Systel Technologies is an embedded telecom solutions company that helps businesses across the telecom value chain to accelerate product development life cycles.
It was established in 1989 and currently employs about 2400 people at offices in India, Canada, China, Germany, Japan, Sweden, the UK and the US. Among its clients are Fortune 500 companies such as Nortel, Nokia & Motorola. The company was born in a small garage in San Francisco. The founding team consisted of four partners, all of whom were software technologists working in US companies. They invested $200,000 to set up Systel in 1989. The company later relocated its headquarters to Bangalore in 1991. Systel’s history can be divided into three phases. In phase one the company was just founded and the emphasis was on building technical competence. This was followed by a second phase, in which there was a sustained thrust on marketing. This was done through setting up of basic marketing infrastructure by recruiting marketing professionals and also modernizing the company website. During the third phase of its growth, Systel decided to restructure the organization into market-centric Strategic Business Units (SBUs). Accordingly they reorganized themselves into three divisions, namely, the semiconductor division, the terminal equipment division and the networking services division. They are also in the process of establishing a new SBU for the service-provider market to focus on wireless LAN technology.

The reason behind Nitin’s decision to examine the entire Performance Management System was to see whether or not it was adequate for an organization of Systel’s size and stature. The existing appraisal process starts with a self assessment by the concerned employees of their own abilities and performance, both on the job and in their individual capacities. This was then considered by the manager, and he gave his own inputs to the subordinate. The evaluation is deemed to be complete only when an agreement on performance and goals is reached by both the manager and the employee. Nitin’s examination of the system revealed some deficiencies. One of the biggest deficiencies he noted was the fact that only the manager to whom the employee was assigned was allowed to assess him. In a software company, especially a large one like Systel with a matrix structure, employees work in dynamic and virtual teams and do not always work under the same manager. There is a lot of movement between teams, especially when there are important deadlines to be met and work needs to be done quickly. Also when employees worked on-site in different offices, cities or even countries, it would not be possible to report to one specific manager in a different location. It was hence difficult for that manager to gauge the employee’s performance accurately and objectively......

Questions for Discussion 

1. Distinguish between performance appraisal and performance management.
2. Discuss the feasibility and desirability of fixing and periodically reviewing the KPAs for each employee. Would it be better to do this exercise for job-categories rather than for each individual employee?
3. While trying to bring about transparency in the appraisal system and processes, is there a risk of violating confidentiality? How should Nitin bring in transparency without violating confidentiality?
4. Which method of appraisal do you think is the best for ensuring fairness and objectivity? Is it possible to completely eliminate subjectivity from appraisals?
5. What should Systel do with the appraisal outcomes? Should they be used only for giving feedback to employees? Or, should they be used for identifying training needs, improving performance, and/or deciding on increments and promotions?
6. Do you think it was appropriate on the part of Nitin to enlist the services of a consultant to review the appraisal system? What are the relative merits and demerits of engaging consultants for such reviews as against doing it internally?
7. Comment on the recommendation of the consultant to replace the present system with 360-degree appraisal. What other degrees (like: 90, 180, 270, 540, and 720 degrees) could be considered in the case of Systel and why? What are the cultural and operational barriers of implementing 360-degree appraisal system in Indian organizations?
8. Based on a review of literature on appraisal, examine the rationale and legitimacy of different systems of appraisal. Which one would you recommend for Systel?