Ring out the Bell Curve, Ring in the New
With Infosys and IBM doing
away with the bell curve system of appraisal, more companies likely to follow
suit and find new methods of assessment
With Infosys and IBM doing
away with the so-called bell curve system of employee appraisal, more companies
are likely to follow suit and find new methods of assessment as more
millennials join the workforce.
Experts said this may be
because 52% of the millennials, or those who reached young adulthood around
2000, expect to leave their current employers within the next two years, as per
a Deloitte report. The figure shot up to 76% when the time frame was extended
to 2020.
Since millennials account
for more than 70% of the workers in some companies, employers have little
choice but to tailor their policies accordingly.
“This group of people we
manage today want fast, frequent, instant and more feedback,“ said Richard
Lobo, senior vice-president at Infosys, where millennials form nearly 85% of
the workforce. “These youngsters are driven and are comfortable being measured
against something they understand unlike the earlier generations,“ he said.
Under the old system, the
systematic bell-shaped graph classifies a majority of the employees in the
middle and assumes all employees in a company can be ranked as either top
performers (20%) or average performers (70%) and the bottom 10% are typically
weeded out.Such a pay-for-performance system, companies earlier believed,
encouraged employees to perform better.
Infosys has introduced for
its 1.9 lakh employees a system called iCount, under which employees are
rewarded on the basis of their performance on specific short-term but important
targets during the year.
Google, Microsoft,
Accenture, KPMG and HCL have also either discarded or phased out the bell curve
system.
Business consultant Ram
Charan told ET in a recent interview that his advice to CEOs is that they have
to adapt to millennials. “I tell them you can't fire them. They will fire you.
We have to give up most of the hierarchical structures and use digitisation for
that. If you do not do that, you will get left behind. It's going to happen in
the next three years. Millennials have skills that older people don't have,“ he
said.
Companies are increasingly
adapting to this reality .
At HCL, where 60-70% of the
1.7 lakh employees are millennials, chief HR officer Prithvi Shergill advi ses
against companies treating their employees as a herd.
“Organisations that treat their
workforce as a blob of people will have a challenge retaining them.The same way
companies think about customers, they must think about each and every employee
a workforce of one,“ he said. The change is proving to be a challenge for
companies such as Infosys, though, which are figuring out how to iron out
issues in the transition phase. Consultants said one way to bring attrition
rates down is to adopt a more robust system which indicates that every employee
counts.
“The whole notion of
employment is turning into `Uberisation of work'. People are happy to take
short-term projects and their risk appetite is higher. Therefore, retaining
them is harder too,“ said Kunal Sen, senior VP and strategic business unit head
at Teamlease Services.
TIME FOR CHANGE
The time is now right for a
new system of performance management for companies, said SV Nathan, human
resources leader at Deloitte.
“It's nearly a 100-year-old
system and people are tired of it. One ask of millennials is that they want
feedback in a timely fashion that doesn't come in a year later. Beyond the
feedback they're looking for coaching. They don't want to be told they're dumb
but want solutions,“ said Nathan.
At Citi India, which uses a
distribution curve rather than a pure bell curve, the average employee age is
31and a significant percentage of employees are millennials.
The chief HR officer at
Citi South Asia, Anuranjita Kumar said the trend of moving away from the bell
curve is so far largely for companies in new age and technology industries.
“There is a lot of debate about the use of the bell curve and some of that
discussion is driven by millennials who are hungry to grow, learn and develop.
The trend is really about moving to real-time feedback and for companies to
talk about development rather than appraisal for rewards,“ she said.
Many companies are now
seeing a shift in feedback flow in the opposite direction, that is, from
employees to managers. “We all grew up with parents telling us what to do. Now
it's the other way around. We are finding millennials are taking control of
feedback. The practice of having positive, reinforcing conversations is
becoming a must,“ said Shergill.
Another thing that managers
would shy away from earlier difficult conversations are becoming a must on
a more regular basis.
AWARDING BEST YOUNG
PERFORMERS
In many cases, such as at
HCL, the company is seeing that managers are still sticking to evaluating
employees in categories like good and better and they have a little more
flexibility (3-5% more employees are appraised better). According to a
Teamlease study , employees across sectors such as banking, pharmaceutical,
FMCG and IT are also getting a larger number of counter offers (20%, up from
last year's 15%).
Everyone getting the same
payout is a strict no-no, but some feel differential money wouldn't be the only
determinant. Outperformers can be recognised by being offered better assignments,
said Lobo. Performers will be allowed to do better work, attend seminars and
more, he said. HCL plans to have recognition programmes such as `CEO clubs' or
`build the business'.
|
Varuni Khosla
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ET12FEB16
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