2. 1987- Company was founded in Ames
1989- Established its own manufacturing facility in Ames
1991- Business had grown to $3million per year
1994- Signed a distribution agreement with leading pharmacy
retailers.
1995- Launched the company into global markets
1997- Acquired Herba Pure Nutraceulticals and changed their
name to Vitality Health Enterprises
3. Late 1990s- Floated IPO
2007- Company had grown to nearly 7000 employees
2008- Global crisis bought relative stagnation to company’s growth
Hired Beth Williams as the new CEO
4. Global VP of skincare products at Barstow & Wyden
Disciplined operational mindset
Popular for reducing global production costs by 12% during her 3
years at B & W Beauty
No-nonsense approach and willingness to handle difficult issues.
Hired as a new CEO of Vitality Health Enterprises
5. Williams organized a committee to track the performance of all non-
sales and non- executive employees.
PMET studied evaluations and rewards system using internal &
external benchmarking, focus groups and employee interviews.
Problems of PMS:
13 different rating levels(A+ to E-)
Homogeneous ratings
6. Top performers felt slighted and undervalued financially.
Job evaluation points- pay policy associated with the position
Technical Knowledge
Problem solving-skills
Level of accountability
Pay policy line= Base salary + ( Job evaluation
points* Increase per point)
7. Based on individual performance in the company
Increase with rise in merit and falls whenever salary-line
formula is moved upward
Comparative ratio= Employee’s current salary
Current market rate
8. Low employee turnover
Stability of a flat salary
No provision for bonus or alternative forms of
compensation
Seniority based increment
Difficult to differentiate top performers and low
performers.
9. Forced distribution model of performance rankings- shift
from absolute to relative ranking system.
Not rated for too new employees or position difficult to
rate
Ranking Category Target Constraints
Top Achiever(T) 10% Max of 14%
Achiever(A) 75% Min of 70%
Low Achiever(L) 12% Min of 7%
Unacceptable(U) 3% No minimum
Not Rated --------- ---------
10. Evaluation team researched the core competencies and key
duties of different jobs.
Managers need to develop specific goals with their
employees.
Performance reviews were to be conducted at the beginning
of the year.
Incorporation of a system of performance-related short and
long- term cash and equity bonuses.
Limited stock options for upper level of management and
directors.
11. Williams appointed Hoffman as a VP of HR To head PMET2
PMET2 compared performance rankings data for early 2009
and early 2011 and found a shift in distribution of rankings.
Surveyed to know the response of employees:
54%- preferred new system
31%- preferred old system
15%- indifferent
12. Managers felt difficult to discuss with employees
since it affects the merit increase.
Employees didn’t do the work which where not part
of their evaluation.
Unwilling to spend time on implementing process.
13. Rigid forced distribution system
Using Not rated employees category as a tool to
reserve higher rankings for old employees
Uniform rankings
Reluctant to disclose the rankings to the employees
Rotation of highest rankings between employees from
one year to the next
14. Research done by Evaluation team showed
both positive and negative comments
Forced distribution initially helps to get rid of
poor performers but later it removes good
performers as well
Be a star if my team falls flat or fall flat if my
team is a star
Hoffman need to present this in the Board
meeting
