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Diminishing role of Performance Appraisal in Global Business – an Indian perspective

By : Shurlly Tiwari (HR-Faculty)

When Athletes wants to improve their performance they spend hours in viewing their own videos. However, the same thing cannot be possible with white-collar jobs. For the feedbacks in such jobs, Performance Appraisal plays a very important role.

Performance Appraisal is a process, which helps the employee to understand their performance as well they receive feedback to improve their future work. Generally in the corporate this process is conducted every quarterly or yearly. So far, Performance appraisal is considered a very important process in the business world, and is accepted worldwide.

History of Performance Appraisal
Historically, Performance appraisal was started in 20thcentury, by F.W Taylor , Taylor insisted on the periodical check on the employees work so that he can incorporate time and motion study. Mostly Performance appraisal is formally adopted during the Second World War.

WD Scott was credited with bringing up the system of Performance Appraisal , by mid 1950s it was formally established in the business world and the productivity , rewards and bonuses were linked to it.

Various research data shows some advantages and disadvantages of Performance Appraisal like

There are advantages and disadvantages of having or not having performance appraisal into the system, on one hand where it helps in developing the growth culture and helps in career planning , on the other hand,there are downsides to this process also, research shows that during appraisal period the stress levels, Biasness and unfair practices among the employee’s increases. Which is not good for the employees and well the organisation’s  culture.

Recently, top six companies of the world proved that performance appraisal could be avoided. In addition, the employees can perform their work in the organisations without stress.

These companies are GE, Cargill, Eli Lilly, Adobe, Accenture and Google. One similarity among all these organisations is that they are employee friendly multinationals with strong brand image. All these organisations have discovered an alternate way to analyse and evaluate the performance of employees.

Like GE relies heavily on Mentoring and Coaching , it have also rolled up an App for delivering feedback to the employees on regular basis, this system helps both the employees as well as the company to be in regular touch and help the employee to perform better on daily basis . The employee need not to wait for the whole year for its performance feedback, the performance improvement happens regularly.

2. Cargill believes in “Everyday Performance Management” where the feedback is given to the employee on the daily basis. Cargill also believes in giving on-the-job training to the employees, which helps them to build their functional expertise.

3. Eli Lilly came up with an amazing innovative technique of job sharing and Family assistance perks, which develops OCB (Organisational Citizenship Behaviour) among the employees and helps in developing the relationship between the employees and employer by inculcating the trust factors among the team members and helps in developing the innovative practices and creativity of employees.

4. In Adobe, they believe in regular tough discussions, the company believes in giving the feedback on the spot and if required making the tough conversations.

5. Accenture analysed that the employees who do very well in performance appraisal process, tend to be more narcissistic and self-promoting, because of which the employees who are actually better performers but do not show off are the employees who suffer. The company realised that Performance Appraisal does not make fair decisions at all the times. In fact, the company believes in an on-going performance discussion between employees and their managers.

6. Google, as Google is among the top IT companies, it also do things differently, The Company more focused on the development of the employees than ratings. For which they have developed OKRs (Organisations Key results) where the performance of employee and company are linked with each other and regular discussions on the performance is conducted.

As more research is conducted on the subject, author discovered that there are more companies, which do not believe in the performance appraisal system, and one among them is Genpact.

Genpact conducts virtual mirroring, in this process the company vigilant on the social media of the employee especially on the communications with the clients, this was not about putting people on the spot, but to help them in developing their business skills, and giving them feedback in improving their performance.

Is this possible in India

In India, most of the organisations are operating on the lower levels of Maslow need hierarchy, and they follow the traditional way of management. Thus, as per the authors view, it is difficult to avoid or eradicate performance appraisal from the system completely.

According to the business Journal May3, 2012, Psychologist Geert Hofstede, Ph.D., suggest that Indian employees need to establish an emotional connection with their superiors or peers at work. Analysis of the data shows that companies in India struggle because many employees doubt whether a performance management system can actually identify superior performance; they also question whether these systems effectively reward good performance. These emotional responses affect employees’ perceptions of how robust the system is and whether it can distribute rewards fairly and effectively.

In 2010, Gallup report was published, which proved that Indian employees, especially those with three to 10 years of experience with an organization, strongly feel that most performance management systems are not capable of distinguishing superior performance.

In the current scenario, Organisations are analysing the effect of performance appraisal on the employees in different arears. From early 2014, In Indian Global companies the approach towards Performance Appraisal is changing, It is more focused towards development than rankings.

Most of the organisations are critically analysing their performance appraisal process and are modifying the process. According to the report on Performance Appraisal by PWC (2016).the report states the view of industry experts for Performance appraisal in India. (). In Indian context performance appraisal is associated with rewards, removal of old techniques and meeting the expectation of millennials. Mr. Debiprasad Das SVP & CHRO, CEAT says The risk with making a performance evaluation process hard-coded to rewards is that it could become self-defeating in the long term. Employees will be averse to taking on stretch goals, and this will adversely affect the organisation’s ability to take the risks needed in order to deliver ground breaking products or solutions”

Mr. Vikram Tandon Head, HR
 says that “The bottom line is that everybody wants feedback. The millennial employee may want it on a daily basis, whereas employees that are more senior may want to know how they are doing every month. Frequent development discussion is the aspect, which most performance management processes, and systems miss or focus the least on

The report suggests that Indian organisations are going above and beyond the Bell curve , In one of the  survey it’s been found  that organisations  have eradicated the ratings system altogether. The new model adopted involves managers evaluating their employees in a holistic manner and providing ongoing feedback. There was no monitoring or follow-up on whether this feedback had been provided and no documentation was maintained either. The underlying philosophy was that managers had to be self-governing, and those who did not follow this practice would have to face the ire of their team during the year-end process. This process reported the saving of 80,000 hours for the manager, which can be used fruitfully for organisation building.

In India , Some of the changes that HR stakeholders are keen to make to their current performance management approach in order to ensure that their system is future ready and relevant in India are:

1. Balancing short and long objective for the employee.
2. More transparent process with emphasis on conversations that enhance engagement with the                process and outcome.
3. Process that is more objective that is free of biases.
4.Introducing and enhancing behavioural competencies to drive individual and organisational                 performance.
5. Making the process more employee-centred and having a flexible performance management system.
6. Making employees aware of their performance system.
7. Removing the prejudice of the employees towards the system.
8. Designing KRAs that are better linked to JDs and organisational goals, objective and measurable.
9. Rethinking for improving the old processes of performance appraisal like: abolition of some old          methods and developing new ones.

Conclusion:‘Performance management in India suffers from the challenge that process compliance itself has assumed greater significance than the purpose and outcome which it is expected to drive. Also, in most cases, the performance management system becomes limited to just the annual or periodic performance appraisal process Prabhakar Lingareddy VP – HR, Agri Business Division, ITC.

There is no one-size-fits-all approach to managing performance and it is been observed that having a ‘right’ approach in place depends considerably on the context of each organisation.

Therefore, the study reveals that if developmental aspects are not integrated with the key objective of strategy alignment, then the process runs the risk of being narrow in its outlook and unappealing to employees in the longer term. In addition, in Indian scenario it is difficult task because Indian systems have to develop Trust among employees and among the systems. Therefore, in India, Performance Appraisal will always be an important process, which will define the career path for the employees in an organisation.


1. PWC report on Performance Appraisal in India – a change Beakon(2016)

2. India’s Performance Management problem – Business Journal, May3, 2012.
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