Page: 1 2 3 4 5 6 7 8 9 10 11 12 13
A critical evaluation of performance management and development processes within Otis PLC
market share of newly installed lifts and escalators, this in turn allows the organisation to achieve economies of scale in the maintenance of customers’ equipment. Maintenance is the primary generator of profits, with a target of 50% gross margin, that is direct costs of service, excluding Selling and General Administration expense, should be no more than 50% of the cost of the contract. Currently the organisation is achieving 40%.
Traditionally, purchasers of new equipment would choose to have it maintained by the manufacturer. Increasingly, however, purchasers are using a tendering process to select a maintenance supplier and this is placing downward pressure on maintenance prices. This trend, together with the global requirement to increase profitability has led the organisation in the UK to review its maintenance business with a view to increasing efficiency and profits. A significant restructuring process was announced in July 1999 under the title “ Seizing the Offensive”. This restructuring is focused on increasing workforce efficiency while improving customer service levels. It includes a declared intention to take a more active stance on the management of performance coupled with increased investment in training and development. The restructuring included a reassessment of all line managers and sales staff within the maintenance division. The selection process, by means of an assessment centre, was based on a competence model that was developed with support from an external consultant. More details of the competence model are shown in Appendix 2.
Armstrong and Baron (1998: 28) identify the importance of ensuring that an organisation’s performance management system fits its culture. To provide some context to my review I will give a short description of the culture of Otis PLC. Schein (1992) cited by Mabey et al (1998) suggests that culture can be considered on three levels; artifacts and creations; values; basic assumptions. I will use this structure to describe the culture of Otis PLC, beginning at the level of basic assumptions. The core belief is that the elevator industry is in some way different from other industries and there is an unquestioning belief, that Otis is the “best” organisation in the industry. This leads to an unwillingness to learn from competitors or to recruit managers from different backgrounds
The values of the organisation are typical of a small engineering company but with a strong orientation to problem solving which is, perhaps, a product of the highly reactive nature of its business. Long term planning takes second place to the ability to respond well in a crisis. Many of the organisation’s espoused initiatives are long term in focus but there is a tendency not to persist with them to completion. Almost all senior management appointments are made from within and a background in the industry, together with considerable length of service, is considered essential for promotion. Loyalty and hard work have been valued more than actual achievement and, historically, few concerted attempts have been made to [next page]