Question

2. What are the salient features of the revised performance management system that was developed by the JC Penney and how did they implement the revised performance management system?

QUESTIONS: 1. Discuss why JC Penney's shift to a more performance-oriented compensation system had to be linked to market pricing? marks 2. What are the salient features of the revised performance management system that was developed by the JC Penney and how did they implement the revised performance management system? 5 marks

Answer 1

1.

An organization's decisions about whether to adopt a pay for performance policy and, if adopted, the type of plan to use are, in principle, subject to an assessment of trade-offs among performance, equity, and costs. In practice, these assessments have been notoriously difficult to make. Nevertheless, economists have developed models of the basic performance/cost trade-offs and some of the contextual conditions that influence them. A firm's choice among plans basing pay increases on seniority or across-the-board criteria, merit plans, or piece rate (individual incentive) plans would depend on its assessment of each plan's ability to accurately measure employee performance and the costs of implementing the plan in the firm context. By design, piece-rate plans, tied to specific, quantitative measures of employee productivity, are viewed as the most accurate of the three alternatives. Merit plans, tied to supervisory judgments about employee productivity, are the next best alternative in terms of accuracy. Standard rate plans, in which pay increases are tied to seniority or across-the-board criteria, are considered the least accurate alternatives.

The costs of actually implementing and monitoring each plan so as to reap the benefits of accurate performance measurement vary with firm context. Several contextual variables that many economists have predicted will influence these costs: the organization's size, its occupational diversity, the demands its technology makes on job structure, skill variation and quality versus quantity measures of performance, the organization's labor intensity, and the degree of unionization in the organization, industry, or sector.

2.

(a) Employee performance management is one of the most important management tools that influence employee growth and organizational development significantly.

(b)  A performance management system includes various important HR functions like goal-setting, feedback, rewards and performance review. An effective performance management system helps HR managers establish clear performance expectations through which employees can easily understand what is expected of their job.

(c) Planning – Setting Clear Goals and Objectives

Setting proper goals for employees is one of the initial steps that lead to increased employee productivity as well as organizational productivity.

(d) Implementation – Understanding The Bigger Picture

In this phase, managers align employee goals with organizational goals and motivate employees to achieve them. Over the course of the year, employees focus on achieving the goals that were set by their managers. They also should be able to understand how their individual contributions help the organization.

(e) Assessment – Frequent Communication And Real-time Feedback

An effective performance management system helps you create a culture of ongoing communication about your team goals, training, etc. Communicating frequently with direct reports and giving them real-time feedback not only keeps them motivated to do their best but also gives them an opportunity to improve themselves constantly without having to wait until the next performance review.

(f)  Review – Performance Review And Suggestions

A performance management system aligns everyone in the organization with the company’s mission and vision.