It will be difficult to disagree that one of the best moments of this IPL so far has been those three consecutive sixes by Dhoni against MI at Wankhede. On the other hand, one could argue that such play was expected of Mahi and he was simply delivering on his role!
Meanwhile, I am currently struggling to decide if I should vote again for the sitting MP in the upcoming Lok Sabha election, whom we voted based on the promises he made last time. Promise versus delivery has become a sensitive debate at home as it appears we vote based on emotions rather than track record.
In the midst of this summer of IPL and Elections where we are evaluating players and politicians, it’s also appraisal season at enterprises, where employees and employers are evaluating each other on their say-do ratios.
The Promises
“In the next cycle, we shall make the correction” is a common hiring managerial assurance when organisations can’t match the new joiner’s pay demand. Once hired, the managers continue to build this salary correction hope with the new recruit throughout the employment cycle. The employee plays the underpaid card, and the manager dangles the carrot for the next cycle correction. It’s an endless loop where the manager can never get the best of any employee after pay-related broken promises. Picture this: many salary benchmarking consulting firms have projected an 8-10 per cent average salary hike this year, which further creates a minimal benchmark for most employees. So, a no hike or a lesser increase than average rightfully makes the employees feel betrayed.
The Changed Context
From the time Russia invaded Ukraine in February 2022, global enterprises have been on a continual volatile journey. Their ability to grow, maintain profits, hire, give hikes or promote employees has been highly challenged. Moreover, many of them over-hired talent at inflated salaries, and the new recruits haven’t delivered against their enhanced titles and inflated salaries. Sounds similar to the ongoing struggling performance context of Mitchell Starc and Hardik Pandya, who have yet to substantiate the highest-paid tag in IPL and captaincy? Enterprises like the IPL franchises must be wondering what happened to their new hires’ potential and promises. Should they consider the difficult circumstances under which employees are supposed to perform while appraising them or weigh on the organisational affordability? When the organisations choose the latter, the consequences are not difficult to predict.
Attrition Quarters
In the IT industry, it’s well known that a significant percentage of employees across hierarchies quit between April and September after receiving their hikes. Last year, in spite of a tight hiring market, 46,000 employees of the top four Indian IT services companies joined other IT services companies or GCCs in the 2nd and 3rd quarters. It’s now an acceptable interview conversation in these April, May, and June quarters for job seekers to say, “I am at X salary, expecting a 10 per cent hike; I need at least 30 per cent above that to switch my job”. Appraisals seem to have become trading counters for job changes.
Appraisal Blues
One of my managers had recommended hikes in the range of 40-50 per cent to half of her team members. Her team had achieved 50 per cent of the targets for two consecutive years. But she was petrified that her team would leave post-appraisal if those generous hikes weren’t given, and performance over the 18 months was the least of her considerations. She said, “Last year also there was only a 10 per cent hike, and we have to give a better hike to retain them”.
Organisations and managers operate under this constant threat of resignation during annual appraisals, and an honest conversation on productivity, process improvements, and development is hardly covered. One year, we had a flat performance without any revenue growth. When we analysed the appraisal ratings, all employees’ average rating was a 3 out of 5. Here, three meant meeting expectations of 100 per cent achievement. None of the managers had rated any of their reportees 1 or 2 despite achieving 50 per cent or less. They were playing it safe. Some even praised their hard work and commitment and ignored the performance metrics while recommending over 20 per cent hikes.
The Flowing River
In a world where there is a constant churn of good talent, organisations and managers are struggling to make honest assessments of their employees, and hikes/bonuses have become the only instrument to contain attrition. The burden of more work, loss of IP and the discontinuity of people and processes are producing indecisive managers. IT services companies that shed significant headcounts last year are still showing increases in employee costs, highlighting the cost increase to replace, upskill, and retain skilled talent.
Just like in our upcoming elections we have a limited pool of politicians who show up after elections, the enterprises also have to budget for a significant number of leavers post appraisal. As I head to the polling booth and also approve the salary hikes this week, I am reminded of the quote, “Promises are like a full moon: if they are not kept at once, they diminish day by day.”
(Kamal Karanth is the Co-Founder of Xpheno, a specialist staffing company.)