Vitality Health Case

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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,…show more content…
This policy is damaging the company because the initial objective of Vitality, which is also the root cause of the problem, was the attempt to decrease turnover and attract top talent. Those objectives are not being met and the high performers are the ones who have turnover intentions. Another problem is the fact that there is no control or monitoring by a responsible team. As we explained above, managers have the freedom to evaluate performance as they want and sometimes there are some abuses. For this reason there should be someone with aim of supervise the all process or give support to the evaluators. The main cause for this problem is, again, the low importance that Vitality gives to the performance system. The final problem that we identified is the incoherence of inclusion of the cumulative merit in the calculation of salaries. In the case-study we can read that the system includes cumulative merit. However it is not clear how it is included in the compensation system. In one hand it is said that they measure performance over time at Vitality but in the other hand it is not accounted for rewarding employees. To conclude, we can say that the Performance Management System does not include fairness in what regards to performance. One can see that there is a lot of variation in employees’ performance but those differences are not being pointed and consequently there are no consequences in the compensation package of low,
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