Assignment

On
Ameco Beijing Benefits of Performance Appraisals Harvard Case Study
Solutions & Analysis.

Submitted To
Salma Akther
Associate professor
Department of Management Studies
Faculty of Business studies
Jagannath University, Dhaka.

Submitted By:
ALPHABET GROUP
11th Batch, Section: A
Department of Management Studies
Jagannath University, Dhaka

Date of submission: 19 December, 2020

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 List of the group member

SL. No. Name ID No. Remarks

01. Morgefa Akter B150202027
02. Md. Minhaz Abedin B150202037
03. Syeda Mafia Zaman B150202039
04. Nurtakia jannaty B150202043
05. Md. Arif Anzum B150202082
06. Md. Shibbir Ahmed Sajib B140202051

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Executive summary
The case of Ameco Beijing benefits of performance appraisal is designed in a manner so that
a student can experience practical problem. The Ameco Beijing benefits of performance
appraisal case is based on a current managerial & strategic problem faced by the
organization. The case mainly give emphasized some strategic models & tools including
SWOT analysis, porter five forces analysis, marketing mix analysis. The managers of
different department failed to take right decision in time so the company could not achieve
their goal. Also shows us the competitive situations, rapidly changes external factors, weak
strategy, less revenue but more employee make Ameco Beijing performance down. Try to
take some steps to overcome their problem but not properly solve the problem.
After preparing the whole report I pointed out some findings which I felt from my point of
view. As an inexperience person I may have made many mistakes. Based on those findings, I
recommended some points which may help the company to remove their lackings.

Introduction:
Ameco Beijing was situated at Beijing capital international Airport Ameco started its officials
operation on August 11989. The registered capital was US$ 187.53 million. A 40 years joint
venture Between Air China which hold 60% of the company share & Lufthansa AG with
40% of share that’s mean current cost of components of company is 60% and Personal cost is
40% - misplaced focus. The service provided by Ameco include airline maintenance overhaul
and painting of air craft, engines repairs and ground equipment calibration which requires
more employee & cost. Mainly external factor, labour cost change & new competitor’s
entrants of the airline field affected the performance of Ameco Beijing. Again their weak
strategy, delay in decision, less revenue but more cost make Ameco Beijing performance
down. As a result, creating misunderstanding, conflicts increased that divert the mangers,
shareholder from the Organization right direction. They are thinking appropriate decision that
helps them to solve the problem.

Problem identification:
1. They are affected by their external environment (labor cost increase) that is badly
affected their working of the company.
2. Have a huge misunderstanding between the shareholder & the stakeholders.
3. To improvise the current state of the Organization through pursing innovation on
other change, avoiding the upcoming risk.
4. Allow the Organization and management in specific direction rather than move in
different direction.
5. SWOT analysis does add value but does not provide any specific direction. It depends
on the capabilities of the manager. The managers didn’t take effective decision.

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 6. They earned lower than their expense.
7. Ameco Beijing performance appraisal problem statement is employees retention,
external completion treat, cost cutting.
Performance management refers to the quarterly/half-yearly/annual formal communication
between a supervisor and subordinate that is conducted to assess the achievement of role-
based objectives, identify critical areas of concern, clarify employee expectations, provide
feedback, and set objectives for the future.
Well, when we talk about performance management, we aren’t referring to just one process.
Essentially, the performance management process involves end-to-end management of the
on-the-job performance of an individual, right from the time a job is allocated to the time an
employee exits the job. For a company the main goal of performance management is to create
surrounding where
People can perform most effectively and efficiently to produce highest quality of the work in
accordance to their abilities. The quality of the individual work is directly proportional to the
organizational performance in achieving overall company's goal. Performance management is
a tool that company uses to establish rules and clearer understanding of expectations. It
creates a system where they everyone are more accountable towards their work. The
managers and supervisors are involved in the main part.
Few reasons why a company need to implement performance management:
1. It helps set achievable goals.
2. It helps managers identify the training requirements of their employees.
3. It enables supervisors to recognize and reward good performance.
4. It is very useful in planning for employee professional development.
5. It is one of the best tools to reduce workforce attrition.

Analysis of the situation:

Low operation efficiency and annual performance appraisal approach was the main problem
of Ameco. Annual performance evaluation program practice in Ameco. It took long
assessment period for obtaining employee feedback. So it is difficult to for the organization
to give feedback immediately. Annual performance evaluation is less efficient. Chief
executive officer of Ameco Li Ma introduce monthly performance appraisal program. It is
more efficient and it give immediate feedback to employee. These appraisals program give
some positive feedback for several consecutive years.

The reason of Problems occurring after some year can be found by SWOT analysis.

Strengths:
1. Maintain a strong relationship by providing satisfactory services.
2. They could manage order because of their strong brand value.

Weaknesses:
1. Ameco's revenue is lower than their expense so that they faces fund crises.

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2. Ameco fail to maintain individual equality that’s why technical employees leave the
organizations.
3.  Ameco did not focus on the workforce planning, hiring more employees to deal with the
increasing volume of the maintenance business approximately 300 per year on average.  

Opportunities:
The demand for airline services are increasing rapidly.
 
Threats:
1. Technological advancement reduce the workload as a result income are getting low, in
turn, reduced monthly variable salaries of the employees for that reason  some technical
employee  leave the organization.
2. External environment can’t control by the management 
3. New market entrants became new threat for the organization because already their some
competitors who gives tough competition.

Alternative solution Matrix:

We have to find out solution for the problems that are faced by the Ameco Company. We saw
that due to inappropriate performance appraisal system the talented employees are leaving the
organization. On the other hand the major client Air china made a contract with Ameco. The
contract payment is US $ but for the continuous appreciation of Chinese yuhan Ameco could
not get real benefit of the organization. So the probable solution is:
1. Compensation of employee should be determine. Employee should get benefit according
their performance. The measures of evaluation can be done through weighted checklist.  As a
result employee will not dissatisfied regarding their salary moreover turnover rate can be
reduce.

2. Renegotiate with the major client Air china so that organization can get real benefit of the
contract otherwise Chinese yuan appreciation hampers the organization earnings.

Now we have to find out apparent answer of chief executives officers questions:
How can we set up the indicators to motivate the employees and keep talented personnel in
the company?
Employee performance should align with the strategic goals of the organizations. If any
employee does identical jobs their payment should be on the basis of individual equality .So
that the talented employee feel motivated to stay in the organization. Job can be evaluated
through Job ranking, job classification, point score so that everyone can get according to their
job salary.
How can we minimize the impact of external factors, while considering more about the
workload?  
• Find out the employee needs
• Frequent feedback to employee
• Fair performance appraisal
• Ensure employee satisfaction
• Organizational achievement aligned with individual achievement

How can we reasonably assign the department tasks to each employee, while avoiding the
phenomenon of unmerited workers reaping the benefits?

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Need assessment should be done for individual employee based on organizational level, task
level, and individual level. So if the employee unmerited they can improve themselves
through trainings. On the basis of past performance timeline, task can be assign. 
On the other hand technical courses can be taken up by the employee to improve themselves.
On the basis of their result benefit should be given.
How can we let the employees receive real benefits from the appraisals while increasing the
overall performance of the company?
Task completion capability based on this or some other criteria benefit should be given .As a
result all employees will be self-motivated to improve themselves to get this benefits. 

Monthly appraisal program is compared with the yearly assessment are given below:-

Yearly appraisal program: 

1. It is too long for obtaining timely feedback and incentives. 
2. Difficulty in identifying problems in time.
3. Difficulty in controlling process efficiency. 
4. The assessment effort is weak that is only 10 percent is linked to year.
5.  The goals have not been broken down for each month.

Monthly appraisal program:

1. Shorten assessment period
2. Ease of identification 
3. It will force production managers to look to operation efficiency 
4. Timely feedback 
5. The revenue and cist can be broken down for each month and linked with monthly
performance salaries.
5. It could encourage all of the Departments to reduce costs and Increase efficiency. It would
help making timely adjustment for each Department. 

And therefore as a result of this, monthly appraisal system were deemed necessary for the
management situation of the company. And moreover, whether  the work content  of each
Department was right or wrong and whether the result were good or bad,  should be guided
and judged by performance evaluation indicators. 

Problems in the process of designing a performance Appraisal period:

1. Employee retention
2. External competition threat
3. Cost cutting / optimization while increasing the overall performance of the company.
4. The changes in the external environment result of in sharp conflict among Departments.

The appraisal indicators of Amecco: - 

1. Fewer in number but better in quality. 
2. Communication with the employees should be simple and easy to understand 
3. Interest of the shareholder should be taken care of.

I think, the appraisal indicators of Amecco are reasonable, because -

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A three month observation period was set up in order to determining whether the monthly
performance appraisals could help solve the current and future development problems within
the company. 
Even though, the workload for the human resource and financial Departments to collect and
organize the data increased significantly, it the program, budget indicators of monthly
operations, monthly product operations, and monthly costs were designed for different
product departments. Every month, three product departments were to compare their actual
situations with the budget and monthly variable salaries of the Department, based on the
ratio.

Contents and Steps of performance Management:

The performance management process or cycle is a series of five key steps. These steps are
imperative, regardless of how often you review employee performance.
 Planning
 Monitoring
 Developing
 Rating
 Rewarding
Planning: This stage entails setting employees’ goals and communicating these goals with
them. While these goals should be disclosed in the job description to attract quality
candidates, they should be communicated once again when the candidate becomes a new
hire.
Monitoring: In this phase, managers are required to monitor the employee performance on the
goal. This is where continuous performance management comes into the picture.
Developing: This phase includes using the data obtained during the monitoring phase to
improve the performance of employees. It may require suggesting refresher courses,
providing an assignment.
Rating: Each employees performance must be rated periodically and then at the time of the
performance appraisal. Ratings are essential to identify the state of employee performance.
Rewarding: Recognizing and rewarding good performance is essential to the performance
management process.
Difference between Performance management and Performance Appraisal:
Performance management is the process of identifying, measuring, managing, and developing
the performance of the human resources in an organization. ... Performance appraisal is how
you evaluate the progress being made by assessing or measuring
the employee's actual performance on a regular basis over time.
The company implement the DCPC monthly performance Appraisal program
Ameco's director of human resources, had prepared a report titled assumption of human
resources. Monthly performance appraisal could ensure high pertinence and timely feedback
and the effective starting point for reducing cost and increasing efficiency. Furthermore,
based on his year experience, he convince the heads of all departments. They improve their
process supervision and problem control.

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This method has been encouraged by all the three departments and they set their target by
this.
Monthly appraisal was suitable for the current management situation of their company. The
implementation of monthly performance appraisal program from the demand level of the
market and customers of the basic level of financial data and detailed human resources
management.
This company’s performance appraisal method was not in accordance with performance
management cycle. They did not prerequisites their performance criteria. They had not a
proper performance planning with accurate execution performance assessment and
review system was not inaccurate with this method.
By the following ways in the place of ma, I would further improve the performance
management program _

* The company improve their performance management program by adding substitute

products are an alternatives that are available in the market at comparatively better prices.
Such products prevail due to the technical and innovative advancement. Due to which the
products being produced by the companies that are already existing in the market and is using
the same technology are than replaced by the other company’s product are comparatively
better in terms of price and quality and are being produced from sectors with significant
profits. 

* They further improve their performance by managing more powerful suppliers possess to
capture significant value for themselves by demanding high prices while limiting the quality
and the quality of the products or services by transferring the cost on the participate of the
company. 

* The company can allow the organization and management in a specific direction. It actually
increase working efficiency. 

* The company choose profitable clients and it is crucial for the organization as to avoid the
situations of being highly demanded on the buyers. Then the number of the buyers are limited
and each of the buyer purchases large quantity. 

* The company can improve their technological factors. These factors not only drives
globalization but also the factors includes environmental and ecological aspects, and
available services as well as products, the organization should innovate and be compatible
with the technologies. 

* The company can take monthly performance appraisal rather than yearly performance
appraisal. Because it is more effective and brings more profit for the company. 

* The company should analysis the environment that affect their Organization products
before commencing the process of marketing. It should be used on regular basis so that the
company would be able to identify the trends. 

* The company can ensure product safety and maintenance quality. In the past the CEO
would talk repeatedly about "stability", but now he focused on the balance between safety
and efficiency.
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 Recommendation:
1. Need to update a new strategy.
2. They should make sure to review the external environment to make sure that it
responds external factor during strategic decision.
3. Need to reduce conflict amnog mangers.
4. Fixed a benchmark to match the desired condition of the Organization & take enough
effort to keep the team in right direction.
5. Reduce cost & increase revenue
6. Communication with the employee & managers should be simple and easy.
7. Ensure the monthly performance appraisal but it would be more fruitful to go to
Quarterly assessment program.
8. Allow effective team for controlling process efficiency.

Conclusion:

Although the implementation the DCPC monthly performance evaluation program had
generated positive influence on Ameco Beijing but their strategic strategy was weak so they
could not cope with the problem. Manager can force employees to work effectively so that
they can control their save labour cost and increase revenue.

References:
1. Herman Agunis, Performance Management, 3rd ed, (Upperr Saddle River, NJ: L
Pearson Prentiee Hall, 2OO9), 37-58.
2. Mello Jeffrey A., strategic Human Resource Mangement, 4th ed, (Nelson Education,
America, 2013), 239-250.