At a time when many companies are engaged in unrelenting searches for ways to improve operations, reduce costs, fight attrition and increase retention, there is one aspect of organizational life that has gained immense impetus performance appraisal. Since switching jobs is no longer easy nowadays, performance review play a crucial part in ensuring that an employee is to be retained in the organization and is constantly engaged. As the rate of employment continues to decline drastically due to the economic slump, most companies are working towards retaining and strengthening the talent pool that they already have. And in order to achieve that, organizations are introducing half yearly appraisal systems.
Nirula’s has a half yearly appraisal system, which was started a year ago. This activity was started keeping in mind the dynamic behavior of the industry. With a half yearly appraisal system, the employee gets feedback twice a year, which gives him/her a chance to re-look at his/her approach of working. Necessary steps are also undertaken for employees who deviate from their goals. They have introduced a comprehensive system of quarterly appraisals’ where an employee selects his/her own goals or Key Result Area (KRAs) every quarter and him/her self assesses his/her own performance against these parameters. At Spice jet while formally the process is annual, for several of the frontline employees, there are performance related quarterly payouts designed to reward them with incentives for their performance. This has resulted in quarterly assessments which are aligned overall to annual KRAs
At Era Group, it was decided in 2002 that they shall have a midterm review for all those who have been performers, thereby creating an expectation amongst the employees of an increase in salary twice a year if they perform well. They used to have annual appraisals earlier, but then they felt that the incentives are not enough to motivation the sales department, which generates major revenues or the organization. So, they introduced the system of quarterly appraisals about one and a half year ago.
On the other and, though VLCC does not have a half yearly performance appraisal system, they have gone a step further and introduced a monthly review system, three months ago.
Until a while ago, most companies were dong half yearly reviews which meant overall assessing an employee’s performance in the past six months and giving deserving increments and designation hikes that commensurate with their performances. But now several organizations have revised their appraisal systems and added monetary increments and designation like.
At FIHL, they do give monetary increments and designation hikes, according to the performance. If the employee deserves both, they give him/her both the advantages otherwise at least one of them. Designation hikes are given annually. These are proportional to effort of the individual, team and the department. Designation changes are given keeping in mind the immense responsibility one has to shoulder in a high rank. Monetary increments are primarily incentives that are given either in cash or kind for example they give them travel package within India or outside. Also, they have an accumulating incentive scheme in which employees can accumulate incentives and get them annually with interest. Similarly at Nirula’s the company has a half yearly performance appraisal system. To meet the new demands of the business and to motivate the employees for higher performance, they have started linking a part of the salary increase to individual performance measures as variable pay. At present, between 6 to 8 percent of the compensation is variable pay, which they are planning to increase over a period of time. Executives are categorized in levels based on their performances in a relative ranking and based on out come performance-linked pay is awarded.
VLCC’s monthly reviews are conducted at the beginning of every month by the supervisors. For example, the monthly target setting and monthly review is done for the senior leadership by the CMD in a one to one meeting. Likewise, the head of departments do it for their team members. Even though, there are no monetary increments and designation hikes achievements are celebrated. At Spice-Jet they give incentives, but all salary hikes outside the annual appraisal are market driven. If that merits correction, it is done based on market data. —