WMBA 6201 Week 11 Performance Management Proposal Example

A Performance Management Design the Executive Team Can Fund: One Cycle, Named Owners, About $38,000 a Year and a Four-Quarter Phase-In for a Dealership's Service Advisors, With Technicians to Follow

Student Name

Walden University

WMBA 6201: Individual and Organizational Performance Management

Instructor Name

Month Day, Year

A Performance Management Design the Executive Team Can Fund: One Cycle, Named Owners, About $38,000 a Year and a Four-Quarter Phase-In for a Dealership's Service Advisors, With Technicians to Follow

The Decision Requested

The executive team of Cascade Ridge Auto, an invented dealership, is asked to approve a performance management design for the service department's five advisors, at a cost of about $38,000 a year, phased in over four quarters beginning in January. If the first year meets its measures, the same design would be extended to the fourteen technicians the following year.

What the Design Fixes

The current arrangement rewards hours billed and work sold, rates advisors once a year on an inherited form that cannot separate strong from weak performance and gives no written link between ratings and pay. The result, documented this term, is a department whose stated value is "customers for life" and whose comeback rate is about 4 percent, whose last promotion went to its highest seller with its lowest satisfaction scores and whose advisors cannot tell how their raises are set.

The Cycle

Table 1

The Annual Performance Management Cycle

Composite design built from the Week 2 to Week 10 components.

The Components

The design assembles the term's work into one system. The five goals from Week 2 set countable targets with owners. The job analysis from Week 3 defines what advisors exist to produce. The rebuilt form from Week 4 replaces vague anchors with behavioral ones. The measure collection plan from Week 5 assigns each number to a system, a person and a day. The evaluation method from Week 6 requires a dated incident under every rating. The conversation and record format from Week 7 governs difficult cases. The single quality metric and its counterweights from Week 8 enter the bonus plan. The development plan from Week 9 follows every half-year evaluation. And the pay rules from Week 10 publish the arithmetic and the appeal route.

Cost

Table 2

Annual Cost of the Design

Estimates for a composite dealership; the bonus is paid only when the fixed-right-first-time target is met.

Against this cost, each comeback avoided saves about two hours of unpaid technician time and, more important, a customer's trust. If the comeback rate falls from about 4.1 percent to the 2.5 percent target on roughly 9,000 customer-pay repair orders a year, the department avoids about 144 comebacks, worth roughly $29,000 in technician time alone at a loaded $100 an hour, before counting retained customers.

Phase-In

In the first quarter, the form is rebuilt and the service manager is trained to keep weekly notes; goals and measures go live. In the second quarter, the first half-year evaluation is completed under the new form, and development plans follow. In the third quarter, the quality bonus begins, after two quarters of data establish that the metric and its counterweights work. In the fourth quarter, the year-end evaluation and the published pay matrix set raises. Starting the bonus only after the data are tested avoids paying, or refusing to pay, on a metric nobody yet trusts.

What the Executive Team Is Not Being Asked to Approve

The proposal does not change the commission plan in its first year, does not extend to technicians until the advisor design has been tested and does not require new software. Each of those would be a larger decision, and asking for them now would slow approval of the part that is ready.

If the executive team approves, the service manager will present the rebuilt form and the five goals to the advisors in the first week of January.

Risks and Responses

The design depends on one person, the service manager, for weekly notes. If he stops keeping them, every later step weakens. The general manager will check the notes file quarterly. Pulakos and O'Leary (2011) argued that performance management fails mostly through the everyday behavior of managers and employees rather than through forms, and this check is aimed at that behavior. The second risk is that the commission plan continues to reward volume so strongly that the quality bonus is ignored. The design does not change commission in the first year, but if the quality measures do not move by the third quarter, the executive team should revisit the commission rate.

What Will Show the Design Works

Four measures will be reported to the executive team at year end: the comeback rate, the manufacturer satisfaction score, the spread of advisors' overall ratings and the number of challenges filed and upheld. A spread of ratings shows the form now separates performance; a few challenges, resolved from the record, show the process can be defended. DeNisi and Murphy (2017) concluded that the value of appraisal lies in whether it improves performance, not in the precision of ratings, and the comeback rate is the test of that here. Kerr (1975) documented how rewards and hopes drift apart; this design is an attempt to bring the department's two back into line.

References

DeNisi, A. S., & Murphy, K. R. (2017). Performance appraisal and performance management: 100 years of progress? Journal of Applied Psychology, 102(3), 421-433. https://doi.org/10.1037/apl0000085

Kerr, S. (1975). On the folly of rewarding A, while hoping for B. Academy of Management Journal, 18(4), 769-783. https://doi.org/10.2307/255378

Pulakos, E. D., & O'Leary, R. S. (2011). Why is performance management broken? Industrial and Organizational Psychology, 4(2), 146-164. https://doi.org/10.1111/j.1754-9434.2011.01315.x