Case 6: Appraisal at Systel Technologies

Systel Technologies is an embedded telecom solutions company that helps businesses across the telecom value chain to accelerate product development life cycles. It was established in 1989 in the USA and later moved its headquarters to Bangalore, India, in 1991. Currently it has three divisions, namely, the semiconductor division, terminal equipment division, and networking services division (with a proposal to set up a fourth division on wireless LAN technology), and employs about 2400 people at offices in India, Canada, China, Germany, Japan, Sweden, the UK, and the USA. The company is known for its performance-oriented work culture and innovative human resource policies and practices, which they periodically review and revise to accommodate the changes in the product-market situations and the corresponding changes in the organizational structure/design and processes. Accordingly, they recently conducted a review of their performance appraisal system under the initiative of a newly appointed HR Manager (Nitin Parekh) who had specialized expertise and experience in performance management. Based on the inputs received from discussions with the various stakeholders, Nitin designed a new system of performance appraisal, which had many progressive features such as joint identification of KPAs (Key Performance Areas) by the employee and his/her manager; building of KPAs around four functional clusters, namely, project, process, people, and developmental; goal setting based on KPAs and clusters; making the superiors’ (including the CEO’s) goals known to the subordinates; reducing the impact of rating errors (such as severity, leniency, and central tendency) through the statistical process of normalization; accommodating the requirements of the IT-enabled work system, where the employees are often required to work under several managers in different locations/countries and in virtual teams; ratings based on scale points indicating the extent to which the expectations are met; and the creation of a “comprehensive portal” where the raters can access all the details of the employee’s performance. Although the new system was generally well-received by the employees, the feedback collected by a consultant after 1 year of its implementation showed that there were still a few areas of concern for the employees. Based on the employees’ feedback, the consultant made a few suggestions, which included the introduction of the 360-degree appraisal system; conducting the appraisal training to help employees participate effectively in the appraisal process; initiating adequate follow-up on the outcomes of the appraisal including the training for better job performance; and developing a corporate-level policy on employee compensation (where the appraisal outcomes could also be considered). Nitin was wondering what he should recommend to the top management.