Reference no: EM133344969

Performance Appraisals and Compensation at Sweetwater University Case

Rob Winchester, newly appointed vice president for administrative affairs at Sweetwater State University, faced a tough problem shortly after his university career began. Three weeks after he came on board in September, Sweetwater's president, Rob's boss, told Rob that one of his first tasks was to improve the appraisal system used to evaluate secretarial and clerical performance at Sweetwater U. The main difficulty was that the performance appraisal was tied to salary increases given at the end of the year. Therefore, most administrators were less than accurate when they used the graphic rating forms that were the basis of the clerical staff evaluation. Each administrator simply rated his or her clerk or secretary as "excellent." This cleared the way for all support staff to receive a maximum pay increase every year.

However, the current university budget did not include enough money to fund another "maximum" annual increase for everyone. Furthermore, Sweetwater's president felt that the custom of providing invalid performance feedback to each secretary was not productive, so he had asked the new vice president to revise the system. In October, Rob sent a memo to all administrators telling them that in the future, no more than half the secretaries reporting to any particular administrator could be appraised as "excellent." This move, in effect, forced each supervisor to begin ranking his or her secretaries for quality of performance. The vice president's memo met widespread resistance immediately-from administrators, who were afraid that many of their secretaries would leave for lucrative jobs; and from secretaries, who felt that the new system was unfair. A handful of secretaries had begun quietly picketing outside the president's home on the university campus. The picketing, caustic remarks by disgruntled administrators and rumors of an impending slowdown by the secretaries (there were about 250 on campus) made Rob Winchester wonder whether he had made the right decision by setting up the forced ranking. He knew, however, that there were a few performance appraisal experts in the School of Business, so he set up an appointment with them to discuss the matter.

He met with them the next morning. He explained the situation as he had found it: The present appraisal system had been set up when the university first opened 10 years earlier. A committee of secretaries had developed it. Under that system, Sweetwater's administrators filled out forms similar to the one in Figure 6-8. This once-a-year appraisal (in March) had run into problems almost immediately since it was apparent from the start that administrators varied widely in their interpretations of job standards, as well as in how conscientiously they filled out the forms and supervised their secretaries. Moreover, at the end of the first year, it became obvious to everyone that each secretary's salary increase was tied directly to the March appraisal. For example, those rated "excellent" received the maximum increases, those rated "good" received smaller increases, and those given neither rating received only across-the-board cost-of-living increases. Since universities in general-and Sweetwater in particular-have paid secretaries somewhat lower salaries than those in private industry, some secretaries left in a huff that first year. From that time on, most administrators simply rated all secretaries excellent in order to reduce staff turnover, thus ensuring each a maximum increase. In the process, they also avoided the hard feelings aroused by the significant performance differences otherwise highlighted by administrators.

Two Sweetwater experts agreed to consider the problem, and in 2 weeks, they came back to the vice president with the following recommendations. First, the form used to rate the secretaries was grossly insufficient. It was unclear what "excellent" or "quality of work" meant, for example. They recommended instead a form like that in Figure 6-2. In addition, they recommended that the vice president rescind his earlier memo and no longer attempt to force university administrators to rate at least half of their secretaries as less than excellent. The two consultants pointed out that this was, in fact, an unfair procedure since it was quite possible that any particular administrator might have staffers who were all excellent-or conceivably, although less likely, all below standard. The experts said that the way to get all the administrators to take the appraisal process more seriously was to stop tying it to salary increases. In other words, they recommended that every administrator fill out a form like that in Figure 6-2 for each secretary at least once a year and then use this form as the basis of a counseling session. Salary increases would be made on some basis other than the performance appraisal, so that administrators would no longer hesitate to fill out the rating forms honestly.

Rob thanked the two experts and went back to his office to ponder their recommendations. Some of the recommendations (such as substituting the new rating form for the old one) seemed to make sense. Nevertheless, he still had serious doubts as to the efficacy of any graphic rating form, particularly if he were to decide in favor of his original forced ranking approach. The experts' second recommendation-to stop tying the appraisals to automatic salary increases-made sense but raised a practical problem: If salary increases were not to be based on performance appraisals, on what were they to be based? He began wondering whether the experts' recommendations weren't simply based on ivory-tower theorizing. Case

Questions *Your response should be two to three paragraphs at least.

1. Do you think that the experts' recommendations will be sufficient to get most of the administrators to fill out the rating forms properly? Why? Why not? What additional actions (if any) do you think will be necessary?

2. Do you think that Vice President Winchester would be better off dropping graphic rating forms, substituting instead one of the other techniques discussed in the chapter, such as a ranking method? Why/why not? If a ranking method is not ideal, which method(s) would you recommend and why?