Reaching goals in this manner is a form of performance management as "performance management includes activities to ensure that goals are consistently being met in an effective and efficient manner. Performance management can focus on performance of the organization, a department, processes to build a product or service, employees, etc.," as reported by McNamara (1997-2006).
creation of shareholder wealth over time," reports Stewart (2006). TCS uses EVA as a tool to measure the value that has been created by the company within a certain amount of time. In other words, TCS's monetary value at the beginning of a time period is subtracted from the monetary value at the end of that period in order to come up with the EVA. The workforce's pay and bonuses were then based on this EVA. This created a close relationship between work performance and pay.
Most of TSA's workforce scope of EVA, only a few were able to benefit from Employee Stock Ownership Plans (ESOPs). Retirement Terminology (n.d.) states that an ESOP "gives employees the opportunity to invest in the potential growth of their employer. If the company prospers, stock will follow suit. But, stock can decline if the fortunes of the company take a turn for the worse. Also, employees can become over invested, and be vulnerable to inadequate portfolio diversity."
From management on down, all benefited from the advantages of EVA. Employees realised that they played a part in increasing the EVA of the unit and the organisation. They also realised the importance of their responsibilities as there was a close link between performance and pay. The bonus banks also confirmed the connection and the importance of responsibilities. Due to an increase in EVA resulting in an increase in pay, teamwork was better achieved and all acquired a sense of belonging. All were involved in making decisions which empowered the staff members.
They benefited from pride of ownership which causes people to work harder. Employees received credibility as they were rewarded for their performance and those who fell below par were given
Organisational Behaviour 4
additional training. Other benefits included focusing on long term goals and increased transparency as communication amongst all staff members, particularly within a unit, had increased.
The company revealed one of the lowest attrition rates of the Indian IT businesses. The average employee turnover rate at that time (2004) was 15% yet