Performance Appraisal System in TCS

Tata Consultancy Services Limited (TCS) is the world-leading information technology consulting, services, and business process outsourcing organization that envisioned and pioneered the adoption of the flexible global business practices that today enable companies to operate more efficiently and produce more value. They commenced operations in 1968, when the IT services industry didnt exist as it does today. Now, with a presence in 34 countries across 6 continents, & a comprehensive range of services across diverse industries, they are one of the world's leading Information Technology companies. Seven of the Fortune Top 10 companies are among our valued customers. The TCS-HR group operates with technical experts to create a synergy which is enviable. Figure 1 illustrates the role of HR, which evidently is that of a facilitator. So whether it is recruitment or even career development, HR is the catalyst which initiates and institutionalizes processes. To manage all the functions for over 14000 employees is a Herculean task but the smoothness of operations is intriguing. The HR structure, which allows flexibility and empowerment, is the solution.

A poor performer is not always a poor performer for life, says S Padmanabhan, executive vice president, global human resources, Tata Consultancy Services (TCS).

Performance Appraisal Criteria at TCS OBJECTIVES

Data relating to performance assessment of employees arc recorded, stored. and used for seven purposes. The main purposes of employee assessment are: 1. To effect promotions based on competence and performance. 2. To confirm the services of probationary employees upon their completing the probationary period satisfactorily. 3. To assess the training and development needs of employees. 4. To decide upon a pay raise where (as in the unorganized sector) regular pay scales have not been fixed. 5. To let the employees know where they stand insofar as their performance is concerned and to assist them with constructive criticism and guidance for the purpose of their development.

6. To improve communication. Performance appraisal provides a format for dialogue between the superior and the subordinate, and improves understanding of personal goals and concerns. This can also have the effect of increasing the trust between the rater and the rate. 7. Finally, performance appraisal can be used to determine whether HR programmes such a selection, training, and transfers have been effective or not. Broadly, performance appraisal serves four objectives(i) (ii) (iii) (iv) developmental uses, administrative uses/decisions, organizational maintenance/objectives, and documentation purposes

Table below outlines these and specific uses more clearly:-

Multiple Purposes of Performance Assessment

General Applications Specific Purpose
Identification of individual needs Performance feedback Determining transfers and job assignments Identification of individual strengths ad development needs Salary Promotion Retention or termination Recognition of individual performance Lay-offs Identification of poor performers

Developmental Uses

Administrative Uses/Decisions

Organizational Maintenance/ Objectives

HR planning Determining organization training needs Evaluation of organizational goal achievement Information for goal identification Evaluation of HR systems Reinforcement of organizational development needs Criteria for validation research Documentation for HR decisions Helping to meet legal requirements

Documentation

PERFORMANCE APPRAISAL ADVANTAGE IN TCS

AND

COMPETITIVE

The objectives of performance appraisal, point out the purpose which such an exercise seeks to meet. What needs emphasis is that performance evaluation contributes to TCSs competitive strength. Besides encouraging high levels of performance, the evaluation system helps identify employees with potential, reward performance equitably and determine employee's need for training. Specifically, performance appraisal has helped the TCS gain competitive edge in the following ways :

Strategy and Behavior

Improving Performance

Making correct decisions

Competitive Advantage

Values and Behavior

Minimizing dissatisfaction and turnover

Ensuring Legal Compliance

TCS conducts two appraisals: 1. At the end of the year 2. At the end of a project. Appraisals are based on Balanced Scorecard, which tracks the achievement of employees on the basis of targets at four levels financial customer internal learning and growth

The financial perspective quantifies the employees contribution in terms of revenue growth, cost reduction, improved asset utilization and so on; The customer perspective looks at the differentiating value proposition offered by the employee; the internal perspective refers to the employees contribution in creating and sustaining value; the learning and growth are self-explanatory. The weightage given to each attribute is based on the function the employee performs. Based on their individual achievements, employees are rated on a scale of one to five (five = superstar). If employees get a low rating (less than two) in two consecutive

appraisals, the warning flags go up. If the poor performer continues getting low scores then the exit option may be considered Over the years TCS has found the pattern that leads to the maximum decline in performance boredom. If employees work for more than two years on the same project, typically either their performance dips or they leave the organization. To avoid that, TCS shuffles its employees between projects every 18 months or so. Performance drops if motivation drops At the heart of an employee's satisfaction lies the fact that his performance is being appreciated and recognized. TCS's performance management system has metamorphosed into one that emphasizes objectivity and a system that mandates performance evaluation against pre-determined criteria. What deserve special mention is the active participation of the senior management in the determination of guidelines for the performance appraisal process. The process ensure buy in of the employees since the guidelines for the rating system and its conversion into money terms is not unilaterally decided by HR but is a consensus of a cross functional team with representation from all levels.

TCS's performance appraisal system is supported by an online system called the Human Resource Management System- an Oracle Developer 2000 based tool. The system individual right from his biographical details to his projects performance. An employee's performance history at the click of a button and this accurately maintained for 14000 employees! Right from his entry, an employee in TCS get formal performance feedback once very two months till such time that he is confirmed after which the performance feedback is provided twice every year on a formal basis. TCS however widely encourages informal feedback discussions between Project Leaders and Team Members and this concept has found an overwhelming appeal among the people.

Recognition at TCS
Guaranteed high motivation levels at TCS through competitive compensation packages, stimulating job content, outstanding development opportunities, and, not the least, an innovative recognition mechanism The various ways in which TCS recognizes its people are listed below.

Project milestone parties to encourage efficient execution of projects. Recognition of star performers / high fliers to recognize outstanding talent. Nomination to covet training programmes to encourage self-development. Best project award to promote a spirit of internal competition across work groups and to foster teamwork. Best PIP award to encourage innovation and continuous improvement. Best auditor award to acknowledge participation in critical support roles Spot awards to ensure real-time recognition of employees. Recommendations for new technology assignments / key positions to ensure career progression and development of employees' full potential. Performance-based annual increments to recognize high performers Early confirmations for new employees to reward high-performing new employees Long-service awards to build organisational loyalty EVA-based increments to ensure performance-based salaries. On-the-spot recognition to guarantee immediate recognition of good performance.

P-CMM ( PEOPLE CAPABILITY MATURITY MODEL )

The concept that is very close to the heart of the HR group and one that has seen mass appeal is the PEOPLE CAPABILITY MATURITY MODEL or the P-CMM. TCS has been the first company in India to be visited by the author of P-CMM - Dr. Bill Curtis. The HR group along with the Software Engineering Process Group has dedicatedly worked towards achieving a high maturity level for the people processes. And it is no mean feat that the two groups have generated such synergy that for a long time every one will be speaking one language - the-P-CMM. For the first time, all of the HR processes will be subjected to an audit and that in itself is an achievement to be proud of because we hear so few a company having its HR processes audited. TCS plans to have an organization wide assessment this year. So HR now in the books of "QUALITY". Developing the HR capabilities has been an imperative. Equipped with the training programmes at TMTC (The TATA Management Training Centre), the extensive Labs at ISABS and ISISD the constant exposure at conferences, the HR team is a formidable one and at the cutting edge of HR technology. The HR team in TCS is transcending from its traditional "maintenance" role to a new developmental role. Designing training modules for Senior Project Leaders on performances management, facilitating the implementation of P-CMM ( being done for

the first time in Asia) or designing a Balanced Score Card for the team, the HR group is at the forefront, rubbing shoulders with the technology experts.

The People Capability Maturity Model consists of five maturity levels that establish successive foundations for continuously improving individual competencies, developing effective teams, motivating improved performance, and shaping the workforce the organization needs to accomplish its future business plans. Each maturity level is a welldefined evolutionary plateau that institutionalizes new capabilities for developing the organization's workforce. By following the maturity framework, an organization can avoid introducing workforce practices that its employees are unprepared to implement effectively.

The five stages of the People CMM framework are:

P-CMM - Initial Level (Typical characteristics: Inconsistency in performing practices, Displacement of responsibility, Ritualistic practices, and Emotionally detached workforce). P-CMM - Managed Level (Typical characteristics: Work overload, Environmental distractions, unclear performance objectives or feedback, Lack of relevant knowledge, or skill, Poor communication, Low morale) P-CMM - Defined Level (Although there are performing basic workforce practices, there is inconsistency in how these practices are performed across units and little synergy across the organization. The organization misses opportunities to standardize workforce practices because the common knowledge and skills needed for conducting its business activities have not been identified) P-CMM - Predictable Level (The organization manages and exploits the capability created by its framework of workforce competencies. The organization is now able to manage its capability and performance quantitatively. The organization is able to predict its capability for performing work because it can quantify the capability of its workforce and of the competency-based processes they use in performing their assignments) P-CMM - Optimizing Level (The entire organization is focused on continual improvement. These improvements are made to the capability of individuals and workgroups, to the performance of competency-based processes, and to workforce practices and activities. The organization uses the results of the quantitative management activities established at Maturity Level 4 to guide improvements at Maturity Level 5. Maturity Level 5 organizations treat change management as an ordinary business process to be performed in an orderly way on a regular basis)