GB520 Unit 7 Performance Management Design Example

Retiring the Zero-Injury Bonus: A Unit 7 Performance Management Design for Refrigeration Crews

[Student Name]

Purdue University Global

GB520: Strategic Human Resource Management

Unit 7 Performance Management Design

[Instructor Name]

[Date]

The contractor, its crews and every figure are composite and illustrative; the regulation and sources cited are real.

Why the Current System Fails

Kestrel Refrigeration Services pays each crew a quarterly bonus of $600 per person if the crew records no injuries. The bonus was meant to improve safety. In the last year, recorded injuries fell by half, but first-aid cases logged by the shop's tool crib, such as burn ointment and bandages issued after jobs, rose. Two technicians told the safety manager they had stopped reporting minor injuries so the crew would not lose the bonus. A refrigerant burn left untreated on one job became an infection that cost a technician two weeks of work.

Kerr (1975) named this trap long ago, in an article about paying for A while hoping for B. Kestrel hoped for safer work and paid for silence.

The rest of the system is an annual review with a one-to-five rating, completed by project managers who rarely see the crews work. It measures nothing the growth plan needs.

Exhibit 1: The Goal Cascade

Three strategic goals sit at the top: grow CO2 installations, deliver systems that work the first time, and send every technician home safe. Each cascades to crew measures, and crew measures to individual ones.

Crew measures

First-time startup success: the share of systems commissioned with no callback for the same fault within 90 days; current 81 percent; target 92 percent.

Punch-list items at commissioning: open items on the grocer's checklist at startup; current average 14; target 6.

Schedule adherence: milestones met within three working days of plan; current 74 percent; target 88 percent.

Hazard and near-miss reports submitted: reports per crew each quarter, with a follow-up recorded for each; current about 1; target 6 or more.

Leak checks completed on time on older systems: current 86 percent; target 98 percent.

Individual measures

For crew leads: coaching record, including hours spent coaching academy participants on startups and the progress of apprentices on the crew; the crew's results on the measures above.

For technicians: certifications completed, such as manufacturer CO2 training; observed safe practices on unannounced field audits, scored against a checklist; and contribution to the crew's punch-list and startup results.

A crew earns more under the new system by reporting a near miss than by hiding one, because hazard reports with follow-up are a measure in themselves.

Exhibit 2: The Calendar

Quarterly check-ins: each lead meets each technician for 30 minutes to review progress on individual measures and agree on one development goal. The project manager meets each lead to review crew measures.

Mid-year review: a short written summary, with no rating, to flag anyone off track early.

Year-end calibration: operations leaders from each branch meet to compare proposed ratings across crews, with evidence from the measures, so that a lead in Milwaukee and a lead in Minneapolis are judged on the same standard.

Rewards: a crew quality bonus paid twice a year on first-time startup success, punch-list results and schedule adherence, provided the crew has met its hazard-reporting floor. Merit increases follow year-end ratings.

Pulakos and O'Leary (2011) trace most failures to systems built around a yearly form, and most successes to managers who talk with people often and specifically about their work. The quarterly check-ins and the calibration session are designed around that finding.

Legal and Ethical Considerations

Under the federal injury records rule, Kestrel must give workers a sensible way to tell it about an injury, and it may not punish anyone who does (29 C.F.R. § 1904.35, 2024). Federal safety officials have said that incentive programs are not automatically prohibited, but a program that discourages employees from reporting injuries can be treated as retaliation. A bonus that crews lose when one member reports an injury creates exactly that pressure, which is the main legal reason for retiring it.

The new system raises ethical questions of its own. Hazard reports could be inflated to meet a target, so each report counts only when a follow-up is recorded. Field audits must be unannounced but fair, using the same checklist for every crew. Ratings should be checked each year for differences by sex, race and age at calibration, since subjective judgments are where bias enters. Aguinis (2019) recommends that a performance system be seen as fair by those it measures, and the calibration session and written evidence for each rating are meant to make it so.

Links to the Rest of the Strategy

The cascade connects to the academy in Unit 6, since coaching hours and certifications are measured, and to the pay strategy in Unit 8, since the crew quality bonus replaces the injury bonus. First-time startup success is the measure the grocers care about most, so it links crew work directly to the growth goal.

Implementation

Announce the change in a meeting with every crew, explaining why the injury bonus is ending and what replaces it. Run one quarter with the new measures reported but not yet paid, to test the data. Train leads in quarterly check-ins before the first round. Review the system after one year, asking crews whether reporting has become easier and whether the measures reflect their work.

References

Aguinis, H. (2019). Performance management (4th ed.). Chicago Business Press.

29 C.F.R. § 1904.35 (2024). https://www.law.cornell.edu/cfr/text/29/1904.35

Kerr, S. (1975). On the folly of rewarding A, while hoping for B. Academy of Management Journal, 18(4), 769-783. https://doi.org/10.2307/255378

Pulakos, E. D., & O'Leary, R. S. (2011). Why is performance management broken? Industrial and Organizational Psychology, 4(2), 146-164. https://doi.org/10.1111/j.1754-9434.2011.01315.x