MNGT 474 Case 60 Background John Carpenter, general accountant at Mills Paper Company, was about to be fired.

Hired two years earlier at 56, Carpenter was a highly experienced accountant and financial analyst. Like all employees at Mills Paper Company, he had signed a written performance agreement shortly after joining the company. Mills Paper used a Management by Objectives performance appraisal system, and put new objectives and expectations put into performance agreements annually. Carpenter consistently received poor performance ratings, but was given a salary increase of seven percent his first year regardless. Performance assessments from various supervisors included the following observations: Information furnished not consistently accurate Poor supervision of direct reports Accounting information not submitted on time Managers not satisfied with financial guidance provided Paucity of key financial information available concerning manufacturing operations Slow response to requests for information Lack of solid response and follow through on specific requests for assistance Organization concerning financial aspects of strategy preparation and budgeting not good No solid proposals given on how to improve the effectiveness of the accounting department Managers not satisfied with responses and state they were wishy-washy Very little improvement around routine reporting No initiative in putting together a better financial forecasting form

Carpenter was demoted a total of two times due to poor performance ratings. Initially hired as a division controller, he became a financial analyst and finally a general

accountant at reduced pay. Goals for improvement were agreed upon between Carpenter and his supervisors, but he never met those goals. In the case of his final demotion, Carpenter was given choice of being demoted with reduced pay or fired Carpenter chose demotion. After his last demotion, he was given one last set of performance objectives. After two months, he was unable to meet the minimal requirements of those objectives. Citing financial reports that were inaccurate and otherwise of poor quality, the CFO terminated Carpenter. He was given 21 weeks severance pay, payment for unused vacation, and use of the companys outplacement service. At the time of termination, Carpenter displayed anger and shock. Problem After his termination, Carpenter filed complaint with EEOC alleging age discrimination, unfair performance appraisal, and negligent and intentional affliction of emotional distress. Causes of the problem We dont have enough information to determine whether or not Carpenter really was the victim of age discrimination or unfair performance appraisals. There doesnt seem to be any indication of such from the information presented in the case, although it could still be the case that he was discriminated against. His poor performance appears to be well-documented, with many warnings and chances given for improvement. Appraisals seemed to focus on job performance-related issues, not age-related issues. The company did not attempt to analyze why Carpenter was performing poorly.

Management by Objective might have been a poor choice in this case. Although Management by Objective has been shown to increase productivity, it may not be the best fit for all employees or the best way to get at the heart of poor performance issues in every case as we will discuss later. Carpenter received a 7% raise his first year, despite poor performance, which sends a mixed message. It may have caused him to believe his performance wasnt as bad as claimed. It might also have been better to have fired Carpenter earlier; demotions might have hurt his ego more than an early termination would have. These incidents may have lead Carpenter to believe he was the victim of discrimination. Alternative Solutions The company should first try and understand the reasons behind the employees performance problems. Factors to consider in analyzing poor performance include: Does the employee recognize what he or she is supposed to do? Are other job demands interfering with good performance? Are the job flow and procedures logical? Do the employees have the resources needed for successful performance? Does the employee have the necessary skills and knowledge needed? Is the employee mentally, physically, and emotionally able to perform at the expected level? Does the employee believe he or she can reach the performance standard? Are the performance consequences valuable to the employee?

The company should develop clear and concise steps to address the underlying problems, which should include additional training, implement employee assistance programs, and managing employee behavior. Before the final decision of termination is made the company should bring in human resource departments to look for a bias or over-or undervaluation of the

performance appraisals. This will protect the company from legal issues regarding employment laws. In using the thorough evaluation of the criteria, the human resource departments can put together training for managers in regards to properly appraising subordinates. One alternative to their current performance appraisal systems we suggest the Behavioral Approach to define the employee behaviors that must be present in order to be effective in their job. We could use critical incidents to keep track of the employees behavior in regards to how they handle a critical situation. Behavioral observation scales uses a large number of behaviors to show different levels of performance. This will allow for more specific behaviors to be linked to effective job performance. This observation also allows for the manager to record how many times the behavior has been performed to tabulated an overall performance rating. Organizational Behavior Modification can also be used as a means of positive reinforcement for the employees. OBM is a more formal system of employee behaviors, reinforcement and feedback which relies on the theory of future behavior comes from past behavior that was positively reinforced. The positives of this alterative include the high validity, reliability and specificity. The downfall to these alternative is it is time consuming to gather all of this information from managers and difficult to develop. Another possible alternative is to use ProMES (Productivity Measurement and Evaluation System. The main goal of ProMES is to motivate employees to higher level of productivity. This could be applied to Mills Paper Company in the following ways: Identify the critical objectives for the employee: financial guidance and reports, timely reporting, and superior forecasting methods

Identify important measurement parameters for critical objectives: quality of financial reports and guidelines( report prepared according to GAAP or IFRS, accurate financial guidelines provided to managers) Establish a feedback mechanism congruent with the relevant measurement parameters Research strongly suggests this technique is effective in increasing productivity and is an effective feedback mechanism. A drawback to this approach is that it is timeconsuming to develop the initial system

Analysis of the Results approach indicates that this approach minimizes subjectivity by relying on objective quantifiable indicators of performance. More importantly, it is usually acceptable to both managers and employees and links individual results with the organizations strategies and goals. The drawbacks of this approach include the fact that objective measurements can be both contaminated and deficient, that individuals may focus only on the measurable aspects of their performance, and that feedback may not help employees learn how they need to change their behavior to increase their performance. Whatever system is used, we feel it should have the following traits to withstand legal challenges: The system should be developed by conducting a valid job analysis that ascertains the important aspects of job performance Evaluations of ambiguous traits should be avoided Raters should be trained in how to use the system There should be some form of review by upper-level managers of all the performance ratings and an appeal mechanism for employees The organization should provide performance counseling or corrective guidance to poor performers Multiple raters should be used, employees should be asked to comment on their appraisals, and dialogue between employees and managers should be encouraged

Best alternative We believe the best alternative to head off this sort of problem in the future is to use the Behavioral Approach. We feel this approach is best because it can link the companys strategy to specific behavior necessary for implementing that strategy. It also provides specific guidance and feedback for employees about the performance expected of them. In 5

the Behavioral Approach, behaviors that are identified and measured are valid. And since those who will use the system develop the measures, acceptability tends to be high. Additionally, we feel that in any performance appraisal system, supervisors should be consistent. The mixed messages delivered to Carpenter (giving him poor performance ratings while increasing his pay) may have contributed to his perception that he was discriminated against. We feel that the Behavioral Approach combined with consistent messages and behavior from supervisors could have helped the company avoid the problem theyre faced with now.

Implementation Steps In order to best implement the Behavioral Approach, the critical behaviors necessary for good job performance should be compiled. A significant amount of research would be entailed, including interviewing current managers and employees, as well as research into existing empirical data describing effective behavior patterns. Simulations could be designed, and the behaviors that best suit the goals of the company could be decided upon. Finally, Organizational Behavior Modification can be used to reinforce positive behaviors and provide effective feedback to employees.

Conclusion While we did not have enough information to determine whether or not Carpenter was the victim of discrimination, we feel that a combination of mixed messages and a less effective performance appraisal system contributed to the problem. We feel that

implementation of the Behavioral Approach combined with consistency between appraisals and outcomes could prevent this sort of problem from arising in the future.