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India Inc may show no mercy in firing bottom 5% performers

Companies are getting stringent on the performance appraisal processes and with costs under pressure, bottom 5 percent performers are being fired.

M Saraswathy | Moneycontrol News

Till 2016, if you were among those individuals in sectors like Information Technology or BFSI and were unable to meet the yearly targets or performance criteria, you would have been given an opportunity to upskill post the appraisal. Not anymore. Companies are getting stringent on the performance appraisal processes and with costs under pressure, bottom 5 percent performers are being fired.

Wipro is said to have let go of around 400 employees purely on performance issues. This was part of the process to remove poor performers from the system. Here, Wipro had said that it undertakes a ‘rigorous performance appraisal processes on a regular basis to align its workforce with business objectives, strategic priorities of the company, and client requirements.

It had further said that the performance appraisal may also lead to the separation of some employees from the company.

Human resource experts said that with uncertainty on the global front over US' H1-B visa reforms, a massive clean-up is happening on the domestic front.

Lohit Bhatia, Business Head, Staffing, IKYA Human Capital Solutions said that the top five IT companies will see a few tough quarters. “Some rebalancing will have to happen. Pink slips are part of the process. If a portion of the staff (usually around 5 percent) is considered below par, they will have to be let go,” he added.

Appraisals are usually annual, though some companies also have bi-annual or quarterly reviews of performances. Employees are classified into top 10 percentile, mid performers and bottom 10 percentile. From the bottom performers, a call is taken on how many will be asked to leave.

A senior human resource professional with a mid-size IT firm explained that up-skilling or re-skilling employees is no longer top priority. “If we find job-ready talent, we may replace them with the existing talent. Because the situation is challenging, some tough decisions are being taken,” he added.

In the IT space, Bhatia said that the situation is more international and geo-political in nature with factors like Brexit and Trump policy are impacting the companies. Further, hiring is also getting cautious, since there is a fear that people on the bench may increase.

In sectors like banking, automation is also playing a part in the reduction of headcount. On one side while employees are being let go of every quarter or on a half-yearly basis, the numbers being added are low.

Sunil Goel, Managing Director of GlobalHunt said that there was a time when there was a talent fight in the market. He added that since they had spent money on hiring them, they wanted to give them time to gear up.

"Off late, businesses are getting stringent and increased resources are now being available in the market. So, companies are looking at right-sizing the talent. This is happening even in startups which due to fund crunch are looking at consolidation and merger opportunities. Efficiency management is being looked at, rather than the headcount and training," he said.

The appraisal process is completed by end of March in most companies. Post this, letters are handed out to employees based on their performance. Those among the bottom performers are being informed in advance so that they can look for appropriate opportunities in other companies.