Introduction

The role of HR managers in the corporate world has undergone a tremendous shift and it is now
emerging as a strategic function which helps in meeting the corporate strategies. Today, HRs are
trying to bring in all the perspectives into play while managing the performance of the
employees. This helps the employees to grow personally and professionally and thus enabling
them to a part of organizational strategic planning. According to a PwC survey 2016, 93% of the
organizations consider business objectives to be a primary purpose of the performance
management system.

With booming IT sector in India, employment opportunities for the millennial are also growing
which in turn necessitates the need to have good employee retention and performance
management system. Every IT company has set up its own performance management system
which helps it to continuously monitor the employee’s satisfaction level and nurture their
performance. An increasing number of grievances towards the appraisal methods has forced the
organizations to review their existing methods. 52% of the organizations are planning to make
changes to their existing PMS (PwC survey 2016). The performance management system in
IT/ITeS sector has made a shift in the recent years from a traditional system to an advanced
system with new aspects, like institutionalizing team or project ratings instead of individual
ratings, increasing evaluation frequency etc., taken as the basis of performance. Among, many
other sectors, IT/ITeS sector leverages its PMS in the most effective way.

The performance management system is a challenging task when it comes to IT organizations

such as TCS, Infosys etc. having a large workforce. While TCS has undergone a major revamp
in its performance appraisal system, Infosys has also introduced many new policies related to
PMS. Through this case, we have tried to analyze the major performance management practices
prevalent in these IT giants.

Infosys - Performance Management system

Infosys performance management has revamped itself holistically to adjust to the needs and in all
fairness to the employees to measure and gauge the performance of their workforce by an open
ranking system.
 Old Model of Performance Management System
It has given up the bell-curve assessment tool which was a forced ranking methodology wherein
limited people got the top rating and the maximum workforce, in spite of their good
performance, had to be compromised with the average rating in order to maintain the bell curve
by relative performance. This, in turn, categorized the performers into a certain bracket
depending on whether the individual has met his/her targets relatively to others. Now, the focus
has shifted to individual performance which is given more weightage than the relative
performance wherein it will now disproportionally reward the top performers and also executives
who have directly contributed to the success and revenue of the company.

 Current Model of Performance Management System

The new appraisal system in Infosys is called iCount, where it rewards individual performers
based on the specific targets assigned to them. Each employee will be offered feedback on a
continuous basis throughout the year subject to reviews rather than just the annual feedback
given during the appraisal. Also, individual employees are appraised on the basis of how well
they perform in the short-term assignments and targets given to them for example, bagging an
important customer account or managing a client event, all these are based on the role of the
employee.

iCount provides more phased out approach by allowing the direct reporting manager to set the
performance goals (which are clear objectives and expected deliverables) of the team and
individual, based on which each individual employee is encouraged to have a discussion over the
same and come to an agreeable goals and expectations thus reducing ill-effects of an annual
appraisal. Once the performance goals are locked, employees are measured against their own
targets fixed which almost makes their performance rating and career controlled by their actual
performance. There is a provision for another reviewer apart from the direct reporting manager
who is called the reviewer 1 to whom the results of the performance appraisal are shared for
review and hence by which the delivery manager of each client account assigns the performance
rating and the variable pay.

TCS – Performance Management System

TCS believes in a Performance Management system which enables a culture of Continuous
Feedback.

A system which is fair, equitable, based on individual achievement of goals and which is aligned
with TCS’ Vision, Mission and Values.

 Old Model of Performance Management System

Previously, TCS used to follow Bell Curve based performance appraisal but it scrapped it during
2016. As mentioned, the bell curve is universally loathed by those being ranked on it, and TCS
employees are happy that the company has scrapped the system. In the bell curve method, there
was too much room for manipulation. Lots of people used to be unhappy, the project managers
used to say that they were forced to put good performers into the poor bracket just to fit the
curve.

The bell curve analysis is usually seen as a rigid framework that in a way compels the manager
to slot some of its teammates under poor performance bucket. Some of the companies even feel
that the relative ranking process is not in line with their business and employee needs.

 Current Model of Performance Management System

Currently, TCS is following continuous feedback approach to doing the performance appraisal of
its employees.

The purpose of the Performance Management System is to promote a strong, integrated

Performance Management System, to set clear objectives linked to Organization’s goal, provide
qualitative developmental feedback to the employee, to manage, recognize and motivate talent
that enables TCS to be more competitive and to ensure fair and impartial proceedings along with
establishing accountability.

In TCS, generally 2 types of appraisal are available:

1. Annual Appraisal:
i. A single Annual Appraisal is conducted for all employees
ii. The Annual Appraisal cycle is from 01 April to 31 March of a Financial Year.
2. Project End Appraisal (PE):
i. A Project End Appraisal is conducted at the end of an employee’s allocation to a
 Project or whenever there is a change in the Role; provided that the minimum
duration for which the employee has worked on that Project/Role is 60 days.
ii. The Project End Appraisal may be initiated anytime during Annual Appraisal cycle.
The Performance Planning begins with Goal Setting and Goal Discussion, where the appraiser
and appraise have a joint responsibility of setting goals by discussing them. The goals are
tangible and attainable and both arrive at a consensus at the end of this process.

Continuous feedback is provided to appraise by the appraiser, where the appraiser highlights the
strengths and the areas of improvement for appraising. Developmental feedback, recording of
real-time achievements with appraising is an ongoing process.

During the performance evaluation to ensure the appraisal is fair and unbiased the evaluation is
done by the appraiser (immediate supervisor) and then by secondary level supervisor (reviewer).
Appraisal evaluation is a two-way discussion, where feedback is provided along with a thorough
discussion on the goals which were agreed at the beginning of the process and at the end
Individual Performance Factor (IPF) is calculated for the appraising. In the Reviewer evaluation,
the record is sent to the reviewer, the reviewer can change the IPF in consultation with the
appraiser.

Once the evaluation is done, Individual Performance Band is assigned to the individual; the
composition of the band depends not only on the individual’s performance but also on the
performance of the Business Unit at the Organization Level. Once the performance band is
decided it is communicated to the individual via email and performance portal of TCS.

It can be concluded that the performance management system plays a strategic role in these 2 IT
organizations. Employees’ goals and objectives are taken into consideration while managing
their performance. They are more aware of the parameters they are being judged on. HR
managers have started taking a balanced scorecard approach in these organizations. Employees
are given personal counseling on the lacunae in their performance ant their training needs if any.
Such a kind of performance management system has helped both these organizations to sustain
as the top leaders of the industry and meet their customer expectations.