Vitality Health

Enterprises Inc.
Syndicate 7
Background
• Founded in 1987 in Ames, Iowa. Started by importing beauty
products from Japan.
• Estblished its own manufacturing facility in 1989 to reduce
dependency to imports.
• In 1994 Vitality enters mainstream market by signing
agreements with several leading pharmacy retailers.
• In 1997 Vitality acquired HerbaPure Nutraceuticals and
changed its name into Vitality Health Enterprises.
• By late 2007 Vitality Health has grown into nearly 7.000
employees with three-quarters of the workforce located in
and around its headquarters.
• In 2008 the global economic brought Vitality’s growth to a
stagnation. Beth Williams is brought in to address the issue.
Problem Analysis
• In 2009 Vitality rolled its new business strategy to tackle
stagnation issue.
• PMET discovered problems in the performance management
system.
• Performance rating is considered unfair especially by scientist
and engineer.
• This problem create lack of motivation among the employees.
Old Performance Management
System
• Consisting of 13 ranking levels from A to E with plus and
minus. This ranking system creates managerial abuse.
• Pay policy line was done on the following basis
Pay Policy Line = Base salary + (Job evaluation
points * Increase per point)
Job evaluation points were calculated on the basis of the level of
the accountability, technical knowledge and problem solving skills
• Individual Salaries were further modified by comparative ratio
.This ratio was defined as the employee’s current pay in
comparison to the current industry pay rate.
• This results in the top performing employees ended up getting
similar grades to other less productive employees leading to
decreased motivation and frustration.
New Performance Management
System
• The new system removed the 13-rankings format with a 5-
rankings format which makes it easier to determine which
employee goes to which categories.
• Managers were instructed to set specific goals for each
employee and use these goals for performance evaluation
purpose.
• Compensation were also adjusted. Rather than relying on
salary increase, the new plan will incorporate a performance-
related short-and long-term cash and equity bonuses.
• New plan also allow for limited amount of stock options for
upper level management.
Our Analysis and Suggestion
• It should be noted that different department in the company
have different workload also. Therefore a different benchmark
should be applied to different department.
• Leadership issue among manager is also something that needs
to be addressed in Vitality Health.
THANK YOU