APPRAISAL TIME...TRICKY SITUATION.......NEED INPUTS...

Hi Guys,

It's the appraisal time.

Attrition is very meager at our office. The seniors are becoming even more senior, but the designations are stagnated, so no additional responsibility/work can be allocated. However, the salaries are hiked during annual appraisals every year based on the revenue.

Now, the question is, despite strengthening the sales team in terms of manpower and salary, we could get very little work this year and couldn't even reach break even; it's in loss. And yes, appraisals again. I am very confused because I cannot terminate or lay off employees as they are emotionally attached to the company, have been working here for quite some time, and have been well trained during bench hours. However, I cannot hike their salaries according to market standards as the company is in loss.

How do you think this situation should be handled? It is not the employees' mistake as we have not provided them work; otherwise, they all were performing well when given work.

I request all the seniors to please come up with your solutions.

Thanking in anticipation.

Regards,

Sari

Dear Sari,

Yes, this is a very critical situation and it's very hard to handle things. As you said, the employees are very loyal to the company and well-trained. The first thing you can do is to inform them about the situation - that the company is not able to reach break-even and we are facing some financial crisis. When these crises are over, the company will start performing again, and you will be appreciated for your work and loyalty to the company.

Note: Don't lay off employees. Also, don't make them impatient. Loyal and hardworking employees are assets to the company. Retention for the company doesn't mean that you want to save the money spent on them in the past. It's about their presence, loyalty... These are the things that are more important. This could be a challenge for...

Wish you the best of luck.

Regards,
HASSAN

Most of the employees better know whether they have a business or not.

Thank you, Hassan, for your prompt reply.

The worst part is employees are expecting a hike irrespective of being aware of the business situation of the company. After all, they have valid reasons - family, loans, etc. This is a human side of me.

But if I think only from HR's perspective, the employees have been here for quite some time, getting stagnated with no new creativity, new ventures, and the manpower being more than required. We end up paying salaries even when they are on the bench. I can hire freshers in the meantime with a meagre pay and train them until we get projects. In fact, I have seen new joiners performing better than seniors. The old employees have become accustomed to this company, taking it for granted at times, showing no discipline or proper etiquettes, and not being flexible for new policies and changes. On top of it, they don't let new joiners grow in the name of seniority. So, competent ones are not in the right chairs.

WHAT SAY?????

If this would be the case, then just go ahead. Blast an email stating that all employees are under strict observation, and the company needs to be restructured. The performance of all employees will be monitored.

Alternatively, you may initiate the necessary actions because there wouldn't be any compromise on discipline. Matters should not be taken lightly.

Regards,
HASSAN

Hi Sari,

My views...

If you are appraising sales guys, then you can take the targets and the highest target that has been achieved, then do a forced ranking as per the bell curve and analyze as to how many are your anchor guys, star performers and the bottom performers. Based on your ranking of the employees, select the bottom performers and let them go through a rigorous performance improvement plan.

Ultimately, I don't think you might want to retain the non-improvers despite these efforts. In their place, get some freshers, where your wage cost will reduce.

Gone are the days when HR was just a support function, now even we have the cost savings and earnings in our KRAs and will have to support our performance, especially when the company is in a challenging situation.

Thanks and Regards,
Siva

Dear Sari,

You need to give some token hike. The way I see it is this -- you need to communicate to all employees when they are having their appraisal meeting that they will get a hike. If someone complains that they have a meager hike, the following reasons can be cited:

1. The company is not making as much profit as expected.
2. You are not performing to your optimum.
3. We've been noticing unacceptable behavior from many employees that we are going to deal with separately.

If the HR in your company is strong enough to voice its opinion, I think you should suggest that hard-working newcomers will have to get higher raises.

Ultimately, it is the law of the survivor. The seniors eventually have to move on to other roles in bigger companies, and the newer lot needs to breathe in fresh energy.

With this in mind, you should devise your strategy. Otherwise, your problems are not going to end. They may get compounded.

Don't send a mass mail telling your employees that the company is not doing well. It may lead to unexpected repercussions. Let the message be subtle yet firm. Eventually, the ones you deem redundant will move on. Meanwhile, you can train freshers to take newer and better responsibilities.

Regards,

SS

Thank you, Siva, for your genuine inputs. The sales team is target-based, but most of the projects are on the verge. However, we may not hike their salaries until they achieve targets, and they are aware of it.

Coming to ranking the employees, the perception is changing with different people. As I am not a technical person, I am forced by the PMs to believe that a few are performing well and the rest are average. However, when I hear from the employees, they express feeling discriminated against and not allowed to grow.

Thank you, SS, it sounds good to sit with them and explain why there is a meager hike.

I am stuck with raising my opinion about hardworking new guys getting a better hike due to a lot of politics entangled with it. In the last two months, two new joiners left the organization as they were offered double the pay, and I couldn't stop them. I have made it clear to senior management many times, but they are taking very little action. Nowadays, I see PMs behaving rudely and absurdly with me. Being alone in HR, I find it really hard to deal with it.

Hi Sari,

I can empathize with you. I have handled a similar situation a few years back. The same argument that they had been there with us was an emotional catch. The market is bad; we did not offer them enough jobs was another excuse.

1. We did not offer them enough jobs.

Let us compare with organizations who have done very well during this period. My only question was if others have done why did we not?

2. They had been with us for long.

Are you running a charitable institution or a business institution? This is what I asked. It took nearly a year, and the culture changed. Some even criticized that I am not a genuine HR person!

HR is not about taking care of all people. HR is about taking care of performers and enabling and converting non-performers as performers. But no organization can wait indefinitely for training non-performers. One of my friends used to say, "we are not a training organization," when I used to criticize him for his quick decisions on manpower. I did not agree with him then, and I was in HR then. I agreed with him the moment I became the head of Operations!

Well, that was my view.

Thanks,

Siva

Thank you once again, Mr. Siva, for a very clear picture of taking things and motivating me. I am sure this is not faced only by me; there are many HR professionals who are struggling to make a change. The change may not be drastic as the root cause has much to do with the mindsets of the people and the culture that has been practiced, but yes, "WE WILL."

A workshop is being conducted on the subject you are talking about. Please see the attachment; it may be helpful to you.

Anand

Thank you, Anand. True. Attending such a workshop would definitely help me handle such situations better.

Dear seniors, I request you to share your views on this. By next week, I should be submitting my report on appraisals to management.

Dear Sari,

You should also be conscious about the Halo and Horns effect on appraisals. I have come across these errors frequently. I used to educate the team on these concepts with examples, and I have experienced changes. If you are preparing a document, then I strongly recommend you highlight perceptual errors, including the Horns and Halo effect.

Siva

Dear Sari,

Payment is for performance and not for the persons. Hitherto, it appears to me that you had been paying to the persons and not for their performance. Link the annual increment to the performance. If they are unable to meet their performance targets for the coming quarter, give them a warning, then a show cause notice, and then you can very well remove them. A business leader needs to be dispassionate and work for the common good and not for the emotions of the selected few.

Thanks,
Dinesh V Divekar
Soft Skill & Behavioural Trainer

Thanks, Siva. Could you please be a little clearer on the kind of errors? Thanks, Dinesh, for your genuine inputs. As mentioned earlier, they are performing well with the tasks assigned to them, enabling them to reach targets within the specified time. However, performance alone is not the only metric to consider.

Dear Sari,

I am attaching a nice presentation on Performance Management. This presentation deliberates on various methods and perceptual errors. This is a downloaded presentation, but I made a similar presentation a few years back when I introduced performance management in an organization.

Please go through this, and if you have any doubts, I will clarify with practical examples.

Siva

Thank you a ton, Mr. Siva, for the detailed PPT. I could understand the actual errors, measures of evaluation, and the checklist. 😊 Yes, if I have any doubts during the process, I might disturb you again. 😳 Thank you once again for sparing your valuable time to clear my doubts, Mr. Siva. 😊

Regards,

Sari

There are two parts to the issue. One involves handling the Sales/Business Development team. Since they are directly accountable for the business, you should clearly communicate with them and, when necessary, take extreme measures.

Regarding others (developers/PMs?), as they are the backbone of the company, you should communicate the situations to them and perhaps offer a nominal increase. Additionally, you may commit to a reward, for example, six months later if the situations improve (you can also issue a letter regarding this now). This can be done provided you have a definite plan to improve the top line, which includes appropriately managing the sales team.

Ultimately, maintaining open communication with a sincere commitment may help you. Cheers,
Bala

Since it is the sales team, you can modulate the incentive scheme instead of annual increments. This way, they can strive for it, and your sales can also improve.

Thank you, Bala. It's a good idea to reward them once the situation improves. Yes, as discussed, we are considering revising the salaries of the competent employees who are the backbone of the company.

In terms of sales executives, they are target-based, and their salary is revised once they prove their performance through metrics, also known as projects.

Hello,

From the post, it sounds like the employee evaluation is based on perspective rather than quantifiable evaluation results. Loyalty to the company is key to the success of the organization. However, having loyal employees who cannot add value to the organization may not necessarily be an asset.

The review and appraisal process in your organization needs re-evaluation. You may consider conducting employee self-evaluation by creating a set of questions based on Technical Understanding, Mentoring Attitude, Project Management expertise, and the categories relevant to the specific employee group. This will give you a quantifiable mechanism to decide on the salary appraisal.

The main responsibility of HR is to identify and place the right person for the right job. With a little coordination with the respective department, you will be able to help not only the employees but also the management by way of separating facts from perceptions.

Hi All,

Even I’m some what in the same situation as Sari’s, my Ops team hasn’t performed well but during their yearly appraisal review all of them talk about their experience (as they have been with us for more than 2yrs) and are asking hike according to market standards.

Now my company is not that big, we are a small call centre in Chennai which is doing well but if the salary increases our over all cost would go high. We focus on employee satisfaction but the problem is that everyone in the team are expecting 30% to 50% hike which is not possible and we would not be able to satisfy each and everyone. So I thought if I could show my employees the statistics of appraisals in other companies and tell them that their salaries are all most close to that they would not feel let down, now for this I would require statistics of salaries in other SME’s and the percentage of hike offered.

So I would request you all to help me out with some presentation which would provide me with these statistic.

Thanks and Rgds,

Neha.

Hi, I am assuming certain things... a job description is in place for all employees with agreed-upon KRAs, including targets. If the sales targets are not up to the mark, you need to think about all possible ways to boost sales. First of all, you need to understand the issues behind the decline in sales figures. If it is due to economic slowdown or because of product/service quality or related aspects, you can't project the dip in sales figures as a performance issue. Otherwise, you need to counsel employees with an objective to convince that the company can't go for a revised pay package without getting the right kind of sales volumes. But at the same time, you need to convince them with supporting data. Also, try to motivate them by introducing incentive schemes, have some weekend parties, etc. Best of luck.

Thanks Kumar for your quick reply
My company has everything in place from bonuses, to incentives (wherein my top agent takes home anywhere between 30K to 50K of incentives) Parties, get to gathers everyone in my company is happy and we have always lived up to our employees expectations but at the time of appraisals as you always know that not everyone will be happy with their hike, all my agents are only talking about MARKET STANDARS where as non of them have the right knowledge about this. I just want to show them few realistic statistic of the hike that is offered in the market and compare the hike that we would offer them.
It’s just to enlighten my agents and give them real figures about the appraisal systems in this industry.

Well said, Mr. Hassan.

My point of view is that how does it matter to an employee whether the company is doing well or not. If an employee has done well, he deserves the hike, and if you don't give the same, then my apprehension is that you will have high attrition. This happened in my organization, so we had to give good hikes to the deserving employees irrespective of the fact that we didn't do well to retain our performers.

Regards,
Govil Nanda

The sincere employees of a company know how the company is doing. Hence, it will always be prudent to have face-to-face communication with the entire team. When a company is not performing well, one has to pinpoint the reasons - whether it's the Sales Team, Production Team, Logistic/Procurement Team, or any other team that is not fully engaged with the team spirit. Once identified, you can start rectifying the game plan of that particular team and improve their performance.

Regarding the question of a salary hike, sincere employees who understand the actual reasons/results of the company's performance will never regret the decision of a "No Hike" and instead will try their best to turnaround the company.

Be honest and transparent with the sincere employees of the company, and you will never regret it. Everyone understands the ups and downs in business. However, if you intentionally show poor performance in the company's books, you will get into trouble from which you cannot be bailed out.

Thank you to all who have come forward with genuine suggestions and inputs, sparing their valuable time.

I am planning something like this:

1) Pressure the sales team (which is a vital source for the economic status of the company) with targets as of now, pay them (hike) once they reach the targets, as I can see a few projects are in the pipeline.

2) Assess the revenue generation for the coming year, based on the forecast plan the manpower for long-term and short-term projects.

3) Grade the staff (A, B, C, D, E). Encourage self-assessment along with reporting from the head.

4) Those who are average or below average can be laid off (as we cannot invest more time and money in training them at this point).

5) Pay more to retain the A category as per market standards, but increase their responsibilities, add more levels to avoid stagnation of levels/ job descriptions in terms of giving them more exposure.

For B and C, the same applies as for A, but with lesser pay compared to level/job description.

For D and E, pay them the same until you occupy them or lay them off with one month's notice.

Grading is based only on the rare skill set, personal characteristics, technical exposure, not solely on seniority.