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  2. 2. INTRODUCTION 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. Established in 1968 as ‘Tata Computer Centre’, Tata Consultancy Services (TCS) was a pioneer in the Indian Information Technology (IT) arena. Despite numerous obstacles, including the government interventions and rigid licensing system, the company emerged as a successful player in the country. Headquartered in Mumbai, TCS has nearly 120,000 IT professionals working in offices spread across 42 nations. TCS is a part of one of Asia's largest conglomerates - the TATA Group - which, with its interests in Energy, Telecommunications, Financial Services, Chemicals, Engineering &Materials, provides us with a grounded understanding of specific business challenges facing global companies. Its focus on building a diverse workforce along with its healthy work environment contributed to its growing popularity. In 2007, it topped the Global Services magazine’s list of ‘100 Best Performing IT Services’ while in2008, Data Quest ranked it as No.1 among IT service providers. TCS strives to conduct a fair and objective appraisal process to ensure that employees who perform well are rewarded while the non- performers are given timely feedback. The company also boasts of low attrition rates as compared to the other players in the industry. But in recent years the picture has changed for TCS. There has been a high attrition rate and nearly 80% of TCS work force is de-motivated with the performance appraisal system. There has been high absenteeism, degradation in individual performance, constant complains of excessive work pressure and improper appraisal system. In recent years, performance management has become more important because managers are under constant pressure to improve the performance of their organizations. It is now realized that the performance of organizations influence the organization’s continued existence and success. The increasing realization that one of the key roles of managers is to manage employee’s performance is the key to the success of management in general and performance management in particular. It is now well accepted that performance management is a wider concept than performance appraisal. Appraisal being part of performance management plays a vital role in encouraging desirable performance and discourages undesirable performances before they become ingrained. Performance appraisal is a systematic and objective way of judging the relative worth or ability of an employee in performing his job. The companies to prove their competency in the highly competitive market, has to come up with innovative ways of resource management. With employees being a strong determinant of the company’s performance, various performance appraisal
  3. 3. techniques are introduced into the system to analyse the individuals’ share to the company’s objectives. With above aim in view, I have made an attempt to gather and critically examine the valuable inputs from the company and carry out a deductive/inductive analysis of the qualitative and quantitative data for arriving at desired results. This research comes up with a view that the respondents of the company are in agreement with the improper and unimproved appraisal system. Results of my survey and analysis would provide a very useful input to the employees of all ranks, who are ceased with the problem. They have welcomed my efforts and are looking forward to collecting all available data in this respect for examining the problem in totality. OBJECTIVE AND SCOPE LITERATURE REVIEW Performance appraisal is a well-established way of providing milestones, feedback, guidance and monitoring for staff. A further development is tying this appraisal into a larger and more complex system of performance management (Weightman,1999). CIPD (2008d) support the view that whilst performance appraisal is an important part of performance management, it is only one tool amongst a range of tools that can be used to manage performance. The performance appraisal is essentially a formal mechanism of reviewing individual employee performance. But TCS uses an appraisal method that is way past its due date. The name of the method is bell curve-based performance appraisal system. The bell curve-based performance appraisal refers to forced rankings which compare employees' performance relative to others and require that managers plot team members along a distribution curve. Forced ranking has been defined as “a workforce management tool based on the premise that in order to develop and thrive, a company must identify its best and worst performers, then nurture the former and rehabilitate and / or discard the latter” – SW learning. Bell curve system rates the entire workforce by comparing the performance of those engaged in similar activity and ranking them on the basis of their performance. The entire workforce is segregated as the top performers, medium performers and the poor performers. The percentile varies with the company policy; it could be the top 10%, middle 80% and the bottom 10%. The employees belonging to the higher grade contribute significantly to the enterprise. They are showered with rewards like restricted stock options, bonuses, etc so as to motivate them to continue their excellent services to the business entity. The middle percentile employees are significant in number and their presence ensures uninterrupted work flow within the organization. They generally have some weakness which is negated by the training facilities offered by the company. Similarly training is also provided to enrich
  4. 4. their key skills to utilize in a way profitable to the entity. The bottom ranking consists of those whose performance needs significant improvement and whose is unsatisfactory. The ranking acts as a warning system that tells the employee where he stands in relation to his peers. The employees belonging to the lower strata are at times given the opportunity to improve their efforts or are renounced from the system. Higher authorities of the organization said that “People do not have a problem with the bell curve, but rather, with the lack of transparency or understanding of the process”. But the picture turned out to be completely different. BACK DROP After interaction with some past employees and employees of different levels of the company it became evident that this system creates too much emotional stress, and most importantly, it destroys the loyalty factor and has lead to high levels of attrition. The bell curve-based appraisal system causes a great deal of unhappiness, and unnecessary stress both for managers and their team members. It's too much of a de-motivator and sometimes also unfair. It is also true that TCS has over looked the greatest disadvantage of the bell curve-system, i.e. that it is dependent on the supervisors who judge the capability and contribution of the employee. The supervisor is to keep a day-to-day physical record of the favourable and unfavourable tasks performed by the employee. But as it is a time consuming task, many supervisors record them just before the submission of the appraisal sheet to the HR leaving ample room for errors and omissions. This system is also open to the bias and prejudice of the supervisors. Ranking based on favouritism is a failure. It is assumed that the bottom performers are replaced every year on account of their unsatisfactory performance by fresh talents who can add up to the output of the organisation. This is impractical as the replacement is always an expensive affair, and the high attrition rates can reflect a negative outlook towards the goodwill of the company. The likelihood of the presence of poor performers amongst the new additions is another possibility which can adversely affect the success of this system. A single system of appraisal has high chances of giving out false reports leading to dispirited workforce. With this back drop it was decided to scientifically further research the problem of the performance appraisal system in TCS. OBJECTIVES 1. To critically examine the Performance Appraisal Systems of TCS with reference to its practices and processes at the different levels. 2. To draw the necessary findings in the light of the data analyzed and interpreted.
  5. 5. SCOPE This study has been confined to: a) Present Employees of TCS and, b) Some of the past employees of TCS, who had left the organization in the recent past. METHODOLOGY After doing the explanatory research to identify the problem and a detailed study of the various aspects of the appraisal system, it became clear that two categories of people need to be interacted with. They were: a) the present employees of TCS and, b) the past employees who have since left the organization. It was therefore, planned to conduct my project work for the collection of data (both primary and secondary). PRIMARY DATA I have planned to use two tools of research namely the Questionnaire and the Structured Interviews. Questionnaire: On the basis of explanatory research the theoretical perspective gained, a Questionnaire was developed and pre-tested for the improvements. It was thereafter administered through personal contact/visits to TCS. An evenly balanced sample was selected at random for responses. Details of the sample are as under. a. Sample size : 25(respondents) b. Sample composition Mangers/Staff : 5 Heads of departments/Senior Executives : 5 Administrative Heads/HRD Heads : 10 Junior Associates/Executives : 5 Structured Interviews a. Sample size : 10 b. Sample composition Managers/Staff : 2 Heads of departments/Senior Executives : 2
  6. 6. Administrative Heads/HRD Heads : 2 Junior Associates/Executives : 2 SECONDARY DATA Despite all efforts no earlier study on the subject could be obtained from TCS. However, I was able to study considerable amount of already published material on internet and from articles in business magazines, on the subject and this served as useful input in conduct of my project. Information gained during the explanatory research while doing interaction with the managers and executives working at the middle and top level of management were also valuable inputs. DATA COLLECTED Q.1 Age profile of respondents (in respect of Questionnaire) Table 1 No. Categories Age in Years Total 20 - 30 31 - 40 41 - 50 51 - 60 1. Managers/Staff 1 1 2 1 5 2. Head of Departments /Senior Executives - 1 2 2 5 3. Administrative Heads /HRD Heads 4 4 1 1 10 4. Junior Associates/ Executives - 3 2 - 5 Total 5 9 7 4 25
  7. 7. Q.2 Position / Designation profile of respondents Table 2 Q.3 Work experience in the organization profile of respondents Table 3 No. Categories WORK EXPERIENCE IN YEARS TotalLess than 5 5 - 10 11 - 20 Over 20 1. Managers/Staff 2 1 1 1 5 2. Head of Departments /Senior Executives - 1 2 2 5 3. Administrative Heads /HRD Heads 3 2 3 2 10 4. Junior Associates /Executives - 3 1 1 5 Total 5 7 7 6 25 No. Categories Managers Supervisors Level Workers / Staff Total 1. Managers/Staff 1 2 2 5 2. Head of Departments /Senior Executives 2 2 1 5 3. Administrative Heads /HRD Heads - 6 4 10 4. Junior Associates /Executives 1 2 2 5 Total 4 12 9 25
  8. 8. QUESTIONNAIRE RESPONSES CODE AT – Almost always true MT – Mostly true ST – Sometimes true RT – Rarely true NT – Not at all true Table 4 Sr. No. Question / Statement AT MT ST RT NT Total 1. You feel reluctant to go home from work at night because of the enjoyment you are getting from your work? - - 1 9 15 25 2. If you were offered a better salary package, you would not leave you job? 1 1 1 6 16 25 3. You get a sense of achievement in your job? - 1 4 9 11 25 4. Attempts to do things in better ways are encouraged in this organization? - 2 6 10 7 25 5. You are satisfied with the reward system in your organization? - - 2 6 17 25 6. You see your future with the company? - 3 5 8 9 25 7. The top management of this organization makes efforts to identify and utilize the potential of the employees? - 10 6 6 3 25 8. There is a general feeling amongst employees that anybody can be removed from his job at anytime? 10 8 6 1 - 25
  9. 9. DATA ANALYSIS Q1. Table 1 – Age profile of respondents 1. From a total of 25 respondents 4 were from the age group above 50, 7 were from the age group 41-50, 9 from the age group of 31-40 and 5 respondents were from the age group 20-30, thus indicating an evenly spread out of age profile of respondents. 2. Even from within the age groups the respondents were from different categories. Out of a total of 4 respondents from the age group above 50, 1 belonged to the Managers/Staff category, 2 from the Head of Departments/Senior Executives and 1 from the category of Administrative Heads/HRD Heads. 3. In the age group of 41-50 total respondents were 7, out of which 2 belonged to Managers/Staff category, 2 from Head of Departments/Senior Executives, 1 respondent belonged to Administrative Heads/HRD Heads and 2 were Junior Associates/Executives. 4. Likewise out of a total of 9 respondents from the age group 31-40, 1 belonged to Mangers/Staff category, 1 belonged to the Head of Departments/Senior Executives, 4 belonged to Administrative Heads/HRD Heads and 3 were Junior Associates/ Executives. 5. Finally, out of a total of 5 respondents from the age group 20-31, 1 was from the Managers/Staff category and 4 belonged to the Administrative Heads/HRD Heads. Thus age-wise it was an evenly distributed sample. Q2. Table 2 – Position/Designation profile of respondents 1. From the total of 25 respondents 9 were from the workers/staff designation, 12 were from the supervisory level and 4 from manager designation. From within the position of worker/staff which had a total of 9 respondents, 2 belonged to the Managers/Staff category, 1 belonged to Head of Departments/Senior
  10. 10. Executives, 4 belonged to Administrative Heads/HRD Heads and 2 were Junior Associates/Executives. 2. From the total of 12 respondents of Supervisory level, 2 belonged to Managers/Staff category, 2 belonged to Head of Departments/Senior Executives, 6 belonged to the Administrative Heads/HRD Heads category and 2 from Junior Associates/Executives. 3. From the Manager’s designation out of a total of 4 respondents, 1 belonged to the Managers/Staff category, 2 from the Heads of Departments/Senior Executives and 1 from the Junior Associates/Executives category. Thus designation-wise it was an evenly distributed sample comprising of all categories. Q3. Table 3 – Work experience in the organization profile of respondents 1. Out of a total of 25 respondents 6 respondents were from the work experience group of over 20 years, 7 were from the group of 11-20 years of work experience, another 7 were from the work experience group of 5-10 years and 5 were from the less than 5 years work experience group. 2. From within the over 20 years work experience group, out of a total of 6 respondents, 1 belonged to the Managers/Staff category, 2 belonged to the Head of Departments/Senior Executives, 2 from Administration Heads/HRD Heads and 1 was from Junior Associates/Executives category. 3. Out of a total of 7 respondents from the 11-20 years group, 1 belonged to the Managers/Staff category, 2 from the Head of Departments/Senior Executives, 3 belonged to the Administrative Heads/HRD Heads and 1 belonged to Junior Associates/Executives. 4. From the 5-10 years work experience group, out of the total 7 respondents, 1 was from the Managers/Staff category, 1 from Head of Departments/Senior Executives, 2 from Administrative Heads/HRD Heads and 3 from the Junior Associates/Executives category. 5. Finally, out of a total of 5 respondents from the less than 5 years work experience group, 2 belonged to the Managers/Staff category and 3 from the Administrative Heads/HRD Heads.
  11. 11. This indicates that the total work experience profile of respondent is a well-distributed sample. Table 4 - QUESTIONNAIRE RESPONSES 1. Out of a total of 25 respondents 24 stated that they rarely or not at all get the enjoyment from their jobs. One respondent sometimes enjoyed his work. This clearly confirmed that most of the employees did not find any enjoyment in the work place and thus were not happy with their jobs. 2. 22 respondents were prepared to leave their jobs for better salaries elsewhere while 2 respondents only expressed that they would not leave for the salaries. 1 respondent was not so sure. It established the fact that majority were not satisfied with their jobs and would leave if better salaries were offered elsewhere. 3. 20 respondents did not get sense of achievement in their jobs. 4 respondents sometimes did so and 1 respondent mostly got a sense of achievement. This reflected low job satisfaction, as majority did not get sense of achievement. 4. 17 respondents felt that even attempts to do things in better ways were not encouraged. 6 respondents were of the view that they were encouraged sometime. Only 2 respondents were mostly encouraged. This response was comparatively more in favour of the organization. However, majorities were not satisfied with their job even from this point of view. 5. 23 respondents were unhappy with the reward system in the organization. Only 2 respondents were sometimes happy. This clearly showed the non-existence of a fair and just promotion/reward policy for good work. Majority were unhappy with their job in this account. 6. 17 respondents did not see their future with the organization while 5 felt some hope of their future. 3 respondents however, felt that they have a future in this organization. Out of these three respondents 2 were from the higher authorities of the organization. This clearly established that majority did not see their future in the organization and were perhaps on the lookout for better jobs elsewhere. 7. This response was evenly divided while 9 respondents felt that the Top Management did not make any efforts in this regard, 10 respondents felt otherwise. 6 respondents were generally neutral and felt that the Top Management sometimes made efforts to identify and utilize the potential of the
  12. 12. employee. When read in conjunction with Q. No. 5, it became even more negative and tends to be exploitative. 8. 18 respondents confirmed that there was a general feeling that anybody can be removed from the job at any time, 6 respondents were doubtful and only 1 respondent thought that it was not true. This showed that the organization has started to get to the point of hire & fire policy. Structured Interview I had planned to interview 8 (sample size) employees. My composition of the sample was: a. Managers/Staff : 2 b. Head of Departments/Senior Executives : 2 c. Administrative Heads/HRD Heads : 2 d. Junior Associates/Executives : 2 After interviewing them, I found out that majority of them, however, desired that their names should not be mentioned ‘anywhere’. This was assured. The two Junior Associates/Executives were more forthright and frank, even exaggerating their grievance a bit. The managers were very tactful and somewhat avoided commenting on sensitive issue. Aggregate response of the employees was that, they were unhappy with their job due to excessive work pressure, non standardized yearly increments and poor appraisal system. They are highly de-motivated with their working environment and most of them are at constant lookout for better opportunities. On top of that attempts to do things in a better way or improvising were not encouraged, as the organization did not see fit from their own point of view. Feedbacks were also not taken into account seriously. As a result no steps are being taken to make changes in the working environment and the appraisal system. This in turn has resulted in growing grievances among the employees of the organization. FINDINGS Based on the data analysis of 25 responses to the Questionnaire and 8 responses to the structured interviews it became clear that there is definite lag-behind approach by the organization towards the proper performance appraisal system and also creating a proper work environment to increase the motivation of the employees. It was found that TCS is following the bell curve-based performance appraisal system, which has way past its due
  13. 13. date. This system does not value people's strengths. It only gives a forced value. Even though this system is used to classify and clearly demarcate the employees who are relatively low performers, this method still has a lot of back drops. One's merit should stand for what one actually does, and not against what someone else does. It is quite destructive to tell your team that one day they need to come together and innovate, and the next day, they get ranked against each other. Also, in technology, everything depends on innovation, and you need the brightest of minds to come together. So the organization should have an open mind and should discuss with the employees about the innovative ideas they come up with; who knows, maybe an employee who was relatively a low performer can come up with a great idea which can profit the organization. As per a Senior Executive, who didn’t want his name to be mentioned said that “This system treats employees like machines, and their work like factory output”. . "The only thing that should matter at the end of the year is whether or not an employee has achieved the set goals. Target achievement is the number one criterion in terms of performance," he adds. In TCS goals set and evaluated do not govern performance appraisal. Goals are set to evaluate performance and a number is given on fulfillment of each goal. All these numbers are rolled up to get a number from 1 to 5. However, this number is not used for performance appraisal band determination and a manual ranking of associates in each project determines performance band. Factors that govern ranking and, thus, performance band: 1. Are you required in next 6 months? If so you will get good ranking. It does not matter whether you have contributed anything to revenue until the time of this ranking. 2. If person is getting released from project then he will get D, if not E. 3. Onsite associates gets lower ranking. Logic is to keep everyone happy – Onsite associate gets Onsite allowance (which is usually higher than Offshore salary) and Offshore associate gets higher band. 4. Since consecutive E leads to service termination, another higher performer has to be sacrificed by giving him E. Following year, this higher performer needs to be saved and the cycle continues 5. How close you are to decision makers? Performance appraisal mars collaboration in project. Associates in a project compete to get A, B or C (tragically, even D to escape E). A Project Manager bleeds when he has to burn his best diamonds (team member) like a coal.
  14. 14. A pattern has been found that leads to unhappiness among the employees and maximum decline in performance — boredom. A lot of employees work for more than two years on the same project, and because of that, typically either their performance dips or they leave the organization. All in all it came out loud that: 1. TCS appraisal process is not clear & also not perfect at all 2. TCS project manager generally give good performance band/rating according to personal relation 3. Employee Performance Appraisal is Painful & does not motivate the TCS associates 4. TCS appraisal process does not assess actual performance of team member 5. TCS appraisal process is a non data based assessment 6. TCS appraisal process actually de-motivate the associates 7. Cross-comparisons is not possible in TCS appraisal process 8. No alert is given to TCS associates regarding their performance RECOMMENDATIONS The study has amply revealed that the job satisfaction level of the TCS employees is extremely low and the Top Management needs to address specific area of concern for better performance and should change the appraisal system. Major Recommendations are: 1. 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 to be metamorphosed into one that emphasizes objectivity and a system that mandates performance evaluation against pre-determined criteria. 2. To understand the role and importance of the performance appraisal processing an organization. 3. To analyze the advantages and drawbacks of the different appraisal methods. 4. To discuss the pros and cons of the appraisal process at TCS.
  15. 15. 5. To debate on the challenges of designing an objective and transparent appraisal method. 6. Ensure that everyone is rated on the same scale. If goals are well-defined and appraisee appraised on goals then individual factors, onsite/offshore, requirement over the time etc. will disappear. 7. Promote collaboration rather than competition especially in team. Reduction in number of band values (D and E, even possibly C) will further reduce competition. 8. Allows company to grow when performers in best projects are distributed in organization and bottom performers are coached or terminated. Dropping the bell curve will have long-term ramifications on several conceptions we hold. The notion of getting a bonus or promotion based on what your so-called ranking was, or even how many years of experience you have, will eventually become irrelevant. CONCLUSION In this present paper, with the help of questionnaire analysis, the existing performance appraisal systems of TCS has been evaluated on the basis of criterias considered for appraisal, Clarity of performance appraisal process and transparency of performance appraisal process. It appears that majority respondents of TCS are not in agreement with their existing performance appraisal system. TCS needs to recognize that there is a need to overhaul its people practices, in order to truly evolve. And the first thing they should go for is its performance management system. It can rather have a purely target-achievement based model. Performance appraisal can never be perfect and suggested method (under recommendations paragraph) may also suffer from some problems. One of the problem I envisage is that reduction in competition will not address lack of motivation (not de-motivation) in 40% of least performers (in TCS‘s D and E scale)(consult “Findings paragraph”). With 60% of work force motivated and rest 40% not de-motivated, suggested performance appraisal method is far superior than TCS‘s current performance appraisal method. Any appraisal system is susceptible to subjectivity. Bell curve system tops all other systems in this regard. Unless purpose of using this system is declared as 'development of middle and under performers', the system breaks the team spirit, demotivates all middle and under performers and even the top performers not being sure of being retained in that
  16. 16. category as supervisors rotate top performers over a period to keep more number happy, leave organization after snatching best rewards. Here are the reasons, which indicates why the current models don’t work: 1. No one wants to be rated on a five point scale First, much research shows that reducing a year of work to a single number is degrading. It creates a defensive reaction and doesn’t encourage people to improve. Ideally performance evaluation should be “continuous” and focus on “always being able to improve.” In fact, David Rock’s research shows that when we receive a “rating” or “appraisal” our brain shifts into “fear or flight” mode and shifts to our limbic brain. This shift, which takes place whenever we are threatened, immediately takes us out of the mode to learn or create, making us defensive. So the actual act of executing a performance appraisal itself reduces performance. 2. Ultra-high performers are incented to leave and collaboration may be limited The bell curve model limits the quantity of people at the top and also reduces incentives to the highest rating. Given the arbitrary five-scale rating and the fact that most people are 2,3,4 rated, most of the money goes to the middle. If you’re performing well but you only get a “2 or a “3 you’ll probably feel under-″ ″ appreciated. Your compensation increase may not be very high (most of the money is held for the middle of the curve) and you’ll probably conclude that the highest ratings are reserved for those who are politically well connected. Since the number of “1 s” is limited, you’re also likely to say “well I probably wont get there′ from here so I’ll work someplace where I can really get ahead.” Also, by the way, you may feel that collaboration and helping others isn’t really in your own self interest – because you are competing with your team mates for annual reviews. 3. Mid level performers are not highly motivated to improve In the bell curve there are a large number of people rated 2, 3, and 4. These people are either (A) frustrated high performers who want to improve, or (B) mid-level performers who are happy to stay where they are. If you fall into category (B) you’re probably pretty happy keeping the status quo – you know the number of “1 s” is very limited so you won’t even strive to get there. In a sense the′ model rewards mediocrity. 4. Compensation is inefficiently distributed
  17. 17. People often believe the bell curve is “fair.” There are an equal number of people above and below the average. And fairness is very important. But fairness does not mean “equality” or “equivalent rewards for all.” High performing companies have very wide variations in compensation, reflecting the fact that some people really do drive far more value than others. In a true meritocracy this is a good thing, as long as everyone has an opportunity to improve, information is transparent, and management is open and provides feedback. Just think about paying people based on the value they deliver (balanced by market wages and scarcity of skills) and you’ll probably conclude that too much of your compensation is based on tenure and history. 5. Incentives to develop and grow are reduced In a bell curve model you tend to reward and create lots of people in the “middle.” People can “hang out” in the broad 80% segment and rather than strive to become one of the high- performers, many just “do a good job.” This is fine of course, but I do believe that everyone wants to be great at something – so why wouldn’t we create a system where every single person has the opportunity to become a star? I have accordingly kept the top management in picture and have made my point for addressing these areas promptly. I am more than satisfied that my efforts have enabled me to successfully complete my project and my mini research will be useful to the organization to optimize their performance appraisal system. BIBLIOGRAPHY 1. Armstrong, M. and Baron A. (2005): Managing performance: performance management in action. 2. Arun Monappa & Mirza S Saiyadain: Performance Appraisal || Factsheet 3. C.S Venkata Ratnam: Managing People (Strategies for Success) 4. Fletcher C. (2001), ‘Performance appraisal and management: The developing research agenda’ Journal of Occupational and Organizational Psychology, 74, 4, 473-487. 5. D.M Pestonjee: Motivation and Job Satisfaction