1/25/2011 Cos Overhaul Appraisals

Publication: The Economic Times Mumbai;Date: Jan 25, 2011;Section: Career & Business;Page: 14

REACHING OUT: PROCESS GETS

EMPLOYEE-FRIENDLY
Cos Overhaul Appraisals
Virtual teams, competition and talent retention make it
necessary for companies to improve existing systems of
evaluation
Devina Sengupta BANGALORE

IT’S that time of the year again, when employees are on tenterhooks because performance appraisals are just
around the corner. This year, faced with a host of new workplace trends — more virtual teams, frequently changing
bosses, stiff competition and the growing problem of talent retention — companies are tweaking appraisal
processes to keep pace.

Companies like MphasiS, Phillips, MindTree, Essar, Titan, Intel and Wipro are, this year, looking to overhaul
their existing performance appraisal process for an improved and more appropriate system. Last week, IT firm
Mphasis decided to drastically change the way their performance appraisals are conducted. The bell curve on
which employees are marked from now on has become more accommodating. Earlier around 70% of employees
would fall in the middle category — the bottom 20% on one end and the top 10% on the other side. Now, with
increased competition, the firm has decided to allow more people in the top category, even at the risk of promoting
mediocrity.

Mid-tier IT companies like MindTree, have also spotted the error in giving grading like 1, 2, 3, and 4 to
employees when there can be more specific differentiations possible. According to HR head Babuji Abraham, this
year their new grading system will include fractions for greater accuracy. So a person with 3.4 is better than
someone with 3.2, while previously, they might have both received a 3. Industry experts feel these distinctions can
make a big difference to employee morale and performance.

Understanding employee behaviour has become top priority for most companies that are battling attrition. As
more young managers come on board, it becomes imperative for employers to train them on how to handle their
teams. In 2010, Phillips decided to assess employees on how they achieved targets, rather than just the target
achieved. “You may be a top performer, but working in isolation is unhealthy for the team,” says Deepak Shetty,
director, HR, at Philips Innovation Campus. On the other hand watch and jewellery maker Titan is going the old-
fashioned way — by giving employees more money. Rewards officer S Ramadoss says earlier the firm used to roll
out 10%-40% of variable pay to the employees. This year they are in talks to increase it.

Wipro, too, had made changes in its appraisal systems last year, to bring more standardisation. Among other
things, the online system that links post-appraisals to e-learning modules, were fine tuned. Not Wipro has three
sets of appraisals for employees: A pre-confirmatory appraisal for new recruits, a midyear or interim appraisal for
all employees to review goals and objectives and the regular, annual appraisal in April after the financial year is
over.

Appraising virtual teams are the toughest. Without a boss physically present, it is like being on a road trip
without a map. Mrinalini Shinde, clinical head at the counselling firm One-to-One Help, dealt with a case a few
days ago, where an employee attributed her poor ratings to the absence of a boss. With a US-based boss and
little clarity on her role and job description, the telephone and internet were the only means of conversation. This
seemed inadequate to her and Shinde advised her to reach out to her team for more feedback. “Indians are not
always very assertive, and this becomes a problem when people work away from the parent company,” says
Shinde.

Consumer electronics major Phillips handles this problem by letting other seniors, who are in the same place
as the virtual team, give feedback on performance. An Enterprise Resource Planning (ERP) environment that
diversified corporate group Essar adopted some years ago, also addresses this. In this automated system,
managers can view the previous history of employees. So even during a change in leadership or department, the
boss knows exactly how the employee ranks.
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“Earlier, appraisals were linked only to performance, and would not reflect how much training is required by an
employee. Now career management and succession planning can be mapped in detail with sophisticated tools,”
says Adil Malia, president, group HR, for Essar.

Despite automation, face to face interactions remain an integral part of appraisals in many companies. To
ensure a fair appraisal, managers across verticals in companies like NetApp debate over who is at the top, and
who is at the bottom of the bell curve. This standardisation is done so that those under a ‘lenient’ boss are at par
with those working with a ‘strict’ boss.

“Make sure there are no surprises at the end of the year,” says SR Manjunath, HR head for NetApp.
Companies now insist on two appraisals before the final one so that the employee knows where s/he stands.
Indeed, counsellors have seen a 20% increase in calls post-appraisal since last year, mostly from people
contesting a negative appraisal. An Infosys employee says despite companies professing an open door policy,
many do not practise it for fear of retribution.

He said hierarchy at the IT firm changed, and more levels were added with an influx of employees. This only
made the rise to the top more difficult. “What happens when managers do not speak up for you in meetings?” he
asks. “Why don’t the concerned employees get to know what vertical heads say about them in meetings?” He
recounted an incident last year when a colleague received a below-par rating when she had done well through the
year. Her manager agreed, but was not the kind to voice his opinions at meetings. Her appraisal remained
unchanged and she contemplated leaving the company.

JUDGEMENT-DAY PARADIGMS

MORE REWARDS

MphasiS has made the bell curve on which employees are marked more accommodating. Earlier 70% of
employees were in the middle category — the bottom 20% on one end and the top 10% on the other side. Now,
with increased competition, the firm has decided to allow more people in the top category.

THE ‘HOW’ OF TARGETS

In 2010, Phillips decided to assess employees on how they achieved targets, rather than just the target achieved.

‘VIRTUAL’ APPRAISALS

Essar adopted an Enterprise Resource Planning environment which addresses assessment of employees abroad.
Managers can view the previous history of employees. Career management and succession planning can be
mapped too.

NEW SETS

Wipro has three sets of appraisals for employees: A pre-confirmatory appraisal for new recruits, a mid-year or
interim appraisal for all employees and the regular, annual appraisal in April after the financial year is over.

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