CASE STUDY
I.
POINT OF VIEW
This case analysis takes on the viewpoint of Ekdahl (VP of HR), for he is
responsible for the smooth and profitable operation of the company’s human resources
department. He supervises and provides consultation to management on strategic
planning staffing plans, like compensation, benefits, training and development, budget,
and labor relations.
II.
STATEMENT OF THE PROBLEM
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Should Ekdahl order another round of reviews or make do with the data he has?
Context: The Circale corporation wanted to cut $20 million dollars from their payroll after
the merger and acquisition. Therefore, the decisions about post merger personnel cuts
surfaced in the meeting between Ekdahl and Fierst. Ekdahl, the VP in the HR department,
is tasked to get the right data from the performance evaluation system generated from the
three companies in order to fire employees to cut payroll. However, Ekdahl stated that it
would be wrong to let go of some of the employees from the acquired company and retain
the veteran. He further added that it is much better to place the best person in every
position.
The issue here is that the managers are not too honest in giving ratings and grade inflation
and compressions happened. Grade inflation happens when managers give almost
everyone the same grade. At the first review, most scores are 4 & 5. He convinced
managers to rate their employees low where 3 is the highest. Ekdahl said that it is better
to rate the employees with a range of 1s or 2s for them to improve themselves. Therefore,
he decided to let the managers do the performance reviews again and again. The
complication is Ekdahl can’t order the managers to another set of reviews right away
because they’ve already spent a lot of time on the reviews. They need to figure out what
went wrong to get better results. This is where Ekdahl wondered whether he really ought
to follow through with his vow to make managers keep doing performance reviews until
they got them right or make do with the data he has.
III.
AREAS OF CONSIDERATION
STRENGTHS
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Putting right people in the right positions
It is useful for identifying true potential and interests of the employees.
It improved organizational performance and personal growth of employees.
It ensures that the company has required quality and quantity of manpower to carry out
its operations.
It enhances the communication in the organization.
WEAKNESSES
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The process includes a lot of procedures and thus time consuming.
Negative feedback may result in noncooperation from the employees in the near future.
It results in ignoring employee’s current performance and to make decisions based
mainly on his past performance.
Unfair results due to managers' behavior to resort to giving an average rating to
employees irrespective of their actual performance.
Human resource and managers goals may not align in terms of their aim in assessing
the performance of employees (manager; for compliance. HR; development.).
OPPORTUNITIES
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It enables to find out areas or tasks in which the employee is competent and where
improvement needs to be made.
It encourages employees to do better as well as recognizes employee’s efforts and
rewards their performance such as promotions.
It provides the content and method of designing training programs to overcome their
weaknesses and develop their strengths even more.
It facilitates a good work atmosphere which directly benefits the organization as a whole.
It usually results in healthy competition among employees and increased productivity.
THREATS
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IV.
o
Possible lay off people that have potential due to weakness in performance appraisal.
Emphasized too often on the process of ranking performance and attaining specific
scores.
It is impossible to eliminate personal and subjective elements from it.
It may result in dishonesty as managers try to avoid possible conflicts or arguments with
employees.
It may not be conducted properly owing to lack of communication and relationship
between the managers and employees.
ALTERNATIVE COURSES OF ACTION
Do another round and ask managers to talk to employees and build an in-depth
relationship. Also, create a different evaluation form
Pros: The managers have an opportunity to not just discuss the work of their
employees, but also ask questions about why they are - or are not - content with
their current position. The managers can strengthen those relationships and gain
valuable insight into how you can improve employee retention.
Cons: this may still be difficult to do with the history of managers not giving honest
evaluations of their employees which leads to grade inflation and compression.
The company doesn't have the luxury of identifying the perfect individual for every
position.
o
Make use of the data he has.
Pros: He would not do another round of reviews on their employees as it is timeconsuming.
Cons: The reviews he got from the managers are not completely honest and it
may hinder in making decisions.
o
Quantify the head-count mix (suggestion ni Gabriel Dichiera)
Traditionally it’s used as the denominator in rate measures (i.e. Termination Rate,
Promotion Rate, Transfer Rate, Hire Rate) for better comparison purposes.
Pros: They will identify the right number of people with the right skills in the right
roles so the company.
Cons: The issue with this calculation is the company may overstate or understate
a rate measure by applying this method, causing difficulty in comparison.
o
Just do the Cuts randomly (CFO’s Suggestion)
Pros: The company will be able to effectively compete with other companies
because it will cut costs and increase profits of the company.
Cons: They might lose potential employees and retain unskilled workers.
o
Integrate Informal Performance Review
This will be done once a month where team managers find time to supervise and
communicate with each member of their team in order to gain insight and familiarize their
tasks.
Pros: From the regular feedback, employees will have more time to improve their
performance and they won’t be surprised whatever critics or ratings they receive
during the formal performance review consultation. Furthermore, with the
managers monthly interaction with the employee, they’ll be more familiarized with
the employee and their tasks in order to give a genuine rating and conversation
during the formal performance review and present a more reliable report to the
human resource.
Cons: The managers may lose their standing or respect if they are too acquainted
with the employees and may not create a balanced environment for a successful
conversation for the formal performance review consultation.
V.
RECOMMENDATION (SHORT & LONG-TERM)
Short-term Recommendations:
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Remind managers that they're accountable for their team performance which is
tied to their compensation and let managers justify each rating they give.
Managers should take training sessions where they role play in giving realistic
feedback. Those who fail are not allowed to do solo-review.
Integrate Informal Performance Review in order to gain insight and provide
genuine ratings.
Long-term recommendations:
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The new performance review that is based on Ekdahl’s suggestion should be taken
slowly and not abruptly like how the CEO and his predecessor wants to allow the
people to adapt to it or else they will see it as poison. For the first year of the
system, it should just be used to identify candidates for promotion and offer special
assignments. Only after the system is working well and everyone adapted to it,
should it serve as a Should Ekdahl order another round of reviews or make do with
the data he has?basis for compensation and lay-off.
A performance-review system that is crafted meticulously should be rolled out just
as carefully. Leaders must frame it as a long-term tool for developing high
potentials, improving the performance of all employees, and generating data that
help executives to direct financial rewards appropriately.