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Trends in Performance Management Global Business Review

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System: A Study of Indian Service © 2019 IMI
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DOI: 10.1177/0972150919867853
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Soni Agrawal1

Abstract
The purpose of the present article is to understand current trends in performance management. For this
purpose, perceptions of professionals providing knowledge services are analyzed. In the present article,
feedbacks are collected from middle-level executives and HR professionals on dimensions, namely,
performance planning, goal setting process, review process, reward discussion, etc. In the present work,
qualitative method is applied with multiple case studies. The idea behind is to understand the current
aspects, challenges, and the strategies applied by the organizations. Data were collected from nine
companies from different sectors such as information technology and information technology enabled
services (IT/ITES), consulting, and financial service providers. The results revealed that companies are
open in goal setting process and give employees a lot of flexibility as what should be their goals and
objectives. They believe in continuous improvement in all the processes, whether it is goal setting or
continuous feedback system. Goals may change or can be different for onsite and offsite professionals as
per the requirements of the clients. Many firms had removed bell curve from their system. Professional
perceived the performance management systems need to be internally aligned, but at the same time
pointed towards a need for improvement on the way feedback are communicated. The recent trend
is seen in terms of usage of cutting-edge technology even in human resource functions, which gives
them better results. Companies believe in recognizing the potential and performance of employees.
Promotions are no more based on only past performance.

Keywords
Performance management system, feedback, rating, bell curve, human resource practices

Introduction
Performance management system (PMS) is continuously evolving (Bititci, Garengo, Dorfler, &
Nudurupati, 2011), and a new trend of forward looking is taking place (Shah, 2012). In the traditional
system, major dissatisfaction was observed with backward-looking systems (Nudurupati, Bititci, Kumar,
& Chan, 2011). It often criticized traditional performance measures based on costing and accounting
systems, and thus had short-term view (Gerwin, 1987). It is understood that revenue numbers for each
1
International Management Institute, Kolkata, Alipore, Kolkata, India.

Corresponding author:
Soni Agrawal, International Management Institute, Kolkata, 2/4 C, Judges Court Road, Alipore, Kolkata 700027, India.
E-mail: [Link]@[Link]
2 Global Business Review

product line and year-on-year growth have now become more and more aggressive. To get the margins
and to survive in this competitive world, technology solutions are to be delivered to clients at a rapid
pace. Business leaders want to relook the PMS as a tool that can help in managing the workforce spread
across multiple products, projects, and locations. It lacks strategic focus, and had less scope for continuous
improvement (Lynch & Cross, 1992). The underline meaning here is that traditional system was designed
way-back as per the requirements of the manufacturing world, which was later implemented on IT and
other knowledge sectors. The knowledge sector does not find the system suitable for them, and showed
dis-satisfaction (Pareekh Jain, research director at technology consultancy firm HFS Research).
In an organization in general, measurement of performance of employees is a herculean task, and
most of the times, an individual’s performance is evaluated with other employees’ performance using the
bell curve method or forced distribution. The recent trend is seen in the light of IT companies, which can
give better results in the performance of their employees. Infosys and other major IT companies had
recently stopped using the traditional bell curve system for measuring the performance of their employees.
With a rapid change in technology, emergence of newer products, never ending customer expectations,
margin pressures, competition, consolidation (smaller companies getting acquired by the bigger firms)
and changing regulations are the recent norms. Moreover, workforce dynamics are changing fast. New
generation, who is technology savvy is working with the traditional mindset of employees at the same
time. And IT industry generally leads to disruptive and rapid changes (Franco-Santos, Lucianetti, &
Bourne, 2012). The diversity count is increasing even more with workforce mix having onshore/
offshore model to have lower cost advantages, and to balance value and skill availability. It shows
emergence of new products and services as the requirement puts a pressure on them to perform as per
the expectations of the end users. Different models are experimented at organizational level to remain
competitive and relevant.
Thus, the present article is an attempt to understand and discuss the present trends in PMS. The article
starts with the review of literature after introduction. Thereafter, objectives of the article are discussed,
followed by detailed methodology, which includes sources of data, sample frame and discussion on
internal and external validity and reliability of data sources. Analysis of the data is done using content
method. Examples of data coding, and identification of themes are also included. Then, discussion,
conclusion and managerial implications are dealt in the later part of the article followed by limitation,
acknowledgement, references and appendices.

Review of Literature
PMS is an integrated approach, which understands strategic focus of the organization for delivering
successful results by improving performance and developing capabilities of teams and individuals
(Armstrong, 2012). Researchers and practitioners had always questioned the veracity of financial-based
performance measures, and demanded a broader view in the face of new trends that had taken place in
the current scenario (Kaplan, 1984). Moreover, competitive landscape and increasing pressure on
business objectives had placed strong emphasis on measuring and managing individual performance
through goals and objectives. With these efforts, a new system, based on non-financial indicators with
flexibility, is appreciated more (Slack, 1983).
A framework that is an integration of five systems, which includes performance, cost system,
capability evaluation system, benchmarking and planning are suggested for strategic performance
management (SPM) success (Taticchi, Balachandran, & Tonelli, 2012). SPM implementation issues and
critical success factors are supported by top management such as usage of right and adequate measures
Agrawal 3

and tools, quality of data, flow of data, good organizational acceptance, implementation by champions
and aligned incentive scheme (Akhtar & Mittal, 2015). The primary goal of PMS today is to assess the
progress for achieving both financial and non-financial objectives. Meanwhile, the output of PMS is
used for assuring efficiency and effectiveness of resource allocation in an organization (Acharyya, 2007).
A recent review on trends in performance management by Bishwas (2015) found that innovation and
flexibility affects survival, growth and performance of an organization. As per Parent, Sloan, and Akio
(2015) the usage of innovative tools and technology is becoming important for real-time, pulse-based
monitoring of feedback and engagement. In addition, PM process is now more integrated with strategies
for employee engagement. A recent development discussed by Yadav, Sushil, & Sagar (2013) is the
flexible strategy game-card (FSGC) that proposes to look beyond enterprise-centred measures, rather
towards dual perspectives of performance, namely, enterprise perspective and customer perspective. In
this approach, all major stakeholders are considered under enterprise perspective, and customers are kept
at the centre for strategy formulation and implementation (Yadav et al., 2013). According to Chenhall,
Hall, and Smith (2014), in performance reports, elaborate spreadsheets, metrics, and indicators need to
be highlighted. Moreover, with time, systems need to be developed that can improve organization’s
capabilities and performance (Koufteros, Verghese, & Lucianetti, 2014). Another important tool as
suggested by Saraiva and Alves (2015) is adoption of balanced score card (BSC) approach as a strategic
performance measurement tool by most of the organizations. The tool is very effective and gives the
organization a holistic as well as global view of the firm. It enables enterprise with wide approach for
measuring organization’s performance. Hence, it provides an excellent infrastructure for an enterprise-
wide risk management. Organizations utilize BSC to focus on the achievement of strategic goals and
priorities (Kalender & Vayvay, 2016). In addition, it is important that there should be an effective
personal and departmental goal alignment with respect to the strategy of the firm. These tools are thus
important and allow strategic learning and advancement. Srivastava (2014) had suggested the usage of
innovative models with holistic approach towards achieving the goals of the organization. He
recommended the form of leadership, which believes in prompt execution and communication to all
levels on a timely manner. This leads to better strategy execution and builds an adaptive culture.

Gaps in Literature
With changing nature of work, there has always been a debate on the applicability of forced distribution
system and bell curve. Also, the requirement of a rating system also seems debatable. Moreover,
importance of multi-level feedback system in the present scenario needs special attention. However, the
suggested models and system as discussed in the review of literature may not be efficient in all types of
industries. Thus, understanding the changing requirement with respect to the present business needs in
the present changing environment is not only important, but also crucial. Thus, the present study is an
attempt towards achieving the goal.

Objectives
The main objectives of the study are:
1. To examine current practices in PMS followed in companies providing knowledge services
2. To analyze issues and challenges faced by companies while implementing the process
4 Global Business Review

Rationale of the Study

The present study is an attempt to understand the changing trends in the area of PMS, which is always a
very sensitive issue not only for managers but also for employees. Generally, it is seen, employees
hesitate to share their discomfort openly with others. Managers also restrict themselves to share it openly.
But, it is important for HR managers to know satisfaction level of employees in the changing scenario.

Methodology: Data Source and Sample Frame

In the present article, a multiple case study method was applied as it helps in comparing findings and
ensuring the generalizability of the theory. The results from one case study can be considered as subjective
or non-scientific (Yin, 2009). It enables a researcher to study a phenomenon in a real-life setting (Stake,
1995). The study is explanatory in nature as it contains why and how research questions. The companies
included in the study provide knowledge services, and their workforce is mostly a mix of employees with
the age group of 21–55 years.
For data collection, semi-structured interviews with the help of open-ended questions were conducted,
and review of company documents and website were applied. In the present study, after approaching 40 odd
companies using convenient sampling method, nine were finally selected. These 40 companies are majorly
in IT/ITES sector, and some are in consulting and financial services. The heterogeneous set of companies
offer firmer grounding of theory than a more homogeneous one (Santos & Eisenhardt, 2009). Selection of
the companies is based on the number of employees and the services provided by them as we term here
knowledge services. Although, these companies are competing in different industries with different
products, services and customers, though, overall they are catering to similar types (skilled) of employees.
Interviews were conducted with executives, who are mostly at middle level such as human resource
manager, manager operations, senior consultants, analyst, software developers, etc. The questions were
focussed on policies, norms, practices, events and outcomes, which reduced the potential for retrospective
biases. Initially, a questionnaire consisting of open-ended questions was shared. Thereafter, follow-up
interviews and discussions were taken place to have the clarity on different aspects such as day-to-day
functioning, practices, norms and challenges of the companies.
A short detail about the companies is mentioned here.
Company A is a multinational company and was established in 1975. It deals with software product
development and believes in technology and innovation. Other streams are core engineering and
operations, technical support and research centres. Presently, it has around 130,000 employees
worldwide and 10,000 plus employees in India.
Company B is a global management consulting and professional service provider fortune 500
company. It came into existence in 1994 and has around 270,000 employees world-wide and 150,000
employees in India. It operates in digital business, operations and systems.
Company C is an IT consulting business process outsourcing (BPO) company. It was founded in
1945 in India. Presently, it has 125,000 employees in India and around 35,000 employees in other
locations.
Company D is a multinational company founded in 1945 and provides services in digital technology,
consulting and operation services.
Company E is an India-based company located in Noida, which came into existence in 1976. It deals
with IT business service consulting and outsourcing services. It has around 130,000 employees.
Agrawal 5

Company F started its business in 1911 and has operations in 170 countries. It manufactures and
markets computer hardware and software. Presently, it has around 400,000 employees.
Company G launched in 1968 is an India-based IT services and consulting company and operates in
46 countries.
Company H is a UK-based company and presently deals with audit tax consulting, enterprise risk
and financial advisory services. Presently, it has around 300,000 plus employees.
Company I is an India-based insurance company and was founded in 2000, and has more than
30,000 employees.

Analysis
Responses were documented and content analyzed based on themes emerged from the discussions. Steps
undertaken in this study include formulation of data into related themes, interpretation, and conclusions.
Then cross-case analysis (Eisenhardt, 1989) mainly for comparing findings was carried out to draw
conclusion. While the study focussed on understanding the performance management process followed
in these organizations, practices and process mentioned by executives were compared among nine
companies’ responses in order to explore patterns of within-unit convergence. The search for the
progression of activities was assisted by selecting pairs of companies by listing similarities and differences
between each pair to compare each set of them for the same. After that, again these tentative sequences
were revisited to understand whether it confirmed them or not.
For answering the question of reliability and applicability of the case study method that refers stability,
accuracy and precision of measurement developed for case study protocol are followed. Interview
questions were drafted based on the understanding from the existing database, which includes transcripts
and prior academic references. Internal validity of the study was enhanced by incorporating and
supporting the findings with earlier studies. Initially, current PMS of an organization was discussed in
brief, followed by rating system and so on. Few themes such as competitors’ expectations and monitoring
process are not included as an independent theme as much data was not available to support that. The
themes that finally included in the study combining sub-themes are Role of Line Managers in Performance
Management, Performance Planning, Formal meetings and discussion points, Rewards, and at last any
other inputs or insight to improve current performance management. It was found that employees’
performance in the industry context varies on a range of tasks, and require dynamism, technical know-
how, understanding of project hierarchy, processes and client expectations and coordinated working with
team members. Besides this, it was felt that performance measurement in service industry is predominantly
team based.

Data-coding Examples
Interviewer excerpt: Can you please explain how and when the company starts planning for identifying
individual goals against the company goals?
Interviewee: In his company, individuals sit with their managers to discuss and finalize the yearlong
goals. Goals are to be SMART (specific, measurable, achievable, recent and time bound). Departments’
head expect their managers to write goals for their supervisee, and it is expected that employees beat the
earlier benchmarks.
6 Global Business Review

Coded as Performance Planning; Goal Setting Process is the Sub Theme

Role of Line Managers in Performance Management

Many of the line managers shared that their role is crucial on task dependency among individual and
project teams. According to them, optimum individual performance is related to proper task allocation,
mutual exchange of project information, and synchronized work between onsite and offsite development
teams and their members. It was further added that most performance-related problems in projects were
occurred due to lack of coordination and understanding between onsite and offsite team members.
According to 70 per cent of the companies, line managers play a very significant role in performance
planning. Industry context made it important for line managers to initiate goals, Key Result Areas
(KRAs) setting for their team members is done in the beginning of the year, and re-working on them is
performed as and when required. One of the senior executives from a multinational firm mentioned that
immediate supervisor or team leader should always play a key role in deciding overall performance of
their team members. In contrast, around 20 per cent of the organizations feel that both HR and line
managers have a lot of task interdependency. Also, constant changing work requirements made it
absolutely necessary for supervisors to periodically review performance and provide feedback on a real-
time basis. Human resource managers further added that line managers are instrumental in performance
facilitation for them. Since senior line managers have vast experience and tacit knowledge accumulated
over a period of time, thus it becomes instrumental in facilitating team’s understanding of project
requirements. Line managers validated this view by stating that defining and clarifying what is to be
done is often more challenging than actual execution. Moreover, task clarity evolves only after greater
client–project team interaction over a period of time, frequent communication across levels and real-time
information sharing practice facilitates and improves team performance as shared by another company.
Some organizations had pointed out the role of project managers and their importance, but also stated
that it varies from one organization to the other. Previous literature suggested that software projects are
typically dynamic and involve unstructured tasks (Brodbeck, 1994), and their execution requires
knowledge and expertise from many domains (Curtis, Krasner, & Iscoe, 1988). At the same time, system
measures must be efficient. Measurements tend not to influence the skills of rater, instead should
highlight the skills of the ratee. In the present system they had devised a way so that real information
about ratee is captured by the system

Performance Planning
Elucidating this point, senior HR manager of company B mentioned the practice of setting goals starts
with employee. In the company employees select goals for the financial year, and are reviewed by the
supervisor. Finally, the reviewer has the authority to accept, change, or modify some of the goals as
mentioned by the employee. In company C, there are some predefined goals as are decided at the
company level. However, the employee can edit, add or remove few goals after consultation with the
supervisor. In most of the companies, once the goals are finalized, employees are committed to fulfil
those goals. However, when an individual employee finds difficulty for achieving a goal because of
changed market condition, unexpected competition, personal inability to work on the project, etc.,
revisiting to goals is encouraged. In that case, one can modify goals during the financial year itself. The
discussion between the manager and the managee plays an important role. At the time of final appraisal,
all the aspects and developments are considered, as what was the reason for leaving/changing the project.
Was that too difficult to achieve, or there were personal reasons that were involved.
Agrawal 7

Table 1. Rating Cycle Frequency (perceptions based on insights from the studied companies)

Sl. No. Frequency Practice (%)

1 Once in a year 70–80
2 Twice in a year 20–25
3 Any other 4–5
Source: The author.

In most of the companies, it was found that performance rating is given after the completion of a
financial year (Table 1). Company C organization follows traditional method of performance management
process. The company believes in rating employees in a traditional way, and follows a mid-year review
process followed by formal appraisal meetings and award of ratings. Formal ratings are on the scale of
four, from highest to lowest. The immediate supervisor first gives the rating to an employee, after that
employee is given the rating by the reviewer, which is again based on four point scale, and can be varied.
The executive from Company H added that

in a case where employee is not working with its immediate supervisor or working with more than two or three
supervisors from different level, then the performance data is collected from all the supervisors under whom that
person had worked. This process is followed by the reporting officer, who finally collates all the information for
taking the decision for final rating.

In such case, reviewing officer does not come into picture, as the manager had performed at different
levels and under different supervisors. If the employee is not satisfied with the ratings as given by the
manager then one can visit the manager and can make him understand his point, else it become difficult
to change the rating, once it is given by the manger.
Company A had redesigned their PMS. They do not believe in giving formal rating as it affects the
overall performance of an employee. Rather than providing an overall rating, they believe in continuous
performance feedback. On the other hand, other companies believe that rating is a must and they do not
have an alternative of it. One more MNC added that their focus is more on three things. First, evaluation,
which is project based, but in case project is of long term nature then quarterly/monthly review/
measurement reports are collected. Goal setting is initiated by the supervisor, but consensus is gathered
by both manager and managee, and there is no restriction of the number of meetings between them. The
other two crucial aspects are review and rewards. In company E, goals are set in the beginning of the
year. As far as goal setting is concerned, it is a very specific process, and employee and his/her manager
are responsible for finally setting the goals. The role of supervisors is very important in communication
of final rating to employees (refer Table 2). Rating is provided on a ten point Likert scale from ‘one’ as
being considered inferior and ‘ten’ is the highest rating to employees. The company follows mid-year
and final annual performance appraisal process. The reviewer also examines the performance on the
same scale. This rating then goes to the performance management and development (PMD) team.
Another leading Indian IT/ITES company uses rating for measuring performance of employees and ‘1’
is given for highest performance and ‘5’ for lowest performance.
The executive of company D mentioned that a

manger rates employees on a continuous linear scale with points from 0 to 200, and under which 60 is minimum.
Each leader in the organization has a set budget for rewards to its employees. The managers rate their employees
on this linear scale, and round off is done by the system to the nearest discrete point, and accordingly the leaders
decide on the actual amount of the rewards.
8 Global Business Review

Table 2. Rating No. and Involvement of Seniors (perceptions based on insights from the studied companies)

Sl. No. Seniors’ Involvement in Communication of Ratings Practice (%)

1 More than One 70–80
2 Only One 10–15
3 Any other 5
Source: The author.

Table 3. Review Process (perceptions based on insights from the studied companies)

Sl. No. Frequency of Review Process Practice (%)

1 Only once 10–15
2 More than once 70–75
3 Monthly 5
4 Weekly 2–5 per cent
Source: The author.

In case there is a discrepancy among the managers’ rating and the business results of the unit, then a
discussion is organized between the leader and the manager of the unit regarding the performance of its
employees.
As stated by a HR manager of a company, ‘there is a concept of two performance cycles in a year (H1
from April to September and H2 from October to March). In H1 and H2, an employee can initiate for
only one project. In case an employee works on two projects in six months, then he can raise two Project
Ends and can get the rating for those two projects. So far, decision on the rating of the employees is taken
in the Mid-Year (H1) or Year End (H2). The average of both the ratings is considered to draw the final
rating'.
In another company, which is in financial service sector follows the PMS more on traditional lines.
As usual, performance goals are decided in the beginning of the year and a formal mid-year review
process takes place, and final ratings are provided after annual meetings (refer Table 3). In the mid-year
review process, only performance discussions and support in case required are discussed with the
employee. Formal ratings range between ‘five’ as poor and ‘one’ as excellent.

Formal Meeting and Discussion Points

In practice, there is a provision of meeting twice in a year in most of the companies, and maximum this
can go up to four times in most of the cases. The level of satisfaction varies. It was found that employees
are more satisfied with the review process when feedback is provided in a personalized manner and
communicated to them in a constructive and development-oriented approach (refer Table 4). These
formal meetings are called ‘connect’ in company A and performance of the quarter is reviewed. Feedback
is collected from different sources such as peers, clients, colleagues. In a case, where employee is not
working with the immediate manager then the performance feedback is collected with the manager(s)
under whom that employee had worked.
Agrawal 9

In company C,

there is a concept of L1, who is the team lead and L2 who is delivery head, who collects the performance
information from each employee. Performance discussions happen twice in a year that are mid-year review as
well as annual review process. Annual review process is more formal, whereas in the mid-year review process,
employees are not given ratings, rather discussion happens between the supervisor and the employee.

On the question, whether companies follow an appeal process when employees are not satisfied with
their current appraisal. It was found that around 40 per cent of the companies do not follow an appeal
process. In practice, rather if an employee is not satisfied with the current performance ratings or
incentives, then the matter can be discussed formally with HR (refer Table 4).
In one of the companies, which is a leading IT/ITES company shared that they follow an annual
formal appraisal system, along with that, employees can meet with their managers as many times as they
wish. It facilitates flexibility to both managers and employees to fix the issues in a formal or informal
discussion as and when required. In contrast to others, two leading MNCs had added that in their company
employees are most important and they all try to facilitate them. There is no minimum or maximum
number of meetings as fixed by them. If an employee is not satisfied with the ratings then it can write
back for review. An action is thus taken at the time to see the whole process and the employees’ concerns
are taken into consideration. The responsibility is given to managers for understanding various aspects
of the issue and sort out the case to follow the process smoothly. These managers further added that
frequent progress review meetings and feedback can reduce the occurrence of fire-fighting situations
in project.
Respondents from companies A and H stated that many a times, performance discussions happen
with the immediate supervisor. But in case, where the employees is working with another manager then
performance feedback will be collected from that person under whom the employee had worked. Line
managers added on this that frequent progress review meetings and feedback are important as these
practices reduce the occurrence of fire-fighting situations. A leading consulting firm had mentioned that
there are check-points as feedback review sessions are held on quarterly basis, and employees
performance is discussed during those sessions. The final ratings are given at the end of each year,
however quarterly performance feedbacks are considered for calculating the final rating. Company F’s
executive mentioned that

they now do not believe the effectiveness of 360-degree feedback system. Rather a feedback mechanism works
better for them, which can answer the critical questions by the immediate supervisor. Also rather than collecting
feedback data from a number of verticals, quality of feedback based on critical questions that reveal relevant
information about the skills set, potential and attitude of the employee is more important for them.

Table 4. Satisfaction with Feedback Discussion Procedure (perceptions based on insights from the studied
companies)

Sl. No. Frequency of Review Process Practice (%)

1 Very much satisfied 5–10
2 Satisfied 50–60
3 Neutral 5
4 Not happy 15–25
Source: The author.
10 Global Business Review

Another company’s executive added that 360-degree feedback review process followed in the
organization. Another company mentioned that HR and business unit leader practices appeal process in
their company, in case the employee is not satisfied with performance ratings.

Rewards and Promotions

Around 70 per cent of the organizations mentioned that decision on distribution of incentives is taken
once in a year, and is kept separate form performance appraisal report. Incentives are calculated based
on previous performance, and also on the potential of the employee. Depending on the band of the
employee, variable pay and incentives are decided. Progress meetings are held quarterly in a year to see
the progress of the employee.
As per companies G and I, incentives are decided by manager based on performance information as
fed by the immediate manager/supervisor of the employee, and the decision is taken by the organization
at the higher level and is revised each year as per the performance of the organization. The promotion
policies followed in the organization are based on understanding of the potential of employee for doing
the next job/assignment. In case of awarding promotions, as per the policy of the organization, an
employee needs to spend a minimum period on a position. Only after that the employees can apply for
the promotion. In general, promotion is awarded after a discussion that is held in a meeting in which
business unit head, reviewing officer, and HR managers are invited.
The leading consulting firm company H had shared that

calculation of incentives in his organization depends, majorly on the organization’s performance along with
individual and team performance parameters. Now potential as a parameter for measuring performance is also
give a prime focus. Promotions are awarded after considering the overall performance, and the readiness of the
employee for the next level.

Business head and HR takes part in such discussions. As per company A on rewards and recognition, it was
revealed that recognition and reward should be transparent. They mentioned that they had included some
parameters in their system, which can improve transparency as they found it very critical for a system.
In company H, promotions are awarded twice in a year. There are many stakeholders, who are
involved in following the practice. These stakeholders are manager, leaders, and HR. During talent
discussions, HR helps in drawing out the trends and related questions are answered to have a better
understanding on issues related to promotion and performance.
The IT/ITES company G shared that

incentive and rewards are discussed on one to one basis. There is no comparison between two employees as one
had done better than other, rather it is based on actual performance. If a person is not satisfied with the formal
appraisal results then it approaches HR for further discussions. Promotion policies in the organization are based
on minimum completion of number of years’ service in the organization along with performance feedback.

If the person has completed required number of years’ service along with satisfactory performance then
that person is eligible for promotion, and promotion decisions are taken by a committee, who decides all
these issues.
In this organization, promotions are decided on Deployment Index, which decides the quarterly pay-
outs and monthly pay-outs to the employee. (If an employee is allocated on a project, then his Deployment
Index increases day by day as the number of days when he works increases.) If an employee is not
Agrawal 11

allocated to any project, then he does not get the variable pay. Then at the year end, depending on the
rating (there are 4 types of bands-A, B, C, D, A highest, D lowest) and bands, the employee gets an yearly
increment in his cost to company (CTC).

Discussion
Implementation of PMS has many challenges. Measurements can be erroneous due to usual human
factor. Managers are reluctant to rate their employees and most of the times, employees are not convinced
that ratings are fair. The insights as gathered from different companies operating in service domain
revealed that in general, process of formal ratings is practiced in most of the organizations, but these
organizations use rating mechanism in an innovative manner. Out of them a few do not believe in
providing ratings at all. Also, many of the companies had started collecting data more frequently.
Emphasis is more to bring transparency. There is a lot of emphasis of not comparing employees’
performance against each other, rather absolute performance feedback is the major focus (Chattopadhyay,
2017). Companies believe in individual personal development (Tabiu, Pangil, & Othman, 2018). Latest
technologies and software are used as employees appreciate to know the reasons of low or high rating in
a justified manner. Moreover, most of the companies are in search of replacing the annual rating process
and willing to implement real time data for personal and career development plans for their employees.
Technology companies seem to be leading the way in removing the traditional bell curve to continuous
feedback mechanism based appraisal rather than on one time or stand-alone performers parameters.
Instead, they created a system that will reward rainmakers and align bonus pay-outs to customer delights
that they execute. Thus, more and more companies are discarding the bell-curve rating mechanism
(Khosla, 2016).
As explained by M. P. Sriram, partner at Aventus Partners, a HR consultancy and talent acquisition firm:

Today, goals are no longer pushed from the top level to the bottom, but emerge through collaboration and are the
result of a dynamic interplay between levels and various parts of the organization. To follow the typical bell-
curve, team leaders have to re-categorize employees. Often good performers were labelled as average to fit the
curve. This unseen hand of moderation resulted in disgruntled and disengaged employees.

These organizations maintain performance driven culture and fast growth targets and are highly
competitive. Thus, rather than maintaining the traditional hierarchical nature, where loyalty to the
organization was emphasized and mutual long-term commitments are made between employee and
management.
Another trend is giving utmost importance to the potential of employees, rather than rewarding only on
past performance. It is also seen that rewards and performance should not always be linked. The traditional
belief of linking promotion and rewards to past performance was that stronger performance deserves
better pay and rewards, than the average performers somewhere get market average. Software service
industry follows an agile and intellectually challenging work environment. Starting from conceptualization
stage to final execution and delivery of a software project, multiple teams working from geographically
dispersed and culturally diverse locations, and are required to put efforts in synchronized manner. Nature
and characteristics of the industry posits several challenges for effective functioning of performance
management. Thus, it is crucial to have a well-designed system that can facilitate desired outcomes such
as greater role clarity, better alignment at different levels, improved superior-subordinate relationship, and
greater employee motivation towards performance. Considering the work structure in today’s time, a
well-designed system can be effective if it is based on multi-source assessment.
12 Global Business Review

Conclusions
In general, organizations plan in the beginning of the year with the line manager and the HR manager
plays an important role in finalizing the year-long goals of the employees. Most of them follow mid-year
review process before giving the final ratings. There is a demand of involvement of more employees for
setting their challenging targets and a system should be in place where employees can discuss important
changes that had taken place recently in the industry. Moreover, a debate of having or not having the bell
curve is still an ongoing process, but many organizations had taken a decision and either they had
removed the bell curve or had implemented a flexible bell curve system. Some of the HR professional
are trying to figure out an alternate or a better solution for their organizations, which can serve their
purpose in terms of merit based performance.
Firms are keeping performance review discussion and incentive discussions separate. Most of the
firms are meeting more than once in a year for discussing the performance of their employees. Still there
are some gaps, and performance systems have their own challenges. Measurements can be erroneous due
to usual human factor. Managers are found sometimes reluctant to rate their employees, and most of the
times employees are not convinced that ratings are fair. The current PMS is a recent change over the
traditional PMS. As the system is relatively new, measurement of success of the present system cannot
be captured. Rather, in this article, feedback and statements of managers are documented and analyzed,
rather than measuring the success of the present PMS.

Managerial Implications
There are a number of aspects that are discussed and seem to be of utmost importance for managers. The
aforementioned results are important to understand recent practices adopted by companies. Few
important trends are in the form of giving more emphasis on maintaining transparency and lowering
subjectivity. There is an absolute no to comparison of one employee to another. Latest tools and
technology help in collecting real time data to justify the important decisions. Importance is given on
personal and career development related aspects. Companies are in process of implementing a system,
which is better than giving formal ratings only. Moreover, potential of employees is seen as important as
past performance. Regular feedbacks to employees are provided to rectify the problem and implementing
solutions in a timely manner. One to one discussion, which is development oriented is emphasized more
than the mechanical way to collecting and communicating the feedback. Performance related pay is no
more the only parameter to award performance. Recognition and development of employees is seen
better parameters of rewarding performance. A 360-degree feedback system is used selectively and
mostly used for developmental purposes.

Limitations
The present study used a convenient sampling method for selecting 40 companies and majorly from IT/
ITES companies. Also, could not disclose the name of the company because she was not permitted to
disclose the name.
Agrawal 13

Acknowledgement
The author is grateful to the anonymous referees of the journal for their extremely useful suggestions to improve the
quality of the article.

Declaration of Conflicting Interests

The author declared no potential conflicts of interest with respect to the research, authorship and/or publication of
this article.

Funding
The author received no financial support for the research, authorship and/or publication of this article.

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