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A critical evaluation of performance management and development processes within Otis PLC
the organisations studied contained 6 elements; organisational planning; a method of communicating objectives; a performance plan for each employee; regular reviews during the year leading up to a formal annual review; a performance rating on which pay decisions could be based and a discussion of longer term development needs. This model seems to embody the key points of the models I reviewed and for this reason I will use it as the basis of my comparison. In addition to the six key points I will review how well Otis’ practices are able to deal with the issues of the tensions between monitoring and developing performance and providing meaningful measures of both inputs and outputs.
Evaluation of the current performance management and development practices of Otis PLC
Overview of the HRD strategy
I will start my review by providing some general information about HRD strategy and practice at Otis PLC. The organisation does not have a written HRD strategy but in Otis globally the development of all employees is seen to be of critical importance. The organisation has launched a number of initiatives in this area in recent years. These include a centrally managed curriculum of business education programs, a group of corporate university programs and the recently introduced UTC Scholar program, which provides funding, time off and financial rewards to those pursuing academic study of any subject at diploma or degree level. Otis PLC makes a significant investment in training its employees, on average each field employee received five days training in 1999.
Otis PLC classifies its employees into two groups, field and staff. Field employees, those installing and maintaining equipment on customers’ sites, are the majority. Performance management and development for field employees is conducted under the progression scheme, which is a separate system from the general appraisal system that is applied to staff employees. Where appropriate, I will review each of these systems separately using the headings derived from the IDS study (1997).
Organisational Planning
The process of organisational planning is typical of a US multinational. Planning starts at the most senior level, MD and direct reports, for which international management set the main objectives. These objectives are predominantly financial, referring to business volume, profit levels, return on sales and asset management amongst others. Using the terms defined above, these are essentially output measures. There are also functional objectives, which are set by functional departments at World Headquarters level, and values based objectives, which reflect organisational imperatives. Again using the terms set out above these are input measures.
Although there is some room for discussion of the appropriateness and achievability of the objectives this is essentially a top down process with each level imposing objectives on the level below. In the case of both output and, more particularly input measures, this raises issues about the validity of the measures. This point is discussed in more detail below.
Method of communicating objectives
Once company level objectives have been established they are cascaded [next page]