Performance management system at TCS

The performance management process involves all levels in an organization. Strategic goals set by
the organization filter through the organization and affect the goals and activities of each employee. In
addition, the performance management process gathers and updates current employee data to
maintain the human resource information system (HRIS). The HRIS contains a skill bank of employee
information that enables the HR department to determine if the organization has the right mix of skills
and people to achieve the organization’s goals in an ever-changing world. This information is used in
all areas of HR decision-making. Effective performance management requires ongoing
communication between supervisors and staff. The assessment and review part of the process
provides the opportunity for documentation and formal communication. It’s the time for the supervisor
and the employee to set developmental goals that reinforce the organization’s strategic plan and, if
there are areas of problem performance, action plans for improvement. There should be discussion of
the employee’s career progress and plans made for training and long-term career growth. Many
supervisors see the appraisal process as a motivation tool to improve employee performance.

The employee’s main objective is to obtain feedback from the supervisor on his or her work
performance. Ideally, employees receive feedback at all times and not just through the review
process. The employee will also expect organizational support in his or her career growth. Together,
the employee and the supervisor should identify areas for improvement and set goals for training and
skill development. Anything the supervisor can do to enhance the employee’s skills will benefit both
the employee and the organization. If the organization links performance appraisal to compensation,
most employees will expect a raise as a result of a positive review. Though supervisors generally
conduct the review, they may not have a say in the amount of compensation awarded because
compensation is normally determined by organizational policy. This can be particularly problematic for
supervisors who want to motivate employees through the appraisal process but find the organization’s
compensation to be a de-motivator when increases are not as much as employees would like. For
this reason, many supervisors prefer that compensation increases are not linked to the performance
appraisal process.

Difference between Performance management and performance appraisal Performance Management

Performance Appraisal Performance management is a goal-oriented system to ensure that
organizational processes exist to maximize the productivity of employees, teams and, ultimately, the
organization.

A performance appraisal is a formal system of review and evaluation of individual or team

performance.
Performance management is an ongoing organizational process that is conducted to maximize the
productivity of employees with the overall intention of improving the organization’s effectiveness.

The performance appraisal is a periodic event to reflect and evaluate past performance with the intent
to identify strengths and weaknesses of an employee’s performance and to identify developmental
goals.

It is strategic in nature and involves every person and all HR processes in the organization. All are
directly tied to achieving the organization’s goals.

A performance appraisal is just one part of a performance management system.

The Importance of Performance Management The employees are an integral and indispensable part
of running a business smoothly and efficiently. That's why, keeping in mind the crucial role of the
employees, a recent trend known as Performance Management has come into practice. Using
performance management, we can ensure that our employees not only fulfil their responsibilities, but
do so to the best of their abilities and up to your expectations. Performance management allows us to
tap the full potential of our staff. It can be described as a comprehensive process starting from
monitoring and developing the desired traits to rating their progress and rewarding them for their
achievements. I. Involve Employees in the Planning Stage

The making of plans alone will not help us to run our business successfully. We must also focus on
the appropriate ways to get business tasks done. One way of doing this efficiently is to involve our
employees in the planning process. This will not only boost their morale and confidence, but also help
us avoid any communication gaps in the process. Additionally, it will also help in providing them with a
clear picture of what we expect from them and what they need to accomplish.

II. Monitoring the Progress of Our Employees Just as revision of business plans is sometimes
necessary for the success of our business, measuring the performance of every employee is also
important. This ensures that tasks are efficiently completed on time and on or under budget. It also
points out to you any shortcomings of either our staff or business plans, and helps us to take the
appropriate corrective actions.

III. Ensuring All Around Development of Employees Performance management gives us the tools to
install the desired qualities in our employees in order to get the job done. Development is not limited
to only individuals in our workplace, but also addresses the performance of the team as a whole. All
around employee development not only ensures the personal and professional growth of our
employees, but also the expansion and improvement of our business.

IV. Evaluation of Individual Performance Evaluating and rating the performance of our employees on
an individual basis is essential. This gives them a clear picture of where they presently stand, areas
that they need to work on and what they are good at. This way, they can focus more on their
weaknesses and work to strengthen those areas. We should make it company policy to issue
performance reviews while providing your employees with the feedback that they need to perform
better at their jobs.

V. Rewarding Our Employees

Rewarding and appreciating our employees' efforts ensures that the level of their performance and
consequently the performance of our business is not compromised. It ensures optimum productivity,
Performance and maximum profitability. Rewarding our staff for a job well done not only enhance
their performance but also serves as a tool to keep them motivated. Therefore, performance
management is an effective system that allows us to achieve the financial goals of our small
business. Methods of Performance Appraisal

There are a variety of appraisal methods available to organizations. The method selected by the
organization should fit well with the organization’s goals and be appropriate to the job being
appraised. Some organizations use different methods for different positions. Regardless of the
system used, regular communication and feedback from managers are more important than the
method used. Graphic rating scale

A graphic rating scale is the most commonly used appraisal system. Evaluators record their
judgments on a scale that includes about 5–7 categories. Categories are defined by adjectives such
as outstanding, meets expectations or needs improvement. This method is popular because it is easy
to administer and can be quantified, if desired, by adding a numeric value to each description.

Ranking method In the ranking method, the evaluator places employees from a particular group in the
order of overall performance, starting with the top performer--who is rated the highest--and moving
down to the poorest performer in the group who receives the lowest ranking. Paired comparison is a
variation of the ranking method in which the performance of each employee is compared with every
other employee. The comparison is often based on a single criterion, such as overall performance.
The employee who receives the greatest number of favorable comparisons is ranked the highest.
This can be difficult to administer if your work group consists of a large number of employees.

Forced distribution method The forced distribution method requires the evaluator to assign individuals
to a limited number of categories, much like a normal frequency distribution curve. A few individuals
will get very high ratings and a few will get very low ratings, with the majority averaging in the center
of the curve. Generally, those with very low ratings are subject to termination. As with the ranking
method, this system requires the evaluator to place some employees at the bottom, even if their
performance is acceptable, and some at the top, even if performance may actually be less than
outstanding. The system makes the erroneous assumption that there must be some outstanding
workers and some poor workers, even when that may not be the case. Forced distribution is
unpopular among managers because many believe it destroys teamwork and fosters cutthroat
competition among employees.

Critical incident method The critical incident method requires the evaluator to maintain records of
employees’ favorable and unfavorable performances. These critical incidents become the basis for
evaluation. The incident log must be maintained over the entire evaluation period to eliminate the
problem of just evaluating an employee’s most recent Performance.
Essay method In the essay method, the evaluator writes a brief narrative of the employee’s
performance. The major criticism of this method is that it is very subjective because the evaluation
criteria left entirely to the discretion of the evaluator and the results are dependent on the writing skills
of the evaluator. It can be difficult to compare the results of employee evaluations that use the essay
method because there are no common criteria used for evaluation. BARS–behaviorally anchored
rating scale

BARS is a behaviorally anchored rating scale that combines elements of a traditional rating scale and
a critical incident method. Various performance levels are described on a scale, and the evaluator
compares the employee’s performance to the levels described. The descriptions provided reduce the
amount of judgment required of the evaluator and rely on the evaluator’s observations of the
employee’s work behavior.

MBO–management by objectives Management by objectives, or MBO, is a results-based system that

relies on the manager and the employee to jointly agree on objectives, the attainment of which
becomes the basis of evaluation for the next appraisal period.

TCS- Tata Consultancy Service

About The Company 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 flexible global and pioneered the adoption of the flexible global business
practices that today enable companies to operate more efficiently and produce more value. They are
part of one of Asia's largest conglomerates- the TATA Group- which, with its interests in Energy,
Telecommunications, Financial Services, Chemicals, provides us with a grounded understanding of
specific business challenges facing global companies. The role of HR assumes unthinkable
proportions and is subject to mammoth challenges. With this sensitive breed of IT professionals, how
has TCS grown to and sustained at the number one position is a question which market watchers
have asked themselves a thousand times. There is but one answer- passion for excellence in the
workforce practices.

TCS has developed an unbreakable bond with sound HR practices in an environment that defines
traditional roles and responsibilities. The TCS-HR group operates with technical experts to create a
synergy which is enviable. The role of HR, which 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 difficult task but the smoothness of
operations is intriguing. The HR structure, which allows flexibility and empowerment, is the solution.

Performance Appraisal Criteria at TCS Objective Data relating to performance assessment of

employees are recorded, stored and used for different purposes:

MAIN PURPOSE OF PERFORMANCE APPRAISAL General Applications Specific purposes

Developmental Uses Identification of individual needs Performance feedback Determining Transfers
and job assignments Identification of individual strengths and development needs. Administrative
Uses Salary Promotion Retention or termination Recognition of individual performance Lay-offs
Identification of poor performers Organizational Maintenance/ Objectives HR planning Determining
organization training needs Evaluation of organizational gal achievement Information for goal
identification Evaluation of HR systems Reinforcement of organizational development needs
Documentation Criteria for validation research Documentation for HR decisions Helping to meet legal
requirements

Performance Appraisal and Competitive Advantages in TCS 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 TCS’s competitive strength. Besides encouraging high levels of
performance, the evaluation system helps identify employees with potential, reward performance
equitable and determine employee’s need for training.

Specifically, performance appraisal has helped the TCS gain competitive edge in the following ways:
Improving performance Making correct decisions Ensuring legal compliance Minimizing
dissatisfaction and turnover Values and behaviour Strategy and behaviour

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:

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. If employees work for more than two years on the same project, typically either their
performance dips or they leave the organisation. To avoid that, TCS shuffles its employees between
projects every 18 months or so. “Performance drops if motivation drops” the employee satisfaction
depends upon the fact whether 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. 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 every 2 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 leader & Team
Members and this concept have 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.

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