Companies make appraisals transparent
Over the years, organizations in IT,
pharmaceutical, banking and financial sectors have made this process
transparent, leaving little room for surprises.
MUMBAI: It's that time of the year when
companies set goals for employees, which are linked to annual increments and
bonuses. Over the years, organizations in IT, pharmaceutical, banking and
financial sectors have made this process transparent, leaving little room for
surprises. Today, startups are driving the change. Companies have begun clearly
articulating the overall remuneration philosophy to make it more analytical so
that employees know what they are due to receive in salary hikes, depending on
the extent of individual accomplishments.
Hiring agencies said many Indian companies that provide the visibility to employees today fall in sectors like IT, pharma, financial shared services and private banks. Kamal Karanth, MD, Kelly Services & KellyOCG India, said, "Most of the companies do know the range of hikes the organization intends to give its top, middle and poor performers every year. There is always an increment range which managers work on every year. It is always good to communicate this to employees at the beginning of the year. This increases the credibility of the manager when the employee gets increments within that range."
Marico follows a performance management system 'management by results' wherein the goal-setting process is highly participative and employees propose their goals based on the organizational and functional strategic thrust areas. "The underlying principle in defining each goal is that the member has a direct influence on the outcome and the goals and performance indicators are discussed and agreed with the supervisor and concerned stakeholders. So at the beginning of the year, there is a high degree of clarity in performance expectations and the measures that will be used to assess performance. As a result of this, members are themselves able to assess their performance at the end of the year,'' said Ashutosh Telang, chief HR officer, Marico.
Indian companies are progressively getting more mature in their reward frameworks commonly shared and explained. Gaurav Bahadur, senior director - HR (India & South Asia), Sanofi, said managers and employees clearly define at the beginning of the year their business objectives and LEAD (Lead, Empower, Act, Deliver) competencies they will demonstrate and be measured for. This helps facilitate transparent appraisal discussions that are easier to have.
"To enable ease of administration, our performance system is managed through an online platform that is operated three times in the year, i.e. at the beginning of the year employees document the mutually agreed upon objectives, and then later the mid-year and year-end discussions. The formal mid-year appraisal review ensures that there are no surprises at the end of the year and that any streamlining that is required can be undertaken before it's too late. The company's internal tool 'Madhyam' helps facilitate a structured two-way dialogue process on performance as well as development," said Bahadur.
The one factor that is pushing companies to make their processes more transparent is the arrival of the millennial generation. "It's the generation of workers that makes the difference. When you have large population of Gen Y and millennials, they would need to be treated with more transparency than, say, Gen X who are used to letters arriving with unknown increment numbers," said Karanth.
Echoing a similar view, Joseph Devasia, MD, Antal International India, said, "Tech (firms) and startups, which are entirely performance-oriented businesses, are changing the system with millennials demanding more clarity."
Globally, the picture is completely different as HR is mandated under law to spell out a transparent appraisal process, with clearly-defined goals and performance. Large Indian companies are transparent with performance pay conveyed by the business head with the "intent" being there, but it has not been followed through in the entire appraisal process, according to Devasia. There is lack of understanding in the appraisal process in mid-cap and small companies, while MNCs and consumer companies have structured HR systems in place.
According to Prabir Jha, global chief people officer of Cipla, individual compensation is still typically privileged information. Moreover, the rewards are a combination of team and company performance, not just the individual. "Companies have to practise their rewards programme guided by external competitiveness as also internal affordability. While broad parameters are always good to share and be transparent about, the exact mathematical payout is something that's not practical always. At certain levels, there is a need of judgment to be applied for a variety of reasons. As long as the judgment is true and fair, it suffices well," said Jha.
Hiring agencies said many Indian companies that provide the visibility to employees today fall in sectors like IT, pharma, financial shared services and private banks. Kamal Karanth, MD, Kelly Services & KellyOCG India, said, "Most of the companies do know the range of hikes the organization intends to give its top, middle and poor performers every year. There is always an increment range which managers work on every year. It is always good to communicate this to employees at the beginning of the year. This increases the credibility of the manager when the employee gets increments within that range."
Marico follows a performance management system 'management by results' wherein the goal-setting process is highly participative and employees propose their goals based on the organizational and functional strategic thrust areas. "The underlying principle in defining each goal is that the member has a direct influence on the outcome and the goals and performance indicators are discussed and agreed with the supervisor and concerned stakeholders. So at the beginning of the year, there is a high degree of clarity in performance expectations and the measures that will be used to assess performance. As a result of this, members are themselves able to assess their performance at the end of the year,'' said Ashutosh Telang, chief HR officer, Marico.
Indian companies are progressively getting more mature in their reward frameworks commonly shared and explained. Gaurav Bahadur, senior director - HR (India & South Asia), Sanofi, said managers and employees clearly define at the beginning of the year their business objectives and LEAD (Lead, Empower, Act, Deliver) competencies they will demonstrate and be measured for. This helps facilitate transparent appraisal discussions that are easier to have.
"To enable ease of administration, our performance system is managed through an online platform that is operated three times in the year, i.e. at the beginning of the year employees document the mutually agreed upon objectives, and then later the mid-year and year-end discussions. The formal mid-year appraisal review ensures that there are no surprises at the end of the year and that any streamlining that is required can be undertaken before it's too late. The company's internal tool 'Madhyam' helps facilitate a structured two-way dialogue process on performance as well as development," said Bahadur.
The one factor that is pushing companies to make their processes more transparent is the arrival of the millennial generation. "It's the generation of workers that makes the difference. When you have large population of Gen Y and millennials, they would need to be treated with more transparency than, say, Gen X who are used to letters arriving with unknown increment numbers," said Karanth.
Echoing a similar view, Joseph Devasia, MD, Antal International India, said, "Tech (firms) and startups, which are entirely performance-oriented businesses, are changing the system with millennials demanding more clarity."
Globally, the picture is completely different as HR is mandated under law to spell out a transparent appraisal process, with clearly-defined goals and performance. Large Indian companies are transparent with performance pay conveyed by the business head with the "intent" being there, but it has not been followed through in the entire appraisal process, according to Devasia. There is lack of understanding in the appraisal process in mid-cap and small companies, while MNCs and consumer companies have structured HR systems in place.
According to Prabir Jha, global chief people officer of Cipla, individual compensation is still typically privileged information. Moreover, the rewards are a combination of team and company performance, not just the individual. "Companies have to practise their rewards programme guided by external competitiveness as also internal affordability. While broad parameters are always good to share and be transparent about, the exact mathematical payout is something that's not practical always. At certain levels, there is a need of judgment to be applied for a variety of reasons. As long as the judgment is true and fair, it suffices well," said Jha.
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