Performance Management in Woolworths

This report analyzes the performance and compensation management issues at Woolworths, a major Australian supermarket chain. The report details the background of Woolworths, highlighting its market position and employee count. It then identifies key problems, including underperformance linked to unmet targets and customer dissatisfaction, and compensation issues such as unpaid overtime and inequitable reward distribution. The analysis draws upon relevant theories like expectancy theory and goal-setting theory to explain the observed issues. The report concludes by recommending several improvements, including clearer communication of goals, task delegation based on employee skills, transparent goal setting, and the implementation of both monetary and non-monetary incentive programs. Regular training to keep employees updated on organizational changes is also suggested. The overall aim is to improve employee performance and satisfaction, leading to better business outcomes for Woolworths.

Running head: PERFORMANCE MANAGEMENT
Performance Management
Name of the Students
Name of the University
Author note

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Executive Summary
The aim of the paper is to analyze the issues in the performance and compensation
management of Woolworths over the years and offer some solution. It has been seen that
Woolworths has faced issues in relation to unsatisfied underperforming workers and low
compensation to some of the workers in Woolworth’s stores. This has lead to many problems
such as low growth, high employment turnovers and others. Moreover, the employees under
perform due to this. Thus, it is suggested that the company should offer some training to help
organization to perform better and offer incentives to motivate them to offer better results and
meet the goals.

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Table of Contents
Introduction................................................................................................................................2
Discussion..................................................................................................................................2
Background of the Company.....................................................................................................2
Performance Management and Compensation Issue.................................................................3
Analysis of the Issue..................................................................................................................4
Need for Improvement...............................................................................................................5
Recommendation for Improvement...........................................................................................7
Conclusion..................................................................................................................................8
References..................................................................................................................................9

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Introduction
Performance and compensation are two most important variables in the organization
for the betterment of the company as well as the employees. Any issue on these grounds
would be detrimental for the growth of the company in some way or the other. Performance
issue and compensation issues are mostly related to each other in some way or the other.
Performance problems are often caused due to problems in management, workplace
condition, policies and other issues. There can be various performance issues such as missing
targets, unhappy customers and others. On the other hand, compensation issues can be unpaid
overtime work, salary problems, incentive problems and others. An organization can face
these issues from employees and management (Sangwan 2015). The report discusses about
the compensation and performance problems in Woolworths supermarket in Australia. It
further analyses the reason and need for improvement of these problems. Lastly, a
recommendation is given by which the company can solve the problem in its work
environment.
Discussion
Background of the Company
Woolworths is a well-known supermarket in Australia that sells grocery and operates
store chain in the country. It operates as a duopoly in the Australian market by joining hands
with Coles. This helped the company to take up 80 percent Australian market in the past
years. It offers various types of groceries such as vegetables, fruits, packed foods and others.
However, the company is also involved in selling other items such as household goods, baby
products and others. Thus, the supermarket involves itself in selling all kinds of goods to the
customers in order to cover wide range of market. Currently the company is operating 1000

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stores all over Australia, which are divided into 968 supermarkets, and 19 stores
(NewsComAu 2017). It is considered as the second largest retailer in Australia because of its
expansion all over the country. The company also has 202,000 employees working under
them in various departments, which has also helped the organization to grow from the day it
has launched in the market. To motivate the employees the company also offers rewards and
recognition from to encourage the employees to perform their best and provide maximum
business to the customers (Pc.gov 2017). These rewards help the organization to measure the
performance of the employees according to the set objectives to each one of them. The
rewards are given to the employees through various types of elements such as salary,
incentives, career growth, promotions, and awards for extra efforts and Annual CEO Awards.
The compensation includes the items that are offered to the employees based on their
performance. However, the employees had to meet the targets give by the company on a
monthly basis to get such rewards. Thus, the compensation pattern and performance of the
employee are interdependent on each other in Woolworths. However, the company is facing
various challenges and problems in the performance and compensation management system
from past few years. This is because of various reasons offered by the customers as well as
the organization itself.
Performance Management and Compensation Issue
Companies nowadays face many issues in their performance and compensation
structure. The issue in performance comes from the lack in show in the employee in such as
unachieved targets, lack of customer dealing and others. However, sometimes the
performance of the employees goes down due to issues in compensation management. Some
of the organization does not pay the employees according to their performance. They remain
underpay or work for extra hours without any incentives (Adeoye and Fields 2014). This

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reduces the enthusiasm in the employees to give their full potential and perform nicely.
Woolworths is recently facing many problems in the performance of their employee in most
of its stores. The lack of performance in stores is evitable due to lack of customer satisfaction
and reduction in revenue of the company. This is causing a decrease in the revenue of the
company. Moreover, the company is also facing issues in its employee compensation
management, which was seen in the organization as most of the staffs are unpaid for overtime
work and are exploited by the managers. This has demotivated the employees to work and
offer their full potential in sales and targets (Gupta and Shaw 2014).
Analysis of the Issue
The issue in the performance management department in Woolworths was seen in the
year 2012 when approximately 3000 staffs in 200 stores of the company was redundant about
the payout that was offered to other employees in the stores. They missed the protective
award that was given to the employees. This leads to demotivation in the staffs to perform
well for the organization. Such an incident has put a negative effect on the performance of the
employees in these stores. This is shown in the expectancy theories of compensation in which
it is stated that if the employees are offered by an extra reward or compensation for the work
that they have done, it helps them in performing high in the near future (NewsComAu 2017).
Similarly, a nonpayment of reward leads to underperformance of the employees in the
organization. Thus, according to expectancy theories rewards and performance are related to
each other in an organization and in order to achieve success in the market the company
needs to overcome the issues coming from both the grounds (Van Dooren et al. 2015).
Further, the expectancy theory focuses on other factors that are necessary for getting good
compensation from the company such as behavior, motivation and outcomes (Howard et al.
2016). Similar things happened in Woolworths in which employees showed very low

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performance by not meeting their sales targets. This has lead to lowering customer
satisfaction and lowering income of the company.
The issues that the company is facing in case of performance management can be
related to the Goal Setting Theory. According to this theory, setting a monthly or weakly goal
for the employees in the company can motivate them to offer superior performance (Locke
and Latham 2013). This can be judged on the ground that the employees with some goals
continuously try to meet that goal which leads to better performance. Woolworths follow the
same strategy in their organization; however, they failed to meet the desired goals. These are
the two most important issues that the company faces in its organization recently, which is
inter-related, to each other. This means an improvement in one factors might automatically
lead to improvement in other issue.
Need for Improvement
Performance and compensation are two most important attributes of an organization
as it helps in its continuous growth. An organization facing issues with these two factors will
never be able to grow at the rate that it expects its organization to be in a year. Thus, it is
important for the organization to get rid of such issues in their management. This is because
performance allows the organization to attain advantage in whatever they are doing and fight
away tough completion that it is facing. Similarly, improving the performance of the
employees, Woolworths will be able to offer tough competition to other competitors that exist
in the supermarket industry of Australia. On the other hand, compensation management is yet
another important thing a company needs because it is the only way it can motivate the
employees (Budworth et al. 2015). Thus, it is important for Woolworths to take care of the
compensation issues that they are facing. This is because lack of compensation will
automatically lead to poor performance and a chain of negative affect will lead to the

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downfall of the company. These factors show that it is necessary for the organization to
improve the issues that it is facing in these two departments.
Compensation has a lot of benefits on the employees and on the organization that
shows its importance. Some of the reasons behind solving the issues arising from
compensation are that it facilitate the organization to recruit employees in the organization,
help to motivate the employee, increase employee retention and abides with the
compensation laws. Thus, these benefits are enough for the organization to improve the
issues that it is facing in the compensation management (Elnaga and Imran 2013). Employee
performance also holds similar importance in the organization because it decides the overall
growth of the business. Thus, Woolworths also needs to maintain both that issues that has
arisen.
Even though Woolworths is facing a lot of problem in its compensation management,
yet there were various evidences that shows that the company offered some of the best
remuneration policy to its employees. The remuneration includes both short term and long-
term incentive plan for its employees (Pc.gov 2017). Short-term incentive plans suggested
that the incentives are offered based on performance and is designed to improve the quality of
performance that the employees are offering. On the other hand, long-term incentives were
offered by the company to motive, retain the existing employees of the business, and help in
value creation. The incentive in this case depends on the level of growth the company is
achieving over time (Schultz and Schultz 2015). This shows that Woolworths has the
potential of offering incentives to its employees and should thus try to improve the issues that
they are facing in order to operate as it used to be in the past.

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Recommendation for Improvement
In order to improve the condition of the business it is necessary that the company
carry out certain steps to improve the performance and compensation issues that it is facing.
The steps that the company can follow in order to improve the performance of the employees
are:
1. The company should not be afraid of discussing its motives and goals with its
employees. Accordingly, it should give responsibilities to the employees so that they
feel connected with the organization and perform its best.
2. Secondly, the organization should distribute the task of the store among the
employees according to their skills and behavior so that they can handle the task with
the best possible expertise. For example, it should allow staffs that are extrovert to
handle the sales department, as they will be able to deal with the customers very well.
3. Thirdly, the goals of the organization should be clear in front of the employees so that
they are ready for the consequences that they might faces if they fail to meet the goals
(Schultz and Schultz 2015).
4. Fourthly, offering incentive to the employees is the most beneficial way in which the
company can motivate the employee to perform well. Incentives can be monetary and
on-monetary benefits. This also acts like a reward for the employee that performs very
well and motivates other non-performing employees.
5. Lastly, offer regular training to the employees according to their monthly performance
will add to the organizational growth. Training can also be provided while
incorporating new system in the organization. This will help the employees to keep up
to date with the changing systems.
Thus, it can be seen that Woolworths can solve both its issues by following these steps.
This is because both the issues are inter-related such as an improvement in the compensation

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system of the company will motivate the employees to work well. However, there are other
steps too that can be used by the company such as training and others to improve
performance other than just increasing compensations.
Conclusion
From the above analysis about the performance and compensation issue faced by
Woolworth it can be deduced that the issue in these two departments prove to be detrimental
for the company’s growth. This makes it necessary for the organization to get rid of these
issues and attain maximum growth. Two main issues that is seen in Woolworths are under
performance of the employees that has lead to low customer satisfaction and under payment
to some of the employees of the organization. these two problems can be resolved if the
company focuses on offering employees with good incentive plan so that they feel motivated
and perform their best. However, it can also solve the issues that other way round in which it
can improve the performance of the employee by offering training and targets and in turn
improve their compensation pattern.

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References
Adeoye, A.O. and Fields, Z., 2014. Compensation management and employee job
satisfaction: A case of Nigeria. Journal of Social Sciences, 41(3), pp.345-352.
Budworth, M.H., Latham, G.P. and Manroop, L., 2015. Looking forward to performance
improvement: A field test of the feedforward interview for performance management. Human
Resource Management, 54(1), pp.45-54.
Elnaga, A. and Imran, A., 2013. The effect of training on employee performance. European
Journal of Business and Management, 5(4), pp.137-147.
Gupta, N. and Shaw, J.D., 2014. Employee compensation: The neglected area of HRM
research. Human Resource Management Review, 24(1), pp.1-4.
Howard, L.W., Turban, D.B. and Hurley, S.K., 2016. Cooperating teams and competing
reward strategies: Incentives for team performance and firm productivity. Journal of
Behavioral and Applied Management, 3(3).
Locke, E.A. and Latham, G.P. eds., 2013. New developments in goal setting and task
performance. Routledge.
NewsComAu. 2017. ‘The system of work left our client vulnerable to injury’. [online]
Available at: http://www.news.com.au/finance/work/at-work/woolworths-worker-wins-
230000-compensation/news-story/ab6faa0f7af86bf9c53585290a0c483b [Accessed 1 Nov.
2017].

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Pc.gov.au. 2017. Remuneration report. [online] Available at:
https://www.pc.gov.au/inquiries/completed/executive-remuneration/submissions/sub091-
part2.pdf [Accessed 1 Nov. 2017].
Sangwan, S., 2015. IMPACT OF COMPENSATION MANAGEMENT PRACTICES ON
EMPLOYEE’S PERFORMANCE IN PRIVATE SECTOR BANKS.
Schultz, D. and Schultz, S.E., 2015. Psychology and work today 10E. Routledge.
Van Dooren, W., Bouckaert, G. and Halligan, J., 2015. Performance management in the
public sector. Routledge.