Infosys Says Goodbye To Bell Curve Appraisal System, New 'Open' 'Flexible' Review System Will Reward Performance

Infosys has finally bid adieu to the bell curve as a performance assessment tool for its 1.76 lakh employees. The decision is already showing results.

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Attrition is estimated to be 13 per cent this quarter, compared with more than 20 per cent a year ago. On an annualised basis, the rate was 14.2 per cent at the end of June, ET had reported earlier.

"From this quarter, we have removed the forced ranking and in the October appraisal, employees will be appraised on the open ranking. From now on, the managers will take a call and reward," said Richard Lobo, senior vice president, human resources department, at Infosys. The IT services company started conversations around getting rid of the bell curve three months ago.

The change in the performance assessment system has primarily been pushed by chief executive Vishal Sikka. Since taking over in August last year, he has made several employee initiatives, including relaxation in dress code. "Attrition is now close to 13 per cent. One of the big reasons for this (attrition) to come down is because we consciously got rid of the bell curve," Lobo said. The new system, he said, will be more open and flexible with a pronounced focus on rewards for performance.

An example of the infamous bell curve

Infosys is one of the latest companies globally to move away from bell curve, which is often criticised as a forced ranking system as managers have to mandatorily classify employees into three categories, and rank the performance of 70 per cent as average, 20 per cent as high and 10 per cent, low.

"In performance evaluation based on bell curve, it became a race to get to the top for employees. We were losing a lot of good people who were not ranked at the top," Lobo said.

As reported by ET earlier, among the top four Indian IT companies, Infosys had been grappling with rising attrition rates of over 20 per cent up until the latter half of 2014. It had also seen several high profile exits, causing concerns about employee retention among analysts.

For this fiscal year ending March 2016, the company is looking to hire 20,000 people. "We are growing and at the same time, our attrition rates are coming down," he said.

While Infosys has seen a drop in employee turnover, Mumbai based larger rival Tata Consultancy Services in July reported a rise in attrition at 15.9 per cent, which the company had attributed to improving demand in the IT sector and seasonality.

Kissing goodbye to the bell curve, however, is creating problems to managers while justifying ratings to team members. "They will now be forced to face their team members. In the former world, it was easier for the managers to push any disagreement from the team members to the forced ranking," Lobo said.

(Originally published in The Economic Times)