SeaCloud Real Estate: Performance Management

This case describes how SeaCloud, a real estate company founded in 1999, redesigned its performance management system in an attempt to achieve the strategic goal of improving efficiency at a time when many Chinese real estate enterprises doubled down on their strategies to undertake projects with short turnaround times. In December 2018, Ling Yun, the Founder and CEO of SeaCloud, discovered that a major project under development by the company was significantly behind schedule, despite most employees meeting their performance goals. It was then he realized that there were problems with the company’s existing performance management system, and he asked the HR Director, Liu Min, to undertake a full review and redesign the performance management system. The new performance management system needed to address a number of issues, including (i) there was no direct link between mid-level and junior employees’ performance appraisal results and salary increases; (ii) neither was there a link between corporate strategy and the performance criteria used to evaluate staff performance; (iii) senior executives were appraised annually, limiting the ability to take more timely corrective measures and actions; and (iv) cross-departmental collaboration was not effective. Under the new system, mid-level and junior employees’ performance bonuses were based on and determined by both individual and departmental evaluation outcomes. In addition to job responsibilities, key performance indicators (KPIs) and key work processes were established by managers and used to evaluate staff performance. Senior executives were now appraised on a quarterly rather than annual basis. The results of 360-degree feedback were also taken into consideration when assessing staff promotion. To enhance cross-departmental cooperation, employees from different departments would also be jointly evaluated. Although the new performance management system led to significant improvements in the company’s performance, a number of issues remained.