De La Salle University
Ramon V. Del Rosario College of Business
HR535M G91 Term 1 AY 2019-2020
Dr. Rachel Quero
Submitted by:
Alcantara, Pao Fonseca
Alvarez, Anna Pilar
Balba, Fitz Gerald Tolin
Naungayan, Rowealth Quinones
Villazon, Sheryne Manzanero
I. Background of the Case
Otis Elevator Company is the world’s leading manufacturer and service provider of
elevators, escalators and moving walkways, and has been operating for more than 150 years since
its foundation in 1853 (Marks, 2018, p. 1). From the 19th century where elevator was symbolic of
dirty industrialization, Otis has introduced various inventions and pioneered innovations, making
them one of the biggest players in the elevator industry, where they boast signature elevator
projects like the Eiffel Tower, World Trade Center, Petronas Twin Towers, and many among
others (Robins, 2014).
One of the values that Otis Elevator Company embodied is putting people at the center of
everything they do (Marks, 2018). Hence, even in their human resources management, Otis
Elevators has been adopting relevant changes to better serve their employees. For example, they
have addressed issues in the credibility and confidentiality of their old paper-based appraisal
systems by introducing a 360-degree feedback system for their managers using internet and/or
intranet. In this system, subordinates, superiors, peers, and customers may be able to provide
performance feedback which will be used in the performance appraisals of the concerned
employees. This was developed and maintained by an independent external party called E-Group
to maintain its integrity. Prior to using the 360-degree feedback system, the company was using a
one-way appraisal system where managers are solely responsible for the performance evaluation
of the employees. Tan & Falcone (2013) opined that this is not effective because “many leaders
view the performance appraisal as a mandatory paper chase only, rather than a true opportunity to
heighten employee engagement.” (p. 60). This is prone to abuse when managers do not give credit
where credit is due, and when they want to solely claim the credits of good performance.
II. Point of View
Sandra Lee, Director of Human Resources, Otis Southeast Asia at Otis Elevator Co.
III. Statement of the Problem
What performance appraisal system should Otis Elevator Company use to effectively
assess and improve the performance of its managers?
IV. Statement of Objectives
● To improve the performance of engineering managers. Specifically, project management
and project team leadership skills by suggesting an inclusive employee appraisal system
for engineering managers
● To reduce subjectivity in the current employee appraisal for engineering managers by
incorporating objective measures in the appraisal system
V. Assumptions
● Sandra Lee has the authority to implement changes
● The case geographic is Southeast Asia
● The 360 degree feedback system has been implemented smoothly with no major issues
● Focused on managerial position involving engineers considering the nature of operations
of Otis
VI. Areas of Consideration
In order to properly address the problem statement as it related to the performance
appraisal of the managers of the Otis Company, the group identified important areas of
consideration to guide us in coming up with sound and feasible alternative courses of action.
Each area of consideration is discussed subsequently.
A. Purpose of Performance Appraisal
Performance Appraisal is the systematic evaluation of the performance of employees and
to understand the abilities of a person for further growth and development. The main objective of
performance appraisals is to measure and improve the performance of employees and increase
their future potential and value to the company (Jordan, 2009, p.1). Other objectives include, but
not limited to the following:
1. To identify the strengths and weaknesses of employees to place right men on right job.
2. To maintain and assess the potential present in a person for further growth and
development.
3. To provide feedback to employees regarding their performance and related status.
4. To serve as a basis for influencing working habits of the employees.
5. To review and retain the promotional and other training programmes.
Performance appraisals offer a variety of benefits not only for the employees but also to
the management. Appraisal offers a valuable opportunity to focus on work activities and goals, to
identify and correct existing problems, and to encourage better future performance. Thus, the
performance of the whole organization is enhanced. Further, it also boosts employee morale as
this is an avenue for the supervisors to sit down with employees and basically to ask how they are
doing. The value of this intense and purposeful interaction between supervisors and subordinates
should not be underestimated.
B. Industry Practices
Top players in the elevator industry based on revenues in 2017 include Otis Elevators,
Mitsubishi Electric, Kone, Schindler, and ThyssenKrupp, and while their corporate offices are
mostly located in Finland, Switzerland, Germany and the United States, most of the demands of
the industry come from the most populous countries such as China and India (Wagner, 2019).
Mikkola (2000) further adds that “the elevator industry is characterized by a few large and a high
number of small local companies. Over 80 % of the world market share belong to the seven global
players” (p.13). In relation to the case of this paper, there is no common industry practice on
employee appraisal system, because this is mainly dependent and influenced by the values of the
respective companies in the elevator industry. Therefore, we give more weight to the values,
mission, and strategic imperatives of Otis Elevators in our consideration, identification, and
evaluation of alternative courses of actions.
C. Otis Elevator Company Values, Mission, and Strategic Imperatives
In its 2017 annual report, Marks (2018) emphasized their vision of giving people freedom
to connect and thrive in a taller, faster, and smarter world, and further highlighted the company
values of leading the industry with their pioneering spirit, culture of innovation, and the trust of
their customers. The company has six strategic imperatives: People first, safety, accessibility,
innovation, digitalization, and growth (p.17). Marks (2018) further reiterated how they value
people in their organization when she said that “we are convinced that our activity should focus
on people. The people who form our group are those who enable the customers to feel satisfied
and also those who allow millions of users to feel safe and comfortable when using Otis equipment.
Our company employees are our principal capital, the foundations of the success of this project.”
(p.18). Otis Elevators also values being reliable, smart, and future oriented, they wanted to create
personal and connected world, and they roll up their sleeves to get things done. (Otis Website,
2019). Finally, Otis Elevators is consistent with United Technologies, their parent company, on
their commitment to create an environment and culture where all their employees can be
themselves and share ideas openly (United Technologies Website, 2019).
D. Skills and competencies required of an Otis Manager (Project Management and
Leadership)
Engineers may be responsible for consultation, investigation, evaluation and planning,
design, design review and approval, and/or determination of environmental and safety impacts of
work processes and products (buildings, utilities, systems, sites, mapping, or infrastructures);
provide project management oversight, which may include supervision of lower level staff;
oversee or review environmental, infrastructure and geomatic projects; and manage
implementation of projects/plans according to codes and regulations, which may include approval
authority. It also includes exercising judgment and decision-making that directly impacts life,
health, safety and/or the environment.
For purposes of this case, the following are the minimum competencies of an Engineering
Manager:
Competency Definition
Professional Possession of a designated level of technical engineering skill or knowledge
Knowledge and the ability to keep up with current developments and trends in areas of
expertise. May be acquired through academic, apprenticeship or on-the-job
training or a combination of these. Possession of knowledge of
statutes/codes/regulations, including program procedures, methods and
practices and their application to specific situations, usually acquired on the
job or in lower-level positions in the same or similar career path.
Program/Project Ability to coordinate and administer programs, activities and protocols.
Management Ability to manage resources, monitor activities and assess environmental
risk, safety, and quality control associated with the program.
Engineering Knowledge of and ability to use effective approaches for choosing a course
Review, of action or developing appropriate solutions and/or reaching conclusions.
Decision Ability to make decisions and take action consistent with available facts,
Making & constraints, and anticipated consequences. Identify issues, obtain relevant
Analysis information, relate and compare data from different sources, and identify
alternate solutions
Communication Ability to communicate, in written and oral form, detailed and technical
engineering information, guidelines and standards/statutes/codes/regulations
to various audiences to ensure that they understand the information and the
message, and to seek compliance. Ability to deliver presentations suited to
the characteristics and needs of the audience such as negotiating solutions
among different parties, or providing expert testimony.
Engineering Identifies, develops, and analyzes engineering designs and/or specifications;
Design and plans and modifies methods. Identifies and plans for resources. Approves
Analysis engineering designs and/or program/project specifications of other
engineers/design professionals to meet desired compliance with engineering
principles, standards, statutes, codes, regulations and design. Monitor and
ensure program/project meets specification and design. Negotiates design
changes
Leadership Demonstrated skills and abilities needed to coordinate, facilitate, and
participate in a collaborative approach to the completion of tasks or
assignments.
E. Framework: Lewin’s Force Field Analysis
The team decided to make use of Lewin’s Force Field Analysis in evaluating the case. The
Force Field Analysis was created by Kurt Lewin in the 1940s. It is widely used in change
management and can be used to understand most change processes in organizations. The idea is
that situations are maintained by an equilibrium between forces that drive change and others that
resist change. For change to happen, the driving forces must be strengthened, or the resisting force
must be weakened.
Figure 1: Force Field Analysis
Source: mindtools.com
The force field analysis integrates with Lewin’s three stage theory of change working
towards unfreezing the existing equilibrium, moving towards the desired change, and then freezing
the change at the new level so that a new equilibrium exists that resists further change.
● First, an organization has to unfreeze driving and restraining forces that hold it in a state of
quasi-equilibrium
● Second, an imbalance is introduced to the forces to enable the change to take place. This
can be achieved by increasing the drivers, reducing the restraints or both.
● Third, once the change is complete the forces are brought back into quasi-equilibrium and
re-frozen.
The Lewin’s framework will aid the team to fully understand the proposed solutions
holistically in line with the organization’s main objective in using performance appraisal to
improve managers project management skills and team leadership skills.
VI. Alternative Courses of Action
A. Status Quo: 360 Degree Feedback
The 360 Degree Feedback is a relatively modern approach to performance management
whereby employees are appraised based on the data and feedback gathered from various sources
such as their respective superiors, peers, subordinates, clients, and even the employees themselves.
The stakeholders, which typically total eight to twelve people who have routine or significant
interactions with the manager, receive a feedback form that includes a questionnaire covering a
range of important competencies relative to the manager’s job requirements. Through this
appraisal methodology, the manager’s performance is rated by his/her superior while their
subordinates and peers also make an evaluation based on general competencies that may include
leadership, project management, decision making, communication, and coaching skills. Self-
appraisal is also an important component of this methodology where the manager is given an
opportunity to assess his/her performance reflecting on own strengths and development areas as it
relates to his job requirements and career aspirations. The clients, both internal and external, are
also asked to provide their comments about the performance of the manager and his/her team as it
relates to projects and engagements that involve them. It is called 360 degrees because the feedback
comes from the above, alongside, and below as it regards to the hierarchy, which ensures a
comprehensive review of the manager’s attributes such as behaviours, capabilities, and
contributions.
Advantages:
1. It reveals the strengths and weaknesses of the managers
2. The gap between self-assessment and other’s assessment about the manager’s
performance is addressed and reduced
3. Manager’s important competencies that are difficult to measure are addressed
4. Staff are heard and so they feel empowered
5. Peer group assessment encourages teamwork.
Disadvantages:
1. Response from manager’s stakeholders including peers and subordinates may be
biased
2. Manager’s goals as it relates to KRA’s may be ignored
3. Negative feedback may cause frustration and resentment among managers
4. The methodology is complex and time consuming
B. Management by Objectives
Management by Objectives (MBO) is another relatively modern approach to performance
management appraisal that focuses on a mutually agreed set of goals and objectives by the superior
and subordinate. The managers, together with their respective superiors, will jointly discuss and
agree upon measurable objectives based on the former’s major areas of responsibilities and their
need to develop themselves. The objectives should also be aligned to the common objectives of
the organization through various Key Result Areas (KRAs). With the superior’s guidance and
approval, the subordinate manager then comes up with detailed action plans as to how to achieve
the said goals that become the basis of their periodic review. During these instances, they come
together to both evaluate the progress of the employee towards the identified objectives where any
deviation needs to be addressed through action items. The superior is expected to play a supportive
role to encourage and motivate the subordinate manager to perform to his/her best ability. It is a
continuous process that should happen three to four times a year, or even more often based on
actual needs, to make sure that necessary feedback is given with the right frequency and timeliness.
Advantages:
1. It focuses on meeting the targets as it relates to the KRAs
2. It forces managers to think how the objectives can be achieved and what help and
resources they need
3. It ensures objectivity and reduces element of rater’s judgment
Disadvantages
1. Manager’s important leadership and management competencies may not be
addressed
2. There is a tendency to overemphasize only on quantifiable goals
3. The superiors are not always in contact with the managers
4. Stakeholders feedback, such as that of subordinates, peers, and clients, may not be
taken into consideration
C. Traditional Rating System (Scoring & Bell Curve)
The Traditional Scoring and Bell Curve are examples of old performance appraisal
methods based on job knowledge, capacity, judgment, initiative, attitude, loyalty, and leadership.
To establish a quantifiable and standardized process, Otis Company will set numerical ratings to
represent the different levels of manager’s performance based on company expectations and
objectives.
Through Scoring or Rate Scale Method, the managers will be rated from a scale of 1 to 10
where 1 indicates negative feedback and a need for performance improvement while 10 for positive
feedback and excellent performance. Rating will come from the managers’ superiors based on the
available data at hand as well as their superior’s own judgment and observation. It will be
documented and be followed by a discussion between the managers and their respective superiors.
This method will be complemented by another traditional method, Bell Curve System. Otis
leadership will group the best, mediocre, and the least performing managers based on the ratings
provided for the by the manager’s superiors. Necessary adjustments will be made to make sure a
normal distribution of managers’ final ratings, i.e., most managers should fall in the average rating
while a few managers will be skewed to the left and right of the bell curve.
Advantages:
1. Managers will be rated by their superiors who have a clear understanding of the
company objectives and skills required of a manager.
2. The targeted line items in a Scoring sheet provides easier evaluating experience for
raters.
3. The Bell Curve Method has predetermined categories which are easy to understand,
though not quantifiable.
4. It is a simple and straight-forward approach that is relatively easier to implement.
Disadvantages:
1. Feedback from subordinates, peers, and other stakeholders about manager’s
performance, skills, and contributions may be ignored.
2. The Bell Curve Method creates an unnecessary competition among managers as
they will be grouped into different rankings.
3. Managers will have a low buy in rate because of its lack of transparency.
4. Leadership does not have a concrete basis how managers are ranked and grouped.
D. Integrate Management by Objectives and 360 Degree Feedback
The managers and their respective superiors will agree upon quantifiable objectives based
on identified KRAs following the concepts and methodologies of MBO. To supplement this,
feedback from the manager’s stakeholders as well as from one’s self about leadership and
management competencies will be gathered and consolidated following the concepts and
methodologies of 360 Degree Feedback.
The managers, with their superior’s guidance, will set goals and action plans based on the
company’s common objectives as well as the manager’s need for personal and professional
development, identify what resources are needed, and describe how to optimize their relationship
with their stakeholders to ensure success. Regular discussions will be arranged between the
managers and their respective superiors for check-points as to the manager’s progress. Discussions
will include assessment of the numerical targets as well as progress related to other competencies.
Stakeholders who may have significant feedback about the performance of the managers, such as
fellow managers, direct reports, and clients, will be asked to rate the manager and provide
qualitative comments about the strengths, development areas, and valuable contributions of the
manager.
Advantages
1. The integrated method aims for the holistic development of the managers. Not only
does it measure the manager’s metric attainment, but it also evaluates the managers’
leadership styles and attitude towards work.
Disadvantages
1. More complex materials will be created for the appraisal. Conducting the appraisal
will be more complex than traditional methods. It will require different materials
for different stakeholder - peers, direct reports, and superiors.
2. Longer turnaround time for results.
Decision Criteria Matrix
Using the Lewin Force Field Analysis, factors are ranked from 1 (weakest) to 4 (strongest).
Each factor for different ACAs were ranked in line with the organization’s use of their appraisal
system which is to improve project leadership and project management skills. The scoring was
anchored in the organization’s value wherein they clearly stated in their annual reports that “Our
company employees are our principal capital, the foundations of the success of this project”. The
ACA with the highest net forces for change will be chosen as this represents the most feasible
ACA that will meet the organization’s objectives.
ACA 1: 360 Degree Feedback
Driving Force Score Score Restraining Force
Inclusivity & empowerment 4 4 Fear of negative feedback
Diverse input and rich dialogue 4 3 Focus on behaviors and
competencies more than job
requirements
Focused on future 4 3 Goals related to KRA’s may be
capability/potential of ignored
employees
12 10
ACA 2: Management by Objectives
Driving Force Score Score Restraining Force
Appraisal is related to 4 3 Pressure driven
achievement of organization’s
goals
Reduce subjectivity 4 4 Tendency to overemphasize on
quantifiable goals
Allows strategic thinking to 4 3 Deals with short term goals only (1
achieve goals year)
12 10
ACA 3: Traditional Rating System (Scoring & Bell Curve)
Driving Force Score Score Restraining Force
Less complex 4 4 Creates unnecessary competition
Management driven 3 4 Exclusive
Less costly 3 3 Lack of transparency
10 11
ACA 4: Integration of Management by Objectives and 360 Degree Feedback
Driving Force Score Score Restraining Force
Balance between objectivity 4 2 Complexity
and subjectivity
Strategic alignment with 4 4 Fear of negative feedback
business goals (i.e., holistic
approach)
Inclusivity 4 3 Pressure driven
12 9
SUMMARY OF RESULTS
ACA 1 ACA 2 ACA 3 ACA 4
Net Score 2 2 1 3
VII. Recommendation
Based on the group’s assessment of the alternative courses of action using the Lewin Force
Field Analysis, we recommend that Otis Company follow an integrated approach of 360 Degree
Feedback and Management by Objectives in the performance appraisal of its managers. An
integration of these two approaches presents the benefits of properly assessing and developing the
performance of the managers based on agreed set of goals that will incorporate the feedback
gathered from various stakeholders. This approach ensures a holistic evaluation of the manager’s
development because it does only capture quantifiable accomplishments based key result areas but
also the necessary skills required of a manager that are difficult to measure in numerical terms.
Furthermore, the managers will be empowered to work with their respective superiors in coming
up with development plans to achieve their goals and will be given the chance to assess their own
performance. Periodic reviews will be beneficial because feedback is given in a timely manner,
which then ensures that issues and concerns are addressed properly. While it is very tedious and
time-consuming for Otis Company to adapt this performance appraisal approach, the benefits will
be worth the investments because it will lead to highly performing, motivated, and engaged
managers.
VIII. Implementation Plan
What Specific Steps Who When
Job Analysis The HR and the Management shall discuss HR and December
Review the competencies and requirements of an Management 2019
engineer manager.
The HR identifies objective measures and
finalizes rules on who are qualified to
provide feedback. (in this case, these are the
people who are working directly with the
manager)
This will become the basis of the new
performance appraisal methodology.
Drafting of the The HR drafts the new policy incorporating HR and December
new Policy MBO in the new performance appraisal Management 2019
system. This should be approved and signed
by the management
Announcement The HR makes a formal announcement (via Management January
about the change email) about the new performance appraisal 2020
system.
Roll-out new The HR presents to the managers the HR February
performance guidelines and objectives of the new 2020
management approach performance appraisal. This shall
guidelines indicate how the MBO and 360 Degree
feedback is integrated to make a holistic
evaluation of the manager’s performance.
One component of the performance appraisal
is the MBO, which covers quantifiable goals
and targets. This will evaluate the
Professional Knowledge, Project
Management, and Engineering Design and
Analysis competencies.
Another component is the 360 Degree
Feedback from various stakeholders to cover
other competencies such as Engineering
Review, Decision Making & Analysis,
Communication, and Leadership.
Setting of Goals The manager sets specific goals for Manager February
himself/herself that is aligned with the job 2020
requirements and organizational objectives.
He/she also creates a developmental plan to
achieve these goals as well as identify
resources needed.
Approval of The manager and his/her superior discuss the Manager and March 2020
Goals goals and development plans and make Superior
necessary changes based on superior’s inputs
and suggestions. The final goals shall contain
the descriptive objectives based on job
requirements, numerical targets based on key
result areas, and the criteria by which
performance will be evaluated.
Establishment of The manager and his/her superior agree on Manager and February
Check-point the schedule and frequency of check-point Superior 2020
Frequency meetings which acts as a venue to
periodically assess the progress of the
manager as it relates to the objectives.
Periodic Periodic reviews with the manager and Manager and All
Reviews superior may happen quarterly, monthly, or Superior throughout
bi-weekly depending on needs. During these the year
meetings, the progress will be assessed,
priorities may be adjusted, and feedback
should be given.
Submission of The manager assesses his/her own Manager October
Self-Assessment performance based on the agreed criteria and 2020
goals in consideration on one’s
achievements, strengths, and improvement
opportunities
Peer Assessment The manager’s fellow managers and Colleagues October
colleagues who have worked directly with and Fellow 2020
him/her rate the performance of the manager Managers
in a questionnaire form and provide
qualitative assessment of skills, behaviours,
and contributions.
Client Feedback The superior shall provide a feedback form Clients and January to
to the clients and ask them to rate the Superior October
performance of the manager and provide 2020
qualitative assessment of skills, behaviours,
and contributions.
Consolidate The superior consolidates all feedback Superior November
Feedback gathered from the manager him/herself, 2020
peers, subordinates, and clients and will
incorporate own feedback and observations.
The superior should also incorporate the
accomplishment of numerical targets based
on the KRAs. The superiors should then
summarize the manager’s strengths and
achievements as well as areas to improve on
and suggestions for development.
Calibrate All superiors shall meet to discuss and share Superiors November
Feedback the overall feedback on their managers to 2020
calibrate the rating among the managers.
This will ensure that all raters are using the
same guidelines and follow the same criteria
in evaluating the performance of the
managers.
Share Feedback The respective superiors have to meet with Superior and December
the managers to share with them the overall Manager 2020
rating and performance feedback in terms of
manager’s strengths and achievements as
well as areas to improve on and suggestions
for development based on various sources.
Survey About The HR shall send out a survey to everyone HR, December
the Performance who has experienced the new performance Managers, 2020
Appraisal appraisal methodology to gather inputs for Superiors,
Method further improvement. Revisions on the Subordinates
approach may be implemented based on the
results of the survey.
IX. Learning Points
In this case, we have learned the importance of performance appraisal for organizations
and development of its employees. One important point that we noted is that performance
appraisals are used for different purposes such as identifying training needs and rewarding
employees. Moreover, different organizations require different performance appraisal system
depending on the industry, nature of business and most importantly, the organization’s values.
360 degree feedback promotes inclusivity. However, for organizations like Otis,
incorporating Management by Objectives will be beneficial as the nature of the organization
requires highly technical skills that makes it difficult to assess without a well designed matrix.
Adding more objective measures reduces bias in the performance appraisal process that will lead
to a more effective appraisal system.
Lastly, frequent and timely feedback plays a significant role in the professional
development of the employees. Management should prioritize objectivity while ensuring that the
current appraisal system promotes the company’s values. A sound performance appraisal system
leads to motivated and performing employees.
IX. References
Jordan, K. (2009). Performance appraisal: Expert solutions to everyday challenges.
Massachusetts: Harvard Business School Publishing Corporation.
Marks, J. F. (2018). 2017 annual report. New York: United Technologies.
Otis Website. (2019, November 19). About Otis. Retrieved from Otis:
https://www.otis.com/en/us/about/vision-and-values/
Robins, D. (2014, September). Founded In Yonkers, Otis Elevators took American industry to
new heights. Westchester Magazine, pp. 1-2.
Tan, W., & Falcone, P. (2013). The performance appraisal tool kit. New York: AMACOM.
United Technologies Website. (2019, November 19). Our Company. Retrieved from United
Technologies: https://www.utc.com/
Mikkola, J. H. (2000). Modularity and interface management: The case of Schindler Elevators.
Proceedings of DRUID’s Winter Conference 2000 (pp. 1-29). Frederiksberg: Winter
Conference.
Wagner, I. (2019, January 28). Statistica. Retrieved from Top elevator & escalator companies
worldwide in 2017: https://www.statista.com/statistics/281179/leading-companies-in-the-
area-of-elevators-and-escalators-by-revenue/
https://sites.google.com/site/whatishumanresource/objectives-of-performance-appraisal
https://www.managementstudyguide.com/performance-appraisal.htm
https://ts.hr.ncsu.edu/wp-content/uploads/sites/14/2016/06/Engineer.pdf
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