The communication plan at Accounting, Inc. addresses most key questions about the new performance management system except for defining what performance management is. This risks employees not fully understanding and buying into the new system. To remedy this, the summary recommends delivering employee training on the basics of performance management, why the previous system changed, and goals of the new system after establishing core competencies. This will help ensure employees understand and support the new performance management system.

1. Worked Solutions for End-of-Chapter Cases
Case Study 7.1: Implementing a Performance Management Communication Plan at Accounting, Inc.
The communication plan used by Accounting, Inc. seems to address all of the key questions with the exception of one:
“What is performance management?” A consequence of not dealing with this issue directly is that employees may be
reluctant to buy into a system that they do not fully understand. After the establishment of the core competencies, it
would be helpful to deliver a training session targeting all employees covering the basics of performance management,
why the performance management system was changed, and the goals they hope to accomplish with the new system.
The following table summarizes which questions are addressed by the communication plan. An “X” means the
question is addressed by the communication plan implemented at Accounting, Inc.
What is Performance Management? Answering this question involves providing
general information about performance management, how performance management
systems are implemented in other organizations, and the general goals of performance
management systems.
X How does Performance Management Fit in Our Strategy? To answer this question, we
should provide information on the relationship between performance management and
strategic planning. Specifically, information is provided on how the performance
management system will help accomplish strategic goals.
X What’s in It for Me? A good communication plan describes the benefits of
implementing performance management for all those involved.
X
How Does it Work? Answering this question entails giving a detailed description of the
performance management process and timeline. For example, when meetings will take
place, what are the purposes of each meeting, when decisions about rewards will be
made, and so forth.
X
What Are My Responsibilities? The communication plan should include information on
the role and responsibilities of each person involved at each stage of the process. For
example, it includes a description of the employees’ and supervisors’ main
responsibilities in the performance management process.
X
How is Performance Management Related to Other Initiatives? The communication
plan should include information on the relationship between performance management
and other initiatives and systems such as training, promotion, succession planning, and
so forth.
Case Study 7.2: Implementing an Appeals Process at Accounting, Inc.
(Note to grader: The following is a sample response--any response will suffice as long as it covers all of the points in
learning objective 7.6 and provides an implementation of the appeals process, rather than a simple description.) Since
the Case Study refers students to the University of North Carolina example, something similar is an acceptable
response. An answer that breaks the process into two distinct appeals processes would be superior. Such a response
would put HR into an investigation and mediation role for the first level and a senior level management team into the
final decision-making role for a second level appeal.
Proposed Performance Management Appeals Process for Accounting, Inc.

2. General Provisions
Under company policy, neither party in the Appeals Process may be represented by an attorney. Company
policy provides that the Director of Human Resources’ decision on an appeal is final and cannot be appealed further.
The Appeals Process has jurisdiction over the following issues only:
 the overall evaluation received as part of the Annual Review
 the rating on one or more principal functions
 the explanatory remarks included in the evaluation
Depending on the actions taken by supervisors regarding salary increases related to the performance evaluation
process, the following issues also may be appealed:
 failure to receive a performance increase and/or performance bonus when eligible
 the amount of the increase or bonus received
An employee is limited to one appeal for any work cycle, regardless of the number of issues involved. The
employee should describe the complete remedy desired if the appeal is decided in his/her favor. (For example, an
employee who appeals the overall evaluation should specify the overall evaluation requested. If such an overall
evaluation would result in eligibility for a performance increase, an increased percentage should be stated as part of the
remedy requested in the appeal.)
By request (and with management approval) an employee may be granted a maximum of 12 hours off from
regular duties for processing an appeal under this Appeals Process without any loss of pay and without charge to leave.
Performance Management Review Board
The Director of Human Resources appoints the Chair of the Performance Management Review Board (Board
Chair) and the other members of the Review Board. When an appeal is received, the Board Chair selects a three-
member Panel and appoints a Panel Leader. The Board Chair notifies the employee of the name, job title, and
department of each proposed Panel member. The employee has the right to disqualify up to two proposed members by
notifying the Board Chair before the date stated in the letter of notification.
Each panel will have one member with supervisory responsibility and two members with no supervisory
responsibility. No member of the Panel will be from the employee's own department. Any member may be designated
as Panel Leader. The Panel determines what information is needed. The involved parties must provide the information
requested by the Panel.
The Panel Leader notifies the employee and the department head in writing of the hearing date and location.
Every effort must be made to arrange for a timely hearing. The appeal hearing is confidential. It is not open to the
media or other persons whose attendance is not approved in advance by the Panel Leader. The employee, the
department head, and supervisors involved in the performance review are allowed to appear in person at the
hearing. However, any party may elect not to appear and to have the Panel's recommendation based only on
documentation presented to the Panel. The chair must receive advance notification if anyone other than the employee
and department head are to provide information to the Review Board. The employee and management must request
approval in advance for witnesses to address the Panel. Only witnesses approved in advance may appear at the
hearing.
After the hearing, the Panel decides whether additional information is needed. Any information requested and
received after the hearing is shared with the employee and the department head. After considering all of the
information presented, the Panel makes its recommendation by majority vote and submits its written recommendation
through the Board Chair to the Director of Human Resources. The Director of Human Resources accepts, modifies, or
rejects the Panel's recommendation and issues the company decision within 15 calendar days of receiving the Panel
recommendation. If the Director of Human Resources rejects the Panel recommendation, the written decision will state
the reason(s) for rejection. The Director of Human Resources sends the written decision to the employee.
Case Study 7.3: Evaluation of Performance Management System at Accounting, Inc.
While user satisfaction and distribution of ratings are important, Accounting, Inc. should also ensure that all
employees are being measured, especially because pay is linked to the performance review. Furthermore,
Accounting, Inc. should also measure the cost/benefit ratio of the system. Three-hundred-sixty-degree feedback
instruments are costly, so the company needs to decide if the feedback received is worth the cost of the
instruments. Finally, Accounting, Inc. should measure whether the new system is helping the company meets its
goals and objectives. Sample measures may include financial improvements and customer service measures.

3. Additional Cases and Worked Solutions
Case Study: St. Jessica’s Urban Medical Center
Based on your performance in helping the Board of Directors at St. Jessica’s Urban Medical Center to establish a
performance measurement approach, the Board has asked you to stay on as a consultant to help them implement their
new performance management program. You understand that this is not the first time that St. Jessica’s Urban Medical
Center has attempted to implement a performance management program. From your conversations with various
managers and employees, you have heard that many people expect this program to be a dismal failure, just as past
programs have been. The scuttlebutt is that those past programs were unfair. You have a sense that employees at
various levels had no idea what the goals of the program were and you have an uneasy feeling that, unless a number of
activities precede implementation of the new program, it is destined for failure, too.
Write a memo to the Board describing what actions must be taken before the program can be effectively implemented.
Discuss the primary goal of each of these interventions and explain how you will know that these goals have been met.
(
Answer:
(Note to grader: The following is a sample response--any response will suffice as long as it covers all of the learning
objectives covered in “Suggested points” above. This is primarily a test of knowledge.)
Thank you for your confidence in hiring me to help you implement the new performance management program. The
purpose of this memo is to caution you that immediate implementation of the program we have designed may lead to
the kinds of problems you have experienced in the past with other programs. Without some preliminary steps, many
employees may feel that this is a repeat of old situations which they have already decided were not in their best
interests. Motivation could be lowered and there will probably be a basic lack of trust and enthusiasm for the program.
I would like to recommend taking the following steps before we actually implement our program:
 Implement a communication plan which answers the following key questions for every employee:
 What is performance management?
 How does performance management fit in our organizational strategy?
 What’s in it for me? For everyone else?
 How does the system work?
 What are my responsibilities? Other people’s responsibilities?
 How is performance management related to our other organizational initiatives?
 In addition, the plan should include features that reduce various cognitive biases that will affect how people
perceive the program. Some ways of doing this would include:
 Employee involvement
 Employee needs
 Strike first--create a positive attitude toward the new PM system before any negative attitudes and rumors
are created
 Provide facts and consequences
 Put it in writing
 Use multiple channels of communication
 Use credible communicators
 Say it, then say it again
 Another step that we will need to take will be the development of an appeals process (preferably two-level) so that
employees can trust that any concerns or disagreements about the system and its implementation will be handled
fairly and without retaliation.

4.  Since raters can make a variety of intentional and unintentional errors when they rate employee performance, it
will be important to conduct training to both teach them about the performance management process and to alert
them to the possibility of such errors, so that they can avoid making them. They will need to learn
 how to use the forms
 how to identify and rank job activities
 how to observe, record, and measure performance
 how to minimize rating errors
 how to conduct an appraisal interview
 how to train, counsel, and coach their employees
We will need to discuss the various kinds of training (such as Rater Error, Frame of Reference, and Behavior
Observation) and Self-Leadership programs that might be implemented.
 Finally, it will be very important to pilot test the program we have developed, to identify any glitches and fix them.
There are several advantages to conducting such a pilot program, as well:
 We’ll gain information from potential participants
 We’ll learn about possible difficulties and obstacles
 We’ll collect information from the participants on how to improve the system
 We’ll understand personal reactions to the system
 We’ll get early buy-in from some participants
 This will lead to a higher rate of acceptance when we roll out our new and improved program!
Case Study: CRB, Inc.
At CRB, Inc. (a small car restoration business), you have been working with Al and Mary Brown to design a
performance management system. As you have interviewed employees, you’ve learned that they are concerned about
a lack of clarity regarding scheduled work, who does what, the need for supplies and parts to be available when
needed, etc. Al and Mary are hoping that many of these concerns can be alleviated by implementation of a more
structured performance management system where there are clear job descriptions and expectations.
Al is excited about tying the employees’ quarterly bonuses to the system, which he thinks will increase “buy-in” from
the employees. You caution him that, in order for his plan to be effective, he will need to explain the program to the
employees in a fairly structured fashion so that they have a full understanding and acceptance of the program. Since
there are only six employees, you suggest that Al and Mary announce the process over a lunch meeting and then
arrange for individual meetings with each employee to ask more direct questions. Al agrees to this plan of lunch
followed by individual meetings with each employee in his office so that the mechanic, painter, detailer, and body
workers can ask questions about how the program will specifically impact his own employment, without worrying that
other employees will tease him.
Provide Al with a detailed outline of what should be covered in the lunch meetings. Give him specific examples
relating to the jobs, so that he has some guidance in what to say and how to say it so that his employees will understand
what they are getting involved with.
Answer: (Anything that covers the same general material is appropriate. The following is an example.)
Al, here are some things that you’ll need to cover overall and then with each and every employee in your meetings. I
think it would be a really good idea to give each guy a copy of this outline at the beginning of the lunch meeting, so he
can take notes on it and have it to talk to his wife at home. I know you hate to interrupt their work, which is why I
suggested lunch. I also think it would be a good idea to give them something positive to associate with the program. . .
like a free lunch! You’ll get it back in productivity because they won’t be as likely to take work time to talk
everything over behind your back, if they’re sure they all got the same story.
So, here’s the outline that I think you should hand out:

5.  What is performance management?
 It’s a way of identifying, measuring, and developing performance in the shop.
 How does performance management fit the shop goals?
 When we get this system going, we ought to get more done, better, with less effort.
 What’s in it for me?
 We’ll all make more money and we ought to be a lot less frustrated.
 We’ll have a better definition of who is responsible for what. . . and when. . . so you’ll have supplies
and parts when you need them.
 We’ll be able to tie your work to your pay. In fact, I’m planning on developing a quarterly bonus
system, so that you can get a bonus on top of your regular 40% commission (or hourly wage) when
jobs go out early and/or when we don’t have any customer work to be redone.
 For everyone else? They’ll get the same kind of treatment related to their jobs.
 How does the system work?
 I’m going to be setting up regular meetings with each of you to let you know how you’re doing on the
schedule. We’ll agree on your schedule (as we have been doing) and then we’ll meet monthly to
discuss how you’re doing in relation to what you planned. We’ll have a quarterly review and your
bonus will be directly tied to how the shop is doing and what you did to get us there.
 What are my responsibilities?
 You’ll need to make a good estimate of how long it will take you to do the work…and you’ll need to
let me know in plenty of time when you’ll need parts and supplies so I can get them to you on time.
You should track your time and what you get done so that we can make sure you get credit for what
you do. You need to remember to ask for help when you need it and don’t try to tough everything out
by yourself.
 Other people’s responsibilities? The foreman will track your hours and help you when things get tough.
I’ll buy your parts and supplies as long as you get the information to me in time. I can’t drop what I’m
doing for rush orders; give me a couple of days to get the order in. . . and don’t forget that some parts
will take awhile to get here!
 How is performance management related to other shop goals?
 We’re constantly looking for ways to make this shop a better place to work, more interesting for our
customers, to be known in the public eye as “The Place to Restore Your Old Car”! As we get more
control over the basics of who’s responsible for what--and how you guys are rewarded for helping us
meet our goals--we’ll look for more ways to help you meet your goals. Is there any training you’ve
wanted to get? Some kind of certification? As we become more profitable, we will want to help you
get it.
Do you have any questions?
Thanks for your time--we’ll get together later this week more formally to go over any questions that you’ve thought of.
. . or just come ask me.