Performance Management in Pepsico

Performance and Compensation Management: Kroger

In order to maintain an effective and efficient performance in the organization by the employees, there are various steps or measures that are taken by the top management officials in the organization. One of those measures that play a major role is: Performance Management.

About Kroger

The Kroger Co., or simply Kroger is an American retail company which was founded by Mr. Bernard Kroger in 1883 in Cincinnati, Ohio. It comes under one of the largest supermarket chain in the United States, the second-largest general retailer and the 17^th largest company in the United States. Currently it is ranked #17 on the Fortune 500 rankings of the largest United States corporations by total revenue. As of 12 September 2019, Kroger operates, either directly or through its subsidiaries, 2,759 supermarkets and multi-department stores. Kroger's headquarters are in downtown Cincinnati. It maintains markets in 35 states and the District of Columbia, with store formats that include hypermarkets, supermarkets, superstores, department stores, and 251 jewellery stores (782 convenience stores were sold to EG Group in 2018). Kroger-branded grocery stores are located in the Midwestern and Southern United States. Kroger operates 35 food processing or manufacturing facilities, 1,556 supermarket fuel centers, 2,264 pharmacies and 221 “The Little Clinic” in-store medical clinics. Kroger's employees are mostly represented by collective bargaining agreements and many are represented by the United Food and Commercial Workers (UFCW) union.

Performance Management Practices Performed By Kroger

These are the following practices that are performed by the top management at Kroger in order to attain the best results from their employees. Some of these are as follows: -

·         In most of the organizations, there are two important aspects which are of utmost importance for any individual, Pay and Performance. Thus in order to satisfy the employees, the management at Kroger decided to align the pay and performance of the employees by arriving at a decision that as the level of performance of the individual increases so does his pay shall increase.

·         At any stage in life, money plays a very important role. In any organization, majority of pay is considered as a long-term asset and also as a risk with no guaranteed bonuses or increase in salaries.

·         In order to have a successful run in the market each organization designs few business strategies. These strategies help employees by providing them with the right path to direct their performance methods such that they receive better pay packages.

·         Shareholders also play an important role in an organization. Thus Kroger established few stock ownership guidelines which helped in aligning the interests of their executives and directors with that of their shareholders.

·         Few of the top level managers at Kroger decided that a significant portion of the pay provided to the employees should be based on their performance since many people take it very light that however they perform in the organization, anyhow they will be getting their full pay with benefits. Thus if a small portion of the pay becomes a part of their performance, it will encourage them to perform better and give exceptional results towards the betterment of the organization.

·         Kroger’s top management believes that the compensation provided to the employees should include incentive-based pay in order to drive their performance in the right direction, providing them with exceptional pay packages for their excellent performance on a short-term as well as long-term basis.
Weaknesses

·         The financial conditions of the company are not in a comfortable state. The major reason for these conditions is due to improper and inefficient financial planning of the resources of the company.

·         The organization structure relates only with the present business model and without any due changes there is less scope for expansion in product segments.

·         Facing challenges in moving to various product segments due to majority of failures in parental businesses.

·         Creating a Unique Selling Proposition (USP) that is beneficial and different from the regular stuff available in the market can prevent attacks by its competitors.

·         Having a higher attrition rate in the workforce has brought about a negative impact on the spending capacity of the company on its training and development programs as compared to its competitors.

  Leading Companies in the Same Domain

   There are basically many companies which are involved in the same business as Kroger. But two of its top competitors are: Walmart and Walgreen. Thus we will be looking after the Performance Management Models of these two companies for better understanding.

Walgreen’s Performance Management Model

Walmart’s Performance Management Model

  Revised Performance Management Model of Kroger
.     Top Level Management: - Top-level management basically comprises of the executives who are responsible for bringing change in the workstyle of individuals working in the organization. They are also interested in bringing out the best leadership qualities from their subordinates. These are also the people who have the responsibility of setting the overall direction for a company and ensuring that the major organizational objectives are achieved. Few of those people are: - CEO, CFO, President and Vice-President.

2.     Middle Level Management: - Middle management basically comprises of the people who are present at the center of any hierarchical organization. The individuals present in this level are accountable to the top management for the proper functioning of their respective departments. They play various roles in the organization such as that of a problem solver, team builder, performance manager and talent developer. They are also responsible to provide lower management people guidance in tasks and inspiring them to perform better.
3.     Lower Level Management: - Lower management constitutes of the people in the business who generally oversee the performance of the employees working on line tasks in various managerial positions such as foreman, line boss, shift boss, section head etc. They are also called as supervisory personnel or first level managers.

Different Techniques to Improve Performance Management

There are various ways in which the performance of an organization can be managed but there are few very particular techniques which play a huge impact. These are as follows:-

·   Tracking Turnover by Performance Level: - It helps the manager understand whether high performing employees are quitting the organization at a faster rate than the average number or low performing employees provide tremendous insight into workforce health.

·   Tracking Associations between Performance, Compensation and Promotion: - It helps in analyzing different areas of improvement and understanding the relationship between employee performance, pay, and promotion in various areas of the company.

·  Diagnosing Workforce Strengths and Development Needs: - It analyzes the employee performance, goals and objectives which determine whether it is able to meet the strengths and demolish the weaknesses of the organization.

·   Measuring Managerial Effectiveness: - It ensures that data can be used to evaluate how effectively managers are engaging their employees to set expectations, clarify their doubts and address performance issues. It provides ways of understanding whether managers are doing the things required to be good managers.

·      Identifying Potential Talent: - Focuses on data which reflects different performance capabilities, skills and development objectives which can be used to identify employees who have the potential of getting posts of greater responsibilities.

·     Predicting Attrition: - Focuses on enhancing different techniques which help in reducing the rate of attrition in the organization.

·     Evaluating Staffing Effectiveness: - It helps in assessing the quality of the candidates hired into the organization from different recruitment sources based on different selection criterions.

Weaknesses of Performance Management System

1.     Employees could quit Based on Unfair Results: - If an employee fails to perform well and then feels that they were not assessed unfairly, there’s very little chances of his/her being motivated to stay in the company. On the basis of the ongoing results, even if the employee doesn’t leave the company, he may become withdrawn and disengaged.

2.     Fabricated or Misleading Information can Affect the Review: - Lack of performance data in order to back up the appraisal, there’s no way in which an individual can determine what is true- a manager or peer shall be able to provide information about performance that’s either false or misleading can create a huge impact on the performance of the organization.

3.     Employee Morale May Drop: - The employees who feel that they were evaluated on an unfair basis, they are most likely to lose their self-esteem, which ultimately creates resentment towards the management of the organization as a whole, thus damaging the morale of the employee across the company.

4.     Resources are getting wasted: - Ongoing performance management is much more time and cost-efficient and it produces better results.

5.     Employees Become Demotivated: - When employees get the feeling that they are being less appreciated or their efforts are not being recognized, their motivation levels drop down, which ultimately leads to lower job engagement and lower rates of performance.

6.     Drop in Job Satisfaction: - If the employees feel that the performance management system through which they are being evaluated is using unfair and invalid means, there are more chances of them getting dissatisfied and quitting their jobs.

Benefits of Performance Management System

1.     Performance-Based Conversations: - This process forces managers to discuss performance related issues with their employees. These managers are busy with their respective daily responsibilities. This can make them reluctant towards the necessary interactions with their staff which provides them with opportunities to coach them better and offer them work-related feedback.

2.     Targeted Staff Development: - All the employees are a part of a developing journey. It is the organization’s responsibility to prepare the employees for this journey. If carried out in the right manner, there is a possibility of understanding the employee’s career ambitions in the right manner and also identifying the developmental opportunities of the employee such that it becomes an important part of his successful planning process.

3.     Encouragement to Staff: - Performance appraisals are considered as a time to celebrate all the wonderful things which an employee performs over the course of a year and thus help in encouraging the staff.

4.     Rewards Staff for a Job Well Done: - The main aim of people going to work is because they need the pay and second is their curiosity to know which behavior will result in more money. When there is an increase in the pay or bonus, it brings about an increase in the performance of the individual thus showing a direct correlation between performance and financial rewards. This type of benefit motivates and encourages employees to perform efficiently at higher levels.

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