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Gap Inc Refashioning Performance Management Case Solution

Solution Id Length Case Author Case Publisher
2127 2258 Words (6 Pages) Joshua D. Margolis, Paul D. McKinnon, Michael Norris Harvard Business School : 416019
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The new goal-setting approach is well justified as in the traditional performance management system; the employees were involved in preparing a list of tasks that were supposed to be done rather than focusing on the details of the tasks and their outcomes. Hence, under the modified method, they would be able to have a fewer number of goals, but those goals would require constant reflection throughout the year rather than just pondering over them at the end of the year for the sake of getting a higher rating. A stretch component in the goal would therefore consider goals with different time frames and steer the organization towards long term sustainability as people would not just be focused on the short term wins but would have a broader focus as they would consider the long term success of the business. This would also allow for better evaluation of the employees as they would be ranked and rated not based on their year-end performance but how they engaged throughout the year and meet their sub-objectives consistently for the achievement of their ultimate set goals. Therefore, this way, the employees would be better motivated, and their performance can be better tracked. They would be working on combining short-term goals and long-term goals rather than just goals spread over a year’s timeframe. The employees would feel that their performance is being evaluated the same way as the overall company’s and would develop a serious and dedicated work attitude as they would focus on improving the performance of the business as their bonuses would closely be tied to that. 

Following questions are answered in this case study solution

  1. Gap Inc. has introduced a “modified goal-setting approach to ensure employees set fewer, more outcome-oriented goals with a stretch component.” It also allows goals with shorter timeframes and longer timeframes. If you were Ollander-Krane, how would you justify the new goal-setting approach? Also, is there any caveat with setting stretch goals [Note: stretch goals are deliberately challenging or ambitious goals]? How would you mitigate it?  

  2. The old performance management at Gap Inc. Headquarters had a very “nice” culture. The new GPS (Grow, Perform, Succeed) performance management system supports a shift toward a “nice and honest” culture. It also replaces the year-end reviews with monthly “touch-base” sessions between managers and employees. Assume you were Ollander-Krane; how would you justify the changes? What practices would you introduce to support the implementation of the changes?  

  3. Under the old reward system, the bonus for employees was 50% financial and 50% individual contribution. The 50% economy was driven by business unit performance. The 50% personal contribution was linked to employee rating in a forced distribution ranking. In the new system, bonus tied more closely to financial performance. What are the pros and cons of this change? What would you recommend to mitigate the cons? 

Case Analysis for Gap Inc Refashioning Performance Management Case Solution

Talking about caveats when setting stretch goals, it should be kept in mind that the employees might resign and switch jobs, which would mean that those goals need to be taken ahead by the other members of the team or the replacement employees. They might lack the motivation to drive those goals, which would adversely influence the achievement of such purposes. Apart from this, as the goals would be long term, the employees might lose motivation in the short time as they would not realize the true benefits of performing hard in the present rather when the goals would be achieved in the future. Another issue is that the modified performance system might make the current employees lose the will to work hard as they might feel that they may not be able to get the high amounts of bonus as they previously used to under the new system.

To deal with such employee confusion and mitigate such risks that would threaten the long term sustainability of the business, specific measures would be put in place to ensure that the employees are kept in confidence, which will, in turn, positively influence their motivation and productivity. It will be assured that the managers are given sufficient leverage that would allow them to reward their employees based on their contribution towards the business unit performance. The employees would then be more oriented towards achieving collective success rather than focusing on individual success to earn bonuses. Collective success and strong teamwork would therefore reflect in the improved overall business productivity and well-motivated employees who would be focused on achieving their sub-goals, leading towards the achievement of overall goals. As the stretch components in the goals make them challenging and ambitious, it is highly important to have motivated staff who are willing to take leadership and responsibility for achieving the set goals. This can, therefore, be done by constant touch base so that managers can continuously provide feedback to the employees on their performance, and employees can grow in a continuous learning environment. As they would learn from their setbacks, they would be in a better position to perform well and improve the overall work quality required to meet the objectives and succeed in the long run. They would also be intrinsically motivated because they would feel that the organization is placing extra importance on their career progression by constantly providing them with mentoring and coaching opportunities that would help them move up the career ladder.

2. The old performance management at Gap Inc. Headquarters had a very “nice” culture. The new GPS (Grow, Perform, Succeed) performance management system supports a shift toward a “nice and honest” culture. It also replaces the year-end reviews with monthly “touch-base” sessions between managers and employees. Assume you were Ollander-Krane; how would you justify the changes? What practices would you introduce to support the implementation of the changes?  

The new GPS would help in shifting the organisational culture to a nice and honest one, which is a good thing as in the new performance management system, the employees will not be evaluated based on their year-end goals, which is usually a one-time thing but rather on monthly touch-ups where their supervisors would be giving them feedback, and they would be learning from their mistakes to perform even better. Through this method, there is a huge opportunity that the employees can improve their performance by improving upon the feedback received from their supervisors and increase their chances of earning a higher bonus than they could have in the traditional system as then they would have known about their performance and laggings at the year-end only and would not be able to do anything about it. With the monthly touch base, the opportunity for improvement is high. Not only will the employee performance improve on which his individual bonus depends, but there is a high likelihood that the performance of the entire department will improve, which will secure even higher rewards for the staff. It can, therefore, be deduced that a monthly touch base would prove to be a very effective technique for employee engagement and would allow for effective appraisal as the goals can be easily communicated to the employees. They can be motivated to perform well during the session by providing them with constructive feedback, which would therefore set the stage for an effective employee skills development plan. It helps establish the stance that under the new system, employees will be evaluated fairly as they would be constantly given a chance to improve and grow through monthly feedback sessions. By the year-end, whatever performance bonus employees get would therefore be a true reflection of their overall year’s performance.

However, being in the position of Ollander Krane, I would be considerate of the fact that bringing about such a shift might create a sense of insecurity among the employees who might not properly understand the system. Even the managers might show resistance to adopting the new performance management system, which is why I will make sure to have separate training sessions with the managers where I will make them realize the benefits of having a monthly touch base session and how it would potentially contribute towards improving their department performance. Once the managers own the new system, it would be easier to communicate it to the staff and the department employees. Also, effective manager training would allow them to provide valuable feedback to the employees and speak to them about the benefits of the new system. This way, there will be less resistance to change and smooth implementation of the new process.

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