TechSavvy Final

7/31/2019 TechSavvy Final

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TechSavvy: Time to eliminate the underperformer?

1

ames stood in front of the President’s office.

A bead of perspiration trickled down his

brow. He knew that this was the opportunity

he had been waiting all along. This was the one

interview that could make or destroy him. He

tapped lightly on the door. A gruff voice told him to

enter.

The President was sitting in a chair that seemed

too small for him. He seemed to be a small, wrinkly

man of sixty. He stood up to greet James and

politely asked him to take the chair opposite to him.

Here was the man himself; or the “Legend”, as

everyone in the tech industry called him. James

took a moment to come to terms with his bearings.

The cabin was warmly lit with several motivational

posters along the walls. He thought that this mustbe a wonderful place to work at. The President’s

voice interrupted his thoughts.

“Welcome to TechSavvy, young man. I understand

that you are here to conduct an interview for the

Daily Prophet?” he said.

“Indeed sir, I am,” James answered politely.

“Well then, let us begin shall we?” the President

said with an encouraging smile.

“Where to begin, Sir! TechSavvy is such a huge

success. It is currently ranked 5th in Fortune’s

Magazine’s wealthiest companies, and it has won

several national and international accolades in the

past year. What do you think is the reason behind

your recent success?” James got it all out in a

rush.

“Aah, yes. 2012 has indeed been kind to us. Well, I

put it down to the dedication and commitment of

TechSavvy’s employees. We only recruit the best

candidates and their intelligence and drive is what

propels us forward. And we, in turn, reward them

justly,” the legend said, the pride evident in his

face.

“Sir, can you elaborate on how you reward your

employees?” James asked.

“Here at TechSavvy we reward the best of the

best. If you had looked around the offices, you

might have noticed the relaxation centers and spas

on every floor. They have been specially designed

for the fast trackers of TechSavvy. And then, there

is of course our no-nonsense appraisal system.People with good appraisals are rewarded with a

hefty bonus at the year end and also receive a

share in the company’s profits,” the President said.

“And how do you judge who is better, Sir?” James

asked, curious.

“I’m glad you asked that. Well, you see, it’s rather

like your annual school report card. Some

employees receive E’s for Excellent, most receive

S’s for Satisfactory and a few receive CC’s for

Causing Concern. The only difference is we limit

the number of E’s, S’s and CC’s we give out,” the

President replied.

“And why is that?” James questioned.

“Mostly, it is to avoid leniency, severity and central

tendency errors. Also, it helps employees realize

J




2

their weaknesses by comparing themselves with

their peers. And off the record James, even though

we are one of the wealthiest companies in the

world, we only have a finite number of bonuses to

give out. This ensures that only the most deserving

ones get the bonus,” the President said with

conviction.

“I see. What happens to those who receive CC’s?”

James was hurriedly scribbling as he asked this.

“They are put through training and counseling. If

they are still unable to manage at least an S, they

are let go. TechSavvy has no tolerance for

laggards,” he said sternly.

“Are the employees accepting of this system?”James was confused.

“Of course they are. TechSavvy employs around

92000 people. If they weren’t accepting, they

wouldn’t be working here. You can talk to my

employees if you want. I believe they would be

more than happy to share their experience,” the

President offered.

“That will be very helpful Sir. Thank you for your

time.” James stood up to shake hands with the

President.

“No problem. My secretary will show you the way

out,” he replied.

The secretary ushers James towards the

employees’ cabins. A lone man of fifty, sitting

nonchalantly at his desk, catches James’s eye.

The secretary tells him that the man is a certain

Tom Riddle. James walks up to him and introduces

himself. Mr. Riddle seems eager to talk. So James

asks him about his experience at TechSavvy.

“I’ve been with this company for 25 years. I’ve

given it everything I have. All throughout my life,

I’ve been a model employee. I’ve always gotten E’s

on my evaluations and enjoyed all the perks that

came with it. And now, in my final years, this

company has turned its back on me,” he says with

a sigh.

“But why would they do that?” James asks,

astonished.

“Because TechSavvy no longer needs me. I’m old

and dispensable,” Mr. Riddle says matter-of-factly.

“Sir, I’m sorry but I don’t understand what you are

saying.” James is confused beyond measure.

“I’ve mentioned to you how I’ve always gotten E’s

all throughout my career and enjoyed the best that

this company has to offer. But last year, I got an S.

I asked my supervisors, because they are the only

ones who do the appraisal. They said that there

was no change in my performance and that I

should be happy with what I got. But I wasn’t. So I

probed farther and one of them finally cracked and

told me the real reason. He said their hands were

tied. Because of the forced distribution, they were

only able to give out 3 E’s in IT. And they chose to

give them to the new recruits for retention

purposes. I am nearing the end of my job career

whereas they are indispensable to the firm. Two of

them are on my current task team. I can’t even look

them in the eye.” he concludes.

“But Sir, there must surely be something you cando. Have you tried taking this matter to the

President?” James asks.

“I wrote him a letter eleven months back. He is yet

to answer it. Another performance appraisal looms

on the horizon. I am surely doomed,” the old man

says dejectedly.

“I don’t know what to say.” He honestly didn’t.

“It’s okay, son. I’ve accepted my fate. And look at

you, sitting here in a dark office listening to the

ramblings of an old man. The sun shines bright. Go

and enjoy it!” The old man says, slapping his back.

“Good luck, Sir. And thank you for your time.” The

man just shakes his head. James steps out of the

office, his thoughts a confused mess.




3

Learning Objectives:

1. To analyze the current performance appraisal system and evaluate its alignment with the

organization’s culture.

2. Learning to evaluate a performance appraisal system and to generate necessary recommendations.

3. To assess the possible outcomes of seeking legal action against a company.




4

Questions and Answers:

What is your opinion of the current performance appraisal system in TechSavvy?

Is it at par with its team-oriented focus?

TechSavvy currently evaluates its employees on the basis of a forced distribution method. It aligns the

employees in accordance with previously decided

performance-distribution percentages. In TechSavvy,

for example, the supervisors were only able to give

out 3E’s in IT. This had been pre-assigned by

management and hence the supervisors had no other

option but to comply. Now to give a fair opinion of the rather controversial forced distribution method, one

needs to consider both the pros and cons associated with it. Proponents of forced distribution state that the

approach may:

Foster a high performance culture in which the workforce has a continuous chance of

improving. Although the fate of Mr. Riddle does seem unfortunate, there might be some people who

actually deserve the S or CC. Receiving a lower grade will motivate them to strive harder to achieve an

E and the associated bonus. This feeling might be further strengthened when they see their colleagues

enjoying the added benefits of a good appraisal.

Force supervisors to make tough decisions and identify the strongest and weakest links in a

group. Had there been no pre-assigned distribution, the supervisor might have given everyone a good

grade (leading to both central tendency and leniency error) in order to be better liked among his

subordinates. Alternatively, if a supervisor is too strict in his evaluation, he might give everyone a bad

grade on average leading to strictness error. Hence TechSavvy’s appraisal system ensures that these

errors are avoided, ensuring that only the truly deserving ones enjoy the perks of a good appraisal.

(Lisa, S.)

Those who are opposed to forced ranking suggest that the process may:

Demotivate workers . Mr. Riddle was very discouraged when he received his first S in 25 years

despite no change in performance. The forced ranking left his supervisors with no other option.

Discourage collaboration and teamwork . When employees know that they are up against each

other, they tend to act in their individual interests rather than in what is beneficial for the whole group.

Give rise to gender, age or race distribution . Many argue that managers often use forced

distribution to serve their individual biases. In Mr. Riddle’s case, for example, he was given an S

because he was “old and dispensable.” Alternatively, the new recruits were given E’s because of

retention purposes.

It is obvious from the above arguments that the forced distribution method is best suited to organizations that

seek to engender a competitive culture. It is useful when making distinctions between employees and making

“An effective performance

appraisal system needs to be in

place before forced ranking is

undertaken”




5

difficult decisions like layoffs. It instills the concept of “Survival of the Fittest” into the minds of employees who

then compete with each other for scarce organizational resources. Hence this method is very suitable for

hypercompetitive cultures.

TechSavvy, on the other hand, has a more team-oriented

focus. In such cultures, forced distribution may be

counterproductive, since it pits associates against

each other. (Fisher, C, D., Schoenfeldt. L, F., Shaw,

J, B) Team members are busy competing with each other

for good grades, rather than functioning together as a

whole. TechSavvy only has a “finite number of bonuses to give out”. Accordingly the forced distribution makes

team members compete for these bonuses, hampering largely in the process. Two of Mr. Riddle’s team

members received E’s in their evaluation, whereas he only received an S. This greatly upset Mr. Riddle, who

“can’t even look them in the eye.” If such is indeed the situation, then it would be very difficult for this team to

work together both in the present and in the future.

The forced distribution does not seem to be at par with TechSavvy’s culture. Given its team focus, it would thus

be beneficial for TechSavvy to employ an appraisal system that rewards teamwork and collaboration and

removes the element of competition within employees.

“It’s usually best to replace C

players. Development efforts too

often result only in their moving

up just slightly and displacing

other marginal performers”




6

How might the performance system be redesigned to eliminate/address the

current issues?

In order to redesign the appraisal system, one first needs to know the problems associated with it. The forced

distribution system currently practiced at TechSavvy has given rise to a number of issues mainly:

Employee appraisals only take place once a year, thus reducing feedback opportunities and chances

of improvement.

The appraisal is kept confidential. Employees are not judged on the basis of specific Key Performance

Indicators (KPI’s), but on the basis of overall performance. This lack of transparency leads to low

procedural justice in the system.

On those occasions when employees are part of exclusive high-performing teams where each member

is equally talented and bears an equal share of the weight, someone still must be ranked low, despite

meeting performance plan goals. Hence there is low distributive justice in this system. This ultimately

lead to Mr. Riddle receiving a low score despite giving his best efforts. There is evidence of age discrimination in the system. All the new recruits at IT received E’s on their

evaluation, whereas Mr. Riddle received an S because he was “old and dispensable.” This issue must

be addressed as quickly as possible if TechSavvy wants to avoid potential lawsuits.

So, to bring internal equity in TechSavvy, along with transparency and fairness in the performance appraisal

system, one solution might be a 360 degree assessment system. (Peiperl, M, A.) It is feedback that comes

from members of an employee's immediate work circle. With the increase in focus on teamwork in TechSavvy,

the emphasis of appraisal has shifted to employee feedback from the full circle of sources which includes self-

evaluation, evaluation of peers and supervisors.( (Fisher, C, D., Schoenfeldt. L, F., Shaw, J, B.)

Self-assessment : Self-appraisals are particularly

valuable in situations like TechSavvy where the

supervisor cannot readily observe the work

behaviors and task outcomes. This form of performance information is actually an informal part of the

assessment. The supervisors at Tech-savvy, can ask their employees “How do you feel you have

performed?” in a somewhat formal approach. In this way they can identify the key accomplishments of

the employees and how they feel about themselves. If self-ratings are going to be included in the

appraisal, structured forms and formal procedures are recommended. Moreover, the self-assessment

should take place in every quarter of the fiscal year to ensure a continuous flow of motivation in

achieving potential targets.

The peers: With downsizing and reduced hierarchies in organizations, as well as the increasing use of

teams and group accountability, peers are often the most relevant evaluators of their colleagues’

performance. Peers have a unique perspective on a co-worker’s job performance and employees are

generally very receptive to the concept of rating each other. Peer ratings can be used when the

“Charlie is better than Sam, but

not as good as Mary ”




7

employee’s expertise is known or the performance and results can be observed. Peer evaluation will

be a very effective tool in TechSavvy as team orientation is the integral to organizational structure.

Using this tool, the behavioral factors of an

employee can also be judged in terms of

acceptable behavior and good interpersonal

skills. Moreover, the increased use of self-

directed teams make the contribution of

peer evaluations the central input to the formal

appraisal because by definition the supervisor is not directly involved in the day-to-day activities of the

team. So, the addition of peer feedback can help move the supervisor into a coaching role rather than

a purely judging role.

Superiors (Supervisors): Evaluations by superiors are the most traditional source of employee

feedback. A 360 degree assessment should include both the ratings of individuals by supervisors on

elements (KPI) in an employee’s performance plan and the evaluation of programs and teams by

senior managers. The supervisors must inform the employees beforehand the basis against which

they are being evaluated. To make the rating fair, superiors should be able to observe and measure all

facets of the employee performance to make a fair evaluation. Moreover, supervisors need training on

how to conduct performance appraisals. They should be capable of coaching and developing

employees as well as planning and evaluating their performance.

Thus, after considering all the above recommendations, the redesigned performance appraisal scheme should

have:

.A quarterly self-assessment, peer and superior evaluation instead of the yearly basis. This will help

ensure a continuous flow of motivation and feedback to enhance attainment of performance targets.

A higher weightage on peer evaluation followed by supervisors’ evaluation and self -assessment. The

peers and superiors must clearly mention the basis of each score and justify the reasons behind

giving a particular grade. Moreover, the superiors and peers are liable to answer any sort of queries

on the score. Keeping this in mind, TechSavvy might arrange an interactive session after the

performance appraisal.

All in all, 360 degree evaluation will help address most of the issues faced in the current performance scheme

in TechSavvy.

“The research indicates that

positive feedback charges up a

worker, but negative comments sap the job of some of its

intrinsic motivation”




8

Do you think it is feasible for Mr. Riddle to file a lawsuit against TechSavvy?

Please explain the rationale behind your answer.

Mr. Riddle has been working at TechSavvy for the last 25 years. He fell on the wrong end of a forced

distribution method which is used by the company for employee performance appraisals. He has the following

alternatives which he can choose from on the matter:

1. Take legal action against the company

2. Accept TechSavvy’s evaluation of his performance

Mr. Riddle had dedicated the major part of his professional life to TechSavvy. The least that TechSavvy could

have done was to honor him for his loyalty and dedication by giving him a grade he deserved. Not only did they

fail to do that, the supervisors were also unable to give him a proper explanation as to why his grades suffered.

He was snubbed from getting an E in his evaluation even after a performance worthy of the grade because the

number of E’s given by the company was limited. For retention purposes, only 3 new recruits were given E’s.

Hence, Mr. Riddle’s grade suffered.

Clearly, Mr. Riddle was discriminated on the basis of his age. The new recruits seem more important to them

even though Mr. Riddle gave his whole life to TechSavvy. Mr. Riddle was, in his own words, “old and

dispensable.” Here, Mr. Riddle was a victim of discrimination on the basis of age. This unfair action against him

would not hold in court and TechSavvy would have no other choice but to settle the lawsuit with a large amount

of money. There is indeed very little chance of the lawsuit getting revoked. (Alsever, A.) Hence, if he decides

to take legal action against the company, it is safe to say that he would be paid a handsome amount to settle

the lawsuit.

The only drawback to taking legal action is that everything between him and the company would end on a bitter

note. He gave 25 years of his

life to TechSavvy. And to end his time

in the company by filing a discrimination

lawsuit against them would be the

worst possible scenario if professional

image and goodwill is Mr. Riddle’s

priority.

All in all, there should be no doubt that Mr. Riddle should take legal action against TechSavvy, unless he feels

his professional image and goodwill is too important for him, and he wants to end his career in the company on

a positive note.

“The strategy has also resulted in legal

troubles for such companies as Microsoft,

Ford, Goodyear, 3M, and Capital One, which

have fought discrimination lawsuits” filed by

former employees who claimed forced ranking

was used to discriminate on the basis of race

or age.”




9

References

1. Lisa, S. (2002, June 20).Forced Ranking- A Good Thing for Business. Workforce. Retrieved on May

22, 2012, from www.workforce.com

2. Fisher, C, D., Schoenfeldt. L, F., Shaw, J, B., 2009. Human Resource Management . Boston, New

York: HMC.

3. Peiperl, M, A. (2001, January).Getting 360-Degree Feedback Right. Harvard Business Review.

Retrieved on May 22, 2012, from http://hbr.org/2001/01/getting-360-degree-feedback right/ar/1.

4. Fisher, C, D., Schoenfeldt. L, F., Shaw, J, B., 2009. Human Resource Management . Boston, New

York: HMC.

5. Alsever, A. (2007, March 20). What is Forced Ranking? CBS news. Retrieved on May 22, 2012, from

http://www.cbsnews.com/8301-505125_162-51059306/what-is-forced-ranking/

http://www.workforce.com/



http://hbr.org/2001/01/getting-360-degree-feedback%20right/ar/1











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Appendix A: Case Source

Originally published Monday, October 9, 2006 at 12:00 AM

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Microsoft exec puts her stamp on human resourcesIn Microsoft's hypercompetitive culture, employee evaluations are a fact of life. For the past 15 years, a ranking systemforced managers...

By Benjamin J. Romano Seattle Times technology reporter

In Microsoft's hypercompetitive culture, employee evaluations are a fact of life.

For the past 15 years, a ranking system forced managers to limit the number of top scores and

associated bonuses to their staff, even if everyone pulled an equal share of the weight.

Someone had to get the shaft. The forced curve was company policy. And it climbed up a list of employee

gripes that grew as Microsoft's stock, which accounts for much of the company's compensation,

languished.

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1 1

In May, after barely a year as Microsoft's human-resources chief, Lisa Brummel swept away "artifacts of

the past," starting with the widely disliked forced curve.

She announced myMicrosoft, a broad program including resources for career development, management

training and new perks. Now in her 18th year with the company, Brummel calls it the biggest human-

resources policy change ever introduced.

These course corrections come as Microsoft faces perhaps its stiffest competition for talent, often referred

to as the raw material of the technology industry.

myMicrosoft v.1.0

Big changes Microsoft employees recently learned how they fared under a new evaluation and compensation system

introduced in May. The new myMicrosoft employee program also includes new perks. The company is reviewing version 1.0

of the program and plans to continually tweak it. Here are some other elements of the program:

Management training More manager accountability and opportunities to improve skills.

Career development A clearer path to the next promotion to help employees plan their careers at the company.

On-campus services At the Redmond corporate headquarters, employees have access to laundry and dry-cleaning,

grocery delivery and convenience stores. More food options were added to company cafeterias. Free towel service in

employee locker rooms was also restored.

Discounts Microsoft arranged for employees to get discounts on services such as housekeeping, yard and pet care and

auto repair.

Source: Microsoft

Recruiters say talented programmers have virtually unlimited choices — from industry stalwarts to the

companies that have thrived past the dot-com bust — Google and Yahoo! foremost among them — and a

new crop of well-funded Web 2.0 startups.

And Microsoft is as hungry for workers as it has been at any time since the peak of the tech bubble in

2000 and 2001. Its global work force ballooned by 16.7 percent to 71,172 in fiscal 2006, which ended

June 30. While Brummel doesn't expect that blistering pace to be matched this year, she said the

company's growth plans are unchanged.

Keeping employees happy and recruiting new workers are critically important to Microsoft's success. And

Brummel is just getting started.

"With our employee base — the way it grows, the type of people we want to bring in here, the way our

whole system works — we have to keep evolving it," she said.

So far, the rank and file appears to have welcomed Brummel's initial efforts. And while top Microsoft

executives typically don't comment on individual performances, the company's leadership appears to be

pleased with her. She has the green light to continue expanding the program.




1 2

Under the new system, evaluations were completed last month and employees from Redmond and

Fargo, N. D., to Bangalore, India, and Cambridge, England, learned how they had fared in the past cycle,

when bonuses and raises hit their bank accounts Sept. 15.

Employees are now supposed to be judged against specific, measurable performance goals instead of

against their peers. They're also evaluated on potential long-term contributions to the company (althoughthese rankings are still given on a mandated curve). In theory, managers can distribute bonuses and

stock to reward employees as they see fit.

Brummel said Microsoft put more money into compensation — she wouldn't say how much — and

expects the top performers to see rewards "above and beyond" what they got in the past.

Global work force

Reactions have run the gamut, and it's difficult to characterize the experience of employees across the

world.

The author of Mini-Microsoft, the widely followed, anonymous blog where employees railed against the

forced curve, wrote: "I think for most Microsofties, the rewards ended up being very similar to last year. A

few folks on each team might still be trying to pop their eyes back into their sockets. I'm pleased."

Other Microsoft employees expressed ambivalence and noted that there's still confusion on how it works.

Many are withholding judgment until at least the next go-around.

More important to morale, some said, is the stock's recent rally — it has now recovered all of this year's

losses — and optimism over imminent high-profile product launches, including the Zune digital media

player next month and the Windows Vista operating system, scheduled for a broad rollout in January.

Brummel said she's received universally positive feedback from managers on the new system andemployees have been "generally positive," but are wondering what their reviews mean for their careers.

"And in fact, we don't know, because everything will build on what we did this year" and in subsequent

years, she said.

Brummel, 46, grew up in Westport, Conn., received a degree in sociology from Yale and started her

career selling college textbooks. She was recruited by Microsoft while finishing an MBA at University of

California at Los Angeles.

She spent 16 years in a variety of management roles throughout Microsoft's product groups before

reluctantly accepting the top human-resources post. During an evening meeting in her office, she said

"no" three times before Chief Executive Steve Ballmer persuaded her to assume responsibility for keeping

a global work force happy and aligned with company goals.

Human-resources experts say employee review and compensation systems are among the most

important tools to communicate goals to workers.

"The performance-management system tells you what it is in this company that we value and reward,"

said Herman Aguinis, a professor of management at the University of Colorado at Denver Business




1 3

School, and author of a recent book on the topic. "If you're changing the things that you value and reward,

people are going to change their behaviors accordingly, so it is a very powerful tool to change a

company's culture."

Addressing issues

Brummel said there's much more to an employee's experience at the company, and myMicrosoft seeks to

address a spectrum of issues.

She has been deliberate in her efforts to learn more about employee concerns.

Brummel, who walks the same halls as Microsoft's topmost executives, embarked on a "listening tour"

shortly after she got the job. Once a week, usually in the morning, Brummel would find a conference room

big enough for at least 100 people and invite everyone from adjacent buildings to come talk with her

directly.

Brummel is modifying that effort as she gathers feedback on myMicrosoft and prepares a new set of

changes to roll out with version 2.0 of the policy. Later this month, she plans to begin an internal blog,

InsideMS, where employees can raise issues — anonymously if they choose — and she can contribute to

the discussion when appropriate.

She sees this as a more favorable venue to air company complaints than external blogs such as Mini-

Microsoft, which she reads but does not participate in. "One of the reasons why I don't participate in any

of the external blogs is you have no idea whether it's a Microsoft employee posting, or somebody else

posting just to ... provoke a discussion," she said.

She also implored employees during the company meeting last month to "be responsible" with what they

write, especially regarding Microsoft's intellectual property.

New initiatives

Another new initiative addresses an awkward internal-transfer process that discouraged people from

exploring their options. In the past, an employee needed a manager's permission to move to another

team. Now, managers are notified, but can't block a move. Brummel said the new system shortens the

internal interviewing process and "allows people to move more freely."

This is another change employees have long asked for.

Looking further ahead, Brummel said the company will revamp the way managers are evaluated by their

staff. Now employees can give feedback on their direct manager, but not on people further up the ladder.

That's probably the biggest change on tap for myMicrosoft 2.0, she said.

It's hard to gauge what impact any of this will have on recruiting and retention. Brummel knows of at least

one example of a college recruit taking note of the changes. She's more optimistic about myMicrosoft's

impact on recruiting in the coming months as employees get comfortable with the changes and attest to

their experience under the new system.

Benjamin J. Romano: 206-464-2149 or [email protected]

mailto:[email protected]







1 4

Seattle Times researcher David Turim contributed to this report.

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