Employers investing in artificial intelligence (AI)-led upskilling programmes for their staff want their money's worth. And the sure-shot way they’re doing it is by including AI adoption as a parameter in performance appraisals.
From banking to consulting, business houses have started rating 5-15% of their senior leadership based on how they used AI beneficially, along with factors like people management, operations and financials.
"Over the past few years, we have made sustained investments in upskilling our partners and people on AI. Today, AI is far more deeply integrated into our workflows, with significantly expanded access across teams,” said Vivek Prasad, partner and chief commercial officer at PwC India. “We will assess impact through measurable gains in productivity and efficiency and explicitly embed AI adoption as a parameter in performance evaluation."
PwC is part of the audit and consulting coterie, which, like information technology companies, have been early adopters of AI. Over the past couple of years, advisory firms have used AI for research and documentation and now most of them have built AI-backed in-house platforms for tax services to clients as well.
The inclusion of AI as a performance parameter makes it tougher for employees whose appraisals are based on the bell curve model followed by many companies. The bell curve classifies employees as exceptional, average and poor performers, depending on how much of their core work goals are achieved. The largest chunk of employees—60-70%—typically falls into the average rating category and the rest are in the top and bottom categories.
The stringency of the bell curve ensures that a company can reward its best performers and retain them when times are uncertain. The best performers may be given 1.7-1.8x the salary increase of the average performer.
Private banks
Private lenders such as Axis Bank have already started measuring its top leaders against their AI work.
"AI implementation is embedded in our leaders' appraisals. It is part of their key result areas,” said Rajkamal Vempati, group head—human resources, at Axis Bank. “Our top leaders are each working on five to 10 AI projects, with the expectation that they spend about 20% of their time on these initiatives and demonstrate tangible outcomes."
Axis Bank, India's third-largest private lender, hired Namrata Dubashi, a senior executive at McKinsey & Company, as its AI officer in June to spearhead its AI initiatives. The appointment is part of a broader strategy to prepare the bank for deeper usage of such tools and makes it one of the first Indian banks to have an AI officer.
"We are focused on moving beyond pilots to delivering measurable value, whether that is revenue uplift, cost efficiency, stronger risk management or improved customer experiences. The intensity of this effort has increased over the past six months," Vempati told Mint.
Compensation advisory firms estimate that this push to measure AI work performance will be limited to the top management for now and may percolate to the middle and lower orders later.
"AI is increasingly becoming part of senior leadership’s key performance indicators, alongside financial, operations, customer and people management goals. About 5-15% of senior leader goals could align to AI implementation as senior leaders are being increasingly asked to demonstrate use of AI and get their teams to work with it," said Roopank Chaudhary, partner for human capital solutions at Aon.
Typically, during reviews, 30-40% of the leaders' compensation depends on business performance linked to industry and company metrics and the remaining 60-70% is fixed.
Benefits, productivity
Sasken Technologies, a product engineering company, started measuring AI impact last year.
"That was when we really began to push hard across all levels, including enterprise management systems,” Rajiv C. Mody, managing director and chief executive officer, told Mint. “What we are measuring is, in a particular programme, what benefit do we derive because of AI? Did it reduce our time by 30%? Were we able to deliver more productivity because of AI?"
Conglomerates have stepped on the AI accelerator. Mint reported in June that Reliance Industries, India's most valuable company, asked its senior leadership across the oil-to-telecom business house to respond to a detailed survey in January and February on the AI-preparedness of their businesses and areas where the technology could be meaningfully deployed.
For some of them, AI adoption is now part of their key responsibility areas and a performance appraisal metric. Reliance, which employs almost 420,000 people, is working on becoming an "AI-native" organization—one where the core processes of budgeting, payroll processing, cost control, revenue reconciliation and business planning are redesigned from the ground up with an AI-first approach.