Inc.

Refashioning Performance Management

Presented by
Harshil Doshi
Lushna Mahapatra
Meghna Peethambaran
Gap Inc.

01
Gap Inc. was founded The company was a
on Ocean Avenue in San hit with sales more
Francisco, in 1969, by than 2 million dollars
Donald and Doris Fisher. in the first year
02 03
In 1970, the
company opened its
second location in
San Jose, California

04 05 06

In 1983, Gap bought Children’s apparel Gap Inc. opened its

Banana Republic retailers, Gap Kids, first e-commerce
debuted in 1986 store in 1997
Gap Inc. in 2015
Gap Inc. was made up of Revenues topped
5 brands: Gap, Old Navy, 1 2
$16.4 billion
Banana Republic, Athleta
and Intermix

Designed its own clothes, More than 25% of the

3 2015 4 company’s purchases
shoes, accessories,
jewellery were from suppliers in
China

Business was cyclical Gap Inc. digital

with about 60% of 5 6 channels shipped to 90
business occurring in fall countries
and winter
Competitors
Abercrombie & Fitch, American Eagle Outfiters,
Mall Brooks Brothers, Hollister, Polo Ralph Lauren &
retailers Urban Outfitters

Women's’ Ann Taylor, Forever 21, Loft

retailers

Global
H&M, Uniqlo and Zara
retailers

Department
J.C.Penny and Macy’s
stores

Athletic wear
Lululemon Athletica
retailers
Gap Inc. Stores

Product assortment,
The typical Gap Inc.
marketing and pricing
Store was about
strategies were driven by
8500 sq ft.
headquarters

Store managers were

Average Average store judged on metrics
headquarters manager oversaw including payroll, sales,
manager oversaw 3 between 35 and 45 customer traffic, profit
to 5 direct reports people in total margin, new credit cards
opened and customer
checkouts per hr.
Traditional Performance Management System

Focused Distribution
Rate & Rank Employee Curve

Below target : No bonus

50% based on Company On Target (OT) : 100%
Performance & 50% Based on Bonus
Individual Performance Saturn isAbove
the Target(AT): 150 %
ringed one Bonus
and
Scientifically above
a gas giant
Target(SAT): 200% Bonus
Outcome of Traditional Performance
Management System

Employees & No
Linked it to
Management measurable Stressful
company
didn’t like the impact on exercise
culture
conversation performance

Lack of honest Employees Did

Manager were
feedback soon not
unformattable
became understand
while giving
company wide why they were
feedbacks
problem rated
Refashioning Performance Management
4 source which influence to rethink!

“ Rethink & Revamp GAP Inc Performance Management Process”

 Grow, Perform, Succeed (GPS)
Raise
performance
Process that
would take the Shift from ‘nice’
handcuffs off to ‘honest’
the manager

Allow manager
Simple and
to take full
easy to
accountability
understand
for their report
Align reward
with actual
performance
Grow, Perform, Succeed (GPS)
Touch Base
• Regular meet ups
Performance • Encourage manager not to take
Standard notes during meetings
• Remove stress
• Eliminate year end • Decide mutually
review • Share responsibility to have such
• Regular coaching & meetings
Feedback
Reward
Goals • Change bonus structured & link to
• Introduce modified goal each business unit performance
setting approach • 75% of annual bonus is based on
Business performance and 25% for
• More outcome oriented Individual performance
goal
• Bonus is not determine by year end
• Not more than 8 goals review, it is replace by monthly
touch based meeting.
Implementation Challenges
Some managers did not understand reasoning/need of GPS – this
issue was resolved through training – made these managers
understand how GPS will give them more freedom to motivate
their employees – both high and low performers – regular
feedback – greater rewards for those who performed.

Exhibit 7 – Old Bonus Plan – Financial Component (50%) and

Individual Component (50%) – New Bonus Plan – Financial
Component (75%) and Individual Component (25%).
Implementation Challenges
Challenges – 1. bonuses tied to financial performance – harder to earn a
bonus since the company recently missed some of its financial targets, 2.
Performance review conversation was much easier in the old process – self-
assessment through report, four categories and justification – not that
straightforward in the new process.

“Feedback People Can Hear” training program two purposes –

neuroscience of social interaction and introduction of the model – SCARF
model

Challenge – In case of disruptions (role shift, boss gets fired, etc.), monthly
conversations will be a very difficult task.
The First Year Results of GPS

Managers capable of giving rewards without

ratings.
Monthly meetings on a regular basis.

Monthly feedback was helpful for the employees.

Bonus differentiation.

Significant drop in complaints from employees

who were unhappy with their bonuses.
Dilemma

Whether to extend GPS to If yes, how and when to

retail stores as it is or proceed?
make some changes to it?
Recommendations

1 2

Reducing number of When to implement –

goals per employee 2016

Bonus Plan – 60% individual How to implement – All GAP

component and 40% financial stores starting from North America
component and then to other brands

3 4
Thank
You