Cheer for achievers, rest need to shape up - Times of India

Cheer for achievers, rest need to shape up – Times of India

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A growing number of firms is neither using pandemic disruptions as an excuse to deny better incentives to star achievers nor accepting it as a reason for a lackadaisical performance.
Two key performance assessment indicators — incentive thresholds and accelerators — are back to their pre-pandemic levels at several organisations. ‘Thresholds’ for performance assessment refer to a certain level that one needs to achieve before incentives start paying off and ‘accelerators’ determine greater payouts for better achievements. The thresholds were lowered during the pandemic to conserve cash.
During the tough pandemic years of 2020 and early 2021, a number of companies had tweaked their incentive programmes to bring down the threshold percentages to help employees get to an achievement level for payouts to begin but balanced it with a lower incentive payout percentage at the threshold. This change helped organisations to manage both employee motivation and cash flows, said Mansee Singhal, senior principal (rewards consulting leader) at Mercer India.
As organisations started coming out of the pandemic — and last year was a notably good year for most of them because there was pent-up demand, and disposable incomes were returning — they went back to incentivising over-achievement as well. This, said Singhal, was done by going back to exponential returns or accelerators. “If earlier, the payout was 100-105% at achieving 100% of target, the overachievement could see it hit 200%. An aggressive play is being seen by increasing accelerators and, in some cases, this could be 355% of the target payout for substantial overachievement. This could offer significant motivation to employees to really push for over achievement beyond the target and get rewarded differentially,” said Singhal.
On the other hand, with studies pointing out that performance management plans were losing their effectiveness in ensuring better productivity, some organisations are coming out with innovative ways to review employee performance. Bizongo, for one, has quarterly check-ins between employees and their managers. Bizongo chief technology officer Ankit Tomar said, “These check-ins provide employees with the opportunity to introspect on their growth, understand their developmental areas, learn how to leverage their strengths, and eventually contribute to the organisation.”
Tomar reasoned that Bizongo believes it cannot limit its employees with individual goals, and hence the vision is to inculcate a spirit of entrepreneurship and innovation in each of them to give them a larger framework to make contributions. “The role of the manager in this regard is to understand the critical changes an employee needs to bring, so they are able to align them with the vision. Rather than simply evaluating their work, this transparent feedback loop between employees and their managers has been far more beneficial to employees in understanding their deliverables,” said Tomar.
This has a direct impact on employees’ motivation to work as well. “Our metrics are geared towards evaluating impact, which is the overall contribution an employee makes in the company. In this regard, the role of the manager is to guide employees. Due to the frequency of these check-ins, employees and managers have a more updated understanding of their deliverables and are able to be on the same page with respect to the expectations,” said Tomar.
Given that there is a dynamic external environment, Vibhash Naik, CHRO at HDFC Life, said goal-setting can be made a bit more flexible. But not in every field. “In sales, for instance, it is difficult to implement this. It would be difficult to align people to the target if goals keep changing. Thus, apart from measuring absolute performance against the target, we also look at relative performance for assessing and rating a sales employee.”
There’s also been some disgruntlement among organisations with the doing away of the bell curve, a rating-based system. Naik of HDFC Life believes there’s no good alternative to an objective review and the bell curve. “There has to be some science in distributing the ‘Bonus kitty’ or ‘Increment pool’ among employees. Distributing it equally is not an effective process for performance assessment. Even companies that have done away with the bell curve are using other proxies to rate employees for their performance and distribute rewards. High performers need to be rewarded with a bigger amount from the kitty. If there’s no rating, there will not be any transparency either,” he said.
Singhal said most organisations have reverted to pre-pandemic levels, both in terms of annual increments and variable payouts. “As sales picked up to pre-pandemic levels, the construct of variable plans underwent a change to reward differential performance with significant upside. In general, the bonus payouts have been considerably higher than a couple of prior years,” said Singhal.



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