Case Study: Performance Management at Heinz Australia
Fair Work Australia (FWA) has found it was unfair for HJ Heinz Company Australia to dismiss a sales manager named Moretti who refused to be performance managed because he feared it was designed to trigger his exit from the company.
In ordering the reinstatement of the former West Australian sales manager- Moretti, employed by Heinz from 1983 until his dismissal in August 2011, FWA Deputy President Brendan McCarthy said the performance grounds relied on by management had been ‘imperfectly, if not carelessly, formed for an employer of Heinz's size'.
One of the reasons Heinz management gave the hearing for insisting on an individual performance management plan for the manager was a low score in his annual review. However, this score was not an individual performance rating, but a company-wide rating that gave all employees the same score.
‘It could not be a justifiable reason or even part of a reason for the development of a plan solely for [the sales manager- Moretti]', McCarthy said.
After taking part in an annual performance review in May 2011, Moretti attended a meeting in early June with the retail sales general manager who, according to Moretti, told him that there was no longer a job for him and he should resign or he would be performance- managed out.
Heinz provided no evidence from the retail sales manager to dispute the employee's account of this meeting, which included notes made immediately after the meeting.
In July and early August, a series of meetings and communications took place between Moretti and Heinz during which he was told the company had some performance concerns, but these would be discussed once he had agreed to sign an individual performance management plan.
Moretti repeatedly asked for details of the performance concerns and expressed his fear that the company was going to use this process to force him out. Ultimately, he was given until 17 August to sign the plan or be dismissed.
Heinz argued before McCarthy that the dismissal occurred because Moretti refused to take part in discussions about performance concerns or sign up to an individual performance management plan.
However, McCarthy said that he did not accept Heinz's argument, but believed that it was instead based on a possibly flawed view that his performance required improvement.
He said that the company chose not respond to repeated requests by Moretti for details of the performance concerns the company purported to have, insisting that he instead sign the performance plan before further discussions.
When Moretti refused to sign, company management told the hearing there was no other option but dismissal. ‘I disagree. There are alternative actions Heinz could have taken', McCarthy said.
He said the employee (Moretti) had ‘good reason' to be suspicious about the company's intentions.
‘He (Moretti) had not been subjected to any performance plans of this nature in the past, no other managers were being subjected to performance plans, his experience was that when employees were subjected to performance plans it was because of poor performance plans and importantly [the retail sales manager] had told him he was going to be performance-managed out of Heinz'.
McCarthy said the company had not satisfied him that reinstatement was not possible and ordered that the company appoint him to a position on no less favourable terms and conditions and repay the remuneration the manager had lost between his dismissal and reinstatement.
Task:
You are asked as an independent consultant to conduct a critical review of the company's employee performance management strategies for Heinz Company Australia and recommend the way forward. Write a business report that answers all the three questions:
1. How was Heinz's approach to performance management invalid in relation to Moretti's job? Explain your answer in relation to significance of strategic performance management, appraisal and employee feedback in organisational context.
2. How was Heinz's approach towards employee performance management unreliable? Discuss your answer that relates employee performance management and its impact on strategic human resource management and organisational performances.
3. Identify the ways in which Heinz's employee performance management could be improved. As part of your answer, make sure you explain carefully how the company should implement your recommendations because so much of success in this area depends on the ‘how' of any strategy is implemented.