Why Omega Healthcare gives salary increments every quarter

May 8, 2024

Omega Healthcare, which has a staff strength of about 30,000 employees, redefined its performance-measuring parameters with the concept of Performance-Based Quarterly Merit Index (PBQMI) introduced in October 2021. The salary increments happen at the company on the first of April, July, October and January. Currently, this pay raise is applicable for agent-level employees in Operations, which account for about 75 percent of the workforce.


  • The company has internally developed an application that measures its employees’ performance on three parameters – productivity, quality and domain knowledge.
  • The attrition rate of the firm has dropped from 6.1 per cent to 3 per cent.
  • Additionally, employees with a rating of “Exceeding Expectation” were at 13 per cent in FY 2020-21 before introducing this programme and that increased to close to 30 percent consistently every quarter.
  • To manage the budgeting challenges that may arise, the organisation is already adding quarterly increments in every year’s budgeting proposal under the payroll cost.

Generally, the wait to see a salary hike is more than 12 months in most organisations. Have you ever wished the Earth could revolve even more faster, so that you could slide into another performance appraisal discussion without such a long wait? Well, the employees at Omega Healthcare, a leading revenue cycle management company, don’t have to! The firm has redefined its performance-measuring parameters with the concept of Performance- Based Quarterly Merit Index (PBQMI) introduced in October 2021. And the performance appraisals and salary hike expectations are not a one-time yearly discussion at the company.

The salary increments happen on the first of April (1st quarter), July (2nd quarter), October (3rd quarter), and January (4th quarter) at Omega Healthcare. The company has a staff strength of about 30,000 employees. Currently, this pay raise is applicable for agent-level employees in Operations, which account for about 75 per cent of the workforce.

Lalitha M Shetty, Vice President – HR, Omega Healthcare Management Services, says, “When we felt like introducing quarterly performance management, it took us almost nine months to think through and redo the entire performance management cycle. Sustaining this kind of programme every quarter is not that easy. We have done a lot of budgeting, forecasting exercises for the next five years, and preparations for making such a major change in our performance management system. The HR and finance teams worked closely with the CXOs, including CHRO, CFO and COO. And, at least 60 versions of budgeting would have been done before we took the financial decisions.”

Elaborating on the objective behind the intervention, Shetty says, “The current generation has different expectations from that of the previous generations. At Omega, 60- 70 percent of the hires are entry- level employees who are just out of college. We wanted to see what we could do differently to keep talent motivated in the organisation and find a unique differentiator in attracting talent and retaining them in the organisation. Thus, as a forward-thinking approach to recognise the high performers, we planned the pay rise as a performance-linked rise.”

Omega follows a five-rating system that sets parameters in line with the ‘Scorecard – KPI’ parameters such as Exceeds Expectations (EE), Above Expectations (AE), Completely Meets Expectations (CME), Partially Meets Expectations (PME) and Needs Improvement (NI). And only the employees who get an average quarterly rating ‘Completely Meets Expectations (CME)’ and above will be eligible for a quarterly salary increment.

“We have a very transparent mechanism and applications to measure the employees’ key performance indicators and their scorecards are captured on a daily basis. The internally developed application measures employees on three parameters such as productivity, quality and domain knowledge. The captured score of employees will be frozen on the 7th day of every month and employees have visibility access to their scores,” Shetty says.

There is a centralised MIS team from the resource management function that tracks, validates and publishes the performance report of employees every quarter. And this report will be sent to the business leaders and the HR business partners, which they once again evaluate and give the final confirmation rating. The rating is directly integrated into the organisation’s ERP system, which is Oracle HCM. This in turn connects the rating to the compensation page and the system generates the compensation provisions on a quarterly basis under the administration of the ‘Centre of Excellence team’ from the HR department.

The domain knowledge of the employees is tested every quarter through the organisation’s internal learning management system, which is administered internally every quarter. The test covers the new updates from the clients or a process change that would have happened, along with the topics covered in the continuous awareness and learning programmes that employees have to undergo.

“We fix the standard parameters every year and set a hike slab to the pre-decided performance ratings for each service line like AR, medical coding, etc. The letters will be issued to the eligible employees and every process is documented in the HCM portal for anytime reference,” Shetty says.

Drastically reduced the attrition rate

Stepping into the third year of implementing the intervention, Shetty says, “I must say that this has been a win-win for both the organisation as well as the employees. The updated performance evaluation model has enhanced the overall productivity of the employees by motivating them to perform and earn better.”

“Our monthly undesired attrition rate from this cohort before implementing the programme was trending at 6.1 per cent and we have seen a significant declining trend over the months ever since the programme was introduced, and currently our monthly undesired attrition rate is less than 3 per cent,” Shetty says.

Additionally, employees with a rating of “Exceeds Expectations” were at 13 percent in FY 2020-21 before introducing this programme and that increased to close to 30 percent consistently every quarter. Moreover, the eNPS Score went up by 18 points in 2022, as compared to the previous year’s survey and further increased by 13 points in the 2023 survey.

“Besides the quarterly performance appraisal, Quarterly Retention Bonus was also introduced during the post-Covid phase in 2022 when the firm was experiencing bigger attrition rates. And an employee engagement bot was deployed to understand the wellbeing of the employees. Besides this, the opportunity for growth and the work culture are the other collective reasons to attract and retain talent in the organisation,” Shetty says.

HR challenges

Talking about the administrative challenges while initiating the PBQMI, Shetty says, “Generally, in most organisations that follow an annual appraisal cycle, processing the annual increments and performance evaluation takes almost 3 to 4 months. We are able to do this every quarter systematically because of the adopted tools and transparent mechanisms. We leverage technologies as much as possible to help us administer this entire process. Otherwise, it would be a humongous task.”

Initially, when Omega Healthcare administered the quarterly appraisals, it had to rely a lot on manual interventions. “The administrative challenges definitely are a huge task. Sometimes, the automatic data points cannot be absolute, and we cannot be solely dependent on them. Maybe, the integration can fail or data might not fit correctly,” says Shetty.

To refrain from any possible technological discrepancies, the HR team used to take input from the centralised MIS records, enter it manually in the Excel sheets, and validate the performance rating as well as the compensation range marked in the HCM portal. “Now, we have come a long way by leveraging the technology and strengthening our internal processes and mechanisms,” Shetty says.

And, to manage the budgeting challenges that may arise, the organisation is already adding quarterly increments in every year’s budgeting proposal under the payroll cost.

“Now, we are hiring 1500 employees every month and the data population that Omega has to handle is six to ten times higher on a monthly basis. More than hiring, onboarding these many employees on a monthly basis is a bigger task. The reporting managers play a greater role in bringing awareness about the appraisal programmes to the new hires,” Shetty says.

The role of the reporting manager

The role of the reporting manager is to ensure that the productivity scores of the employees are recorded on a daily basis and also validate if the process-domain test scores and quality scores are captured correctly in the system on a monthly basis. “The beauty here is that the line managers’ performance is linked to their team members’ performance. Almost 60 percent of their monthly scorecard weightage is based on employees’ productivity and their scorecard rating. So, it becomes even more imperative for them to ensure that all this data is accurately maintained and recorded in the system,” Shetty says.

More importantly, reporting managers have to assist those who are in the PME and NI category with additional support. Besides them, process coaches and quality- controlling assistants are available within the team to help them perform better.

Dos and Don’ts

Commenting on the dos and don’ts companies have to consider while adopting quarterly appraisal cycle, Shetty says, “Organisations have to think through before venturing into a major intervention like this, as it becomes a hygiene factor and has a critical impact like dissatisfaction in employees’ morale. Proper mechanisms m must be there to measure the performance and parameters to track it should be clearly set. Technological support is needed to administer the programme and dedicated resources should be there to address the employees’ queries on a timely basis. Or else, damage control would be the next challenge ahead of the organisations.”

Source: GWFM Research & Study

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