James Parker Lauron MBA-1

Mrs. Vivien Lawansa

Performance Management at Vitality Health Enterprises, Inc.

I. Statement of the Problem

In 2009, during the economic crisis, Vitality discovered some problems related
with its performance management system. The company started to review its business
strategy and, in particular, the current system of performance appraisal and
management. This system, which ran until 2009, had some problems and some of them
were identified by a committee, Performance Management Evaluation Team (PMET),
which was assigned by the new CEO, Beth Williams, in order to evaluate it and suggest
changes to this system. How to find a better way to identify and reward top performers
in order to keep A players in their positions and accelerate company growth by
attracting new top talent.

II. Areas of Consideration

Strengths:
Global distribution channels
Strong revenue growth
Higher employee compensation.
Weaknesses:
Gradually increasing turnover
Ineffective performance management
Employee complacency
Opportunities:

Increasing demand for cosmetics and nutraceuticals

Emerging markets


Threats:

Intense competition in the industry

Economic conditions

Emerging markets

III. Alternative Courses of Action

-Annual business plan development cycle

-Monthly reporting of measurement results

-Online tools that allow employees to view not only their personal
measures but all the company measures

-Quarterly strategic reviews by management

-Dedicated corporate-level resources responsible for improving the

measurement process, and benchmarking best practices

IV. Recommendation

Performance management system primary goal should be to stimulate

behaviors that improve performance within a company. It appears as Hoffman
suggested that Vitality has missed the mark and is not fostering the type behavior
originally set out to accomplish. I have identified few key suggestions based on the
organizational feedback that would enable Vitality to hit the mark with their performance
management system. We would address the time constraints the managers have in
preparing the evaluations by allowing the process to be extended by three months.
Teamwork is the central to turning out new products, yet the evaluation removes the
motivation and encouragement for individual that would benefit team performance. We
recommend a piece of the individual performance, perhaps 20-30% of the evaluation
must be based on the team accomplishments. We would also remove the required
number of rankings for top achievers, achievers, low achievers, unacceptable and not
rated. We would leave these up to the discretion of the manager. The manager would
then have a pool of money distribute throughout his team contingent on the
performance evaluations. In order to entice innovation within the organization a specific
bonus/ kicker structure should be incorporated into the plan that rewards individuals and
teams that bring new product development to market.

V. Conclusion
The underlying problem within Vitalitys performance management system
despite record growth will lead to a continued loss of market share. Many leading
companies are faced with a similar fate as they often produce incremental
improvements and follow their core technologies to obsolescence and obscurity, while
companies that are able to produce technologically radical innovations become the new
leaders. If Vitality Enterprises successfully reorganizes the PMET into a department
and replaces, much of the current performance management system with a proven
balanced scorecard methodology, they will surely continue to prosper despite market
volatility. It is critical that Vitality moves towards rewarding individuals based on
measurable performance, as well as include team-based incentives. The animosity
among staff members regarding current compensation should be immediately
addressed and replaced with a system similar to TVAs Winning Performance Payout
where online tools for monthly reporting and measurement are available in addition to a
dedicated CPM staff assisting in benchmarking best practices. These changes
alongside quarterly reviews replacing annual will go a long way to improving morale and
retention within Vitality. With time and the right performance management team in place
to follow the Balanced Scorecard methodology, Vitality should finally be able to realize
an inter-organizational harmony in line with the external mission of the company.