Background Note

Infosys was incorporated as Infosys Consultants Private Limited12 on July 02, 1981, by a group of seven professionals13. From the beginning, it relied heavily on overseas business. One of the founders, Narayana Murthy (Murthy) stayed in India, while the others went to the US to carry out onsite programming for corporate clients. One of Infosys' first clients was the US-based sports shoe manufacturer Reebok. Infosys hired its first set of employees in 1982 from the Indian Institute of Technology, Chennai...

Abstract:
Infosys Technologies, a leading software company based in India, was voted the best employer in the country in many HR surveys in the recent years. The company was well known for its employee friendly HR practices. Though Infosys grew to become a US$ 2 billion company by the year 2006, it still retained the culture of a small company. Infosys attracted the best talent from across the world, and recruited candidates by conducting one of the toughest selection process. All the selected candidates were required to go through an intensive 14 week training program. All the employees were required to undergo training every year, and some of the chosen employees were trained at the Infosys Leadership Institute to take on higher responsibilities in the company. Infosys was one of the first companies to offer ESOPs to its employees. The company followed variable compensation structure where the employees' compensation depended on the performance of individual, the team and the company. The case highlights many such best practices of Infosys in human resource management. It also discusses the challenges faced by the company to retain its talented workforce.

Issues:

 Study and appreciate some of the unique HR practices at Infosys Understand the recruitment, selection and training practices of Infosys Examine some of the retention strategies adopted by the company Analyze some of the challenges faced by Infosys on the HR front - Business Today on Infosys winning 'The Best Managed Company Award,' in 2005. "We believe that people are our core assets and their empowerment is the key to scalability and longevity. Respect, dignity, fairness and inclusiveness are essential to get the best out of employees"2 - Nandan Nilekani, CEO, President and Managing Director, Infosys, in 2006. "It is the energy of Infoscions3 that make the environment at Infosys exciting and challenging. Our attention to detail, quality, speed and customer satisfaction keep us on the top as we surf successive waves of change. With every step, we learn. By identifying and fostering learnability in Infoscions, we are enabling an agile organization, at the forefront of change.4"

Performance Appraisal
The first step toward carrying out performance appraisal at Infosys was the evaluation of personal skills for the tasks assigned to an employee during the period of appraisal. To evaluate the performance, different criteria like timeliness, quality of work carried out by the employee, customer satisfaction, peer satisfaction, and business potential, were considered. The personal skills of the employees were also evaluated based on their learning and analytical ability, communication skills, decision making, change management, and planning and organizing skills. Each of these criteria was measured on a scale of 1 to 5 (with 1 signifying above the expected performance level and 5 below the expected performance level).
Performance Appraisal System: The performance appraisal process at Infosys begins not only with performance evaluation but also encompasses the evaluation of individual skills for the tasks assigned to an employee during the assigned period of performance evaluation. In this regard, performance appraisal takes into consideration various performance criteria like timeliness, quality of work, customer orientation, peer satisfaction and performance improvement potential. The company has also launched an internal job posting mechanism and the concept of personal development plans, on the basis of 360 degree feedback 12. Compensation and Rewards: The entire organization has restructured its compensations and reward system in order to match the performance of its employees, business needs and the growing scale of operations. The company started following a variable pay structure 10. At the lowest level, 10 per cent of the salary is variable; it is 30 per cent at the middle level and 50 per cent at very senior levels. Salary at Infosys is linked to the topline, performance of the team and performance of the individual. The company also intends to compensate star performers more aggressively than average or poor performers in a move that has more similarities with American culture which promotes and rewards individual merit 11. Another remarkable hallmark of Infosys had been its employee stock options plan (ESOP) framework for which the company has made a mark of its own in the industry. Many organizations had decided to adopt the Infosys ESOP system as an effective way to retain their employees. Worklife Balance Programme: As part of its holistic HR policy, Infosys had opened a satellite centre in the heart of the city to enable its employees (particularly new and to be mothers) to cut down on travel

time to work. The company has also initiated a pilot project for employees giving them an opportunity to opt for a one-year sabbatical at any point in their careers. This could be used for childcare, eldercare, higher studies or for health reasons9. Many working mothers and to be mothers have also been encouraged to work on their projects from their homes. Flexi timing of the working mothers also help these techniques to have enough time with their kids and family. Apart from these the company also emphasizes on organizing counseling programme for their employees so as to provide solutions for better worklife balance. Infosys had always considered its people as its most valuable assets and had seeked opportunities for further improvement in performance, business development by fostering innovation and creativity in the workplace. In the coming years, how the companys HR philosophy would help the organization to steer into the new decade would well be worth watching and a learning experience for HR specialists.