Question

You are the Human Resources (HR) Manager of Australian Travel InsuranceCo, founded in May 2018, which specialises in providing travel insurance and advice to travellers. Australian Travel InsuranceCo has rapidly grown to be a market leader in providing travel insurance, with consistently strong ratings and reviews. The company has also expanded considerably in only a short amount of time, from 10 staff initially, to now employing 35 ‘Travel Specialists’ in its Sydney office. All staff provide tailored advice to customers via phone and email as well as process insurance claims received. The CEO, Mark Strong, believes the company can improve on its already exceptional performance and be the market leader in this sector.

The group of 35 staff, managed by 5 team leaders, have developed a strong sense of collegiality working together at the Sydney office. In addition to having regular company lunches and a competitive table tennis tournament, there was a high level of morale amongst workers.

Inspired from his reading in practitioner magazines about the benefits of flexible working practices for individual and company performance, Strong saw value in considering how the company could work more flexibly. With Sydney rental prices increasing, Strong also believed the company could save money on some of its overheads by having fewer staff needing to come into the office each day. Strong was also inspired by his reading of the new ‘in vogue’ way to appraise performance – holding regular performance ‘conversations’ instead of an annual performance review. Strong is a strong believer of evidence-based Human Resource Management practice and thought the company’s new approach would follow a new trend in performance management he had been reading about. Following discussions with other members of senior management in late 2019, the company introduced a modified performance management system and a new flexible working policy in January 2020.

Before the announcement, each team of Travel Specialists would set their annual performance goals with their Team Leader in January. In July, Team Leaders would conduct a mid-year check-in to see how each team was performing against the set targets. Each team of Travel Specialists were measured on how many insurance claims they closed each month and their quality of customer service, judged by star ratings received from customers at the close of each claim and customer comments. Each team would then receive a final appraisal and single performance score in December. This was linked to salary increases for the following year and an annual bonus for the best performing team.

Under the new performance management system, Travel Specialists would now have their performance measured on an individual basis. Instead of an annual performance appraisal, Travel Specialists would have individual performance feedback sessions every 6 weeks with their Team Leader. Each session would have a particular ‘theme’, such as ‘strengths’, ‘growth’ or ‘my values’. There would still be consideration of the Travel Specialist’s KPI’s (claims closed each month) and ratings from customer feedback. Strong believed this was a way to build more ‘individual accountability’ for performance outcomes. Under the new flexible working policy, staff were also encouraged to start working ‘remotely’ from their home for 3 days each week.

Mark Strong held a meeting with senior management and Team Leaders 2 months into the operation of the new policies to receive feedback. The feedback was disappointing to say the least. Travel Specialists and Team Leaders felt under pressure to constantly discuss performance issues and were given no extra time to complete these discussions (the same KPI’s still had to be met). The ‘themes’ did not seem so relevant either to help in improve their performance. Despite Strong’s desire to achieve some cost savings, morale was dropping from Travel Specialists frequently working remotely. Team Leaders have also reported less staff engagement. Some Travel Specialists are consistently late to virtual team meetings and others aren’t communicating with their Team Leaders in a timely manner.

Strong is pleased with the cost savings being made, but less pleased with business having declined 10% in the last month. Customers are also receiving poorer service. While Travel Specialists previously received consistent 4/5 and 5/5 ratings for customer service, since January 2020 ratings have fallen to 3/5 on average.

Strong isn’t keen on reverting to the ‘old’ ways of working, but still sees some value in the new performance and working practices that have been introduced, seeing these practices as the way of the future based on his reading from practitioner magazines. Help is needed to refine the company’s performance management practices and recommend solutions.

Questions:

1. As the HR Manager of Australian Travel InsuranceCo, identify and analyse the problems at the company in relation to performance management.

2. Recommend two practical solutions for Australian Travel InsuranceCo to help in refining and improving their performance management practices.

In answering both sections of this task, you are required to draw upon relevant performance management theories and concepts in identifying and analysing problems and recommending solutions.

Answer 1

1. Australian Travel Insurance Co had revamped its performance management system. Instead of annual performance reviews, the employees were having feedback sessions every 6 weeks. The KPIs of the employees had remained the same. When analyzed, it was seen that the new performance management system had degraded the employee morale as well as performance. The fundamental problems with new performance management system are as follows:

· The modified performance management system was developed after comprehensive discussion of the senior management of the company. However there was no involvement of the employees in this transition process. If employees were involved, they would have understood the management’s intent in this new performance management system. Then they would have acted as facilitators of the new process and would have ensured its successful implementation. Currently the new system seems forced on them.

· The goal setting process of the company was kept the same and no revision was done to align it with the new process. The same goals which the employee was required to achieve in a year’s time with the old performance management process, they had to achieve it every 1.5 months. This had put the employees in pressure and they were struggling to perform effectively.

· The employees were considering the feedback session as the annual performance appraisal. Hence they used to be quite tensed for the evaluation conducted every 6 months and this was taking atoll on their overall performance.

2. Two practical solutions which will help in refining and improving the new performance management process in the company are as follows:

· Currently the feedback sessions were considered as mini performance appraisal process in the company. Instead the management needs to present it as informal feedback session where the manager and the employee meet and discuss about the things which are going good and the aspects which need to be improved on the part of the employee. The manager can suggest ways in which the employee can improve his performance. This will make the employee feel valued that the company is facilitating his growth and development. The employee will work on his weaknesses and improve his overall performance.

· The KPIs of the employees have remained the same in this 6 weeks performance management process. The management needs to revise the same and scale it in a way to make it realistic and achievable in the span of 6 weeks-time. This will facilitate its achievement and make the employees believe in the new performance management process.

**Do rate the solution. Thank You.