REWARD MANAGEMENT

ASSIGNMENT

Sub By : Sanju K Scaria

MBA 09,DCSMAT
 REWARD MANAGEMENT.
ASSIGNMENT .
A SIMPLER WAY TO PAY

Egor Zehnder is the founder and former chairman of Egon Zehnder International, an
executive search firm with 57 offices and more than 300 management consultants worldwide. In
this case, the company's founder explains how the unconventional compensation system works.
Compensation can be given on the basis of seniority, performance, size of the company, number
of clients they are bringing etc. In addition to base salaries, the firm gives partners equal shares
of the profit and another set of profit shares that are adjusted only for length of tenure as partner.
The company’s rewarding system is very attractive.

Compensation system often prompts people to ask me how the company manage to hire "stars,"
because hire people who are true team players, people who get more pleasure from the group's
success than their own advancement. They eagerly share information and ideas about existing
and potential clients. As it is seniority basis they will stay in the company. They are well
educated and naturally collaborate.
EZI's seniority-based system is as easy to administer as it is to understand. There is some
variation among partner salaries across countries, but in this company there is no difference.
About 20% is retained in the company and the rest is giving to the employees. Sixty percent is
divided equally among all the partners, and the remaining 40% is allocated according to years of
seniority.

When analyzing, the company gives partners more than it gives to Egon. There is a great
acceptance among the associates. The firm should assign the most qualified people in the most
qualified office. Seniority is a very unfashionable idea these days, especially in America, which
worships youth and energy. But in this profession, seniority is a key asset. Because senior search
consultants not only know a great many people, they also know them very well, which means
that their hunches are taken seriously.

Seniority is a key asset, it is only through experience that consultants can hone the intuition they
need to operate successfully in a people-intensive profession. It is also through length of service
that a consultant builds a strong network of contacts. Senior search consultants not only know a
great many people, they also know them very well, which means that their hunches are taken
seriously. Very tough recruitment process is conducted. They observed employees very closely.
Making partner at Egon Zehnder is not an easy process, and it's expensive for the firm.
EVA AND COMPENSATION BENEFITS IN TCS
The case examines the compensation management system at-Tata Consultancy Services (TCS)
based on the EVA model. The new methods help to identify the non-performers and to retain
talents. They used for giving incentives and rewards. HR experts believed that this decision was
based on the implementation of the EVAa-based model for assessing employees' contributions at
the company.

TCS started its operations in 1968 as a division of Tata Sons Limited. During first two decades
of its operations TCS faced many hurdles due to rigid government license system. F.C. Kohli
was the first CEO of TCS. At that time, the company had 10 consultants and 200 operators who
carried out IT assignments in Tata group companies. One of the first assignments that TCS
undertook was the punch card managements system for Tata Iron and Steel Company (TISCO).

There is a talent pool comprising of experts in areas like HRD, MIS, Materials Management,
software consultants etc. after that there is a great growth in the company and it offered IT
solutions to many sectors like banking, retail, financial services, media, etc. TCS aimed to
achieve high revenue growth and maintain its leadership. TCS adopted the Balanced Scorecard8
approach to monitor and implement strategy, and the Tata Business Excellence Model (TBEM)'
for quality and customer focus.
The mission of the company, "The role of HR is to provide the context for energizing and
developing people to play effective roles in ensuring that TCS becomes one of the top global
consulting firms- Towards achieving this we will identify, develop, facilitate, and measure the
human and technological processes in the pursuit of excellence. We will foster the values of the
Tata group."
TCS adopted in 1999 when the company had a staff of around 15000. TCS aimed at creating
economic value by concentrating on long-term continuous improvement. The EVA framework of
TCS was developed to integrate the corporate value with the performance of business units.
Through EVA, TCS planned to focus on creating value and maximizing profitability. According
to the EVA model, the total corporate value depended on the performance of business units and
the performance of the people in those units.
Initially, TCS had set up a working committee comprising of senior executives from different
departments to determine EVA targets for the organization, business units and individuals.
They deliberated upon a wide range of issues regarding the implementation. The employees were
familiarized with the concept during 2000-01 through a pilot exercise.
In the EVA-linked compensation, employees were part of EVA at three levels-at the organization
level, at the business unit and the individual level. TCS took a clear stand on Employee Stock
Options (ESOPS). ESOPS were offered to only a few employees while most of the employees
were under the purview of EVA. Eva was not a performance metric but an integrated
management process aimed at achieving long-term goals. Due to EVA in TCS, there is an
increased transparency in the organization. The internal communication within a unit had
increased considerably. The decision-making process became more decentralized. The
performance of the individual was given importance and those who failed to perform were given
necessary training to improve themselves. TCS had one of the lowest attrition rates among the
Indian IT companies.