BUSN 5061: Performance Management at Gap Inc. Case Study Analysis

This case study examines the performance management strategies at Gap Inc., a major clothing retailer, focusing on the transition from traditional methods to a new GPS (Grow, Perform, and Succeed) system. The study compares the two systems, highlighting the key differences in employee evaluation, feedback mechanisms, and reward structures. The traditional system relied on outlet manager rankings and year-end reviews, while the GPS system implemented monthly touch-bases and regular feedback sessions. The analysis identifies potential challenges in implementing the new system, such as employee confusion, bonus structure concerns, and manager adaptation. The paper recommends strategies for effective performance feedback, including frequent feedback, creating a suitable discussion context, and encouraging employee participation. It emphasizes the importance of manager roles in the process and advocates for an open and honest communication environment to enhance employee engagement and overall organizational performance. The study concludes with a call for proactive risk mitigation and continuous improvement to ensure future success.

Running head: A CASE STUDY ON: PERFORMANCE MANAGEMENT AT GAP
A CASE STUDY ON: PERFORMANCE MANAGEMENT AT GAP
Name of the Student:
Name of the University:
Author Note:

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Response to Question 1: In the following study, GAP Inc. is a vinyl record and mainly,
clothing retailing organization, founded on 1969 and still, being a constant hit in the clothing
market. The company is observed to have 3,200 outlets in 50 countries around the world (75% in
U.S and Canada). An average store has been recorded to have about 35-45 working individuals
in aggregate, while 10 are specified a certain time-schedule. The employees undergo
performance test and feedback with rewards and bonuses under a specified terms, conditions and
time period. This is managed in an organization by Performance management area (Noe et al.,
2016). Gap Inc. developed their performance management (traditional) procedures since 2000s,
and also observed a change in the environment of both periods. Thus, both the systems are
compared to identify the superiority and the inferiority between them.
Traditional performance management New performance management
1) Employees were ranked and rated by
the outlet manager. The rating of each
year determined their reward (from
50% financial and 50% individual
contribution) after a year. Ratings
ranged the level of bonus an employee
could opt for.
1) The new process name GPS (Growth,
Perform and Succeed) sets
objective/goals (eight) under a time-
frame to achieve for the employees.
Reward process was 75% of annual
bonus and 25% of individual
performance. However, the total
process of year-end review was
replaced by monthly touch-base and
regular feedback.
2) The process was comprised of an hour-
long discussion between employees and
2) This process is comprised of free flow
conversation between employees and

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managers about the working
individual’s performance report; hence,
will determine their bonuses. Moreover,
the conversations were not likeable by
both the parties, where employees felt
confused of their judgement and un-
comfortability of reporting feedback by
managers. This also raises questions to
behavioral standards from the system.
managers, where the head of the
department are posted to inspire and
motivate the staffs.
3) Employees were ‘nice’ than honest.
Management demanded both the
performance and bonus to be processed
for improvement in culture and
company’s performance. However, the
unopen behavior and the traditional
methods were considered to be
restriction.
4) The staffs were behaving nice and
honest, due to the frankness in the
sophisticated culture of the business
and management. This enhanced
creativity, innovation and cutting-edge
designing at Gap Inc.
Response to Question 2: In the following paper on Gap Inc., the transfer of the performance
management procedure from traditional to the newly designed GPS (Grow, Perform and
Succeed) was observed. The introduction of the new system inspired employees, managers and

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business performance too. The whole new system was subjected to enhance the performance
standard of the organization.
Gap Inc. has numerous stores and outlets around the world. While, the old system had
been operated primarily and the new system was hidden from the outer world, it was about time
to implement it to the retail store level. GPS was calculated to produce positivity with correct
implementation, however few managers denied the fact and presented opinions against the
management theory. However, the debatable matter was concisely resolved while the distribution
of the GPS was calculated over at headquarters only. After promising implementation, it was the
time to process the theory around the retail stores. Moreover, there may be challenges that can be
calculated to occur. The possibly imagined challenges are-
 Volatility of understanding the new system: The GAP staffs around the world were
accustomed to the traditional reward and ranking system. The new system may confuse
their mind and question the justification of the GPS at preliminary stages of
implementation at the retail stores. It can also be assumed that the new system might also
need modifications and upgrades to suit the level of retail store performance processing.
 ‘Hard to earn bonus’ (from employee’s perspective): While, the same situation have
been seen to occur during the implementation at headquarters, however, the situation of
retail stores are generally different. Employees while, the traditional system paid bonus
on the basis of 50% on business performance to 50% individual contribution, whereas the
ratio is 3:1 (75%:25%) for the new system. Some employees may find this as an issue.
 Issues to managers on receiving/giving feedback: While, this was also an issue being
discussed primarily under the headquarters, however, the same can happen in retail stores
too. While, the managers were ‘boss’ of their outlet and maintained year-end reviews; the

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new system may seem strange to them. The year-end feedbacks are converted to regular
ones, which could be odd to them, hence, they may feel uncomfortable to the situation.
In our following study, the implementation of new system is recommendable due to the
follow pursuance of positive consequences. The new system provides the staffs with correct
rewards which is based on their hard-work and performance statistics. As a result, staffs are
predicted to feel engaged to their work, as it will give them correct bonus, if they are approved.
Next, monthly touch-base and regular feedbacks will create a friendly atmosphere inside the
working environment. Staffs, may not supposedly have to act ‘nice’ (as observed in the
traditional method) but be honest about the right and wrong. The interaction between members
will grow a better connection among the employees. Moreover, for effective performance
feedback around the retail stores at GAP’s, few recommendations could be followed. They are:
 The Manager plays a major role in performance feedback process’s effectiveness
(Moynihan, 2018). If employees are not made aware of how their performance is
meeting expectations, their performance will almost certainly not improve; in fact, it
may get worse (Van Dooren, Bouckaert & Halligan, 2015). Effective managers
provide certain performance feedback to staffs that elicits their positive behavioral
responses.
 Feedback should be given frequently, not once a year. Delaying the process may end
up with productivity loss and damage (Hendersen, 2014). Employees should be
notified of the formal evaluation.
 Creating right context for the discussion is another subject to be noted. Choosing a
neutral location for a feedback session to avoid unpleasant conversations is a right
context (Amaratunga & Baldry, 2013). The meeting should be open and honest.

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 Asking employees to rate their performance before the session is an effective way to
check their motivation (strength and weakness) status. The formal evaluation will
undergo positive change when the self-assessment’s disagreements are judged to be
corrected. However, managers often fail to address and control the performance
weaknesses of employees (Kloot & Martin, 2013).
 Encouraging the subordinate to participate in the session is the last recommendation.
Rather than inheriting the approach of “tell-and-sell”, adopting “tell-and-listen”
where managers discusses the employee’s ratings and then listens to the employee’s
story, is a productive way of feedback process (Gruman & Saks, 2013). Also,
“Problem Solving” approach is a respectable way of dealing with performance
problems where managers and employees work together to mitigate the problem in
an honest and encouraging atmosphere (Aguinis, 2013). Moreover, both the
approaches are support participation primarily.
However, future is uncertain. It is inappropriate to predict the appropriate activities that can
happen in future, yet appropriate steps can be taken to reduce and mitigate the existing risks and
build a better future of productivity and creativity (Lebas, 2015).

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References
Aguinis, H. (2013). Performance management (Vol. 2). Boston, MA: Pearson.
Amaratunga, D., & Baldry, D. (2012). Moving from performance measurement to performance
management. Facilities, 20(5/6), 217-223.
Gruman, J. A., & Saks, A. M. (2014). Performance management and employee
engagement. Human Resource Management Review, 21(2), 123-136.
Henderson, R. I. (2014). Compensation management: Rewarding performance in the modern
organization. Reston Publishing Company.
Kloot, L., & Martin, J. (2013). Strategic performance management: A balanced approach to
performance management issues in local government. Management Accounting
Research, 11(2), 231-251.
Lebas, M. J. (2015). Performance measurement and performance management. International
journal of production economics, 41(1-3), 23-35.
Moynihan, D. P. (2018). The dynamics of performance management: Constructing information
and reform. Georgetown University Press.
Noe, R. A., Hollenbeck, J. R., Gerhart, B., & Wright, P. M. (2016). Human resource
management: Gaining a competitive advantage.
Van Dooren, W., Bouckaert, G., & Halligan, J. (2015). Performance management in the public
sector. Routledge.