process more transparent.

In regards to training, one can find both benefits and drawbacks in this activity in the case of Omega. On the one hand, the program was conducted to increase the knowledge and skills of employees, which is a necessary development activity for professional growth. However, the case shows that each worker had a different level of education and experience. Thus, it is unknown to which extent the training was effective. The feedback on the performance during the training course is not enough to see whether employees are adequately prepared to deliver service. Their understanding of the course material is also not documented, which could raise an issue of workers’ not responding to education.

Sales representatives perform the step of acting, and the case does not provide information about the employees’ records of achieving their objectives. This is an issue that is visible in the next stage – tracking. Managers did not collect any data or record any information that was pertinent to their performance management process. No written records in a paper-based or digital form were available. As a result, the feedback relied on sales rates, panting an incomplete picture, and confusing employees.

Tracking implies regular mutual feedback and progress assessment, which did not occur in franchises. For example, employees did not know whether they were fulfilling their quotas. This lack of information was found to demotivate employees and lower their commitment to high-quality performance (DeNisi & Murphy, 2017). They also did not understand how rewards were connected to their job. One of the pillars of feedback in performance management is transparency, and franchise owners failed to support it.

Finally, the franchise managers also did not have any practical tools for reviewing employees’ achievements and rewarding them sufficiently. Performance appraisal was informal, which increased the risk of bias in discussions. More than that, as employees did not know their success in achieving goals, each assessment was a surprise that did not encourage them or inform them in a meaningful way. The lack of feedback also led to mistakes and low-quality customer support. One can assume these pitfalls also mean that the franchise owners could not discuss future goals with workers and identify areas where their performance needed improvement.

Recommended Rewarding System

The situation at Omega shows that employees do not prioritize customer service quality as they struggle to meet goals related to sales numbers. Thus, the reward system has to focus on client-salesperson relationships, adding sales’ related achievements as well. There are many ways to appreciate workers, and a total reward system includes both financial and non-monetary types. Franchise owners should start developing their reward systems by surveying employees.

Workers may have specific needs and some ideas about incentives that would improve performance. This information is important because unwanted rewards will not have a long-lasting positive effect on performance. Next, the firms should determine SMART goals that are directly related to the mission to see which bonuses are appropriate. The system advised for this case combines these strategies to deliver an incentive that recognizes effort without creating an overly competitive environment.

One of the most critical factors that influence employees’ performance is their work/life balance (McCoy, 2017). By creating comfortable conditions inside and outside of working hours, franchise owners can boost morale and increase commitment, thus also increasing customer support quality. For example, child care, health and wellness services, and sick leave are elements that reduce stress among workers and lower the risk of sickness, burnout, lateness, and poor performance (McCoy, 2017).

As a result, workers will know that their matters outside of work are taken care of, and they can work without external pressures. Moreover, good services increase workers’ desire to remain at the company and deliver high-quality service (Armstrong, 2017). To establish trusting relationships among staff, one can introduce peer empowerment rewards that would allow individuals to appoint each other for a certain benefit. This option encourages interaction and teamwork, while also influencing workers to maintain good relationships with others and keeping the environment friendly and competitive.

Monetary rewards should be based on customer service and sales-related metrics that are available to employees at all times. The client experience will be measured with customer surveys and quality indexes, and the results will be updated and displayed to employees to show their achievement of goals. Each worker has to know their results in real-time because they need this information for feedback and goal adjustment. Compensation and bonuses should be tied to these measurements, and outstanding performances have to be recognized. For example, if a particular employee’s name is mentioned in a survey, this should go towards the reward. However, it is necessary to support and encourage all workers not to create a rift between the best employees and the rest of the team.

Recommended Performance Management System

Based on the cycle and reward system described above, franchise owners have to revise their policy and introduce new tracking and reviewing strategies. To begin with, the firms should set SMART performance goals for each employee and review their previous progress. While some objectives can cover sales quotas, customer experience should be at the center of goal attainment. Second, franchisers should collect data about workers’ experience, education, and knowledge to determine whether they need additional training. They also have to gather information about the current problems as well as rewards that employees would like to see implemented.

The stage of tracking has to be revised significantly as the current processes are ineffective. An official system of records must be created for managers to collect all information related to feedback, performance, customer surveys, and company goals. Managers should monitor employees at all times, regardless of whether a review meeting is soon or not (Schleicher et al., 2018). Employees should have access to the data related to them, including their path towards goals, potential rewards, and previous problems and solutions.

Here, the question of which recordkeeping method should be used is essential. Currently, many digital solutions exist to solve this problem, and the franchise network is strongly encouraged to invest in performance management software. Apart from ensuring that all information will be gathered and stored in one place, this approach will also provide a representation of data. According to Bititci et al. (2016), visual strategy positively influences the success of performance management and engages people. This approach will increase commitment, simplify analysis for the reward system, and improve communication.

Managers will meet with employees regularly (monthly or biweekly) to discuss their progress and assess their development, goals, and any other feedback. This activity will allow franchise managers to adjust short-term objectives and detect problems early. Workers should not be surprised by managers’ feedback – all data has to be transparent and timely. It is crucial to discuss obstacle-removing solutions at these meetings. The input is expected to be useful and not focused on punishment or extensive criticism. Here, coaching is a vital element of success, as employees will encounter problems that can reduce their effectiveness and motivation (OPM, n.d.). Enhancement should be valued over remediation, adding continuous positive encouragement and promotion chances for well-performing employees. With the implementation of these strategies, the final step should be easier to introduce as well.

Lastly, the process of performance review and reward will be based on the collected and analyzed information and established systems for appraisal. Meetings discussing achievements will be more formal and less frequent than feedback discussions. For instance, they may happen once or twice a year, although yearly evaluations may present a risk of unfair judgment. During these conversations, managers should not give any information that is not known to the employee – the feedback has to be consistent throughout the year. Furthermore, as minor problems and concerns will be discussed often, it is expected that they will pay more attention to ways of improving performance. As a part of learning opportunities’ identification, they can suggest formal and informal training, assign new responsibilities, and decide whether a transfer is necessary. The final step contains the franchisers’ need to reward employees, as discussed in the previous part of the paper.

Conclusion

A proper performance management process can significantly influence the way people work, improving the company’s objectives attainment as a result. The cycle includes a preparation step for data gathering as well as four interconnected stages: planning, acting, tracking, and reviewing. In the case of Omega, franchise owners completed the first few steps with marginal success, collecting information and specifying the mission of the business and employees’ personal goals. However, they failed to track progress and provide workers with meaningful feedback with created confusion and decreased motivation.

The suggested reward system for sales representatives is based on customer feedback, with some attention given to sales quotas. Work/life balance, recognition, peer support, and monetary bonuses are advised to create a positive environment among employees. The recommended process management process focuses on transparent feedback, frequent meetings, development opportunities, and consistent rewards.

References

Armstrong, M. (2017). Armstrong’s handbook of performance management: An evidence-based guide to delivering high performance (6th ed.). KoganPage.

Bititci, U., Cocca, P., & Ates, A. (2016). Impact of visual performance management systems on the performance management practices of organisations. International Journal of Production Research, 54(6), 1571-1593.

Bjerke, M. B., & Renger, R. (2017). Being smart about writing SMART objectives. Evaluation and Program Planning, 61, 125-127.

Cappelli, P., & Tavis, A. (2016). The performance management revolution. Harvard Business Review, 94(10), 58-67.

DeNisi, A. S., & Murphy, K. R. (2017). Performance appraisal and performance management: 100 years of progress? Journal of Applied Psychology, 102(3), 421-433.

McCoy, R. (2017). The relationship of employee reward systems and motivation levels with special emphasis on franchising. LIGS University. Web.

Schleicher, D. J., Baumann, H. M., Sullivan, D. W., Levy, P. E., Hargrove, D. C., & Barros-Rivera, B. A. (2018). Putting the system into performance management systems: A review and agenda for performance management research. Journal of Management, 44(6), 2209-2245.

U.S. Office of Personnel Management. (n.d.). Performance management: Understanding performance management process and practices. Web.

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BusinessEssay. "Omega Inc.'s New Performance Management System." November 18, 2022. https://business-essay.com/omega-inc-s-new-performance-management-system/.