The New Performance Management System

1452 Words6 Pages
Vitality Health Enterprises, Inc., was founded in 1987 in Ames, Iowa by 42 year old “Fred” Kikuchi. Kikuchi’s original vision for Vitality was matching the corporate strategy to one of his favorite ancestral sayings: Outer beauty can only be achieved as inner harmony is reached. In the first quarter 2009, Vitality began rolling out its new business strategy. Beth Williams organized a committee to review the present performance management system and make it a coherent performance management system in order to hold employees accountable for their actions incentivize strong employee performance by offering thoughtfully designed compensation packages, including salaries, bonuses and equity opportunities in the form of options. The new performance management system would institute a forced distribution model of performance rankings, shifting from an absolute ranking system to a relative one.

The literature review focusses on two main systems of performance management mainly the forced distribution performance ratings system and the absolute performance ratings system. Organisations use both the systems of performance measurement. “The Forced Distribution rating system (FDRS) forces supervisors to distribute a predetermined percentage of employees in performance categories based on their employees ' performance compared with that of his or her co-workers” (Moon, Scullen, & Latham, 2016, p. 166). This approach
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