Case Study – The O’Meara Electronics Company
O’Meara Electronics has been operating for 20 years and has had a reasonably high market share in the general electronics sector in Australia and a small market internationally. About 10 years ago the company set up subsidiaries in four countries within South-East Asia and one in Germany. The company has mostly semi-automated factories and employs electronics engineers and electronics technicians who design audio equipment, televisions, telephones, digital cameras and other accessories. Other staffs are employed in research and development, production, storage and dispatch departments, marketing department, accounting department, general administration and a Human Resource (HR) department. The company employs over 1,000 staff and in Melbourne there are 250 staff. In the production department there are ten teams comprising twelve staff each. Most other departments have between five and fifteen employees. The Company has aspirations of expanding into other European countries.
In mid-August 2016, David O’Meara, the President, began the monthly company meeting with ‘Our profitability is down and our market position is declining. We need to rationalise a number of areas but this meeting is about our performance management and our remuneration management strategies’. O’Meara explained to key executive staff that he had reservations about developing an international strategy and wanted to start with Melbourne. He advised the meeting that his plan was to implement new systems in Melbourne and then replicate in other subsidiaries, and in accordance with their country practices and legislative requirements.
Sarah Jones, Director of HR Management, addressed the meeting – ‘It’s time for change and whilst we have worked to a position-based remuneration system in the past, we now need to consult with staff and change our strategy. We need to work towards a person-based system. We have to evaluate our remuneration and performance management policies and procedures and basically develop new systems’. To commence an evaluation of the remuneration and performance systems Sarah Jones recommended a HR consultant be appointed on a six-month contract, commencing within one month. O’Meara and the Executive team supported the recommendation and the meeting decided to immediately look for and appoint the right HR Consultant.
Note: Students enrolled in this course become the appointed Consultant
Sarah Jones, Director of HR, planned and announced, to Melbourne staff, that there would be an Executive Staff Forum about a new Remuneration System. Following the Executive Staff Forum Sarah planned to appoint a Consultant to organise an all Staff Forum to discuss Remuneration Systems and a separate forum on Performance Management. Sarah was somewhat frustrated because the President was mostly interested in the Remuneration
Management System. In the monthly meeting O’Meara had espoused to be concerned about performance but somehow he changed his mind. Sarah realised he was happy for her to organise the Consultant for the Performance Management Forum and the all staff Reumuneration System Forum. When Sarah left the meeting her first job was to find a Consultant. It was not difficult because the Recruitment Agency was able to recommend a number of excellent Consultants. Sarah made the appointment and Kurt Turner, HR Consultant, was to commence within days.
Executive Staff Forum – The Remuneration System
The first Executive Staff Forum was set up on a Friday and held on site. Key executive staff attended. Sarah announced that the HR Consultant would be starting work next week. Discussion commenced around the current position-based remuneration system that had been in place since the first days of O’Meara Electronics. Sarah opened discussion by asking delegates if they wanted to offer up comments that could build discussion.
Harry, Manager Production called out – ‘Joe’s paid according to the award and working like a slave, yet Ian who’s meant to be his supervisor does nothing. It’s never sat well with me that they are these kind of discrepancies’. Karen, Head of Research and Development, commented ‘We need to consider what we have now and what we want to achieve. Let’s take a systematic approach and get everything up on a whiteboard. The new system has to be beneficial to the organisation and employees’. Everyone nodded in agreement and there was no argument to this statement.
James, Manager Marketing added ‘Sam has some great ideas about how he used to work for his previous employer. He says we need to use a participative approach with all staffs?’
Sarah Jones contributed ‘A participative approach to a new remuneration management system will mean that everyone is involved. We will get all the staff together in the factory and have an open discussion. Let’s get it organised for next week.’ Sarah left the Executive Staff Forum to speak with the Consultant, Kurt Turner, to set up the all staff forum to be held in the factory some time within the next month. The Consultant will be in charge of the all staff forum on Remuneration and it is yet to be organised.
The Performance Management System – All Staff/All Day Forum
The Performance Management all day forum was organized during the middle of the week on a Wednesday at a resort in the Yarra Valley. Staff arrived the evening before and over dinner discussion started.
James, from Marketing, expressed his concern about ways in which performance is currently managed at the organizational and individual levels – ‘We have a lot of work to do….our organisational performance management is basically all about customer contracts and numbers, and our individual staff performance is so ad hoc and we don’t really measure it –
it’s in a mess and it will take a long time to change. There’ll be a lot of resistance from the staff, particularly those who have worked here since the doors opened’. Roberto, an engineer with 15 years experience, commented ‘Our work teams are not self-managed. We have permanent work teams and temporary work teams when demand for certain electronics is high but basically there’s little direction’. Maria from Research and Development added ‘The teams are made up of different people from across the company, from engineers to production and marketing experts so we all come from different perspectives’. Discussion developed around the need for self-managed work teams.
The following morning the all Staff Forum began. The Consultant, Kurt, opened the forum –
‘Remember everyone, during the course of today, when we discuss performance management, it’s important in our discussions that we consider that individual performance must be linked to organisational performance’. The consultant, Kurt, then opened up discussion and called for comments on performance goals. It was difficult for Kurt because there was a lot of negativity which was encapsultated in a comment from Nick, an engineering technician, who said ‘We don’t know what a performance goal is….why don’t you tell us’.
Performance Goals – Kurt was not concerned about the negative comment from Nick and he was silently happy that he had some difficult staff members to win over. He steered discussion towards how the organisation’s goals should influence individual goals and ultimately performance. Kurt worked on a whiteboard with a system called management by objectives (MBO). The Consultant explained the process requires participation and helped managers to monitor and control performance. ‘As I have already mentioned, it’s important in this process that organisational performance is linked to individual performance’. In the first stage the workers at the lower levels in production set achievable goals with specific measures. At the second stage workers set goals with their supervisors and managers. At this point the worker is responsible for putting forward their individual career goals and performance goals. The individual workers then specify a period where they demonstrate how they work to achieve their goals. The supervisor and/or manager then provides feedback to the worker and at this point there is a performance appraisal. The results of the performance review become the foundation for changing goals and/or setting new goals.
Performance Management Systems
The Consultant guided discussion to what the organisation was doing well. ‘Fundamentally, our Performance Management System is based on our customer relations. We have always developed innovative products to meet our customers’ needs’ – Nigel, Engineer from Research and Development. It became evident that most staff believe that the systems and practices in place at O’Meara Electronics is lacking in terms of processes and activities to manage performance. The staff made it clear that supervisors and employees don’t work well together. The supervisors are too afraid of complaints from employees who have been with the company for many years. ‘We don’t have programs that support the employee and
the supervisor or manager working towards success for everyone. Really, we don’t have the incentive to achieve high results. It’s a matter of working every day and not thinking about how well most of us do our jobs’ – Tyler, Electronics Engineer. The discussion continued about how effective the organisation was and how it could be much more effective if everyone shared the same goals.
Performance Evaluation – Ross, an engineer at O’Meara Engineering, was a former employee of Ballantyne Engineering. He started talking with a group of engineers and reflecting on how staff performance was evaluated in his previous place of employment. He explained that a performance management system was in place and all staff were evaluated every six months. Ross spoke about the performance appraisals. Basically, we were evaluated on weekly output and the company had a zero tolerance for rejects. Ross claimed it was a highly competitive and nervous environment – ‘We have to make performance achievable. Where I used to work staff were always concerned when they found faulty products. We had a zero fault policy and it impacted on performance and staff morale. Staff were evaluated the zero fault policy and on attitude, loyalty, their potential for promotion and their absences. We have to be mindful of not making performance management unachievable at O’Meara’. Maria, from Accounts, commented ‘Why don’t we set some criteria around peoples skills and capabilities?’ Sally from General Administration, added – ‘We could also look at a number of different rating systems, 360 degree feedback methods and factor in self appraisals’.
At the end of the Performance Management Forum the Consultant, Kurt Turner, knew that today was just the beginning and he was left to contemplate how he would proceed. He was also pondering about how he would set up the all Staff Forum on Remuneration. For Kurt the issue would be convincing everyone at O’Meara Electronics that remuneration and performance management systems would involve more than measurements. He knew he had a big job ahead.
In this report you are acting as a hr consultant to the case study organisation. The report is to written in report format with a table of contents and headings, sub-headings and numbering for each sect ion and sub-section. The report must provide a clear purpose, scope and limitations of the case study. The report will include a diagnosis of the current performance management system in the Case Study. It will identify the performance management issues in the case study and provide an understanding of such issues related to the staff and the organisation. The report will also com pare at least two performance management systems and relative elements/practices/processes. You will need to argue which performance management system or hybrid of two or more performance systems should be implemented at the Case Study organisation. Remember you have to come to conclusions before you can develop any performance management system and practices. As the HR consultant you must write the report as you would present to the Case Study organisation.