Smith compressors Ltd. is a company based out of Ontario, manufacturing and supplying 

compressors to various industries since 1980. In 2004 they bagged a very prestigious 

contract to sell their products to Brazil after PM of Canada signed on a bilateral trade deal 

with Brazil. To support the increased demand in production, Smith compressors invested 

in a new production facility in Nova Scotia. 1st shipment left for Brazil in the summer of 

2005. 

Everything was working well for Smith compressors until recession hit the world markets 

in 2008 and by 2010 Smith compressors was struggling to keep itself above the water. 

Eventually they decided to close down their facility in Ontario and laid off 250 employees. 

Fast forward 2014, encouraged by better economic environment Smith compressors 

reopened its closed-out facility in Ontario and made a cautious start of production. It 

penetrated in newer growing markets in Asian countries and in couple of years it was 

producing at its full capacity. Happy days were back again.2018 onwards Smith 

compressors however started facing problems with it's labour unions regarding wages, 

benefits & working conditions at the plant level. High turnover of supervisory and 

managerial level staff was also becoming a big challenge for the company to deal with.  

After they failed to manage this situation, Smith compressors hired your company for 

external intervention and bail them out and put them back on track.  

Other information available: 

Smith Compressors Ltd. Is the 3rd largest compressor manufacturing company in Canada 

employing about 1200 employees serving domestic as well as international markets. 

After about 4 weeks of investigations by interacting with all stake holders your team came 

to the conclusion that employees at all levels are unhappy. Apart from many other points 

following were the 2 main reasons of discontent 

a. No guidelines for appraisals leading to random promotions/increments/transfers 

b. Poor benefits & relatively lower pay specially at the supervisory levels 

In your recommendations you are required to suggest the;              

1. Well-developed appraisal system for: 

a. Front line production workers 

b. Front line managers 

c. Sales staff 

2. Make recommendations for compensation and benefits for;           

a. Front line production workers 

b. Front line managers 

c. Sales staff 

A well developed performance appraisal system should contain the following

a) Clear goals and standards.

b) Continuous feedback.

c) Controlling measures.

d) Self Evaluation of real time assessment.

e) Compensation and Rewards .

 

 

 

Clear goals and standards have to be put in place so that the employees know what they are expected to do similarly proper guidelines also have to be clearly communicated so as the employees know how to achieve those goals effeciently and effectively.

The goals should be realistic achievable clear and specific.When there are proper performance standards appraisal becomes extremely easy because the manager or supervisor know what the employee has accomplished. Whether he has underperformed or performed or at least matched the standards.but managers should also keep in view the complexity of the goals and also the efforts put in by the employees irrespective of the fact whether or not they reached those goals.

 

360 degree continuous feedback would be helpful when it comes to assessing the performance of the employees.

Employees should get continuous feedback on every task and every effort they put in by the team members their work with and also the supervisor they report to.

 

Controlling measures: the supervisor should not wait until the deadlines are met to tell the employee whether or not they are going in the right direction. both pre and post control measures are extremely important to let the employer know whether or not the course of the action that their following is in alignment with the organisational goals. The supervisor should be proactive enough to correct and redirect the employees in case they are going off the the chartered course of action.

 

Real-time employee assessment should be imbibed in the appraisal system of the organisation if it has to be effective all the rating scales on which the employees are appraised are different for different organisations, nonetheless the supervisors should keep on treating the employees right from the moment goals are set to the point when those goals are met.

To have clear and transparent system,

It is extremely important that those rating methods be used that imbibe critical incidents with each rating so that the employees know what particular effort or behaviour of theirs got them a particular ranking. So that they can self evaluate and self improve in in the future.

 

 

a) Front line production worker:

Setting clear standards in terms of performance for frontline production worker would include producing 20 woolen sweaters per day.

Continuous feedback should be given by the reporting managers as well as the fellow production workers so that they can self improve .Also the reporting manager can use pre controlling measures when the workers are not working up to their maximum expected level.The reporting manager can also provide different ratings based on the performance of the workers so that they can self evaluate themselves and self improve in the future.

The ratings can be done on the basis of organisational skills, cross training skills, attention to detail,

Interest and aptitude for technology,

Critical thinking etc

b ) Front line manager:

Performance standard would include decreasing the number of errors occurring in the assembly line per day to a number x.

Similarly feedback should continuously come from the supervisor, the fellow workers as well as the subordinates if at all they are not working up to the expected standards and pre controlling measures should be employed almost immediately . Self evaluation and self improvement should be done when the reporting manager provides the rating on the efforts put in by the front line manager.The ratings can be on the basis of of the engagement of the worker in the work, communication skills, emotional intelligence, leadership skills , coaching skills etc.

 

c) Sales staff:

Performance standard would include telling at least 5 sweaters per day per Store.

 

Continuous feedback from customers about the behaviour of the sales staff on their visit to the store, and also feedback from the reporting manager and fellow salesmen should be produced .

 

The ratings can be done on the basis of of engagement with the customer, communication skills , persuasion skills,

Objection handling, active listening, business acumen extra...

 

 

 

2. Compensation and benefits.

 

 

Glassdoor found that with 10% increase in the base pay there is about 1.5 % increase that the individual will stay in the company. Compensation and benefits are a very important part of the effective performance appraisal system.

Compensation is the cash reward that the employees receive in exchange for the labour and the efforts they offer to the company.

 

 

Compensation and Benifits are of various types:

Salary

Hourly wages

Bonuses

Stock options

Profit sharing

Sales commission

 

 

Recognition for merit pay

Performance-based compensation can help increase the moral and the motivation of the employees because they will be able to do self speculation and eventually self improvement. This will decrease employee turnover and increase retention.

Benefits on the other hand are non-monetary in nature for example Health insurance , dental insurance, accident insurance, early vocations and retirement benefits.

 

 

a) Frontline production worker:

Compensation can be given in the form of wages that are at least equal or greater than the efficiency wages to retain the employees. To increase the outperformers, compensation can be given in the form of quarterly bonuses.

 

b) Front line manager:

Salary that is at least equal or greater than the industry standards . Those frontline workers who meet the standards of performance or out perform them should be compensated by giving them stock options , or paid leaves or sending them to week long vacations or even benefits in the form of family insurance , retirement benefits etc can be provided to boost their moral and keep them going in the right direction.

 

c) Sales staff

A variable pay should always be coupled with basic pay when it comes to compensating the the sales people.

Bonuses , sales commission or even a paid leave can be provided to the outperformers every month.