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Problem Description
The Japanese IT joint-venture company has a large overseas office where 80% of its employees are locally hired. It has been observed since the start of the century that many young employees are leaving the company in disproportionate numbers in just after 3 years. The HR manager suspected that the reasons for leaving are rooted in the nature of these young people as members of a distinct generation called Generation X or Millennials (Bersin).
In the exit interviews, it was discovered that these young people believe that they are not being compensated fairly based on their output. In a related long-term issue, they also claim that they felt pessimistic about upward mobility when they learned that promotions depend more on seniority and personal factors rather than on job proficiency.
The country manager who is also a local hire, proposed changes in the performance management system that would lift the motivation of new employees to stay longer with the company. Motivation is affected by compensation, performance evaluation, job design and work schedules (Schermerhorn 128).
Solutions from Compensation
The first aspect that was examined was that of performance pay. Currently, the weight given by to seniority in the performance evaluation criteria is 50%. This is simply a matrix of points for the number of years of service. It is felt that the weight is too high wherein the effect is that the variance in rewards is disproportionate to the perceived efforts and results achieved among colleagues. The Japanese headquarters reiterated that seniority (Pollack) and company loyalty remains to be a major value in the company and that tradition must be maintained.
The compromise proposal then was make the new weight 35% but 15% would be in the form of stock dividends in the Japan stock exchange. They will be assigned after performance evaluations but ownership transfers will only done 5 years after issuance. This change was seen to be more performance-contingent.
Another motivator proposed was in the use of extrinsic rewards. Work for the Japanese was seen more as a duty to family rather than achievement to be praised. The GM believed that the expressions of appreciation would be motivational for the local hires. Awards for ‘Employee of the Month”, “Client Hero” and the “Lightbulb Award” will be given every month when applicable. They are for general performance, client appreciation and best idea.
A budge for small spot bonuses were also requested for an exceptional act that will be examined and awarded by the HR manager, employees’s manager and finance manager.
Solutions from Performance Evaluation
Part of the reason why employees have an impression that their work is underrated is that performance evaluation is done only annually which many feel is too far in between. Many agree that quarterly would be ideal so that impressions will be more recent. HR objected that it entail more work for its limited staff but the GM advised that they find ways to make the task easier to compensate for higher frequency.
Another weakness noted is that the performance criteria are too broad and non-measurable. The HR explained that some criteria are for work attitudes that Japanese management find important. They believed team work will only be achieved if members have agreeable work attitudes that would minimize inter-team frictions. For measurability, the GM suggested that a clear distinction be made on criteria for output and activity measures and that the ratio should favor more on output measures. Overall, the weights for output measures and the combination of work attitudes and activity measures should be equal.
Evaluation for work attitudes was also suspected to be subjective because only the manager is providing input. Employees suggested that more people who they interact with should be involved. The HR recognizes this as pointing to the 360 degree method. It was agreed that collaborative departments and key customers would be included.
Lastly, it was agreed that rating scales be increased from 5 to 10 for more accuracy.
Solutions from Job-Design Alternatives
The practice of job rotation was also linked to dissatisfactions on work performance by employees. They feel that their chances of performing well and being rewarded accordingly diminish when they get transferred to jobs that are not exactly their expertise. The Japanese has reasons for this practice in that it enhances better communication and collaboration when you understand everybody’s jobs (Lohr). This presumes that one will stay long enough in the company to understand most jobs but this conflict with millennials’ view of career which is a commitment to one’s craft rather than to a company. A compromise therefore was reached that job rotation may only commence on the fifth year when there had been time enough for employees to have sharpened on their main skill before broadening.
The younger employees also wish that their jobs be enlarged based on their performance. They believe that good performance should be rewarded with bigger challenges regardless of age, rank or seniority ad this should lead to better compensation.
A good job design must show clear and accurate task responsibilities on which objective performance evaluation can be based from. Annual objectives should be measurable as much as possible so direct evaluation would be possible. This will apply to both output and activity measures. The use of scales in qualitative criteria would also make them quantifiable.
There was also a suggestion to improve the upward mobility prospects of employees. There should be a promotion path for expert consultants for those who are not partial to management work. They are averse to handling other people’s problems but are more than willing to assist on more cordial circumstances. They wish to practice their skills as deep as they can and at the same time help solve the company’s problems by themselves or by coaching or mentoring others. These expert consultant positions should be compensated near those of managers.
Solutions from Alternative Work Schedules
With the introduction of flexible hours and telecommuting, those who are being allowed to practice them feel that the current performance evaluation system is not applicable to them anymore. Their jobs are backroom jobs like data processing and accounting where they hardly interact with other people. They believe that their performance be evaluated solely on output measures and nothing else. There should be a modified performance evaluation regimen for them that is more similar to contract agreements.
Another issue which many believe affect their performance is the excessive demands for overtime. They feel that the quality of their work suffers at a certain point where there is too much overtime. For the good of the company and employees, employees should have right to refuse overtime after a certain volume without any effect on their performance evaluations. Too much overtime also affects family life which at times creates distractions. These distractions directly affect work performance.
Works Cited
Bersin, Josh. "Millennials Will Soon Rule The World: But How Will They Lead?". Forbes, 12 Sep. 2013. Web. 26 April 2016. <http://www.forbes.com/sites/joshbersin/2013/09/12/millenials-will-soon-rule-the-world-but-how-will-they-lead/#dab76852d7bd>.
Pollack, Andrew. "Japanese Starting to Link Pay To Performance, Not Tenure". The New York Times, 2 Oct 1993. Web. 20 April 2016. <http://www.nytimes.com/1993/10/02/world/japanese-starting-to-link-pay-to-performance-not-tenure.html?pagewanted=all>.
Schermerhorn, Jr., John et. al. Organizational Behavior. New Jersey: John Wiley & Sons, 2010. Print.
Lohr, Steve. "How Job Rotation Works fo the Japanese". New York Times, 12 Jul. 1982. Web. 26 April 2016. <http://www.nytimes.com/1982/07/12/business/how-job-rotation-works-for-japanese.html>.
