Today, we received our performance appraisal. All TCS employees were divided into five bands from A to E – A being the top rated and E being the bottom. Top 10% associates get A, next 20% B, next 30% C, next 39% D and bottom 1% E. Band distribution motivates top 10% and at least half of next 20% (bottom half of 20% who knew they did not deserve A). Overall, 20% of work force is motivated and rest all are demotivated. You can notice the feeling when associates take longer tea break, hesitate to talk, do not return calls, and when SLAs breach or just escape breaching.
Why is performance appraisal demotivating for 80% of TCS work force?
Goals set and evaluated do not govern performance appraisal. Goals are set to evaluate performance and a number is given on fulfilment 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:
- 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.
- If person is getting released from project then he will get D, if not E.
- 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.
- 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
- 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.
Should we not have performance appraisal?
We should have performance appraisal. However, performance appraisal needs major revamp:
- Only one person or one committee sets performance goals for all associates in a project. Number generated from goal attained should determine ranking of person in project.
- Many a times supervisor keeps goals in a goal-sheet vague (not specific or quantifiable) so that he can evaluate overall and give his opinion. Instead of that one of the goal measure can be supervisor opinion of appraisee performance. This goal should be subjective.
- Have two scales of performance appraisal – project performance and personal performance.
- Have 2-3 performance levels. A – top-performer, B – mediocre, C – non-performer. Employ level C for very small percentage like 1%. Applying level C should not be mandated on personal performance but mandated on project performance scale. Coach or terminate a person with both individual and project performance C.
- Disburse project team that obtains project band A and C.
How is suggested performance appraisal method better than TCS‘s method?
- Ensures 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.
- Promotes collaboration rather than competition especially in team. Reduction in number of band values (D and E, even possibly C) will further reduce competition.
- Allows company to grow when performers in best projects are distributed in organization and bottom performers are coached or terminated.
Performance appraisal can never be perfect and suggested method may also suffer from some problems. One of the problem I envisage is that reduction in competition will not address lack of motivation (not demotivation) in 40% of least performers (in TCS‘s D and E scale). With 60% of work force motivated and rest 40% not demotivated, suggested performance appraisal method is far superior than TCS‘s current performance appraisal method.