Performance appraisal : A tool to motivate employees , says Sudhir Dhar

The performance appraisal is an essential part of the human resources department's contribution to an organization.


Since appraisal and performance evaluation season is in progress on the Indian corporate landscape, in an interaction with Sudhir Dhar, Director - Head HR , Motilal Oswal Financial Services Ltd spoke about Importance of Performance Appraisal. 

How important is performance appraisal for employees and employers perspective? 

The performance appraisal is an essential part of the human resources department's contribution to an organization. An effective appraisal may not only eliminate behavior and work-quality problems, it can motivate an employee to contribute more. 

It plays a crucial role for both employees and for the organization

  • Appraisal process is designed for future goal in reality of past performance.  
  • It improves communication between employee and the manager
  • To evaluate performance – year gone by
  • We get learnings from what worked and what did not for our employee as well as or the company
  • Provide career paths
  • Encourage good work environment
  • Improves productivity
  • Removes biasness if any
  • Sets clear goals for the coming year

What is the gap between existing and retention decisions? 

When its respect to people then the gap between existing and retention will be less than 10 percent of employees. The reason being we follow a clear meritocratic performance culture. At MOFSL, performance would make it clear to evaluate in making existing and retention decisions.

If the gap is in terms of monetary benefits will largely be around the variable pay and it would range from an additional 10 percent - 50 percent and additional 5 percent - 15 percent in fixed pay to that of the existing decisions.

How can this gap be reduced? 

In my view it cannot be reduced. Till the time you have a strong job market with competition in your segment that is ready to offer more at a scale higher than yours; the gap between existing and retention will exist.

Will we move to a merit based salary program in coming years? 

To move to a merit based salary program you need a strong performance evaluation system which is objective, precise and accepted by the employees across the organization. Objective based performance evaluation is followed but not for all 100 percent employees as still organizations are not equipped to do it, my view is that process should be agile and not rigid it should help business. With the fast moving technology and automations; measuring performance will become easier however acceptance of only objective assessments with zero subjectivity will take time especially in growing organizations.

What is the process for performance evaluation this year? 

The process of evaluation happens twice a year (October and March) though the process is same for mid as well as for year-end. Firstly employees should complete a self-appraisal within the HR portal post which discussion round is conducted with the managers (both reporting and skip level are scheduled on one on one basis) to provide a more comprehensive review of each employee and help ensure consistency across the organization. This discussion revolves around the functional based goals set by the associate along with the behavioral competency framework model designed specially as per the needs of our company. Post the discussion managers and skip managers respectively write down their remarks and ratings for the employee in our HR portal. Post the discussion rounds ratings are calculated as per our rating parameters post which if any normalization is required for the ratings we do connect with the concern team and get it normalized. Once the final data is ready with the PMS team we initiate compensation depending on the ratings and recommendations received post the appraisals.

What are the base pay promotions and retention decision carried out in your organization? 

At MOFSL, we follow a meritocratic culture, where in we emphasis on employee’s performance and accordingly decide their promotion and retention plans.

For Junior-Mid level – the promotions are carried out on the basis of the criteria set as per our policy. We check on the individual demonstrating competencies throughout his working tenure, along with that performance ratings of that individual in the past 2 years.

For Senior level – along with the criteria set we also assess them on 4 P’s which includes:

P - Performance

P - Potential

P - Perception

P - Personality

Post which we extract a report and carry a panel discussion with the Chairman of the company, JMD, CHRO, Head of the dept. along with an external coach to get an external insight on the employee eligible for the senior level promotions.  

How do you align employee’s goals with the organization’s goals? 

The process begins with business goals being finalized at the start of the year. Basis the finalized business goals, goals for each function and its employees is followed. Using a top-down approach these goals are then converted into SMART goal sheets for employees. At MOFSL we do goal setting exercise twice a year first in April is about its about setting goals and second post mid –year appraisal in October for any course correction that needs to be done in the goals.

Once company-wide goals have been established, managers can then set goals for their individual departments which clearly support our overall business strategies. Major job functions and responsibilities can serve as a general framework while writing their goals in our In-house HR portal as per the SMART principle. For example, a customer service representative might be given the goal to boost customer retention (the "what") by improving customer service (the "how"). To be most effective, goals should also pass the S.M.A.R.T. test and be specific, measurable, attainable, relevant and timely. This provides clarity up front to employees who will ultimately be evaluated against these goals.

How does your organization play a role in building individual career? 

Performance appraisals process captures data points like Future aspirations / roles, training and development, focus areas for individuals, strengths. These data points are captured and considered for future role planning and employee development. There are catered through various interventions like trainings for the year, talent development programs. Tracking of these data points and progress is discussed in next appraisal.

For senior level we have defined developmental programs for identified high potentials through our programs called as

MOLD (Motilal Oswal Leadership Development) and

PACE (Professional and career enhancement)

Through which we cater associates developmental journey. Both the programs have defined developmental tools aligned with individual interest and business needs.  We focus on evaluating success of our leadership programs on the basis of participants’ capabilities development, their engagement during and post the program and the overall impact on their performance.

How can your job be done differently?

In my view change is hard, but just because you’ve always done something a certain way doesn’t mean your approach is set. It’s time to shake things up and adopt a fresh outlook on how we manage people. It’s time to rethink of how we “do” HR.

As per my views few points that makes a good HR:

  • Is about working together as a strong team and making changing as per new trends in the field.
  • HR is not about compliance and policy—it’s about people.
  • To provide the right tools and supports, create spaces that fuel creativity and productivity.

 How does your organization carry out employees training and development needs? 

 Training needs identification exercise is done through:

Training needs mentioned by employee, manager and skip in the appraisal forms

Training need identification exercise conducted through focus group discussions and one on one meetings with business stakeholders and employees

Competency assessment from appraisals also helps in identification of behavioral competencies to be developed across levels in the org

On completion of the training need identification exercise, Training plan is created with list of Needs Based and Must Haves training. Behavioural and Leadership trainings are also defined

Based on the above points and business requirement,  experiential and engaging workshops on Communications skills, Email etiquette, Personality Development, Time management, Managing teams,

Grooming and Corporate etiquette, Presentation skills, Assertiveness, Goal setting to name a few, are regularly conducted, and have been highly appreciated.

To enhance Leadership skills and support first time managers, insightful workshops on Behavioral interviewing Skills, Managing Performance through Coaching, Emotional Intelligence One Minute Manager, and Managing like a Pro have been conducted, covering mid and senior level management.

What is the optimal outcome for performance management?

For the organization: Employee performance data in line with business performance, list of top and bottom performers for whom a clear developmental agenda needs to be created, clear training needs for the organization, list of key performers who could be your future HIPOs and validation of performance of HIPOs. Basis the PMS results for each business vertical you are able to clear HR agenda aligned to business

For the employees the outcome is clear direction and next steps that they need to focus in their career, clear evaluation of how their performance is being evaluated, skills that are their strengths and skills that they need to develop.


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