Assessment of Performance Management System of Volkswagen


Identify the weakness

Major weakness in the performance management system of Volkswagen is the performance-based remuneration component. Volkswagen has introduced a performance-based remuneration component, in order to recognize employees’ individual achievements. This concept assists in staff retention as top performers are rewarded for excellence and bottom performers can effectively manage their weak areas with assistance from supervisors and employees can become fully aware that their performance is directly linked to their pay cheque, thus there’s an increase in productivity and profits guaranteed.
Apart from these there are many weaknesses related to this performance, management process. There will be concerns about favoritism. For example, a salesperson with the best sales can have an advantage during appraisal because he had the best sales territory. As pay is the major say today, the contributing factors such as teamwork, cooperation and assistance are affected by the intense competitiveness because of this merit based pay concept. Implementing this system into an organisation may cause some issues like lack of team work, recognition etc. There might be recency error as supervisors might base the performance ratings on an employee's most recent job performance rather than the performance for the entire year which might be unfair to an employee as his overall effort goes waste. Fierce competition may disrupt the working relations among employees and might cause tension among them.

Suggested Performance Management Module:

360o Performance Appraisal:

A 360-degree feedback is a process through which feedback from an employee's subordinates, colleagues, and supervisor, as well as a self-evaluation by the employee themselves is gathered.

This evaluation approach offers a comprehensive view for the employee’s performance and is considered to be the best appraisal approach for improving the performance of an employee. This system is a way to make sure the appraisal is done in a complete manner considering all the elements surrounded to the employee. It is a professional opportunity given to the co-workers to provide feedback about the performance of their fellow employee. The feedback is collected from peers subordinates customers managers and the team members of the employee.  The employee himself or herself also can take part in this appraisal as a part of self – assessment. This method is generally used to ensure the organizational justice.

Disadvantages of 360o appraisal process:

  •        The process is very lengthy, complex and takes a lot of time.
  •        This feedback process can create trouble and tension among the staff.
  •    Some feedbacks can become personal in nature.
  •  Since the 360-degree performance appraisal system involves feedback from multiple levels in the company, the immediate superior does not get much involved.
  •    360-degree performance appraisals can damage morale. People might feel that peers are rating them unfavourably to get ahead themselves
  •  The 360- degree appraisal can be continuous and overall performance rather than recent performance of the employees can be considered.



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