Utley Food Markets was founded in the 1930s in the St. Louis area. It grew to 86 supermarkets in the Missouri and Southern Illinois area. Up until 1948 it was a family owned company, but then sold and went public, with the Utleys moving out of managerial roles. The company is now heavily unionized, and even those employees who are not union members receiving similar salary increases as to union members. One of the largest concerns is the manner in which employees are reviewed; now typically with the supervisor answering, "how did this employee do in the past year." There is no quantitative data, dialog, supervisory committee, or employee response. This has resulted in a culture of mistrust and suspicion, with the general view that the system is unfair. When employees complain, supervisors typically respond with a larger than average raise simply to make the concern "go away."
Problem Analysis -- Regardless of the issue with unionization, the Utley Food employee review process is completely flawed. Not only is it largely arbitrary, but there are no quantitative measures to which employees can be compared or any decisions defended legally. Supervisors have no guidelines, and there is no employee manual so that employees know which criteria will enter into their review. Raises are based on union negotiations, not performance, and are also sometimes arbitrary. Because there is no standard, no one, not supervisors nor employees, really knows what performance expectations exist. This leads to ambiguity in performance, which leads to discontent, lack of productivity, resentment, and a general malaise in the work environment.
Pay for Performance System- -- In most organizations, the needs to be a way to measure job performance of an individual in terms of quality, quantity, cost benefit, time, and efficiency. A performance appraisal is just such a tool, and as such, should be seen as part of a guide in improving skills, elucidating potential weaknesses, and as a dialog for discussion and growth for both the employee and manager. In theory, a performance appraisal is an ongoing process of analysis and synthesis. It should take into account an employee's successes, failure, strengths, and weaknesses -- and also become a training too for promotion or future needs and training. It should not be a surprise attack, a series of derogatory statements about "what should have been done," or a snapshot of only one project or one series of events. Rather, a good performance appraisal takes many things into account and is a conglomeration of input from a variety of sources designed to improve performance (Patterson, 1997).
Pay for Performance is not a new concept in the world of fiscal remuneration. The standard business and scholarly literature of the past three decades often postulates the question: what better, more productive way, to drive individuals to work harder, more efficiently, and to accomplish standards and goals than to offer them a special "performance" wage or bonus? Essentially, this human resources system allows increased compensation for the individual if their team, department, or company reaches certain targets. This is popular enough that about 75 per cent of all U.S. companies connect at least some part of an employee's pay to measures of performance. Research actually shows that pay for performance increases individual and group performance when tasks tend towards the repetitive, but are reduced when the work requires more creative or abstract thinking. Interestingly, while there is sufficient evidence that pay for performance incentives work well for employees, there seems to be very little correlation between performance pay of CEO's and the overall success of the company (Beer, 2011).
Changes Necessary to Implement PFP- There are several changes that will be necessary in order to implement any new performance, salary or benefits strategy in Utley Foods. These involve: 1) vision statement/strategic plan, 2) job descriptions, 3) determining the evaluation criteria, 4) creating a rating instrument, 5) training for management, 6) information dissemination and training for employees, 7) appeals process, 8) monitoring/review and compliance management and criteria. For any revision to be effective, management must make some rather broad and critical changes. Since there are no job descriptions, measurement criteria, or even any objective and quantitative measurement instruments, management will need to work very closely with Human Resources to develop an entire program; likely also involving managers from each department who must fill out a template and write descriptions for each and every job. Because the company is so heavily unionized, however, such drastic changes will likely need to be negotiated with the union as well, adding time and cost to the procedure.
Ways to Implement Changes- Implementing these changes will not be easy, nor will it happen quickly -- there are simply too many changes necessary because of decades of neglect. Change is difficult; unions tend to react negatively, so it will be paramount that Utley management finds a way to present the changes in the most positive light that appear to have greater benefits to the employees in the long-term.
Vision statement/strategic plan -- Before any new performance criteria can be discussed, it will be necessary to form a strategic plan that will allow for direction, making decisions, and allocating resources to pursue the idea, including human capital and finances. Most agree that in order to know where the organization needs to go, it is important to: 1) Define what the organization does; 2) Why and for whom? 3) How do we excel? 4) How do we forgo barriers to entry and beat the competition? Utley can use a number of techniques to provide insight into this planning process: market analysis, PEST analysis, market segmentation, SWOT analysis, positioning analysis, and situational analysis -- or a combination of these techniques. Once done, Utley will have a far better basis for deciding where it is going as an organization and how changes to compensation can help it get there (The Strategic Planning Process, 2010).
Job Descriptions -- Because everything has been so vague, job descriptions must be created using strict criteria for every job performed within the company.
Evaluation criteria -- Appraisal criteria is part of a strategic managerial decision. For the greatest efficacy, it should be quantifiable, measurable, and logical. Everyone should be treated the same, regardless of their job description. There are a number of online templates and software packages that can be used for this, yet this will likely involve most every member of the organization and take the largest block of time.
Rating instruments- The purpose of a performance appraisal is to measure the performance of the employee rather than the employee themselves. The focus should be on the development of the employee, and how they contribute to the overall goals of the organization. The instruments should be logical and compartmentalized enough so that one trait does not affect the other measurements too much. Objectivity is vital, and the job description and scale of performance of specific actions and duties the measure. Above all, qualitative questions like, "how do you think the employee did over a year," should be changed to "using x measurement on y job, specifically how did the employee perform that task." Because unions and employees often fear negative ratings, the more initial buy-in to the rating system and measurement criteria from all levels of the organization, the more likely it will be accepted (Challenges of Performance Appraisal, 2007).
Training for management -- Since this is a new system, and rather contrary to what is currently in place, management must be trained in the new procedure. This will involve HR professionals reviewing the documentation, answering questions, ensuring understanding of rating criteria, and performing mock-appraisals. The more previous buy-in management has in the job description process, the easier it will be to transition to a more objective rating system.