Remuneration and Performance Management in General Motors - Research Paper Example

Name: University: Instructor Date: Remuneration and Performance Management Executive Summary Basically, performance management system is made up of people and process constituents with the process constituent entailing items like rating criteria, job descriptions; performance appraisal debates time, as well as recognition and reward systems. The fundamental element of the people constituent is the director, who steers the system by laying down prospects, communicating strategies, supporting development, and receiving as well as providing feedback. For this reason the study seeks to provide a critical analysis pertaining to performance management system in General Motors (GM). This will be achieved by a brief overview of GM organisational culture, business strategy, and business environment. Furthermore, the study will evaluate GM’s performance management system, propose necessary improvements; outline contingency factors that can be considered; and, illustrate if reward and compensation system is compatible with GM’s performance management system. 1.0 Introduction There has been an attentive movement across the globe toward transparency and accountability in public companies over the previous two decades, starting with the New Public Management movement that begun in the early 90s (Helm, Holladay and Tortorella 51). Arguably, this movement has generated innumerable recognized structures on the design and enforcement of performance management systems, addressing not only the measurement of accomplished results but as well the likelihood to empower managers to comprehend their working settings as well as to assess outcomes. Whereas the design and enforcement attributes of performance management are modified to conform to the unambiguous necessities of every company, nearly all systems work around the three key subsystems of scheduling, functionality, and assessment. GM have progressed on making use of performance management systems to incarcerate the fundamental intricacies of transparency and accountability; yet, practice and research have revealed that performance management is growing as a successful managerial approach in most companies (Lega and Vendramini 15). For instance, Gunaratne and Plessis (19) in his study concluded that performance is the mainstream focal point of global management study and that the restraints of available models have to be dealt with. 1.1 Organization Overview General Motors Company was first established in 1908, but in 2008, the key depression and worldwide credit catastrophe pushed the car sales close to depression levels and desiccated private basis of funds. GM, seriously without in service cash, obtained a bridge credit from the United States Treasury, under the order that the company speeds up a tough reorganization of its processes that had been in progress for some years (Bosco and Plante 181). For this reason, GM filed for bankruptcy in 2009 and with the help from the U.S. Government, a new-fangled GM was born-again with four brands: Cadillac, GMC, Buick, and Chevrolet. From that time, the company has developed hastily with over 70 percent of its sales sourcing from other countries apart from US and has turned out to be one of the world’s top automotive manufactures. Presently, GM employs more than 209,000 people across the world and carries out its business in over120 nations plus china is its largest market. Besides that, GM as well as its strategic associates manufactures trucks and cars in 31 countries, where they as well sell and offer services for the brands: Cadillac, GMC, Buick, Chevrolet Isuzu, Vauxhall, Daewoo, Jiefang, Holden, Wuling, and Opel (Olson and Thjømøe 104). Following the bankruptcy and the help they received from US government, GM has tailored their strategy and at the moment come plans to be concentrating on restructuring their brand while concentrating on their key business with Buick, Cadillac and Chevrolet remaining at their core business. Besides that, GM plans to either sell or close other brands like Hummer, Saturn and Saab and this resolution is rooted in sales statistics, which management believe is falling behind in their local market. Sales from Saturn and Saab trail behind all through the board and bringing in novel models and re branding of such certifications this late in the competition will just push GM’s breakeven point further instead of experiencing a constructive effect on the end result (Bosco and Plante 184). Besides that, Hummer fails to be compatible with GM's strategy of sustainability as well as fuel efficiency, but emphasizes an excess standard of living that fails to endorse the green initiative. Even though Hummer is still beneficial in our day its future feasibility is under debate. Given that, the young generation demographic is ever-increasing in haste, with statistics pointing out that by 2020 there will be more than three billion people aged between 15 and 44 (Goussak, Webber and Ser 47). This statistic stresses the necessity to identify the desires of modern youth and furnish that desire through motor vehicles with alternatives and attributes that charm to that market. For this reason, Gm plans to fill this marketplace with Pontiac, which they believe will gratify the ever increasing youth demographic providing way in to mid level cars like the Grand Am, Grand Prix, G6 and G5. In essence, this will successfully decrease the number of Stock Keeping Unit, in that way decreasing production as well as operating costs (Olson and Thjømøe 107). 1.2 Good performance management system Helm et al (64) believe that both selection of suitable method to performance management as well as the assessment of available resolutions requires the criterion list to be defined that can be employed as an orientation requirements set. Lawrie, Cobbold and Marshall (357) on their part stresses on different requirements that must be satisfied by contemporary performance management systems; therefore, the innovative proposal of wide-ranging set of such criterion is pursued by succinct evaluation of views and debates from the pertinent scholastic literature. De Toni, Fornasier and Montagner (428) maintain that the conventional performance standards are insufficient and from time to time deceptive. Furthermore, they claim that they are rigid, over and over again belatedly to be efficient, typically articulated in inappropriate fiscal terms and are not openly associated to the strategy of the company. Therefore within the structure of first-class manufacturing, Samarakone (36) recognizes at least seven universal attributes of performance management systems as well as performance measures: non-financial measures, openly connected to the production strategy, contrast between locations, fast feedback, uncomplicated to use, change in due course, and planned to instruct rather to supervise. De Waal, Kourtit and Nijkamp (1251) present a structure for evaluating production performance derived from two basic hypotheses. Based on their view, the initial step is to institute decisive accomplishment aspects, matter so vital to the company that, devoid of any the company might not succeed. Some aspects are common to all production companies like GM and they differentiate customer service, quality, cost, resource management, as well as suppleness. Subsequently, all measures for manufacturing at every organization level must be connected to guarantee steadiness of function in the midst of organizational levels and also to identify cause-and-effect connections so that all workers can resolve the setbacks that bring about poor performance and carry on practices that bring about good performance. Panda (33) claims that the insufficient communication between lower and upper level managers can lead to resolutions that are not reliable with the company’ strategic course; hence, they suggest that performance management systems basic requirements should include the following: The performance management system must entail set of standards that openly sustains the business strategies of the company and offer varied and even-handed support (Lawrie, Cobbold and Marshall 362). Furthermore, the performance measures should offer ever level of management with feedback pertaining to how well the objectives and strategies are being adhered. Besides that, Cho and Lee (503) insist that performance measures must express objectives and strategies by means of cross functional and hierarchical connections. Essentially, hierarchical connections offer feedback to strategies or objectives at manifold organizations level (de Waal, Kourtit and Nijkamp 1261). 1.3 Evaluation of the system Performance has proved to be a true litmus test for GM’s continued existence in the global marketplace, given that high-performing workers bestow higher performance, offering the company a competitive advantage. GM has ensured its Performance management system is efficient, support teamwork, cooperation, and communication. The system was primarily implemented to recognize, identify, reward, and retain their best performers to attain sustainable development. GM’s management understands the importance of sustainable development that is why it has spent large amount of money in acquiring performance management system to make sure they succeed, but extensive disparity in worker performance persists in spite of this investment. In Goussak, Webber and Ser (49) study which they carried out in GM’s employees in more than 22 countries they established that over 54 percent of workers felt that GM’s performance management system was ineffective. Basically, this observation is expected to de-motivate workers, generating feelings of aggravation or anguish that harmfully influence their overall performance, which eventually overcomes the entire reason of designing and implementing a useful system. Goussak, Webber and Ser (49) evaluation discerned that GM invests in superlative processes for their performance management system; however, they fail to notice the significance of the people element. Given that the GM’s managers encompass the utmost effect on that people element, GM’s management assist workers to feel empowered, identify or praise workers' accomplishments, care about their workers, as well as carrying out regular discussions with workers. 2.0 Proposed Improvements The existence of an appropriately prepared formal performance management system is essential for GM now, given that the field of performance management contains the entire process from worker performance monitoring, setting up an outline for analysing that performance, setting up that outline and taking action in view of that. The vital transformation that has been seen in the process has been a concentration on the workers’ long-standing growth, where the company does not consider building up a worker for its own gain, but rather seeks to offer lasting advantage to the worker through the growth, which can be as well be employed after the worker leaves the company (Lega and Vendramini 21). GM’s performance management system appears to be somehow behind as compared to the rest global business, due to the fact that even in modern’s fast as well as contemporary epoch, GM still employs performance evaluation system devoid of physical documentation or records. Validating the process has failed to be a concern in the management program hitherto. Panda (39) believes that documenting any and every organizational process is essential for future point of reference, and to make sure the exclusion of unfairness, chauvinisms and pre-judgmental resolutions. For this reason, GM should perform its e performance appraisals on paper and not on the foundation of interviews, instead the interview system must be eradicated and estimates should be performed by means of evaluation forms. Lawrie, Cobbold and Marshall (364) believe that this will be useful to GM in record keeping of all appraisal conferences and therefore, all workers’ performance record for future point of reference. The entire procedure must be performed in a designed and well thought-out approach. Financial situation is the only decisive factor for evaluating workers’ performance in GM, without reflection to any other know-how or measure at all. The process of evaluation must be arranged methodically and the core responsibilities and competencies, performance measures and unique projects must be appropriately determined so as to evaluate performance without bias. What’s more, the performance management system must be purposeful from start to finish, setting up an outline that noticeably describes the condition for the performance measures, evaluation, as well as the suitable reward or penalty action that can be used after the evaluation founded on worker performance (Samarakone 37). This penalty or reward plan must consist of such information as what performance level is worthy what explicit penalty or reward action. All this would make sure that the appraisal system goes on smoothly as well as making sure the utmost result of the preferred outcomes, which is the worker performance goal evaluation and pursuing correct steps of optimizing the supposed performance to offer advantage to both the company itself and its workers. A development plan for the employees must be generated and incorporated in the framework of performance management. GM must not be narrow-minded with staff development; apprehensive thoughts on the lines that staff development will indicate heightened turnout, which will not be helpful to either the company or employees (Gunaratne and Plessis 24). Preceding performance must constantly be evaluated at the start of all performance appraisal gathering. Fundamentally, this will assist both, the worker and the supervisor or manager, to maintain a trail of the performance changes, regardless of if they high-quality or appalling, which assists in pondering more developmental actions anchored in the supposed changes. Lega and Vendramini (19) posit that an evaluation form must be formulated for the purposes of performance appraisal. Besides that, the form must affirm comprehensively the criteria of evaluation, the evaluation rating scale to be employed and the actions, penalty and rewards, which workers are permitted to if they fall in a certain score range. 2.1 Essential contingency factors to be considered In GM, the process of performance, where entity goals are connected to organisational objectives, is the archetypal basis of the cycle plus setting of goal often happens in correspondence to yearly standard evaluation cycles. Goals are occasionally articulated as Key Result Accountabilities and supported by performance measures and performance standards. Cho and Lee (509) believe both theory and practices have concentrated on the organization’s goals nature, and how they are determined and articulated. On his part, Simon (221) argues that even though both goal- expectancy theory and setting theory underline the significance of setting a few moderately solid objectives, this may perhaps be complex to accomplish in reality on account of either the insufficient apparent strategic organisational objectives or their diversity, sheer volume or intrinsic volatility. For this reason, GM management should know that defining organisational goals is not enough in itself, rather there have to be a number of understanding and agreements of on the manner to measure performance. 2.2 Performance management system plus compensation and reward system With regards to performance management, extrinsic (monetary) rewards will associate normally to contingent or merit pay; that is to say, where a pay element is at jeopardy and reliant on performance, implementing performance management as the procedure through which resolutions based on reward allocation is prepared (Aureli and Salvatori 321). Intrinsic (non-financial) rewards will consist of acknowledgment, growth, access to other tasks, profession help and the working life quality, which many can be achieved by performance management developmental forms. Heated debate persists as to the viability of performance management system to achieve both extrinsic and intrinsic objectives, with Aureli and Salvatori (328) positing that too much focus on extrinsic reward will lead to diminishing of intrinsic reward. Indeed, for this reason it will be wise for GM should ensure their performance management system is completely developmentally focused, and the allotment of compensation or pay increases should be done through other methods. 3.0 Conclusion In conclusion, performance measures must offer invariable feedback at every business function and management level. As observed, the feedback makes sure that top management’s ideas are interpreted to objectives and strategies for middle level management as well as action plans and critical success factors for strategic management. For this reason, GM requires an extrinsic benchmark to assess feedback plus they must include performance measurement in the process of budgeting as well as lasting business preparation. Besides, the company should set both permanent and temporary targets while still eying competitive performance. Finally, the company must balance its performance measures, which include balancing non-cost and cost measures as well as external and internal benchmarks. Work Cited Read More