Gokaldas Exports operates in a business where performance depends on the coordination of people across production, quality, logistics and corporate functions. In garment manufacturing, the contribution of one employee is often closely connected to the work of several others. That makes the way organisations assess, reward and develop people particularly consequential.
For Amit Sharma, CHRO at Gokaldas Exports, this raises questions about how performance itself should be understood. Should variable pay reward individual achievement or collective results? Should strong performers automatically be considered for management roles? And what happens when capable employees cannot demonstrate their abilities because the workplace has not removed the barriers they face? In conversation with HRKatha, Sharma discusses these questions and explains why HR professionals must understand the commercial realities behind the people decisions they make.
Collective incentives, shared direction
Variable pay is intended to reward performance, yet individual incentives can sometimes work against teamwork. Should organisations be rewarding collective outcomes rather than individual targets?
Variable pay should be clearly linked to team or organisational goals, not to individual performance targets.
Individual performance is already reflected in the appraisal process and the increments employees receive. Variable pay should serve a different purpose: keeping employees focused on the collective goals the organisation is pursuing.
Those goals might relate to customer outcomes, financial performance or specific business initiatives, depending on what the organisation needs to achieve in a given period. The important point is that they should be shared goals.
When variable pay is tied to individual targets, employees have an incentive to optimise for their own number. That can work against the collaboration and shared accountability that most organisations need, particularly in manufacturing and operations environments where the work is interdependent.
When variable pay is tied to collective outcomes, everyone has a reason to help the organisation succeed rather than compete for a share of a fixed pool.
Individual contribution should be recognised through the performance-management and increment process. Variable pay should reinforce collective effort. Keeping those two purposes separate makes the incentive system more coherent and clearer about what it is trying to achieve.
“HR professionals need to understand the financial engine of the business before they can determine how people practices can support it.”
Continuous feedback, transparent bands
If forced rankings and annual appraisals are increasingly being questioned, how can organisations differentiate performance fairly without making compensation decisions appear arbitrary?
The starting point is not the appraisal format. It is whether employees receive feedback frequently enough to improve.
A year-end rating tells an employee where they stand. It does not help them get there. Organisations that have moved away from annual appraisals towards continuous feedback cycles, regular check-ins, real-time recognition and ongoing development conversations tend to see stronger performance outcomes because the feedback loop is short enough to be useful.
Differentiation still matters. Not everyone performs at the same level, and a system that pretends otherwise loses the trust of strong performers. But differentiation should be built on transparent criteria that employees understand in advance, not on a forced distribution that treats the rating as a quota to fill.
Compensation bands are the structural foundation that makes this credible. Every role should have a clearly defined minimum and maximum that the organisation is willing to pay. Progression within that band depends on performance.
Employees who deliver consistently can move towards the higher end. Those with lower performance outcomes may remain towards the lower end. When someone reaches the upper limit of their band, further fixed increments can be replaced with lump-sum payments to maintain balance within the structure.
The critical element is transparency. When employees understand the band applicable to their role, how progression within it works and what the criteria are, there is far less room for perceptions of bias or arbitrariness.
Transparency in compensation structures is not a nice-to-have. In a workforce where trust in the system is hard-won and easily lost, it is essential.
“When organisations remove communication barriers and create an environment where people can demonstrate their abilities, they access talent that would otherwise be overlooked.”
Potential over performance history
A strong individual contributor is not necessarily a good manager. What should organisations assess before deciding that someone is ready to lead people?
This is where potential assessment becomes important, and where many organisations make an avoidable mistake.
When considering an individual contributor for a people-management role, performance history is relevant but insufficient. The question is whether this person has the potential to succeed at a fundamentally different kind of work.
Managing people requires a different capability set from delivering individual results, and the two do not automatically go together.
A useful potential-assessment framework examines two attributes: agility and aspiration.
Agility is about the ability to learn new things, adapt when the context changes and acquire skills that the role will require. Aspiration reflects genuine willingness to grow, take on greater responsibility and invest in developing others. Without both, the promotion is a risk.
Assessment alone is not enough. Potential managers need development: specific preparation for what leadership will require of them, exposure to the behaviours the organisation values and senior leaders who model those behaviours consistently.
When senior leaders demonstrate the right qualities, they give aspiring managers something concrete to learn from. When they do not, no training programme fully compensates.
Promotion decisions should therefore be based on demonstrated potential to lead people, not only on results in the current role.
The cost of getting this wrong is significant: the organisation loses a strong individual contributor and gains an ineffective manager, which is a worse outcome than having made no promotion at all.
“Promoting someone simply because they perform well, without evaluating their leadership potential, can be a serious mistake.”
Removing the barrier, not lowering the bar
Inclusion is often discussed in terms of representation. Can you share an experience that changed how you think about what genuine inclusion requires?
In a well-run organisation, performance should be the basis for evaluating employees, not their background, caste, religion or the state they come from. People who deliver results should have opportunities to grow. That principle is straightforward.
What is less straightforward is recognising that some employees face barriers that affect their ability to demonstrate what they can do.
The question for organisations is not whether to maintain standards but how to ensure those standards are applied on a genuinely level playing field.
The most instructive experience I have had came from a partnership with an NGO that trained people with hearing and speech impairments.
Their ability to understand, learn and apply information was strong. The barrier was communication, not capability.
We brought them in as interns for a year, hired someone who understood sign language, trained existing employees to communicate with them and created the conditions for them to do the work.
At the end of the year, almost all the interns were absorbed as full-time employees. Not because we had made an exception or lowered our standards, but because we had removed a barrier that was preventing capable people from demonstrating what they could do.
That experience clarified something for me. Inclusion is not about adjusting expectations. It is about identifying what is preventing people from meeting them and removing that obstacle.
When organisations do that consistently, they access talent they would otherwise overlook and build a workforce that is stronger for it.
“Transparency in compensation structures is not a nice-to-have. In a workforce where trust in the system is hard-won and easily lost, it is essential.”
Understanding how the business makes money
What must HR professionals understand about the economics of their business before they can genuinely influence its decisions?
The starting point is understanding how the organisation makes money.
HR professionals who cannot follow a conversation about revenue, margins, customer dynamics or operational constraints will always be operating at a remove from the decisions that matter. They may be technically competent, but they will struggle to make their work commercially relevant.
In garment manufacturing, that means understanding the economics of a production order, what drives lead times, how quality defects affect customer relationships and what the workforce implications are when a large export contract comes in.
Those are not HR questions, but the answers to them shape every significant people decision the function makes.
Functional expertise matters equally. HR professionals need to know their discipline well enough to design credible systems, give useful advice and earn the confidence of the business leaders they work alongside.
But functional knowledge without business understanding produces HR that is technically correct and commercially irrelevant.
The combination of deep functional knowledge and a genuine understanding of how the organisation operates and creates value is what allows HR to contribute to decisions rather than simply implement them.
That is the difference between a seat at the table and a report delivered to people who were already in the room.
“When variable pay is tied to individual targets, employees have an incentive to optimise for their own number. That can work against the collaboration most organisations need.”