Reference no: EM132749436

Performance Management and Rewards at Tata Consultancy Services Established in 1968.

• TCS is a pioneer in the IT arena in India. As part of the business mandate to become more responsive, TCS announced in the beginning of 2018 that it is adopting enterprise-wide Agile, a new delivery model that is focused on delivering outsourcing projects in increments within a well-defined short duration. This necessitated overhauling its HR strategy.

• The move was intended to support the new shorter and quicker delivery model demanded by clients today. Agile systems are typically comprised of smaller teams who work on a finite set of clearly defined items. The teams' goals and composition change as the project evolves. Becoming agile has implications for core processes like HR. One significant impact of building agile systems was on the performance appraisal mechanism at TCS. Previously, workforce planning, budgeting, and goal-setting were easier to do IT projects were longer and more predictable in nature. Scrapping the bell curve model, TCS set about redesigning its appraisal system. The bell curve system of performance appraisal is a forced ranking system. Through this system, Strategic Human Resource Management the organization tries to segregate the best, mediocre, and worst performers and nurture the best and discard the worst.

• This segregation is based on relative comparison of the performance of the workforce against those engaged in similar activity and ranking them accordingly. TCS has decided to give up this model for a more agile system. Its appraisal system will be redesigned from scratch. To build a flawless model, the company would be assessing its employees on a more regular basis, instead of periodic appraisal. This new system was planned to be implemented in a stage-wise manner covering one sub-set of employees at a time. Gradually, the company would be ready to move towards continuous appraisal and feedback cycle round the year applicable for all employees. Instead of half-yearly appraisal system, targeted employees would move to a project end appraisal cycle-and that the projects could last anywhere from two months to a year. It is a more continuous feedback system. The entire workforce is being trained in Agile methodology.

• However, the new system is likely to face many challenges. It involves addressing key concerns such as: How will the new system apply to all employees? How to measure people as they are doing small projects? How will accountability get fixed? and so on. The company feels that the younger workforce is more aware of the way it works and are, thus, more receptive of the new system. The challenge is mid- to senior-level employees to also appreciate this process because they are accustomed to doing things in a specific way. Changing their mindset will require time. IT service companies in India as well as across the globe will keenly watch how TCS manages its appraisal system, given the scale of the exercise. TCS is looking forward to adopting a system of continuous feedback and performance improvements, a goal that may be hard to achieve, given its sheer size and number of employees.

Problem a. Discuss the key features of the new business model at TCS. What are its HR implications?

Problem b. What are the challenges that TCS is likely to face vis-à-vis its new performance management and reward strategy? Suggest ways to overcome the initial hurdles