Performance Management
At Nissan, performance was measured according to the employee’s achievements regarding his targets; this had kept employees engaged in order to produce maximum output as per their limitations and capabilities. Ghosn practiced “performance-oriented pay structure” and executed various practices in the organization and hired a lot of dedicated professionals from Renault for the purpose of knowledge sharing, learning and development among the employees of Nissan for the purpose of effective performance management. Leadership program was one of the prime examples of effective management criteria for Nissan. Ghosn had set the criteria for performance appraisal very clearly to the employees, bonus and increments were directly associated with the actual performance rather than the seniority level. In addition, it was not necessary that senior level positions were filled by the senior employees and even new employees could be assigned to that designation in relation to their performance level. This made the contest very interesting and tough for the senior level people, which were also very beneficial for the organization’s success (Dr.Aubery, 2006).
Retention and Downsizing
Nissan had focused a lot on labor cost cutting and introduced a “Labor cost reduction scheme” which boosted merit based system to some level, downswing had occurred consistently during the Ghosn’s tenure, it had make the employee uncomfortable and unsecure regarding their jobs and it was also affected negatively to the overall organization success. As a result of Ghosn’s implementation of that strategy, around 21,500 employees lost their jobs including 4,000 in the production department, 6,000 in sales management and 6,500 in sales outlets across the country. You have to motivate and give the job security to the employees if you want to become success and gain competitive advantage in the market. Nissan was unable to retain their employees on constant basis, they had also outsourced employees as well, and it had affected both organization performance and employee motivation as well as performance appraisal. That was one the reason Ghosn was not only called as “Cost Killer” but also known as “Employee Killer” as well. The reaction of that strategy was that labor union demands secure empowerment for workers and secure job for members.
How to Create a Performance-Based Compensation System
Compensation and benefits play a very important role in order to keep the employees motivated and encouraged, it also affects the overall organization success in a positive manner. As in the case of Nissan, they had created performance based compensation system in their organization, hence, no one was superior on inferior in it and if the employees were performing up to the mark then they would get benefits, increments and appraisals in their salary. This had totally encouraged those employees, who were able to succeed and this was giving equal opportunities to the employees in order to prove themselves. In the case of Nissan, there was open merit system if we talk about the employee, it was not necessary that senior level positions were filled by the senior professional, who were working in the company for years and in case the young and talented people were performing then they were offered that positions as well (Rogovsky N, 1998).
The Role of CEO and Executives
The roles of CEOs as well as executives are very significant for an organization’s success in the long run. There are different kinds of executives serving in the organization, some of them are senior and other are junior, therefore, it is very important to make a bridge between these two levels of executives. Organizations should have a proper organized structure of this hierarchy in order to encourage team work in the organization. CEO is the supreme authority in the organization and can do whatever he wants; organization’s performance is directly related with the CEO’s progress and policies. In the case of Nissan, the CEO was performing efficiently as well as effectively and he totally changed the organization performance as compared to the past. His policies were effective for both the employees as well as for the organization and he made various achievements in his tenure (Ian MacKenzie, 2006)......................................
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