Compensation and Performance Evaluation at Arrow Electronics

Steve Kaufman has basically the right idea to find the weaknesses and either getting rid of them or working on them, he is just going about it all wrong.  The performance review will never be an accurate way to define performance, especially if it has positive or negative rewards linked to it like raises.

Steve is angry that his new Performance Evaluation system is failing miserably.  Managers basically didn’t take the reviews seriously.  He wanted to get a truly objective opinion from this to help the company.  The managers took the performance evaluation as a negative.  He goes on to say how everyone can be doing their job perfectly.  He contradicts his original thinking in that he wanted to base new pay off of evaluations as opposed to use them to help the people and tell them their weaknesses.  He doesn’t know why the reviews aren’t getting accurate data.  Could it be that everyone is lying because of fear of losing job and they want a raise?  That typically is the problem with performance reviews and they never fulfill the job that they were intended for.

An interesting side note observation about the company’s early stages.  Did the three graduates help the company grow as the article points out or was it just because the electronic industry was just starting to boom?  This is an interesting question to answer but would require a further evaluation of the company and market.

Steve has the proper idea in that you need a strategy but more importantly that this strategy needs to be executed well.  He has a strong belief that this people are his best assets and the company’s best assets. If one of his salespersons leaves he or she leaves with the companies they represent.  This is a good and a bad thing. This is good that they have built such strong relationships and loyalty but bad because it is loyalty directed at the wrong thing.  The company’s loyalty needs to be with the company and not with the salesperson.  The commission structure that they give the sales people has created this relationship.  The sales people aren’t loyal to the company and they are typically W-2 hoppers, and the company needs to realize this and weed them out.  These W-2 hoppers are only a short term fix and the company needs to think more long term.  The management team and how the company is structure keeping the different teams close minded and they do not share ideas with each-other.  Steve says all the managers need to learn how to weed out these hoppers and that they all need to learn from the mistakes as opposed to talking to them about it and making everything a team decision he takes it into his own hands.

The college plan was a great plan but once again it wasn’t implemented properly.  It created heavy problems between the new recruits and the old staff.  He once again put himself in a predicament where he had to make a short term decision and lost basically all of these graduates.  I would have probably let them go also to help in the short term but he needs to think more in the long term and if he would have kept him he would have a better team now.



  1. Polprav Said:

    Hello from Russia!
    Can I quote a post in your blog with the link to you?

    • nickhalen Said:

      Sorry it took so long to reply i am still kinda new at this and didn’t even realize that i had a comment. Sorry, but yes I would be honored if your quoted one of my blogs, thanks for reading.

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