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Performance Management System Development

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The Hotel Ole's competitive strategy is "to use superior guest service to increase the length of stay and return rate of guests, and boost revenues, and profitability.". HRD Director Sue Smith knows that the Hotel Ole's performance evaluation system is archaic. When the owners started their first hotel many years ago, they went to paper supply store, and purchased a pad of performance appraisal forms. The supervisors currently utilize this form to conduct annual performance appraisals on all their employees. Supervisors indicate whether the employee's performance in terms of various standard traits including quantity of work, quality of work, and dependability is excellent, good, needs improvement, or does not meet standard.  Unfortunately, there has been very little guidance given to supervisors concerning how to conduct these interviews, or concerning what should be done after they have been completed.

Sue Smith knows that, among other things, this appraisal tool does not force either the supervisor or the employee to focus on the extent to which the employee workforce can help the hotel to achieve its strategic goals.  There seems to be very little consistency across supervisors as to the extent to which they include goal setting, coaching, and employee development issues in their appraisal interviews.  Although the stated objectives for appraisals are that they should be linked to the organization's competitive strategy, and thus reflect the organization's reward system, there is no formal means for doing this.
Director Smith has decided to form a task force that would develop a performance management system that focuses the employee's attention on taking those actions that would contribute to helping the organization achieve its goals, for instance, in terms of improved customer service. As such, the task force will need to develop a performance management system (PMS) that focuses on both competencies and objectives related to the strategic statement.

Task Force Mission:  Consider the following topics: annual appraisal ratings, appraisal interview, feedback, goal setting, coaching, linkages to employee development, and linkages to organization rewards.  Using as many of these elements as necessary to meet the organization's stated strategy, the task force is to design an effective performance management system.

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Solution Summary

Discusses design of an effective performance management system

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In order to set up a good performance management system, one needs to consider these four major elements. First of all, it is very important to set clear goals and objectives. The goals and objectives should be clearly discussed with the employees and their buy-in should be secured for the goals and objectives. Clarification of clear cut goals and objectives along with the buy-in from the employees help in motivating and guiding employees in the right direction and sets a good platform for the performance management system to execute. Employees also feel like an integral part of the system, if the goals and objectives and clearly discussed with them. Hence, goal setting is extremely important for a good start of this exercise.

Secondly, it is important employees are empowered with the right set of training, tools and resources to achieve the desired goals and objectives. For example, employees should be provided with personal growth and development opportunities via training and ...

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  • BCom, SGTB Khalsa College, University of Delhi
  • MBA, Rochester Institute of Technology
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