The performance apprasial practices and methods in Accenture services

About the project

This project aims to compare and contrast performance appraisal and feedback process of banking and software sector. For this we have chosen two well known organizations in these fields – ICICI bank and Accenture Services Pvt. Ltd.

Both, ICICI and Accenture, following growth strategy, have grown at a decent pace over last couple of years. This organisation has not seen much growth in terms of size of organisation after its inception in 1993.Our research project plans to cover mainly the performance appraisal methodology adopted in these organisations and compare them critically and evaluate its effectiveness.

Methodology

1) Secondary Data Collection: Our approach towards the project will involve gathering data from company’s website, magazines, and other researches done in the past over relevant topics.

2) Primary Data Collection: It will involve taking in-depth personal interviews of different categories of employees to generate multiple viewpoints or source points of information.

ICICI BANK

Introduction

ICICI Bank (formerly Industrial Credit and Investment Corporation of India) is India’s largest private sector bank by market capitalisation and second largest overall in terms of assets. Total assets of Rs. 3,634.00 billion (US$ 81 billion) at March 31, 2010 and profit after tax of Rs. 40.25 billion (US$ 896 million) for the year ended March 31, 2010.The Bank also has a network of 2528 branches and about 6000 ATMs in India and presence in 19 countries, as well as some 24 million customers. Its total number of employees is approximately 74,056. ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and specialised subsidiaries and affiliates in the areas of investment banking, life and non-life insurance, venture capital and asset management. ICICI Bank is also the largest issuer of credit cards in India.

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Organizational structure

The organization structure is divided into five principal groups – Retail Banking, Wholesale Banking, Project Finance & Special Assets Management, International Business and Corporate Centre.

The Retail Banking Group comprises ICICI Bank’s retail assets business including various retail credit products, retail liabilities and rural micro-banking.

The focus of our research has been on retail banking group. This group is divided in four zones viz. east, west, north and south. The hierarchical structure of this group is as follows:

Performance appraisal in ICICI Bank

ICICI BANK performance appraisal environment

The bank is using the Management by Objectives (MBO) method. In this method the subordinate in consultation with the supervisor chalks out short term objectives followed by specific actions that he has to carry out. The goals are finally set and are action oriented. The goals set are specific, measurable, achievable, review able and time bound and most importantly they use to be aligned with the goal of the organization. At the end of a specified time period, the activities are jointly reviewed by both the subordinate and his supervisor. Depending on the performance of the subordinate, the goals are modified or redesigned for the next period of time. The MBO is thus a performance oriented system.

A well thought out MBO system provides multiple benefits. It establishes a link between the performance of the individual and the bank .It is easy to implement because those who carry out the plan also participates in setting it up. Each employee becomes aware of the task he has to perform in the bank. This leads to better utilization of capacity and talent. It promotes better communication and information sharing. It provides guidelines for self-evaluation as well as evaluation by the superior against set tasks and goals. It facilitates guidance and counseling.

Effective components of ICICI PA system

Performance Planning (includes employee goal setting / objective setting)

On-going Performance Communication

Data Gathering, Observation and Documentation

Performance Appraisal Meetings

Performance Diagnosis and Coaching

Performance Appraisal system in ICICI bank emphasizes individual objectives, Bank objectives and also mutual objectives. From the viewpoint of individual objective the Performance Appraisal talks about

a) What task the individual is expected to do?

b) How well the individual has done the task?

c) How can his performance be further improved?

d) His reward for doing well.

From the bank view point a Performance Appraisal should generate manpower information, improve efficiency and effectiveness serve as a mechanism of control and provide a rational compensation structure. In short the appraisal system establishes and upholds the principle of accountability in the absence of which bank failure is the only possible outcome. Finally, talking about mutual goals, the emphasis is on growth and development, harmony, effectiveness and profitability of the bank.

ICICI has adopted a “Performance Appraisal” model in which best-to-worst ranking methods are used to identify poor performers. The identified poor performers are then given a time period during which they have to show an improvement in their performance. In cases where the employee fails to improve his performance he is asked to leave the organization gracefully and a severance package is offered to him. If the employee refuses to leave then his service is terminated and no compensation is offered. This system is called “rank and yank strategy”. Advocates of this system feel that it continually motivates employees to better their performance since nobody would like to be included in the poor performance band. But the flip side of this strategy is that employees become too competitive and team spirit is not nurtured.

Effective banks are not build merely on investment and returns but more on the quality of the workforce, its commitment to the organizational goals and investments made to attract train and retain superior human capital. An integrated Performance Management system is essential to get the best out of its people. Employee performance is linked to the bank’s performance. This helps in achieving the organizational goal and creates a performance culture in the bank. Invention, creativity, diversity of perspectives is fostered. Employees act as one bank one brand.

360 degree feedback

The annual “Performance Appraisal” is usually done in two steps. First, the employees and their manager complete the “Performance Appraisal” form – doing a self-assessment. Often the bank also uses a 360 degree feedback process, asking for input from peers. Secondly, the bank employees and manager participate in a formal “Performance Appraisal” interview. The appraisal form, used in the first step, consists of performance standards and criteria that are used to judge evaluate your performance. The items comprising your job description are usually the performance standards that are used in employees annual appraisal .The performance standards are derived from a job analysis, which is a detailed list of all of the skills involved in performing a task. For example, what are the skills necessary to perform a complete blood count? The criteria are used to determine the level of performance, which can be excellent, average, or poor (or alternatively meets, exceeds or does not meet standards). Once appraisal is complete, score is averaged and merit raise.

Approaches and Techniques in “Performance Appraisal” Used By the Bank

“Performance Appraisal” is a multistage process involving several activities, which can be administered using a variety of approaches. Some of these approaches are being used by the banks for “Performance Appraisal”

Intuitive Approach: In this approach, a supervisor or manager judges the employee based on their perception of the employee’s behavior.

Self-Appraisal Approach: Employees evaluate their own performance using a common format.

Group Approach: The employee is evaluated by a group of persons.

Trait Approach: This is the conventional approach. The manager or supervisor evaluates the employee on the basis of observable dimensions of personality, such as integrity, honesty, dependability, punctuality, etc.

Appraisal Based on Achieved Results: In this type of approach, appraisal is based on concrete, measurable, work achievements judged against fixed targets or goals set mutually by the subject and the assessor.

Behavioural Method: This method focuses on observed behavior and observable critical incidents

Current problems

But it has been observed that in reality although the 360 degree feedback framework exists it is not actually practised. Employees are required to rate their bosses, peers and subordinates through an online system. However these are not taken seriously while giving the feedback. The bank in fact focuses more on the financial performance metrics and achievement of targets. If an employee meets these targets the 360 degree feedback becomes eyewash.

The main HR problem faced is high attrition rate (20%). The employees how leave the job are generally in their 30s are below the M2 level. The reasons cited by these people are long working hours and heavy workload. Some also leave because of competitor’s temptations like short working hour and same salary.

ACCENTURE SERVICES PVT. LTD.

Company Description

Accenture is a global management consulting, technology services and outsourcing company. Combining unparalleled experience, comprehensive capabilities across all industries and business functions, and extensive research on the world’s most successful companies, Accenture collaborates with clients to help them become high-performance businesses and governments. With approximately 211,000 people serving clients in more than 120 countries, the company generated net revenues of US$21.6 billion for the fiscal year ended Aug. 31, 2010.

Accenture’s “high performance business” strategy builds on their expertise in consulting, technology and outsourcing to help clients perform at the highest levels so that they can create sustainable value for their customers and shareholders. Using their industry knowledge, service-offering expertise and technology capabilities, they identify new business and technology trends and develop solutions to help clients around the world:

Enter new markets.

Increase revenues in existing markets.

Improve operational performance.

Deliver their products and services more effectively and efficiently.

Accenture has extensive relationships with the world’s leading companies and governments and work with organizations of all sizes-including 94 of the Fortune Global 100 and more than three quarters of the Fortune Global 500.

Among the many strengths that distinguish Accenture in the marketplace are their:

Extensive industry expertise.

Broad and evolving service offerings.

Expertise in business transformation outsourcing.

History of technology innovation and implementation, including their research and development capabilities, on which they spend approximately $300 million annually.

Commitment to the long-term development of their employees.

Proven and experienced management team.

Accenture – Core Values

Since its inception, Accenture has been governed by its core values. They shape the culture and define the character of the company. They guide on how to behave and make decisions. The core values are

Stewardship: Fulfilling our obligation of building a better, stronger and more durable company for future generations, protecting the Accenture brand, meeting our commitments to stakeholders, acting with an owner mentality, developing our people and helping improve communities and the global environment.

Best People: Attracting, developing and retaining the best talent for our business, challenging our people, demonstrating a “can-do” attitude and fostering a collaborative and mutually supportive environment.

Client Value Creation: Enabling clients to become high-performance businesses and creating long-term relationships by being responsive and relevant and by consistently delivering value.

One Global Network: Leveraging the power of global insight, relationships, collaboration and learning to deliver exceptional service to clients wherever they do business.

Respect for the Individual: Valuing diversity and unique contributions, fostering a trusting, open and inclusive environment and treating each person in a manner that reflects Accenture’s values.

Integrity: Being ethically unyielding and honest and inspiring trust by saying what we mean, matching our behaviours to our words and taking responsibility for our actions.

HR Policy at Accenture

Accenture has got a comprehensive HR policy in each of the following segments

Absences, Leaves, Work Arrangements.

Benefits, Rewards, Compensation.

Career/Performance Management & Training.

Personal Responsibilities & Behaviour.

Recruiting & Hiring.

Resignations, Terminations, Retirement.

Time/Expense Reporting & Travel.

Work Assignments, Relocation, Transfers & Immigration.

Accenture offers a working environment which is diverse, stimulating, supportive and professional. They give a lot of emphasis on striking a balance between the work and personal lives of employees by offering flexible work, flexible work arrangements, working away from home locations and video conferencing. They also give a lot of emphasis on maintaining a diverse workforce and attracting, retaining and promoting women employees.

Performance Factors

Accenture uses various performance factors to measure whether an individual has the skills and behaviours required to effectively respond to the typical demands of the job. These factors help in providing each employee with targeted feedback. The various career levels in Accenture is as shown below

Career Levels in Accenture

Programmer / Junior Software Engineer

Senior Programmer / Software Engineer

Analyst Programmer / Senior Software Engineer

Systems Analyst / Team Lead

Senior Systems Analyst / Senior Team Lead

Manager / Program Manager

Senior Manager

Accenture uses the following parameters as performance factors to measure the performance of each employee in the organization.

Performance Factors

Organizes and Directs Quality Work Efforts

Drives for Value Added Results

Anticipates and Handles Critical Situations

Builds Technical Capabilities

Demonstrates Professionalism and Confidence

Maximizes Team’s Performance

Communicates and Influences Effectively

Although the basic framework remains the same, each employee’s performance is analyzed and rated according to the level in the organization.

Performance Appraisal System

Annual Calendar at Accenture

CDP: Comprehensive development plan ARD: Annual Resource-Development

The Accenture performance period starts from June to May of every year. All employees of the organization, no matter what designation they hold, need to set the objectives & targets at the beginning of every performance period. Employees set the objectives & targets according to their role and project using an online tool called “My Performance Tool”. The objectives are divided into 3 Leadership Contribution Areas.

Business Operator: This relates to the employee’s performance in project-related activities. It measures how much the employee has contributed in his project and how critically he/she has performed that role.

Value Creator: This indicates how much value the employee has created for the organization, in addition to working in his project-capacity. This shows whether the employee has gone out of his role to play a crucial factor in his team, how much technical contribution he has done to the various technical communities, etc.

People Developer: This indicates how much the employee has contributed towards his own all round development, as well as the subordinates working under him/her.

The objectives are reviewed by the Supervisor and finally fixed by both employee and his/her supervisor. The employee is rated on the basis of whether he meets these targets at end of the year.

Every employee need to fill in midyear self input in the month of December wherein they have to specify how far they have been successful in fulfilling their objectives and meeting their targets. This is a kind of self assessment and it is done twice a year. After the employee submits the self input in the My Performance tool, a copy of that is sent to his supervisor. He gives a midyear feedback to the employee on the basis of his performance in the first half of the year. In the midyear feedback supervisor gives his reviews and also tell about the employee’s strengths and areas of development. The employee need to work on the areas of improvement mentioned in the feedback.

Mid-year Review: The Mid-year review gives an important chance to the employee and the supervisor to review the progress at the middle of the year, to ensure that everything is on track and the modifications needed to ensure effective performance on the part of the employee. It ensures that the employee & the supervisor have the same idea about the employee’s performance and remove any misunderstandings

The final self input has to be filled by the employee in the month of March /April and the supervisor gives the annual feedback after evaluating the performance of the employee against his objectives & targets. The supervisor uses the 7 performance factors for evaluating the performance of the employee. Each parameter in the performance factor is given a 4 point Rating Scale:

Exceeded expectation

Met expectation

Partially met expectation

Did not meet expectation

If the employee is satisfied with the feedback then he can accept it by clicking on the accept button in the tool. If he is not satisfied with the feedback then he can request for a one on one meeting with his supervisor to raise his concerns.

After the feedback for all employees are given, each employee would be given a relative rating based on his/her performance in the performance period and whether targets have been met and objectives fulfilled. The ratings and promotions if any are communicated to the employee in the month of August. The appraisal of each employee depends on the rating he gets. The appraisal happens in the beginning of the Accenture financial year i.e. September.

Based on feedbacks from last year, each and every employee has to create a focused plan for performance enhancement, performance improvement and career development. The employee has to consult his/her career counselor and the supervisor (optional), before deciding on the future career-development plan.

Career-Counsellor: The Career-Counselor Framework is very unique to Accenture. Usually, a person who is at least two career-levels above the employee and working in the same technology or business-domain is appointed as the Career-counselor to the employee and remains so throughout the employee’s duration at Accenture. The Career-Counselor acts as the employee’s voice during meetings with the supervisor or during moderation meetings and tries to ensure that the employee is not discriminated against. He also plays a critical role in guiding the employee regarding how to achieve his/her career goals and advises him based on experience. It is in the employee’s own need to maintain a regular and close contact with the career-counselor in order to make full utilization of this system.

Hence in short we can say that the performance management system at Accenture is a four step process.

Set objectives: Top down approach with senior management deciding the organizational objectives, then at various levels below. Finally individuals set objectives according to role and project. Objectives are set according to SMART (Small, Measurable, Attainable, Realistic and Timely) principle. The Objectives are reviewed by Supervisor and finally fixed by both employee and supervisor.

Assess Outcomes: Structured feedbacks on the results achieved and how they were achieved. First self-assessment, then supervisor and senior assessment. This is done twice a year.

Compare and rate: Final relative ratings based on outcomes according to the objectives.

Plan development: Based on feedbacks from last year, each and every employee has to create a focused plan for performance enhancement, performance improvement and career development. The employee has to consult his/her career counselor and the supervisor (optional), before deciding on the future career-development plan.

Comparison of Accenture and ICICI performance appraisal practices

Accenture

ICICI

Half yearly f/b

Quarterly f/b

Career counselor concept – Employees were very supportive to career counselor concept because they helps employee to save them any biases by their supervisors.

No such concept. The BM provides f/b based on financial targets met.

MBO – set objectives and goals and work on them

MBO – set objectives and goals and work on them

Objectives depend on the role and project in which the employee is working.

Objectives are mainly financial metrics.

Direct relationship between promotion and appraisal process. This shows the robustness and acceptability of performance management system of Accenture amongst its cadres.

Direct relationship between promotion and appraisal process.

Appraisal is decided after discussion among supervisor, Project manager, HR manager and career counselor

The BM is the final deciding authority on the rating and appraisal.

Grievance redressal relating to the appraisal consists of first meeting the supervisor for discussing his/her feedback. The employee can also ask for a meeting with the project manager and HR manager if he/she is not satisfied with the outcome of the discussion wiht the supervisor.

If any discrepancy in the feedback process is perceived by the employee he/she can have a one on meeting with the BM. If still not satisfied with the feedback the employee can approach the HR manager.

Relative rating of performance appraisals. A max cap on the promotions available. Hence team leads are required to discuss among themselves and decide on whom to be promoted that year.

It is also relative rating but there is no max cap and promotion depends on the vacancy available on the next higher level.

Conclusion

It is seen that the two organizations in spite of being in two different sectors viz. Banking and IT have similar performance appraisal systems with subtle differences. These differences not only are a result of the corporate and HR philosophy of these organizations but also due to the performance measurement metrics employed in these sectors in general.

It is seen that Accenture has a more robust appraisal and feedback system wherein the employee can approach multiple levels above his/her supervisor in case of dissatisfaction/ grievance regarding the feedback from his/her immediate supervisor. While in ICICI the avenues for the employee to discuss his/her feedback is limited when compared to ICICI. This may be partly due to the fact that Accenture Services Pvt. Ltd. is a multinational company which employs international HRM practices and methods. ICICI can evolve its appraisal and feedback systems to make it more competitive leading to the reduction in its attritions rates.