Reward system linked to peformance- a broad overview

1
Reward System linked to Performance
in Tata Communications Ltd.
-a broad overview
Janardan Raccha
HR- Specialization
PRIN. L. N. WELINGKAR INSTITUTE OF MANAGEMENT & DEVELOPMENT RESEARCH
YEAR OF SUBMISSION- ***’2014.

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ACKNOWLEDGEMENTS
“Vital to every operation is co-operation, I really agree to this wonderful quotation put
forth by Mr. Frank Tyger.
It is a matter of great pleasure to thank all those people who helped me in completing
this project successfully otherwise it would not have been possible. Acknowledgement is
not only a ritual, but also an expression of indebtness to all those who have helped in the
completion of this project.
I would like to express my deepest thanks to my project guide _________________, for
his guidance which extended me throughout my project. I thanks to Prof.
______________ for his supervision, encouragement and valuable inputs. I also would
like to thank ______________ (Colleague) who helped me to improve the quality and
layout of the project.
Lastly I would like to thank all those, who have been directly or indirectly helped me in
making the project.

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Certificate from the Guide
This is to certify that the project work titled “Reward System Linked to Performance - a
broad overview” in Tata Communications is a bonafide work carried out by Janardan
Raccha (Roll No- ___________, a candidate for the Post Graduate Diploma examination
of the Welingkar Institute of Management under my guidance and direction.
Signature of Guide
Name :
Designation : Sr. Manager- Human Resources
Address :
Date:
Place:

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TABLE OF CONTENTS
Sr. No. Topics Page
1 Executive Summary 5
2 Objectives 6
2
Introduction to Company
 Introduction-Tata Group
 Tata Group at Glance
 Our Businesses
7-10
7
8
8
3
Tata Communications Limited
 Introduction
 Vision, Commitment, Strategy, Our People
 Its Competitors
 Its Divisions
11-15
11
11
14
15
4
Reward System linked to Performance- Theoretical
Background
 Introduction – Reward System
 Rewards & Recognition
 Purpose of Reward System
 Designing a Reward System
 Reward System Linked to Motivation
 Types of Rewards & Awards
 Introduction- Performance Management
 Limitation of Reward System
 Recent trends of Reward System in India
16-30
16
17
18
18
20
23
30
34
35
5
Reward System linked to Performance in Tata
Communications
 PMS Process at TCL
 Energy Curve Consolidation / Calibration
 Talent Conclave
 Performance Improvement Plan- PIP
 Internal Job Posting Policy- IJP
 Reward system Recognition in TCL
 Rewards System Linked to Leadership Signatures
 Awards Category
39-56
41
46
47
47
48
48
48
51
6 Conclusion 57
7 Bibliography 58
8 Annexure-I (Forms) 59-64

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EXECUTIVE SUMMARY:
In a competitive climate, more business owners are looking at improvements in quality
while reducing costs. Meanwhile, a strong economy has resulted in a tight job market. So
while small businesses need to get more from their employees, their employees are
looking for more out of the businesses. Employee rewards and recognition programs are
one method of motivating employees to change work habits and key behaviors to benefit
a small business.
The objective of this project is to discuss the rewards and recognition policies and the
process involved with reference to Tata Communications. It always believe that flexibility
and responsiveness is everything critical in long term success. These rewards aim to
recognize and reward outstanding individuals and teams who have gone beyond their
role requirements and have taken initiatives that have had a positive impact to its short
term and long term growth objectives.
For this huge data collection, I prepared questionnaire and met HR of Tata
Communications to understand their process. After that I made a summary of this data in
Excel sheet and discussed with my project guide, who helped me to select the best one.
Immediately we started implementing those processes in our HR functions.
While doing the project we came across with some drawbacks but we managed to make
corrections as per our need. Overall it was a great learning experience as I have been
interacted with key peoples of the organization due to which it not only helps me to learn
the process of rewards and recognition but gave me to enhance my skills & knowledge.
I also come to understanding that reward system is one of the strategic tool to build a
strong performance culture in the organization. It makes sure that the unit performs in a
sustainable and increasing manner. So in the same way every individual employee would
be able to improve his /her performance considerably.

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OBJECTIVES:
 To Study of various reward systems in TCL.
 Study of linkage between PMS & reward system.
 To identify the gaps in the current reward system.
 Reward System is an official system and this is done by performance-based
measures, objective or subjective.
 To reward employees fairly, equitably and consistently in correlation to the value
of these individuals to the organization.

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INTRODUCTION TO THE COMPANY
TATA GROUP AND ITS HISTORY:
Tata Group is an Indian multinational conglomerate company headquartered in Mumbai,
Maharashtra, India. It was founded in 1868 by Jamsetji Tata as a trading company with
Rs. 21000 capital. It has operations in more than 80 countries across six continents. Tata
Group has over 100 operating companies with each of them operating independently.
Out of them 32 are publicly listed. The major Tata companies are Tata Steel, Tata Motors,
Tata Consultancy Services (TCS), Tata Power, Tata Chemicals, Tata Global Beverages, Tata
Teleservices, Titan Industries, Taj Hotels and Tata Communications.
The Group's major companies are beginning to be counted globally. Tata Steel became
the sixth largest steel maker in the world after it acquired Corus. Tata Motors is among
the top five commercial vehicle manufacturers in the world and has recently acquired
Jaguar and Land Rover. TCS is a leading global software company, with delivery centres in
the US, UK, Hungary, Brazil, Uruguay and China, besides India. Tata Tea is the second
largest branded tea company in the world, through its UK-based subsidiary Tetley. Tata
Chemicals is the world's second largest manufacturer of soda ash. Tata Communications
is one of the world's largest wholesale voice carriers.
Tata Group remains a family-owned business, as the descendants of the founder (from
the Tata family) own a majority stake in the company. Tata Sons is the promoter of all key
Tata companies and holds the bulk of shareholding in these companies. The chairman of
Tata Sons has traditionally been the chairman of the Tata group. About 66% of the equity
of Tata Sons is held by philanthropic trusts endowed by members of the Tata family.
The Tata Group and its companies & enterprises is perceived to be India's best-known
global brand within and outside the country as per an ASSOCHAM survey. In 2009, annual
survey by the Reputation Institute ranked Tata Group as the 11th most reputable
company in the world. The survey included 600 global companies. The Tata Group has
helped establish and finance numerous quality research, educational and cultural
institutes in India. The group was awarded the Carnegie Medal of Philanthropy in 2007 in
recognition of its long history of philanthropic activities.
The combined market capitalization of all the 32 listed Tata companies was INR 6.8 Trillion
($ 109 billion) as of March 2014. Tata receives more than 58% of its revenue from outside
India. The Group employs around 350,000 people worldwide. The Tata name has been
respected in India for 146 years for its adherence to strong values and business ethics. It

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encompasses seven business sectors: communications and information technology,
engineering, materials, services, energy, consumer products and chemicals.
TATA GROUP AT A GLANCE
OUR BUSINESSES
Chemical Sector
 Tata Chemicals
 Rallis India
 Tata Pigments Limited
 General Chemical Industrial Products
 Brunner Mond
 Magadi Soda Company
$109 Billion
Annual Revenue
~ 60%
Non India
Over 150
Years in Operations
Only Indian Entity
On Forbes’ List of World’s 20
Most Reputed Companies
#45
Worldwide Brand
(Source: Brand Finance, 2012)
544502 (till 2013)
Employees Worldwide
#11
Most Reputed Company
(Source: Reputation Institute, 2009)
UK
Group’s Largest Market
outside India
Over 100
Operating Companies in 7
Sectors across 6 Continents

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Consumer Products
 Tata Tea Limited
 Tata Global Beverages
 Titan Industries
 Voltas
 Tata Swach
 Tata Salt
Energy
 Tata Power
 Tata Power Delhi Distribution Limited
 Tata Power Solar
 Jamshedpur Utilities and Services Company
 Tata Projects
Engineering
 Tata Motors
 Tata Technologies Limited
 Tata Consulting Engineers Limited
 Telco Construction Equipment
 Voltas Global Engineering Centre
 Tata Advanced Materials
Information systems and communications
 Computational Research Laboratories
 Tata Consultancy Services Ltd.
 Neotel
 Tata Teleservices
 Virgin Mobile India
 Tata Communications
 VSNL International Canada

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Services
 Tata AIG General Insurance
 Taj Hotels
 Tata Housing Development Company Limited
 Tata Africa Holding
 Ginger Hotels
 Tata Capital
Steel
 Tata Steel
 Tata Sponge Iron
 Tata Bearings
 TM International Logistics
 Tayo Rolls
 Tata Steel Europe

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TATA COMMUNICATIONS
Tata Communications is a leading global provider of a new world of communications.
With a leadership position in emerging markets, Tata Communications Leverages its
advanced solutions capabilities and domain expertise across its global and pan India
network to deliver managed solutions to multi-national enterprises, service providers and
Indian consumers.
The Tata Global Network included on of the most advanced and largest submarine cable
networks, a Tier-1 IP network, with connectivity to more than 200 countries across 400
PoPs, and nearly 1 million square feet of data center and colocation space worldwide. It
currently has a cable network of more than 23500 kilometers.
Vision
Deliver a new world of communications to advance the reach and leadership of our
customers.
Commitment
Invest in building long-lasting relationships with customers and partners and lead the
industry in responsiveness and flexibility
Strategy
Build leading-edge IP-leveraged solutions advanced by our unmatched global
infrastructure and leadership in emerging markets.

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Our People
Our global office holds talent from six continents. Our vast pool of expertise in the
communications and technology sectors embody our commitment to conduct ethical and
sustainable business. Tata Communications continues a tradition of developing and
deploying innovative solutions for existing and emerging markets worldwide. Our
international team reflects the dynamic and diverse market Tata Communications Serves.
State-of-the-art infrastructure
 Over 210,000 km of owned fibre
 Fibre ring around the globe
 400 PoPs
 Over 15 terabits of International bandwidth lit capacity
 More than 1 million sq. ft. of data centre space
Industry leader
 #1 international voice carrier
 #1 submarine cable owner
 #5 IP transit provider
 Fastest growing Tier-1 operator
 #1 in enterprise data in India
 #2 in enterprise and wholesale data in South Africa
Tata Communications in Numbers
 53 Billion Minutes of International Voice Traffic
 42 Data Centers with more than 10,000 racks and one million square feet
 3500 Petabits every month on our Internet backbone
 73 Million Voice Transactions handled every day
 15 Terabits of International Bandwidth Lit Capacity
 High Level Operating Structure

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40
Nationalities
36.6 Average Age
7750+
Employee Worldwide
30% Out-side India
2 Home Markets India
& South Africa
Tata Communications Uniting Assets:
Global Organization

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Corporate Services
Organization Chart
Competitors of Tata Communications
 Vodafone
 Reliance Communications Limited
 Idea Cellular Limited
 Bharti Airtel Limited
 Maharashtra Telephone Nagar Limited
 Bharat Sanchar Nigam Limited
MD & Group CEO
Business Units BU Shared Services
CMO & CEO
Nextgen Business
Chief Financial Officer
General Councel
Human Resources
Business Excellence
Chief Strategy Officer
Global Voice Solutions
Global Enterprise Services
Growth Ventures Group
Global Carrier Services
Neotel
Customer Service &
Operations
Product Management,
Engineer & IT
Global Network
Services

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Joint Venture Structure
TCL is having following Divisions
 Global Voice Solutions
 Global Enterprise Services
 Global Carrier Services
 Growth Venture Groups
 Customer Service & Operations
 Tata Communications Transformation Services Limited
 Tata Communications Payment Solutions Limited
TATA Group
45.15%
BSNL
26%
Share
Holders
28.85%
TATA
COMMUNICATIONS

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INTRODUCTION OF REWARD SYSTEM - A THEREOTICAL BACKGROUND
Wilson (1995) defines reward systems as follows:
“A Reward system is any process within an organization that encourages, reinforces, or
compensates people for taking a particular set of actions. It may be formal or informal,
cash or noncash, immediate or delayed”.
It can also be defined as “a structured method of evaluating and compensating employees
based on their performance”.
Rewards are what employees receive for performing well. Sometimes these rewards
come from the organization in the form of money, recognition and promotions. Rewards
can also consist of feelings from having performed well in work. It can be said that rewards
are very powerful motivators of performance.
Organizations need various types of performance from their employees. They need them
to become active members of the organization, they need them to do their job as it has
been defined and they need their employees to improve their performance. In order to
achieve improvements in performance different reward systems must be applied.
In a competitive business climate, more business owners are looking at improvements in
quality while reducing costs. Meanwhile, a strong economy has resulted in a tight job
market. So while small businesses need to get more from their employees, their
employees are looking for more out of the businesses. Employee rewards and recognition
programs are one method of motivating employees to change work habits and key
behaviors to benefit a small business.
IMPORTANCE OF REWARD SYSTEM
It is important for one's employees to know they are valued. W.P. Brick (2012) elevates
this importance in Public Manager by writing, "Recognition and employee engagement
are so critical to the operations and culture of a modern workplace they can only be
ignored at great peril." In Entre Leadership, Dave Ramsey (2011) adds, "Where there is no
recognition, it is very difficult to have passionate, creative, motivated team members".
When it comes to valuing employees, the manager has nothing to lose when giving the
recognition but much to lose by withholding praise. This is not to say that employees

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should be recognized for anything and everything, but that when a job is done
exceptionally well, there should be recognition.
Employee reward and recognition programs are of immense importance to an
organization and will benefit the employee along with the organization. Most of what has
been mentioned is considered common sense, but common sense does not seem very
common. People should be rewarded and recognized for a job well done but often get
overlooked in a corporation's pursuit of profit and a market advantage. But employee
rewards and recognition can bring an organization profit and a market advantage! It all
comes down to a firm's ability to understand the human need for acceptance, the
definitions for rewards and recognition, the importance and benefits, and finally the
various means of financial and nonfinancial options. Whether it costs money or is free for
an organization, there is a need for employees to be acknowledged and it must be
intentional.
REWARDS VS. RECOGNITION
Although these terms are often used interchangeably, reward and recognition system
should be considered separately. Employee reward systems refer to programs set up by
a company to reward performance and motivate employees on individual and/or group
levels. They are normally considered separate from salary but may be monetary in nature
or otherwise have a cost to the company. While previously considered the domain of large
companies, small businesses have also begun employing them as a tool to lure top
employees in a competitive job market as well as to increase employee performance.
As noted earlier, although employee recognition programs are often combined with
reward programs, they retain a different purpose altogether. They are intended to
provide psychological rewards a financial benefit. Although many elements of designing
and maintaining reward and recognition system are the same, it is useful to keep this
difference in mind, especially for small business owners interested in motivating staffs
while keeping costs low.
DIFFERENTIATING REWARDS FROM MERIT PAY AND THE PEFORMANCE APPRAISAL
In designing a reward program, a small business owner needs to separate the salary or
merit pay system from the reward system. Financial rewards, especially those given on a
regular basis such as bonuses, profit sharing, etc., should be tied to an employee’s or a
group’s accomplishments and should be considered “pay at risk” in order to distance

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them from salary. By doing so, a manager can avoid a sense of entitlement on the part of
the employee and ensure that the reward emphasized excellence or achievement rather
than basic competency.
Merit pay increases, as a result, are not part of an employee reward system. Normally,
they are increase for inflation with additional percentages separating employees by
competency. They are not particularly motivating since the distinction that is usually
made between a good employee and an average one is relatively small. In addition, they
increase the fixed costs of a company as opposed to variable pay increases, such as
bonuses, which have to be “re-earned” each year. Finally, in many small businesses
teamwork is a crucial element of a successful employee’s job. Merit increases generally
review an individual’s job performance, without adequately taking into account the
performance within the context of the group or business.
PURPOSES OF REWARD SYSTEMS
 To recognize individual and team efforts
 To re-enforce positive behaviors
 To create a better working environment
 To have a system that recognizes as many people as possible.
 To attract and retain good employees
 To reduce the absenteeism
 To facilitating organizational culture and strategic objectives.
DESIGNING A REWARD PROGRAM
The key characteristics of developing a reward program are as follows:
 Identification of company or group goals that the reward program will support.
 Identification of the desired employee performance or behaviors that will
reinforce the company’s goals.
 Determination of key measurements of the performance or behaviors, based on
the individual or group’s previous achievements.
 Determination of appropriate rewards.
 Communication of program to employees.

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Reward system are concerned with two major issues: Performance and Rewards.
Performance includes defining and evaluating performance and providing employees
with feedback. Rewards included bonus, salary increase, promotions, stock awards and
perquisites.
Large corporations with several different businesses may have multiple reward systems.
And while they may share some fundamental philosophies and values, they may differ
accordingly to the particular business setting, competitive situation, and product life
cycle. Thus, multiple reward systems can support multiple cultures within one
organization.
These components will be designed, developed and maintained on the basis of reward
strategies and policies which are created within the context of the organizations between
strategies.
1. Improve Organizational Effectiveness: Support the attainment of the organization’s
mission, strategies, and help to achieve sustainable, competitive advantage.
2. Support and Change Culture: Under pin and as necessary help to change the
organizational culture as expressed through its values for performance innovation, risk
taking, quality, flexibility and team working.
3. Achieve Integration: Be an integrated part of the management process of the
organization. This involves playing a key role in a mutually reinforcing and coherent range
of personal policies and process.
4. Manageable: It helps to manage the undue administrative burdens imposed on
managers and members of the personal department.
5. Motivate Employees: Motivate employees to achieve high level of quality performance.
6. Increased Commitment: Enhance the commitment of employees to the organization
that will a) want to remain members of it, (b) develop a strong belief in and acceptance
of the values and goals of the organization; and (c) be ready and willing to exert
considerable effort on its behalf.
7. Fairness and Equity: Reward assesses can upgrade competence and encourage
personal development.

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8. Improved Skills: The employees can upgrade competence and encourage personal
development.
9. Improved Quality: Help to achieve continuous improvement in levels of quality and
customer service.
10. Develop team working: An effective award system improves co-operation and
effective team working at all level.
REWARD SYSTEM LINKED TO MOTIVATION
One of the primary purposes to use rewards in companies is to motive the employee to
perform well. When we talk about motivation from managerial prospective it is important
to bear in mind that: “You can’t motive other people. You can only influence what they’re
motivated to do”.
In other words we do things because it will fulfil some current or future personal goal or
desire we have. It is therefore important for the corporate management to identify what
motivates their employees and try to join their personal objectives with the ones of the
company.
MASLOW – HIERARCHY OF NEEDS
The motivation process can be described in the term of need theory which states that it
is an unsatisfied need that motivates behavior. The best known theory within this
category is written by Abraham H Maslow (1908-1970). An American psychologist in 1954.
Maslow’s hierarchy of needs is one of the most famous theories in the term of individual
motivation. Human need are by him divided into five different levels, physiological, safety,
belongings, esteem and self-actualization. Maslow’s hierarchy of needs always illustrated
in the pyramid, shown in the following figure.

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MASLOW’S NEEDS CLASSIFIED INTO FIVE CATEGORIES:
Physiological needs – are basic needs for survival such as food, water & sleep.
Safety needs – consist of variety of safety needs such as security of employment, health
& family.
Social need – consist of friendship, family, love & intimacy.
The esteem needs – presents the desire to be accepted & valued by others. Here we find
the concept such as self-esteem, confidence, achievement, respect for others and respect
by others.
The need for self-actualization – here we find the motivation to one’s own maximum
potential, self-fulfillment and try to become everything that one is capable of becoming.
It includes the concept as morality, creativity, spontaneity, problem solving and some
more.
HERZBERG’S MOTIVATION-HYGIENE THEORY (TWO FACTOR THEORY)
To better understand employee attitudes and motivation, Frederick Herzberg performed
studies to determine which factors in an employee’s work environment caused
satisfaction or dissatisfaction. He published his findings in the 1959 book the Motivation
to work.
The following table presents the top six factors causing dissatisfaction and the top six
factors causing satisfaction, listen in the order of higher to lower importance.

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Factors Affecting Job Attitudes
Leading to dissatisfaction Leading to Satisfaction
 Company Policy  Achievement
 Supervision  Recognition
 Relationship with Boss  Work itself
 Work conditions  Responsibility
 Salary  Advancement
 Relationship with Peers  Growth
From the above table of results, one observed that the factors that determine whether
there is dissatisfaction or no dissatisfaction are not part of the work itself, but rather are
external factors. Herzberg argues that these provide only short-run success because the
motivator factors that determine whether there is satisfaction or no satisfaction are
intrinsic to the job itself, and do not result from carrot and stick incentives.
EXPECTANCY THEORY
Expectancy Theory (1964) is a motivational theory written by Victor Vroom, born 1932, in
Canada. The theory states that motivation will be strong if the individual can expect that
their effort & contribution will give meaningful rewards. It means that motivation is more
likely when a clear relationship is exists between performance and outcome and the
outcome is satisfying needs.

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Motivation in work can be reached in two ways. Firstly, people can motivate themselves
by working with things that satisfied their personal needs. Secondly people can be
motivated by management using incentives such as pay, promotion, praise.
TYPES OF REWARDS
Rewards serve many purposes in organizations. They serve to build a better employment
deal, hold on to good employees and to reduce turnover. The principal goal is to increase
people's willingness to work in one’s company, to enhance their productivity.
Most people assimilate "rewards", with salary raise or bonuses, but this is only one kind
of reward, extrinsic reward. Studies proves that salespeople prefer pay raises because
they feel frustrated by their inability to obtain other rewards, but this behavior can be
modified by applying a complete reward strategy.
Besides verbal appreciation, tokens of appreciation, rewards (award trophies, framed
certificates, special parking spaces, gift cards, pens or a free day off.) etc. are generally
given to employees. The principal difficulty is to find a balance between employees'
performance (extrinsic) and happiness (intrinsic)
There are two kinds of rewards:
Extrinsic Rewards- Tangible / Concrete Rewards.
Intrinsic Rewards- Non Tangible / to give satisfaction to Individual.

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Extrinsic
Rewards
Intrinsic Rewards
Interesting work
Responsibility
Recognition
Achievement
Task variety
Task Significance
Job feedback
Financial Nonfinancial
Performance-based Membership-based
Career rewards
Job security
Career growth
Self-development
Social rewards
Status symbols
 Title
 Office
 Preferred schedule
Direct Compensation
Basic Pay
Merit Pay
Bonus
Direct Compensation
Cost-of-living increase
Seniority-based increase
Education-based
increase
Indirect compensation
Public protection
 Social security
 Unemployment premiums
 Disability premiums
 Private protection
Private protection
 Pension
 Savings
 Life Insurance
Paid Leave
 Training
 Illness
 Vacation
Life cycle
 Child and elder care
 Parks and playgrounds
Types of Rewards

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Various categories of rewards that are given and can be given are:
Basic Pay: Basic Pay is defined as the rate fixed by applicable law or regulation. Examples
of special types of pay included in Basic Pay are:
 Night differential pay for wage employees
 Environmental differential pay for employees who work under hazardous
situations.
 Premium pay for groups such as law enforcement officers
 Locality-based comparability payments.
It is an essential factor which is closely related to job satisfaction and motivation.
Although pay may not be a reward as this is a static amount which an employee will be
paid every month, it will be considered as a reward if similar worker is paid less.
Additional Hour’s Rewards: This is similar to that of overtime. However, it is paid to
employees if they put in an extra hour of work for working at unsocial hours or for working
long hours on top of overtime hours.
Commission: Many organizations pay commission to sales staff based on the sales that
they have generated. The commission is based on the number of successful sales and the
total business revenue that they have made. This is a popular method of incentive.
Performance Related Pay: This is typically paid to employees who have met or exceeded
their targets and objectives. This method of reward can be measured at either team or
department level.
Profit Related Pay: Profits related pay is associated with if an organization is incurring a
profit situation. If the organization is getting more than the expected profits, then
employees receive an addition amount of money that has been defined as a variable
component of the salary.

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Payment by Results: This is very similar to that of profit related pay. This reward is based
on the number of sales and total revenue generated by the organization.
Piece Rate Reward: Piece rate reward is directly related to output. The employees get
paid on the number of pieces that they have produced. These pieces will be closely
inspected to make sure that quality standards are being met.
Bonuses: Bonuses will be paid to employees who have met or exceeded their targets and
objectives. This is aimed at employees to improve their performance and to work harder.
There are several types of bonus programs followed by industries, some are as follows:
Current Profit Sharing, Gain Sharing, Spot Bonus Award, Noncash Bonus, Sign-on Bonus,
Mission Bonus, Referral Bonus, Retention Bonus, Holiday Bonus, etc.
Recognition: Employees will not always be motivated by monetary value alone. They do
require recognition to be motivated and to perform well in their work.
Job Enrichment: This is a common type of recognition that is aimed at employees to get
motivated. Job enrichment allows more challenging tasks to be included in the day-to-
day tasks performed by the employee.
Job Rotation: Unlike job enrichment, job rotation refers to shifting employees between
different functions. This will give them more experience and a sense of achievement.
Teamwork: Teamwork is also considered as recognition. Creating teamwork between
team members will improve performance at work. Social relationships at work are
essential for any organization.
Empowerment: Empowerment refers to when employees are given authority to make
certain decisions. This decision making authority is restricted only to the day to day tasks.

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Training: Many organizations place a greater emphasis on training. This is considered as
recognition for employees. Training could vary from on the job training to personal
development training.
Benefits: Another element in the total rewards approach includes employee benefits.
Benefits are programs that an employer uses to supplement the cash compensation that
employees receive. These benefits provide a level of security for employees and their
families, and may include health care insurance, time off, disability insurance and
retirement programs. As such, benefits fall under the “satisfier” category.
AWARDS:
This again is an important type of recognition that is given to employees who perform
better. Organizations have introduced award systems such as best performer of the
month etc. and all these will lead employees to perform better.
Rewards are basically the methods to extrinsically motivate employees. These awards can
be MONETARY or NON MONETARY. Some of the commonly given awards in various
organizations are:
Service Awards:
Each year that an employee commits to an employer, he offers great advantages to the
business or organization. Employees gain more knowledge of their position and
responsibilities over time, and the company does not have to set aside time and money
hiring and training new employees. Employers often reward employees who remain
committed with a recognition pin or a certificate acknowledging the number of years of
continuous service. Employers may further reward long-term employees with an extra
gift such as a watch or a special desk set, typically engraved with the employee’s name
and the date they received the honor.
Employee of the Month:
Some workers will consider being designated Employee of the Month a great honor. This
award is commonly given to the one employee each month who has given exceptional
service, had perfect attendance and gone the extra mile for the company to ensure all

28
customers are given the service they expect. These employees are often recognized
during monthly staff meetings with a plaque or certificate recognizing their efforts. A
designated parking space is another good idea, and displaying the plaque where
customers can see it adds to the honor. Employers should take care in choosing
employees in a manner that shows no favoritism. If others perceive that employees are
chosen unfairly, the award can be counterproductive.
Attendance Awards:
Companies depend on employees to be punctual and perform tasks to their potential so
that the work load can be evenly distributed. Employees who strive to be at work during
every scheduled shift and never come in late deserve to be recognized in a special way.
Perfect attendance awards can be given in the form of a certificate, plaque or even as a
cash bonus. Sometimes employers will give employees with perfect attendance a day off
with pay or a gift certificate to a local restaurant in appreciation for their commitment to
the company.
Safety Awards:
Safety awards are a great way for employers to recognize employees or teams for their
continued adherence to safety guidelines. This kind is typically awarded when an
employee or a group files no incident or accident reports over a given period of time, such
as a month or year. These acknowledgements are often expressed in terms of the man
(or woman) hours since the team last experienced in injury. Cash bonuses or gifts such as
tickets to popular local events make great safety awards.
Company Advancement:
The ultimate reward that every employee tends to strive for is company advancement.
Employees generally work hard to earn recognition in an attempt to be promoted to a
higher position within the company or receive an annual raise in pay. Employers should
choose candidates for advancement carefully, avoiding favoritism and ensuring that the
most reliable and skilled employees are advanced to higher positions.

29
Special Operating Unit Award:
Individual bureaus may establish award programs which are appropriate to their
particular interest in recognizing certain group of employees. There are a large variety of
programs, ranging from recognition for scientific accomplishments to employee of the
year. These award programs can be cash or non-monetary.
Cash-in-Your Account Award:
A small cash award designed to recognize employees for going the extra mile in getting
the job done. These awards do not recognize overall performance, but rather specific
instances of exemplary performance. Awards range from Rs. 1000 to Rs. 10000 in Rs. 1000
increments.
Suggestion Award:
Under the suggestion program, employee are granted an award for formal suggestions
which have been evaluated and adopted. The amount of the award is determined by the
amount of tangible and intangible benefits of the idea.
On the Spot Award:
A small award which is granted as a means to recognize employees for those day-to-day
efforts which contribute in a special way to get the job done.
Certificates of Appreciation:
Certificates granted to employees or non-employees who have made outstanding
contributions or who have performed significant services to the Department.
External Awards:
Awards sponsored by other agencies and non-government organizations given to
corporate employees.

30
Group-Based Reward Systems
Group-based reward systems are based on a measurement of team performance, with
individual rewards received on the basis of this performance. While these systems
encourage individual efforts toward common business goals, they also tend to reward
under-performing employees along with average and above-average employees. A
reward program which recognizes individual achievements in addition to team
performance can provide extra incentive for employees.
WHAT IS PERFORMANCE MANAGEMENT
It can be defined as a continuous process of assessing and measuring the performance of
an individual and aligning it with the organizational goals. It is the job of the HR people to
design an effective performance management system.
Expansion for the word “Perform”, best explains it.
P – Potential
E – Enthusiasm
R – Reliability
F – Flexibility
O – Orientation
R – Reengineering
M – Motivation
Why Link Reward to Performance
To connect two ends of the rope, a knot is required; to make it lengthy and useful for long
run. Likewise, the tie up between the reward and performance should be made for
employee retention and their commitment to work, which ultimately improvise the
contributing factor of the employee. Employees should perform well to be rewarded and
the approach designed for this is “Pay for Performance”. Apart from the base pay, which
is based on job description, a variable pay should be announced for their outstanding
performance. Although the pay raise motivates the employees to an extent, ultimately
they want them to be appreciated and recognized in a society for their work, here comes
the employee recognition program. Many employees become less committed to work not
because of their low pay structure, but for the lack of recognition. Both types of rewarding

31
system should be ensured for higher motivation, retention, engagement and job
satisfaction.
A simple example for performance based reward system can be best explained by the
game of cricket. When a bowler or batsman performs well in a match, his performance is
rewarded by the cricket council through the title “Man of the Match” and cash award. It
motivates the winner and also the team players to perform well for their team.
PERFORMANCE MANAGEMENT, REWARDS AND AWARDS
Performance management is the systematic process by which an organization involves its
employees, as individuals and members of group, in improving organizational
effectiveness in the accomplishment of agency mission and goals.
Employee performance management includes:
 Planning work and setting expectations.
 Continually monitor performance.
 Developing the capacity to perform.
 Periodically rating performance in a summarized fashion, and
 Rewarding good performance.
Planning
Rewarding Monitoring
Rating Developing

32
Performance appraisals and rewards are designed to show recognition to employees.
Those who exemplify outstanding abilities in the workplace are celebrated through an
appraisal and reward system. Managers may offer employee praise in a one-on-one
setting, such as a performance evaluation, or in a group setting among peers. Archer
North, a company that designs and develops employee performance appraisal and
corporate evaluation systems, says that social recognition is powerful and is an effective
forum for showing value in employees.
Employee recognition programs boost the morale of employees and positively change the
health of an organization. By instituting performance appraisal and reward systems, an
employer lets its workers know that their hard work pays off and is appreciated.
Reward system is a part of performance appraisal. When an employee do performance
appraisal he uses reward system to appreciate the work done by the employee. Every
company has its own reward system which has to be linked with its performance appraisal
method. Reward systems are concerned with two major issues: performance and
rewards. Performance includes defining and evaluating performance and providing
employees with feedback. Rewards included bonus, salary increase, promotions, stock
awards and perquisites.
Purposes of Performance Management
The purposes of performance management may be grouped as under:
a) Informational Purpose
 To let an employee know how his performance compares with job standards.
 To assist in identifying special talents and abilities.
 To identify employees needing performance improvement.
 To allow employees to evaluate management.
b) Motivational Purpose
 To establish closer employer-employee relationships and communicate the job
development. Requirements and standards of performance in a periodic basis.
 To provide financial rewards or recognition for a job well done.
 To work out plans to solve performance problems.
 To encourage initiative, creativity and develop a sense of ownership amongst the
employees.

33
c) Developmental Purpose
 To identify individual employee training needs.
 To identify individuals for potential development.
 To help the employee strengthen current performance and prepare for higher
responsibilities.
 To show organizational interest in attracting and retaining capable employees.
d) Managerial Purpose
 To translate organizational goals into individual job/performance objectives.
 To communicate management’s expectations regarding employee performance.
 To provide feedback to the employee about job performance in the light of
management’s expectations.
 To coach the employee on how to improve job performance on a periodic basis.
 To diagnose the employee’s strength and weakness.
 To determine what kind of development activities might help the employee better
utilize his competencies / skills on the job.
Functions of Performance Managements:
 To communicate vision of its objectives to all its employees.
 To set departmental and individual performance targets which are related to wider
objectives.
 To conduct formal review of progress towards these targets.
 To use the review process to identify training, development and reward outcomes
and
 To evaluate the effectiveness of the whole process in order to improve
effectiveness.
Benefits of Performance-based Rewarding approach
An effective Performance-based Rewarding approach can bring out multiple benefits to
an organization and employees,
 Decreased attrition rate, which empowers employee retention in long run and
commitment. Due to decreased attrition rate and increased employee retention,
recruitment cost is less which helps in the financial stability of the organization.
 Motivate employees to perform better, aligning with the organizational goals.
Employees get a clear insight of what should be done to meet the goals.

34
 Employee involvement (Participation Management) is increased which results in
autonomy, more productivity and satisfaction. Employees feel that they are part
of a big success, enabling more confidence and innovation in work.
 Rather than working on routine jobs, employees volunteer to work on challenging
jobs to increase their recognition levels in the working society. It enforces healthy
competition among individuals to perform better.
 Employee gets a chance to learn and enhance their skills, which highlights their
development in career.
For the real success of the system, it should be implemented without any bias or
oversight. When employees perform well, he should be acknowledged rightly by the
supervisors. HR department should not make this process to follow over a night; its
importance has to be stressed to the supervisors and employees at all levels. When a
perfect system is implemented, it results in higher retention of talented employees and
greater profits to the organization.
LIMITATIONS OF REWARD SYSTEM
Feeling of discrimination or dissatisfaction among employees (if they feel the reward
assessment process is not transparent).Staff morale could fall if there is a large difference
in the amount of reward being paid out to people doing similar work. Staff may become
too focused on individually earning those rewards/bonuses that they forget to work in
the best interests of the team as a whole. Competition can be good but if it’s too
aggressive it can be detrimental. There will always be an element of judgment required
to administer such a system. Someone will have to rate the performance of staff. This
judgment may end up being too subjective rather than objective. Some functions are
support roles in nature (and therefore may not attract as much rewards as other roles
such as sales). There must be a good balance of incentives for these admin/support staff
or else they will not feel appreciated.

35
RECENT TREND OF REWARD SYSTEMS IN INDIA
Reward systems helps in increasing performance and creating happier employees.
The greatest management principle is that the things that get rewarded get done. All
reward systems are based on the assumptions of attracting, retaining and motivating
people. Financial rewards are an important component of the reward system, but there
are other factors that motivate employees and influence the level of performance.
Those organizations which gives the maximum reward attracts and retains most people.
Higher rewards will give higher satisfaction. This will lead to lower turnover and more job
applicants. It is difficult to retain the best performers in any organization. They will get
higher offers from competitive organizations and may leave the company. For retaining
the best performers, the organization needs to reward people at all level above the
reward standards in similar organizations.
In some organization, reward system is based on performance and skills of the employees.
So higher rewards will motivate skilled employees to perform better. In hierarchical
organizations, reward system acts as a motivation for lower cadre employees to learn
those skills which will lead to promotion to the higher levels. The reward system
contribute to the overall culture and climate of organizations.
Reward systems are a major cost factor in many organizations. There are some criteria
for building effective reward systems.
 Give Value for the employee’s preference in the reward system. Employees prefer
rewards in different ways like cash awards, plaques, recognition in award
ceremonies and company newsletters.
 Reward systems should simple and specific. Easy understanding of the system will
make the system work effectively. Elaborate procedures, evaluations and review
by different levels will lead to confusion among people. A line of sight should be
maintained between rewards and actions.
 Rewards should be timely. The recognition/rewards should be provided frequently
enough to make performers feel valued for their efforts.
 Reward systems should be fair and effective.
 It should be reliable, that is, the program should operate according to its principles
and purpose.

36
 Involve people in the formulation of the reward system. By ensuring the
participation of the people in the reward system, the company can empower them
to do the needful.
For most people, the most important reward is the pay they receive for their work.
Effectively planned and administered reward systems will enhance motivation thus
performance also. Employees who work hard and produce better quality products should
get higher pay than the poor performers. The employees should be satisfied with the
rewards they receive for their good work. They should be given extrinsic rewards like pay,
promotion and other status symbols. This will give them a feeling of competence,
achievement, personal growth and self-esteem.
In India, rewards are given in the form of financial benefits, incentives, profit sharing, gain
sharing and stock options. Financial rewards are given to employees for their
achievements. Pay is of many types like Competence related pay, Skill-based Pay, Team-
based pay and merit pay.
RECENT TRENDS – A FEW EXAMPLES
It’s an annual affair at Genpact to identify 35 star leaders within the company and fly their
families on a vacation. This is apart from regular ritual of recognizing high performing
leaders in every board meeting. Even as salary levels soar and are a given in the current
war for talent, more and more companies are fumbling for the ideal mix of non-
compensation rewards to retain leaders.
Retaining and rewarding leadership is a hot button issue facing most organizations.
Increasing complexity of hiring leadership talent in the face of burgeoning market
demand is bringing companies under pressure to retain their top talent. “The only way to
reward and retain top leadership is by sharing the success of the company with them,”
says Piyush Mehta, senior V-P, Genpact.
It is common to see firms ring fence their senior executives by devising long-term wealth
certain opportunities in the form of retention pay, deferred bonus plans, stock options
and shadow options. Companies are arriving at a reward system, which is linked with the
company’s performance.
As a business leader in Accenture moves higher, the variable component in his

37
compensation goes up. “Equity has been quite effective as a leadership reward system.
Conversely too, it works well as it makes leaders conscious of the fact that they carry the
weight of the organization,” says Rahul Varma, senior HR director, Accenture India.
Employee stock plans offered by Indian firms in the past few years have been able to
create the right setting than that MNC counterparts, says K Sudarshan, managing partner,
EMA Partner International. “Key employees feel a lot closer to centre of action with a
belief that they are making a difference to the fortunes of the organization as opposed to
large MNCs where the India business is still a small percentage of their overall numbers,”
he says.
The attractiveness quotient for Indian companies is increasing all the time. Even though
we see emergence of several “employee millionaires”, analysis caution, relying on
generous compensation as the only strategy for retaining your key resources is a sure shot
recipe for disaster.
There is interplay of multiple factors which makes the organization a preferred
destination for top talent and creates a long-term sustainable employer brand. That’s why
the best employers need not necessarily be the best paymasters.
“First and foremost is to create a sense of ownership and belonging to the organization.
Successful organizations have a culture which supports and encourages entrepreneurial
behaviour, the freedom to make informed business decisions and above all eliminates the
fear of failure,” says Mr Sudarshan. This will work only if it goes hand-in-hand with
standard compensation levels in the industry.
HR fraternity believes ICICI Bank has done well on both fronts. They have provided great
opportunities to their stars plus have locked in their key people with significant stock
options. It also helped that ICICI bank is growing more rapidly when compared to HDFC
Bank and there is a great passion at work one can experience with senior people in ICICI
group.
“HDFC Bank has largely adopted the ESOP route to reduce fixed cost but this has backfired
in the long term because people moved on once the stocks vested and their exit barriers
significantly reduced,” says a head of headhunting firm.
Bharti has largely taken the compensation route both fixed as well as long-term wealth

38
creation opportunities for their people. Hutch has always retained their key people on
the basis of the work culture and freedom to operate though the compensation levels
have always been pegged lower than Bharti and Reliance.
Aditya Birla Group has built a great sense of belonging for their leaders and has always
been looked upon with the larger picture in mind. The chairman Kumar Mangalam Birla
says a company executive also deploys his personal touch with his key managers who are
valued.
“There is a great sense of security built in for key people,” adds a senior HR consultant
who has worked with the group. The Tata Group has always institutionalized the group
and managers are empowered to take critical decisions like no other business house and
there is a deep sense of loyalty to the group at senior levels.
An ambitious business leader, believe HR fraternity, is constantly evaluating headroom
for professional learning and growth and it is critical that the organization is capable of
creating such opportunities. This keeps senior managers motivated with fresh challenges
all the time. “Today, there’s a need to customize rewards – both monetary and otherwise
– to suit individual’s specific needs,” says Mr. Mehta of Genpact.

39
REWARD SYSTEM LINKED TO PERFORMANCE IN TATA COMMUNICATIONS
TCL has developed an unbreakable bond with sound HR practices in an environment that
defies traditional roles and responsibilities. The company views its employees as assets,
which as to be utilized efficiently. The TCL senior management constantly keeps track of
the vast intellectual assets, their skills sets, the status of projects on which they are
working, and the number of people available for being placed in other projects. TCL
determines its manpower requirements based on inputs from senior consultants, who
provide information on changes in the technology and the potential demand for new skills
in the immediate future. This enables the HR department to plan and schedule
recruitment and training programs.
Figure 1 illustrates the role of HR, which evidently is that of a facilitator. So whether it is
recruitment or even career development, HR is the catalyst which initiates and
institutionalizes processes. To manage all the function of employees is herculean task but
the smoothness of operations is intriguing. The HR structure, which allows flexibility and
empowerment, is the solution.
TCL takes care of every aspect of Human Resource Management, from recruitment to
training and career development. The company combines its aim of recruiting skilled
employee with the broader objective of improving educational standard in India. TCL is
well recognized in the industry for its emphasis on employee training. Company is having
its own training center in Dighi, Pune, where induction and other training are conducted
by its expert trainer who provide functional and operational knowledge about the TCL
and its subsidiaries. It keeps decent amount of budget from its annual sales on training.
In addition to training, TCL also believes in grooming its employee into managers. In their
first couple of years at the company, employees are put to work on different technological
platforms and applications. The organization consciously does not try to develop its
employee as specialists, as it knew that they would become useless once their area of
specialization becomes obsolete. This approach was different from that of many other
companies, who stressed specialization of their workforce.

40
Corporate HR-
Centre of Excellence
Learning &
Development
Talent Management
Talent Acquisition
Compensation
Management
Employee
Engagement
HR Information
System/Analytics
HR Shared Services
Role of HR in TCL
Vice President
Human Resources
The HR Group at TCL
Corporate HR Regional HRBusiness HR
Figure 1
Figure 2

41
PERFORMANCE MANAGEMENT SYSTEM AT TCL
Performance management system actually operates when whole system is designed
carefully and it has been conveyed properly to employees in the same way. TCL follows
an effective PMS system. The purpose of the Performance Management process is to
have a systematic administration of the Performance Management activity in order to
create a high performance culture in company and improve overall performance &
capability of TCL.
The goal setting process for employee is done in a manner that it enables employees to
realize about their contribution to the organizations better performance.
PERFORMANCE APPRAISAL
TCL conducts appraisal twice a year.
 Interim Review
 Year-end Review
Performance appraisal is based on a review of performance against set Goals, and
assessment of Performance & Potential. It also captures employee aspirations and the
support required by employees from the organization in the Career Planning section.
GOAL SETTING FOR INDIVIDUAL EMPLOYEE
The Performance Management Process is a continuous cycle that begins with Goal
Setting. Mutual goal setting is a must for developing agreed-upon measures for
performance review. Effective goal setting provides the framework needed for managers
and direct reports to discuss and monitor progress and to assess results.
All goal setting is done using the SMART technique and could involve quantitatively /
qualitatively measurable goals or milestone linked goals as appropriate. The measures for
the various goals are selected on the basis of their suitability for assessing whether the
desired performance is happening. In case of role change during the year, employee
needs to update his Goal-Setting document, readjust his KRAs and weightages within 2
weeks of moving into his/her new role.

42
GOAL SETTING PROCESS
An Employee fills up KRAs and update JD forms in consultation with Manager and submit
it to Manager through its employee portal. Once manager is validate and approve then it
would be consider for review and If any changes are required, the Manager can make the
change or send the form back to the employee for making the change.
INTERIM REVIEW PROCESS
Interim review is conducted every year to review the performance midway through,
provide performance feedback to employees, revisit the Goals set for them and make any
revisions, if required.
YEAR-END REVIEW PROCESS FLOW CHART
The annual Performance Management process plays a pivotal role in imparting a
comprehensive and formalized view of progress and growth of employees. Year-end
process start in following manner.
1) Self-Appraisal & Managers Review
2) Energy Curve Consolidation
3) Sharing of Rating & Final Review

43
1) Self-Appraisal & Managers Review
Employee Employee’s
manager (EM)
Employee’s manager
manager (EMM)
Employee completes
Self-Assessment and
sends the Year-end
review form to his
manager
Manager reviews the
Self-assessment done by
employee. Evaluates
employee’s performance
and potential
EMM reviews rating and
energy curve for the team
EMM reviews individual
assessment form, ratings
and comments
EMM checks if assessment
confirms to the energy
curve requirement
(applicable for team size
=>40
If Self-
assessment
satisfactory?
Manager sends the form
back to the employee for
necessary changes, with
relevant comments
Rejects
rating with
comments
EMM approves rating
with comments and
sends to EMMM
Satisfa
ctory?
Completion of
Manager
Assessment
A
Manager
sends Year-
end review
form to EMM
X
X

44
2) Energy Curve Consolidation
Employee’s L3
Manager (EMMM)
BU HR GMC Member
EMMM (L3) reviews energy
curve and rating for the
BU/Function
A
BU HR reviews energy
curve and rating for the
BU/Function
Review consolidated energy
Curve
EMMM (L3) checks if
assessment confirms to
the energy curve
requirement (applicable
for team size=>40
Changes
required?
Changes
required?
Sends the form back to the
EM, with comments,
specifying the change
Discuss with approver/BHR
for initiating changes
EM and EMM discuss with
BU HR, EM makes changes
to the rating on the system
Changes initiated by EMM
& EM. EM to make change
in rating in Prism
Satisfactor
y?
Approve overall rating &
energy curve
Prepares consolidated
energy curve for respective
BU/Function
Send energy curve to GMC
Send approval
B
EMM sends the form back
to the EM, with comments,
specifying the change
EM & EMM discuss with
EMMM. EM makes changes
in rating on the system
EMMM (L3) approves overall
rating and energy curve
NO YES
No YES
NO YES

45
3) Sharing of Rating & Final Review
HR Employee’s
Manager (EM)
Employee
B
Review by Global head
and Corporate TM team
System gets unlocked.
Employee rating visible
to the manager.
PMP ratings get locked in
Prism Set-up final review
meeting with
employee. Publish
Year-end assessment
& Final rating. Provide
feedback.
Energy curve reports
created for Talent
Conclave
Talent Conclave
BHR head initiates
changes in rating along
with EM & EMM, if any,
post Talent Conclave
Acknowledg
e Rating?
Acknowledge
assessment &
ratting
Request for
Reassessment
Employee clicks
on “Send to BHR”.
BHR consults with
Manager,
Reviewer, RHR
and GMC to make
the decision.
Manager to share
the final decision
on rating
(changed or not)
with the
employee
PMP
Completion
Corporate TM sends all
assessment forms to ‘next
step’ for publication of
rating
NO YES

46
ENERGY CURVE CONSOLIDATION/CALIBRATION
Energy Curve is the histogram distribution of the Performance-Potential rating. It shows the
percentage/number of employees who are Best in Class, Vital contributor, Need Revving and
Bottom Performer.
a. It takes into account both Performance & Potential rating
b. It is done for: a) Team b) Function c) Level d) Company
c. For a function/group, the distribution needs to be applied to each level separately
d. B3, C3 & C2 has 2 options to choose from as by 2 different color codes
e. Cells A1, C4, D3, & D4are unlikely combinations and are not permissible to be selected
The color coding of the Grid below and the energy Curve is same as the overall distribution needs
to be obtained for the Grid.
Best In Class
Vital Contributor
Need Revving
Bottom Performers
Unlikely Combination
POTENTIAL
PERFORMANCE
Performance Potential Matrix
5%
5%
70%
20%
Energy Curve

47
TALENT CONCLAVES
Business heads and HR heads participate in the Talent Conclaves to review the energy
curve, outliers and profile the Best-In-Class raters. Talent conclaves having following
objectives
a. Sign-off the energy curve
b. Review, approval and adoption of Individual CAP for the ‘Best-in-Class’ Employees
c. Identifying the Owners/Anchor of individual CAPs
d. BHR Head will inform Corporate Talent Management about the outcome of the Talent
Conclave discussions
e. Initiating promotion discussions for BIC/VC rated employees. The final promotion
decisions to be taken during the increment phase.
PERFORMANCE IMPROVEMENT PLAN (PIP)
Performance Improvement Plan (PIP) is a focused development plan to facilitate
improvement in performance of poor performers within the organization. It is initiated
for the below two categories of employees:
a) Employee who are rated NR (Needs Revving)/ BoP (Bottom Performer) during the Year
End Review.
STAR
EmergingSTAR
– HighPerformer
EmergingSTAR
– HighPotential
Marginal Performer
SolidContributor
Future STAR
SuperContributor
Performance Issues–
NeedsDevelopment
Performance Issues
– ChallengingFit
Performance Issues
Borderline
Performer
Performance
Enhancement
Performance
Consolidation
NeedsDevelopment

48
b) Employees (rated VC / BCI during the year-end review) who demonstrate poor
performance during the year.
At the end of the defined performance Improvement Plan review period, if the employee
do not improve to a grade better than VC, the employee is asked to resign.
INTERNAL JOB POSTING POLICY:
The intent of this policy is to facilitate and enable all regular employee of Tata
Communications to apply and offer their candidature for all open positions based on their
career aspirations, knowledge, skills and abilities they possess vis-à-vis the job
requirement. All regular employees who have completed minimum 18 months in the
current role will be eligible for IJP. It’s a framework for internal hiring process whereby
employees get the flexibility to choose between various job options within TCL rather
than pursuing options outside of company.
REWARD & RECOGNITION IN TCL:
TCL believes that flexibility and responsiveness in everything is critical to its long term
success. These awards aim to recognize and reward outstanding individuals and teams
who have gone beyond their role requirements and have taken initiatives that have had
a positive impact on its short term and long term growth objectives. These awards have
been distributed in following ways.
REWARD SYSTEM LINKED TO LEADERSHIP SIGNATURES:
More than ever before, companies are becoming global. Setting up operations in new
geographies, gaining local market share and leveraging the low cost base through
offshoring and outsourcing has now become a necessary strategic option for large
companies. This is leading to large numbers of managers and leaders working with cross
cultural teams, in different countries. From an employee’s point of view, many have co-
workers across the globe. This throws up new challenges.
The Leadership Signature Programme is the DNA of managers at Tata Communications
and has been designed to create a common inspiring culture in the company. The
objective is to groom and develop talent into future leaders who not only provide the

49
right environment for the employees, but will also enable them to give their best so that
they accomplish tough business goals. They will become good at the ‘how of leadership’.
These 6 attributes are linked to reward system which are summarized below:
LS Behaviors
Themes
Identified
Examples
1. Ability to
energize
1. Leading by
example
 Setting example for others by displaying high energy and
enthusiasm.
 Demonstration of proactiveness by going beyond the
specified work expectations in a particular situation.
 Significant overall contribution to the project by being the
pivotal force or live wire of the team or exceeding
expectations of the managers or customer.
 Excellent Effort towards teamwork that has helped to
improve team Effectiveness or team synergy
2. Positive
influencing
across
Bus/regions
 Extraordinary cooperation within the team, support extended
to other team members who may not be adequately strong as
well as cross-functional cooperation.
 Excellent effort towards cross functional teamwork that has
helped to improve cross functional collaboration and synergy.
 Drive for results by successfully working/ collaborating with
cross functional teams
2. Assume
responsibility
1. Personal
accountability
 Display strong sense of ownership / passion towards work.
 Step forward to address difficult issues
 Any personal sacrifices made at a particularly crucial time
during the project leading to achievement of the work
objectives
 Takes ownership of the situation and responds quickly and
effectively
2. Conflict
Management
 Maintain positive outlook in difficult situation and proactively
resolve conflict
 Creativity of any manner on the job, including practical
solutions offered on the spot leading to compliments from
the customer or solving a work-related problem or conflict.
3. Ability to
turn diversity
into synergy
1. Global
Citizen
 Value and seek diverse perspective i.e. sensitivity and
openness towards gender, culture, personal values and
opinions.
 Display a global mindset to address diverse customer
requirements
 Bring in global perspective in successful implementation of
initiatives.
 Keeps abreast with knowledge of political developments,
market trends, business opportunities, government
regulations, products, technology and customers in multiple

50
countries to conduct business successfully in different parts of
the world.
2. Collaboration
 Leverage strength of other team members to achieve
common goal/objectives
 Foster information sharing and fluid communication within
the team to deliver uniform results (business/functional)
 Being proactive in being involved in large cross team /
functional projects
4. Translate
ideas into
reality
1. Innovation &
Creativity
 Challenge status quo and come up with new ideas to make
things better
 Successfully adopting innovative approaches to work within
the team resulting in substantial gains to the
business/function.
 Designing and developing systems or processes that lead to
increased effectiveness
 Constantly update self and team with the products and
technology based information/news leading to improvisation
 Regularly contribute on online portals/blogs/newsletters
2. Focus on
execution
 Think through ideas, build on them, display advocacy and
gain buy in
 Consistent compliance to SLAs and set guidelines in
execution of business activities
 Ensuring business continuity and process adherence in critical
times
 Mindful of positively impacting additional technical expertise
that helps in achievement of the overall targets of the group
and contributes to organizational capability building.
5. Think and
act with
focus on
profit
1. Excellence in
business results
 Any brilliance / presence of mind demonstrated in
successfully handling a crisis situation
 Contribution to long-term capability development of the
organization.
 Deliver simple and easy to use solutions resulting immediate
acceptance and wide usage
 Improvising on existing processes through automation
2. Drive
profitability
 Initiate activities / suggested practical solutions that resulted
in cost reduction or resource management in a specific
situation or event
 Sustained efforts leading to earning of goodwill from internal
or external customers or increased business / opportunities
 Superior contribution of team leading to positive feedback
from the customers resulting in generation of additional /
new business
6. People
centricity,
empathy &
listening
1. People
Development
 Empathize and patiently listen to people with open mind
 Work towards knowledge sharing and training within the
team at all times resulting in an enabling culture and
increased efficiency within the team

51
 Proactively engage and collaborate with peers to add value
and create win-win partnership
 Encourage constructive feedback from external & internal
sources
 Build trust and confidence among other and ensure shared
purpose and mutual respect
 Passion for people development activities like coaching,
training and mentoring
 Being genuinely interested in other people and success
2. Customer
centricity
 Bring customer experience in every decision
 Take accountability for identifying and addressing customer
issues.
 Sustained exemplary performance by tem exceeding
expectations, leading to total customer satisfaction and
appreciation.
 Averted a difficult or embarrassing situation by responding
tactfully to a customer or a customer query
 Proactively ask and act on customer feedback to constantly
create delightful customer experience.
 Apply innovation and execution skills to partner with
customer for long term relationship
AWARD CATEGORIES
There are three award levels in new appreciation framework. Each award level has
multiple awards as detailed below:
Level 1- Marking a difference
i) Thank you appreciation card
ii) Hi 5
Level 2- Above and Beyond
i) Xtra Mile
ii) Blue Ribbon
iii) ACE
iv) Partner & Progress
Level 3- CEO Recognition
i) Proclub

52
The detail description of awards are as follows:
1) Thank you appreciation card: It is basically a simple greeting card which is been given
by any employee to the performer for his significant performance.
2) Hi 5- As on the spot recognition program to recognize any significant contribution of
individuals at any time.
Process:
• Nominations along with the citation will be made by the Reporting Manager.
• All winners would receive gift certificates, given by the Reporting Manager.
• All efforts should be made to ensure that the recognition is done publicly. Citations
through mail will also be sent by the Reporting Manager to the peers/team members of
the winners to ensure transparency of the process.
• Rewards will be given at any time.
3) XtraMile: It is an On-the-Spot Recognition program to recognize any significant
contribution of individuals in solo or in a team.
Process:
• Nominations along with the citation will be made by the Manager and would be
approved by the ‘one level up’ manager/ reviewing manager.
• All winners would receive gift certificates, given by the Reporting Manager.
• All efforts should be made to ensure that the recognition is done publicly. Citations
through mail will also be sent by the Reporting Manager to the peers/team members of
the winners to ensure transparency of the process
• There is no fixed number of nominations during the year, but an approximate of 1-2%
(per month per division) of the employees can be rewarded, but such budget(s) would be
required to be approved in the AOP of the respective function and managed by the
Function Head.
4) Blue Ribbon: It is a Quarterly Reward and Recognition program for exceptional
contribution by individuals in their respective Function/ LOB/ Shared Services.
Number of rewards: Maximum of 1-2 rewards in every LOB/ Shared Services per quarter.
Process:
Nominations and Selection:
• Individual nominations will be made by the Manager. Nominations must be made using
the nomination form provided in the annexure. The nomination would have to be
approved by the Reviewing Manager.

53
• The form should be duly filled with very specific details of the initiatives and results. All
relevant supporting information like Rs / $ savings or profit, customer or team
appreciation etc. should be provided to strengthen the case.
• To qualify for consideration, the achievement must be in line with the Corporate and
LOB/Shared Services goals (e.g. profitability enhancement, process improvement,
superior contribution or teamwork).
• The selection would be made by the LOB/ Shared Services Head.
Timeline
• Request for nominations for achievements in the previous quarter, to be sent out in the
first week of every quarter.
• Completed nominations to be submitted within two weeks of request for nominations.
Rewards
• Each of the winners would receive gift certificates.
• All winners would receive a certification and the winners would be recognized during
town halls.
• The names of such winners would be announced in the Company Newsletters/ Tata
Communications Buzz with a brief write-up on their achievement.
5) A.C.E.- Award for Champion Employees is a quarterly reward and recognition given to
an individual for his/her outstanding contribution towards the achievement of the
company’s objectives.
Number of Rewards: Maximum of 1-2 rewards in every LOB/ Shared Services per quarter.
• Individual nominations may be made by a LOB / Shared Services Head.
• To qualify for consideration, the achievement must be in line with the Corporate and
LOB/Shared Services goals (e.g. profitability enhancement, process improvement,
superior contribution or teamwork).
• Nominations must be made using the nomination form provided in the annexure.
• The form should be duly filled with very specific details of the initiatives and results. All
relevant supporting information like Rs / $ savings or profit, customer or team
appreciation etc. should be provided to strengthen the case.
• The final selections will be made by the nominating LOB/ Shared Services Head in
consultation with another LOB/Shared Services Head who has reasonable visibility of
either the individual or the delivery of the outcomes of that individual who is being
considered for the reward.
Timeline

54
• Request for nominations for achievements in the previous quarter to be sent out in the
first week of every quarter.
Rewards
• Each of the winners would receive gift certificates.
• All winners would receive a certification and the winners would be recognized during
town halls.
6) Partner & Progress: It is a quarterly reward and recognition program, primarily meant
for recognizing outstanding team achievements. The teams may be cross functional or
cross geography.
Process:
Number of Rewards: Selections will be made from the teams registered in the quarter.
• Functional/cross- functional/ cross- geography teams may be formed. Retrospective
team formations cannot automatically be considered as a competing entry.
• The team members have to sign a charter clearly identifying members of the team, the
objectives, deliverables and timelines of the project. The format is provided in the
annexure.
• The charter has to be approved by the LOB/ Shared Services Head. The team size would
be at the discretion of the LOB/Shared Services Head. In case of cross functional teams,
the approval of each LOB/ Shared Services head would be required.
• The duly approved charter needs to be submitted to the HR team.
• To qualify for consideration, the deliverables of the project would be reviewed by the
LOB/ Shared Services Head after the completion of the project, provided they are within
the timelines mentioned.
Timeline:
• Request for nominations of team formations to be sent out a fortnight before the
quarter begins.
• Charters have to be submitted within two weeks of the announcement i.e. starting of
the quarter.
• All teams whose charter is approved will be permitted to create a unique team identity
for all its members. This can be in the form of either T-shirts, mugs, photo frames, caps

55
etc. For this purpose the Head of the LOB / SS is authorized to permit expenditure in the
range of US$ 25 to 35 per team member.
• At the end of each quarter, all teams whose projects are due for evaluation will be taken
up for review by a Committee of LOB / SS Heads and the final list of winners decided.
Rewards:
• Each of the team winners would receive gift certificates.
• The details of teams along with brief citations will be put up on the Company Intranet
every quarter.
7) Proclub- It is the highest/most prestigious award at Tata Communications. It is
designed to acknowledge and award exceptional performers and inspire proactive
practices.
Process:
• Nominations can only be made by LOB/ Shared Services Head.
• To qualify for consideration, the achievement must be in line with the corporate goals
(e.g. profitability enhancement, process improvement, superior contribution or
teamwork).
• Nominations must be made using the nomination form. The form should be duly filled
with very specific details of the initiatives and results. All relevant supporting information
like Rs/ $ savings or profit, customer or team appreciation etc. should be provided to
strengthen the case.
• Final Selections would be made by a team of the top management at Tata
Communications
Timeline:
• Request for nominations for achievements in the year to be sent out in the first fortnight
of the next financial year.
Awards:
• The winners will go on a holiday together as a group for 3-4 exciting days at an exotic
location. All travel arrangements and hotel accommodations for Proclub winners will be
provided by Tata Communications.
• Winners will be awarded at an award ceremony by the executive management.

56
• Budget for this would be required to be approved in the AOP and managed by Human
Resources.

57
CONCLUSION:
I am highly privileged that I got an opportunity to work with Tata Communications which
is a leader in Telecommunications industry. Here I got to learn a lot about my project
which is on Reward System Linked to Performance. I am really happy that I got an
opportunity to have a deep knowledge about the subject.
It has been a great learning experience. For my project which I had interacted with
different departments, understand their working, their contribution and TCL as a whole.
Somewhere or the other, it has directly helped a lot in my confidence building because in
the process I got to interact with TCL management from all the departments.
This essay has evaluated the reward systems and highlighted the importance of reward
management. As discussed above, payment including reward and other benefits does not
mean simply encourage minimal expectation of employees. This can be basic in
organization to attract and retain people. Effective reward management can not only be
applied to dominate an individual’s behavior but also improve an organization’s
productivity.
These rewards aim to recognize and reward outstanding individuals and teams who have
gone beyond their role requirements and have taken initiatives that have had a positive
impact to its short term and long term growth objectives.
There is a general direct / positive relationship between total rewards and employee
performance which are linked with Leadership Signatures on its 6 attributes.
Reward is very critical and central activity in the human resource management function
in the organization which can be used in scientific way.
Through embracing a total reward approach to management of rewards, organizations
are able to address diverse needs of employees in their organizations and the diverse
ways in which individuals are motivated to work.

58
Bibliography:
http://www.answers.com/topic/employee-reward-and-recognition-systems
http://www.opm.gov/retirement-services/calculators/fegli-calculator/basic-pay/
http://www.ecommerce-now.com/images/ecommerce-now/HRM%20Strategies.htm
http://www.businessperform.com/articles/performance-management/money_in_reward.html
http://www.mbaskool.com/business-articles/human-resource/5260-performance-management-linking-
reward-to-performance.html
http://www.slideshare.net/search/slideshow?ft=all&lang=%2A%2A&page=1&q=rewards+system+linked
+to+performance&qid=2f88a192-78c1-4801-8552-ed894b8a68e0&searchfrom=header&sort=&ud=any
http://www.humanresources.hrvinet.com/performance-management-handbook
http://www.hr-guide.com/
http://www.tatacommunications.com/
http://www.inc.com/encyclopedia/employee-reward-and-recognition-systems.html
http://www.citehr.com/
http://ceo.usc.edu/working_paper/performance_management_and_rew.html
http://corehr.wordpress.com/performance-management/performance-appraisal-methods/
http://www.citeman.com/
www.project-team-rewards.com
A. M. Sarma- “Performance Management & Rewards System” published by Himalaya Publishing House
Pvt. Ltd.
Prof. Mr. Pravin Late- “Organization Behavior” published by published by Himalaya Publishing House Pvt.
Ltd.

59
Annexure I
Nomination form for Hi - 5 – Monthly –On the Spot Award
(Performance period (DD/MM/YYYY to DD/MM/YYYY)
Name of the employee :
(As it would appear on the certificate/announcement):
Employee Code :
Designation :
Function :
LOB :
Location :
Please give details of the work / activities performed by the employee that makes him / her eligible for the
nomination.
Please provide details on the steps taken by the employee that went beyond their job requirements.
Is there anything else you’d like to tell us further to support the nomination of this candidate?
Nominated by (E2 & above): Endorsed By (Manager – E3 & above):
Name : Name:
Designation: Designation:
Date: Date:
Digital Signature: Digital Signature:

60
Nomination form for X-tra Mile – Monthly –On the Spot Award
Employee Code :
Designation :
Function :
LOB :
Location :
nomination.
Is there anything else you’d like to tell us further to support the nomination of this candidate?
Name : Name:
Date: Date:

61
Nomination form for Blue Ribbon – Quarterly – Individual Award
(As it would appear on the certificate)
Employee Code :
Designation :
Function :
Location :
LOB :
nomination.
Is there anything else you’d like to tell us further support the nomination of this candidate?
Name : Name:
Date: Date:
Digital Signatures: Digital Signatures:
Date: Date:
Functional Head & Chief –Officer VP (HR) / Sr. VP (HR)
Digital Signatures/E-mail Approval Digital Signatures/E-mail Approval

62
Nomination form for ACE Award – Quarterly – Individual Award
Employee Code :
Designation :
Function :
LOB :
Location :
nomination.
Is there anything else you’d like to tell us further support the nomination of this candidate?
Name : Name:
Date: Date:
Date: Date:
Digital Signatures/E-mail Approval Digital Signatures/E-mail Approval

63
Partner & Progress Review Form
Team Project Registered on:
Team Project Review Due on:
REVIEW ON COMPLETION OF PROJECT
Key Result Areas (as
defined in pg 1)
Weight
(%)
Appraiser 1
(1- 5), 1
being lowest
Appraiser 2 (1-5) 1
being lowest
Average
Score
Weighted Score
(Avg. Score *
Weight)/100
A C D E F G=C*F/100
1 2 3 4 5
Total Score 100%
Additional Comments (if any)
Recommendation by LOB/ SS Head
Name: Designation Date Sign
Endorsed by Additional LOB/SS Head Name:
Designation Date Sign
Summary of decisions taken in
Final Review meeting held on Date:
Members:
VP(HR) / Sr VP (HR)

64
Charter Form for Partner & Progress
Name of the Employees
to be considered for the
Reward
Employee
Code
Designation LOB/ Shared Services - At least one
member from Cross functional &
Cross Geography
Name of the Team:
Name of TEAM LEADER:
Function:
Location:
Team Objectives :
Team Deliverables
Key Result Areas
Timeline /
Target
Weightage
1
2
3
4
5
Total Score 100
Signature of the team leader:
Approved By (One or more LOB/
Shared Services Head) Name:
Designation Date Signature
Endorsed by: (Another LOB/SS Head) Name: Designation
Date Signature

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