Case Background Vitality enterprise was founded in 1987 in Ames Iowa by Hikaru “Fred” kikuchi. Initially it started with importing products and marketing them. In 1989 import tariffs and supply constraints forced vitality to start their own manufacturing unit. In 1994, vitality partnered with several leading pharmacy retailers to market their products. In 1995, company went global, targeting markets around the Pacific Rim including Taiwan, China and Japan. In 1997, Vitality acquired HerbaPure Nutraceuticals. Vitality’s name was changed as Vitality health Enterprises. Also in this period company went public. By 2007 company had around 5500 employees in HQ and nearly 1500 employees in global offices. In mid 2008 Ms. Beth Williams was made the CEO of Vitality Health Enterprises. In order to improve the company performance she implemented a new performance management system in the organization. In 2010, a review of the system gave mixed reviews from the employees with only 54% of the employees in affirmative. The Problem The Company needs to evaluate whether the new system was actually generating the desired results in terms of financial benefits and employee motivation. Performance Management System (before 2009): Pros: Low turnover rate due to average compensations being 7- 8% higher than the competition. The pay policy accounted for comparison ratios which measured the employee compensation to that of similar people in other organizations and adjusted the compensation accordingly. Cons The system required the managers to rate the employees from 13 different rating levels. The rating levels were not clearly defined which resulted in managers giving homogenous ratings to all the employees. The method de-motivation performers as some employees ‘coasted’ while receiving the same benefits. Though the attrition rate was low, the little attrition that was happening was of the productive scientists and engineers since t