Reference no: EM133275968

Vehicle Salon is a very small sized vehicle crash garage business. They have just hired you for the position as its human resources manager on a part-time basis, working 20 hours per week, while completing your degree. You would be the first HR manager they have ever been able to afford to hire, and the brother and sister owners (Alvin and Andrea Brown) have been operating the business for 10 years. In addition to you, they recently hired a part-time cleaner. This brought the paid staff to seven full-time employees: a foreman who is responsible for scheduling and overseeing the work, two auto body repair workers, a person who disassembles and reassembles cars, a painter, and a detail person who assists the painter with getting the car ready to paint and sanding and waxing it afterward. Alvin Brown handles sales and estimating prices, runs errands and chases down parts, and envisions the future. Andrea has been doing the bookkeeping and general paperwork. They are both very proud of the reputation for doing high quality work in the restoration of crashed vehicles.

Vehicle Salon (VS) pays its employees based on "flagged hours" which are the number of paid hours that were estimated to complete the work. (For example, the estimate may say that it will take 3 hours to straighten a fender and prepare it for painting. When the auto body repair worker has completed straightening the fender, he would "flag" completion of 3 hours, whether it took him 2 hours or 6 hours to actually complete the work. It is to his benefit to be very fast and very good at what he does.) VS pays the workers 40% of what it charges the customer for the flagged hours; the other funds are used to pay the employer's share of the taxes and overhead, with a small margin for profit. The foreman, who does some "flagged hours" auto body repair himself, is also paid a 5% commission on all the labour hours of the other employees, after the car is accepted as complete by the customer and the customer pays for the completed work.

Employees are given feedback by Alvin, the foreman, and by customers on an infrequent basis. Right now, everything is going well and the employees are working as a team. In the past, the situation was less certain and some employees had to be fired for poor work. Terminated employees sometime go to the Ministry of Labour and Social Security about their termination. Usually, Vehicle Salon was able to prove to the ministry that Al had given memos to the employee requesting improvements in quality or quantity of work. There has never been a formal planning or appraisal process at VB.

Andrea Brown has read an article about performance management and is wondering whether Vehicle Salon should implement such a system.

Question

The article that Andrea has read also proposes a Performance Management System, she wants to implement this system in two weeks. Comment on the risk that Alvin and Andrea might face with this implementation.