*Managing Performance at Pro Ad Software* Pro Ad Software develops computer software for the entertainment industry, including that used in film animation and to create computer-generated images. Pro Ad was one of the early pioneers in the industry and is still highly regarded both as a provider of innovative new products and as an employer. However, as the demands of film and programme makers grow and competition in the market intensifies, Pro Ad has begun to see its market share and its reputation in the industry diminish. Broadly speaking, new business for Pro Ad is generated in two ways. First, it provides custom software designed to the specification of customers. This is typically through the modification of existing products. Second, it develops new, improved and occasionally ground-breaking products which it seeks to establish as industry standards. The former tend to be the company’s ‘bread and butter’, providing the majority of its revenue. The latter, however, is how the company develops prestige in the industry but it provides much more sporadic return for the company. The last significant ‘breakthrough’ product it produced was three years ago and, as a result, the company has seen its competitive edge gradually erode over this time. As an employer, Pro Ad typifies the ‘collegiate’ approach to people management that is common in the ICT industry. The company employs 35 workers, approximately two-thirds of whom are directly involved in the core activity of software development. There are two vaguely defined work groups: the first producing customized products to customer specification (locally known as the ‘tweakers’); the second, developing new products from scratch (who refer to themselves as the ‘A Team’). A development manager has oversight of the two work groups but they are largely self-managed. Both groups of workers are highly skilled, possess scarce skills and knowledge and tend to have similar educational backgrounds. Working styles, however, differ between the two departments. New product developers typically work independently on their own ideas, occasionally sharing their work informally or jointly problem-solving. In the past, however, where new ideas have shown potential, much of the team becomes involved in development and share in bonus payments for successfully taking the product to market, although the originator typically takes a greater share of the bonus pot. In the custom product team, knowledge and ideas are shared more widely and workers collaborate extensively, partly out of necessity in order to get the job done. Reflecting this, working patterns are also distinct. Workers in the new product team are very relaxed about timekeeping, often starting late in the morning and working late into the night, although there is no real way of knowing individual working hours. They also make extensive use of the company’s chill-out rooms, often playing pool or video games for long stretches of time. In contrast, the custom team keeps relatively regular hours and makes more limited use of recreation facilities. This reflects the fact that their work is constrained by tight deadlines. At present, all developers, regardless of the team to which they belong, are paid on the same salary scale and salary tends to reflect length of service.Despite the laissez-faire management style and the relaxed approach to work at Pro Ad, rivalry between the two groups has intensified over recent months and usually collaborative working between the groups, previously characterized by a fluid exchange of ideas, has begun to disappear. The ‘tweakers’ have become increasingly dissatisfied with the ‘A Team’, both over their failure to make any substantial breakthroughs in new products over the past few years and resentful of the fact that senior managers appear to treat the ‘A team’ with ‘kid gloves’ and give them preferential treatment despite this failure, particularly the MD and finance director, neither of whom have any substantial technical expertise in the area of software design. They feel that their contribution to the business is largely taken for granted, despite them providing 100 per cent of revenue over recent years. The development manager has some sympathy with the perception of the ‘tweakers’, yet recognizes the potential of the new product team to make a huge impact on company performance through the development of a single innovation; without such innovation, the demand for custom products would soon begin to decline. He also recognizes that successful new products that make it from development to market are difficult and time-consuming to create. QUESTION: 1. Apply an Effective Performance Measures using SMART 2. Identifying areas of good and bad in Pro Ad Software