Case Study - Tropical Fruit Research Institute The year is 2018 (That is, do not consider anything to do with the Covid-19 pandemic) Background The Tropical Fruit Research Institute (TFRI) is an industry owned organisation to conduct Research and Development projects for the processing of the Tropical Fruit. The Board of TFRI is made of seven elected representatives of the various member Cooperatives and Companies who grow and process the tropical fruit. The board appoints the CEO who heads an Executive Management Group (EMG) including the Business Manager, and Unit Managers of the three Research Units, including Agronomy, Engineering and Chemistry Departments. The Business Manager oversees all the Business and Administration functions including HR and Accounting. Each of the Research Units is headed by a Unit Manager and consists of several Senior Researchers, Researchers, and technical support staff. Each Manager also has a personal assistant for the administration duties of the Research Unit. An Organisational Breakdown Structure is shown in Figure 1. 7 Board Members (Elected by TFRI members) Business Mgr Agronomy Unit Mgr Chemistry Unit Mgr | Engineering Unit Mgr Senior Professionals Senior Professionals Professionals Techs/Trades Professionals HR Mgr Professionals Professionals | i H Techs/Trades Techs/Trades Admin Support Admin Support | Admin Support Admin Support | Figure 1 TFRI's Organisational Breakdown Structure Revenue for the institute comes from three main sources. e Primarily, funding comes from the Member Companies through an annual levy, based on company turnover, * Secondly, Member companies can engage researchers for specific consultation services and research projects. Thirdly, funding comes in the form of grants from various government departments and industry funding initiatives. TFRI's financial reporting year is the calendar year. In simple terms, a forecast annual surplus revenue (the annual net revenue minus the annual net costs) is divided into two components as recommended by the EMG and approved by the Board at the September board meeting. The annual surplus revenue essentially goes to two internal accounts: Rewards Management Account which funds the annual rewards to staff as bonuses. In awarding bonuses, TFRI would first take into consideration bonuses it is contractually obligated to provide and then distribute the remaining approved amount as discretionary bonuses. Discretionary bonuses to staff take into consideration their formal annual performance reviews held in November. Revenue Reserves Account is an account to fund strategic projects. It is also worth noting that if the annual net revenue is less than the annual net costs (ie TFRI effectively made an annual loss), the shortfall would be taken from Revenue Reserves. Strategic projects may include procurement of research equipment and staff development and seed funding for new research initiatives. Strategy Review Earlier this year, the EMG conducted a workshop to update the organisational strategy for the next five years. As part of this Strategy Review process, they undertook a SWOT analysis to determine their Strengths, Weaknesses, Opportunities and Threats as those summarised in Figure 2. Strengths Weaknesses e Guaranteed source of Levy funds o Lack of applied or practical skills in e Reputation of established researchers professional researchers e Strong talent pool of recently acquired Lack of knowledge in emerging technologies researchers and technicians o Weaker relationships with Member Well-equipped research facility Companies Healthy Revenue Reserves * Some discontent emerging over base pay rates across departments. Opportunities Threats Increase of Member base to other * Encroachment on existing client base by industries or other countries other research providers (e.g., Provide consulting and research universities) services to non-member companies e Downturn in Tropical Fruit industry both domestically and internationally and/or economy e Engage persons skilled in emerging * Loss of talented staff SWOT technologies Figure 2 Summary of TFRI''s SWOT analysis Performance Management Review TFRI, recently engaged your team as independent consultants to review the existing performance and reward management systems. The Performance Management Review was to be completed in three steps: 1. Review the historical records of staffing and reward distribution and performance justifications. 2. Conduct an anonymous survey of all staff regarding the existing Performance and Rewards Management Systems. 3. Develop Recommendations for a New Performance and Rewards Management System. You have completed the first two steps as detailed below. For the last three years, the distribution and accumulated Revenue Reserves for TFRI is shown in Table 1. In Table 2, the distribution of staff bonuses are shown for the corresponding years against the various staff levels. Table 1 Summary of Revenue Reserves Account (2015-2017) Year 2017 2016 2015 Annual Surplus Revenue (S) (S) (S) Annual Nett Revenue 4,910,759 5,098,427 4,686,239 Annual Nett Costs 4,657,822 5,157,822 4,527,822 Surplus Revenue 252,937 -59,395 158,417 Distribution of Surplus Revenue () (S) (S) to Rewards Management System 49,000 5,000 43,600 to Revenue Reserves 203,937 -64,395 114,817 Total 252,937 -59,395 158,417 Accumulated Revenue Reserves () (S) (S) Opening Balance 1,925,050 1,989,445 1,874,628 Annual Credit 203,937 -64,395 114,817 Closing Balance 2,128,987 1,925,050 1,989,445 Table 2 Summary of Rewards Management Account (2015-2017) Year 2017 2016 2015 No of Sum of No of Sum of No of Sum of Level persons bonuses (5) | persons | bonuses (S) | persons | bonuses (S) CEO 1 3000 1 2000 1 5000 EMG 4 7000 4 3000 4 6000 Senior 6 6000 7 0 6 7500 Professionals Professionals 16 16000 18 0 15 21000 (degree qualified) Technicians and 9 9000 10 0 9 2700 Tradesperson Administration 8 8000 8 0 7 1400 Support Total Bonuses 44 49000 48 5000 42 43600 Table 3 -Demographic details of staff levels Year 2017 2016 2015 Level %male Avg. age %male Avg. age %male Avg. age CEO 100% 50-60 100% 50-60 100% 50-60 EMG 100% 45-50 100% 45-50 100% 45-50 Senior 67% 38 71% 36 83% 36 Professionals Professionals 63% 28 61% 25 60% 25 (degree) Technicians and 56% 45 60% 44 56% 43 Trades Administration 25% 38 25% 37 29% 37 Support All staff 59% 37 60% 35 62% 35 Commentary on the Performance Review Process Annual performance evaluations are completed by supervisors for each subordinate employee prior to the annual performance review meetings. The performance evaluation document is a standard document and is reviewed annually but, in practice, has not changed in years. The document is an online form and can only be accessed by supervisors and the Executive team. The supervisor completes each employee's form by noting comments against their listed KPIs and providing a single performance rating of 1 (high performance) to 5 (poor performance) Employees attend a short annual performance review meeting with their supervisor, where the supervisor discusses their notations against the KPIs and advises the staff member of their performance rating. The employee can challenge the supervisor determined rating during the performance review meeting. The supervisor may adjust the final performance rating. After the performance review meeting the supervisors completes the form by adding recommendations for supportive actions such as training and development to their Business Unit Manager for approval. Bonus payments are paid to employees according to their performance ratings. Bonus payments are advertised as a benefit of employment to potential recruits. Internal Communications clearly states that internal promotion to vacant positions is tied to the performance rating system. Analysis of the data collected from the anonymous survey completed by all staff included: Only 25% of survey participants are satisfied or very satisfied with the existing performance management system and reward program. 86% of employees are interested in non-monetary rewards. 82% of employees indicate that the annual performance review document included key results areas (KRAs) and key performance indicators (KPIs) that do not relate to their specific role. 77% of employees were unable to directly align all their KPIs with a Business Strategy listed within the Organisations Five Year Plan