Case Solution

Robert L. Simons, Natalie Kindred
Harvard Business School ()

This case illustrates the implications of using strict performance measurement systems to create pressure for performance, motivate employee performance, and strengthen a company’s competitiveness. It begins with a description of the downsides of the ruthless competitive culture at Zynga, a young and successful online gaming company. A similar data-driven performance measurement system is used at Dovernet, a Vancouver-based provider of corporate communications and social media technologies. The founder and CEO of Dovernet believes that performance measurement systems are critical to creating the innovative and competitive workforce that Dovernet needs to succeed in a highly competitive industry. Dovernet uses quarterly top-down reviews and stack rankings (with a significant impact on bonuses), as well as bottom-up reviews to reward the best and notify the weak. The practical challenges in using this system are presented in three short vignettes. In the first two cases, students can take on the role of a manager who interprets the negative criticisms of two employees with unique (but extenuating?) Personal circumstances and implements them accordingly. The third vignette places students in the role of an employee conducting a bottom-up evaluation as they struggle to balance honesty with the potential impact of imperfect feedback to their manager. The case allows students to consider the benefits and risks of various performance appraisal strategies and their impact on the performance, culture, and morale of a company’s employees. Are there certain types of companies or industries for which these systems are best suited? Does the integrity and effectiveness of a performance measurement system depend on the cool objectivity of managers, or is there room for flexibility? Can companies that lack a strong focus on performance beat competitors like Dovernet and Zynga in highly competitive industries?

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