Hrm - Case on Pay and Rewards Essay

1718 Words7 Pages
PERFORMANCE MANAGEMENT AT VITALITY HEALTH ENTREPRISES, INC 1) What were the problems with Vitality’s old Performance Management System? What were the root causes of those problems? In order to figure out how the performance management system (PMS) impacted the low work spirit of the employees, a committee was formed to review the policies and methods for tracking the performance goals of all non-sales and non-executive employees from across the entire company. The committees research has found out that the company lacked many of the key characteristics of a coherent performance management system, which include holding employees accountable for their actions and incentivizing strong employee performance by different forms of compensation: The old PMS was based on managers rating their subordinates in 13 different rating levels from A to E including pluses and minuses. Vitality Health Enterprises than used these ratings for their point system of salary calculations and performance-based raises. In this system each position had a base-level monthly salary, which was modified upwards along a pay, policy line depending on the number of ''job evaluation points'' associated with the position. Furthermore, the individual salaries were modified by a ''comparative-ratio'' based on individual performance in the company, compared with the industry average pay. In this quite complex system, an employee with a compa-ratio of e.g. 80% would receive 80% of his monthly target salary. These compa-ratios ranged between 80% and 125% of the target salary, and merit increases to compa-ratio tended to decrease on a percentage basis as an employee climbed through the range. A very positive component of the compensation system is that Vitality benchmarked the pay policy line at about the 75th percentile with regard to their compensation peer group, meaning that their

More about Hrm - Case on Pay and Rewards Essay

Open Document