Performance Management System Chapter 8 Case Study 2

Performance Management Systemchapter 8 Case Study 2 Performance Manage

Performance Management Systemchapter 8 Case Study 2 Performance Manage

Performance Management System Chapter 8-Case Study 2-Performance Management System Helps Freeport-McMoRan Switch Strategic Gears Answer the following questions: Why did Freeport-McMoRan need a performance management system? How might it have helped the company adjust its strategy? Do you think a pen-and-paper performance management system could have been as effective as the web-based system Freeport-McMoRan adopted? Why or why not? The following requirements must be met: Write between 1,000 – 1,500 words using Microsoft Word in APA 6th edition style.

Use an appropriate number of references to support your position, and defend your arguments. The following are examples of primary and secondary sources that may be used, and non-credible and opinion based sources that may not be used. Primary sources such as government websites (United States Department of Labor - Bureau of Labor Statistics, United States Census Bureau, The World Bank), peer reviewed and scholarly journals in EBSCOhost (Grantham University Online Library) and Google Scholar. Secondary and credible sources such as CNN Money, The Wall Street Journal, trade journals, and publications in EBSCOhost (Grantham University Online Library). Non-credible and opinion based sources such as, Wikis, Yahoo Answers, eHow, blogs, etc. should not be used.

Cite all reference material (data, dates, graphs, quotes, paraphrased statements, information, etc.) in the paper and list each source on a reference page using APA style. An overview of APA 6th edition in-text citations, formatting, reference list, and style is provided here. Case Study 2 Performance Management System Helps Freeport-McMoRan Switch Strategic Gears What do you do when your organization needs to completely turn around its strategy due to a changing marketplace or for competitive reasons? Situations such as these are common in today’s fast-paced business environment. How does a firm manage drastic changes like this?

A good performance management system can help. Freeport-McMoRan Copper & Gold is a case in point. The company, which is based in Phoenix, is the second-largest copper mining company in the world. It employs approximately 35,000 workers and has mining operations that span five different continents. But it wasn’t a poor market condition that caused Freeport-McMoRan to shift gears.

It was a booming one. During much of the 1990s and 2000s, the price of copper was low—only about 75 cents per pound—making mining less profitable than it had been in the past. Mining a large amount of copper therefore became less of a priority than keeping costs low for Freeport-McMoRan. However, after the price of copper jumped sharply upward and hit $4.50 a pound, Freeport-McMoRan realized it needed to change its strategy—and fast. It needed to ramp up production and invest in new people and equipment in order to mine as much copper as possible while its price was high.

The question became how to implement the change. Compounding the task was the fact that each mine was run separately. The firm’s top managers did not even know how its employees were organized at the separate mines, let alone what their goals were or the metrics they were expected to achieve. The company had also acquired a rival mining company twice its size—Phelps Dodge—which made coordinating the performance of its people and operations even more difficult. In 2013, Freeport-McMoRan went to into a completely new line of business—oil and gas—making the coordination even more difficult.

To align the goals of everyone in the company and get all of its various mines performing at top capacity, Freeport-McMoRan needed a new performance management system. The system would hopefully enable the company to quickly implement and monitor the changes needed, while giving it the agility to change strategies again if or when the price of copper dropped. Many of the employees who work in its mines and oilfields do not use computers regularly on the job, so Freeport-McMoRan needed a system that was easy to use. For this reason, the company adopted a web-based performance management system that employees could use at home. Initially, the firm rolled out the system to 500 employees as a pilot program.

When it proved to be successful, the entire company began to use the system. The software keeps everyone in an organization focused on a company’s most important goals, which can have a strong impact on the firm’s financial performance. It also helps organizations measure the contributions of its employees and to nurture, motivate, and reward employees based on their achievements. “Managers need reliable real-time data and pragmatic e-tools to measure, identify, analyze, and understand their organization’s people capability—and what capability is needed to compete in the future,” explains Jonathon Hogg, with PA Consulting Group, an IT and management consulting firm. The performance system, along with the company’s strategic move into oil and gas seems to be working for Freeport-McMoRan.

In 2013, the company posted a 19 percent return to shareholders, despite copper prices plummeting again. Questions Why did Freeport-McMoRan need a performance management system? How might it have helped the company adjust its strategy? Do you think a pen-and-paper performance management system could have been as effective as the web-based system Freeport-McMoRan adopted? Why or why not?

Paper For Above instruction

Freeport-McMoRan Copper & Gold exemplifies how a strategic shift necessitated the adoption of an advanced performance management system to navigate the complexities of a rapidly changing market environment. The necessity for such a system stemmed from both internal coordination challenges and external market dynamics, notably the fluctuation of copper prices that significantly impacted operational strategies and profitability.

Initially, Freeport-McMoRan’s operations were decentralized, with individual mines run separately, and top management lacked real-time insights into employee performance, goal alignment, and operational metrics. This fragmentation hindered management’s ability to quickly implement new strategies designed to capitalize on high copper prices. As the company shifted focus toward ramping up production during a market boom, it became apparent that a more integrated and dynamic performance management approach was vital to ensure cohesive efforts across its geographically dispersed and diversified assets.

The adoption of a web-based performance management system represented a strategic enabler that facilitated real-time data collection, goal alignment, and performance tracking across multiple divisions. This system allowed managers to monitor key performance indicators (KPIs), identify operational inefficiencies, and rapidly adapt strategies—particularly critical when market conditions shifted unexpectedly. For example, by providing accessible and timely information, the system empowered managers to make informed decisions regarding resource allocation, workforce deployment, and operational priorities.

Furthermore, the performance management system supported the company’s strategic pivot into new lines of business such as oil and gas, by fostering transparency and coordination among diverse teams. The system's ease of use, necessary given that many employees did not regularly use computers, was crucial for successful implementation. The initial pilot with 500 employees demonstrated the system’s practicality, leading to a comprehensive rollout that enhanced organizational agility and alignment with corporate goals.

The effectiveness of the digital system contributed to Freeport-McMoRan’s resilience during a turbulent market, as evidenced by a 19% return to shareholders in 2013 despite declining copper prices. Such performance underscores how a sophisticated performance management system can serve as a strategic tool not only for operational efficiency but also for sustaining competitive advantage (Aguinis, 2019).

In contrast, a pen-and-paper system would have been considerably less effective in managing performance across a global, diversified enterprise like Freeport-McMoRan. Paper-based systems lack the immediacy and accessibility necessary for real-time decision-making, especially in a dynamic market context. They are more prone to delays, errors, and difficulties in data aggregation and analysis. Consequently, such manual methods would have hindered the company’s ability to rapidly align operations with evolving market conditions, thereby compromising its capacity to capitalize on high copper prices and mitigate risks associated with market volatility.

In conclusion, Freeport-McMoRan’s experience illustrates that in today’s complex and fast-paced business environment, an integrated, digital performance management system is essential for effective strategy execution. It enables organizations to respond swiftly to market shifts, improve coordination across dispersed teams, and sustain competitive advantage. The case exemplifies how technology-driven performance systems are not merely operational tools but strategic assets critical for navigating market uncertainties and implementing strategic pivots successfully.

References

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