Precision Manufacturing produces machine parts and has nearly200 production empl

Question

Precision Manufacturing produces machine parts and has nearly200 production employees and 50 employees in their front office with responsibilities ranging from data entry to marketing. Jackson Smith is the new compensation manager at Precision and his first task is to implement a merit pay program that would tie to the company's performance appraisal process. For the last 1- years, all employees have received an annual pay increase, but it has been an across-the-board increase, with all employees receiving the same percentage increase in base pay. Jackson and the company president have agreed that implementing a merit pay program to provide pay increases based on performance would support the company's competitive strategy by rewarding employee productivity.

The first step in developing the merit pay program is to ensure that the performance appraisal process aligns with the proposed program. The purpose in implementing the merit pay program is to provide the employees with pay increases as a reward for performance, and therefore, effective measurement of performance is essential. Jackson must now review the current appraisal process to ensure it will tie to the proposed merit pay program.

The current appraisal process is fairly simple. Once each year, the supervisors at Precision provide their employees a written performance appraisal. The supervisors use a generic form to conduct their appraisals, and the same form is used for all employees. The form asks the supervisor to rate the employee on a scale of 1 to 5 in four areas: quantity of work, quality of work, attendance, and attitude. Once the form is completed, the supervisor meets with the employee to share the results. Both the supervisor and the employee sign the form, and then it is placed in the employee's personnel file.

Jackson's initial research on the appraisals has brought several concerns to his attention. First, employees do not have written job descriptions that clearly state their performance expectations. Further, his review of past appraisals suggests that the supervisors tend to rate all of the employees about the same. Very rarely is an employee rated exceptionally high or low; most are rated as average. Finally, it seems that employees are supervisors communicate very little about performance. Aside from the one meeting a year to deliver the performance appraisal, the supervisors tend to talk to employees about their performances only if the employee is having a problem.

Jackson knows he has a lot of work ahead of him to create a performance appraisal process that will provide a reliable assessment to support a merit pay program. First, he must clearly identify the problems with the current performance appraisal process, and then he must lay out a plan to correct any deficiencies.

1. Where some problems with Precision's performance appraisal process that might cause challenges for Jackson to implement a merit pay program?

Explanation / Answer

Following are the problems with precision performance appraisal process that might cause challenges for jackson to implement a merit pay program are the employees may be resistant to the program beacause they have all been rated preety much the same in the past, so now that some will stand out there could be some controversy with that. another issue is communication and understanding of the performance goals. the employees will need to have two way communication which they have not had in the past. they may feel cheated at first, likely they dont have the information they need and its been held from them because they dont know the goals or have been. the supervisior dont seem to encourage their employees, they only adress them if they are having issues with performance.

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