Performance management at vitality health enterprises, inc

1. Submitted By:
N V Jagadeesh Kumar
Nisha Agrawal
Susrita Maharana

2.  1987- Company was founded in Ames
 1989- Established its own manufacturing facility in Ames
 1991- Business had grown to $3million per year
 1994- Signed a distribution agreement with leading pharmacy
retailers.
 1995- Launched the company into global markets
 1997- Acquired Herba Pure Nutraceulticals and changed their
name to Vitality Health Enterprises

3.  Late 1990s- Floated IPO
 2007- Company had grown to nearly 7000 employees
 2008- Global crisis bought relative stagnation to company’s growth
 Hired Beth Williams as the new CEO

4.  Global VP of skincare products at Barstow & Wyden
 Disciplined operational mindset
 Popular for reducing global production costs by 12% during her 3
years at B & W Beauty
 No-nonsense approach and willingness to handle difficult issues.
 Hired as a new CEO of Vitality Health Enterprises

5.  Williams organized a committee to track the performance of all non-
sales and non- executive employees.
 PMET studied evaluations and rewards system using internal &
external benchmarking, focus groups and employee interviews.
 Problems of PMS:
 13 different rating levels(A+ to E-)
 Homogeneous ratings

6.  Top performers felt slighted and undervalued financially.
 Job evaluation points- pay policy associated with the position
 Technical Knowledge
 Problem solving-skills
 Level of accountability
Pay policy line= Base salary + ( Job evaluation
points* Increase per point)

7.  Based on individual performance in the company
 Increase with rise in merit and falls whenever salary-line
formula is moved upward
Comparative ratio= Employee’s current salary
Current market rate

8.  Low employee turnover
 Stability of a flat salary
 No provision for bonus or alternative forms of
compensation
 Seniority based increment
 Difficult to differentiate top performers and low
performers.

9.  Forced distribution model of performance rankings- shift
from absolute to relative ranking system.
 Not rated for too new employees or position difficult to
rate
Ranking Category Target Constraints
Top Achiever(T) 10% Max of 14%
Achiever(A) 75% Min of 70%
Low Achiever(L) 12% Min of 7%
Unacceptable(U) 3% No minimum
Not Rated --------- ---------

10.  Evaluation team researched the core competencies and key
duties of different jobs.
 Managers need to develop specific goals with their
employees.
 Performance reviews were to be conducted at the beginning
of the year.
 Incorporation of a system of performance-related short and
long- term cash and equity bonuses.
 Limited stock options for upper level of management and
directors.

11.  Williams appointed Hoffman as a VP of HR To head PMET2
 PMET2 compared performance rankings data for early 2009
and early 2011 and found a shift in distribution of rankings.
 Surveyed to know the response of employees:
 54%- preferred new system
 31%- preferred old system
 15%- indifferent

12. Managers felt difficult to discuss with employees
since it affects the merit increase.
Employees didn’t do the work which where not part
of their evaluation.
Unwilling to spend time on implementing process.

13.  Rigid forced distribution system
 Using Not rated employees category as a tool to
reserve higher rankings for old employees
 Uniform rankings
 Reluctant to disclose the rankings to the employees
 Rotation of highest rankings between employees from
one year to the next

14.  Research done by Evaluation team showed
both positive and negative comments
 Forced distribution initially helps to get rid of
poor performers but later it removes good
performers as well
 Be a star if my team falls flat or fall flat if my
team is a star
 Hoffman need to present this in the Board
meeting

15. Thank you