Presented by,

Francis Rajan . J.SVinoth Arockiaraj .

RGayathri . V

Priya . SMadhuvanthi . K

TCS

INCENTIVE SYSTEM- EVA

Vinoth

Born1963Mohanur, Tamil Nadu, India

Residence Mumbai, India

Alma mater Coimbatore Institute of Technology

Occupation CEO&MD of Tata Consultancy Services

INTRODUCTION

Tata Consultancy Services Limited (TCS) is a global IT services, business solutions and outsourcing company

a subsidiary of the Tata Group conglomerate.

Second-largest India-based BPO services

Ranked #20 in the list of top companies of India, by Fortune India 500magazine.

 Largest technology service company in India by revenue and market capitalization.

142 offices across over 47 countries and generates around 30 per cent of India's IT exports.

Type PublicIndustry IT services, IT consultingFounded 1969Headquarters Mumbai, Maharashtra,

IndiaArea served WorldwideKey people Subramaniam Ramadorai

(Vice Chairman)N. Chandrasekaran(CEO & MD)

Services IT, business consulting and outsourcing services

Revenue  Rs. 37,928 crore (US$8.34 billion)(2011)

Profit  Rs. 9,068 crore (US$1.99 billion)(2011)

Total assets  Rs. 25,037 crore (US$5.51 billion)(2011)

Employees Rs. 226,751 (Q3 2011)

Parent Tata Group

HISTORY

Early 1970s- Tata Consultancy Services started exporting its services.

1974- The company pioneered the global delivery model for IT services with its first offshore client

1975- TCS conducted its first-ever campus interview which was at IISc,Bangalore

HISTORY

1979- TCS associated with a Swiss partner, TKS Teknosoft, which it later acquired.

1981-TCS set up India's first software research and development centre, the Tata Research Development and Design Center (TRDDC) in Pune

1999- TCS saw outsourcing opportunity in E-Commerce and related solutions and set up its E-Business division with ten people

 2004- TCS became a publicly listed company, much later than its rivals, Infosys, Wipro and Mahindra Satyam.

2005-TCS ventured into a new area for an Indian IT services company – Bioinformatics

2006-TCS designed the ERP for IRCTC

2008-TCS went through an internal restructuring exercise that executives claim would bring about agility to the organization

2011-TCSentered the Small and medium enterprises (SME) market with cloud-based offerings

TCS COMPENSATION&

APPRAISALGayathri

 TCS conducts two appraisals:1.At the end of the year2.At the end of a project.

Appraisals are based on Balanced Scorecard, which tracks the achievement of employees on the basis of targets at four levels —  Financial Customer  Internal Learning and growth

Financial perspectiveQuantifies the employee’s contribution in terms of revenue growth, cost reduction, improved asset utilization and so on;

Customer perspectiveLooks at the differentiating value proposition offered by the employee

Internal perspectiveRefers to the employee’s contribution in creating and sustaining value;

Learning and growthAre self-explanatory. The weightage given to each attribute is based on the function the employee performs.

INCENTIVE PLAN

TCS can review and design your incentive plans which could include any of the following:

Annual Bonus Plans Short-term Incentive Plans Long-term Incentive Plans Equity Incentive Plans

PROCESS OF INCENTIVE PLANThe process for establishing an incentive compensation plan is as follows:

Develop organization business strategy Link business strategy to overall goals and

objectives Identify prospective plan participants Establish individual goals and objectives Evaluate market practices and determine target

awards Assign performance objectives to award levels Communicate plan elements to staff.

It can be an effective tool for motivating employees to increase both individual and organizational performance and recent market trends reveal that incentive planning can be effective in a not-for-profit environment as well as a for-profit environment.

EVA MODEL Madhu TCS adopted EVA in 1999, when the company had a staff of around 15000, working at several locations across the world

Through the EVA model, TCS aimed at creating economic value by concentrating on long term continuous improvement

EVA measured operating and financial performance of the organization and the compensation of all employees was linked to it

EVA was adopted to focus on continuous improvement rather than short term goals and also to motivate employees

PERFORMANCE-LINKED SALARY STRUCTUREPERFORMANCE-LINKED SALARY STRUCTUREPERFORMANCE-LINKED SALARY STRUCTURE

PERFORMANCE LINKED SALARY STRUCTURES

PERFORMANCE-LINKED SALARY STRUCTURE

Aimed to give differential pay scales to employees at the same level of the hierarchy based on the performance of the individual and the company

INDIVIDUALLEVEL

BUSINESS UNIT

LEVEL

CORPORATE LEVEL

Fixedsalary

Variablesalary

Industry practicesService practices

Global and regional operating areas 

EVADimension

s

A business unit could be a part of a service, a practice, a geographical unit or a combination of all the three

Every unit was considered to be a revenue center and had its own EVA target

Employees could claim stakes at three EVA levels - at the organization level, at the business unit and the individual level

The individual was informed how he or she could contribute to the EVA enhancement at all three levels.

EVA was controlled by revenues, capital and costs, and an individual could contribute in any or all of these areas at all the three levels

BENEFITS OF EVA

The benefits of EVA were realized across all levels in the organization

increased transparency in the organization The decision making process became more

decentralized. The internal communication within a unit

had increased considerably  the employees were motivated to increase

their contribution

All the units could determine how they had fared against the targets.

Employees became aware of their responsibilities and their share in increasing the EVA of the unit and organization

EVA was not just a performance metric but an integrated management process aimed at achieving long term goals.

DRAWBACKS OF EVA

EVA concentrated mainly on return on investments, due to which the growth of TCS could be restricted

In 2003, TCS caused an uproar in the IT industry when it reduced the variable salaries of employees by 10%

The reduction in the variable salary resulted in an overall reduction of monthly take-home salary for most of its employees

Recognition at TCS

Project milestone parties — to encourage efficient execution of projects.

Recognition of star performers / high fliers — to recognize outstanding talent.

 Nomination to covet training programmes — to encourage self-development.

Best project award — to promote a spirit of internal competition across work groups and to foster teamwork.

Best PIP award — to encourage innovation and continuous improvement.

Best auditor award — to acknowledge participation in critical support roles

Spot awards — to ensure real-time recognition of employees.

Recommendations for new technology assignments / key positions — to ensure career progression and development of employees' full potential.

Performance-based annual increments — to recognize high performers

Early confirmations for new employees — to reward high-performing new employees

Long-service awards — to build organizational loyalty

EVA-based increments — to ensure performance-based salaries.

On-the-spot recognition —  to guarantee immediate recognition of good performance

EXHIBITSExhibit I: Goal Setting and Balanced Scorecard

Perspectives

Exhibit II: TCS - Mission, Vision and Values

Exhibit III: Components of TCS EVA Incentive

Exhibit IV: Best IT Employers in India

Exhibit V: TCS Employee Satisfaction (2003-04)

Exhibit VI: Top 15 Companies in Business week Information Technology 100 Rankings (2005)

Queries