Post Graduate Diploma in Management

(2019-2021)

Assignment
Submitted To:
Dr. Deepak Sharma

Submitted by:
Group 5
Saurabh Pratap Singh - B040
Kriti Rai - A023
INTRODUCTION TO AMAZON

Amazon, based out of Washington (USA), is a technology company focused primarily on

E commerce, artificial intelligence, digital streaming and cloud computing. On July 5
1994 Amazon was founded by Jeff Bezos and has now become largest internet retailer
in the US. Amazon has been included Fortune magazine’s elite list.

Bezos is often to known as champion of lean and six sigma style process. This process
has enabled Amazon to offer its customer best experience in terms of price and quality.
By using a data driven strategy that specifically describes measurement metrics for both
workers and customer behavior, Amazon gets its cutting-edge advantage. Sean Boyle,
Finance Head (Web Services) said that “Data creates a lot of clarity around decision-
making. Data is incredibly liberating”.

Before understanding performance management process in Amazon let’s try to identify

key challenges faced by Amazon. The problems were raised by an article in “THE
NEWYORK TIMES” which portray Amazon which pushed its white-collar workers to
achieve its “ever expanding dreams”

Problems in Amazon
1. Work Culture: It was cut throat. It involved policies like, rigorous measures of
feedback and the mind space of being ruthlessly critical in the discussions. This
led to unrest in the organization.
2. Gender Based Division: As amazon did not have female employees in the leadership
panel of the organization so female employees faced difficulties while conveying
problems.
3. Job dissatisfaction: From the constant negative feedback, to the urge of the company
to put the long hours. From the ruthless criticism during discussions to no perks or
incentives at all.

Amazon is introducing a systematic method of success management. There is no clear

evaluation of team success, since it is decided by the team leader's performance (Matth
ews et al., 2018). It organizes a basic midyear evaluation and perform yearend analysis
from Dec to next April.
Performance management at Amazon

In our research we have discovered that following process management policy were
discovered
1. Beyond the perks
2. Continuous Feedback and a Culture of Transparency
3. Regular Departmental Reviews
4. One-on-One Performance Coaching

PERFORMANCE MANAGEMENT AT AMAZON

Amazon has built their performance management on a software called “Perform Yard”
which is used to streamline and automate Amazon performance management process.
Amazon strong believe that there should be a valid justification for any performance
improvement process to occur. Perform Yard solution offer a clear process of
performance management so to Amazon run’s its performance management process.
The aim of Amazon’s performance management is clear: to always the best.

Continuous feedback meets annual stack ranking: Amazon performance management

system is based on “stack ranking (a.k.a “rank and yank”) methodology. During this
process the employees are rated against each other. In this performance management
process, every work-related aspect of worker’s performance is ranked & yanked.

Anytime Feedback Tool: As part of performance management process, via its "Anytime
Feedback tool," Amazon uses continuous feedback. This is actually an internal platform
where workers can anonymously praise or criticize their employees.

PIP process: Amazon also uses a 3 month “Performance Improvement Plan” or

commonly called PIP to help an employee to get back on track. This process is a formal
process so as to improve an employee’s performance within a certain time frame. This
process is often accompanied by a well written document. If the employee does not
improve, termination of employee results.

At Amazon, PIP involves basically two phases:

  Phase 1: This phase is called as “dev list”. This is a discussion with manager on
areas where an employee can improve. It is easier to survive dev list
 Phase 2: This is the dangerous phase. It is difficult for everyone to survive.

Beyond the Perks: Amazon offers its employees external mentorship and life coaching.
This program involves a list of coaches which help its employee to improve their
interpersonal relationships to engineering apprenticeships. Amazon uses “areas of
responsibility” to describe the roles to its employees. Each department is documented
as an AOR with one person as its responsibility. The role of the manager is to be a
coach.

Bi-Annual Organizational Appraisals: In Amazon, every six months Amazon appraisals

cycle happen. This is the time when employee of organization to step away from the
daily schedule and reflect on the progress made over six months
Amazon White Paper process: “Good intentions don’t work, but mechanisms do,” is
the believe held by the founder of Amazon, Jeff Bezos. One of the techniques which is
developed is known as White paper process. As explained by Beth Galeti “This paper
outlines their reasoning and approach, anticipates and addresses tough
questions, and states what else the person has considered and rejected in
developing this suggestion, and even includes a draft press release that
showcases the customer experience at launch”.

As part of performance management process, if a manager is looking to promote

someone, they are actually required to write a white paper which actually document’s
employee successes, failure and how the person has grown in this process. This
document not only is helpful in accessing people performance but also play a critical role
for making business decision. This process is also a core part of Amazon’s pay increase
and promotion process. This review process attempts to collect data on each individual
employees’ superpowers and areas of strength.
Regular Department Reviews: As part of performance management process, teams
have product review meetings. The goal of these meetings is to share observations and
offer guidance to its employees. This approach keeps an employee to work in
challenging environment while it keeps an organization agile

One to One Coaching: To lay emphasis on personal growth, Amazon has developed one
to one coaching methodology between employers and managers. These coaching
sessions are actually meant to address employee satisfaction and engagement.

PROCESS OF PERFORMANCE MANAGEMENT SYSTEMS IN AMAZON

Clear to Mid Feedback Final Final Review

report Process
KRA employees Year Review
Realignment of KRAs Year Review
Based on 5 rating scale
Smart
PERFORMANCE MANAGEMENT CONTROVERSIES IN AMAZON

Amazon performance management process is being criticized for creating a "stack level"
or "rank and yank" evaluation scheme which removes lowest performing employees in
favor of high performing employees. A New York Times articles called Amazon “bruising
workplace” in August 2015. During annual evaluation meeting it as appears as if
managers are going to court, with piles of material to clarify or support why an employee
should stay or quit.

A 2013 PayScale survey found that among other Fortune 500 firms, Amazon has one of
the lowest employee retention rates. The interviews conducted by journalists Jordan
Kantor and David Streitfeld of The NY Times show that the feedback culture of the
business is one factor.

Kantor and Streatfield said that employees receive 50 to 60 pages of array of

performance metrics data in print form for which they are held accountable for.
Employees are also tested for their understanding of these indicators during these
assessments. These sessions are lengthy and frustrating, taking a considerable number
of working hours with planning and discussion of the metrics.

Another argument made is how Amazon uses the reviews provided to executives by co-
workers as a basis for making a list of bottom performers to let go of annually. Every
year, Amazon organizes Organization Level Reviews where the top and bottom
performers are taken to the board of managers. Called "purposeful Darwinism" by one
former Amazon HR manager, the approach is disguised as the traditional activity of
"rank and yank."

Its structure would be another critical critique of the performance management of

Amazon. The performance management system of Amazon encourages meritocracy, in
which ideas are forced into competition. This sort of competition for employees creates
an unhealthy workplace environment where each person tries to outperform each other.
PERFORMANCE MANAGEMENT DURING COVID-19 IN AMAZON

With many facing shortened hours, changed targets, furloughs, or even layoffs, COVID-
19 has affected how companies work.

Thus, it is necessary for companies to revamp and reevaluate their aspects of

performance management so as to respond to changing environment. Carrying out the
process of performance cycle without any changes will result in employees having
negative experiences.

Here, Amazon was quick to response to changing performance management needs and
tweak the current changes in performance management cycle to counterfeit the
changing experiences.

The critical steps are described below:

 Amazon followed the policy of SMART goals but ensured flexible goal setting.
Performance expectations was communicated through proper channels that
evolves new normal demands. Amazon focused on shorter term prioritization of
workflow.
 Flexi goal setting with multiple short review was adopted by Amazon in its
performance management processes.
 Amazon now started recognizing contribution too and not just prolonged
performance which was its earlier method of evaluation.
 Managers were asked to focus more on behaviors of employees rather just
outcomes during such a pandemic scenario.
 Amazon followed a policy of discussing work plans weekly or monthly with their
subordinates.
 Amazon enabled flexi work models with limited constraints of time and space
 Amazon realign its KPIs which were made sync with the organizational goals by
discussing with reporting managers.
 Amazon laid focus on employee engagement and keep its employees informed
with the recent developments during the pandemic crisis.
PERFORMANCE MANAGEMENT AT IKEA

Introduction

IKEA is a multinational group of Swedish companies headquartered in Delft,

Netherlands, which among other useful products and sometimes home services, designs
and sells ready-to-assemble furniture, kitchen appliances and home accessories.

More than 200,000 co-workers and hundreds of businesses with various owners
worldwide are united by the IKEA Name. This is one brand, but it's touching millions of
hearts and households. Their chain of value is special. It involves everything from
product development, design, supply, distribution and sales, and it starts and ends with
our customers, of course.

Not only are consumers restricted to the idea of making everyday life easier, but it also
extends to all individuals and organizations affected by IKEA's business activities.
Therefore it can be inferred that the IKEA Group has closely defined its KPMs in relation
to global strategy and priorities, which state that one of the critical areas of growth is the
personal development of customers and co-workers.

Organisational Culture

The organization has managed to maintain its identity in a fast-moving and changing
world over the last decades. This is seen by its good brand image and is IKEA’s main
competitive advantage. Creativity, creativity, entrepreneurship and hard work at all levels
of workers are supported by values and beliefs. These are principles which have
contributed to the success and sustainability of the business. The organization makes
sure that they continue to be imaginative to be ahead of the competition.
 "Why is their intent and conviction, why the company exists; that in a customer-focused
strategy not only makes money but also meets the needs of consumers. In the case of
IKEA, it is the company's willingness to question the status quo by delivering goods that
are well-designed and practical at reasonable prices. Then the cost-conscious "how do
you do it" method follows and they finally think "what do you do". IKEA has not only
created a loyal partnership between consumers and their brand by beginning with why,
but also creates cultural incorporation into a strong human capital that is driven,
empowered and engaged in executing the business strategy of IKEA.

Problems at IKEA

• Targets are set based on a mix of three specific factors: market conditions, historical
figures, and what can actually be measured. Objectives were set with no rational
foundations and an unclear action plan.

• Every year there is a performance audit that sets targets for the next year and reviews
salaries in terms of new goals and individual career growth. Only one follow-up talk a
year is included in the current process.

• No relative performance assessment is carried out on an individual basis due to the

more subjective evaluation of each employee as an individual.

• There is a performance evaluation done every year in which goals are set for the
following year and salaries reviewed in terms of the new goals and individual career
development. The current process includes only one follow-up talk a year.

The team-oriented strategy represents the avoidance by IKEA of a general failure of

management reward, in which companies frequently reward individual effort while
hoping for teamwork. Team-based rewarding, however also suggests that co-workers
who do not contribute as much as others earn the same incentive because they do not
put in as much effort as others.
IKEA is working to incorporate the performance appraisal in one-to-one meetings with
co-workers and supervisors that are now taking place every 4 to 6 weeks. On a more
frequent basis, these talks can be used to address individual goals and progress. This
will allow workers in the following weeks to get input on their current results and the
supervisor's expectations, as well as review their priorities and if necessary, adjust them
to unforeseen circumstances.

The coherence between the performance assessment method and the IKEA Group's
overall strategy and the context in which it operates is seen in the following aspects:

• Targets are defined at a global level, from which sub-companies and divisions then set
their own targets, aligning themselves with the initial global path. This illustrates that
the performance management system of IKEA is related to both its core success
drivers and the overall global strategy.

• Management in various hierarchical levels base their decisions on the input from
employees, and this reflects the values of IKEA by providing a voice for everyone and
involving the employees in the process of critical organisational decisions. This
practice is optimally achieved with clear communication.

• IKEA’s team-based incentives are coherent with the organisation's values of equality
and togetherness. In addition, the absence of penalties for underperforming
employees reflects how the company values its personnel. Instead of penalising its
employees, IKEA focuses on employee development, which is also consistent with the
company's strategy of having a positive impact on all stakeholders.

• Within IKEA, flexibility to changes and adaptability are also demonstrated by involving
employees in regular talks with managers. Also, since IKEA’s the strategy is customer-
focused, changes in customer data can exert an influence on the organisational
decision-making process, so the company makes effort to include employees in the
decision-making process as well.
Retention and Engagement

IKEA promotes work-life balance in a flexible workplace where safety always comes first.
The well-being of the employees is demonstrated by both the high outcomes they
achieve and their productivity. Recognition of achievements and hard work is
demonstrated by rapid promotion, in particular to those employees who display the
passion and unity that the HR ideology of IKEA is all about. The value policy of IKEA
includes an above-average salary, a generous store incentive program that
acknowledges the contribution of employees.

This is to keep staff satisfied and avoid any external associations with IKEA's incentive
program with other businesses. This collaborative leadership engages workers who try
to develop the business together and concentrate on the company's overall
performance.

Performance Management at IKEA

Performance assessment is a method that executives carry out to assess employee

performance based on their positions and duties within the company and their
performance. It is very necessary for management to monitor the output of workers in
order to fulfill the organization's requirements. The manager adopts a broad variety of
strategies for controlling and handling the output of workers in the sense of IKEA. Some
of the major techniques are:

 Checklist and weighted checklists: The manager primarily produces a list of

comments, whether effective or unsuccessful, of each and every behavior among
the employees in this approach. This largely helps the supervisor to depict the
employees' mediocre or excellent conduct in the workplace. This strategy would
assist IKEA in removing biases in performance and would provide a basis for
discussion of performance.
• Management by objective: This strategy would allow the management to
clearly define the goals and communicate the same among the workforce. The
management of IKEA would be able to decide for the staff members the exact
time period to be met by them. In general, the management controls the
performance of the employees and reviews the outcomes with the employees.

• Graphic Rating Scale: This approach was introduced by the IKEA management
in order to increase the employee's efficiency and productivity along with income
increases. The graphic rating scale enables the manager to rate employee
members from 1-5 on the basis of their organizational behavior and efficiency.
This helps to accurately evaluate the success of employees.
Assessment of the approaches used to manage the employee welfare in IKEA

Employee health is recognized as the most significant feature of an enterprise. IKEA

makes use of numerous programs to control employee wellbeing in the workplace, which
effectively raises the motivational levels of staff members. Personal assistance to
address their personal problems will help to incline the workers towards the company by
making different programs such as the training program. In addition to this, IKEA could
also make use of the job security management program which provides with the
assurance to the employees working for more than one year.

Management also simplifies profitable retirement plans for workers earning after-work
pensions for potential survivors. The underlying purpose behind these IKEA
management techniques is to build confidence and loyalty from employees and inspire
them to work actively towards organizational goals. These strategies help ensure
employees' well-being within the company and make their job more productive and
profitable for employees.

Performance Management Coaching at IKEA

An immersive foundation seminar to inspire the team and to share the vision of what
could be generated by implementing a performance management and leadership
approach focused on values was included in the first steps. This really illuminated the
creativity of the top team and gave the rest of the project the optimal momentum and
placement.

Evaluation and Impact on KPIs

 All participants (some requiring additional assistance and training) passed their
evaluation and were certified. They began to offer 2-day Performance
Improvement Coaching courses in branches around the nation and to train new
in-house trainers.
  The coaching training between participants and their teams has created
extremely high internal motivation and enthusiasm.

 Received consistently good reviews praising the methodology and preparation

offered by coaches.

 Great stories about how coaching has influenced the organization and lowered
expenses and increased creativity have been compiled.

KEY LEARNINGS

 Coaching programs can help managers to assess, develop and reward

performance without any bias and can lead to more impactful performance
management.

 Consistent feedback and coaching also leads to improved

employee performance and engagement.

 Performance management doesn’t solely focus on individual employees, it can

also focus on teams, departments, or even the entire organisation.

 Increased participation of the employee in the performance management process

leads to higher satisfaction, higher commitment, and higher motivation to improve
one’s performance.

 Employees need "regular, quality feedback on their performance and specific

details on how they can improve. Once skill gaps are identified, employees have
clear insight into the skills they need to develop if they wish to progress in their
career".

 Implementation of PMS should not be the responsibility of HR alone but each

and every individual should play his/her role in implementation and success of
PMS