Category: Performance Management

Abstract

This study is aimed at examining the effectiveness of the performance management system and performance enabling system in Dr. Reddy’s Laboratories, CTO Unit VI, pydibheemavaram. A performance management system is an approach to evaluating employee performance. Through this the organization align their mission, goals and objectives with available resources. And additionally added another system performance enabling system known as PES was implemented at the Dr. Reddy’s Laboratories Ltd. PES was developed for the purpose of evaluating employee performance according to their role bands. There was a clear strategy on the use of the results of the PMS for the decision-making purposes, such as on promotion, reward or consequences for non-achievement of targets. Moreover, there was a good feedback on the result of the final performance assessment.

The present study aims to know the effectiveness of the overall implementation of the PMS and PES in Dr. Reddy’s Laboratories, CTO Unit VI, pydibheemavaram. The feedback that is taken from employees is useful for implementing further changes. This study finds out how the performance management system and performance enabling system plays an important role in enhancing the productivity of an organization’s workforce in the competitive edge.

Keywords: Performance Management System and performance enabling system.

Introduction

In the present competitive and dynamic environment. The competitiveness that would provide them with a sustainable competitive advantage is now becoming important for organizations to create and retain employees. However, in the knowledge age, where human assets are valued more than physical assets, a planned and strategic approach to PMS and PES has been adopted by organizations. PMS has become more important than ever in this direction.

It elaborates how the organization aligns the PMS with the organizational system and articulates the company business objectives to the individual goals. This paper deals with the effectiveness of PMS & PES. The result of the study shows that it acts as a strategic tool and a powerful foundation for the employees to achieve their ambitions and organizations to achieve their key financial goals.

Dynamic and growth-oriented companies recognize that an important aspect of organizational activity is the performance management system. No organization in a hypercompetitive business will lose long if it has no trouble keeping up with emerging market trends and technological change. Thus, PMS plays an essential role in improving the overall performance of the organisation.

Objectives of the study

• To study the effectiveness of performance management system and performance enabling system in Dr. Reddy’s Laboratories, CTO Unit VI, Pydibheemavaram.
• To analyse the awareness level of performance management system and performance enabling system methods among employees.
• To analyze the impact of PMS & PES on employee performance.

Performance management system process and plans in Dr. Reddy’s laboratories

The performance management process is a systematic process of managing and monitoring the employee’s performance against their key performance parameters or goals. It is regarded as a process for driving individual and organizational performance management. The PMS is a systematic activity performed to improve the performance, skills, attitudes and behavior of an employee to accomplish goals. There are 4 steps in the process.

Performance planning/goal setting in Dr. Reddy’s:

Planning is simply referred to as the process of formulation of future courses of action. Plans and objectives on which they are based give purpose and direction to the organization.

The appraiser has to plan for the performance appraisal meeting before it is conducted and communicate to the appraisee in time. This gives the appraisee time to prepare well for the appraisal process. The organization scorecard will be prepared by the leadership team with inputs from strategy and corporate finance. The scorecard will have clear KPIs, targets and weights and will be tracked on a regular basis. This will help us calibrate our performance throughout the year. While the scorecards will identify the priorities and targets at the BU/function level, we would need to define the goals at an individual level which will essentially articulate targets and accountability for each individual. For the individual goal setting, the manager (L+1) and the employee should meet to clarify expectations from their key customers/stakeholders and each other. This input should be converted into performance goals to be met during the review period.

Measurement criteria are for tracking performance against the goals. The manager (L+1) and employee must freeze the criteria as relevant to their work. Possible criteria may be quantity (Tons produced, Units sold), Quality (Number of defects, Service levels), Cost (Unit cost, Cost reduction targets), Time (Leadtime), Human Reaction (Feedback) and Compliance.

Performance coaching in Dr. Reddy’s:

Performance coaching is an ongoing process and is a result of continuous dialogue between the manager (L+1) and employee regarding performance. The manager (L+1) and employee should meet periodically to review performance, learnings and progress against set goals. Regular dialogue enhances employee engagement and is the foundation of coaching.

Performance review in Dr. Reddy’s:

Performance review is a process of working with and through others to achieve organizational objectives in a changing environment. Through the review process, the appraisee tends to evaluate the appraiser to ascertain whether the intended organizational objectives are meant through an effective and efficient manner.

Performance is formally reviewed twice a year.

a) Half Yearly Review:

A formal half yearly review is important for the manager (L+1) and employee to take a stock of the progress made and to make course corrections. The focus during the review should primarily be on overcoming constraints and planning for the rest of the performance cycle. The manager (L+1) collects feedback from the customers, suppliers and peers and collates this feedback. The manager calls project managers to the review if the employee has project goals. The manager (L+1) is expected to give feedback on achievement of goals and behavioural aspects for the period under review. Employees are also provided with an opportunity to give their feedback and seek clarifications from the manager. In addition to these regular discussions, the manager (L+1) may need to conduct and document an interim review if the employee is being transferred to another department. This must also be done if the employee demonstrates any extreme performance.

b) Annual Review:

The manager (L+1) will conduct the Annual Review at the end of the year with the employee, based on the metrics defined at the time of goal-setting.

Rating Methodology & Differentiation in Dr. Reddy’s:

The appraisal rating is based on a Three Point rating scale A+, A and Z, where A+ is a top performer and Z would be a bottom performer. There is a flexibility to differentiate widely among ‘A+’ and ‘A’ rated employees by using the point range. A manager is expected to differentiate performance of employees in A+/A category by using the point scale range. (The point factor should be rounded off to the nearest decimal 0.05). (A+ – 1.25 to 1.50, A – 0.6 to 1.2, z – 0).

Feedback and Consequence Management in Dr. Reddy’s:

feedback is a communications process. It should be ongoing meaning as adjustments are made based on the information exchanged between manager and team member. There should be regular follow up dialogue to determine success. Feedback is designed to note where things are going right and where they are going wrong. This means that leaders may need to be patient as new habits get developed and the learning curves for new skills are overcome. Effective and timely feedback is a critical component of a successful performance management program and should be used in conjunction with setting performance goals. If effective feedback is given to employees on their progress towards their goals, employee performance will improve.

Review of Literature

• Study by DDI (1997), Performance Management Practices is the most recent performance management study. It proves that successful organizations realize that performance management is a critical business tool in translating strategy into results. The CEOs in the majority of the 88 Organizations surveyed say their performance management system drives the key factors associated with both business and cultural strategies. Performance management systems directly influence five critical organizational outcomes: Financial performance, productivity, product or service quality, customer satisfaction & employee job satisfaction. When performance management systems are flexible & linked to strategic goals, organization are more likely to see improvement in the five critical areas: team objectives, non- manager training, appraiser accountability & links to quality management are the specific practices most strongly associated with positive outcomes.
• The article of Javed Iqbal, Samina Naz, Mahnaz Aslam, Saba Arshad (2012), offers a survey of selected literature on performance management. The purpose is to identify key themes that govern the topic in the contemporary turbulent economic and business environment where employees are more uncertain than anything else because every day they face downsizing, volunteer retirement and “golden hand shakes’’ to get rid of them. Under these circumstances, it is worthwhile to look into the ways by which they can be motivated to work under hard conditions. It is found that performance management processes, evaluation, its impact and factors are key themes. Researchers apply popular research approaches for data collection analysis and communication.
• The paper of Akua Asantewaa Aforo and Kodjo Asafo-Adjei Antwi (2012) shows that academic libraries have a performance appraisal system comprising setting of goals, feedback, participation and incentives for performance. This study aimed at evaluating the performance appraisal system in the KNUST and GIMPA libraries in Ghana and give recommendations on improving the system. Questionnaires were randomly administered to 46 staff members of these libraries.
• The paper of Jawaria Andleeb Qureshi, Asad Shahjehan, Zia-ur-Rehman and Bilal Afsar (2010) notifies that many organizations install Performance Management Systems (PMS) formally and informally in their organizations, with the motivation to achieve better organizational results. In practice, organizations have difficulty in implementing a performance management system because its different dimensions are not taken into consideration enough. This article describes the findings of comparative analyses conducted between a standard performance management model and performance management systems as applied by Local Development Organization (LDO). Data was collected from 50 employees of the organization with a Cronbach Alpha (0.935). Results identified barriers to implementation of effective PMS, also recommendations and viable solutions are presented.
• (Gratton 1996) There has been a change in scope of the appraisal process in recent years, with an increasing focus on employee development, as more and more businesses focus on how targets are achieved rather than just the achievement itself. This has led to a combination of both objectives (outputs) and competencies (inputs, Taylor, 2005) and the recognition that personal development planning (PDPs) are a fundamental part of a PMS. By offering employees the opportunity of enhancing their skills through training, levels of self-confidence will improve and performance will be enhanced (White 1999).

Research methodology

Collection of the data is essential in the research process and it has both primary and secondary data. The information is being taken from the respondents by using questionnaire. Data that has been collected for the research helped in the development of findings and used for the proper development of research process.

Tools for data collection:

By keeping the objectives of the study in mind and towards the execution of the objectives of the research, a study of the Human Resource Department has been undertaken and research process begin by conducting surveys, and gathering data from the primary and secondary data.

· Primary data:

The primary data is already existed data that has already been collected by some individuals, at some time for their purpose. Primary data means the original information which was taken from the employees of the organization by conducting a questionnaire.

· Secondary data:

The secondary is collected from the research articles, journals, reports and internet sources.

Sampling technique:

Stratified random sampling technique is being implemented to create a limit for samples. To obtain the information with the stratified sampling method we have to use primary and secondary data.

Analysis of data:

The data that was obtained by using various aspects was interpreted and analysed. Simple percentile method has been used in this study for the analysis of the data.

Tabulation:

Tabulation is the final stage in the acquiring of data which is used for the statistical treatment.

Data analysis and interpretation

1. Are you aware of the performance management system methods being followed by your organization?

ATTRIBUTES

RESPONDENTS

PERCENTAGE

Yes

106

95

No

6

5

TOTAL

112

100

INTERPRETATION:

From the above graph it was observed that majority 95% respondents are having awareness towards the performance management system methods followed by the organization and only 5% respondents are not aware of the performance management system methods of the organization.

2. After introducing performance enabling system, is there any change in your ratings?

ATTRIBUTES

RESPONDENTS

PERCENTAGE

Yes

76

68

No

36

32

TOTAL

112

100

INTERPRETATION:

From the above graph it was observed that majority i.e., 68% respondents says there was change in their rating after introducing performance enabling system, 32% respondents says that there is no change in their ratings.

3. which of the following rewards are given by your organization after performance review?

ATTRIBUTES

RESPONDENTS

PERCENTAGE

Intrinsic rewards

46

41

Extrinsic rewards

6

5

Both

60

54

TOTAL

112

100

INTERPRETATION: From the above figure it was obtained that majority 54% respondents are getting both intrinsic and extrinsic rewards, 41% intrinsic rewards, 5% are getting extrinsic rewards from the organization.

4. Do you think performance management system, motivates and improves performance of employees?

ATTRIBUTES

RESPONDENTS

PERCENTAGE

Yes

92

82

No

20

18

Total

112

100

INTERPRETATION:

From the above graph it was identified that majority 82% respondents feels performance management system improves their performance, 18% feels performance management system don’t improve their performance.

5. Does the superior give feedback, recognition and appreciation towards task achievements?

ATTRIBUTES

RESPONDENTS

PERCENTAGE

Always

80

71

Sometimes

32

29

Not at all

TOTAL

112

100

INTERPRETATION:

From the above table and chart we found that 71% of respondents felt that employees can be appraised based on his/her performance if he does a very good job, 29% felt sometimes and none of them felt not at all.

Suggestions

• The above observation, it confirms that the majority of employees aware of the performance management system methods used by the organization.
• It is observed that, the majority of the employees felt that PMS & PES is to evaluate the employee performance.
• The majority of employees believe that PMS functions fairly / equitably.
• The majority of the employees have endorsed that PMS improves their performance and motivates them to reach their targets.
• From the above basis it is clear that after the completion of the performance management system feedback session will be conducted to manage consequences.
• The majority of the employees have endorsed satisfaction with respect to PMS & PES. And agreed the effectiveness of the performance management system & performance enabling system.

Conclusion

The above analysis concludes that the performance management system and the performance enabling system are more or less identical to the performance standards of Dr. Reddy’s Laboratories Ltd, CTO Unit VI, Pydibheemavaram. The performance management system is not only a performance evaluation process with the final result as a reward/punishment. In fact, its goal is to coordinate and improve an individual’s production to achieve overall organizational goals. In this phase, highlights the strengths of employees and define the areas for improvement so that they can focus on and set broader goals for future reviews. This will allow employees to contribute to the long-term success of the organization by offering valuable ideas that will improve the quality of the results obtained. The organization creates a culture of collaboration by implementing PMS. The performance review will inspire the employee who felt there was no progress in the business using PMS and serves the employee growth goal, so that it can be used as an important tool for career planning. The effective implementation of PMS and PES within the organization will play an invaluable role in achieving the vision of the organization.

References

1. Cheng, M-I, Dainty, A & Moore, D 2007, ‘Implementing a new performance management system within a project-based organization: a case study’, International Journal of Productivity and Performance Management, vol.56, no. 1, pp.60 – 75.
2. Armstrong, M. (2004); Handbook of Human Resources Management Practices (9th Edition) London: Kogan Page.
3. Clause, TS, Jones, KT & Rich, JS 2008, ‘Appraising employee performance evaluation system’, CAP Journal, vol. 78, pp. 64 – 67.
4. Akata, G.O. (2003); Strategic Performance Management: Your key to Business Success; Ibadan Spectrum Books Linited.
5. Moharman, AM and Mohrman, S A (1995) performance management is ‘running the business’, Compensation and benefits Review, July – August, pp 69 – 75.
6. Sahu R.K. (Performance Management System) 2007 edition.

The purpose of this assignment is to analyse and compare two articles that relate to performance management effectiveness within an organisation. Performance management refers to a range of different activities that are undertaken by the organisation to improve the performance of individuals, with ultimately the purpose of improving the overall effectiveness of the organisation (Denisi, 2000). Both articles suggested that performance management is a key driver for implementing new strategies and continues to help with the development of the organisation however; in turn both also stated that there are high levels of dissatisfaction and many inconsistencies had been established in regards to its effectiveness. The involvement of senior management was also a similarity that was identified within both articles. The differences that were identified throughout the articles were simply the methods each used to promote performance management effectiveness within the workplace. One article believed strategic and tactical goals was more effective then the other article, which stated that employee recognition, was more effective overall.

The article ‘Performance management effectiveness: Lessons from world leading firms’ uses the signaling theory to suggest that when firms promote certain facilitating practices in turn it has an effect on the effectiveness of the performance management systems. The framework uses four performance management system facilitators that push managers attention towards performance related issues. Firstly, while many firms refer to practices such as performance evaluation or feedback as the core component of performance management a more comprehensive approach may reflect the firms view of performance management not just as a tactical tool but also as a strategic one. Secondly, senior management involvement may contribute to the overall success of the system by means of a stronger alignment between the firm’s strategies and its HR practices (Wright & McMahan, 1992). Thirdly, a clear communication path during the implementation of a system may assist employees in understanding what is expected from them and why their efforts are important to the organisation and finally formal rater training shows the firms efforts in trying to keep performance assessments impartial. Research shows that trained managers were found to be more knowledgeable of performance appraisal procedures and their discussions were perceived more satisfying to employees when compared with untrained managers (Davis & Mount, 1984). The presence of these indicators shows that the organisation cares about performance management and in turn the effectiveness of the organisation overall.

The article ‘performance management effectiveness: practices or context’ investigates the influence of practices and context on performance management effectiveness. The article outlines three performance management practices which include performance management training, multisource feedback and employee recognition as well as performance management contextual factors which included culture, climate and the strategic integration of human resource management in which performance management is implemented. The main issues outlined throughout the article are related to overall performance management effectiveness rather then on specific design interventions. Studies throughout the article have stated that too much time and effort is placed on the design of the system and not enough is being placed on the implementation process (Posthuma & Campion, 2008). This proving that the main purpose of this article is to help managers improve the functioning of their specific employee performance which involves setting goals, coaching, ongoing feedback, regular performance appraisals and employee development.

The first similarity identified within both articles is that performance management is a channel for implementing new strategies and continues to expand the development of the workforce (Lawler & McDermott, 2003) however, research has suggested that there is a high level of disappointment with the functioning of these systems and many irregularities have been established in regards to its effectiveness. The articles state that many companies are finding that their systems are not living up to their expectations and that these inconsistencies are linked to the lack of information given regarding the factors that could assist in improving the effectiveness of these systems. Another similarity that both articles had in common was the need for senior management involvement and performance management training. The articles state that performance management is likely to be more effective when senior management outlines this process as a fundamental and core procedure of the HR function and the organisation as a whole. Senior managers should undertake performance management training as it can assist with the delivery of performance management tasks to their employees, which in turn will help to gain a clearer assessment of overall performance effectiveness. Research showed that those closely involved with performance management processes are integral to the success or failure of the system and therefore should be trained correctly (Kanin & Bevin, 1992).

The first difference between the articles that was identified was the use of performance management as a strategic and tactical tool with the comparison of the use of employee recognition to met organisational goals. Throughout the article lessons from world-leading firms studies suggested that the use of performance management systems are designed to achieve a variety of different organisational objectives. These systems are designed to achieve strategic business objectives as well as being used to gather valid and useful information for making important HR decisions, including salary, employee retention and termination. The information gathered allows managers to provide on going coaching to employees by identifying their strengths and weaknesses as well as pointing out the causes of performance shortages (Cleveland et al, 1989). In comparison the article practices and context outlines that employee recognition assists organisations in meeting their goals. Employee recognition is seen to be reinforcing and has the capability of shaping the behaviour of employees as well as improving overall performance. Managers provide employees with behavioural penalties for their actions as a way of reinforcing the behaviour that they want to encourage to improve the effectiveness of the system. This same article also suggested that organisational culture plays an important role in ensuring the effectiveness of performance management systems. The organisation will receive more positive performance outcomes when employees believe they are valued within the organisation and when a higher emphasis is placed on the employee’s commitment to their jobs.

In conclusion, both articles outlined that implementing a performance management system assists with the development of the organisation however; research has shown that there are high levels of dissatisfaction with the functioning of the system and inconsistencies occur due to a lack of information and minimal training options. The differences identified throughout each article were simply the methods that each believed were effective in implementing the system. The comparison was made between the use of strategic and tactical goals and the use of employee recognition in order to improve the effectiveness of performance management systems.

Reference List:

1. Cleveland, J.N., Murphy, K.R., and Williams, R.E. (1989), ‘Multiple Uses of Performance Apprasial: Prevalence and Correlate,’ Journal of Applied Psychology, 37, 439-452.
2. Davis, B., and Mount, M. (1984), ‘Effectiveness of Performance Appraisal Training Using Computer Assisted Instruction and Behaviour Modelling,’ Personnel Psychology, 37, 439-452.
3. DeNisi, A.S. (2000), ‘Performance Apprasial and Performance Management: A Multilevel Analysis,’ in Multilevel Theory, Research and Methods in Organisations, eds. K.J. Klein and S.Kozlowski, San Francisco, CA: Jossey-Bass, pp.121-156
4. Kanin, J., and Bevan, R. (1992), ‘Don’t Evaluate Performance – Manage It,’ Journal of Compensation and Benefits, 7, 51-54.
5. Lawler, E.E. III, and McDermott, M. (2003), ‘Current Performance Management Practices: Examining the Varying Impacts,’ WoldatWork Journal, 12, 2, 49-60.
6. Posthuma,R.A., and Campion, M.A. (2008), ‘Twenty Best Practices for Just Employee Performance Reviews,’ Compensation and Benefits Review, 40, 47-55.
7. Wright, P., and McMahan, G. (1992), ‘Theoretical Perspectives for Strategic Human Resource Management,’ Journal of Management, 18, 295-320

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Essay:

My essay is about performance management, process is a systematic process of managing behavior and monitoring employees’ performance against their key performance or goals. Its process for the individual and performance management of the organization. In this we analyze, individual behavior that they contribute for the organization’s goal. In this essay, we will cover employees performance analysis and measured their behavior that are good for the organization’s objectives or goals. We evaluate performance on fair bases and we evaluate performance on the bases of job knowledge, skill, and quality of work. There are three types of criteria in which we create and measure performance management system, Behaviour approach, Result approach, and Trait approach ( Herman Aguinis ) 2009.

Literature:

In the behavior approach, employees engage with specific behavior and there is no clear link between behavior and employee outcomes. In result approach, we only deal with employees’ results what they contribute for the organization’s goals and the outcome that they produced. The result approaches give employees the opportunity to done work according to their skill, and information and achieved desired outcomes in an autonomous way. In triat approach, we deal with employees’ unchanged characteristics like personality and intelligence. There is a link between some performance and traits ( Judge, Bono, & Illies 2002 ). Multiple methods is used in the organization to evaluate their performance management system. Our is about to measure the organization performance management system, we relate behavior approach with performance system in this we measure right level of performance and behavior that are desirable for the organizational outcomes. And in the trait approach, we measure the positive relationship between an employee’s personality and abilities and also desirable work-related behavior. We can say that there is link between behavior and result outcome in the result approach. Performance management systems help managers to know about their employee’s issues about their negative responses and find the best solution to fix them for their performance improvement ( R. K. Sahu “ performance management ‘ ). Employees adopt behavior that helps them to gain bonuses and pay increase that give them reward for their outcomes and also motivate the employees that help employees to increase their growth.

Performance System :

Performance management systems begin from the hiring process when employees know about the tasks that would perform for the organization. Goal setting and reward system involve in PM system. It’s a continuous process in which we deal with prerequisites, performance planning, performance execution, assessment and performance review. In order to achieve organizational goals, HR department should clarify their duties to the employees and employees will motivate if the job is according to their skills then employees set some expectations from the organization in the foam of the reward system. Performance management plays a vital role in various organizations that adopt them to know about their operations and their employee’s skill and its very important concept in business. Goal-oriented strategies that help organizations to achieve their objectives and goal. Through a performance management system, organizations evaluate the value of their employees that they contribute to the organization. We have many ways to perform performance management system, their tools, and techniques, and manage and monitor the employees. The organization uses its performance management system effectively, for their effectiveness they should be dedicated and committed by the HR department and managers and employees. Through analyses, organizations can develop individual talent, and strength, and also help to increase their performance. Many organization deploys their performance management system to know about their operation on a timely basis. With the help of performance management system employees engage with organization and consider it they have worth and some status in the organization. Through a performance management system, we can gather information about employees’ performance and do discussions on their feedback. The performance management system is the nervous system of the organization and provides performance relative to goals, managing the organization, effectiveness, and efficiency of services that are offered by the organization. For an effective performance management system, it is necessary that each employee should be aware of the role that will perform in the organization. The performance review stage also involves in this stage we conduct meeting between employees and managers to discuss about their assessments, this meeting is also called an appraisal meeting in which the employees receive feedback on their performance.

How does the PM system apply in the company?

The overall goal of a performance management system is to set targets that are derived from and linked to the corporate objectives and monitor performance levels and development activities in a structured way so that issues are addressed in good time and with a clear purpose. When implemented well, it drives employee engagement in the company’s overall goals, which leads to improved performance of both employees and the company. In the assessment stage, we use the appraisal form to gather the information of employees, discuss their issues and choose the different sources to gather the information. Information gathers by using paper manually and electronically. Electronically information can be stored easily and shared and it modifies easily rather than paperwork. We need an appraisal form to offer training and development, and to give rewards. When we gather information regularly its also help the organization to find out the problems and immediately fix them rather than make a more complex problem for the organization. Its helps employees to engage themselves and boost productivity. Using the information that we collect about an employee’s past performance and their current contribution, it helps the employees to grow their skills and talent. O organization applies theories and models when they used appraisal foam to collect information about employees’ performance. That form has a section in which clearly defined things like basic employees information, objectives, and competencies if employees has a behavior approach then to assess them we have a competencies secton, achievement, goals, comments and employee signature this is a generic type of form that can be used almost in every position. In some cases form has contained the competencies section rather than the result approach and on the other hand form consists of development issue and ignore both approach’s behavior and result. We have certain ways that make effective our appraisal foam. We have some factor that makes our form effective, the simplicity that makes our form easy to understand employees can easily understand, relevancy that are directly related to the tasks and responsibility, descriptiveness form should be descriptive and has a clear understanding, adaptability in this section manager deal with particular needs and situation, definitional clarity in which competencies and result clearly defined, communication in which communicate all the people that are the part of the evaluation, time orientation deal not only past employees performance but also the future. The form should have clarity in all their section if one of the section have incomplete information and not clearly defined then the rating may be inconsistent. Some organizations choose to conduct appraisal forms annually, we also have other choices we conduct that foam on a quarterly and semiannual basis. The annual basis form does not provide sufficient opportunity to discuss employees’ performance issues in a formal meeting. The review that held twice a year, individual receive feedback and adjusts goals and objectives. The company reviews on the basis of quarterly that employees receive feedback from their coworkers how they perform. Its open communication help employees to give comments to coworkers about how they are performing and also trained employees to give effective comments on their positive and negative points of their coworker. In which employees feel improvement by the help of their co-worker comments they can easily adopt a way that are effective for their career growth and also improve their performance. The performance management system has some formal meetings, system inauguration in which we discuss how the system will work and our duties and responsibility, self-appraisal in which employees himself judge their performance, classical review we discuss compensation changes, and developmental plan in which we discuss employees performance need and how we will improve their performance, objective setting in which we setting our goals in both ways behavior and result oriented. After that , we discuss where we can get the information, we discuss on sources. Some organization get direct report from the supervisor for their employee because the supervisor observes the employees directly and have good knowledge about performance, but we also have other sources to get information. We can collect from their peers, subordinates, self, and customer. Many organization uses these sources for their employee’s evaluation. According to that theory and models, an organization applies and chooses models in its performance management system. We have different degrees to conduct appraisal review, its also depend on our organization in some companies they use more then one degree. 90-degree review is basic form in which no self-evaluation and employees directly receive an evaluation by their manager. 180 degree in which we have a self-evaluation section, Once the appraisal and appraisee agreed on the evaluation then is signed off. 360-degree reviews involve four group of people. The manager gathered feedback from peers and subordinates or customers, and clients. Supervisors and managers need to utilize a performance management system in order to fullfil the gap of communication, and understanding between employees and managers. Organization applies a performance system to directly link with compensation and modify their behavior in order to compete and achieve their objectives. To applies a performance management system organization should conduct a training program to eqiup staff with skills. Performance system involve rating and evaluation, we should rate employees according to their skills and ability, its also help to motivate the employees. The organization should use a communication method in which they train their employees what is performance management how it fit to a strategy that we use in the organization and our responsibility. The organization should involve their employees and know about their needs. The appeal process in which they work according to their employee’s acceptance. Before launch the performance management system, we should trained their employees its also help increase satisfaction with system. Behavioral observation training is another program to implement the performance management system its use to observe the behavior, then we have pilot testing and online implementation. After all the testing, we implement a performance management system in our organization.

Strength and shortcoming:

Rainbow is a departmental store that provide all facilities that also engage to address the ever-changing needs of their customer. Rainbow cash & carry operates six branches and performs similar jobs not only in Lahore but across the city. Rainbow cash & carry more concerned about their quality and services and achieving their target. The performance management system is very important for every business in which we know about our employees’ performance and also know about our organization. This system is made goal achievable in an effective manner ( Agunis 2005 ). Performance management systems are implemented to know about the employee’s development and improve communication gap and solve the issue for improvement in the system to achieve goals. Rainbow cash & carry give rewards to their employees for their excellent performance in the foam of their contribution. Rainbow cash & carry use 180 degree for appraisal review in this we have a self-evaluation section. The organization evaluates its approaches by establishing level. The evaluation system have only employees’ performance information. Rainbow cash & carry thet we choose for this project, their appraisal form do not have all section in which we can easily measure employees’ performance. The evaluation process measure the level of job satisfaction between the company and employees. But Rainbow cash & carry appraisal form consists on four parts, first one they discuss employees’ basic information designation, position and rating scale to which extent individual has met expected level of performance they rate them according to them. Rainbow cash & carry do their review on annual basis they assign the task beginning of the year and according to them they calculate weightage at the end of year. Their rating scale 1-5 and according to their overall rating they give review to their employees. Then we have a comments section in which supervisors give comments on their employee’s performance and also have an employee comment section its optional if employees want to give comments. After that, we have a development training plan in which they deal with different skills like, soft, technical, leadership & management, and other. They also give job cross-training, inter-departmental work, and on-the-job training to their employees. These all are very beneficial for the employee’s improvement, for their career growth also. Rainbow cash & carry should add quatitative data also to evaluate the performance. In their appraisal form they do not have the quantitative data they can add like, what elements of your job you consider its difficult, your job interest, past experience. Employees easily state their duties and responsibilities. List of objectives that employees set by themselves and set for future for their personal growth all the data, we need that is necessary for evaluation of the employee’s performance evaluation. These are some shortcoming that needs to improve.

Improvement:

Rainbow cash & carry uses an annual review system that are not more effective. Organizations should use the complete components of appraisal foam and use a semiannual review system twice in a year that are effective rather then using an annual system. Organizations should improve and update their performance evaluation system for the betterment of employees and also the organization. Many factor impact an organization’s effectiveness and performance management system, but some factor are more important like, the system need to align and support the organization’s direction and critical success factor. Well-developed, efficiently administrated tools and processes are needed to make the system friendly. Both employees and managers use the system in a positive manner in which benefits are awarded and value-added in performance development, planning, feedback and achieving goals. Manager can improve their performance appraisal by providing regular employee feedback, two-way discussion, use employee self-appraisal. Through a performance management system, we can get adequate feedback to each person on his performance, changing behavior towards tasks, and providing data to managers which they judge future tasks.

Conclusion:

My essay is about performance management, process is a systematic process of managing behavior and monitoring employees’ performance against their key performance or goals. Its process for individual and organization performance management. In this we analyze, individual behavior that contribute for the organization’s goal. In this essay, we will cover employees’ performance analysis and measure their behavior for the organization’s outcomes or goals. We evaluate performance on fairly bases and we evaluate performance on the bases of job knowledge, skill, and quality of work. There are three types of criteria in which we create and measure a performance management system, the Behaviour approach, Result approach, and Trait approach ( Herman Aguinis ) 2009. We also discuss the performance management system and how we collect data about employees’ performance through appraisal forms. We find some gaps in our organization and also discuss how they bring improvement in their appraisal form. I will recommend improving their communication with their employees, they should use modern communication patterns. An annual review is slow and does not provide feedback immediately. They should motivate their employees it will be helpful to their organization’s objectives. They should customize their performance system in that they can collect more data about their employees’ skills, and abilities. Organizations should increase incentives ( financial incentives as well as non-financial incentives ) to motivate employees. Organizations should not use those measures that implements negative effect give training to their employees and those employees who are underperforming after the training should be terminated because it would be affect on those employees who are currently giving good performance.

MNCs in today’s time are dealing with many types of complex situations. In this environment, it is critical for the management to ensure that they have a plan for the skills management. In the international markets there is higher competition hence efficiency needs to be brought in the work process which cannot be possible without making the skills within the MNCs efficient. International HRM has to make sure that they have a performance management plan in each country (Cogin and Williamson, 2014). However, there is always a question that whether there should be common performance management plan or there should be different performance management systems that differ country-wise. Since the nature and behaviour of the people differs with the culture hence performances also varies accordingly. This essay will illustrate the things that need to be considered while implementing a common set of performance management practices throughout its global subsidiaries with the examples of two nations.

Performance management system is necessary in the modern day business as it is helpful in monitoring the performance of the employees and at the same time it is helpful in improving the skills on the basis of the pre-defined measures (Briscoe, Tarique and Schuler, 2012). It is critical that at the global levels MNCs implement performance management practices that improve the overall performance of each of the subsidiaries of the organization. There must be use of best practice approach at the global levels in performance management.

At the global levels when the MNC is planning to implement a common set of performance management practices throughout its global subsidiaries then they need to make sure that they are taking care of different cultures in different nations. This is necessary for ensuring that no cultural aspect of any people gets hurt while the performance management system is implemented at the global levels (Ahlvik and Björkman, 2015). For example in the countries like United Kingdom and Vietnam, there is difference in culture and if the company implements the common performance management system then they need to ensure that all the aspects of the cultures in both nations has been taken care effectively. For instance the working culture in both the nation is different i.e. in United Kingdom people like to have more leaves when compared with Vietnam and hence if the performance practice includes the numbers of days they are present then it will not motivate the people that are in United Kingdom. On the other hand if the performance management practices include reviewing number of extra hours a worker is working then United Kingdom’s employees will be more disappointed (Mahlendorf, Rehring, Schäffer and Wyszomirski, 2012). However this evaluation totally depends on the compensation that is given in two nations.

If the performance management practices include higher use of technology then a company always need to make sure that what is the condition of the market in terms of technology i.e. technologically advanced nations such as United Kingdom will have more employees that will be highly sound in the use of technology and hence utilising technology in the performance management practices will be easier (Mellahi, Frynas and Collings, 2016). This is true in terms of the fact that how the employees are using technology in the workplace and at the same time how the HR managers can use technology for monitoring the performance of the employees. This can also be understood in terms of the fact that if the employees were able to use technology in a better manner then it is also easier for the HR managers to monitor the performance of the employees as well. For instance in the sales department if the employees were able to do sales through the help of technology mediums then there is a better chance that companies are able to have account of the performance. In Vietnam where the employees at lower levels are not so good in technology, it is always difficult to measure their performance (Ansari, Reinecke and Spaan, 2014). In this kind of difference it is essential that when the company is implementing common performance management practices then a bit leverage needs to be given to the workers in Vietnam so that they also fill in the criteria for effective performance. It is critical that employees of Vietnam are trained in a better manner so that they equal the technological skills of people in United Kingdom. This will make it easier for the managers to implement the common set of practices related to technology at the global levels.

On the other hand practices such as regular audits can be implemented in both nations at the global levels. However the people that will be included in the performance audit and the way in which performance also needs to change according to the country. For instance in United Kingdom people are more concerned about their rights hence they ask for getting indulged in the performance management systems (Holtbrügge and Mohr, 2011). Increasing employee’s engagement in the deciding the criteria for performance management will have impact on the motivation of people. It is necessary that in the performance management practices the concerns of people in both nations needs to be addressed. Company needs to ensure that they engage people from different organisational levels in deciding the criteria for performance management so that there is no chance of conflict in any country.

It is also to be understood that performance management practices such as productivity evaluation can be done in any country but a fact needs to be taken into account that people in both these nations have different levels of knowledge as they have graduated from different standards of college and hence expecting exactly same performance from people of these nations will be appropriate (Ferner and Almond, 2013). It is critical that while decision about the common performance management practices are made, it is taken care that knowledge levels of the people in these two nations are different and hence the comparison between the performance of people in these two nations must be done from the people of the same nation rather than from each other. Productivity standards need to be set at the minimal levels so that employees from both the nations qualify in the performance evaluation criteria.

In the performance management practices deciding of the rewards is very much critical aspect as it is directly connected to the motivation of the people which again has a direct relation with the performance (Lin, 2014). It is to be understood that pay scale of the employees in both the nations are different where it is seen that United Kingdom has higher pay scale when compared with Vietnam and in this condition when the rewards will be paid it will be higher for the people in UK then in Vietnam. Due to this there is always a chance that companies will have to spend more on the people of UK and hence MNC will have to spend more amount of money and it is also a chance that Vietnam’s subsidiary will not feel good. In this regards it is critical that a standard reward plan is made so that it satisfies the need of the people in both the nation and also do not have significant effect on the overall expenses of the company (Kostova, Marano and Tallman, 2016). In this also there must be higher employee engagement as people will be more satisfied when the reward plan is decided as per their demand. It is also the fact that better the reward always motivates people and hence reward management needs to be done appropriately.

Performance management practices such as coaching and training also needs to be given effectively. It is critical for the management to understand the complexities and the difficulties faced by the employees in their work. It is critical that company provides training at regular interval so that skills of the employees remain on the better side. In the MNCs there must be implementation of training model that is same however the cultural aspects needs to be given as a priority within the firm (Ambos and Birkinshaw, 2010). For instance people in these nations have different understanding and different level of training requirement hence performance management practices must include the training model that can bring them at equal platform on the basis of which they can do their work. Once the employee’s standards come at the equal levels they can implement common performance management practices. There must be regular training of the reviewer so that they can also do the review of the performance in an effective manner (Schaaper, et al. 2013). This training should also be uniform as they are the major people who will have the responsibility to make performance review.

International HRM needs to ensure that there must be transparency in the common performance management practices. This is essential for improving the efficiency of the performance review and at the same time it will also ensure that every subsidiary knows about the other which will automatically reduce the chances of conflict between the subsidiaries and also reduce the chance that people at any subsidiary gets dissatisfied. Each subsidiary knows about the other and at the same time each employee knows about what is common standard in the company throughout the globe (Maley and Moeller, 2014). Such transparency also allows MNCs to avoid the chances of internal dissatisfaction. International HRM will have to make sure that they implement advanced technologies in performance assessment. Since in the age of internet technologies, all the subsidiaries are connected and at the same time each subsidiary has access to the information that is stored by any subsidiary. On the other hand with the help of technology an organisation will be able to store every data in front of the people that are actually the part of the performance review or say whose performance will be reviewed. This will help in implementing common performance management practices irrespective of the country they are in. Nobody will raise their concern as they can see what performance is and they can themselves audit their performance and calculate the reward (Chung, 2015). Transparency also allows company to do appraisal in a better manner. This is because when they are transparent no one feels that they are being cheated or they have not been rewarded as per their performance.

Appraisal another important practice of the performance management can be made common for all the subsidiaries. For this they need to have a common appraisal policy where the according to the work done by the people they should be given appraisals (Heikkilä, 2013). When a common policy is made by the company by discussing it with the employees at the global levels then companies might not face implementing it. In appraisals there must be only one criterion that is performance of the employees. Since people are from different parts of the world working at each unit hence there must not be any kind of discrimination among the people. Performance management practices like promotions should also have the same criteria where promoting a person should be dependent on the skills and the performance that they have delivered (Chung, Sparrow and Bozkurt, 2014). Implementing at the global levels can only be done if proper organisational structure within the firm is followed. Hence at the global levels proper structure needs to be followed.

Performance management practices like finding the future skill requirements for the company as per the industry standards and the changing dynamics of the market. Hence performance at the global level needs to be managed smartly where each people’s weaknesses are to be found out and accordingly they need to be trained so that performance standards are met and accordingly they can make and redefine their performance management practices for their future (Fee, McGrath‐Champ and Yang, 2011). For this a committee needs to made within the firm to ensure that they are moving as per the standards in the industry and design the organisational practices and processes also in the best interest of the firm. This is necessary for continuous improvement in the organisation.

In conclusion it can be said that it is good to implement universal performance management practices in different parts of the world but they need to take care that they take care of the local demands of the people and the business culture in that nation.

References

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Introduction

Over the last decade there has been a worldwide movement towards the implementation of performance management in both the public and private sectors. Performance management targets planned performance along with the improvement that needs to be achieved overtime. It is important for both organizations and individuals working in them and is best viewed as the development of these individuals who are working towards the achievement of shared meaningful objectives of the organization. Performance management system is a systematic way of measuring the performance of employees, through which the organization aligns their mission, goals and objectives. It also follows an integrated and goal oriented approach to assign, assess, train, and reward employees’ performance. However if its not conducted properly, they can give an inaccurate result about the performance of the employees which in turn affects the overall performance of the organization. Due to this reason the appraisers also need to be trained properly so that they can ensure the maximum effectiveness of this continuous process.

Employee performance management includes – planning, monitoring, developing, rating and rewarding. In effective organizations, managers and employees practice good performance management regularly by executing each key component process well. Goals are set and work is planned routinely. The progress that is made toward those goals is measured followed by giving employees the feedback. High standards are set, but it is also kept in mind that they are made achievable and the proper skills are taught through training needed to achieve them. Lastly both formal and informal rewards are given to recognize the behaviour and results that help in the accomplishment of the organizational goal. Therefore all five component processes work together while also supporting each other to achieve an effective performance management system.

The pharmaceutical industry in Bangladesh is one of the most developed sectors within Bangladesh. The two companies that we will be analysing in this report are:

• Square Pharmaceutical Ltd.
• Novartis (Bangladesh) Ltd.

Square Pharmaceutical is the local company whereas Novartis Pharmaceutical is the MNC. Square pharma is the flagship company of Square Group which has been holding a strong leadership position in the pharmaceutical industry of Bangladesh since 1985. They have been the market leader for the last 32 years. On the other hand Novartis provides healthcare solutions. The Company is a multinational group of companies specializing in research, development, manufacturing and marketing of a variety of healthcare products. Their portfolio focuses on science-based healthcare sectors that are growing rapidly while rewarding innovation and enhancing the lives of patients. The performance and appraisal management system in Square Pharmaceuticals Company is a planned system. They use different management tools for establishing their performance and appraisals management. For Novartis, they measure employee performance following three methods of performance appraisal – MBO, 360 degree feedback and SMART.

Problems with PMS Application in Bangladeshi Pharmaceutical Industry

In case of performance management application in Bangladesh, there is some evidence that shows performance management concepts are not being practiced properly in all organizations yet. Performance management system is not just about ticking the right boxes on a form. The concept of performance management is neither sufficiently well understood nor appreciated in most of the organizations in our country. In most cases current practice involves an old style of performance management system being followed which is highly bureaucratic and follows an hierarchical system with inadequate management expertise. The rigid hierarchical structures that exist in most organizations is also a reason for this situation. Performance management system is likely to be seen as a threat, facing resistance, at all levels of an organization and a reason for this is the absence of high level of technical capacity and transparency. In most of the organizations, it is a confrontational, one way communication done by the management or a formal interview carried out to take disciplinary action.

The broad objective of this study is to find out the overall situation regarding the practices of the performance management processes of the two selected companies in the pharmaceutical industry in Bangladesh.

The specific objectives of this report are:

• To identify the level of practicing the performance management system in the selected companies.
• To identify whether the practice of performance management system varies across these two companies.
• To provide some suggestions which could be used as contribution regarding managerial perspective for improving the management system of these two selected companies.

Company Overview

Square

Square company was founded in 1958 where it started its journey leading to today’s present state as one of the top line conglomerates in Bangladesh. It was converted into a public limited company in 1991 and listed with the stock exchange in 1995. Square Pharmaceuticals Ltd., the flagship company, has held a strong leadership position in the pharmaceutical industry of Bangladesh since 1985 and is now on its way to becoming a high performance global player. The turnover of Square pharma was Taka 45.88 Billion (US$ 540 million) with about 16.95% market share and a growth rate of approximately 8.52% from July 2017 to June 2018. Square Pharmaceuticals Limited has extended its range of services towards the highway of global market. It pioneered exports of medicines from Bangladesh in 1987 and has been exporting antibiotics and other pharmaceutical products since then. Present export market covers 42 countries. This extension in business and services has proved the credibility of Square Pharmaceuticals Limited.

Novartis

Novartis was created in 1996 as a result of the merger between Ciba-Geigy and Sandoz Laboratories, both of which are well known Swiss companies with years of experience. Novartis International AG is a multinational pharmaceutical company based in Basel, Switzerland. Novartis (Bangladesh) Limited researches, develops, manufactures, and markets pharmaceutical products. It operates as a subsidiary of Novartis AG. It is one of the largest healthcare companies in the world. Novartis produces medications for many diseases with cancer and cardiovascular medications making up the bulk of sales. Novartis is different from other major pharmaceutical companies as it also has a strong presence in the generic market with Sandoz being one of the largest generic manufacturer under a major pharmaceutical company. This investment in the generic market helps Novartis to be partially insulated from patent expiration. The Pharmaceuticals Division of Novartis is recognized worldwide for the innovative medicines provided to patients, physicians and healthcare organizations. The products are concentrated in major therapeutic areas: Cardiovascular and Metabolism, Oncology and Hematology, Neuroscience and Ophthalmics (NSO), Respiratory, Immunology and Infectious Diseases (IID).

SWOT Analysis

SWOT analysis conducts the external and internal analysis of a business. The acronym SWOT stands for strengths, weaknesses, opportunities and threats. This analysis may help to develop strategies for Square and Novartis pharmaceutical companies.

Square Pharmaceuticals Limited

SWOT Analysis of Square Pharmaceuticals

Strengths Weaknesses

• Good reputation with strong brand image
• Large customer base
• Product development capabilities
• Visible presence in the market • Some product prices are quite high
• Low investments in innovative R & D work
• Lack of latest or modern technology

Opportunities Threats

• Intensive Government support
• Global market
• Growing export potential • Growing competitors in this industry
• Innovative products offered by other companies
• Export efforts hampered by procedural hurdles in BD

Strengths

As one of the oldest companies in Bangladesh, Square pharma has developed a strong brand image in the pharmaceutical industry. They also have a large customer base and to support that base they developed the capabilities to produce different types of generic medicines. On the other hand they have the largest market share in this industry which shows a strong existence of Square Pharmaceuticals in the market.

Weaknesses

They have been using relatively older technology to manufacture medicines. Pharmaceuticals industry is a knowledge-based industry and due to this the entrepreneurs should be well aware of the necessity for research and development. However they do not spend as much as they should in this department which is necessary for innovation and to stay in league with the competitors. Some of their product prices are also quite high and one reason for this is the increase in price of raw materials.

Opportunities

The pharmaceutical industry of Bangladesh is growing day by day and the government is giving intensive support toward its future growth as it contributes to the GDP growth. This industry is also entering the global market. Along with this Square pharma’s share is increasing as well in the global market. On the other hand Bangladesh offers significant manufacturing cost advantages due to the lower cost of labour as it is 3 to 4 times lower than that of China and India. Due to this Bangladesh has huge potential to export pharmaceuticals products which is yet to be fully tapped.

Threats

As the industry is being supported by the government while also having a positive environment for growth, the competition is gradually increasing. Also competitors are offering innovative products. The customs authority of Bangladesh imposes a lot of restrictions in sending drug samples to the importing countries. However it without sufficient drug samples, no foreign buyers will be interested to buy our products.

Novartis (Bangladesh) Limited

SWOT Analysis of Novartis Pharmaceuticals

Strengths Weaknesses

• Ensures high quality products
• Highly skilled management team
• Innovative and unique product lines
• High quality customer service • Quite expensive raw materials leading to relatively higher costs
• Narrow product lines
• Lack of proper awareness regarding their products in the market

Opportunities Threats

• Scope to improve in export oriented products
• Transferring technological know-how to new products
• Global company reputation • Strong local competition
• Unfavorable regulations for pharmaceutical exports
• Negative country image

Strengths

Novartis provides high quality products as the quality of medicine that we get from them is identical with all other countries in other parts of the world. Since Novartis Pharma specializes in patent products, the products invented here is innovative and unique. They are also well known for recruiting highly skilled management, who are responsible for the success of this company. Novartis also has a separate division of customer care service who always keeps the current conditions of the customers updated and tries to provide them maximum service based on their medicines.

Weaknesses

Most of the raw materials Novartis uses to produce medicine are imported from abroad due to which the cost of purchasing raw material gets quite high causing the impact to fall on the products’ price. In spite of producing high quality products, Novartis does not have the same level of awareness regarding their products in the market, like Square and Beximco who have created a significant place in the mind of the customers. Another problem of Novartis is, its product line is narrow compared to that of their competitors. They create patent products which has higher price but at the same time variety is less. Hence other companies get the advantage of this.

Opportunities

They can transfer their technological know how to produce new products. Also their reputation of being a global company can put them at an advantageous position as they produce excellent quality products everywhere. Lastly there is high potential for export activities in this industry, as has been mentioned earlier, which can be achieved with the help of the Government.

Threats

As has been mentioned earlier, the local competition is very strong in this market. On the other hand Bangladesh bank permits to remit maximum 30,000 USD in a year which is hampering the export activities. Some small scale companies in our country are still producing drugs which are not up to the standard and this is damaging the overall image of Bangladeshi products to the international community. We don’t have a modern, well equipped Drug Testing Laboratory (DTL) with sufficient and skilled pharmaceutical scientists. Due to lack of this, our drug control authority cannot monitor the quality of drugs manufactured by different pharmaceutical companies in Bangladesh.

Industry Analysis

The pharmaceutical industry in Bangladesh is one of the most developed sectors within Bangladesh. After the promulgation of Drug Control Ordinance in 1982, the development of this sector was accelerated. The professional knowledge, thoughts and innovative ideas of the pharmacists working in this sector are the key factors for this development. During the last two decades the pharmaceutical industry of Bangladesh has been taken to newer heights. This sector provides 98% of the total medicinal requirement of the local market. The industry also exports medicines to global markets, including countries like Europe. Pharmaceutical companies are expanding their business with the aim to expand the export market. In the first quarter of 2018, the market size of pharmaceutical products in Bangladesh was $2.35 billion and year-on-year growth rate was 8%. Per capita consumption of medicine was about $15.36.

Company Name Market Share Annual Sales (in crore)

Square 16.95% Tk 3476.25

Incepta 11.08% Tk 2272.99

Beximco 8.26% Tk 1694.26

Renata 5.20% Tk 1066.43

Health Care 5.17% Tk 1061.07

Opsonin 5.08% Tk 1042.53

ACI 4.38% Tk 898.79

Eskayef 4.37% Tk 895.71

Aristopharma 4.11% Tk 842.48

Acme 3.52% Tk 721.66

Figure: Market share and annual sales of 2018 of top 10 pharmaceuticals

According to the Bangladesh Association of Pharmaceutical Industries (BAPI), there has been an upward trend in the domestic market for pharmaceutical products over the past few years, and market size now stands at around Taka 200 billion. In addition, Bangladeshi pharmaceutical products are being exported to atleast 70 countries, and generated over $100 million in the last fiscal year. Out of 31 listed companies in the sector, 24 are listed in the category ‘A’, meaning the companies regularly provide dividends to shareholders. The remaining seven listed firms fall under the categories of B, N, and Z. A recent study by LankaBangla Investment Ltd revealed that local players dominate Bangladesh’s pharmaceutical market. The top 10 pharmaceuticals hold 67% of the market share whereas the remaining 194 pharmaceuticals hold only 32% according to IQVIA data. Square Pharmaceuticals holds 16.95% of market share which is the highest market share as shown in the table above. There are about 204 companies in this sector.

The imported drugs mainly include cancer drugs, vaccines for viral diseases, hormones etc. However Bangladesh Pharmaceutical Industry is heading towards self-sufficiency in meeting the local demand. The industry is the second highest contributor to the national exchequer after garments while also being the largest white-collar intensive employment sector of the country. Bangladesh pharmaceutical industry is mainly dominated by domestic manufacturers. Of the total pharmaceutical market of Bangladesh, the local companies are enjoying a market share reaching around 75%, while the MNCs are having a market share of 25%.

Porter’s Five Forces Model

The threat of new entrants: Low

A company that wishes to enter in a pharmaceutical industry requires huge capital expenditure and regulatory permission from the drug authority; which creates a significant barrier to enter in the industry. Furthermore, customer’s loyalty to the drugs of established brands, access to distribution channel creates further barrier. This causes threat of new entrants in the industry significantly low. However creating a strong distribution network would be easier if the producer knows his regional customers or retailer very well and that may in turn make it easier to enter the market for a new entrant.

The threat of substitute product: High

The retail consumer of pharmaceuticals product often switch from one brand to another. There are many substitute brands of single medicine. If consumer does not find one brand, he switches to another brand very quickly. Thus, the threat of substitute product is very high.

The bargaining power of buyers: Very Low

The government strictly maintains the retail price of lifesaving drugs. Pharma companies are free to set up the price of other drugs. Thus they have no choice to take alternative medicine. Bargaining power of customer for pharmaceuticals industry is low in Bangladesh, as patients typically depend on the prescription provided by physicians. NPPA (National Pharmaceuticals Pricing Authority) tries to control the price of all drugs but they cannot do it in that much effective way as the market is very competitive.

The bargaining power of the supplier: High

Bangladesh largely relies on imports for raw materials, in the absence of local active pharmaceuticals ingredients (API). About 95% of the Tk 5,000 crore worth of raw materials needed by the pharmaceutical sector are brought in from abroad – mainly India and China. Concentration of the supplier and high switching cost creates high bargaining power of the supplier. Presently an API Industrial Park is being set up by the Government at Munshiganj, 37 Km from the capital city Dhaka. This commercial operation of API Park in Munshijang will certainly decrease import dependency for raw material. Hence, bargaining power of supplier is expected to decrease in near future.

Rivalry among the exiting competitors: High

The pharmaceuticals market is highly concentrated as the top 20 players dominate the major portion of the market. Every company has similar medicine with different brand names. The companies are competing with each other fiercely in order to grab higher market share. Rivalry among competitors is very intense and the number of firms in the industry is very high compared to other industries in Bangladesh. Some of the firms are using differentiation strategy to modify their product with general competitors’ product while some are using cost leadership strategy to reach the mass population.

Literature Review

Concept of HRM and SHRM

The term HRM stands for Human Resource Management and it explains the implementation of management principles used for managing an organization’s workforce. It is simply the process of managing human resources in a systematic way that maximises the performance of employees and makes them more efficient and productive (Surbhi, 2016). HRM consists of human-oriented activities like recruiting, training and development, performance appraisal, safety and health, industrial relations and so on. It helps to align human resource policies and practices with the strategies of the organization. The functions of a human resource manager include planning, staffing, developing, maintaining, monitoring, managing relationships, evaluating, managing change, etc.

SHRM (Strategic Human Resource Management) is the process of aligning the business strategy with the company’s human resource practices, which includes development of policies, programmes and practices which, therefore, leads to the attainment of strategic goals of an organization (Surbhi, 2016). In this case the workforce of the company is managed proactively. Its primary purpose is to improve the performance of the business and maintain a culture that encourages innovation while working continuously to gain competitive advantage. It lays down a clear corporate strategy and vision for future.

Definition of Performance Management System

Performance management system is a systematic approach, to measure the performance of employees, through which the organization aligns their mission, goals and objectives with the help of available resources and systems to set the priorities of an organization. It also takes an integrated and goal-oriented approach to assign, assess, train, and reward employees’ performance. Through this process the overall performance of an organization can be improved by improving the performance of individuals within a team framework. It is a means for promoting superior performance by communicating expectations, defining roles within a required competence framework and establishing achievable benchmarks. Employee performance management includes (“Definition Of Performance Management”, 2018):

• Planning: Planning refers to setting performance expectations and goals for groups and individuals which will lead to the achievement of organizational objectives. Employees should also be involved in the planning process to understand the goals of the organization.
• Monitoring: Proper monitoring means consistently measuring performance and providing ongoing feedback to employees on their progress toward reaching their goals. Thus its easier to identify unsatisfactory performance during the appraisal period while providing assistance to remedy them immediately instead of waiting till the end of the period.
• Developing: Providing employees with training and developmental opportunities encourages good performance, strengthens job-related skills and competencies, and helps employees to keep up with changes in the workplace.
• Rating: Organizations need to know who their best performers are. Rating means evaluating employee or group performance against the elements and standards in an employee’s performance plan and assigning a summary rating of record.
• Rewarding: Rewarding means recognizing employees for their performance and acknowledging their contributions to the organization’s goals. These can be done formally, informally, positively and negatively. Good performance is recognized constantly without waiting for nominations of formal awards.

Importance of Performance Management System

The term performance management received proper attention in the early 1980’s when total quality management programs were recognized for its importance in the achievement of superior standards and quality performance. Tools such as job design, leadership development, training and reward system received an equal momentum along with the traditional performance appraisal process in the new comprehensive and a much wider framework (Juneja, 2018). Performance management is an ongoing communication process which is carried out between the supervisors and the employees throughout the year.

According to Armstrong and Baron (1998), Performance Management is both a strategic and an integrated approach needed to acheive successful results in organizations by improving the performance and at the same time developing the capabilities of both teams and individuals. Performance management is a much broader and complicated function of HR, as it includes activities such as joint goal setting, continuous progress review and frequent communication, feedback and coaching for improved performance, implementation of employee development programmes and rewarding achievements (Juneja, 2018). A performance management system is important to carry out the following actions:

• Developing clear job descriptions and employee performance plans which includes the key result areas and performance indicators.
• Selection of right kind of employees by following a suitable selection process.
• Negotiating requirements and performance standards for measuring the outcome and overall productivity against the predefined benchmarks.
• Providing continuous coaching and feedback during the performance period.
• Identifying the training and developmental needs by measuring the results achieved against the set standards and enforcing effective development programs for improvement.
• Holding quarterly performance development discussions and evaluating employee performance.
• Designing effective compensation and reward systems to give well deserved recognition to those employees who excel in their jobs.
• Providing the employees with promotional/career development support and guidance.
• Carrying out exit interviews to understand the cause of employee discontentment leading to their exit from the organization.

By establishing clear performance expectations which includes results, actions and behaviours, performance management system helps employees to understand what exactly is expected from their jobs while the setting standards help to eliminate those tasks which are not important. Through regular feedback and coaching, problems can be determined at an early stage and necessary corrective actions can thus be taken (Juneja, 2018).

Linkage of Performance Management with SHRM and Organizational Strategy

Performance Management and SHRM

Strategic HR decisions establish standards for each job role to define its competencies. Then, performance management systems measure employee achievement relative to those competencies. Managers use performance management systems to assess and reward the behaviour of their employees whereas a strategic human resource management function handles the recruiting, interviewing, hiring and development of all personnel needed to achieve organizational goals. The relationship between performance management and strategic planning links day-to-day operations with the company’s vision (Duggan, 2018).

• Setting Organizational Goals: As part of the strategic planning process, an organization defines its goals and objectives. Strategic direction may dictate whether a company maintains research and development spending. This impacts the HR department’s ability to attract and retain top talent.
• Defining Personal Development Goals: An individual establishes his personal goals by aligning his development activities to the organization’s needs. Establishing a specific, measurable and attainable goal makes it easier for an employee to achieve his objective.
• Managing Change: In order to ensure an organization’s capability to provide critical services, the entire workforce needs to be assessed against a defined competency model for each role. Managers need to recognize individuals who can act as leaders and help others achieve strategic goals.
• Providing Training: Strategic HR management allows us to recognize the need to offer training and development opportunities which ensures that employees can respond to challenges both in the present and the future.

Performance Management and Organizational Strategy

In a company where hundreds of employees are working in different and diverse departments, employees should develop their individual and team goals while also ensuring that they don’t lose sight of the organization’s overall mission and objectives. The challenge is to align performance management with organizational strategy so that everyone coordinates their individual goals with those of the organization. A performance management system is not only crucial for employee training and development, but for organizational alignment as well (“Aligning Performance Management with Organizational Strategy”, n.d.). It includes:

• Performance Reviews and Goal-Setting: employees can set goals that match with the organizational objectives and review those goals at any time. Managers and executives can easily track the progress of these goals and ensure they are being met on aa regular basis.
• Competencies and Skills Matrix: Managers can use the system to gain insight about their workers’ skills and close any gaps that may exist. They can also match the right employee with the right job or task with this.
• Continuous Feedback: Organizations should promote an environment of continuous feedback and coaching of their employees by managers. Managers can communicate with employees about their performance and goals and offer feedback while creating stronger relationships as well.
• Observation Checklist: With this tool the skills of each employee are automatically recorded in real time and their competencies are evaluated. This process eliminates the need for paper-based evaluations.

In the past decade, numerous businesses have emerged pertaining to various sectors of industry. This has given rise to a highly competitive market wherein survival for each business has become crucial. Due to the continuous changes in business environment, it is of utmost importance that businesses undergo an enhancement in the quality of their goods or services in order to achieve an organizational competitive advantage. Improvement in the quality can be attained by the implementation of Total Quality Management (TQM) principles. TQM is defined as a systematic set of principles or practices employed for the improvement of an organization in terms of the quality of its goods or services, productivity, customer satisfaction and profitability. The basic philosophy underlying the concept of TQM is that the cost of prevention is less than the cost of correction. The goal is to promote and encourage long-term and continuous improvement in the quality and productivity along with eliminating the fear of change in the employee’s mind. Eight principles are associated with the implementation of TQM which are given as follows: 1) focus on customer; 2) leadership driven; 3) employee/staff involvement; 4) process approach; 5) systematic approach towards management; 6) continuous improvement; 7) decision-making by considering facts; 8) mutual beneficial supplier relationship.

Purpose of Research

The general purpose of this research is to understand the concept of Total Quality Management (TQM), its importance, principles and its implementation. The research also helps understand how it helps improve the growth and competency of an organization by evaluating its effect on organizational performance in terms of various indicators such as financial, market share, customer satisfaction, productivity, profitability etc.

Review of Literature

Al-Qahtani, Alshehri, and Aziz (2015) discuss about the relationship between the implementation of TQM and the organizational performance. Implementation of TQM in Pakistan in terms of three categories namely, quality control, quality assurance and continuous improvement have been studied and discussed. The main goal of implementing a TQM in an organization is to achieve improved harmony and coordination amongst the organization’s employees so as to provide better and high-quality services to meet customer’s expectations. The managerial philosophy/strategy involved herein is of focusing on improving the business quality by considering customers as the key focus. Effective organizational management can be evaluated by conducting a performance measurement which in turn is directly related to organization’s achievement of their financial and strategic goals and objectives. Performance measurement can be in terms of finance, market share etc. It can also be measured as the performance of the whole organization which includes customer satisfaction, product quality or, performance in terms of organization’s operation which includes efficient delivery, process productivity, flexibility, reduction of errors and costs etc. The two major measurements which are directly affected by the implementation of TQM are quality and cost. It is of utmost importance that management of quality process begins at the time of initiation process and ends only after the expected quality standards are achieved.

The article later discusses the significance and results of implementing TQM strategies and practices in five categories in Pakistan such as: 1) Zero level (no control/no customer focus); 2) Level one (quality control); 3) Level two (quality assurance); 4) Level three (continuous improvement in quality); 5) Level four (quality award models).

Literature reviews have suggested that just like there is a positive impact and relation between the organizational performance and TQM, the same TQM practices can also serve as a hindrance for the organization to achieve its goals. Efficient implementation of TQM also depends on various other categories serving as performance predictors such as leadership, individual management, etc.

Wang (2017) discusses in his article various TQM practices implemented by China’s retail stores which gives them an edge over the department stores. In the past couple of years, the profit margins of China’s traditional department stores have dropped down to only 3%. On the other hand, the profit margins of the online retail transactions have soared to as high as 64.7%. The market share and dominancy of the traditional department stores are decreasing gradually requiring the need for a huge reform and innovation in their business models. The department stores need to change their business model focusing more on the customer’s needs and expectations and developing service-oriented businesses. Implementation of TQM is suggested to emphasize creation of a circle focusing on innovation, creativity, risk-taking in meeting customer’s demands by the employees of an organization (Wang, 2017). Customer orientation is the main issue for increasing the profit margins for these department stores as customer loyalty, word-of-mouth, sustainable sales is what constitutes the objectives of every organization. The article discusses various methods by which the competency and growth of China’s department stores can be enhanced.

The author suggests the department stores to study the social and demand characteristics, purchasing behaviors and adjusting their products and services to have a firm grasp on such groups of people. Focus should be on making changes in terms of satisfying the customer’s body characteristics, emotional needs as well as their social status. E.g. If customers are more inclined to buy branded clothes and beauty products, the departmental store should emphasize on such products. Since the profits are usually obtained from the price gap between the wholesale price and the retail price, the stores need to have unique product or services which add more value and can include private brand strategy as a try for retailers etc. They can provide some fee-based quality services like delivery and health care. And since service quality subjectively depends on the interaction between the customer and the employee, improving it can be profitable for the stores. They can also improve the staff and their performance by providing training, evaluation, incentives, new recruitments etc. Increasing employee’s job satisfaction is important because satisfied employees lead to satisfied and happy customers and hence, an internal marketing strategy should be followed to create a unique brand and culture promise. Studies have shown that nowadays, the ‘store image’ has become more important for the customers than the ‘product brand’ (Wang, 2017). Hence, the author suggests that the department stores need to mobilize all tangibles (facilities, goods, price, communication, staff etc.) and intangibles relevant to the company’s image (company vision, mission, values, consumer experience etc.). The department stores can create long-lasting relationship with the customers by creating a corporate branding strategy wherein they build customer base by realizing and cultivating the brand work and company’s image. This followed by continuous provision of consistent and high-quality goods and services would help the company soar high in the market.

Conclusion

To conclude, TQM is a holistic management strategy that supports continuous improvement in an organization. It embeds into all the functions of an organization by making quality a strategic objective. The success relies on its effective implementation from the first step i.e. procurement of raw materials to the final step i.e. sale of goods or services to the final customers. Enhanced quality can be a critical factor when determining the price or value amongst the competitors and can lead to sustainable competitive advantage.

Personal Thoughts

TQM and its implementation play a very important role in the business market as it can help give an organization an edge over other competitors. In this competitive era, there is no scope of standing still. Either a company can move forward or go backward. Implementation of TQM principles is supposed to be endless process and cannot be considered as a program which once implemented can be forgotten. Moreover, its implementation has to be efficient and up to the par to see the desired results. It is important for all the employees of an organization to be on onboard for it to be truly successful. In case of inadequate resources or efforts, negative effects are bound to appear. For e.g. a lot of companies provide training to personnel but providing a simple training without making use of appropriate statistical tools and evaluating the continuous changes can lead to inadequate results. Continuous evaluation parameters in the form of periodic tests and coaching should be set up to reap the best results. To conclude, it can be assumed that, in this era of ever changing economic market, in order to constantly exceed the expectation of customers with the inclusion of the workers in the decision-making process, TQM is the best option to be considered for the continuous growth of any organization.

References

1. Al-Qahtani, N.D., Alshehri, S.S., & Aziz, A.A. (2015). The impact of total quality management on organizational performance. European Journal of Business and Management, 7(36), 119-127.
2. Wang, S. (2017). Improving china department stores through total quality management. The Chinese Economy, 50(2), 128-138. doi: 10.1080/10971475.2016.1227182

Scientific management is a reference to an approach that seeks to improve economic efficiency through the application of scientific principles to the work design in an organisation (Taylor, 1917). This theory, is also known as Taylorism – a homage to its founder Frederick Taylor, has its genesis in the industrial revolution in the United States. Despite the obsolescence of this approach to organisational design in the 1930s, some of its themes remain relevant in today’s modern workplace design. Some of these themes include but are not limited to the efficiency as well as waste elimination, mass production, division of labour and specialisation, job analysis, as well as design, empiricism, and compensation. This research paper seeks to discuss the effect of scientific management theory on the work design in the contemporary organisation. Besides, the paper also seeks to refer to both flaws and strengths of scientific management as far as its effects on the design of an organisation are concerned.

The theory of scientific management is built on the pursuit of economic efficiency in the production process-an an important objective of the modern organisation. According to Taylor (1917), a high level of management control as far as employees’ work practices are concerned is necessary for quality purposes. He argued that having a greater managerial to worker ratio is key to the attainment of increased quality and productivity. His ideas concerning management control still hold significant sway in management practices. Managers, especially in process-focused production units need to exercise greater control over the workforce to discourage behaviour such as absenteeism, cutting corners, and soldiering which impact individual as well as organisational performance negatively. In this case, the management level staff acts as the quality control department checking the work rate, the output, and the overall efficiency of organisational design.

Nonetheless, this perception has several weaknesses; more recent research has discredited the perspective that greater management control on the process improves performance. Critics argue that greater supervision or control over workers may be counterproductive and undermine creativity in the workplace by limiting the initiative of employees as well as their empowerment to make tactical decisions (Waddell et al 2013). Furthermore, the detail-oriented nature of scientific management also can precipitate friction between low-level employees and their management level counterparts. This is because the watchdog role of the management may alienate them from the rest of the employees, thus resulting in an unconducive work environment characterised by distrust and suspicion.

Scientific management also influences modern organisational design, which stresses on the elimination of waste. As stated earlier, economic efficiency is an important tenet of the scientific approach to management. It is still an important concern for modern organisations as they seek to reduce operational costs and improve organisational performance. According to Taylorism, existing economic or production systems are inherently defective and wasteful, which leads to lost effort, time, as well as labour (Uddina& Hossain 2015). To remedy this, it is important that each organisation actively seeks to reduce defects in their output or any other form of inefficiency in the system. Waste management has important implications for modern organisational designs, which place a lot of emphasis on lean systems. In pursuit of efficiency, modern organisational design has adopted lean, six sigma, and other models that seek to reduce wastage. By reducing the wastage of resources, modern organisations can not only improve the bottom line but also achieve greater sustainability (Thompson, 2018). This is because waste often represents lost potential as far as productivity is concerned. After all, wasted time, information, energy, and labour could have been leveraged to improve performance in both individual and organisational context. Consequently, modern organisations seek to eliminate wastage by streamlining the supply chain, integrating information flow, and becoming leaner (Paramboor, 2016).

Compensation was also an important aspect of the scientific theory of management fronted by Taylor. He believed that monetary incentive was key to eliciting greater production on an individual level. Therefore, by rewarding labour, employers can improve morale, and, consequently, the performance of their workers (Mullins, 2014). The scientific theory of management was of critical traditional flat rate wages. It is argued that it provided no incentive for hard work. For instance, if a hardworking employee is placed beside a lazy one, people are likely to question the logic of applying extra effort if the pay is standardised across the board. This interpersonal bonding that deliberately restricts output was referred to by Taylor as ‘soldiering’. It involves just doing enough not to get punished (Mitcham, 2015).

To remedy this, scientific management proposes a piece rate or payment based on production to ensure pay is reflective of output. The piece-rate approach to compensation is very popular, especially in the gig economy, since it ensures fair compensation or consideration for work done. By paying workers based on tangible results, the company not only encourages them to work optimally, but also ensures value for money is recouped. The principles of Taylor, however, neglected the role of non-monetary incentives such as better working conditions, healthcare benefits, career development, and flexible working hours on job satisfaction as well as organisational performance (McGaughey, 2014). Such factors have almost as much impact on employee morale, job satisfaction, and performance as monetary-based incentives. The monetary incentives proposed by Taylor are an important aspect of employee inducement, even though modern organisational designs tend to lean towards the non-monetary ones, which have shown a greater impact on perceived job satisfaction as well as individual and organisational performance.

Job analysis and design, the two key pillars of modern human resource management, are also vital concepts that are often credited to scientific management. Taylor keenly observed time and the motion involved in the completion of an operation by workers. He argued that it was possible to come up with an optimal design that reduces wastage, matches workers with suitable roles, and improves overall performance. Such a process would entail subjecting the job, employees, as well as the organisation to scientific scrutiny (Gull, 2017). Tasks needed to be critically analysed, broken down, and an optimal methodology of completion designed. Modern organisations employ job analysis and design extensively to ensure the requirements of the job, as well as optimal procedures or methodology, are optimally laid out.

Taylor’s scientific method also sought to establish a job performance criteria which formed the basis for performance appraisal. According to the scientific theory of management, it is important to establish the criteria for job performance to act as a point of reference by employees as far as the required standards are concerned. Performance appraisal refers to continuous assessment of employee performance to judge their capabilities as well as the ability to deliver. Appraisal is an important component of modern human resource practice and is often done to track historical performance by employees and form the basis for promotion, termination, and other personnel decisions. Modern organisations monitor the performance of workers, provide necessary instructions, as well as supervision to ensure they adopt optimal and effective methods of working.

The scientific method also had important implications for specialisation and the division of labour. The theory holds that each individual has unique attributes that make them suitable for specific roles. The implication of this is that workers should be matched with jobs that reflect their capabilities or competencies as opposed to just random assignment (Ebert et al., 2017). These workers can then be trained to perform optimally in their various tasks. The modern organisation is designed to ensure the appropriate allocation of tasks based on individual competencies and their fit for the role.

There is a great emphasis on the division of labour and specialisation. Case in point, companies are organised in functional units representing labour specialisations such as finance, marketing, and legal. Such divisions ensure that each individual gets assigned appropriate roles and tasks. Additionally, modern organisational design also rewards expertise leading to specialisation among workers to increase their competence. For instance, in a police station, some officers are better suited for fieldwork while others suit into administrative roles. Such allocation of roles is based on personality, temperament, and competence. By assigning individuals into roles that take full advantage of unique individual characteristics and automating repetitive or routine tasks, modern organisations can improve workflow as well as organisational performance (Dumas et al., 2013). Moreover, modern organisations seek to train, coach and mentor their employees to improve their skills, which leads to greater job satisfaction and performance.

In conclusion, the scientific approach to management remains relevant and significantly influential in modern-day organisations. The strengths of the approach are clear from various aspects that have been adopted into work and organisational design of modern-day companies. The focus of most of today’s companies relates to the reduction of operational costs. This calls for increased efficiency in the form of elimination of wastage, which modern organisations have sought to achieve through lean systems and the six sigma method among others (Drury 2018). Besides, modern organisations also apply principles of division of labour and specialisation envisioned by Frederick Taylor to greater effect as far as employee morale, satisfaction, and performance are concerned. Concepts such as job analysis, job design, and performance appraisal founded on scientific principles are also important tenets of modern human resource management.

Today’s organisations seek to hire talent that fits the job description as well as the organisational culture to avoid friction and achieve optimal performance. Additionally, employees are often provided with additional on-job training, coaching, and mentoring to improve individual competencies and output. Furthermore, modern organisational design, just like the scientific method, also recognises the importance of compensation in securing employee commitment and performance as optimal levels.

Nonetheless, while the scientific method views monetary compensation as determining the output of production, modern human resources are of the opinion that non-monetary tools are more important in employee empowerment and stimulating performance on an individual level (Burley, 2019). Therefore, despite being absolute almost a century ago, the scientific approach to management still offers crucial insight into the work and organisational designs of modern organisations which are designed with special emphasis on economic efficiency.

1.0 Introduction

In this essay, it is going to mentioned the organizational performance management and measurement subjects of Volkswagen company by using several approaches such as marketing, human resources, financial and organisational structure and some measurement techniques to analyse companys’ todays placement and comparing over ten years period in the automotive industry. In this sector is going to change in near future due to the electric cars or self-driving vehicles, so researching of Volkswagen is interesting and valuable.

In order to identify the risks or market condition which is essential for Volkswagen, improving and effective management is a vital. To ensure development, those organisational approaches should be examined.

2.0 Overview of Volkswagen

Although, Volkswagen was founded in 1934 with the National Socialist project in Germany, these days the company is second biggest automobile and motor manufacturer worldwide, the biggest in Europe due to its share in market and has the most foreign manufacture locations of any German firm as an over thirty in seventeen countries. The Volkswagen Group employs are nearly 656,000 people who is lightly more than 50% are from Germany. Its cars are purchased by over 150 countries and its firms in 15 countries in Europe. Volkswagen Group has a distinct type of products such as motorcycles, cars and trucks beneath 12 varied brands, consist of the Volkswagen, Porsche, Audi, Ducati, Volkswagen Commercial Vehicles, Bentley, Lamborghini and Man at 61 locations in worldwide. (Porsiel, 2008) The German brand manufactured almost 11 million vehicles in 2018.

Therefore, the Volkswagen Group continues to provide and improve its sight in a steady manner while managing strategical changes and business functions.

3.0 Strategic Changes in Volkswagen over the last 10 years

The company confederated with another leading automobile producer Porsche at the end of a strained debate process in 2009. Volkswagen focuses on the main car production business. Its’ aims changed to reduce production costs and increase profitability in 10 years. To reach their targets, the company implements diverse strategies and business development programs. Additionally, identifying the future needs of consumers and to work to transform them into innovative technologies becomes a main target. Today, the company has extensive research and development departments to overcome technological challenges.

Because of monitoring worldwide movements and innovation activities are the part of their strategy’s’, the research department was conducted in Wolfsburg. The company also have research bases in different locations such as US, Japan and China. Sustainability is the foundation of Volkswagen’s corporate strategy and is included in the group’s value-added processes. According to their strategies, Volkswagen’s strategy for electric and hybrid vehicles in the coming years will enable the group to be a global economic and environmental leader among car manufacturers in these durations. (Mannix and Wheeler, 2017)

Volkswagen company has a several strategies to reach the level which is targeted. By using novel technologies and intelligent innovative attempts, they demand to high level of customer satisfaction. In future, their target is to have a sales more than 10 million units per year by catching the mean market share. Additionally, while doing all these processes, to be the best employer the world-wide with a first-class team. (Gong, 2013)

3.1 Leadership of Volkswagen

Some management researchers have argued that German executives have not yet synchronized with global leadership styles that are considered to tolerant and inspiring, very demanding and unwilling. According to some researchers, Germans had very low humanistic levels and high task orientation in business (Richardson et al., 2014).

Supported by the mentality of a manhood that belongs to a German culture, this means a high level of confidence, resistance and competitiveness in the workplace (Deresky, 2014). Since the location of the Volkswagen Group is in Germany, it can be said that these characteristics exist in the management of the company. It will be very important for the company to reassess its management styles and to align them with the globally fast-growing management styles of leadership.

3.2 Organisational Structure of Volkswagen

Management activity ensured by the Volkswagen Board of Management in accordance with the Volkswagen Articles of Association and implementation the rules of procedure for Volkswagen Board of Management issued by the Supervisory Board. Diversified committees which are constituted of representatives each department manage the whole group. Board of management which has independent improvement and business activities manage every group of company. In those ten years period, the company has done adjustments about the management of the organizational structure since September 2015. It is about to define the regional and functional responsibilities in detailed and reinforcement for every brands and regions. With these strategies, to improve the speed of making decisions is the main aim. It will give an empower of their tasks which includes up-to-date technologies and new toolkits. (Structure and Business Activities, 2015). The organizational structure of the company is very resilient with all tasks clearly explained. Due to the knowledge of employees about their job definition and expectation, the organizational structure has been the key factor to the powerful practise of previous strategies.

3.2 Market Force in Volkswagen

Volkswagen Company uses a variety of strategies to expand globally. These strategies include assessing the weaknesses of other companies or competitors in expanding their market share. In the last 10 years, Volkswagen Company has expanded globally by purchasing various motor vehicle companies around the world. He bought 20% shares of the Suzuki engine to meet emerging market opportunities in India and Southeast Asia. Current plans include securing shares in Spain, BMW, Audi and Spain, SEAT, Czech Republic and Skoda and Mercedes in the next three years. It also aimed to steal customers from Toyota, Honda, Ford and other companies selling vehicles in America by offering new styles at affordable prices. In addition, Volkswagen Company is focused on making existing brands more powerful rather than acquiring more global companies. Volkswagen Company acquired new markets in China. Research shows that Volkswagen is selling more vehicles than General Motors in China. Additionally, the Volkswagen Company has been working uninterrupted for the last 10 years to acquire new markets in South America, India and Africa. Automotive News Europe.

4.0 Business Functions of Volkswagen

Volkswagen group have distinct types of business functions to manage the company activities and improve the sustainability, quality and loyalty by customers. Those are organisational management, financial management, human resources and marketing which are based on producing cars, developing new technologies and selling their products to customer worldwide with the high level of customer and employee satisfaction.

4.1 Human Resources Management of Volkswagen

The Volkswagen company has around 200,000 employee whose most of them from Germany. Branding means diversity, justice, tolerance and equal opportunity. Because this innovative power is the foundation of creativity and performance. Company has a very supportive policy for young talents with about 5,000 professional trainees. The company offers its employees excellent career opportunities in worldwide and undertakes its social responsibility as a good and reliable employer entire world. (Volkswagen-Newsroom, 2019)

According to Volkswagen, to be an attractive employer, family-friendly human resources are the essential point. In the last 10 years, they have worked to provide greater equality between the sexes. Therefore, continuous work is being carried out to further increase the proportion of women in leadership positions. For each department in the company, goals have been set to encourage women with high potential in career management decisions. This approach is supported by a variety of measures, including the cross-brand Ment Management Mentoring Program designed to support women in their management positions. Volkswagen has also launched the ‘Career with Children’ project, which helps young mothers and fathers return from their parental leave and return, helping them to maintain their careers as effectively as possible. (Annual report 2016, Volkswagen)

In the near future, the Group proceeds to adopt the key and successful approach of human resources management with the ‘Transformation Authority’. These include a significant stakeholder focus in corporate governance, extensive participation rights for employees, exceptional training opportunities, long-term service principle through the retention of systematic employees, and a desire to balance performance and wages appropriately. (annual report 2017, Volkswagen).

4.2 Finance of Volkswagen

In 2018, Volkswagen constituted sales earnings of € 235.8 billion and so passed the previous year’s image by 6.3 billion euros. Improvements in volume and healthy business performance in the Financial Services Division were stabilised by contrary exchange rate effects. The effects of the implementation of the new International Financial Standards resulted in a general increase in sales revenues. Volkswagen Group generated 81.4% (80.7) of its sales revenue abroad. (Annual report, 2018)

Table 1. Sales Revenue of 2017 & 2018 (Annual Report, 2018)

Table 2. Sales Revenue over 10 years of Volkswagen (Statista, 2019)

While analyse the Volkswagen sales revenue in 10 years period from 2008 to 2018, It is clearly seen that there is an almost constant increase of value in billion euros basis. Although their sales were affected on a regional basis such as US market after the emission crisis in 2015, they continued with also a slight increase in 2016 on the basis of general sales.

Table 3. Operating Profit in ten years period of Volkswagen (Statista, 2019)

To examine the companys’ profit datas on a ten year basis, 2018 has the most improvements with a 13.920 million euros. As i mentioned in previous chart (Table.2 ) organisational faults could be effected companies’ financial situations. In profitability, this crisis has a huge impact on profits of 2015 with a – 4.069 million euros.

4.3 Marketing Operations in Volkswagen

The Group’s main activities are the design, production and distribution of cars and other vehicles worldwide. These activities consist two parts which are automobile and financial services. The automobile division includes the development of vehicles and engines as well as the production and sale of passenger cars, commercial vehicles and buses. The financial department includes vendor and customer finance, leasing, banking and insurance services. While considering some of the company’s unchanging marketing goals, We see that the brand is creating stronger brand awareness for its users and new customers. When we examine the global brand management seven years ago, we see that the company’s aim is to focus on the demands of the customers. When the demand is presented to an affordable customer, it is considered the beginning of innovations. This is the competitive advantage of the firm. Based on this, the company’s’ marketing aims to be the most innovative volume manufacturer in the best quality in all classes in the medium and long term.

In the premium segment, Audi has become one of the world’s most powerful car brands under the motto ‘Vorsprung durch Technik’. Its aim is to become the market leader in this segment. With the slogan ‘Simply Clever’, ŠKODA has become one of the fastest-growing brands, especially in Europe and China. The Spanish SEAT brand is aiming for stronger growth, especially in Europe, by sharpening the brand profile and focusing on unique brand values: dynamic, young and design-oriented.

To look at the company’s current and future marketing and advertising activities, they developed a sales and marketing strategy that targets exciting customers on a whole new level with the slogan of ‘customer delight’. Innovative and sustainable mobility provider for all commercial and private customers worldwide – with a unique product portfolio of twelve successful brands and innovative financial services. (annual report 2018)

5.0 Implementation of Measurement tools

It has long been acknowledged that performance measurement has a crucial role to act in the influential and effective management of organisations. (Neely, 1999) Volkswagen company also need several performance measurement tools to analyse its market situation and improvement of service quality.

5.1 STEEP Model Analysis of Volkswagen

Social influences play an increasingly important role in the growth of the business industry by impacting of sociocultural situations on customers’ preferences and habits. Social trends and people’s preferences change rapidly. The social differences between 10 years and today cause differences in customer preferences. Sociocultural factors affect both sales and marketing. For this reason, brands need to create sales and marketing strategies according to changes about their markets and cultures. (Silver, 2017)

The biggest technological trend facing Volkswagen is the development of self-driving cars which are designed with advances in artificial intelligence, terrain sensors, mapping cameras, radar technology and large data analytics. These driving technologies represents one of the greatest technological threats, not only because it drives people, but also the concept of vehicle ownership. (Gibbs, 2017)

Although Volkswagen is the biggest automaker in the European Union with nearly 25% of the market and more than 4.7million cars sold, the economic issues revolve around the economic impact of political turmoil such as Brexit. These kinds of situations inflation and a decline in consumer spending, leading to a decline in demand for new cars (Bolduc Douglas, 2017). Brexit resulted to increase in car prices by 5% making it hard for consumers to purchase new cars. (Brian, 2017)

Increased public demand for electric vehicles, vehicle sharing services and the continuous development of self-driving vehicles have created a growth opportunity for Volkswagen and other vehicle manufacturers who can renew and dominate this trend. (Lujan, 2017)

Due to political environment and current political tensions between countries affects company’s activities. For instance, in June 2018, US President Donald Trump threatened to impose 20% tariffs on all vehicles imported from the EU; this would bring a tariff increase from the tariff tax of 2.5% in effect since the 1960s.(Fleming, Donnan & Brunsden, 2018)

5.2 Porter Five Forces Model Analysis of Volkswagen

Threat of New Entrants: In the automotive industry, it may not seen as a threat. Accessibility in the market includes all obstacles in this section. (Grant, 2010) As a result, it is clearly seen that this is a low threat to Volkswagen, because a new automobile company already needs huge capital investments, resources and a lot of time to compete with existing cars and market its brand. (Parkin Rich et al, 2017)

Bargaining Power of Suppliers: The number of suppliers in the market is quite high compared to buyers. This situation leads suppliers to have less control over prices, weakening the bargaining power of suppliers. Volkswagen could buy goods at low cost from the supplier, so that the company can earn a high profit. (Frankrijk, 2017)

Bargaining Power of Buyers: While the majority of buyers expect prices to fall, services and quality expectations are also increasing. In addition, buyers have a wide range of car models to decide on. The presence of competitors increased the factors affecting the purchasing decision including quality, price, after-sales service and the design of the vehicle. They are also influenced by the lifestyle of people who influence their choices. (Navoda, 2012) Automobile Industry Analysis. Due to their similarity to other competitors in the designs and specifications of Volkswagen, buyers are not limited to several car options. The availability of competing cars as well as the cost of brands, provides buyers with high bargaining power.

Threat of Substitute Products or Services: Volkswagen can focus on providing higher quality in its products. As a result, buyers will choose products that provide higher quality at a lower price than the replacement products with a higher quality but higher price. As a result, the threat of substitutes depends on economic balance. (Meredith, 2017)

5.3 Stakeholder analysis of Volkswagen

For the company, their customers, shareholders, employees and the community is the most important asset. The Group has an importance awakeness of working ethically and with integrity.

Volkswagen constantly exchanges information and opinions with its stakeholders due to various demands and expectations directly affecting the Group’s economic success. A concept of stakeholder management, which analyses economic, ecological and social challenges in a systematic process through value chains, was developed in 2013 to meet these requirements in a targeted manner. Dialogues, workshops, symposiums, public debates, social media, surveys and projects have begun to communicate with various stakeholders of the company in an open, constructive and equal way. The stakeholder dialogues are documented in an IT-based stakeholder management system customized for the Volkswagen Group, and published in annual sustainability reports to make the interactions with stakeholders transparent and understandable. More than 10,000 companies and other stakeholders from more than 130 countries work together to create a more sustainable and equal world economy. (Annual report 2013)

Nowadays, the issue of diesel, initiated a process in which corporate culture was strengthened. This development led to the launch of programs and projects designed to intensify the collective integrity of Volkswagen. Internal control systems for product development process and vehicle testing were strengthened. The frequency of training courses given to the personnel was increased. The company is renewing itself from the inside out and developing to deserve the trust of stakeholders.

5.4 SWOT Analysis of Volkswagen

SWOT is a founded analysis for supporting the formularisation of strategy. Swot could be assisting to creating new strategic attempts, but a strategic improvement operation also needs remarkable analysis and testing of novel attempts before adoption. (Dyson, 2002)

To evaluate Volkswagen, analysis may start with strengths. The company has the largest product scale between all rival companies. It produces cars, trucks, buses and toolkits. Great brand recognitional over the world is another essential strength for the company. It produces a huge number of vehicles because of the demand. Well-managed operations could be assisted company’s’ effectiveness.

Weaknesses of the company are placement in the US car market. Because of the diesel scandal in 2015 their reputation damaged and image of the brand effected in a negative way. So that the brand inside and outside US decreased its value. Most of their cars are not environmental. Todays’ world, it has an essential importance to protect the environment.

Opportunities of the company is improving demand for autonomous cars. Volkswagen is planning to produce its autonomous vehicle in 2025. Fuel prices are expected to increase in the future. Volkswagen could also plans to meet the first electric car before 2020 and benefit for the improving desire for them.

Threats of the company are intense competition in market. Although there are a lot of traditional automobile firms, the novel players such as electric cars or autonomous vehicle producers will be occur. The government regulations are increasing. Their demand such as reducing greenhouse gas emissions are affected the company.

6.0 Strategy for next decade of Volkswagen

Volkswagen has adopted 2025 new group strategy to become the world’s leading Sustainability Mobility provider. Digitization, autonomous driving, making crucial electrolytic innovations and battery technology are going to be their new qualifications. Because of more than 30 new e-vehicles will be launched, the annual volume will help increase sales to two to three million units. Due to the improvements made throughout the Group in efficiency and optimization of the portfolio, the projected investment will reach a double digit billion market. The return on capital is expected to be 15 percent in the automotive sector by 2025, and sales are estimated to be between 7 and 8 percent. As a term TOGETHER defines the concept of mentality that will be more crucial for the long-term success of the Volkswagen Group. With the new Group strategy is to create forward-looking, customized mobility solutions for everyone, who will continue to inspire our customers to produce exciting vehicles and meet their diverse needs with a powerful brand portfolio.

As a result, the company will target technological leadership in the market, assure their profitability and at the same time become an excellent, trustworthy and safe employer. (Annual report, 2018)

7.0 Conclusion

As a result of Volkswagen case study it is clearly shown that the importance of organisational management and measurement systems so that they could affect companies situations in the industry.

By using distinct types of performance measurement tools and analysis, the company analyses had done with several approaches. This report examined Volkswagens’ market share in industry, strong or weak points in an internal or external scope, to compare their existing and future strategies, business functions. To ensure the company’s’ sustainability and improvement, the future must be implemented and creating new techniques to keep up-to-date and meet customer needs in such a competitive sector. Improvement of brand value Volkswagen should not give up its future aims by ensuring the remarkable organisational management process.

Considering Volkswagen 2025 strategy, with existing 2018 strategy, they should be focus on reinforcement of the company’s brand and its sustainability. To improve company’s’ marketing approaches and sales, new countries could be choosing to expand by drawing new routes. Every novel market has an essential potential to expand its market share.