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Managing performance better: advent of a new appraisal system at Infosys

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Article  in  Human Resource Management International Digest · May 2017

DOI: 10.1108/HRMID-05-2016-0077

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 Human Resource Management International Digest
Managing performance better: advent of a new appraisal system at Infosys Limited
Shweta Shrivastava, Anupama Rajesh,
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Shweta Shrivastava, Anupama Rajesh, (2017) "Managing performance better: advent of a new appraisal system at Infosys
Limited", Human Resource Management International Digest, Vol. 25 Issue: 3, pp.26-29, doi: 10.1108/HRMID-05-2016-0077
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 Managing performance better: advent of a
new appraisal system at Infosys Limited
Shweta Shrivastava and Anupama Rajesh
Shweta Shrivastava is a
Research Scholar at
Amity International
Business School, Amity
University, Noida, India.
Downloaded by Miss Shweta Shrivastava At 21:39 01 June 2017 (PT)
Anupama Rajesh is an
Associate Professor at
Amity Business School,
Amity University, Noida,
India.
PAGE 26 HUMAN RESOURCE MANAGEMENT INTERNATIONAL DIGEST
erformance appraisal refers to planned and formal events in organizations wherein
P performance of the workforce is evaluated and measured against pre-defined
criteria and feedback is provided to employees. Typically, organizations adopt
annual or bi-annual appraisal cycles.
Appraisal is one of the most critical activities both for organizations and employees, as it
has bearing on other important decisions such as promotions, role changes, and rewards
and benefits. Research suggests that employees’ perception of appraisal can have a
far-reaching effect on their behavior and attitudes, such as job satisfaction, commitment
toward job, future work performance, turnover intentions, etc. (Pearce and Porter, 1986;
Poon, 2004).
What is the inverted bell curve system of performance management?
The bell curve or the “forced distribution” system of appraising performance was
championed by Jack Welch, former CEO of General Electric (Stewart et al., 2010). The
system is followed in many organizations across the world.
The bell curve “ranks” or “stacks” employees based on their performance of previous year
in the form of appraisal ratings. Usually, Ranks under the bell curve segregate 10 per cent
of the entire workforce as superior performers and 10 per cent as low performers and
bunches up the remaining majority of the 80 per cent workforce as average performers.
These proportions may vary among organizations.
The fundamental premise of bell curve system is that of rewarding employees
commensurate to their performance to:
 encourage the small number of overachievers or the significant contributors by
providing them prime of reward and growth opportunities;
 motivate the large number of mid-level performers to achieve more by providing
average level of rewards to them, as this significant number of employees keeps the
workflow in the organization intact; and
 reprimand the few underachievers for performing below expectations by providing
them extremely low or zero increments, or even termination in certain circumstances.
Is the bell curve system helpful?
The bell curve was widely implemented in organizations due to some of its positive impacts:
 This “rank or yank” system signals to employees that they must perform well or perish
and helps to build a culture of high performance in the organization.
VOL. 25 NO. 3 2017, pp. 26-29, © Emerald Publishing Limited, ISSN 0967-0734 DOI 10.1108/HRMID-05-2016-0077
  The bell curve helps to identify employees who add the maximum and the least value
to the organization and thus to differentiate between high and low performers.
 Organizations have limits on how much they can spend on employees, and hence they
cannot reward all employees equally. This system helps them to establish an order to
allocate and use limited organizational budget in a judicious way.

What are the disadvantages of the bell curve system?

The effectiveness of the bell curve as a performance management tool has often been
debated upon. This is primarily because the approach of categorization propagated by
the system leads to a ceiling on the number of employees in each group and often
requires “force-fitting” of performance on the normal curve, leading to faulty evaluation
of employees.
The bell curve approach of appraisals also has other ill effects on employees and
organizational culture, such as:
 As the bell curve assumes presence of a normal distribution in a large group of
employees, when it is implemented in small groups of employees or organizations, it
leads to faulty assignment of appraisal ratings (Stewart et al., 2010).
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 As the size of the organization shrinks due to regular ousting of low performers,
managers find it difficult to differentiate between performance of employees. Further, in
response to the mounting pressure of categorizing employees’ performances, they
inappropriately categorize superior performance as mediocre, which can further
impact the morale, satisfaction, productivity, and turnover intentions of employees.
 Employees who do not feel satisfied with performance ratings assigned to them end up
feeling emotionally and sentimentally hurt and stop perceiving organizational practices
in a positive light. This leads to decreased loyalty and commitment of such employees.
 While to some extent the pressure on employees of being assigned a low rating can
lead to better performance, excess fear and pressure have been seen to produce
negative results.
 Relative ranking can bring about rivalry, create internal competition among employees,
and adversely impact teamwork and organizational culture.

Introduction of new feedback-based system

Considering these characteristic shortcomings of the forced ranking system and its impact
on social capital, especially for middle- and low-level performers, some Indian
organizations have implemented new appraisal systems. Infosys Limited, an Indian tech
major, is one such notable example.

Infosys Limited
Infosys Limited, with a headcount of close to 200,000 employees, has chosen to completely
discard the bell curve system of appraisals (The Economic Times, 2016). It has, instead,
adopted an alternative system named iCount, which follows the approach of “open-ranking” of
employee’s performance.
The move has been made to enable the organization to concentrate on the development of
employees and improvement of their performance. Continuous feedback to employees
from all quarters, including peers, managers, and stakeholders, forms the cornerstone of
iCount. While performance of employees will continue to be evaluated, the system will look
at individual performance throughout the year instead of relative performance at the end of
the year.

VOL. 25 NO. 3 2017 HUMAN RESOURCE MANAGEMENT INTERNATIONAL DIGEST PAGE 27

 In comparison to the erstwhile system, iCount is expected to be more successful due to
some of its key characteristics listed below:
 It intends to improve the performance culture that was established by the bell curve
system through continuous evaluation and alignment of organizational goals with those
of employees. It is also hoped to do away with uncalled-for competition among
employees and help foster cordial work environment at the organization.
 Implementation of this system will hopefully make the appraisal process fairer and
more objective, as managers will no longer be forced to categorize employees and will
be able to give due credit to employees for their performance. High performers will now
get better rewards and growth opportunities in return for their hard work.
 Ownership and accountability of managers and supervisors toward employees’
performance and subsequently toward organizational success will increase, as they
will now be more empowered to assign objective ratings and will not be required to
force-fit ratings on the bell curve.
The new system has also been adopted to suit the requirements of millennials in the
organization who are often seen to look for regular feedback and coaching from their
managers, instead of the point-in-time feedback that the bell curve offered (SHRM, 2009;
Downloaded by Miss Shweta Shrivastava At 21:39 01 June 2017 (PT)

Hershatter and Epstein, 2010). Removing the bell curve has been also been welcomed by
employees, as they now hope that their performance will be measured more objectively.
On the downside, iCount may lead to some challenges:
 The lower extent of differentiation in performance and subsequently in rewards that the
process offers may prove to have a demotivating effect on overachievers. Hence,
reinforcing and positive conversations between managers and employees will be a
must to keeping such employees motivated.
 This approach may also add to the company’s costs, which may, however, be
compensated by increased motivation and productivity of employees.

Conclusion
The current competitive and dynamic work environment requires organizations to
Keywords: implement effective policies and practices to keep their social capital intact. Bell curve,
Performance, which is a widely adopted performance management tool, now seems to have run out of
Appraisal, utility. Organizations now need to think of better and more efficient appraisal systems that
Bell curve, are able to keep today’s diverse and evolving new-age workforce sufficiently motivated and
iCount, engaged. iCount is one alternative that companies such as Infosys are trying out. It will be
Infosys interesting to watch over the next couple of years how successful this new tool will be.

References
Hershatter, A. and Epstein, M. (2010), “Millennials and the world of work: an organization and
management perspective”, Journal of Business and Psychology, Vol. 25, pp. 211-223.

Pearce, J.L. and Porter, L.W. (1986), “Employee responses to formal performance appraisal
feedback”, Journal of Applied Psychology, Vol. 71 No. 2, pp. 211-218.

Poon, J.M. (2004), “Effects of performance appraisal politics on job satisfaction and turnover intention”,
Personnel Review, Vol. 33 No. 3, pp. 322-334.

SHRM (2009), “The multigenerational workforce: opportunity for competitive success”, available at:
www.researchgate.net/profile/Karen_Myers8/publication/44630352_Millennials_in_the_Workplace_A_
Communication_Perspective_on_Millennials%27_Organizational_Relationships_and_Performance/
links/5407ea0f0cf2bba34c247784/Millennials-in-the-Workplace-A-Communication-Perspective-on-
Millennials-Organizational-Relationships-and-Performance.pdf (accessed 28 February 2017).

PAGE 28 HUMAN RESOURCE MANAGEMENT INTERNATIONAL DIGEST VOL. 25 NO. 3 2017

 Stewart, S.M., Gruys, M.L. and Storm, M. (2010), “Forced distribution performance evaluation systems:
advantages, disadvantages and keys to implementation”, Journal of Management and Organization,
Vol. 16 No. 1, pp. 168-179.

The Economic Times (2016), “Infosys ahead of bell curve, to evaluate staff with new performance
appraisal system ‘iCount’”, available at: http://economictimes.indiatimes.com/articleshow/50893988.
cms?utm_source⫽contentofinterest&utm_medium⫽text&utm_campaign⫽cppst (accessed 28 February
2017).

About the authors

Shweta Shrivastava is a PhD Research Scholar at Amity University in the domain of Human
Resources. Her interest areas are rewards and incentives, organizational commitment
and organizational behavior. She has seven years of corporate work experience with
organizations like Mercer Consulting, Everonn Education and HCL Technologies. She is
a postgraduate in Human Resources from the Loyola Institute of Business
Administration, Chennai, and a graduate in Commerce from the Shri Ram College of
Commerce, University of Delhi. Shweta Shrivastava is the corresponding author and can
be contacted at: shweta_0708@yahoo.co.in
Dr Anupama Rajesh has the following qualifications: PhD in the area of Technology in
Education, MPhil (IT), MPhil (Mgmt), MEd, MSc (IT), PGDCA, and PGDBA. She has about
20 years of teaching experience, including international assignments, which include a
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teaching stint at Singapore and training of Italian and French delegates and students. She
has written more than 20 research papers and case studies for prestigious international
journals and has two books and several book chapters to her credit. She is a reviewer of
renowned Sage and Emerald journals and is the Editor of Anukriti – The Amity Business School
Magazine. Her research interests are business intelligence, educational technology, marketing
analytics, etc., while her teaching interests are business intelligence, e-Commerce, and
IT-enabled processes. She is an avid trainer and has trained Union Bank of India, NHPC, ILFS,
TATA Motors, and Bhutan Power Company employees, as well as Commonwealth Games
volunteers and army personnel. She is a Master Trainer from Microsoft and an Infosys Partner
for Business Intelligence. She has recently won the ADMA Research Award. She has also been
awarded “Shiksha Rattan Puruskar” by IIF Society and won the second “Best Paper Award” at
IIM Ahmedabad. She recently presented a case study at INSEAD Paris. She also has a MOOC
to her credit. http://amitymooc.com/home/itm.php

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