Question

All About Business (AAB) is a marketing consultancy business based in Melbourne. AAB specialises in consultancy activities relating principally to creating marketing campaigns and implementing marketing strategies. AAB enjoys a good reputation in these two areas of specialisation. However, competition is strong in the marketing consultancy industry, and many domestic and international consulting firms have now entered it. AAB employs highly qualified and experienced staff, whose time is charged out to clients on an hourly basis. Their clients expect high quality service delivery and around- the-clock availability to consultants, and this includes weekends. Given that rival consultancies may be operating from different time zones, AAB has been reluctant to change their clients’ expectations. AAB has been highly innovative in the last few years, with several of its consulting staff building upon their areas of expertise and knowledge to develop new opportunities in AAB’s consultancy portfolio. These new areas are in social media marketing and brand management. AAB’s three senior partners hold monthly performance meetings. At these meetings, they discuss budget performance and pay particular attention to comparing actual performance versus budgeted performance for revenues and profit. They also review their market share and the feedback they obtain from monthly client surveys. They pay their consultancy staff an annual salary plus individual bonuses based upon a team manager’s assessment of each individual consultant’s performance and achievement of targets throughout the year. Team managers set the targets for the consultancy staff, and it is rare for a consultant to miss out on a bonus. The three partners receive a fixed salary and a bonus based on the overall annual business profits.

Required: Critically evaluate All About Business’s process of performance review and target setting. Recommend an alternate performance management control system that integrates objectives with other elements that are key to an organisation’s successful implementation of strategy. Identify your assumptions, and provide your reasons for the design of your control system. (Note: a comprehensive answer is required.)

Answer 1

The performance rating system followed by AAB involves performance reviews based on the expected goals versus the achieved goals by their consultants. As stated in the article that consultants rarely miss out on their bonus means that the targets set by the team managers are achievable and do not make their consultants stretch their schedule to achieve the goals. The performance reviews as done by the partners involves matching the performance on monetary terms by evaluating the P&L accounts which are then matched with the budgeted expectations. Also, the monthly reviews received from the clients are considered important in deciding the performance reviews of the consultants.

The information above clearly shows that the performance review system followed by the AAB is pretty good and favors their consultants. Since the competition is increasing and AAB needs to compete neck to neck in this competition. For this AAB can devise some strict bonus rules which will motivate the consultants in order to work extra hard and deliver their best which will result in higher client satisfaction and new client generation. Consultants can be involved in making the decision about their monthly targets which are generally decided by the team manager himself. This will ensure that consultants work to their maximum potential and maximum benefits can be withdrawn from consultants to the organization.

In the fear of consultants firing back on challenging targets set by the team managers, the organization can devise lucrative perks and compensation system which will make sure that the challenging targets for the consultants do not result in higher retention rates.

The reasons for above mentioned stringent work ethic are to increase the productivity of the consultants which will benefit in the highly competitive environment. Also, already set organization culture and compensation plans show us that there is a fear of consultants getting complacent with their existing work given that hardly anyone misses the bonus, Hence the need for more stringent compensation plans to increase their productivity.