Arrow Electronics Case Study

CEO Stephen Kaufman was facing a few challenges at Arrow Electronics, the two largest being his performance evaluation system and the retention of his key employees. Be looking at the system he has created he might be able to solve these problems, or at least put his finger on why they are occurring.

Kaufman’s performance evaluation system just helps to prove the point that evaluations are a waste of time and energy, because they aren’t fairly conducted and rarely distribute valuable information for the employee and management to use. Kaufman set up his system to make sure the results were normally distributed, ranking his employees from 1 to 5. He also required each employee get at least two 2’s on their evaluation, and tried to manipulate the scores so the average was always a 3. This shows that his system was guided by biased objectives and was developed more for statistical use rather than logical and informative reasons. The evaluations also tended to contradict themselves; there would be positive comments on the performance of the employee but they would still on receive scores of 3 and there would be many areas they needed to improve.

Arrow also tried hard to make their employees the best, by providing them with exceptional training and giving them numerous opportunities for advancement. But where Arrow lacked was it the compensation aspect of the job. They would recruit employees right out of college and give them great training, and it wouldn’t be much longer before the competition would attract the young workers but offering them much more money. Arrow decided they couldn’t increase the new workers’ pay because it would exceed that of many workers with much more seniority, even though the incoming workers were proving to be much more successful and deserving of the raise.

I think Kaufman either needs to scratch the whole evaluation system or he must totally revamp it and make the necessary changes. First he needs to start off by changing his scoring system, so it will actually give honest, constructive feedback to his employees. I think it might also help to give more frequent observations on a much more informal basis so the employees know how their work is perceived and what they need to work on before their annual appraisal comes up. As far as retaining their employees, I feel like Arrow needs to use merit based raises so the employee who is producing the most and is most effective will receive the highest raise, no matter what the employee’s seniority is. But the only way these merit based raises will be successful and fair is if the overall evaluation system is fair and is measuring what it’s supposed to and in the correct way.

Published in: on October 13, 2009 at 7:32 PM  Leave a Comment  

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