Approaches To Employee Performance Management At Colgate-Palmolive

Introduction to Performance Management and Colgate-Palmolive

Question:

Discuss About The Employee Performance Management At Colgate?

The aim of the paper is to delve into different approaches to performance managements and their use in the organisations. The paper takes Colgate-Palmolive as the background of the study to illuminate the two types of performance management namely, traditional approach to management and the new approach to performance management. The paper is divided into several sections to enable the readers get a better grasp of the concepts. The first section introduces the concept of performance management and the company in question, Colgate-Palmolive. The next section deals with traditional approach to performance management followed by an analysis of its advantages and disadvantages. The next section throw light on the new approach to performance management analysing its strengths and weaknesses.

Performance management includes activities, which ensures that the employees achieve the goals and targets assigned to them efficiently. Managers today align their employees’ goals to the organisational goals to ensure high level of productivity. Performance management in multinational companies like Colgate-Palmolive attracts involvement of senior managers, departmental heads, lower level managers, supervisors and executives. The managers in these companies judge the level of performance achieved by the subordinates individually against the targets assigned to them. This judgement and management of employee performances leads to performance appraisals and promotions to higher level(Van et al. 2015)

Colgate-Palmolive is an American multinational FMCG products manufacturing company with its headquarters in the New York City. The company got its name in the year 1953. It is a public limited company and is listed on the New York Stock Exchange. Ian Cook, its President and CEO leads the company.

The organisational structure of the Colgate-Palmolive is primarily business into four divisions namely, North America, Latin America, Europe and South Pacific and Greater Asia and Africa, all of which report to the president, Colgate Africa-Eurasia. The North American headquarters is in the States, the Latin American head office in Venezuela and the European headquarters in Russia, the United Kingdom, Ireland and France. The Asian market is divided into Thailand, China and Philippines, all of which report to the vice president and general manager. These continental headquarters report to the president.  The Philippines market is divided into two divisions namely, oral, personal and home care and pet nutrition. The offices of the president and VP and GM ultimately refer to the CEO and the president. The company is financially extremely strong and earned a revenue of over $ 15.2 billion in the year 2016(colgate.co.in. 2017).

Traditional Approach to Performance Management, Advantages, and Disadvantages

The product portfolio of the company is divided into two main divisions namely, cleaning agents and personal care products. Colgate-Palmolive manufactures and markets products like Colgate range of toothpastes and toothbrushes, Palmolive range of skincare products, Fresh Start detergent and Listerine mouthwashes. The main international competitors of Colgate-Palmolive are British-Dutch multinational company Unilever and American gaint Procter & Gamble. Colgate-Palmolive uses acquisition and direct subsidiary formats to enter foreign markets. The company has a very specialised supply chain and distribution chain throughout the world. The multinational company employs talents from all round the world and follows a stringent performance management strategy to ensure that it maintains a highly efficient human resources. The factors like able organisational leadership, ability to attract investment and sell products globally, efficient supply and logistics management and talented human resources have placed the company in a high global position.

The multinational companies like Colgate-Palmolive apply performance management to ensure their employees consistently meet the target level of efficiency assigned to them. The performances of the employees are aligned to the organisational strategies and the employees are judged on that basis. There are two types of performance management approaches followed in organisations namely, traditional performance management process and modern performance management process.

Traditional performance management systems emphasises on evaluation of the performances of employees based on the targets assigned to them for a given period like monthly and yearly. The departmental managers set goals directly to the subordinates at the beginning of a given time period like at the beginning of a accounting period. The managers then again review the performances of their subordinates in the middle of the year. They monitor the targets achieved by each employee against the targets achieved by them individually.  The managers give grades to the employees on their achievements according to the performance parameters. The performances management parameters contain both quantitative and qualitative components. The quantitative performance management parameters relate to the target achieved by the employees against the targets assigned. For example, the sales executives are assigned the targets of achieving increase in the sales of Colgate-Palmolive products. The managers measure the increase in sales achieved by each sales executive.  The qualitative performance management parameters consist of intangible parameters like leadership initiative taken by the executives to motivate the junior employees and help them in achieving the assigned targets. The leading performance indicators show the outcomes of the target achievements during the period assigned. The managers evaluate their subordinates on the basis of these parameters and give their feedback. They then measure the performance of their subordinates at the year of the year. This year end review of the performance of the subordinates form the basis of their appraisal and promotions.

New Approach to Performance Management, Strengths, and Weaknesses

An analysis of the traditional management approach shows that it is very straight forward and simple. accounting to Van Dooren and Van de Walle(2016), the senior managers assign targets to the subordinates and review them twice a year. The managers measure the performances of their subordinates based on the targets achieved by them against the targets assigned to them. It appears that the process is simple and leads to accurate evaluation of the performance of the employees. Bonet and Salvador(2017) contradicts this statement and state that the managers do not get motivate the employees to achieve their targets. They further show that the process of traditional performance leaves limited scope of the employees to participate in the planning of achieving the target. Pettigrew(2014) further points out that in case of traditional performance management, the managers merely assign the targets to their junior which they evaluate at the end of the year. He points that this system leaves limited scope for employee empowerment and does not encourage leadership and decision making skills among the employees. The employees as a result do not develop managerial qualities and stand very low chances of being promoted. Thus it can be inferred that traditional performance management does not lead to development of efficiency among the employees which ultimately leads to lack of job satisfaction and low performance among the employees. Furusawa et al.(2016) further points out that multinational companies like Colgate and Palmolive carry on continuous training of the employees to enable smooth succession plans. These trainings help the employees to develop managerial competencies like leadership and decision making power which leads to promotion and career growth. These trainings also ensure that competent employees succeed the retiring and resigning employees. Thus, in the light of the above analysis it can be inferred that traditional performance management is not appropriate for dynamic multinational companies like Colgate and Palmolive.

The new performance process in comparison to the traditional approach enables more coordination between managers and the subordinates. The managers at the beginning of the year encourage employees to participate in deciding the targets. The managers on regular basis review the performance of the employees and provide them with guidance and advices to achieve their targets. The managers emphasises on both team and individual performances because they consider team performance because of excellent individual performances. The managers support their teams and mentor weak performers. New performance management process is characterised by continuous communication between the managers and their subordinates. The managers provide feedbacks on the performances of the employees and points out their shortcomings so that they can rectify them. This regular review of the employee performances and guiding of employees contribute towards over achievement of the targets by the end of the year.

Product Portfolio, Organizational Structure, and Financials of Colgate-Palmolive

An  analysis of the new performance management approach shows that the process is extremely time consuming and complex. Goetsch and Davis(2014) point that compared to traditional performance management approach, the new performance management approach is costly because the senior managers review the employee performances on regular basis and offers training to weak employees to enhance their performances. These continuous training sessions often add to the cost of operations of the companies. Jaca et al. (2014) further add to the opinion of Goetsch and Davis and state that continuous training and meeting sessions are extremely time consuming. Navimipour and Zareie(2015) electronic learning facilities allow employees to participate in trainings according to their conveniences and does allow them to obtain training without hampering their daily jobs. They pointed out that in fact, online training methods allow the employees to develop their skills, which help to improve their productivity, and ultimately contributes to high organisational performances. This high organisational performance helps the company to serve its customers better and earn more revenue. Thus, this analysis clearly shows that though the new approach to performance management appear to costly and time consuming, it ultimately in fact leads to increase in revenue generation.

Moriano et al.(2014) point out that as opposed to traditional management approach, the new management approach encourages participation of subordinates in formation of target achievement plans. This participation makes the employees feel more responsible towards their job performances and motivates them to improve their performances. Stiles et al.(2015) in support of Moriano et al. state that in multinational companies this participative team planning helps the managers to allocate the jobs among their subordinates according to their qualifications and eligibility. This motivates the employees to over achieve their targets, which ultimately transpires into high organisational performances in the market.

Vasan et al.(2017) supports the new  performance management approach and state that the continuous review of performance and appropriate guidance from managers act as support system for the employees. The continuous support from managers make the employees feel important and motivate them to perform better. According to Wong and Laschinger(2013) this enhanced performance leads to job satisfaction among the employees. The managers are able to obtain employee participation while making plans to achieve targets. This participation of the employees and managers stimulate better and clearer understanding about the targets and the ways to achieve them. This results in over achievement of the targets. Jacobs, Yu and Chavez(2016) further point out that strong communication between managers and subordinates allow fast flow of information which lends flexibility to the business strategies which is a prerequisite of multinational companies like Colgate-Palmolive. It helps the managers to adapt their strategies and plans to achieve business targets according to the market conditions. The managers in multinational companies like Colgate-Palmolive use this strong communication network to get latest market information and make more market oriented strategies, thus taking advantage of the situations and gaining supernormal profits. Fernández-Gi et al.(2016) further point out that this free flow of communication in fact, help managers to control conflict among employees. This analysis shows that new approach to performance management help organisations to deal with employee conflicts and ensure uninterrupted productivity. Thus it can be inferred from this detail analysis that new performance management is very much applicable in Colgate- Palmolive.

Difference between Traditional and New Performance Management Approach

Conclusion:

The discussion shows that traditional performance management approach is less expensive and time consuming because of minimum communication between the subordinates and the managers. It can also be said that the new approach is better than approach because it gives employees opportunities to enhance their skills. These skilled employees result in high organisational performance as a whole. Thus, this leads to higher competitive advantage in the market and higher profitability. It can also be pointed out that the new approach is fit for and in use in multinational companies like Colgate-Palmolive.

References:

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