Submitted By:

N V Jagadeesh Kumar
Nisha Agrawal
Susrita Maharana
 1987- Company was founded in Ames

 1989- Established its own manufacturing facility in Ames

 1991- Business had grown to $3million per year

 1994- Signed a distribution agreement with leading pharmacy

retailers.

 1995- Launched the company into global markets

 1997- Acquired Herba Pure Nutraceulticals and changed their

name to Vitality Health Enterprises
 Late 1990s- Floated IPO

 2007- Company had grown to nearly 7000 employees

 2008- Global crisis bought relative stagnation to company’s growth

 Hired Beth Williams as the new CEO
 Global VP of skincare products at Barstow & Wyden

 Disciplined operational mindset

 Popular for reducing global production costs by 12% during her 3

years at B & W Beauty

 No-nonsense approach and willingness to handle difficult issues.

 Hired as a new CEO of Vitality Health Enterprises

 Williams organized a committee to track the performance of all non-
sales and non- executive employees.

 PMET studied evaluations and rewards system using internal &

external benchmarking, focus groups and employee interviews.

 Problems of PMS:
 13 different rating levels(A+ to E-)

 Homogeneous ratings
 Top performers felt slighted and undervalued financially.

 Job evaluation points- pay policy associated with the position

 Technical Knowledge

 Problem solving-skills

 Level of accountability

Pay policy line= Base salary + ( Job evaluation

points* Increase per point)
  Based on individual performance in the company

 Increase with rise in merit and falls whenever salary-line

formula is moved upward

Comparative ratio= Employee’s current salary

Current market rate
 Low employee turnover

 Stability of a flat salary

 No provision for bonus or alternative forms of

compensation

 Seniority based increment

 Difficult to differentiate top performers and low

performers.
 Forced distribution model of performance rankings- shift
from absolute to relative ranking system.

Ranking Category Target Constraints

Top Achiever(T) 10% Max of 14%
Achiever(A) 75% Min of 70%
Low Achiever(L) 12% Min of 7%
Unacceptable(U) 3% No minimum
Not Rated --------- ---------

 Not rated for too new employees or position difficult to

rate
 Evaluation team researched the core competencies and key
duties of different jobs.

 Managers need to develop specific goals with their

employees.

 Performance reviews were to be conducted at the beginning

of the year.

 Incorporation of a system of performance-related short and

long- term cash and equity bonuses.

 Limited stock options for upper level of management and

directors.
 Williams appointed Hoffman as a VP of HR To head PMET2

 PMET2 compared performance rankings data for early 2009

and early 2011 and found a shift in distribution of rankings.

 Surveyed to know the response of employees:

 54%- preferred new system

 31%- preferred old system

 15%- indifferent
Managers felt difficult to discuss with employees
since it affects the merit increase.

Employees didn’t do the work which where not part

of their evaluation.

Unwilling to spend time on implementing process.

 Rigid forced distribution system

 Using Not rated employees category as a tool to

reserve higher rankings for old employees

 Uniform rankings

 Reluctant to disclose the rankings to the employees

 Rotation of highest rankings between employees from

one year to the next
 Research done by Evaluation team showed
both positive and negative comments
 Forced distribution initially helps to get rid of
poor performers but later it removes good
performers as well
 Be a star if my team falls flat or fall flat if my
team is a star
 Hoffman need to present this in the Board
meeting
Thank you