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Home > News> Talking Point > Why companies are getting creative with appraisals

Why companies are getting creative with appraisals

The shortage of talented, motivated employees is forcing companies, both big and small, to rethink their appraisal and benefit policies

Companies have to come up with innovative strategies to retain the existing talent
Companies have to come up with innovative strategies to retain the existing talent (Pexels)

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When her employer announced an option to pay her salary by the week instead of at the end of the month, Gargi Mukherjee, a customer success manager at Memechat, a meme creating social networking app, jumped at it. She believes it will allow her to manage her expenses better and give her something to look forward to at the end of the week. “Whether it’s a good or a bad week, receiving a salary at the end of it will pep you up. I know I am getting what I am working for, and it makes me motivated and empowered,” says Mukherjee, 23. The policy kicked off this month.

At Sodexo, the appraisal season has brought cheer, especially to women employees. The French food services and facilities management company says it’s focusing on pay parity “from a gender lens”. The pay parity corrections made in January this year have created a feeling that women are valued. “You feel like a contributor, that the organisation is giving you what you deserve. It will also attract more women as the women employees themselves will be spokespersons for the organization,” says Leah Dango, segment director, FMCG and pharmaceuticals, Sodexo India, and one of the beneficiaries of this effort.

Attrition rates are high, and the demand for good talent is rising in the Indian corporate world. Employees with three to seven years of experience, who aren’t key personnel yet but are slated to play a vital role in the company’s future growth, are the ones most in-demand in the market. Employers are now forced to go beyond the low-hanging fruit of employee wellness programmes and work-from-home reimbursements to attract and retain people. During the pandemic, wellness has become a “basic hygiene policy”, something any good company should have. Organisations, therefore,  have to come up with innovative strategies to retain the existing talent. This has led them to re-evaluate their appraisal models—because appraisal season is also a time that sees the highest churn.

In the 2022 Workforce and Increment Trends survey released earlier this month, Anandorup Ghose, partner at Deloitte Touche Tohmatsu India LLP, observed, “...in 2022, in line with the pick-up in activity, as well as hiring and attrition, companies have surpassed pre-pandemic levels of increments, with a sharp focus on retention of talent through rewards.”

Keeping in mind the current realities, British fintech company Tide, which opened its India office in 2020, has changed its appraisal model, and increments are now linked to inflation based on the consumer price index (CPI) of the region. Any employee who has completed nine months in the organisation is eligible for the CPI-based salary correction, which will be in addition to the increment the employee is due for the year.

“It’s to ensure no one is left behind the market benchmark. It’s only fair. You cannot continue paying 5-6% more as it barely covers inflation,” says Ravi Maithani, head of people and culture, Tide India. For key talent, Tide has introduced a variable pay component, which means that on top of the regular increment, certain tech, product, and design roles can expect a 10-20% hike.

Naturally, the company’s costs have gone up by 110%. But Maithani believes that it’s worth the expense. “In the short term, the cost impact is huge, but if we don’t do this now, we will end up paying more later. If I don’t go with twice the budget now, we will end up paying three times or more in the long term,” he says.

To appreciate, motivate and retain its employees, Sodexo has introduced ESOPs and non-equity-based long-term bonuses for key non-CXO level talents. Around 210 roles that have a direct impact on the business profits have been identified for this bonus. They’re scarce resources that will be of value in the organisation's future growth. The non-equity-based, long-term bonus, which can be redeemed after two years, will be about 20-30% of the employee’s annual salary, explains Pradeep Chavda, director, human resources, Sodexo India.

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ESOP allocation and retention bonuses have always been a method adopted by companies to retain employees, according to Vidur Gupta, director of Spectrum Talent Management. “Some companies, to make up for the pay cuts during the pandemic, have decided on early appraisals and salary revisions. In a few cases, the companies have adopted a six-month hike cycle to keep the employees engaged and motivated,” said Gupta.

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Last August, CredAvenue, a debt marketplace startup, rolled out childcare reimbursement policy for employees with young children to take care of while working from home. An employee can claim 15,000 a month for a creche or a nanny. “We are trying to support the employees in the important stages of their lives. It helps us access a wider talent pool, too,” says Abhishek Mehrotra, chief human resource officer, CredAvenue.

For Swati Singh, associate director, product marketing, CredAvenue, it’s not mere tokenism as the reimbursement amount matches the real cost of child-care services. “The amount is quite decent, and this kind of mindset matters. After a point, you don't join a company just for money; you also see what benefits they are offering,” said Singh, who has hired a day nanny for her two-and-a-half-year-old son.

Some organisations are redefining gig work to draw talent. In January this year, M2P, an infrastructure company, announced a “better-half program” under which people in certain roles can choose to work just five hours a day while receiving the same benefits that a full-time employee gets, such as formal upskilling and ESOPs.

“Since we are bootstrapped, we had to do a lot of creative things to retain and acquire new talent. We thought this would be a great way to reach out to women who want to return to work and we may get more value from two people working half a day than one person working full day for some roles,” explains M2P founder Madhusudan R. It largely will work for individual contributors rather than roles that need team collaboration, he adds.

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