CASE STUDY

XYZ Ltd is a textile firm manufacturing T-Shirts for European customers. The organization started its operation with five employees. Following the success of its product among European customers and its low price due to protectionist measures for Mauritian products, the organization experienced a quick growth and expansion in its business activities. In 2007, there were 3000 employees who were working in organization.

But, with the dismantling of tariff barriers, the organization had to face greater competition from low cost countries like China, India and Sri Lanka. In order to face this condition, the organization decided to review its dissimilar systems in order to be more competitive on the international market.

One of the main measures which the directors took in order to improve performance of employees was the introduction of a performance management system for all level of employees in the organization. According to directors of XYZ Ltd, improving productivity of employees will enable the organization to reduce its costs. In order to execute the new system, an international consultant was hired. The latter had wide experience in the field of performance management and he was successful in implementing such systems in many organizations in his own country.

But, the trade union of the organization wasn’t happy with such a measure and they feared that the performance management system will be employed for firing low performing employees from the organization. In addition, they didn’t understand how the performance management system will work in the organization. They also feared that there will be lot of subjectivity involved in new system.

The consultant started his work by describeing the new system to managers. After the education of manager regarding the new system, he started to design a performance appraisal form with the help of the managers and decided that performance of the employees will appraised at the end of 6 month period. He also came up with a recording system on different characteristics of the employee’s performance and this information was employed for appraising performance.

But, at time of performance appraisal, many employees were frustrated in organization and instead of enhancing productivity; the organization experienced a fall in the general level of productivity across dissimilar parts of organization. Eventually, the directors decided to abandon the new system and to continue to work according to their previous system in organization.
 
problem1. Describe the major reasons that might have accounted for the failure of Performance Management System in this case.     
 
problem2. describe the way in which you would have implemented the performance management system in this specific organization.