benefits of eva

8/3/2019 Benefits of EVA

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EVA and Compensation Management System

Pooja Jain(10bsp0734)

Jayanti Kumari(10bsp0369)

Surbhi Malik(10bsp0532)Petrina Mascarenhas(10bsp1143)

Geet Deshpnade(10bsp0868)


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In 2005-06,about 1000 employees were askedto leave TCS(Tata Consultancy Services).

Based on the implementation of the EVA

based model. Obtained low ratings in their performance

appraisal for two consecutive years.

On April 19,2005,TCS announced its annual

results for the fiscal 2004-2005.


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Declared total revenues of US$ 2.24 billionand net profit of US$ 0.51 billion.

First IT company to achieve the US$ 1 billionrevenue milestone in the fiscal year 2002-03.

It aimed at earning revenues of US$ 5 billionby 2010.

EVA Compensation model was used as a basisfor giving incentives to employees.


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TCS started operations in 1968,as a divisionof Tata Sons Limited.

The initial journey in the IT business was not

easy. FC Kohli was first CEO of TCS.

First assignments was the punch cardmanagement system for TISCO.

Projects for external clients was the InterBank Reconciliation System(IBRS) for CentralBank of India in 1969.


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During the 1970s TCS aimed at serving

foreign clients, to improve its own systemsand procedures.

First international clients was the US-basedInstitutional Group and InformationCompany(IGIC),which was a data center for10 banks.

Indian economy was liberalized in1991,importing computers got much easier.

In mid 1990s the management consultancy

division of TCS was made a part of TCS.


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In May 2005,TCS employed over 45000 peoplein 150 offices spread across 33 countries inthe world.

By 2005,TCS offered IT services and solutionsto many sectors including banking, financialservices etc.

Major clients of TCS in the US included

American Express, AIG etc. TCS adopted the Balanced Scorecard

approach and TBEM(Tata Business ExcellenceModel).


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Highest priority HR function.

Mission statement of HRD:

The role of HR is to provide the contextfor energizing and developing people to play

effective roles in ensuring that TCS becomes

one of the top global consulting firms.


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TCS followed waterfall recruitment process

Recruitment team was trained in various

interview techniques.

TCS had in place a Manpower Allocation TaskCommittee(MATC)


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Employee satisfaction surveys

TCS was first to implement the People

Capability Maturity Model

Senior management was actively involved inperformance appraisal process.


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Economic value added

Determines total value created after takinginto account the cost of capital.

TCS adopted EVA in 1999

First company to implement compensationbased value delivered to employees.

Measured operating and financialperformance which is linked with employeescompensation

Integrates corporate values withperformance of business units

Created value ,maximize profit


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Three EVA levelsorganisational,buisnessunit,individual

Controlled by revenues,capital,costs and an

individual contributionDefines Variable pay

Different at different levels

they wanted each employee to feel as if

they are running their buisness


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Employees became aware of their share inincreasing the EVA of the unit andorganization.

Bonus banks helped in sustainingperformance.

Increased transparency in the organization

Internal communication increased.


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Individual performance was given moreimportance.

Motivation among employees increased.

Low attrition rates among Indian ITcompanies.

TCS also implemented PerformanceImprovement Plan (PIP).


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In the initial years, EVA concentrated mainlyon return of investments.

In 2003, TCS reduced the variable salaries of

its employees by 10%. Problems faced by good performer in an

underperforming team.

Decrease in the goodwill of TCS among the

employees.


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The salaries at TCS were believed to beconservative as compared to othercompanies.

TCS appeared to be putting golden handcuffson employees who performed well.


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benefits of eva

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