Forget bi-annual appraisals in 2020 as India Inc rushes to save costs amid COVID-19

A Mumbai-based financial services firm had in April 2020 assured its employees that the bi-annual appraisal in the second half of the year could bring some cheer. But in the last week of May, the employees were told that no appraisal would be done this year due to the COVID-19 pandemic.

“We were hoping for a revision in pay even as all our incentives have been cut down due to the coronavirus outbreak. However, this year there will be none,” a senior sales executive at the firm said.

Several companies follow the bi-annual appraisal calendar to give employees who miss out on a raise or a promotion in the March cycle another shot in the September cycle.

The lockdown, which was announced on March 25 and has been extended till June 30  in some areas, brought the economy to a halt, leading to uncertainty among businesses.

Companies want to conserve capital and non-core expenses like bi-annual appraisals have been put off to FY22.

Human resource consultants have also been informed by their companies that an external review of the placement cycle would not be necessary this year.

“Companies take the advice of HR firms to help with the appraisal process, especially in structuring the performance metrics and non-cash incentives. However, in FY21 there is hardly business coming in,” said the vice president of a pan-India HR firm.

Also read: Say goodbye to salary hikes for now

Before the lockdown was extended, the expectation was that India will tide over the crisis by June. Hence, companies had deferred pay hikes and promotions to the second half of the year.

With little clarity on when the lockdown would be lifted, appraisal processes have also been indefinitely postponed.

In March, India's largest construction and engineering company Larsen & Toubro (L&T) said it was deferring the extra salary revision, which was planned from March 1 till the end of July. The management said the decision had the backing of its employees.

Similarly, Rajesh Gopinathan, MD & CEO of TCS mentioned in April 2020 that the company would not offer any salary increments but added that promotions would happen depending on business performance.

Another IT firm, Wipro, had a similar situation. Its then CEO Abidali Neemuchwala said in April 2020 that due to COVID-19, there had to be a trade-off, which would be in hiring, salary hikes and sub-contracting costs.