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Background of Heinz

Describe about the Report on Performance Management at Heinz Australia.

In this report I would like to outline the main agendas and recommendations for Heinz Australia that they can use and implement. I will critically analyze the prevailing situation of the company using HRM theories and also outlining the HR framework and strategic management. We will also analyze how an effective performance management can be utilized as in the favor of an organization.

For several decades Performance Management has been utilized as a prime tool to improve efficiency of an organization. The main purpose to implement Performance Management is to align the organizational goal with the annually designed objectives of individual employees. This is done to achieve the organizational objectives as well as everyone is aware of the fact that what they are suppose to do and what company is expecting form them. Moreover employees also get rewarded for good performance (Boswell, 2000). Performance management has been implemented by the organization n accordance to their needs and requirements but it has never been implemented twice in the same way. But abstraction of Performance management about its exact nature and meaning had a thankless preoccupation among HR experts. 

Performance Management has a variety of utilization which is a positive sign as well. An organization is most likely to fail if its business goal, culture, structure and processes differ from Performance Management goals. It is important that performance Management becomes a natural part of an organization so that it is not remained as just a paper work and a bureaucratic system. It is usually avoided by the employees as it is seen as an interruption in their real work or routine.  

In a general understanding the line managers should own Performance management system as a mainstream tool which forms the management system to motivate and monitor their team to be more efficient. But yet sometimes Performance Management is seen as HR-led process which tends to be time consuming and energy for little recognizable perks (Torrington, 2011). Moreover, if Performance management is utilized to give individual performance pay, then it increases the tension and worries. Also they might feel resentment and feel discriminated compared to the monetary benefits offered. This is higher at the times of austerity and low inflation. Performance management has its both positive and negative effects. If not managed properly can result in HR-administered, binary also annual verdict on very employee. But if managed properly can prove to be very helpful in improving employee performance and develop a cooperative environment and cultivate an erg for development among the employees as well as the management. There can be multiple agendas and purpose to have an effective performance management (Boswell, 2000).

How was Heinz's approach to performance management invalid in relation to Moretti's job?

The purpose and characteristics needs to be clear for the articulation of the management literature. Though, it is easier to say it than doing it because it varies in so many ways. A simple figure of Performance Management cycle is explained in Figure 1 below.

Basic Performance Management Cycle

Figure1: Basic Performance Management Cycle (ref: The work foundation, 2014)

According to Aguinis, “Despite its importance, performance management is not living up to its promise in most organizations. A major reason for this is that most performance management systems focus almost exclusively on performance appraisal” (Aguinis, 2011).

There are various approach to performance Management has significantly reflected an important suggestion that Performance Management targets to go beyond the annual appraisal interviews that is there in the direct report of the managers. As specified above Performance Management is ideally successful if and only if organizational goals are synchronized with the individual objectives of the employees.

Background of Heinz:

The H. J. Heinz Company or Heinz is an American brand popular food processing company. They have their headquarters in Pittsburgh Pennsylvania (Heinz, 2016). It was founded in 1869 by Henry John Heinz. Heinz has been holding the 50% market share for Ketchup in US market. Heinz holds 150 No. 1 or No. 2 brands all over the world (cnbc, 2016). The Heinz group agreed on being purchased by “Berkshire Hathaway and 3G capital” for $23 billion (cnbc, 2016). Moreover, in 2015 an official announcement was made that Kraft will be merging with Heinz; it was all set up by Berkshire Hathaway and 3G capital. They completed the merger by July2, 2015 and this gave it another edge made it a market leader.

Heinz Australia has its head quarters located in Melbourne. The most popular products of Heinz in Australia are: Canned beans in tomato Sauce, canned soup, condensed soup and ready to eat soup. Some of the products like ready to eat microwave bowl soups are not produced in Australia, in fact they are imported.   

How was Heinz’s approach to performance management invalid in relation to Moretti’s job? Explain your answer in relation to significance of strategic performance management, appraisal and employee feedback in organizational context.

Response: Performance management includes the evaluation of the company as a whole. It analyses the performance of the company in relation to the organizational goals and set objective. Most importantly the performance management a process in which the performance of an individual is continuously evaluated, identified and set measure is taken in order to align the performance of the employee with the organizational goals (Aguinis, 2010). Performance appraisal is sometimes mistaken as performance Management but performance appraisal is just a part of performance Management. If the overall performance Management or the annual review of the company is not satisfying then it doesn’t mean that the performance of the individual employee is low. It is the percentage or the measure of the whole organization. This can’t be an individual review. The performance Management includes following steps (Mabey, 1999):

  • Objectives are set.
  • Performance is measured
  • Performance feedback
  • On the bases of the performance outcome rewards are given/ or training if otherwise
  • Amendments to the activities and objective.

Response

As per the situation in which Moretti a sales manager at Heinz Australia was dismiss on the bases on the performance management review (or the annual review). it was an invalid approach opted by the company because they were asking him to sign a personal performance management plan. Firstly the approach was invalid because this was not an individual performance review. Therefore the management’s approach of asking him to sign such plan was not based on the performance only. Secondly, the management should have followed the proper methodology to make him understand that why they are asking him to sign such plan. The approach they should have opted would be that they should have given him his personal appraisal stating the exact need of such plan. Though, Moretti on regular bases asked the management to give him the details of the performance concern which the management didn’t provide. This infused the fear of job insecurity in him (moretti) and he refused to sign any such plan.

Now, what management should have opted for a performance management approach such as Goal-setting theory proposed by Edwin Locke. According to this theory, an individual set certain personal goal which play an important role in motivation them, if these goal are aligned with the organizational goals, then the maximum performance can be achieved. If goals are not achieved then they either opt for improving their performance or modifying their goals to make them more realistic and achievable. Thus, opting for this theory results in the achievement of the goals set by the performance management system (Salaman, 2005).

Another approach could have been used by the management rather than forcing him (Moretti) to sign certain personal performance managed plan is Expectancy theory. This theory suggests that an individual is anticipated by the value of the goal set by them in the organization. This results in either improved performance if the goals are achieved or the modification of the employee’s behavior in order to achieve their set goals (Salaman, 2005).

Thus if the Management in Heinz Australia could have implemented this approach, they might have avoid the employee dissatisfaction and the humiliation Moretti faced. Also they might have not face the legal battle they had with him.

How was Heinz’s approach towards employee performance management unreliable? Discuss your answer that relates employee performance management and its impact on strategic human resource management and organizational performances.

Response: Performance management system needs to be fair for both employee and the employer.  The purpose of the performance management system or the strategic performance management is to align the organizational goal with the individual goals to attain the management goals (Bevan, 1991). Now an effective performance management can prove to be beneficial for both the organization as well as the employees working in the organization.

But the performance management system should be design in such a way that it creates a win-win situation for both the organization as well as employee. An effective performance Management can maximize the employee’s satisfaction level as their individual goals are aligned with the organizational goal. Also it helps in utilization

As per Heinz employee performance management was unreliable in various ways. A performance management on a basic level is designed to achieve and analyze the performance of the company or an organization in alignment with the individual objectives. Now Moretti was asked to sign a personal performance management plan because his annual performance management review was low. But the management used it as a reason and portrayed it as his individual performance. It is very clear that a performance management system is the review of the organization as whole not an individual review. This gave Moretti a sense of insecurity and he expressed that management is using this to cut it off from the organization.

The management certainly could have taken other actions as well. They could have opted for a personal performance appraisal without asking him to sign any document. They could have given him his personal appraisals and point out the areas where he was lacking. Moreover, before terminating him the ideal approach would have been to assess that if he needs some kind of training to help him improve his performance and achieve the goal set for him. But what the management at Heinz Australia did was asked him to sign up for a personal performance managed plan without telling him where he is lacking.

Heinz being such a reputed company needs to have more refined and efficient performance management system aligned with its strategic management goal to achieve maximum profitability (Bevan, 1991). It will definitely reduce the financial cost as well. The problems arise from the mobility of the performance management system. 

If we listen to the views of Moretti, he asked the management to provide him the performance concern documents by the management. Which was not done and also this type of performance management strategy had never been implemented in past for any employee so this was definitely something which can’t be accepted. Also it gave him an idea that management is doing all this to let him go from the company without giving any valid reason. It is not a ideal practice of performance management to assess an employee.

An organization if acts like this spreads a sense of insecurity among the other employees as well. This could result in lack of employee retention. This definitely affects other employees as well and ultimately this would result in the lowered profitability of the organization. the management should always keep in mind the ultimate goal of every individual in an organization is to achieve the organizational goal as well as their personal growth. The management must not void Performance management theories for personal interest and grudges. Therefore, the performance management of Heinz was unreliable indeed.

Identify the ways in which Heinz’s employee performance management could be improved. As part of your answer, make sure you explain carefully how the company should implement your recommendations because so much of success in this area depends on the ‘how’ of any strategy is implemented.

Response: Every organization needs to have an effective Performance management system. This helps the organization to achieve its goals and perform well. But if is very important for an organization to achieve employee satisfaction (Hirsh, 2008). If the employees of an organization are not satisfied with the company or the management this would definitely affects the performance of the organization.

As far as Heinz Australia is concern according to the case study we found that the management didn’t pay much attention to the problem faced but the employee, in fact they used it to assess his personal performance on the bases of his annual review which was not personal appraisal but an appraisal of the company as whole (Torrington, 2011). This is not how ideally management handles such situation here are some suggestions for the company that they might have implemented to handle this situation:

The management should have implemented a strategy of aligning organizational goals with the individual objectives.

There should be a mutual agreement between the employer and the employee and they should be clear that what are the individual objects that an employee has work accordingly.

An organization should provide an opportunity to the employee to identify their objectives and goals. Also develop their skills and competency for the optimum personal as well organizational growth.

The performance management should implement an effective cycle in which the performance should be planned, goals should be set, and along with that support should be provided to the employee so that they could achieve what has been set out for them. And as proper review of the performance should be given to them so that they could improve the skill and become competent (Hirsh, 2008).

It should be cleared to the employee that what is expected out of them and how they should perform.

Motivating an employee play a vital role in improving their performance. A regular feedback should be provided to them, so that they can improve where they are lacking.

Performance management system is continues process including series of discrete events and activities. It is an ongoing process which is required to improve the performance of the employee to maximize the organizational profitability (Bevan, 1991).

In performance management the line manager is the key enabler. The manager should adopt a diverse supporting and facilitating roles to back up the employees. A manger should be able to locate the barrier and remove them that are becoming a hindrance in the achievement of the set goals. I couldn’t emphasize more on the feedback. As continues feedback can reduce the time wastage as well as monetary factors.

Performance management needs to be unbiased as well. If the personal grudges are kept in mind them this ultimately hinders the organizational goals.

It is not possible to have an effective performance management if it is considered as just a “system”. It needs to be an integrated part of the management. So that it is effective enough of improve the performance of the employee and profit maximization.

If the complex approaches to performance management can be very risky for an organization. It needs to be simplified. The simpler the approach better are the results.

The object of the performance Management should define “what” of an objective rather than “how”. It is easier to explain what is expected from the employee and help can be provided to understand “how” of an objective (Hirsh, 2008).

The management should follow the moral of encouraging people to take responsibility. They should reward the excellent performer and motivate the best. Also encourage the underperformer in a positive way so that they can also perform better.

Encouragement can help in improving the performance of the employee. Positive motivation is very important and effective in improving the performance of an employee.

The objects that are set for the employees should be revised regularly to remove the barriers and make it more achievable (Bevan, 1991).   

These recommendations can help the management to improve their Performance management system and can result in optimum utilization of resources be it human or others.

Conclusion :

To conclude it is correct to say that Heinz’s performance management system lacks authenticity as well as it was more of a “system” rather than an integrated part of the management system. It is important for an organization to implement performance management system efficiently otherwise it can hamper their reputation, increase employee dissatisfaction and it would be difficult for them to retain their employees.  If the performance management is aligned with the strategic management it can result in the achievement of the organizational goals along with the optimum utilization of the resources available. It helps in cutting cost and lesser wastage of time. It the employee knows that what is expected out of him/ her, then it becomes easier for them to perform as per expectations

For Moretti, the way management handle his situation was not justified at any point. They should have opt for the right way of conducting a performance appraisal where he could be pin pointed that what his weakness are and how he could improve. Apparently, this was not the approach of the management, in fact they judged him on the bases of the annual review and forced him to sign up for a personal management plan, which was an incorrect way of handling the situation. Moreover when he resented the process they ultimately dismissed him from the company. Therefore, it is important for any organization to implement an effective performance management system so the ultimate goal of an organization can be achieved and the employees the organization grows along with the organizational growth.

References:

Aguinis, H.  2009 2nd edition “performance management”

Armstrong K and Ward A, 2005 “What makes for effective performance management” London: The Work Foundation.

Armstrong, M. and Baron, A 2004, “Managing Performance: Performance management in action”.

Bevan S and Thompson M, Performance Management at the Crossroads, 1991. “Personnel Management”, pp 36-40.

Bevan S, “Performance improvement plans and the culture of fear, HR Magazine”. [Online]. https://www.hrmagazine.co.uk/hr/features/1143322/performance-improvement-plans-culture-fear [Assessed on 2016]

“Berkshire Hathaway, 3G Buying Heinz for $23 million” 2012 [online] available from www.cnbc.com assessed on 2016

Corporate Leadership Council, 2002:Building the High-Performance Workforce A Quantitative Analysis of the Effectiveness of Performance Management Strategies”.

DeNisi A and Smith C, 2014. “Performance Appraisal, Performance Management, and Firm-Level Performance: A Review, a Proposed Model, and New Directions for Future Research, Academy of Management Annals”, Vol. 8, No. 1, 127–179.

Hirsh W, Carter A, Gifford J, Strebler M, Baldwin S, 2008. “What Customers Want From HR: The views of line managers, senior managers and employees on HR services and the HR function” Brighton: Institute for Employment Studies, IES Report 453,.

Newbold, C. (2008) ‘360-degree appraisals are now a classic’, Human Resource Management International Digest, 16: 38-40

Newton, T. and Findlay, P. (1996) ‘Playing God: the performance of appraisal’, Human Resource Management Journal, 6.1: 42-58

O'Donoghue, T. and Punch, K. (2003) Qualitative Educational Research in Action: Doing and Reflecting, London: Routledge

Olsen, W K. (2004) ‘Triangulation in Social Research: Qualitative and Quantitative Methods Can Really Be Mixed’, in Holborn, M., and Haralambos (eds.) Developments in Sociology, Ormskirk: Causeway Press

Salaman, G: Stroney, J: Billsberry, H. 2nd edition, 2005 “Strategic Human resource Management: Theory and Practice” sage Publication Ltd.

Smart, B. (1999) Topgrading: How Leading Companies Win by Hiring, Coaching and Keeping the Best People, Paramus, New Jersey: Prentice Hall

Smith, I. (1992) ‘Reward management and HRM’, in P. Blyton and P. Turnbull (eds.) Re-assessing Human Resource Management, London: Sage

Stewart, P., Murphy, K., Danford, A., Richardson, T., Richardson, M. and Wass, V. (2010) ‘We Sell Our Time No More’: Workers’ Struggles against Lean Production in the British Car Industry, London: Pluto Press

 Storey, J. (1992) Developments in the Management of Human Resources, Oxford: Blackwell

Torrington, D., Hall., L. and Taylor, S. and Atkinson, C. (2011) ‘Employee Performance Management’ in Human Resource Management (8th edition), London: Prentice Hall, pp.263-286

Torrington, D., Hall., L. and Taylor, S. (2002) ‘Managing Individual Performance’ in Human Resource Management, London: Prentice Hall, pp.297-315

Townley, B. (1994) ‘Performance appraisal and the emergence of management’, Journal of Management Studies, 36: 287-306

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