Has the Coronavirus hijacked the annual appraisal programme?

With businesses in the doldrums, and paycuts and layoffs dominating virtual boardroom discussions, appraisals seem out of place. This is odd because the corporate world in the middle of the appraisal season. So, companies can’t entirely avoid the question. And they are dealing with it as they deem fit, with the responses varying from a waiting approach and selective rewards to total deferment of the appraisal process.

“March to April is the performance review period and we are seeing organisations adopting a wait-and-see approach. Most organisations are likely to consider the option of selective increments for staff with critical skills, defer staff increments by three to six months, or even do away with increments altogether if the adverse circumstances prevail. For those who plan to proceed, they will likely plan a low to moderate increment in salaries so as to ensure liquidity and protect cash-flow,” says Rajul Mathur, consulting head, Talent and Rewards, Willis Towers Watson, India.

In a ‘COVID-19 India Readiness’ survey by Willis Towers Watson, carried out between March 20 and 31, 42% of the respondents are yet to decide on salary increment budgets for this year. Nearly 33% indicated that performance appraisals and bonus pay-outs will happen as planned. Almost one in three respondents said they anticipated that their “2020 annual bonus for executives and employees will be impacted, while 17% expect an impact on their 2020 Long Term Incentive plans.”   

Present vs future  

There is obviously no one-size-fits-all answer to the question of whether companies should defer, chop-and-match or bypass performance rewards this season — how hard they have been hit by the downturn will determine their course. If paycuts are inevitable, and by holding back the performance rewards salary payments may be a little less difficult to manage, why not?

However, an effort to reward hard work and commitment during challenging times, in whatever measure, is going to earn the admiration of employees. Guided by this philosophy, Tesco Bangalore recently carried out its annual performance-review process, and it came complete with hikes and promotions.

Oil companies such as Nayara Energy that are hit hard by falling oil prices and demand are among those that have honoured its annual performance-linked incentives to eligible employees.

Abhishek Paul, culture shepherd, Kissflow, believes the decision a company takes in such situations does matter as much as how it is arrived at, communicated and executed. These decisions have to be guided by transparency and fairness. For, it is in such critical situations that a company’s culture is shaped.

Kissflow has gone ahead with appraisal rewards, for two reasons, one it is now in a position to do so, besides being comfortable enough to not effect any pay or job cuts.

The main reason for going ahead with the annual rewards programme, according to Abhishek, has to do with the conscious choice not to let the fear of the future hold captive the due processes of the future.

Abhishek points out that CEO Suresh Sambandam was clear that people had to be rewarded for the work they had put in over the year, as the crisis did enter the picture then.

The transparency factor

“In crisis situations of this nature, companies should aim for fairness, and not happiness,” says Abhishek, reasoning it out that when they have to take hard decisions, they have to be transparent about it, deliver the bad news early and not keep employees on tenter hooks. So, if there are no performance rewards, articulate the reasons. Such an approach will instil trust in the workforce.

“If a company can’t avoid layoffs, it should not delay the process, and should focus on giving a good severance package to the employees it has to let go,” says Abhishek. “This is something that a company does not only for those that are leaving, but for those that are left behind. Decisions in such matters have implications for the latter’s trust in the company.”

The sky is the limit

If companies can be extremely generous, they better be. The overall murky picture should not cause it to tighten its purse strings.

Amway India not only stuck to its standard time line, announcing the increments on April 1, but is said to have exceeded expectations.

“In fact, this time our increment percentage is above market. Our top performing associates were given additional salary. And employees who were due for promotions got elevated as well. There have been no recalibration in salary,” says Shantanu Das, CHRO, Amway India. The company has 2570 employees.

Last month, we onboarded close to 20 employees for critical functions such as manufacturing, IT, marketing, data analytics, procurement, and planning, says Das.

At most PSU banks, appraisals are not linked to salary hikes but promotions. Because of the mergers that came into effect on April 1, some banks fast-tracked the process and released the promotion list before the end of the financial year.

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Printable version | Jan 17, 2021 3:35:21 PM |

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