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PERFORMANCE MANAGEMENT SYSTEM IN TCS

INTRODUCTION
Performance management system (PMS) is the core of any “people management
“processes in organization. Organizations exist to perform. If properly designed
and implemented it can change the course of growth and pace of impact of
organizations. If people do not perform organizations don't last. If people perform
at their topmost level organization can compete and create waves. Performance
management systems if properly designed and implemented can change the
course of growth and pace of impact of organizations. Effective performance
management requires:
 Identifying the parameters of performance and stating them very clearly.
 Setting performance standards
 Planning in participative ways where suitable, performance of all
constituents
 Identifying competencies and competency gaps that contribute/hinder to
performance
 Planning performance development activities.
 Creating ownership.
 systematically deciding and communicating what needs to be done (aims,
objectives, priorities and targets)
 a plan for ensuring that it happens (improvement, action or service plans)
 some means of assessing if this has been achieved (performance measures)
information reaching the right people at the right time (performance
reporting) so decisions are made and actions taken.
A Performance Management System enables a business to withstand profitability
and performance by linking the employees' pay to competency and contribution.
It provides opportunities for concerted personal development and career growth.
Most importantly, it gives supervisors and subordinates an equal opportunity to
express themselves under structured conditions. Handling this process effectively
isn't easy. It calls for a high level of co-ordination, channelled information flow,
and timely review. Whether employees are at a single place, or spread across
multiple locations, the use of technology can help simplify the complete process
for more effective information management. Performance management could be
defined as it begins when the job is defined and ends when an employee leaves
the company. Between these points, the following should be understood for a
working performance management system.
Developing clear job descriptions: Job descriptions are the first step in selecting
the right person for the job, and setting that person up to succeed Job descriptions
provides a outline so the applicants and new employees understand the
expectations for the position.
Selection: Jobs have different requirements. This is the process of matching the
skills and interests of a person to the necessities of a job. Finding a good job "fit"
is exceptionally important. Use of a selection process maximizes input from
potential co-workers and the person to whom the position will report.
Providing effective orientation, education, and training: Before a person can do
the best job, he or she must have the information essential to perform. This
includes job-related, position-related, and company-related information; an
excellent understanding of product and process use and requirements; and
complete knowledge about client needs and requirements.
Providing on-going coaching and feedback: People need ongoing, consistent
feedback that addresses both their strengths and the weaker areas of their
performance. Effective response focuses more intensely on helping people build
on their strengths. Feedback is a two-way process that boosts the employee to
seek help.
Conducting quarterly or annual performance development discussions: If
supervisors are giving employees common feedback and coaching, performance
reviews can change from negative, evaluative, one-sided presentations too
positive, planning meetings.
Designing effective compensation and recognition systems that reward people
for their contributions: The power of an effective compensation system is
frequently ignored and moderated in some employee motivation-related
literature.
Providing promotional/career development chances for staff: The supervisor
plays a key role in helping staff develop their potential. Growth goals, changing
and challenging job projects and responsibilities, and cross-training contribute to
the development of a more effective staff member.
Assisting with exit interviews to understand why valued employees leave the
organization: When a appreciated person leaves the company, it is necessary to
understand why the person is leaving. This feedback will help the company
improve its work environment for people. A better work environment for people
results in the retention of valued staff.
LITERATURE REVIEW
 Study by DDI (1997), Performance Management Practices is the most
recent performance management study. It proves that successful
organizations realize that performance management is a critical business
tool in translating strategy into results. The CEOs in the majority of the 88
Organizations surveyed say their performance management system drives
the key factors associated with both business and cultural strategies.
Performance management systems directly influence five critical
organizational outcomes: Financial performance, productivity, product or
service quality, customer satisfaction & employee job satisfaction. When
performance management systems are flexible & linked to strategic goals,
organization are more likely to see improvement in the five critical areas:
team objectives, non- manager training, appraiser accountability & links to
quality management are the specific practices most strongly associated
with positive outcomes.
 Watkins (2007) puts it, most public sector business organization like those
in Delta State of Nigeria have not given adequate attention to performance
management review as a tool for improving performance even when recent
studies suggest that performance review benefit organizational
performance in both private & public sectors. Performance management
has been described as a systematic approach to the management of people,
using performance goal measurement, feedback and recognition as a means
of motivating them to realize their maximum potentials. Public sector
business organizations that strive to deliver quality services at competitive
prices are those that embrace various performance review practices to
assess their employee performance & motivate them with incentives.
 Robert & Angelo (2001), The success or failure of public sector business
organizations depends on the ability to attract, develop, retain, empower &
reward a diverse array of appropriately skilled people and is the key to
improving organizational performance. The explanation therefore is that
human resource managers in the public sector business concerns should
embark on periodic performance management reviews of their employees
in order to re-position their business organizations though owned by
government for better performance & improved competitiveness.
 Study by Wm. Schiemann & Associates (1996), this national survey of
cross-section of executives concluded that measurement-managed
companies- especially those that measure employee performance-
outperform those that downplay measurement. These research studied 122
organizations making between $27 million and $50 billion in sales. A
higher percentage of measurement-managed companies were identified as
industry leaders, as financially in the top third of their industry, and as
successfully managing their change efforts. The research examined
performance in six strategic performance areas deemed crucial to long-
term success: Financial performance, operating efficiency, customer
satisfaction, employee performance, innovation/change,
community/environment. The findings revealed that the biggest
measurement area separating successful from less successful firms is
employee measurement. Successful industry leaders simply do a better job
than non-leaders at measuring their workforce, which the study say is
where real change won or lost.
 Study by Hewitt Associates (1994), The impact of performance
management on organizational success substantiates that performance
management system can have a significant impact on financial
performance and productivity. The study used the Boston Consulting
Group/HOLT financial database to track the financial performance of 437
publically held U.S. companies from 1990 through 1992.The study results
showed that: Companies with performance programs have higher profits,
better cash flows, stronger stock market performance and a greater stock
value than companies without performance management. Productivity in
firms without performance management is significantly below the industry
average, while productivity in firms with performance management is on
par with the industry average. Companies with performance management
significantly improved their financial performance and productivity after
implementing performance management.
 Williams (2002) identifies globalization, increased competition and the
increasingly individualistic rather than collective employee relationship as
some of the major drivers contributing to the increased visibility of
performance management systems (PMS). Faced with fast moving and
competitive environments, companies are constantly searching for unique
ways in which to differentiate themselves from their competition and are
increasingly looking to their “human resources” to provide this
differentiation. This has led to much interest in the performance of
employees, or more importantly, how to get the most out of employees in
order to sustain competitive success.
OBJECTIVES
 To study the process and methods of existing Performance management
systems at TCS.
 To study the effectiveness of performance appraisal at TCS.

RESEARCH METHODOLOGY
Research Design:
As the purpose of research study is that of exploration that’s why a flexible
research design has been chosen which provides opportunity for considering
many different aspect. The research design of this study considering its objectives
was exploratory as well as descriptive in nature. The research study was focus on
performance management system in TCS.
Sources of Information:
 Primary data:
The primary data has been obtained by a survey carried out from 30
employees working in TCS.

 Secondary data:
The secondary data has been obtained from various websites, journals,
news papers, research articles, magazines etc.
COMPANY PROFILE
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
didn’t exist as it does today. Now, with a existence 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. They are 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 worldwide companies. As we move into an era of e-business
where IT professionals will interview employers so stringently that 40 percent
employers will miss recruitment goals the role of HR assumes impossible
proportions and is subject to enormous 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 viewers 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 defies traditional roles and responsibilities. The TCS-HR group operates with
technical experts to create a synergy which is privileged. So whether it is
recruitment or even career development, HR is the catalyst which initiates and
institutionalizes processes. To achieve all the functions for over 14000 employees
is a Herculean task but the smoothness of operations is interesting. The HR
structure, which allows flexibility and empowerment, is the solution.
Performance Appraisal and Competitive Advantage 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 inspiring high levels of
performance, the evaluation system helps classify employees with potential,
reward performance equitably and determine employee's need for training.
Precisely, performance appraisal has helped the TCS gain competitive edge in the
following ways:
• Strategy and Behaviour
• Improving Performance
• Making correct decisions
• Minimizing dissatisfaction and turnover
• Ensuring Legal
• Compliance Values 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 —
1. Financial
2. Customer
3. Internal
4. Learning and growth
The financial perspective quantifies the employee’s contribution in terms of
revenue growth, cost reduction, improved asset utilization and so on; The
customer perspective looks at the distinguishing value plan offered by the
employee; the internal perspective refers to the employee’s 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. At the
heart of an employee's fulfilment 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 appraisal against pre-determined standards. What deserves special
mention is the active sharing of the senior management in the determination of
guidelines for the performance appraisal process. The process guarantees buy in
of the employees since the guidelines for the rating system and its conversion into
money terms is not separately decided by HR but is a compromise of a cross
functional team with representation from all levels.
TCS's performance appraisal system is maintained 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. Right from his entry, an employee in TCS get formal performance
feedback once every 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 inspires informal feedback discussions between Project Leaders
and Team Members and this concept has found an tempting appeal among the
people.

Recognition At TCS
Guaranteed high motivation levels at TCS through competitive compensation
packages, stimulating job content, outstanding growth opportunities, and, not the
least, an innovative appreciation mechanism.
The various ways in which TCS recognizes its people are listed below.
1. Project milestone parties-to encourage efficient execution of projects.
2. Recognition of star performers / high fliers-to recognize outstanding talent.
3. Nomination to covet training programmes- to inspire self-development.
4. Best project award-to encourage a spirit of internal competition across
work groups and to foster teamwork.
5. Best PIP award - to encourage innovation and constant improvement.
6. Best auditor award - to recognize participation in critical support roles
7. Spot awards - to ensure real-time appreciation of employees.
8. Recommendations for new technology assignments / key positions - to
ensure career progression and development of employees' full potential.
9. Performance-based annual increments - to recognize high performers
10.Early confirmations for new employees - to reward high-performing new
employees
11.Long-service awards - to build organizational loyalty
12.EVA-based increments - to ensure performance-based salaries.
13.On-the-spot recognition - to guarantee immediate recognition of good
performance.
TCS Shifts To Performance-Linked Salary Structure
TCS is changing its salary structure and going in for variable compensation based
on business performance. The largest software consultancy has been, for a while,
under pressure to compete with the ESOP-based compensation structures of its
listed rivals in the talent-scarce industry.TCS has taken a bold step to give
differential pay at the same hierarchical levels and linked it directly to the
performance of the business units. TCS is software services company and has till
now based its salaries and compensation on individual appraisals, as well as total
performance of the company. The issue of revenue-sharing with employees has
been at the top of the agenda for the top brass of the Tata. TCS has implemented
the EVA to link incentives and performance for its employees at individual levels.
This will imply a significant variance in extras or the adjustable component of
people's salaries, based on the practice and the area of operation. They have to
think like entrepreneurs and know the cost attached to their business and how
they will add value to the investment. Though TCS is linking the incentives to be
paid to the EVA it will not pay the complete EVA in the same year that the growth
is made. TCS has been paying employees a portion of the EVA and bank the
remaining, so that in case the employees are not able to record the same EVA
growth in the lean years, their compensation will not go down. TCS creates HR
practices that shape its competencies and its workforce to continuously innovate
in a volatile and dynamic industry. As TCS moves into an era of e-business where
IT professionals will interview employers so stringently that 40 percent
employers will miss recruitment goals), the role of human resource assumes
unthinkable proportions and is sustained subject to enormous challenges. With
this sensitive breed of IT professionals, TCS has grown to and sustained at the
top position is a question which market watchers have asked themselves a
thousand times. There is but one answer - desire for excellence in the workforce
practices. TCS has developed an strong bond with sound HR practices in an
environment that defies traditional roles and responsibilities. The TCS-HR group
operates with technical experts to create a synergy which is desirable.
Retaining The Best
In an era where company loyalty is on the decline, and demand for skilled
software resources is so terribly high, TCS's strength lies in retaining and
developing its employees. Its low attrition rate while surprising is also expectable.
TCS constantly reviews its human resource policies because often these decide
whether an employee will stay or choose to leave. In a survey that was conducted
for the compensation study for professionals of IT market, 43 percent of the
respondents cited as ‘lack of career advancement’ as a leading cause of turnover.
Another study revealed that while people may join because of the work culture
and compensation issues among others, they leave on account of poor job
satisfaction. In TCS, the stress is on identifying the competencies required for a
role and then filling the positions. And it is here that the Manpower Allocation
Task Committee (MATC) in TCS has a major role to play. TCS has a career path
for Technical Gurus, for managers and for Research Scientists and here again the
human resource group facilities the entire process through a thorough
competency matching. This is done by a function unique to TCS called the
MATC Manpower Allocation Task Committee. MATC is aided by a system that
assists in identifying not just capabilities for a role but also the level of
competency required to fit. The committee is responsible for the allocation of
every individual to projects depending on the set of competencies and the level
of capability in these competencies. These could be plans in India or overseas.
The career paths have been designed by the consultancy experts and necessary
qualities (both behavioral and technical) required, have been used as inputs.

People management, TCS styles:


TCS, Gurgaon and Noida centers, have become the first in the world to receive
PCMM (People Capability Maturity Model) Level 4 certification. The process of
People Capability Maturity Model consists of the following steps:
1. Questionnaires are sent to 20% of the workforce
2. Interviews with owners, viz Human resource division and managerial staff
3. The workforce itself is interviewed; interpretation of all data carried out
4. Strengths and weaknesses are ascertained, and the organisation informed about
these, and its reaction to the same noted down
5. Managers assigned to ensure evolving growth of the people within the
organisation, with section heads in-charge of nurturing that growth
6. A final rating presented, on the condition that the company will continue to
remain at least at that level.
DATA ANALYSIS
1) Length of Time in Company

Length of time in company


Under a year 1-4 yrs 5-9 yrs 10 yrs and above

18%
24%

21%

37%

Out of 30 respondents, about 37% of employees are employed in TCS for 5-9
years, 24% for more than 10 yrs, 21% between 1-4 years and 18% for less than a
year.

2) Gender:

Gender

Male Female

43%

57%

Out of 30 respondents, around 43% are females and rest 57% are males.
3) Age Group

Age Group
Under 25 25-34 35-44 45 & above

17%
23%

23%

37%

Out of 30 respondents, about 37% are between age 25 to 34 years, 23% are
between 35 to 44 years and under 25 years and about 17% are between 45 &
above.

4) Do you complete a Performance Appraisal Process? If yes, when did you


have an appraisal last?

Last Perfomance Appraisal


Within last 12 months Never

20%

80%
Out of the 30 respondents,80% stated that their last performance appraisal was
within 12 months.20% respondents selected never since they had joined the
organization in less than a year.

5) How often is appraisal carried out in your department?

Frequency of appraisal in departments

Every 6 months Every 12 months

17%

83%

Out of the 30 respondents,83% stated that their departments carry out


performance appraisals in their departments while remaining 17% were not being
carrying out the same.
6) Do you agree that it is necessary for Performance Appraisal to be
conducted in an organisation?
Important to conduct Performance Appraisal
Agree Partially agree Disagree

100%

Out of the 30 respondents, 100% of them fully agreed that Performance Appraisal
should be conducted. Not one respondent selected that they did not agree that
they should be carried out.

7) How would you rate the Performance Appraisal method in your


organisation?

Rating Performance Appraisal Method


Easy Complicated Efficient Inefficient

0%

27%

63% 10%
According to the responses of this question, 63% respondents, rated the
performance appraisal method as efficient. 27% of the respondents rated it as
easy, none of them rated it as inefficient and 10% rated it as complicated. More
than half of the employees surveyed feel the system is efficient, this is a positive
result for the company, but having the respondents stating that it was either
inefficient or complicated could have some implications.

8) In your opinion, what does your organisation strive to achieve through


Performance Appraisal. Please select as many as relevant

Goal for Performance Appraisal Activity


To determine training and development needs To determine upgrading and promotion
To determine payment and rewards To review performance
To set targets for future performance To provide basis for disciplinary actions
All of the above

14% 15%

11%
15%

12%

16%

17%

A total of 17% of employees’ surveys selected to Review Performance as what


the company aims to achieve from the performance appraisal system. The next
answer selected was to determine training and development needs, with 15% of
respondents agreeing that this is what the organisation are striving to achieve.12%
of respondents, selected that their organisation used performance appraisal to set
targets for future performance while 11% respondents selected that the
company’s objective for Performance Appraisal was as a basis for disciplinary
proceedings. The next most popular aim selected by 15% respondents was that
Performance Appraisal is used to determine upgrading and promotion.16%
popular selection by respondents was that Performance Appraisal was used to
determine payments and rewards. 14% respondents stated all the factors are
considerable to achieve company goals through performance appraisal.

9) I receive specific and accurate feedback from my manager on my past


performance.

Specific & Accurate Feedback


Strongly Agree Strongly Disagree

17%

83%

83% respondents stated that they receive specific and accurate feedback after
performance appraisal while 17% thought their feedbacks were inaccurate or
biased.

10) Are your pay, benefits and promotion opportunities based on your
performance ratings?
Are your pay benefits and promotion opportunities
based on performance ratings?
Yes No

100%

A total of 100% of the staff surveyed said their pay benefits and promotion
opportunities were truly based on performance appraisal.

11) Who sets the goals that are put in place in the meeting?

Goals set by:


You Manager Both

50% 50%

The responses are partially divided between goal setting by manager himself and
mutually by manager and the employee.
12) Are the targets based on?

Targets based on:


Individual needs Business needs

17%

83%

Of the 30 employees surveyed, 83% stated that the targets were based on the
business needs. 17% of the respondents stated that they were based on a
combination of both needs.
FINDINGS
The findings of the research have shown that the Performance Appraisal system
in TCS does contain many of the important element that make the system
effective, but these elements are irregular and not present in every appraisal that
is carried out. The analysis of the survey responses has exposed that according
to the employees, Performance Appraisal is effective. The system is a worthwhile
tool; it inspires staff and improves their performance. The organisations appraisal
also includes the massive majority of effective performance appraisal aims. While
the system has its flaws and needs a lot of improving to get it to where it needs to
be, it is going in the right direction and has some positive results.
CONCLUSION
The aim of the study was to examine the efficiency of performance appraisal in
the organisation according to the perception of the employees and in doing this
establish. To complete this, aim the researcher reviewed literature on the area of
performance appraisal and related areas widely and then conducted a survey with
employees of the organisation. The survey analysed the current system in place
in the organisation. A vast amount is equal to performance appraisal established
the benefits of having performance appraisal systems in place and looked at how
they can be used for a variety of purposes. More recent researchers discussed the
ineffectiveness appraisal processes can have and the negative impact on the
system and the organisation as a whole. They also stated how important it is to
have a good system in place so that it does do what it sets out to. The research
revealed that the popular of employees in the organisation complete performance
evaluation and for the most part, have an appraisal meeting once a year.

ANNEXURE
1) Length of Time in Company
 under a year
 1 - 4 years
 5 - 9 years
 10-19 years
 20 years or over

2) Gender:
 Male
 Female

3) Age Group
 Under 25
 25 - 34
 35 - 44
 45 and above

4) Do you complete a Performance Appraisal Process? If yes, when did you have
an appraisal last?
 Within the last 12 months
 Never

5) How often is appraisal carried out in your department?


 Every 6 months
 Every 12 months

6) Do you agree that it is necessary for Performance Appraisal to be conducted


in an organisation?
 I fully agree
 I partially agree
I don't agree

7) How would you rate the Performance Appraisal method in your organisation?
 Easy
 Complicated
 Efficient
 Inefficient
8) In your opinion, what does your organisation strive to achieve through
Performance Appraisal. Please select as many as relevant
 To determine training and development needs
 To determine upgrading and promotion
 To determine payment and rewards
 To review performance
 To set targets for future performance
 To provide basis for disciplinary actions
 All of the above

9) I receive specific and accurate feedback from my manager on my past


performance.
 Strongly Agree
 Strongly Disagree

10) Are your pay, benefits and promotion opportunities based on your
performance ratings?
 Yes
 No

11) Who sets the goals that are put in place in the meeting?
 You
 Your Manager
 Both

12) Are the targets based on?


 Individual Needs
 Business Needs