Frank Henderson is the manager of the General Electric’s Appliance Division. Each April, he must evaluate all of his subordinates to decide who is to receive a merit increase for the upcoming fiscal year. But each year these employees complain about how they are evaluated, how merit money is dispersed, and what criteria are used for the evaluations. However, during the past two years there has been a tremendous emphasis on quality of production. A review of the merit recipients reveals that these people were the ones who had the best quality records. But many of the employees felt that quality should not be the determining factor. At an employee forum, one of the senior members remarked: “How can Frank now reward quality? What has happened to production numbers?”
Another employee agreed and stated: “This quality game is okay for some, but what about overall production? It seems to me that if I will only be rewarded for quality, then I should produce a few items but make them perfect.”
After hearing such criticism, Frank was upset. He was not trying to cause chaos in the evaluations, nor was he attempting to hurt anyone. Unfortunately, what was originally intended to be an evaluation system had just become a nuisance.
Questions:
1 What is the major problem with Frank’s evaluation system?
2 What does this case tells us about the impact of performance appraisals on employee motivation?
