Performance Management System Analysis: Baker Hughes Case Study Report

This report offers a comprehensive analysis of the performance management system at Baker Hughes, a leading oilfield services company. It begins with an introduction to performance management and its significance, followed by an overview of Baker Hughes' operations and a detailed examination of its performance management policies, implementation strategies, and the tools used, including vision/mission statements and Balanced Scorecard Analysis. The report evaluates Baker Hughes' performance across financial, customer, internal business process, and learning and growth metrics. Additionally, an ISO Gap Analysis assesses the company's compliance with quality standards. The role of communication in performance appraisal is also critically evaluated, emphasizing the importance of leadership and effective communication in fostering a positive workplace culture and driving innovation. The report concludes with a critical evaluation of the effectiveness of the performance management system at Baker Hughes, drawing on various research studies and industry reports to provide a holistic assessment.

AN ASSESSEMENT OF PERFORMANCE MANAGEMENT SYSTEM OF
ORGANIZATIONS
Introduction
Human resources development, or the means of acquiring intellectual capital, has
become inextricably linked to the performance of firms in contemporary times. One of
the most powerful instruments for building human assets is a performance management
system, which creates the groundwork for coaching, advancement, workforce planning,
and competence mapping, among other things. The effectiveness and sustainability of a
company's human resource can be determined by evaluating the performance of its
personnel. (Caroll, 2014) This research creates a holistic evaluation of performance
management activities, policies and effectiveness in the organisational settings using a
named company, Baker Hughes. The various tools and techniques used in managing
employee performance in Baker Hughes would be analysed appropriately and its level
of effectiveness in creating value to the firm would be explicitly itemized in the course of
the research report.
Overview of Case Study Organisation
Baker Hughes is a GE (BHGE Company) international industrial service company and is
the third largest oil field service company worldwide, behind Schlumberger and
Harliburton Inc. The company's nearly 40,000 employees work in geo-market
workgroups across more than 90 countries to assist clients in finding, evaluating,
drilling, producing, transporting, and processing petroleum resources, as well as
developing solutions to help manage operational costs, maximize reserve recovery, and

boost overall financial return throughout the life cycle of an oil or gas investment. The
company's operations headquarters are in Texas, USA. (BHGE, 2020)
Planning and Implementation of Performance Management Policies
Performance management, according to Armstrong and Baron (1998), is a planned and
comprehensive strategy to providing sustainable growth to businesses by boosting the
effectiveness of employees and growing the competencies of teams and individual
participants. It backs up the argument that people, not capital, give businesses a
industrial cutting edge (Reynolds & Ablett, 1998).
The objective of performance management is to turn a human resource's potential for
greatness into productivity by eliminating intermediary hurdles and encouraging and
revitalizing the employee (Kandula, 2006). Organizational competitiveness can be
boosted through establishing active employees and successfully training and
developing them (Cabrera & Banache, 1999), which is essentially performance
management. As asserted by (insert citation), the performance management policies of
firms vary across industries and organizational settings. However, the general concept
of policy and strategic planning in designing performance management criteria for
employees of organizations is to purposively and purposefully ensure that there is a
synergy or alignment between the activities of human resource personnel and the
mission/vision statement of the organization. Hence performance management policies
help to ensure that the strategic goals of the firm are infused into the operational and
administrative activities of its employees, with emphasis placed on quality improvement,
quality assurance as well as continued development.

Baker Hughes' performance management measurement (EPM) was investigated
through surveys and analysis of data gotten from magazines, journal publications and
the internet, during the course of a research carried out by Alasgarova (2018). The
examination discovered that the corporation has a performance management
mechanism in place, which is backed up by written policies and standards. The stages
of the procedure appear to be implemented appropriately, based on interview
responses. Collaboration and feedback sessions, on the other hand, have issues. Baker
Hughes has changed to a collaborative and mentoring approach for successful
performance management by creating conversations between production managers
and employees, according to content analysis of the research study undertaken by
Alasgarova (2018). Employees, on the other hand, have a quite different perspective.
According to the Baker Hughes response level, there appears to be little cultural impact
on the planning of performance management policies. Some components of
performance management aren't being executed properly, and the respondents'
responses indicated that these differences aren't due to poor planning but as a result of
changing workplace and the socio-political dynamics of the work environment where the
firm operates. The features of the industry are taken into account as well as
environmental risks and geo-political constraints. Regulations do not provide any
challenges to the organization in terms of performance management implementation.
Industry components are typically examined at a global scale, but not at the municipal
level. (Connexus, 2017)
Application of Performance Management Techniques

There are several techniques and tools used for performance management appraisal in
corporate organizations in contemporary times. The Vision/Mission is a tool used for
accessing the financial and strategic performance of firms. As highlighted by Sorin
(2020), the vision and mission statements are crucial to the high performance of
employees in a firm, as they communicate organizational value and purpose to both
employees and customers alike. These statements of both the vision and the mission
are tools for technical and strategic direction for firms.
Using Balanced Scorecard Analysis to Appraise Baker Hughes
In analyzing and assessing business organizations based on the performance of its
human resource personnel, the internal environment of the firm must be put into
consideration in a bid to achieve competitive edge and gain traction in the industrial
environment where the firm operates. The internal environment of a firm is its strengths
and weaknesses, and a balanced scorecard analysis presents a finite opportunity to
assess the financial and non-financial performance ratings of a firm. (Kaplan, 2010)
As BHGE operates in the international oil and gas industry, an evaluation of its
strengths and weaknesses with respect to the availing opportunities and threats in the
industry would be carried out. This evaluation can be best undertaken using a Balanced
Scorecard Analysis tool, which creates a performance assessment portfolio of BHGE
showing its financial strength, its brand appearance, its internal business process as
well as its strategic development potentials.
Using the four perspectives of the BSC Analysis tool, Baker Hughes as a firm can be
assessed constructively as outlined below:

Financial metrics: With data gotten from Minerva (2018), it can be noted that BHGE as
a business organization performed well financially, with respect to its competitors as its
2017 and 2018 Financial Reports posted positive profitability ratios despite irregular
trends in the industry, largely occasioned by instability of fuel price in local markets.
Customer metrics: BHGE’s brand has experienced continued positive reviews from
both local and international customers due to improvements in product delivery as well
as innovative technological advancements to reduce cycle time and cut down
production cost which inadvertently has led to lower product prices. This can be seen
through the use of the newly developed CAPEX and OPEX solutions.
Internal Business Process: According to Madsen and Steheim (2015), this metric in
the Balanced Scorecard assesses the ability of a firm to drive productivity through value
creation that would generate substantial utility for its customers and clients. At BHGE,
high quality of products and top-notch customer satisfaction are the driving forces to its
internal business process.
Learning and Growth Strategy: This metric measures the development potentials and
the methodologies utilized by organizations to advance its influence in the industrial
environment it operates.
At BHGE, the use of career development and on-the-job training program, such as
LEAPTM for learning as well as usability testing/experience growth program are
strategies implemented to ensure learning and growth. User friendly software are
designed to reduce operational complexities for clients and customers through Baker
Hughes’s User Lab where end-users’s experiences with BHGE’s software tools are

studied using Human Computer Interaction (HCI) techniques to measure subjective
satisfaction. (Connexus, 2013)
ISO GAP ANALYSIS OF BAKER HUGHES
Gap analysis are undertaken in order to ascertain the competencies and performance
levels of organizations with respect to their compliance with laid down quality
specifications and standards. BHGE being a production firm is mandated by the
International Standards Organization (ISO) to constantly check its business processes,
in a bid to ensure efficiency and improve customer satisfaction. Using an ISO Gap
Analysis to assess Baker Hughes as a firm, the following results were obtained:
 Information derived from the BHGE Health, Safety and the Environment Reports
of 2017 and 2019 reveal that safety is given high priority at Baker Hughes, which
infers that there is high compliance to ISO Quality Management System (QMS)
principle of Management Commitment.
 Also, new product designs and the use of the Usability Experience Lab indicate
that BHGE is increasing its customer focus through Innovative Research and
Development (R&D) programs of BHGE. These new technologies are designed
for more customer-friendly service deliveries amongst which includes new
sponge liner coring systems, electrical submersible pump design known as
Centrilift FlexTM and hydraulic fracturing pump design known as RhinoTM bifuel
pump.
Evaluation of Role of Communication in Performance Appraisal

With respect to HR practices, supervisors and managers are also instrumental in
sustaining a positive performance management practice through effective leadership as
the ‘leading’ concept takes centre stage in a firm’s culture (Philemon, 2014; Mayhew,
2017).Delegating responsibility based on employees' skills and interests and
recognizing employees' contributions to the department and the organisation are tenets
of effective leadership. HR provides leadership skills training to supervisors and
managers to ensure that they're capable of managing their department functions and
their employees. Leadership plays an important role in creating and sustaining an
performance management practice that encourages innovations. This is because the
implementation of innovations is not simple, since it requires a combination of creative
ideas and attentive and interested management to bring ideas to realisation. Thus, a
leader could be positive towards innovation and help to create a suitable framework
within the performance management practice that would align creative ideas,
managerial control, flexibility, support mechanisms such as reward systems with
organisational objectives (Osuigwe, 2016). In the same view, it can be duly noted that
the concept of performance management practice isn’t completely in a form of
homogeneity across firms, but there are presence of sub-structural cultural levels within
organisational settings (Cacciottolo, 2014; Jin et al, 2016).
On the other hand, supervisors and managers, who communicate openly with their
employees, provide constructive feedback and coach workers are fundamental to a
positive workplace culture. It is pertinent to note that communication serve as one of the
key elements to infuse individual behavioural patterns into an performance
management practice approach (Amoros and Tippelt, 2012).With an effective

communication system, one can maintain a good relationship within the organisation
and thereby encourage ideas or suggestions from employees and implement them
whenever required, which in turn increases the returns of an organisation (Bharthvajan,
2014).
Another role played by communication in the performance management policies and
activities of Baker Hughes is the development and operations of project engineering and
administrative teams. The operations of BHGE cut across several countries and
continents touching diverse ethnic and cultural lines. This has made the firm to engage
the use of cross-cultural teams in order to effectively handle operations in these various
countries. These teams are coordinated by well-trained leaders, who are regularly
tutored on the nitty-gritty of global leadership by BHGE management are mainly
composed of global leaders who are skilled in multi-lingual diversity, cultural intelligence
and global leadership behavioral traits. (BHGE, 2017; BHGE, 2020)
The key to good performance, according to Lakshman (2014), is a high level of inter-
organizational interaction. The study also asserts that the same techniques do not
provide the same results for two firms in the same industry and in the same place due to
a communication gap caused by differences in opinion. A positive and strong
communication framework can drive an average person to do well and achieve great
things, yet a negative and weak method of mass communication inside an organization
can demoralize an exceptional employee to perform below expectation and
accomplish nothing. As a result, communication plays a direct and active part in
performance management. Kim & Holzer (2016) is of the opinion that communication
surveys and research studies will enable administrators of firms’ better comprehending

performance management. Organizational methods such as performance management,
according to Morley et al., (2016), could be detrimental if they are not considered in light
of the effects of leadership and effective communication, because the two are
interconnected and any change in one will have an influence on the other.
Critical Evaluation of the Effectiveness of Performance Management
Performance can be accessed or analysed based on the level of employees’ work
effectiveness with respect to the goals and objectives of firms (Owoyemi and
Ekwoaba,2014) while performance management is the extent to which performance or
output of employees in a work environment is tracked and monitored for improving and
motivating the employees (Rojniruttikul, 2016).
The process of performance management can be described as a strategic and
integrated approach to delivering sustained success to organisations by improving the
performance of the people who work in them and by developing the capabilities of
teams and individual contributors. This system which relies on innovation and intensive
planning empowers organisations with the ability to direct attention on its intangible
assets such as goodwill and brand while output and productivity have numerical and
financial standings (Ehtesham et al., 2011; Mustafa,2013).
Organisations are able to effectively control the development of necessary employee
attitudes and behavioural tendencies by carrying out appraisals from time to time.
Information derived from these appraisals could be initiated into the selection and
training process in order to change the methodology of developing employees of firms
and infusing them with the critical desired attitudes (Elhazzam, 2015). However, the
productive output of skilled employees will be reduced if there is no attendant motivating

elements to enhance job performance, as well as the fact that the work environment of
organisations usually exerts strong pressures on the cultural terrain of firms which in
turn affects productivity of employees (Uddin, 2013; Ahmed and Shafiq, 2014).
Baker Hughes has improved results by leveraging a better performance management
culture and technology. The firm has also begun to use up-to-date research to develop
a culture that completely supports their business ambitions and celebrates important
employee achievements, all of which are supported by their technological solutions.
Transitioning from a methodology that involves processes to a people-oriented
perspective aided the company's transition to a PM method that highlighted constant
communication and continuous discussions to keep their firm fully informed about all of
their interior activities while also indicating to employees their significance to overall
business performance, as evidenced by the reduction of non-productive time which can
be visualized as a key performance indicator of the oil and gas industry where Baker
Hughes operates. The performance management process of Baker Hughes as
indicated by Ottavio et al., (2018) emphasizes a cultural value system that employs a
hybrid approach to integrating, empowering, and measuring employees' performance
throughout the year. The combination of personnel management and performance has
aided in addressing the skilled labor shortage.
Employees and their managers discuss and agree on performance goals at the start of
the year. These goals are then linked to a performance strategy. Aside from creating
goals connected to work functions, prospects for organization corporate strategy design
plans are also addressed.

Baker Hughes' performance management approach and rules start with the evaluation
process. The evaluation form is divided into four sections: primary business objectives,
development objectives, core values, and miscellaneous objectives. Essential business
goals include company-wide worldwide safety/technical excellence targets as well as
personal goals, which include key deliverables for the future year. Long-term
developmental goals are those that are set for the next five years or more, and they are
aligned with the vision and mission statement of the firm, as well as core strategies.
(BHGE, 2020)
At least three of the company's primary values are covered in the core values aspect of
Baker Hughes performance management policies. Further objectives are included in
other milestones, which are introduced by line managers and project team leaders if
necessary. Collaboration, honesty, knowledge acquisition, competence, and tenacity of
purpose are all core principles. Individual power is leveraged through teamwork.
Individual and organizational actions are built on the foundation of integrity. The desire
to achieve achievements that set you apart from your competition is known as
performance excellence. A learning environment is the key to realizing each person's
and companies maximum ability. Courage allows you to take risks and take immediate
action. (Connexus, 2017; BHGE, 2017)
Effectiveness of the performance management programs and initiatives of Baker
Hughes is evident in several transformational strides experienced by the Multinational
Company (MNC) in recent times. According to a report by BHGE (2021), the use of
Balanced Scorecard Analysis as well as ISO Gap Analysis to carry out performance
management evaluation on its employees have resulted in efficiency in training and

development initiatives which have reflected in the firm’s financial performance as well
as strategic achievement of governance and Corporate Social Responsibility (CSR)
goals. Due to limits imposed by the Coronavirus outbreak, Baker Hughes' learning and
development organization has recently shifted to a digital environment, with 6,155
personnel accomplishing various leadership training programs, recording an equivalent
of 1.27 hours per participant. Upwards of 29% of employees gave their bosses
feedback on their performance. 440 employees also completed the
company's corporate talent development programs.
Baker Hughes' performance management policies and initiatives are reflected in its
human resource development activities, as the company offers lucrative salaries and
benefits to all employees and evaluates its employee’s total rewards on a regular basis
using industry performance analysis and local market sampling methods. The
preponderance of the firm's benefits is tailored to the needs of employees, their families,
and the communities in which they live. Healthcare plans and life insurance are
fundamental corporate benefits that are provided to all full-time employees across all of
the company's operating and administrative bases around the world. (Ottavio et al.,
2018)
Using the emerging skills and competency level required by contemporary employees in
the oil and gas industry, Baker Hughes have been able to put its performance
management programs into good use with positive results accomplished, particularly
with respect to development of behaviours and attitudes necessary to achieve desired
organizational results an pave way for futuristic opportunities. Baker Hughes, in a
similar spirit, provides leaves of absence for a variety of quality-of-life needs, such as