The Performance Appraisal– Jennifer

After spending several weeks on the job, Jennifer was surprised to discover that her father had not formally evaluated any employee’s performance for all the years that he had owned the business. Jack’s position was that he had “a hundred higher-priority things to attend to,” such as boosting sales and lowering costs, and, in any case, many employees didn’t stick around long enough to be appraisable anyway. Furthermore, contended Jack, manual workers such as those doing the pressing and the cleaning did periodically get positive feedback in terms of praise from Jack for a job well done, or criticism, also from Jack, if things did not look right during one of his swings through the stores. Similarly, Jack was never shy about telling his managers about store problems so that they, too, got some feedback on where they stood.

This informal feedback notwithstanding, Jennifer believes that a more formal appraisal approach is required. She believes that there are criteria such as quality, quantity, attendance, and punctuality that should be evaluated periodically even if a worker is paid on piece rate. Furthermore, she feels quite strongly that the managers need to have a list of quality standards for matters such as store cleanliness, efficiency, safety, and adherence to budget on which they know they are to be formally evaluated. She would like your opinion and advice.

Questions

1. Is Jennifer right about the need to evaluate the workers formally? The managers? Why or why not?
   1. Absolutely! Everyone within an organization should have some type of structured feedback. In the subject of Jack’s “Higher Priorities” within the business, many profit and money-saving concerns can be directly correlated with employee performance. And how can performance be measured and improved without some type of performance management system? 
   2. With the Carters running into problems with procedures and other issues with employees, this could be part of the solution. If regular performance appraisals are conducted then issues can be assessed and corrected before they get too big.
2. Develop a performance appraisal method for the workers and managers in each store
   1. In the case of Carter Cleaning, we believe an effective approach would be the Paired Comparison Method. Jack each month (or his line managers) could compare each subordinate based on the suggestions from Jennifer on store cleanliness, efficiency, safety, and adherence to budget. This method also provides an opportunity for each of Jack’s stores to have an “Employee of the Month ” to raise morale and create healthy competition thus boosting sales and limiting costs. Employees would then also be able to see their performance and how it is compared to the other workers allowing them to know what they need to improve on.

 Is Jennifer right about the need to evaluate the workers formally? Why or why not? If you think she is right, how do you explain away Mel’s arguments?
Yes Jennifer is right about the need to evaluate the workers formally. One phase of the annual performance management cycle is performance appraisal, the process of reviewing employee performance, documenting the review, and delivering the review verbally in a face-to-face meeting.
Annual performance reviews are typically intended to:
· give feedback on performance
· justify personnel decisions such as salary actions

Is Jennifer right about the need to evaluate the workers formally? The managers? Why or why not? Jennifer is absolutely correct in having these employee evaluations done formally. Reason for is to protect Carter Cleaning Company and its business goals from discrimination charges or violations of Title VII of the 1964 Civil rights Act. Informal evaluations can lead to unfair appraisals which can open a can of unexpected problems. All employees should receive formal evaluations via by paper or electronic forms in order to have a documented history. Keeping employee evaluations on file makes it easier for employers to reference certain information needed for promotions or projects, etc. Jennifer should get with Jack to discuss what performance dimensions should be measured and how to measure them. Once they’ve come to a decision, Jennifer should look in to developing a sort of graphic rating scale.

The Incentive Plan

The question of whether to pay Carter Cleaning Center employees an hourly wage or an incentive of some kind has always intrigued Jack Carter.

His basic policy has been to pay employees an hourly wage, except that his managers do receive an end-of-year bonus depending, as Jack puts it, “on whether their stores do well or not that year.”

However, he is considering using an incentive plan in one store. Jack knows that a presser should press about 25 “tops” (jackets, dresses, blouses) per hour. Most of his pressers do not attain this ideal standard, though. In one instance, a presser named Walt was paid $8 per hour, and Jack noticed that regardless of the amount of work he had to do, Walt always ended up going home at about 3:00 p.m., so he earned about $300 at the end of the week. If it was a holiday week, for instance, and there were a lot of clothes to press, he might average 22 to 23 tops per hour (someone else did pants) and so he’d earn perhaps $300 and still finish up each day in time to leave by 3:00 p.m. so he could pick up his children at school. But when things were very slow in the store, his productivity would drop to perhaps 12 to 15 pieces an hour, so that at the end of the week he’d end up earning perhaps $280, and in fact not go home much earlier than he did when it was busy.

Jack spoke with Walt several times, and while Walt always promised to try to do better, it gradually became apparent to Jack that Walt was simply going to earn his $300 per week no matter what. Though Walt never told him so directly, it dawned on Jack that Walt had a family to support and was not about to earn less than his “target” wage, regardless of how busy or slow the store was. The problem was that the longer Walt kept pressing each day, the longer the steam boilers and compressors had to be kept on to power his machines, and the fuel charges alone ran close to $6 per hour. Jack clearly needed some way short of firing Walt to solve the problem, since the fuel bills were eating up his profits.

His solution was to tell Walt that, instead of an hourly $8 wage, he would henceforth pay him $0.33 per item pressed. That way, said Jack to himself, if Walt presses 25 items per hour at $0.33 he will in effect get a small raise. He’ll get more items pressed per hour and will therefore be able to shut the machines down earlier.

On the whole, the experiment worked well. Walt generally presses 25 to 35 pieces per hour now. He gets to leave earlier, and with the small increase in pay, he generally earns his target wage. Two problems have arisen, though. The quality of Walt’s work has dipped a bit, plus his manager has to spend a minute or two each hour counting the number of pieces Walt pressed that hour. Otherwise, Jack is fairly pleased with the results of his incentive plan, and he’s wondering whether to extend it to other employees and other stores. He wants your opinion.

Questions

1. Should this plan be extended to pressers in the other stores?
   1. I think it should if the pressers in the other stores aren’t pressing around the average amount of shirts. That way they will be able to continue to get paid what they want and they can actually make more if they press more shirts in the same quality.
2. Should other employees (cleaner/spotters, counter people) be put on a similar plan? Why? Why not? If so, how, exactly?
   1. I don’t think they should. The presser I think has a unique job that can be put on this type of plan but the counter people don’t necessarily have a quota or anything. The cleaners and the spotters could potentially be put on a similar plan if the Carter’s feel their time and money is being wasted but for the most part I don’t think they should be.
3. Is there another incentive plan you think would work better for the pressers? Describe it.
   1. The Carter’s could develop a better incentive plan. One suggestion would be to create a base rate, as well as offering the opportunity to earn a bonus by being able to press more shirts than the average. However, with this there should be a quality standard set in accordance with the extra shirts. This would give them incentive to do more, but also incentive to keep their quality. It will also save the manager time from needing to count each presser’s shirts every hour.
4. A store manager’s job is to keep total wages to no more than 30% of sales and to maintain the fuel bill and the supply bill at about 9% of sales each. Managers can also directly affect sales by ensuring courteous customer service and by ensuring that the work is done properly. What suggestions would you make to Jennifer and her father for an incentive plan for store managers or counter people?
   1. Jennifer and her father should definitely consider implementing an incentive plan. I think the Carter Cleaning Company should look into introducing bonuses of sorts whether that be annual bonuses, monthly bonuses, etc. I think by introducing this it would allow the employees to have something to work for and I think it would increase the overall quality of their work and their work environment.