Performance Management at Vitality Health Enterprise

James Parker Lauron

MBA-1

Mrs. Vivien Lawansa Performance Management at Vitality Health Enterprises, Inc. I. Statement of the Problem In 2009, during the economic crisis, Vitality discovered some problems related with its performance management system. The company started to review its business strategy and, in particular, the current system of performance appraisal and management. This system, which ran until 2009, had some problems and some of them were identified by a committee, Performance Management Evaluation Team (PMET), which was assigned by the new CEO, Beth Williams, in order to evaluate it and suggest changes to this system. How to find a better way to identify and reward top performers in order to keep ‘A’ players in their positions and accelerate company growth by attracting new top talent. II. Areas of Consideration Strengths:   

Global distribution channels Strong revenue growth Higher employee compensation.

Weaknesses: 

Gradually increasing turnover

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Ineffective performance management

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Employee complacency

Opportunities: 

Increasing demand for cosmetics and nutraceuticals

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Emerging markets

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Threats: 

Intense competition in the industry

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Economic conditions

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Emerging markets

III. Alternative Courses of Action -Annual business plan development cycle -Monthly reporting of measurement results -Online tools that allow employees to view not only their personal measures but all the company measures -Quarterly strategic reviews by management -Dedicated corporate-level resources responsible for improving the measurement process, and benchmarking best practices IV. Recommendation Performance management system primary goal should be to stimulate behaviors that improve performance within a company. It appears as Hoffman suggested that Vitality has missed the mark and is not fostering the type behavior originally set out to accomplish. I have identified few key suggestions based on the organizational feedback that would enable Vitality to hit the mark with their performance management system. We would address the time constraints the managers have in

preparing the evaluations by allowing the process to be extended by three months. Teamwork is the central to turning out new products, yet the evaluation removes the motivation and encouragement for individual that would benefit team performance. We recommend a piece of the individual performance, perhaps 20-30% of the evaluation must be based on the team accomplishments. We would also remove the required number of rankings for top achievers, achievers, low achievers, unacceptable and not rated. We would leave these up to the discretion of the manager. The manager would then have a pool of money distribute throughout his team contingent on the performance evaluations. In order to entice innovation within the organization a specific bonus/ kicker structure should be incorporated into the plan that rewards individuals and teams that bring new product development to market. V. Conclusion The underlying problem within Vitality’s performance management system despite record growth will lead to a continued loss of market share. Many leading companies are faced with a similar fate as they often “produce incremental improvements and follow their core technologies to obsolescence and obscurity, while companies that are able to produce technologically radical innovations become the new leaders.” If Vitality Enterprises successfully reorganizes the PMET into a department and replaces, much of the current performance management system with a proven balanced scorecard methodology, they will surely continue to prosper despite market volatility. It is critical that Vitality moves towards rewarding individuals based on measurable performance, as well as include team-based incentives. The animosity among staff members regarding current compensation should be immediately addressed and replaced with a system similar to TVA’s “Winning Performance Payout” where online tools for monthly reporting and measurement are available in addition to a dedicated CPM staff assisting in benchmarking best practices. These changes alongside quarterly reviews replacing annual will go a long way to improving morale and retention within Vitality. With time and the right performance management team in place to follow the Balanced Scorecard methodology, Vitality should finally be able to realize an inter-organizational harmony in line with the external mission of the company.