Case Application 10: TEAM FUN Kenny and Norton, owners of TEAM FUNI, a sporting

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Case Application 10: TEAM FUN Kenny and Norton, owners of TEAM FUNI, a sporting goods manufacturer and retailer, are hosting their annual management retreat at a hunting lodge in central Canada. This year, the attendees re Tony, director of human resources; Josephine, comptroller; Arlien from marketing, research, and production operations; and the three retail branch store managers, Eric, Joe, and Bobby. They are in day 3 of the hunting, fishing, plann appraisal discussions, Tony places soggy agendas in front of them. ing, and evaluating week. Settling into an afternoon of performance Kenny punches Norton in the ribs and says, "Looks like I can catch a 3-4-hour nap this rnoon. Let me know if anyone says anything funny."He turns to Tony, "Sorry about cleaning the fish on these papers of yours. Looked like fish-gut paper to me! Whew. Maybe the smell will keep me ke." The group spent yesterday talking about the successes and failures of each branch for the past year. They talked about each employee, and how that individual helped or hindered overalloperations it was decided to move a few people to new assignments for the coming year Tony starts: "Apparently TEAM FUN! has been using a modified MBO process for all of its employees." Eric, who has run operations since the company was founded, agrees, "Yes, from what you said about MBO, we do. I know I work out with each shift and team goals for each quarter. We usually have five or six goals for each person and group. If all are met, we all get a nice bonus share plan. If most are met, we get decent raises. One year, no one got raises. from the profit Norton shakes his head, "That was a tough time. We turned it around faster than most, though. And we didn't lay anyone off. Bobby asks, "What would be good sales goals? My guys set goals like these, for example: Attract 10,000 customers a month by the third month of operation. Keep shrinkage/breakage under 0.5 percent. Have zero customer complaints and returns. Every cash register balances at the end of each shift. All employees speak both Spanish and English. Tony comments, "Bobby, you were a special case because the south Florida store just opened this year Josephine adds, "You all need good financial goals-for each and every employee Arlien snaps, "Bobby, you need to sell more. And we need to know what you are promising Kenny wakes up and asks, "What about the fun? Do you have goals for fun? Eric, what were you Tony brightens up and pulls out a chart on absolute rating scales, "Now we're talking!" customers before they call to ask me why it's late saying about relative and absolute standards for fun that you learned in that supervisor class that Tony sent you and Joe to? Questions: 1. Does TEAM FUN! follow the six-step appraisal process? 2. Is an MBO plan good for the company? What could be done to improve it? Evaluate Bobby's g according to MBO criteria. Suggest an alternative to their MBO exclusive performance appraisal process. 3. Comment on the overall effectiveness of the performance appraisal process at TEAM FUN! 4. Provide an outline for their discussion on absolute and relative measurement techniques for "fun."

Explanation / Answer

1. Team Fun partially does not follow the six step appraisal process. In a six step appraisal process the 1) standards are established 2) expectations are communicated 3) actual performance is measured 4) actual are compared with standards 5) appraisals are discussed with employees and 6) corrective actions are taken. In this case, Team Fun does not have standard metrics, goals are set in an adhoc manner. While the targets are communicated to the employees, there is no evidence of any comparison of actual performance with any standard or benchmark. There are no corrective actions for bad performance. When goals are not met, there are no layoffs.

2. MBO plans are good for the company if the process is implemented and followed fully. Under MBO, organisational goals are aligned with employee objectives, progress and performance are continuously monitored, evaluated and feedback is provided. The appraisal is made after the feedback discussion with action and review of the goals for the next evaluation period. MBO process can be improved by using transparent and measurable performance indicators.

Bobby’s goals seem to be set based on adhoc numbers. The sales target of attracting 10000 customers is arbitrary. It is unknown ho many of the customers who are attracted may actually convert into sales. Arlien notes that the sales numbers need improvement. The goal of zero customer complaints are also not recorded Andy reported in a transparent way a second pointed out by Arlien. Shrinkage of below 0.5% has to be benchmarked with industry standard or historical data. Language skills may or may not result in any benefit to the company.

The MBO approach to performance appraisal is centred around what the managers set as goals and decide on what was bad or good with one’s performance. An alternative approach to MBO is the holistic 360 degree approach, wherein performance is evaluated on a range of factors including team effort, communication and relationship with other employees, ability to motivate others. The evaluation under the holistic 360 degree approach is done not only by reporting managers, but also by peers and other stakeholders. The diverse feedback along with set metrics will give a better picture of the performance.

3. While the appraisal process at Team Fun is informal and easy to execute, there are gaps in the outcome of these appraisal. Not having standards or benchmarks will result in over or under evaluating the performance. The absence of corrective actions can result in repeat of the poor performance. Overall, the company may have a broad view of how the organisation and its employees performed in any given period, but the evaluation will be inconsistent.

4. The absolute measurement techniques consider only what is a desired goal to be achieved. On the other hand, relative measurement techniques will consider what is a desired goal and compare it with what I say considered standard or what is achieved by competitors. For example in the Team Fun case, Bobby sets an arbitrary target of 10000 customers to be attracted in 3 months. This is an absolute measurement technique. In a relative measurement technique, the goal will be based on how many customers need to be targeted to achieve a particular sales target. In other words, a conversion factor would be considered for setting a target. Based on historical data of Team Fun, let us say half of the potential customers who are attracted actually go on to become sales customers, then there is a conversion factor of 0.5. When Bobby sets the target for his team, he must consider the conversion factor and the sales target for a given period. I feel there every is no historical data, then benchmarking can be done based on what the competitors achieved.

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