Description
Analysis of performance Management System
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CHAPTER 1
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THEORETICAL FRAMEWORK
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1.1 Introduction
In the current scenario organizations all over the world are under tremendous pressure for the improving their performance for survival and growth due to increasing competition. One such source of improving is ³technology´ and the other is ³human system´ existing in the organization. Today the world is shrinking and hence, more and more organization has an easy access to sophisticated technology due to relatively easy availability and transfer availability of technology. Thus the source of improvement i.e. the µhuman system¶ that will differentiate a successful organization from unsuccessful one. Human resource management (HRM) is concerned with the personnel policies and managerial practices and systems that influence the workforce. In broader terms, all decisions that affect the workforce of the organization concern the HRM function. The activities involved in HRM function are pervasive throughout the organization. Line managers, typically spend more than 50 percent of their time for human resource activities such hiring, evaluating, disciplining, and scheduling employees. Human resource management specialists in the HRM department help organizations with all activities related to staffing and maintaining an effective workforce. Major HRM responsibilities include work design and job analysis, training and development, recruiting, compensation, team-building, performance management and appraisal, worker health and safety issues, as well as identifying or developing valid methods for selecting staff. HRM department provides the tools, data and processes that are used by line managers in their human resource management component of their job. Traditionally most of the organizations are turned to computerized performance appraisal system and acquired good results. Staff appraisal gained
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increased importance as a contributor to success of many organizations. It helps in categorizing the performing and non-performing candidates. It properly describes a process of judging past performance and not measuring the performance against clear and agreed objectives.Hence performance management system came into existence and shifts the focus away from just an annual event to an on-going process.In contrasting Performance Appraisal with Performance Management, it suggests that performance appraisals are indeed an evaluation of an employees work. However, Performance Management reflects the continuous nature of performance improvement and employee development, recognizing the importance of effective management, work systems and team contributions. Consequently, many organizations are revising their existing appraisal schemes and introducing performance management system for all the employees. Performance Management System enables a business to sustain profitability and performance by linking the employees' pay to competency and contribution. It provides opportunities for concerted personal development and career growth and now the system tending towards openness, dialogue and performance, rather than personality. The study done on ³Performance management´ focuses on the aim, elements and benefits of the system as observed. The main aim of this is to carry out an analytical study of Performance Management System followed in L&T-ECC Division, B&F, Operating Company and analysis of data and makes suitable suggestions.
1.2 Theoretical background for Performance Management System
Performance Management is a formal and explicit process whereby an organization involves its employees, both as individual and members of a team, in
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improving overall effectiveness, and the accomplishment of its strategic goals. It is focused on achieving results, and may be seen as a vehicle for aligning individual employee performance with organizational strategy. The objective of Performance management according to Schultz, Bagraim, Potgieter, Viedge and Werner (2003:74), is to improve results at the individual, team and organizational level. They state that ³performance management is a process that directs the energy of people in an organization towards achieving strategic goals´. Performance management is the current buzzword and is the need in the current times of cut throat competition and the organizational battle for leadership. Performance management is a much broader and a complicated function of HR, as it encompasses activities such as joint goal setting, continuous progress review and frequent communication, feedback and coaching for improved performance, implementation of employee development programmes and rewarding
achievements. The process of performance management starts with the joining of a new incumbent in a system and ends when an employee quits the organization. Performance management can be regarded as a systematic process by which the overall performance of an organization can be improved by improving the performance of individuals within a team framework. It is a means for promoting superior performance by communicating expectations, defining roles within a required competence framework and establishing achievable benchmarks. Performance management is an ongoing communication process which is carried between the supervisors and the employees throughout the year. The process is very much cyclical and continuous in nature. A performance management system includes the following actions.
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Developing clear job descriptions and employee performance plans which includes the key result areas (KRA') and performance indicators.
Selection of right set of people by implementing an appropriate selection process.
Negotiating requirements and performance standards for measuring the outcome and overall productivity against the predefined benchmarks.
Providing continuous coaching and feedback during the period of delivery of performance.
Identifying the training and development needs by measuring the outcomes achieved against the set standards and implementing effective development programs for improvement.
Holding quarterly performance development discussions and evaluating employee performance on the basis of performance plans.
Designing effective compensation and reward systems for recognizing those employees who excel in their jobs by achieving the set standards in accordance with the performance plans or rather exceed the performance benchmarks.
Providing promotional/career development support and guidance to the employees.
Performing exit interviews for understanding the cause of employee discontentment and thereafter exit from an organization.
Performance Management Process Performance management is the systematic process by which an agency involves its employees, as individuals and members of a group, in improving organizational effectiveness in the accomplishment of agency mission and goals.
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Employee performance management includes: planning work and setting expectations, continually monitoring performance, developing the capacity to perform, Periodicallyrating performance in a summary fashion, Rewarding good performance
The revisions made in 1995 to the Government wide performance appraisal and awards regulations support sound management principles. Great care was taken to ensure that the requirements those regulations establish would complement and not conflict with the kinds of activities and actions practiced in effective organizations as a matter of course.
In an effective organization, work is planned out in advance. Planning means setting performance expectations and goals for groups and individuals to channel their efforts toward achieving organizational objectives. Getting employees involved in the planning process will help them understand the goals of
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the organization, what needs to be done, why it needs to be done, and how well it should be done. The regulatory requirements for planning employees' performance include establishing the elements and standards of their performance appraisal plans. Performance elements and standards should be measurable, understandable, verifiable, equitable, and achievable. Through critical elements, employees are held accountable as individuals for work assignments or responsibilities. Employee performance plans should be flexible so that they can be adjusted for changing program objectives and work requirements. When used effectively, these plans can be beneficial working documents that are discussed often, and not merely paperwork that is filed in a drawer and seen only when ratings of record are required.
In an effective organization, assignments and projects are monitored continually. Monitoring well means consistently measuring performance and providing ongoing feedback to employees and work groups on their progress toward reaching their goals. Regulatory requirements for monitoring performance include conducting progress reviews with employees where their performance is compared against their elements and standards. Ongoing monitoring provides the opportunity to check how well employees are meeting predetermined standards and to make changes to unrealistic or problematic standards. And by monitoring continually, unacceptable performance can be identified at any time during the appraisal period and assistance provided to address such performance rather than wait until the end of the period when summary rating levels are assigned.
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In an effective organization, employee developmental needs are evaluated and addressed. Developing in this instance means increasing the capacity to perform through training, giving assignments that introduce new skills or higher levels of responsibility, improving work processes, or other methods. Providing employees with training and developmental opportunities encourages good performance, strengthens job-related skills and competencies, and helps employees keep up with changes in the workplace, such as the introduction of new technology. Carrying out the processes of performance management provides an excellent opportunity to identify developmental needs. During planning and monitoring of work, deficiencies in performance become evident and can be addressed. Areas for improving good performance also stand out, and action can be taken to help successful employees improve even further.
From time to time, organizations find it useful to summarize employee performance. This can be helpful for looking at and comparing performance over time or among various employees. Organizations need to know who their best performers are within the context of formal performance appraisal requirements, rating means evaluating employee or group performance against the elements and standards in an employee's performance plan and assigning a summary rating of record. The rating of record is assigned according to procedures included in the organization's appraisal program. It is based on work performed during an entire appraisal period. The rating of record has a bearing on various
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other personnel actions, such as granting within-grade pay increases and determining additional retention service credit in a reduction in force.
In an effective organization, rewards are used well. Rewarding means recognizing employees, individually and as members of groups, for their performance and acknowledging their contributions to the agency's mission. A basic principle of effective management is that all behavior is controlled by its consequences. Those consequences can and should be both formal and informal and both positive and negative. Good performance is recognized without waiting for nominations for formal awards to be solicited. Recognition is an ongoing, natural part of day-to-day experience. A lot of the actions that reward good performance ² like saying "Thank you" ² don't require a specific regulatory authority. Nonetheless, awards regulations provide a broad range of forms that more formal rewards can take, such as cash, time off, and many nonmonetary items. The regulations also cover a variety of contributions that can be rewarded, from suggestions to group accomplishments.
Managing Performance Effectively. In effective organizations, managers and employees have been practicing good performance management naturally all their lives, executing each key component process well. Goals are set and work is planned routinely. Progress toward those goals is measured and employees get feedback. High standards are set, but care is also taken to develop the skills needed to reach them. Formal and informal rewards are used to recognize the behavior and results that accomplish the mission. All five component processes
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working together and supporting each other achieve natural, effective performance management.
1.3 LITERATURE REVIEW
(a) Reviewby The Centre for Business Performance, Cranfied School of Management: ³Review on Performance Measurement and management´. The management discipline which most often associates itself with the term is in Human Resources, performance management is often associated with the management of the performance of people. However even in the HR field best practice emphasizes the contribution of people to the achievement of organizational performance. From the HR field Armstrong and Baron highlight the importance of performance management being strategic, integrated (vertical, functional, HR integration and integration of individual needs), concerned with performance improvement and concerned with development. HM Treasury describes Performance Management as ³Managing the Performance of an organization or individual´ . Whilst this is not a precise definition grounded in literature it demonstrates the breadth of performance management and hence the difficulties in defining its scope, activities and practices. It demonstrates that performance management is concerned with the management of performance throughout the organization and as a result is a multidisciplinary activity. Further, in their Glossary of Performance Terms the Improvement Development Agency further suggest that ³It involves you understanding and acting on performance issues at each level of your organization, from individuals, teams and directorates, through to the organization itself´.
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A review of the literature identifies a host of reasons for managing performance falling in to the following categories:
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Strategy
Formulation, determining what the objectives of the
organization and how the organization plans to achieve them. Manage the strategy implementation process, by examining whether an intended strategy is being put into practice as planned. Challenge assumptions, by focusing not only on the implementation of an intended strategy but also on making sure that its content is still valid. Check position, by looking at whether the expected performance results are being achieved. Comply with the non-negotiable parameters, by making sure that the organization is achieving the minimum standards needed, if it is to survive (e.g. legal requirements, environmental parameters, etc.). Communicate direction to the rest of the employees, by passing on information about what are the strategic goals individuals are expected to achieve. Communication with external stakeholders Provide feedback, by reporting to employees how they are, their group and the organization as a whole is performing against the expected goals. Evaluate and reward behavior, in order to focus employees¶ attention on strategic priorities; and to motivate them to take actions and make decisions, which are consistent with organizational goals. Benchmark the performance of different organizations, plants,
departments, teams and individuals. Inform managerial decision-making processes. Encourage improvement and learning.
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These SPM systems¶ roles can be classified into three main categories:
Strategic: comprise the roles of managing strategy implementation and challenging assumptions. Communication: comprises the role of checking position, complying with the non-negotiable parameters, communicating direction, providing feedback and benchmarking. Motivational: comprises the role of evaluating and rewarding behavior, and encouraging improvement and learning.
Conclusions
This report reviews the extensive literature relating to organizational performance management. It is clear from the literature that to be effective performance measurement activities should be designed to (i) manage the right things and (ii) mange them properly. Many tools and frameworks are proposed for each of these attributes of performance management. However there are clear themes which underpin these activities. These can be summarized as: Performance management should be integrated horizontally across the organization; The performance being managed should reflect the requirements, wants an needs of all of the key stakeholders of the organization and not just reflect a limited set; Performance management should be integrated vertically linking the strategies an objectives of the organization to the execution of activities which will enable their achievement; Explicit understanding of linkages across the vertical and horizontal integration (e.g. through success maps) enables consideration of conflicting
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priorities and trade-offs that need to be made in order to achieve overall objectives; The performance monitoring, review and action panning process should e structured around the strategic performance objectives of the organization; Processes and systems should be designed to extract and communicate insights rather than performance data; All systems and processes should be aligned with each other, driving behavior towards the performance objectives; Effort should be dedicated to developing an appropriate culture to engage the organization¶s employees and elicit commitment to performance objectives. Whilst many of the tools and frameworks proposed in the field of performance measurement and management have been designed for commercial organizations in the private sector, there is some evidence that some of these generic process focused principles are also applicable in the public and not for profit sectors. (b) Review by Eul-Kyoo Bae, Inha University: ³Major elements and Issues in Performance Management System´. Due to rapidly changing business environment, HRD practitioners are unprecedently demanded to activelyparticipate in improving organizational effectiveness as performance management specialist. The purpose of this study was to examine and discuss major elements and issues in performance management system through an extensive literature review and provide some considerations for designing and implementing effective performance management system in organizations. Presently, organizations are faced with new competitive conditions, and have to cope with dynamic environments,which lead them to the era of continuous
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improvement, value-addedness, doing more with less, and productivity. These developments have brought performance management to center stage.
Accordingly, organizations are beginning to implement performance management that reflects the new shape of the organization and its emphasis on integration of work, multidimensional influence, and flexible jobs (Mohrman & Cohen, 1995).
Basic Framework of Performance Management System
Defining Employee Performance
Defining performance is considered to be a critical part of performance management system and thus a number of performance evaluation research studies have focused on defining performance (Arvey, & Murphy, 1998). In the process of performance management, identifying performance measures required for appraisal determines performance standards as levels of performance that correspond to predesignated levels of individual and organizational effectiveness. From a rater¶s point of view, performance standards form the frame of reference within which to judge a ratee¶s performance.
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Evaluating Employee Performance
In general, as a critical part of a performance management system, performance evaluation is geared toward the attainment of performance information that can be used for administrative and development purposes. Organizations should realize that it is the employees¶ perceptions of the performance evaluation purpose that affects their attitudes toward it. It is generally predicted that ratings obtained for administrative purposes, such as promotions, transfers, termination, and compensation, are likely to be more lenient and less accurate than those obtained for research, feedback, or employee development purposes (Jawahar& Williams, 1997).
Providing Feedback on Employee Performance
Evaluations of performance are fed back to the individual and relevant decision-makers. In a performance management system, feedback plays an important role both for motivational and informational purposes and for improved rater-ratee communications.
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Conclusion
HRD practitioners concerned with improving individual and organizational performance must bear in mind the following things when designing and implementing a performance management system. The first thing is to decide what aspects of employee performance should be represented in measures of the degree to which they contribute to organizational objectives. The expectations of key internal and external customers must play a critical role in determining the dimensions and standards of job performance as performance measures, thereby eliminating the chance that employees are evaluated for performance that is irrelevant to the organization¶s mission, value, and objectives The second is to evaluate the performance of employees accurately and fairly. Fair and accurate evaluation of employee performance can be achieved through holding raters accountable for their ratings and setting a reward policy for accurate ratings. Finally, feedback is a way to improve job performance as well as to initiate further career development of employees. In particular, with regard to career development, some organizations require that employees take responsibility for their development. The organization may provide the enabling resources but does not take charge of the individual¶s career. Supportive and effective feedback can create conditions that encourage employees to find their own direction and guide their own activities.
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CHAPTER 2
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AN OVERVIEW OF THE ORGANIZATION
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PART-A: Brief profile of the organization
2.1 INDUSTRY PROFILE The engineering industry is the largest segment of the overall Indian industry. The engineering industry can be divided into electrical and non-electrical segments. The electrical segment depends upon the investments in power industry, while the prospects of the non-electrical segment are driven by industrial investment. Engineering equipment finds demand in sectors like cement, steel, power, chemicals and petrochemicals, all of which have been adversely affected by the general slowdown in the Indian economy in the past. Indian manufacturers are capable of catering to most of the customer¶s needs. There may be a supply constraint in some cases. For example, India has an installed capacity of 7000 MW in turbines. Some Indian manufacturers like BHEL and Larsen & Toubro have made a mark in the international markets, while some of the Indian arms of multinationals are a global base for outsourcing products and services including R&D. Along with its inability to be globally competitive in the past; the Indian engineering industry has also suffered from poor demand. The slowdown may just be over and the fortune of the Indian engineering industry is likely to look up.
India emerging as a major outsourcing hub for engineering services The engineering sector in India comprises basic industries such as Metal, Steel, Electrical Machinery, Non-Electrical Machinery and Transport Equipment. Manufacturers, exporters and suppliers of engineering machinery and equipment largely produce industrial machines, rolling mills machinery, plant machinery,
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plastic molding machines, construction machines and equipment, railway products, die casting equipment and other special purpose machines. Majority of Indian engineering firms are pursuing a systematic approach to quality control and standardization so as to curve out market positioning in the competitive world market place. Engineering industry in India has been constantly updating its technology base and diversifying its manufacturing range in tune with global market requirements. Many firms from the engineering sector have acquired ISO 9000 certification in areas such as casting and forging, automobile parts, machine tools, electrical machinery, primary iron and steel products, industrial machinery, IC engines, pumps, textile machinery, etc. to name a few. Indian exporters are well aware and do not lag behind in adopting eco-friendly manufacturing techniques which have become the new emerging requirements of the global development. Most companies in India have advanced capabilities and skill-sets, and have invested in technology to take advantage of this opportunity The automotive industry will start outsourcing 40 per cent of its engineering activities to the engineering service providers by 2015. Nearly 15 per cent of the total outsourced automotive engineering services were catered to by subsidiaries of Indian original equipment manufacturers (OEMs). This is where India needs to concentrate and take advantage by developing domain expertise to cater to the requirements of the OEMs, according to V. G. Ramakrishnan, Senior Director, Automotive and Transportation Practice, Frost & Sullivan, South Asia, Middle East and North Africa who presented the CEO 360 degree perspective on opportunities shaping in automotive engineering services in India.
Advanced capabilities
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India with its natural competitive advantage is likely to play a big role in various segments of the engineering services industry. The Indian engineering industry is rapidly growing as a major outsourcing hub with a compounded annual growth rate (CAGR) of more than 30 per cent. Automotive, telecom and aerospace are the major verticals that spend heavily on outsourcing engineering services. The growth in engineering services signifies the need for global companies to expand their R&D centers beyond their home countries. Global OEMs are increasing their R&D spend to meet regulatory and customer demands in India. Cost arbitrage along with increasing skill-sets is a major driver in channelizing business to India. Engineering services until recently had been aggregated either under information technology services (as research and development services) or under information technology engineering services - business process outsourcing (as engineering BPO). However, the evolution of market demand and increasing
maturity of the vendor landscape for engineering services has highlighted the need for examining this as a separate segment.
Future of India engineering industry The rate at which the Indian engineering sector is growing, its current size indicate a faster growth rate, employment opportunities and a good scope to become a global player. The Indian engineering sector can broadly be bifurcated into heavy engineering and light engineering. The former occupies 80 percent of the sector and spans across transport, equipment, capital goods, other machinery and equipment. The latter makes up the balance and spans low tech manufacturing sectors making castings, forgings, fasteners and highly sophisticated
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microprocessor-based process control equipment and diagnostic
medical
equipment. Players in this sector can also be categorized into equipment manufacturers, execution specialists and other niche players. Despite some slowdown in IT/ITES, aviation, hospitality, travel and tourism sectors, the engineering and manufacturing sector continues to hold on with auto and machinery units fuelling its growth. The future for an Indian engineering sector is certainly very bright considering India¶s high growth economic agenda. The latest talent management and recruitment trends in this sector have gone through a metamorphic transformation. The traditional methods of management of talents and recruitment have gone through a metamorphic transformation in recent times. As far as the industry numbers are concerned, the facts are available for all to see. India has emerged in No.1 spot amongst 33 countries in terms of hiring, as per the Manpower Employment Outlook Survey 2008. With strong economic fundamentals, Indian Inc. is on a steady growth path. Compensation markets have in the recent past been moving from different sectors in the range of 12-14 percent on a total cost to company basis. The cost for talent acquisition for top end talent even in engineering markets has been growing over a period of time. However, it is of course not moving at the same rate as that for investment banking or FMCG/retail markets. Some of the best retention techniques hover around offering huge project completion bonuses, short-term incentives programs, long term value creation bonuses, stock option programs and such other retention tools. Retention success is built around strong performance management system, which is closely linked, to total rewards management program. The differences that we see in the workforce of this sector now from what it was a decade back are notable. Higher mobility, upward migration to other higher sectors are some of the differences that can be seen. Arbitrage of talent from
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classical manufacturing sectors to infrastructure, mining and construction sectors can be seen as these are the new sunrise sectors of the new Indian economic development sector. Lots of sectors hire manpower from other sectors due to shrinking talent pools. Is that true for the engineering sector? Talent has now easily replaceable from sector to sector, unless at the absolute grass root levels, technical subject matter expertise, which now is shrinking. With the µGo-to Market¶ strategies and distribution channels in the market coming closer between Business-Business and Business Consumer markets skill transference from FMCG and retail sectors into the non-traditional B-B domains, is now very easy. The Indian economy is expected to see higher growth in the coming future, a fact that experts have been foreseeing for a very long time. However, if you thought that this growth will have its effects only on selected industries and sectors, then you are highly mistaken. Recent reports say that the engineering oil and gas, manufacturing, power transmission and construction sectors/industries will continue to see a rise in India, as these sectors are considered to be the backbone of the economy and are intricately linked with umpteen other core sectors, for its demand. Studies have proven that in the future, these industries will continue to grow. 2.2 COMPANY PROFILE - ABOUT LARSEN AND TOUBRO
Overview Larsen & Toubro Limited (L&T) is a technology, engineering, construction and manufacturing company. It is one of the largest and most respected companies in India's private sector. It is a technology-driven engineering and construction organization, and one of the largest companies in India¶s private sector. It has
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additional interests in manufacturing, services and Information Technology. A strong, customer-focused approach and the constant quest for top-class quality have enabled the Company to attain and sustain leadership in its major lines of business across seven decades. L&T has an international presence, with a global spread of offices and advanced manufacturing facilities in India, China, Oman and Saudi Arabia. L&T has an international presence, with a global spread of offices. A thrust on international business over the last few years has seen overseas earnings growing to 18 per cent of total revenue. With factories and offices located around the country, further supplemented by a wide marketing and distribution network, L&T¶s image and equity extends to virtually every district of India. Seven decades of a strong, customer-focused approach and the continuous quest for world-class quality have enabled it to attain and sustain leadership in all its major lines of business. L&T has an international presence, with a global spread of offices. A thrust on international business has seen overseas earnings grow significantly. It continues to grow its overseas manufacturing footprint, with facilities in China and the Gulf region. The company's businesses are supported by a wide marketing and distribution network, and have established a reputation for strong customer support. L&T believes that progress must be achieved in harmony with the environment. A commitment to community welfare and environmental protection are an integral part of the corporate vision. History The evolution of L&T into the country's largest engineering and construction organization is among the most remarkable success stories in Indian industry.
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L&T was founded in Bombay (Mumbai) in 1938 by two Danish engineers, Henning Holck-Larsen and Soren Kristian Toubro. Both of them were strongly committed to developing India's engineering capabilities to meet the demands of industry.
Henning Holck-Larsen (4.7.1907 - 27.7.2003)
Soren Kristian Toubro (27.02.1906 - 4.3.1982)
Beginning with the import of machinery from Europe, L&T rapidly took on engineering and construction assignments of increasing sophistication. Today, the company sets global engineering benchmarks in terms of scale and complexity.
Early-days Henning Holck-Larsen and Soren Kristian Toubro, school-mates in Denmark, would not have dreamt, as they were learning about India in history classes that they would, one day, create history in that land. In 1938, the two friends decided to forgo the comforts of working in Europe, and started their own operation in India. All they had was a dream. And the courage to dare. Their first office in Mumbai (Bombay) was so small that only one of the partners could use the office at a time! In the early years, they represented Danish manufacturers of dairy equipment for a modest retainer. But with the start of the Second World War in
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1939, imports were restricted, compelling them to start a small work-shop to undertake jobs and provide service facilities. Germany's invasion of Denmark in 1940 stopped supplies of Danish products. This crisis forced the partners to stand on their own feet and innovate. They started manufacturing dairy equipment indigenously. These products proved to be a success, and L&T came to be recognized as a reliable fabricator with high standards. The war-time need to repair and refit ships offered L&T an opportunity, and led to the formation of a new company, Hilda Ltd., to handle these operations. L&T also started two repair and fabrication shops - the Company had begun to expand. Again, the sudden internment of German engineers (because of the War) who were to put up a soda ash plant for the Tatas, gave L&T a chance to enter the field of installation - an area where their capability became well respected.
The Journey In 1945, L&T signed an agreement with Caterpillar Tractor Company, USA, for marketing earthmoving equipment. At the end of the war, large numbers of war-surplus Caterpillar equipment were available at attractive prices, but the finances required were beyond the capacity of the partners. This prompted them to raise additional equity capital, and on 7th February 1946, Larsen & Toubro Private Limited was born. Independence and the subsequent demand for technology and expertise offered L&T the opportunity to consolidate and expand. Offices were set up in Kolkata (Calcutta), Chennai (Madras) and New Delhi. In 1948, fifty-five acres of undeveloped marsh and jungle was acquired in Powai. Today, Powai stands as a
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tribute to the vision of the men who transformed this uninhabitable swamp into a manufacturing landmark. Public Limited Company In December 1950, L&T became a Public Company with a paid-up capital of Rs.2 million. The sales turnover in that year was Rs.10.9 million. Prestigious orders executed by the Company during this period included the Amul Dairy at Anand and Blast Furnaces at Rourkela Steel Plant. With the successful completion of these jobs, L&T emerged as the largest erection contractor in the country. In 1956, a major part of the company's Bombay office moved to ICI House in Ballard Estate. A decade later this imposing grey-stone building was purchased by L&T, and renamed as L&T House - its Corporate Office. The sixties saw a significant change at L&T - S. K. Toubro retired from active management in 1962. The sixties were also a decade of rapid growth for the company, and witnessed the formation of many new ventures: UTMAL (set up in 1960), Audco India Limited (1961), Eutectic Welding Alloys (1962) and TENGL (1963).
Expanding Horizons By 1964, L&T had widened its capabilities to include some of the best technologies in the world. In the decade that followed, the company grew rapidly, and by 1973 had become one of the Top-25 Indian companies. In 1976, Holck-Larsen was awarded the Magsaysay Award for International Understanding in recognition of his contribution to India's industrial development. He retired as Chairman in 1978.
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In the decades that followed, the company grew into an engineering major under the guidance of leaders like N. M. Desai, U. V. Rao, S. D. Kulkarni and A. M. Naik. Today, L&T is one of India's biggest and best known industrial organizations with a reputation for technological excellence, high quality of products and services, and strong customer orientation. It is also taking steps to grow its international presence. For an institution that has grown to legendary proportions, there cannot and must not be an 'end'. Unlike other stories, the L&T saga continues.
2011 Achievements at a Glance Major Awards Received by L&T in 2011 ICAI Bestows Top Honour on Mr. Y.M. Deosthalee, CFO, L&T The Institute of Chartered Accountants of India (ICAI) ± the country¶s apex body of Chartered Accountants ± has bestowed its highest honour, µBusiness Achiever ± Corporate¶ for the year 2010 on Mr. Y.M. Deosthalee, CFO, L&T, for his outstanding contribution to business leadership as a finance professional. The institute saluted his role in providing strategic direction to the business of financial services, development projects and Information Technology of the L&T Group. (January 30, 2011) Finance Minister Presents Coveted ET Company of the Year Award to Mr. A.M. Naik.
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Vision The L&T vision reflects the collective goal of the company. It was drafted through a large scale interactive process which engaged employees at every level, worldwide.
L&T¶s Signature of Excellence is Evident on: á Hydrocarbon projects executed in India, the Middle East and South East Asia. á Power projects executed in India, the Gulf and Sri Lanka.
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á The world's largest coal gasifier made in India and exported to China á The world¶s biggest EO reactor for a petrochemical complex in the Gulf á The world¶s largest FCC regenerator for a refinery á Asia¶s highest viaduct á The world¶s longest limestone conveyor á L&T played a critical role in building India¶s first nuclear powered submarine á L&T played a major role in India's maiden moon mission á The world's largest coal gasifier - supplied to China.
Companies of L&T: (a) Engineering & Construction- Projects: L&T¶s engineering & construction track record consists of successful implementation of turnkey projects in major core and infrastructure sectors of Indian industry. L&T has integrated its strengths in process technology, basic and detailed engineering, equipment fabrication, procurement, project management, erection, construction and commissioning, to offer single-point responsibility against stringent delivery schedules. L&T¶s core competencies in engineering include highly qualified and experienced personnel from various disciplines, stateof-the-art 2-D and 3-D CAD facilities with sophisticated plant design systems and basic engineering capabilities. L&T is the only Indian EPC company pre-qualified for executing large, process-intensive projects for oil & gas, refinery, petrochemical and fertilizer sectors.
(b) Heavy Engineering:
L&T is acknowledged as one of the top five fabrication companies in the world, with engineering and manufacturing capabilities that are among the most sought after in industry. Operating at the high end of the technological spectrum,
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L&T has led Indian industry in introducing new processes, products and materials in manufacturing. L&T also has the logistics capabilities of fabricating and supplying overdimensional equipment to tight delivery schedules. L&T¶s globally-benchmarked workshops are located in Mumbai, Hazira, Baroda and Kansbahal.
(c) Construction:
ECC ± the Engineering Construction & Contracts Division of L&T is India¶s largest construction organization. Many of the country¶s prized landmarks ± its exquisite buildings, tallest structures, largest industrial projects, longest flyovers, highest viaducts, and longest pipelines « have all been built by L&T. L&T¶s leading edge capabilities cover every discipline of construction ± civil, mechanical, electrical, and instrumentation. L&T has also expanded its focus to the Middle East, South East Asia, Russia, CIS, Mauritius, African and SAARC countries. L&T is also developing markets for its construction services in the Indian Ocean rim countries, Africa and Latin America.
(d) Electrical and electronics:
L&T is a major international manufacturer of a wide range of electrical and electronic products and systems. In the electrical segment, the Company is India¶s largest manufacturer of low tension switchgear, and is rapidly establishing itself in international markets. Its products are widely sold in markets in Europe and Australia. Recently, L&T set up a new manufacturing base for high-end air circuit breakers in China. L&T also manufactures custom-engineered
switchboards for industrial sectors like power, refineries, petrochemical, cement, etc.In the electronic segment, L&T offers a wide range of meters and provides complete control and automation systems for diverse industries. Medical
equipment and systems manufactured by L&T include advanced ultrasound scanners and patient monitoring systems.
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(e) Information Technology:
L&T InfoTech Limited, a 100 per cent subsidiary of L&T, offers comprehensive, end-to-end software solution and services with a focus on Manufacturing, BFSI and Communications & Embedded Systems. It
provides a cost cutting partnership in the realm of offshore outsourcing, application integration and package implementation. Leveraging the heritage and domain expertise of the parent company, its services encompass a broad technology spectrum, catering to leading international companies across the globe. It leverages the L&T parentage to also provide services in the embedded intelligence and e-Engineering space.
(f) Machinery and Industrial Products:
L&T manufactures markets and provides service support for critical construction and mining machinery. We offer surface miners, hydraulic
excavators, aggregate crushers, loader backhoes and vibratory compactors. Each of them incorporates innovative technologies that translate into higher performance on the field. The Division¶s broad spectrum of capabilities cover products that have established brand preference in major markets around the globe ± China, the Middle East, Europe and USA. The range includes industrial valves, tire curing presses, plastics processing machinery and protective maintenance welding alloys.
(g) Corporate Social Responsibility:
Beyond the corporate objectives of achieving growth and profitability, L&T is conscious of its larger social obligations. The Company¶s efforts have been widely recognized.
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LEADERSHIP BOARD OF DIRECTORS
A.M. Naik Chairman & Managing Director
J.P. Nayak Whole-time Director & President (Machinery & Industrial Products)
Y.M. Deosthalee Whole-Time Director & Chief Financial Officer
K. Venkataramanan Whole-time Director & President (Engineering & Construction Projects)
K.V. Rangaswami Whole-Time Director & President (Construction)
V.K. Magapu Whole-time Director & President (IT, Engineering Services & Corporate Initiatives)
M.V. Kotwal Whole-time Director & President (Heavy Engineering)
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Ravi Uppal Whole-time Director & President
2.3
SERVICE PROFILE - L&T PERSONAL AND ORGANIZATION
DEVELOPMENT HR in ECC Division: ECC recognizes that people are the real source of competitive advantage. It is through people that ECC delivers total customer satisfaction. These values are reflected in our Human Resources practices which have earned national recognition several times.
ECC-ites go through a process of continuous learning, assisted by training programmes. Apart from on-the-job training and technical training, over 100
programmes on general management and behavioural topics are conducted each year. Interactive CD-ROM based programmes have enabled employees learn at
their pace. Management Development Centre, Lonavala ECC has always believed in experimentation with and implementation of new ideas. HR practices such as collaborative performance appraisal, career & succession planning, team rewards have been institutionalized.
An extensive and rigorous recruitment process ensures quality induction. L&T's Graduate Engineer Trainee recruitment process covers India's major engineering colleges and institutions. Programmes, plant visits and comprehensive information-sharing facilitate induction.
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ECC Division has an ongoing organization development programme, which is one of the longest sustaining OD efforts in India.
ECC¶s Work Culture: Work culture emphasizes: á Freedom to experiment á Continuous learning and training á Transparency á Quality in all aspects of work á Rewards based on performance and potential ´If you feel like a seagull in the sky, If you feel you belong to the top and want to higher, you are ready for the ECC Challengeµ HR Policy: The basic principles of ECC's Human Resources policies include ? Recruitment based solely on merit by following well-defined and systematic selection procedures without discrimination ? Sustain motivated and quality work force through appropriate and fair performance evaluation, reward and recognition systems ? Identify training needs within the Organization and design and implement those need based training programmes resulting in continuous up gradation of knowledge, skills and attitudes of the employees ? Maintain a quality Human Resource Management System to meet the international standards as per ISO 9001. Plan, design, train, equip and motivate the department staff to meet this standard of expectation. ´Realize your dreams with usµ
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Awards for HR Practices: Asia Pacific HR Conclave Award for the company with ³Most Innovative HR practices´ National award for ³Best HRD Practices´ from Indian Society for Training and Development National Award for Outstanding Work in Human Resource Management from National HRD Network Award for Outstanding Human Resources Development from Confederation of Engineering Industry Integration of Information Technology with HR in ECC Division has been recognized by the National HRD Network.
India's largest construction organization. Join our team and realize your dreams with us.
The P&OD Division has 4 Sub-divisions:
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The Human Resource Department L&T-ECC renders specialized services to various business units/ services units/departments for their effective programs. The four sections in the department are 1. Manpower Planning and Recruitment. 2. Personnel Administration. 3. Training. 4. Systems.
Manpower Planning and Recruitment:
Requirement of manpower is based on Human resource Planning and it is done in accordance with manpower budget. The selection done based on the merit.
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Compensation and Benefits:
Having required the talented people it is important to provide them in invigorating environment. The endeavor of HR department is to keep the people motivate in spite of tough condition they work in. Having many practices traditional and modern as detailed below does this. y Leadership program. y Annual Performance analysis system. y Staff administration y Reward system.
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y Welfare. y Training: Every individual needs some skills to perform his/her job. In order to sharpen his/her skills for scheduling higher responsibilities and to keep his/her with technological changes training is essential. Many core development programs are conducted at regular intervals to increase overall efficiency of staff members.
y Systems:
Systems are backbone of all HR activities. All the details pertaining to Recruitment, Personnel administration and Training are maintained online in the HR Systems.
PART-B
2.3 SIGNIFICANCE OF THE TOPIC IN THE ORGANIZATION Performance management is the current buzzword and is the need in the
current times of cut throat competition and the organizational battle for leadership. Performance management is a much broader and a complicated function of HR, as it encompasses activities such as joint goal setting, continuous progress review and frequent communication, feedback and coaching for improved performance, implementation of employee development programmes and rewarding
achievements. The process of performance management starts with the joining of a
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new incumbent in a system and ends when an employee quits the organization. Performance management can be regarded as a systematic process by which the overall performance of an organization can be improved by improving the performance of individuals within a team framework. It is a means for promoting superior performance by communicating expectations, defining roles within a required competence framework and establishing achievable benchmarks. For several years in L&T, PMS was referred to as HRDS rather than Performance Appraisal System. This system was essentially perceived as a system meant to facilitate learning among the managers. It was envisaged that this system would clarify roles, focus more on performance and development, and strengthen dyadic relationships. Trust levels were expected to improve. Developmental needs would be identified clearly, communications both upward and downward would increase as seniors would get to know the difficulties of the juniors and the juniors would know what their bosses expected from them. Thus the system designed nearly 30 years ago at L&T is a great Performance Management System and had all the components of the most modern appraisal system. Later L&T ECC revised the same system and removed the word appraisal from it. The system was called µPADS¶- Performance analysis and Development System .Later, Company has put in place a robust performance evaluation system, appropriately christened µFAIR¶ for ³Framework for linking Appraisal with Incentives and Rewards´.
FAIR Process in L&T At L &T, performance appraisal is done at various levels in the organization. It consists of self-appraisal, appraisal by immediate supervisor, and appraisal by superiors. The appraisal processes initiate with each employee reviewing his past performance with respect to the objectives and targets and giving his overall
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assessment of the results delivered by him. He also carries out a self-review with regard to significant contributions made by him and important factors that facilitated or hindered his performance. The immediate supervisor, then, evaluates the achievement of his Subordinate by ranking his performance against objectives. The supervisor also assesses the critical attributes of his subordinates with respect to five important criteria-innovativeness, initiative, interpersonal and team relationship,
resourcefulness, and communication skills. Supervisor also notes down the areas of strengths and weaknesses and marks the areas of growth in which the employee has potential to make significant contribution. Supervisor assigns grades such as outstanding, very good, good, average, and inadequate to employees on the basis of the objectives achieved by the employees. After that, the superior along with the employee carries out performance planning and development planning for the next year. The Superior also analyzes the subordinate's past performance and pass on feedback on his performance. Finally the boss can suggest the areas in which training can be imparted to the employee. At the end of the exercise, the next higher supervisor makes an overall observation and gives his own specific development plans. The entire exercise of performance appraisal i.e. from self-review of an employee to final review by his superiors takes about three months. The overall performance report is handed over to HRD department, and then it decides various training needs and compiles various reports which are submitted to GMs and corporate management. At L&T, each employee is given opportunity to appraise his own performance. Performance appraisal for both temporary and permanent employees is done separately. Company gives equal importance to both permanent and temporary staff. This ensures that the employee's perspective of his performance is
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also considered. Moreover, the employee feels a sense of accountability and knows that his performance is being judged on the basis of goals set for him in the previous year. The success of performance appraisal system depends on the sincerity shown by the management and the existence of transparent link between performance and reward.
Components of the system y Identification of Key performance areas (Value drivers) and setting objectives in the beginning of the year jointly by the appraise and the appraiser. L&T introduced the term KPAs for the first time as a counter to key result areas (KRAs). KPA signified the inputs to be given by the candidates to achieve the output he is expected to give. Then the candidate plan what is in his control while focusing on the results he is expected to achieve. y Identification of attributes to be shown by all managers irrespective of the levels. (L&T identified Creativity, Initiative, Leadership and Teamwork as the most important attributes to be shown by all managers and were included in all appraisals.) y Self-Appraisal. y Performance analysis to identify factors facilitating and hindering performance and take corrective action. y Identification of training needs and preparation of development plans. y Assessment by the reporting officer and sharing the ratings with the appraise to arrive at mutually agreed ratings. The discussion was expected to focus on performance and expectation gaps and help bridge them.
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y Performance counseling to help the individual learn from the senior and improve his performance. y Review by reviewing officer. y Development actions by the HRD department. y De-linking appraisal from performance rewards (separate forms are to be used).
FAIR for Temporary Staff y Guidelines for increment for each year made and released to regional manager and Head of the Department along with details of temporary employees working under them. y Compile recommendation received from business/service unit wise and send same to JGMs, GMs and VPs for final recommendations. y Make proposal for increment in the salary/site allowances and submit to DMD¶s approval. y After obtaining the approval, process the increments papers as per final recommendation and release to RMs/Department head for distribution. FAIR process for Permanent Staff
Process Flow Diagram
Self-Review
Immediate Superior Review
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Next Superior Review
Recommendation by MG committe
Optional
Inter-tier Promotion Interview
Recommendation by Bu/Dept. head
Recommendation by SBG head
Process Flow explanation:
y
y
y
The content of Annual Performance Appraisal form of the previous year is reviewed by P&OD each year in consultation with Head P&OD department and changes required are incorporated. Draft guidelines in consultation with Head P&OD department are prepared and approved by DMD. Sufficient number of forms will be printed every year but this year company adopted a SAP system for µFAIR¶ process.
Separate login id is given to staff Using id employees can fill their appraisal forms. Filled appraisal forms will be forwarded to IS and NS. Both IS and NS will give their recommendations through on-line.
y
After this stage system turns into manual process. In this stage staff those who are recommended for Inter-tier promotions are called for interviews. Based on their performance panel will also give ratings and recommendations. y In this stage, Moderating committee review the past and present ratings and recommendations of the staff and also consider the FAIR guidelines -annual rewards/ increments/ promotions will be decided.
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Overall ratings and Distribution:
The comparative rating of performance was introduced by L&T i.e. Forced ranking method to clearly bring out thedifference in level of performance and potential. Such comparative rating needs to be done to give a clear message that good performance is recognized and a poor performance is discouraged. Ratings of outstanding performers and lower performers are elaborated in the FAIR form with specific Qualitative comments. Each band/Tier has its own requirements to fulfill. Based on percentage given in the norms for each rating scale, employee(s) performance is evaluated.It is desirable that the fair ratings of staff members are finalized as far as possible by mangers who have line of sight i.e. are personally aware of work and contribution of the staff member concerned. With the end as well as to have independent company ± centric process, moderating groups are being formed.
Primary functions
a) Ensure compliance with guidelines is
Distribution of ratings Promotion Norms (b) Recommend ratings and promotion (c) Recommend to core committees Exceptions to guidelines, if any Seperation Based on recommendation and guidelines, Moderating group will distribute or fit into Bell curve.
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% AGE OF STAFF
Performance Rating Scale
Rating scale is based in 1 to 8 scales Rating
1 and 2 3,4,5 6,7 8 Promotion Recommendations:
Grade
Average Vital contributor Top Performer Outstanding performance
While recommending for promotions, following criteria should be considered Current and past performance Potential for further growth Personal attributes in discharging his responsibilities His own past history of job rotation.
Promotions can be either recommended either in July or January for all staff members except technical, commercial, secretary and technician cadre.
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Planned Seperation:
Performance is increasingly critical for the company¶s success. Hence staff members who are consistently rated 1 or 2 may be dealt with utmost care and recommended for separation after thorough evaluation.
y
The recommendations given by MG committee is forwarded to BU/Dept. heads and then again forwarded to SBG head. y Once SBG head approval comes, dispatch increments/ promotions letters to the respective Regional managers/ Department heads. y Finally, staff reviews/ Promotion letters/ increments details along with office copy will be filed in their respective folders.
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CHAPTER-2
________________________________________________________________
RESEARCH METHODOLOGY
2.1 TITLE OF THE STUDY
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³Analysis of performance management system´ in Larsen & Toubro Limited, ECC Division, B&F IC Chennai. 2.2 NEED FOR THE STUDY
³MACHINARY MUST BE THERE, BUILDINGS MUST BE THERE BUT WITHOUT THE PEOPLE«.. IT¶S ALL NOTHING. PEOPLE ARE OUR ONLY REAL ASSEST.´ Henning Holck Larsen Performance management system is in the place to track the achievements, strength of the employees to improve all the employees, so this research helps L&T-ECC to know the effectiveness of the system and greatly value the employee¶s contribution. It is the prime responsibility to offer the employee all the tools and techniques to facilitate performance and create competitive environment of excellence. The most challenging task of HR department is to reinforce the employee sense of belonging and sustain motivational levels. For this company believe that it is vital that the employees of the company perceive a clear linkage between their performance and reward they receive. The company has put in place a robust Performance evaluation system, appropriately christened µFAIR¶ for ³Framework for linking Appraisal with Incentives and Rewards.´
2.3
SCOPE FOR THE STUDY
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The scope of the study on ³ANALYSIS OF PERFORMANCE MANAGEMENT´ is to identify and evaluate the effectiveness of the Performance Management System from the employees, at LARSEN & TOUBRO LIMITED, ECCD. The study is focused on employees to whom this fair process (Appraisal Process) is carried out ± to observe its effectiveness among them. This research helps in finding the awareness and perception of employees towards the system and, so that suitable changes can be made to improve the current Appraisal system in work spot. The research would also help management to know the usefulness of the Performance Management system offered in the organization. The industry is booming currently, and this research will help us know the µEffectiveness of Performance Management System¶ in depth.
2.4
OBJECTIVES
Primary Objective
y To analyze the evaluation and effectiveness of Performance management system.
Secondary objectives
y To study the process and methods of existing Performance Management System in L&T.
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y To find out the strengths and weakness of current (180 degree) Performance Appraisal. y To support in bridging the gap between current performance and desired performance. y To identify the most challenging aspects for management in the system. y To suggest the ways and means to improve the existing Performance Management System. 2.5 HYPOTHESIS
The possible outcome of the survey in the organization may be:
y The concept Performance Management System may be understood in a better way and clearly. y PMS would be given more priority among the employees. 2.6 RESEARCH DESIGN ³Research design is the plan, structure, and strategy of investigation conceived so as to obtain answers to research questions and to control variance´ According to Kerlinger. The plan is an outline of the research scheme on which the researcher is to work. The structure of the research is a more specific outline or the scheme and the strategy shows how the research will be carried out, specifying the methods to be used in the collection and analysis of the data. Research design is the blueprint of the research it lays down the method and procedure for the collection of requisite
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information and its measurement and analysis with a view to arriving at certain meaningful conclusions at the end of the proposed study
Research design used in the project
The Research method followed in this project is µDescriptiveResearch¶. I chose the mentioned research method as the basic objective of the project was to examine Performance management system prevailing in the company, suggest some suitable changes in existing system in order to make it more positive and meaningful in achievement of desired organizational goals.
Descriptive studies
Descriptive studies are undertaken when the researcher is interested in knowing the characteristics of certain groups such as age, sex, education level, occupation or income. It can also be conducted when he wants to know the proportion of people in a given population who have behaved in a particular manner, making projections of a certain things; or determining the relationship between two or more variables. The objective of such a study is to answer the ³who, what, where, and how´ of the subject under investigation. Descriptive studies are well structured. It is therefore, necessary that the researcher gives sufficient thought to framing research questions and deciding the types of data to be collected and the procedure to be used for this purpose. If you are not careful in the initial stages you may find that either the data collected are inadequate or the procedure used is cumbersome and expensive. The data and records of the employees are also examined to understand the purpose well. Then the research was designed as a good research design facilitates the study and makes it an efficient as possible. A systematic research with
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structured and specified steps in specified sequence was designed and is as follows: Step1: The objective is specified with sufficient precision to ensure that data collected is relevant. Step 2: The data collection method to be used is questionnaires, interviews and observations. While designing data collection procedure, adequate safeguards against bias and unreliability are ensured. Step 3: The questions are prepared in a clear, understandable manner. Step 4: The sampling design used is stratified random sampling, under this sampling design; every item of the universe has an equal chance of inclusion in the sample.
2.7 ACTION PLAN FOR DATA COLLECTION
To obtain the data free from errors, I performed every step carefully while collecting and recording information and tried to get complete, comprehensible and consistent data The data for the present research study was collected through two methods: 1. Primary data collection method 2. Secondary data collection method
Primary data collection
The primary data are those which are collected afresh and for the first time. These data are obtained by a study specifically designed to fulfill the data needs of the
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problems at hand. Such data are original in character. The primary data has been collected through following methods: 1. Interview method: Direct personal interview method was used to collect the information from the respondents (employees) by personally visiting and meeting the people from whom data have to be collected. This method was used because the project includes an intensive study of a limited field. Moreover, the data needed for the purpose is more of personal nature which can be collected through directly communicating with the employees in order to increase its reliability. The information thus collected is original, accurate and in depth. The interview was unstructured as it was characterized by flexibility of approach to questioning and did not follow a system of pre-determined questions and standardized techniques of recording information. The method of unstructured interview was chosen so as to have greater freedom to ask, in case of need, supplementary questions or at times to change the sequence of questions. 2. Questionnaire method: In this method, a questionnaire was made consisting of a number of questions to be answered and filled by the respondents (employees) on their own. This method was used in order to enable the respondents to answer the questions as per their convenience and to provide those adequate to give well thought out answers. Thus this further increases accuracy.
Secondary data collection
The secondary data are those which have already been collected by someone else and which have already been passed through the statistical processes. Thus
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such data is not originally collected rather obtained from published or unpublished sources. Company Journals, Magazines, Internet, Books and newspapers. . The collection of the secondary data was done through published sources and Unpublished sources of Performance management. The methods of collecting primary and secondary data differ since primary data are to be originally collected, while in case of secondary data the nature of data collection work is merely that of compilation. 2.8 TOOLS USED FOR DATA COLLECTION
Percentage Analysis:
It refers to a special kind of ratio. Percentage is used in making comparison between two or more series of data. Percentage is used to describe relationships. Percentage can be used to compare the relative terms and the distribution of two or more series of data. Since percentage reduces everything to a common mean & therefore meaningful comparison can be made.
2.9
SAMPLE TECHNIQUE:
Non probability sampling:
In non- probability sampling, the chance of any particular unit in the population being selected is unknown.
Convenience Sampling:
In this method, the sample units are chosen primarily on the basis of the convenience to the investigator.
Sample Size:
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Population of this study consists of the employees of L&T, ECCD B&F IC. The total population of employees is 6000 but a sample 100 employees was taken for the study. 2.10DATA COLLECTION METHODOLOGY: Data was collected using Questionnaire. The study relied on primary data. 2.11 STATISTICAL ANALYSIS: The data was analyzed by applying statistical tools like pie charts, bar diagrams and tables.
2.12 LIMITATIONS OF THE STUDY The project is Limited to the L&T-ECCD, B&F IC and do not cover the entire L&T group. Short time of interaction with respondents because they were busy in their work. The study is very subjective in nature and not objective i.e. the results are based on the view, opinion and attitude of the respondents
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CHAPTER-4 DATA ANALYSIS AND INTERPRETATION
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DATA ANALYSIS AND INTERPRETATION
Table 4.1
Is Performance Management System is being implemented successfully?
Factors
Strongly Agree Agree Disagree Strongly Disagree Uncertain Total
No. of Respondents 46 38 12 2 2 100
Percentage 46% 38% 12% 2% 2% 100%
Chart 4.1
Is Performance Management System is being implemented successfully?
50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% 46% 38%
12% No. of respodents 2% 2%
Interference: From the above table it is interpreted that 46% of them Strongly agree, 38% of them Agreed, 12% of them Disagreed, 2% of them Strongly Disagreed and 2%
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of them said its Uncertain that Performance management system is being implemented successfully in the organization, thus maximum respondents Strongly agreed that system has implemented successfully. Table 4.2
Method of Appraisal System used
Factors
180 degree Behavior anchor scale Paired comparison Checklist method Forced distribution Others Total
No. of Respondents 22 12 12 18 33 19 100
Percentage 22% 12% 12% 18% 33% 19% 100%
Chart 4.2
Method of Appraisal System used
No. of Respondents
35% 30% 25% 20% 15% 10% 5% 0% 33% 22% 18% 12% 12% No. of Respondents
19%
Interference:
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From the above table it is interpreted that 22% of them said 180 degree and 33% of them said Forced distribution methods are following in the organization and also both are rating maximum.
Table 4.3
The system followed in your organization for appraisal process is
Factors
On-line Manual Both Total
No. of respondents 74 8 18 100
Percentage 74% 8% 18% 100%
Chart 4.3
The system followed in your organization for appraisal process is
No. of respondents
18%
8%
On-line Manual Both 74%
Interference: From the above table it is interpreted that 74% of them said Appraisal process is Online, 8% of them said it is Manual and 18% said it is Both. Thus the
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maximum respondents are agreed that the System followed for Appraisal process is On-line.
Reason for implementing Performance Management System Table 4.4(a)
(a)Retention Strategy
Factors
Strongly Agree Agree Disagree Strongly Disagree Neutral Total
No. of Respondents 30 46 14 6 4 100
Percentage 30% 46% 14% 6% 4% 100%
Chart 4.4(a)
No of Respondents
6% 14% 4% 30%
strongly Agree Agree Disagree 46% Strongly Disagree Neutral
Interference:
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From the above table it is interpreted that 30% of them Strongly agree,46% of them Agreed,14% of them Disagreed, 6% of them Strongly Disagreed and 4% of them said its Neutral that Performance management system is being implemented by the management for Retention Strategy, thus maximum respondents Agreed that system has implemented for ³Retention Strategy´.
Table 4.4(b)
(b) To identify High Performers
No. of Respondents Percentage Strongly Agree 57 57% Agree 25 25% Disagree 8 8% Strongly Disagree 2 2% Neutral 8 8% Total 100 100% Chart 4.4(b)
Factors
No of Respondents
2% 8% 8%
strongly Agree 25% 57% Agree Disagree Strongly Disagree Neutral
Interference:
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From the above table it is interpreted that 57% of them Strongly agree,25% of them Agreed,8% of them Disagreed, 2% of them Strongly Disagreed and 8% of them said its Neutral that Performance management system is being implemented by the management to identify High Performers, thus maximum respondents Strongly Agreed that system has implemented ³To identify High Performers´. Table4.4(c)
(c) Reward Allocation
Factors
Strongly Agree Agree Disagree Strongly Disagree Neutral Total
No. of Respondents 28 44 4 10 14 100
Percentage 28% 44% 4% 10% 14% 100%
Chart 4.4(c)
No of respondents
14% 28% 10% 4% strongly Agree Agree Disagree Strongly Disagree 44% Uncertain
Interference:
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From the above table it is interpreted that 28% of them Strongly agree,44% of them Agreed,4% of them Disagreed, 10% of them Strongly Disagreed and 14% of them said its Neutral that Performance management system is being implemented by the management for Reward Allocation, thus maximum respondents Agreed that system has implemented for ³Reward Allocation´.
Table 4.4(d)
(d) To identify Training and development needs.
Factors
Strongly Agree Agree Disagree Strongly Disagree Neutral Total
No. of Respondents 30 44 6 18 2 100
Percentage 30% 44% 6% 18% 2% 100%
Chart 4.4(d)
2%
No of respondents
30%
18% 6%
strongly Agree Agree Disagree Strongly Disagree 44% Neutral
Interference:
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From the above table it is interpreted that 30% of them Strongly agree,44% of them Agreed,6% of them Disagreed, 18% of them Strongly Disagreed and 2% of them said its Neutral that Performance management system is being implemented by the management To identify Training and developmental needs, thus maximum respondents Agreed that system has implemented ³To identify Training and developmental needs´.
Table 4.4(e)
(e)To facilitate Promotion & Transfers & Termination decisions
Factors
Strongly Agree Agree Disagree Strongly Disagree Neutral Total
No. of Respondents 32 44 8 2 14 100
Percentage 32% 44% 8% 2% 14% 100%
Chart 4.4(e)
No of respondents
2% 8% Strongly Agrre Agree Disagree Strongly Disagree 44% Neutral 14% 32%
Interference: From the above table it is interpreted that 32% of them Strongly agree, 44% of them Agreed, 8% of them Disagreed, 2% of them Strongly Disagreed and 14%
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of them said its Neutral that Performance management system is being implemented by the management to facilitate Promotion & Transfers & Termination decisions, thus maximum respondents Agreed that system has implemented ³To facilitate Promotion & Transfer & Termination decision´
Table 4.4(f)
(f) Periodic Checks
Factors
Strongly Agree Agree Disagree Strongly Disagree Neutral Total
No. of Respondents 20 44 14 12 10 100
Percentage 20% 44% 14% 12% 10% 100
Chart 4.4(f)
No of respondents
10 12 20
14
44
Interference:
Strongly Agreed Agree Disagree Strongly Disagree Neutral
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From the above table it is interpreted that 20% of them Strongly agree,44% of them Agreed,14% of them Disagreed,12% of them Strongly Disagreed and 10% of them said its Neutral that Performance management system is being implemented by the management for Periodic Checks, thus maximum respondents Agreed that system has implemented for ³Periodic Checks´.
Table 4.4(g)
(g) For Fixing Targets
Factors
Strongly Agree Agree Disagree Strongly Disagree Neutral Total
No. of Respondents 24 42 12 22 100
Percentage 24% 42% 12% 22% 100%
Chart 4.4(g)
No of Respondents
22% 0 12% Strongly Agree Agree Disagree Strongly Agree 42% Neutral 24%
Interference:
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From the above table it is interpreted that 24% of them Strongly agree,42% of them Agreed,12% of them Disagreed, 0% of them Strongly Disagreed and 22% of them said its Neutral that Performance management system is being implemented by the management for Fixing targets, thus maximum respondents Agreed that system has implemented for ³Fixing Targets´.
Table 4.4(h)
(h) To identify barrier(s) to Performance.
Factors
Strongly Agree Agree Disagree Strongly Disagree Neutral Total
No. of Respondents 28 34 16 2 20 100
Percentage 28% 34% 16% 2% 20% 100
Chart 4.4(h)
No of Respondents
20% 2% Strongly Agree 16% Agree Disagree Strongly Disagree 34% Neutral 28%
Interference:
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From the above table it is interpreted that 28% of them Strongly agree,34% of them Agreed,16% of them Disagreed, 2% of them Strongly Disagreed and 20% of them said its Neutral that Performance management system is being implemented by the management To identify Barrier(s) to Performance , thus maximum respondents Agreed that system has implemented ³To Identify Barrier(s) to Performance´.
Table 4.4(i)
(i) Motivational strategy.
Factors
Strongly Agree Agree Disagree Strongly Disagree Neutral Total
No. of Respondents 28 52 4 2 14 100
Percentage 28% 52% 4% 2% 14% 100%
Chart 4.4(i)
No of Respondents
2% 4% Strongly Agree Agree Disagree Strongly Disagree 52% Neutral 14% 28%
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Interference: From the above table it is interpreted that 28% of them Strongly agree,52% of them Agreed,4% of them Disagreed, 2% of them Strongly Disagreed and 14% of them said its Neutral that Performance management system is being implemented by the management for Motivational Strategy, thus maximum respondents Agreed that system has implemented for ³Motivational Strategy´.
Table 4.5
Success of Performance Management System depends on:
Factors
Alignment of individual goals to organizational goals Choosing the right method of Appraisal Total
No. of respondents
78 22 100
Percentage
78% 22% 100%
Chart 4.5
Success of Performance Management System depends on:
No of respondents
80% 60% 78% 40% 20% 0% Alignment of individual goals to organizational goals Choosing the right method of Appraisal 22%
Interference:
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From the above table it is interpreted that 78% of them said Success of PMS depends on Alignment of individual goals to Organizational goals and 22% of them said success depends on Choosing the right method of Appraisal. Thus the maximum respondents are strongly agreed that the success of Performance Management System depends on ³Alignment of Individual goals to Organizational goals´.
Table 4.6
Performance Management System should be owned by
Factors
Line Managers HR Managers Employees Total
No. of respondents
44 40 16 100
Percentage
44% 40% 16% 100%
Chart 4.6
Performance Management System should be owned by
45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Line Managers HR Managers Employees 16% 44% 40% No of respondents
Interference:
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From the above table it is interpreted that 44% of them said PMS should be owned by Line Managers, 40% of them said PMS should be owned by HR Managers and 16% said it should be owned by Employees. Thus the maximum respondents are agreed that the Performance Management System owned by ³Line Managers´.
Table 4.7
Most challenging aspects of Performance Management System is
Factors
Determining the evaluation criteria Creating a rating instrument Rating distribution. Errors in rating and evaluation Total
No. of respondents 15 14 55 10 100
Percentage 15% 14% 55% 10% 100%
Chart 4.7
Most challenging aspects of Performance Management System is
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No of respondents
Errors in rating 10%
Rating distribution.
55%
Creating a rating
14%
Determining the
15%
0%
10%
20%
30%
40%
50%
60%
Interference: From the above table it is interpreted that 30% of them said is Determining the evaluation criteria, 14% of them said Creating a rating instrument, 40% said Rating distribution and 10% said errors in rating and evaluation are the most challenging aspects of Performance Management System. Thus the maximum respondents are agreed that ³Rating Distribution´ is one of the most challenging aspects of the Performance Management System. Table 4.8
Performance Planning is carried
Factors
At the time of Hiring or Transferring employees When Business plans are newly developed Annual performance and development reviews have been completed Not been undertaking Total
No. of respondents
2 6 62
Percentage
2% 6% 62%
30 100
30% 100%
Chart 4.8
Performance Planning is carried
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No of Respondents
Not been Annuak per.. When Business.. At the time 0% 2% 6% 30% 62%
10%
20%
30%
40%
50%
60%
70%
Interference: From the above table it is interpreted that 2% said Performance planning is carried at the time of hiring and transferring employees, 6% said when business plans are newly developed, 62% said annual performance and development reviews have been completed and 30% said system not been undertaken. Thus the maximum respondents are agreed that the Performance planning is carried out when ³Annual performance and development reviews have been completed´.
Table 4.9
Base for reducing subjectivity and bias in the System
Factors
Multiple level of reviews Critical Incident(s) Continuous Observation Peer review outcomes Total
No. of respondents
34 12 52 2 100
Percentage
34% 12% 52% 2% 100%
Chart 4.9
Base for reducing subjectivity and bias in the System
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No of respondents
60% 50% 40% 30% 20% 10% 0% Multiple level of Critical Incident(s) reviews Continuous Observation 12% 2% Peer review outcomes 52% 34%
Interference: From the above table it is interpreted that 52% said Multiple level of reviews, 12% said Critical Incident(s), 34% said continuous observation and 2% said Peer review outcomes are the base for reducing subjectivity and bias in the system. Thus the maximum respondents are agreed that ³Multiple levels of reviews´ is the base for reducing subjectivity and bias in the system.
Table 4.10
Post appraisal feedback mechanism is adopted or not
Factors
Yes No Uncertain Total
No. of respondents
48 42 10 100
Percentage
48% 42% 10% 100
Chart 4.10
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Post appraisal feedback mechanism is adopted or not
No of respondents
10% 48% Yes No Uncertain
42%
Interference: From the above table it is interpreted that 48% said feedback mechanism is adopted, 42% said it is not adopted and 10% said it is uncertain. Thus the maximum respondents are agreed Post Appraisal Feedback Mechanism is adopted in the Performance Management System.
Table 4.11
To whom feedback Mechanism is applicable
Factors
Top Performers Low performers All the employees Total
No. of respondents
24 16 60 100
Percentage
24% 16% 60% 100%
Chart 4.11
To whom feedback Mechanism is applicable
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60% 60% 50% 40% 30% 20% 10% 0% Top Performers Low performers All the employees 24% 16% No of Respondents
Interference: From the above table it is interpreted that 24% said that Feedback Mechanism is applicable to top performers, 16% said it is for Low performers and 60% said it is applicable to all the employees. Thus the maximum respondents are agreed that the Post Review Feedback Mechanism is applicable to ³All the Employees´.
Table 4.12
Action taken when low performers are identified
Factors
Training Improvement coaching Relocation Dismissal / Discharge Feedback mechanism Total
No. of respondents
28 26 4 1 45 100
Percentage
28% 26% 4% 1% 45% 100%
Chart 4.12
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Action taken when low performers are identified
Feedback M.. 1%
45%
Dismissal..
Relocation
4%
No of Respondents 26%
Improvement c..
Training
28%
0%
10%
20%
30%
40%
50%
Interference: From the above table it is interpreted that 28% said low performers are send to Training, 26% said Improvement Coaching, 4% said as Relocation,1% said as Dismissal/Discharge and 45% said they are send for Feedback Mechanism. Thus the maximum respondents are agreed that when low performers are identified, they are sent to ³Feedback Mechanism´.
Table 4.13
Appraisal process brings clear differentiation between high and low performers or not
Factors
Yes No Uncertain Total
No. of respondents
66 22 12 100
Percentage
66% 22% 12% 100%
Chart 4.13
Appraisal process brings clear differentiation between high and low performers or not
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No of Respondents
12%
22% Yes No 66% Uncertain
Interference: From the above table it is interpreted that 66% of the respondents said appraisal process brings clear differentiation between high and low performers, 22% said no clear differentiation can be observed and 12% said it is uncertain. Thus, the maximum respondents are agreed that the Performance Appraisal System bringing clear differentiation between high and low performers.
Table 4.14
In which situation you feel uncomfortable while rating ««
Factors
Appraising distant subordinate Appraising technically superior subordinate The older, highly experienced subordinates The highly compensated individual Dealing with unrealistic expectations Coping with employee defensiveness Forced Distribution Total
No. of respondents
10 6 2 18 20 12 32 100
Percentage
10% 6% 2% 18% 20% 12% 32% 100%
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Chart 4.14
In which situation you feel uncomfortable while rating ««
No of Respondents
35% 30% 25% 20% 20% 15% 10% 10% 5% 0% Appraising d Appraising techn.. The older, highly.. highly... Dealing w The Coping with.. Forced Dist 6% 2% 18% 12% 32%
Interference: From the above table it is interpreted that the most difficult task in Performance Management System is ³Forced Distribution´ and ³Dealing with unrealistic expectations´
Table 4.15
Psychological barriers to effective Performance Appraisal
Factors
Feelings of insecurity Being too Skeptical or modest Worrying that performance appraisal might cause resentment to subordinates Total
No. of respondents
18 12 70 100
Percentage
18% 12% 70% 100%
Chart 4.15
Psychological barriers to effective Performance Appraisal
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No of respondents
18%
12% Feelings .. Being too.. 70% Worrying that p .
Interference: From the above table it is interpreted that 70% worrying that PMS might cause resentment to subordinates, 18% said feelings of insecurity and 12% said being too skeptical and modest. Thus, the maximum respondents are agreed that ³Worrying that Performance Appraisal might cause resentment to subordinates´ is the Psychological barrier to effective Performance Management System.
Table 4.16
Linking rewards to performance would
Factors
Motivate employees Encourage superior performers Compound problems Total
No. of respondents
66 30 4 100
Percentage
66% 30% 4% 100
Chart 4.16
Linking rewards to performance would
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70% 60% 50% 40% 30% 20% 10% 0%
66%
30% No of Respondents
4%
Motivate employees
Encourage superior performers
Compound problems
Interference: From the above table it is interpreted that 66% said Linking rewards to performance would Motivate Employees, 30% said it encourages superior performers and 4% said it compound problems. Thus the maximum respondents are agreed that Linking rewards to performance would ³Motivate Employees´.
Table 4.17
System helps to develop better understanding between the superior and Subordinate
Factors
Strongly Agree Agree Disagree Strongly Disagree Uncertain Total
No. of Respondents
30 56 4 6 4 100
Percentage
30% 56% 4% 6% 4% 100%
Chart 4.17
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System helps to develop better understanding between the superior and Subordinate
Uncertain
4%
Strongly Disagree
6%
Disagree
4%
No of Respondents 56%
Agree
Strongly Agree 0% 10% 20% 30%
30%
40%
50%
60%
Interference: From the above table it is interpreted that 30% of them Strongly agree, 56% of them Agreed, 4% of them Disagreed, 6% of them Strongly Disagreed and 4% of them said its Uncertain that Performance management system helps to develop better understanding between the superior and Subordinate. Thus, maximum respondents agreed that system creating better understanding between Superior and Subordinate.
Table 4.18
Does reporting authorities recognizing achievements
Factors
Strongly Agree Agree Disagree Strongly Disagree Uncertain Total
No. of Respondents
52 36 4 6 2 100
Percentage
52% 36% 4% 6% 2% 100%
Chart 4.18
Does reporting authorities recognizing achievements
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No of respondents
60% 50% 40% 30% 20% 10% 0% Strongly Agree Agree Disagree Strongly Disagree Uncertain 4% 6% 2% 36% 52%
Interference: From the above table it is interpreted that 52% of them Strongly agree, 36% of them Agreed, 4% of them Disagreed, 6% of them Strongly Disagreed and 2% of them said it¶s Uncertain that the reporting authorities recognizing the achievements of subordinates. Thus, maximum respondents Strongly agreed that ³Reporting authorities recognizes the achievements´.
Table 4.19
Post appraisal outcomes aligned with your achievements
Factors
Highly Satisfied Satisfied Dissatisfied Highly Dissatisfied Uncertain Total
No. of Respondents
24 56 6 8 6 100
Percentage
24% 56% 6% 8% 6% 100%
Chart 4.19
Post appraisal outcomes aligned with your achievements
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60% 50% 40% 30% 20% 10% 0% Highly Satisfied 24%
56%
No of respondents 8%
6%
6%
Satisfied
Dissatisfied
Highly Uncertain Dissatisfied
Interference: From the above table it is interpreted that 24% of them Highly satisfied, 56% of them Satisfied, 6% of them Dissatisfied, 8% of them Highly Dissatisfied and 6% of them said it¶s Uncertain that the Post appraisal outcomes are aligned with individual achievements. Thus, maximum respondents Satisfied with the Post appraisal outcomes.
Table 4.20
Performance Management System Effective or not
Factors
Effective Moderately Effective Ineffective Don¶t know Total
No. of Respondents
34 52 10 2 100
Percentage
34% 52% 10% 2% 100%
Chart 4.20
Performance Management System Effective or not
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60% 50% 40% 30% 20% 34%
52%
No of respondents 10%
10% 0% Effective Moderately Effective Ineffective
2%
Don't Know
Interference: From the above table it is interpreted that 34% said PMs is Effective, 52% said it is Moderately Effective, 10% said it is Ineffective and 2% said No idea. Thus, Maximum respondents agreed that the Performance management system is Moderately Effective in improving the overall performance.
Table 4.21
Rate of the Performance Management System
Factors
Upto Standard Ambiguous Confusing Too Adequate Adequate Total
No. of Respondents
52 13 15 2 18 100
Percentage
52% 13% 15% 2% 18% 100%
Chart 4.21
Rate of the Performance Management System
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18% 2% Upto Standard 15% 52% Ambiguous Confusion Too Adequate 13% Adequate
Interference: From the above table it is interpreted that 52% of them rated PMS working Upto Standard, 13% rated it is Ambiguous, 15% rated it is Confusion,2% rated it is Too Adequate and 18% said it is Adequate.. Thus the maximum respondent rated Performance Management System working Upto Standard in the Organization.
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CHAPTER-5 RECOMMENDATIONS AND CONCLUSION
5.1 FINDINGS y The Analysis shows that 46% of the employees were Strongly Agreed that the Performance Management System is implemented successfully in the organization.
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y
It can be concluded that the 180 degree and Forced Distribution methods of Performance Appraisal System is followed in the organization.
y
It can be found that the majority (74%) of the respondents feel that the Performance Management System carried through On-line.
y
It is inferred that the majority (57%) of the respondents feel that the reason for having Appraisal system is mainly to identify high performers and as motivational strategy.
y
The majority of the employees felt that the success of Performance Management System depends on Alignment of individual goals to organizational goals.
y
It is found that the majority of employees felt Performance Management System should be owned by either Line managers (44%) or Hr managers (40%).
y
It can be concluded that maximum number of respondents (55%) were agreed that the most challenging aspect of performance management system is Rating Distribution.
y
It is inferred that the majority (62%) of the respondents feel that the performance planning in the organization is carried when Annual performance and development reviews have been completed.
y
It is concluded that maximum (52%) of the respondents felt that Continuous observation is the base for reducing subjectivity and bias in the system.
y
The majority of the employees felt that the Post appraisal feedback mechanism is adopted in the Organization.
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y
It is inferred that maximum (62%) of the employees felt that the feedback mechanism is applicable to all the employees.
y
It can be concluded that maximum respondents agreed that feedback mechanism is the action mostly taken by management when they identify low performers.
y
The analysis shows that 66% of the employees were felt that the Appraisal process bringing clear differentiation between high and low performers.
y
It is found that management feel uncomfortable mostly in the following situations: When employees are being forcefully distributed in the bell curve. While dealing with unrealistic expectations. When they appraising highly compensated individual. It is inferred that the majority (70%) of the employees Psychological barriers to effective PMS is worrying that performance appraisal might cause resentment to subordinates.
y
y
It is found that linking rewards to performance would: Motivate employees Encourage superior performers.
y
From the analysis, most of the respondents 56% are agreed that the appraisal system helps to develop a better understanding between superior and subordinate.
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y
It can be concluded that maximum respondents 52% were Strongly agreed that the Reporting authority recognizes the achievements stated by them.
y
The majority of the employees satisfied with their Post appraisal outcomes which are aligned with their achievements.
y
It is inferred that maximum 52% of the employees felt that the Performance Management System is effective in improving the overall performance of the employees.
y
The majority of the employees felt that the rating of Appraisal System is Up to standard.
5.2 RECCOMMENDATIONS: (a) The performance appraisal process at L&T is very much time consuming
and tedious. As a result of evaluation of large number of employees in the organization, there is possibility that superior may not able to provide a report reflecting the actual performance of employees. Furthermore, a lot of employees experience that this is a mere paper work which does not have much implication. (b) The performance appraisal process not helps in identifying Key Performance
Areas (KPAs) for the employees. The performance appraisal process should help identify KPAs and then communicate it to the employees to make the employee more focused and effective to achieve the desired targets.
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(c)
The general feedback of the employees is that performance appraisal process
is a formality. Further, one view of employees is that there is no transparent link between the performance and the reward. (d) The current Appraisal method or degree of Appraisal can be changed
according to the employees preference because many employees expecting to have 360 degree feedback. (e) Most of the employees felt that - Midterm review is required, which will
help to maintain the potential of the staff throughout the year. (f) The most integral part of Performance management system is Performance
planning, since it is essential for growth and development of individual as well as Organization, so it also can be followed systematically. (g) Feedback mechanism is adopted successfully in the organization. But
counseling process is not implementing if both are adopted simultaneously company can achieve more results. (h) Therefore the present Performance management System should be improved
further to increase the standard of FAIR Process.
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5.3 CONCLUSION
No system is absolutely fool-proof nor can we develop an ideal system. What would make any appraisal µideal¶ is the honesty and integrity with which it is administered both the company and the appraiser. And, where return with honest intentions any human deficiencies that creep in also be corrected or counter balanced by the system itself. This research helps to the researcher to find out how the Performance Management System is followed and implemented in the organization.
The FAIR Process followed by ³Larsen & Toubro Limited´, Ecc Division, B&F-IC is showing a better result i.e. the present system is effective. Therefore, everyone have to take active part in the Performance Management System for doing further improvements which helps to make the system best.
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_________________________________________________________________________
BIBLIOGRAPHY
References
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1) ³Literature Review on Performance Measurement and Management´ Prepared by The Centre for Business Performance, Cranfield School of Management. 2) ³Major Elements and Issues in Performance Management System´- A Literature Review by Eul-KyooBae, INHA University. 3) Rao T.V( Performance Management and appraisal system) 2005 fourth printing 4) Sahu R.K (Performance Management System) 2007 edition. 5) Michael Armstrong and angela Baron(Managing Performance Management in action) 2005 first edition 6) Decenzo ,A David , Robbins P Stephens ( Personnel and human Resource Management) Ashok K Ghosh Publications 2007 Edition 7) C.B. Gupta, Human Resources Management, Sultan and Chand Publications, New Delhi, Sixth edition, 2003. 8) C.R.Kothari, Research Methodology, Methods and Techniques, New Delhi, Vishwas Prakash, 2nd edition, 2006. 9) ³Performance appraisal reactions: Measurement, Modeling, and Method bias´ Lisa m & Levy, Paul E, vol.85, Oct 2000. 10) ³Utilizing feedback to increase Performance Appraisal´ Wayne
F.Nemeroff(State university of NewYork), vol 22, 1979.
Websites
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www.larsen&toubro.com www.hr-guide.com www.citehr.com www.Performanceappraisal.com www.123manage.com www.tvrls.com www.humanresourceabout.com www.chrmglobal.com www.managementparadise.com www.projectparadise.com www.google.com
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________________________________________________________________________
APPENDIX
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ANALYSIS OF PERFORMANCE MANAGEMENT SYSTEM.
QUESTIONNAIRE
Dear Sir/Madam, I am URMILA ITAM pursuing M.H.R.M course from Andhra University. I have undertaken a project on Analysis of performance management system in Larsen & Toubro Limited, ECCD, B&F IC Chennai. I humbly request you to fill up this questionnaire for my research purpose. For your information, this data will be used purely for academic purpose and will be treated strictly confidential. ______________________________________________________________________________ PERSONAL DETAILS AGE : 18 ± 25 ( ( ) ) 26 ± 34 ( ) 35 ± 46 ( )
47 and ABOVE
GENDER
:
Male (
)
Female (
)
EXPERIENCE IN L&T : Years (
)
Months (
)
CADRE
: _____________________________
______________________________________________________________________________ 1. Performance Management System implementing successfully in your organization? a) Strongly Agree c) Disagree e) Uncertain b) Agree d) Strongly Disagree
2. What type of Appraisal method is being adopted in your organization?
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a) 180 degree method c) Paired comparison e) Forced Distribution
b) Behavior anchor scale d) Checklist method others, please specify
__________________________________________ 3. The system followed in your organization for appraisal process is a) On-line b) Manual c) Both
4. In your opinion, why the management is implementing Performance Management System in your Organization? Kindly tick your response for the following statements
STATEMENT
Strongly Agree
Agree
Neutral
Disagree
Strongly Disagree
Retention Strategy. To identify High Performers Reward allocation To identify Training and development needs. To facilitate Promotion & Transfers & Termination decisions Periodic Checks For Fixing Targets
To identify barrier(s) to Performance. Motivational strategy.
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5. Success of Performance Management System depend on: a) Alignment of individual goals to organizational goals b) Choosing the right method of Appraisal
6. Who should own the Performance Management System? a) Line Managers b) HR Managers c) Employees
7. What according to you is the most challenging aspect of Performance Management System? a) Determining the evaluation criteria b) Creating a rating instrument c) Rating distribution. d) Errors in rating and evaluation
8. Do you undertake Performance Planning? If yes, when it is carried out? a) Hiring or Transferring employees b) Business plans are newly developed c) Annual performance and development reviews have been completed d) Not been undertaking 9. What would you prefer from the following to reduce subjectivity and bias in the Performance Management System? a) Multiple level of reviews c) Continuous Observation b)Critical Incident(s) d) Peer review outcomes
10. Do you have post appraisal feedback mechanism in your organization? a) Yes b) No c) Uncertain
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11. If yes, to whom feedback mechanism is applicable? a) Top Performers c) To all the employees b) Low Performers
12. What do you do when you identify poor performers post your review session? a) Training c) Relocation e) Feedback mechanism b) Improvement coaching d) Dismissal / Discharge
13. Does your appraisal process bring clear differentiation between high and low performers? a) Yes b) No c) Uncertain
14. In which of the following situations you find yourself uncomfortable: (Pls. tick as many options as appropriate) a) Appraising distant subordinate b) Appraising technically superior subordinate c) The older, highly experienced subordinates d) The highly compensated individual e) Dealing with unrealistic expectations f) Coping with employee defensiveness g) Forced Distribution
15. What according to you would constitute psychological barriers to effective Performance appraisal? a) Feelings of insecurity b) Being too Skeptical or modest c) Worrying that performance appraisal might cause resentment to subordinates. 16. Do you believe that linking rewards to performance would:
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a) Motivate employees
b) Encourage superior performers
c) Compound problems
17. Does the system helps to develop better understanding between the superior and subordinate? a) Strongly Agree c) Disagree e) Uncertain 18. Does your reporting authority recognize your achievements? a) Strongly Agree c) Disagree e) Uncertain b) Agree d) Strongly Disagree b) Agree d) Strongly Disagree
19. Do you feel the post appraisal outcomes aligned with your achievements? a) Highly Satisfied c) Dissatisfied e) Uncertain b) Satisfied d) Highly Dissatisfied
20. In general, how effective has your organizations performance Management processes proved in improving overall performance? a) Effective c) Ineffective b) Moderately effective d) don¶t know
21. How would you rate your performance Management System? a) Up to Standard c) Confusion e) Adequate b) Ambiguous d) Too Adequate
22. Are there any other comments you would like to make about your Performance Management arrangements not covered in the questions above? ________________________________________________________________________
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________________________________________________________________________ ________________________________________________________________________ ________________________________________________________________________
doc_716184378.docx
Analysis of performance Management System
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CHAPTER 1
_______________________________________________________________________
THEORETICAL FRAMEWORK
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1.1 Introduction
In the current scenario organizations all over the world are under tremendous pressure for the improving their performance for survival and growth due to increasing competition. One such source of improving is ³technology´ and the other is ³human system´ existing in the organization. Today the world is shrinking and hence, more and more organization has an easy access to sophisticated technology due to relatively easy availability and transfer availability of technology. Thus the source of improvement i.e. the µhuman system¶ that will differentiate a successful organization from unsuccessful one. Human resource management (HRM) is concerned with the personnel policies and managerial practices and systems that influence the workforce. In broader terms, all decisions that affect the workforce of the organization concern the HRM function. The activities involved in HRM function are pervasive throughout the organization. Line managers, typically spend more than 50 percent of their time for human resource activities such hiring, evaluating, disciplining, and scheduling employees. Human resource management specialists in the HRM department help organizations with all activities related to staffing and maintaining an effective workforce. Major HRM responsibilities include work design and job analysis, training and development, recruiting, compensation, team-building, performance management and appraisal, worker health and safety issues, as well as identifying or developing valid methods for selecting staff. HRM department provides the tools, data and processes that are used by line managers in their human resource management component of their job. Traditionally most of the organizations are turned to computerized performance appraisal system and acquired good results. Staff appraisal gained
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increased importance as a contributor to success of many organizations. It helps in categorizing the performing and non-performing candidates. It properly describes a process of judging past performance and not measuring the performance against clear and agreed objectives.Hence performance management system came into existence and shifts the focus away from just an annual event to an on-going process.In contrasting Performance Appraisal with Performance Management, it suggests that performance appraisals are indeed an evaluation of an employees work. However, Performance Management reflects the continuous nature of performance improvement and employee development, recognizing the importance of effective management, work systems and team contributions. Consequently, many organizations are revising their existing appraisal schemes and introducing performance management system for all the employees. Performance Management System enables a business to sustain profitability and performance by linking the employees' pay to competency and contribution. It provides opportunities for concerted personal development and career growth and now the system tending towards openness, dialogue and performance, rather than personality. The study done on ³Performance management´ focuses on the aim, elements and benefits of the system as observed. The main aim of this is to carry out an analytical study of Performance Management System followed in L&T-ECC Division, B&F, Operating Company and analysis of data and makes suitable suggestions.
1.2 Theoretical background for Performance Management System
Performance Management is a formal and explicit process whereby an organization involves its employees, both as individual and members of a team, in
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improving overall effectiveness, and the accomplishment of its strategic goals. It is focused on achieving results, and may be seen as a vehicle for aligning individual employee performance with organizational strategy. The objective of Performance management according to Schultz, Bagraim, Potgieter, Viedge and Werner (2003:74), is to improve results at the individual, team and organizational level. They state that ³performance management is a process that directs the energy of people in an organization towards achieving strategic goals´. Performance management is the current buzzword and is the need in the current times of cut throat competition and the organizational battle for leadership. Performance management is a much broader and a complicated function of HR, as it encompasses activities such as joint goal setting, continuous progress review and frequent communication, feedback and coaching for improved performance, implementation of employee development programmes and rewarding
achievements. The process of performance management starts with the joining of a new incumbent in a system and ends when an employee quits the organization. Performance management can be regarded as a systematic process by which the overall performance of an organization can be improved by improving the performance of individuals within a team framework. It is a means for promoting superior performance by communicating expectations, defining roles within a required competence framework and establishing achievable benchmarks. Performance management is an ongoing communication process which is carried between the supervisors and the employees throughout the year. The process is very much cyclical and continuous in nature. A performance management system includes the following actions.
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Developing clear job descriptions and employee performance plans which includes the key result areas (KRA') and performance indicators.
Selection of right set of people by implementing an appropriate selection process.
Negotiating requirements and performance standards for measuring the outcome and overall productivity against the predefined benchmarks.
Providing continuous coaching and feedback during the period of delivery of performance.
Identifying the training and development needs by measuring the outcomes achieved against the set standards and implementing effective development programs for improvement.
Holding quarterly performance development discussions and evaluating employee performance on the basis of performance plans.
Designing effective compensation and reward systems for recognizing those employees who excel in their jobs by achieving the set standards in accordance with the performance plans or rather exceed the performance benchmarks.
Providing promotional/career development support and guidance to the employees.
Performing exit interviews for understanding the cause of employee discontentment and thereafter exit from an organization.
Performance Management Process Performance management is the systematic process by which an agency involves its employees, as individuals and members of a group, in improving organizational effectiveness in the accomplishment of agency mission and goals.
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Employee performance management includes: planning work and setting expectations, continually monitoring performance, developing the capacity to perform, Periodicallyrating performance in a summary fashion, Rewarding good performance
The revisions made in 1995 to the Government wide performance appraisal and awards regulations support sound management principles. Great care was taken to ensure that the requirements those regulations establish would complement and not conflict with the kinds of activities and actions practiced in effective organizations as a matter of course.
In an effective organization, work is planned out in advance. Planning means setting performance expectations and goals for groups and individuals to channel their efforts toward achieving organizational objectives. Getting employees involved in the planning process will help them understand the goals of
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the organization, what needs to be done, why it needs to be done, and how well it should be done. The regulatory requirements for planning employees' performance include establishing the elements and standards of their performance appraisal plans. Performance elements and standards should be measurable, understandable, verifiable, equitable, and achievable. Through critical elements, employees are held accountable as individuals for work assignments or responsibilities. Employee performance plans should be flexible so that they can be adjusted for changing program objectives and work requirements. When used effectively, these plans can be beneficial working documents that are discussed often, and not merely paperwork that is filed in a drawer and seen only when ratings of record are required.
In an effective organization, assignments and projects are monitored continually. Monitoring well means consistently measuring performance and providing ongoing feedback to employees and work groups on their progress toward reaching their goals. Regulatory requirements for monitoring performance include conducting progress reviews with employees where their performance is compared against their elements and standards. Ongoing monitoring provides the opportunity to check how well employees are meeting predetermined standards and to make changes to unrealistic or problematic standards. And by monitoring continually, unacceptable performance can be identified at any time during the appraisal period and assistance provided to address such performance rather than wait until the end of the period when summary rating levels are assigned.
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In an effective organization, employee developmental needs are evaluated and addressed. Developing in this instance means increasing the capacity to perform through training, giving assignments that introduce new skills or higher levels of responsibility, improving work processes, or other methods. Providing employees with training and developmental opportunities encourages good performance, strengthens job-related skills and competencies, and helps employees keep up with changes in the workplace, such as the introduction of new technology. Carrying out the processes of performance management provides an excellent opportunity to identify developmental needs. During planning and monitoring of work, deficiencies in performance become evident and can be addressed. Areas for improving good performance also stand out, and action can be taken to help successful employees improve even further.
From time to time, organizations find it useful to summarize employee performance. This can be helpful for looking at and comparing performance over time or among various employees. Organizations need to know who their best performers are within the context of formal performance appraisal requirements, rating means evaluating employee or group performance against the elements and standards in an employee's performance plan and assigning a summary rating of record. The rating of record is assigned according to procedures included in the organization's appraisal program. It is based on work performed during an entire appraisal period. The rating of record has a bearing on various
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other personnel actions, such as granting within-grade pay increases and determining additional retention service credit in a reduction in force.
In an effective organization, rewards are used well. Rewarding means recognizing employees, individually and as members of groups, for their performance and acknowledging their contributions to the agency's mission. A basic principle of effective management is that all behavior is controlled by its consequences. Those consequences can and should be both formal and informal and both positive and negative. Good performance is recognized without waiting for nominations for formal awards to be solicited. Recognition is an ongoing, natural part of day-to-day experience. A lot of the actions that reward good performance ² like saying "Thank you" ² don't require a specific regulatory authority. Nonetheless, awards regulations provide a broad range of forms that more formal rewards can take, such as cash, time off, and many nonmonetary items. The regulations also cover a variety of contributions that can be rewarded, from suggestions to group accomplishments.
Managing Performance Effectively. In effective organizations, managers and employees have been practicing good performance management naturally all their lives, executing each key component process well. Goals are set and work is planned routinely. Progress toward those goals is measured and employees get feedback. High standards are set, but care is also taken to develop the skills needed to reach them. Formal and informal rewards are used to recognize the behavior and results that accomplish the mission. All five component processes
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working together and supporting each other achieve natural, effective performance management.
1.3 LITERATURE REVIEW
(a) Reviewby The Centre for Business Performance, Cranfied School of Management: ³Review on Performance Measurement and management´. The management discipline which most often associates itself with the term is in Human Resources, performance management is often associated with the management of the performance of people. However even in the HR field best practice emphasizes the contribution of people to the achievement of organizational performance. From the HR field Armstrong and Baron highlight the importance of performance management being strategic, integrated (vertical, functional, HR integration and integration of individual needs), concerned with performance improvement and concerned with development. HM Treasury describes Performance Management as ³Managing the Performance of an organization or individual´ . Whilst this is not a precise definition grounded in literature it demonstrates the breadth of performance management and hence the difficulties in defining its scope, activities and practices. It demonstrates that performance management is concerned with the management of performance throughout the organization and as a result is a multidisciplinary activity. Further, in their Glossary of Performance Terms the Improvement Development Agency further suggest that ³It involves you understanding and acting on performance issues at each level of your organization, from individuals, teams and directorates, through to the organization itself´.
2 1 3
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A review of the literature identifies a host of reasons for managing performance falling in to the following categories:
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Strategy
Formulation, determining what the objectives of the
organization and how the organization plans to achieve them. Manage the strategy implementation process, by examining whether an intended strategy is being put into practice as planned. Challenge assumptions, by focusing not only on the implementation of an intended strategy but also on making sure that its content is still valid. Check position, by looking at whether the expected performance results are being achieved. Comply with the non-negotiable parameters, by making sure that the organization is achieving the minimum standards needed, if it is to survive (e.g. legal requirements, environmental parameters, etc.). Communicate direction to the rest of the employees, by passing on information about what are the strategic goals individuals are expected to achieve. Communication with external stakeholders Provide feedback, by reporting to employees how they are, their group and the organization as a whole is performing against the expected goals. Evaluate and reward behavior, in order to focus employees¶ attention on strategic priorities; and to motivate them to take actions and make decisions, which are consistent with organizational goals. Benchmark the performance of different organizations, plants,
departments, teams and individuals. Inform managerial decision-making processes. Encourage improvement and learning.
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These SPM systems¶ roles can be classified into three main categories:
Strategic: comprise the roles of managing strategy implementation and challenging assumptions. Communication: comprises the role of checking position, complying with the non-negotiable parameters, communicating direction, providing feedback and benchmarking. Motivational: comprises the role of evaluating and rewarding behavior, and encouraging improvement and learning.
Conclusions
This report reviews the extensive literature relating to organizational performance management. It is clear from the literature that to be effective performance measurement activities should be designed to (i) manage the right things and (ii) mange them properly. Many tools and frameworks are proposed for each of these attributes of performance management. However there are clear themes which underpin these activities. These can be summarized as: Performance management should be integrated horizontally across the organization; The performance being managed should reflect the requirements, wants an needs of all of the key stakeholders of the organization and not just reflect a limited set; Performance management should be integrated vertically linking the strategies an objectives of the organization to the execution of activities which will enable their achievement; Explicit understanding of linkages across the vertical and horizontal integration (e.g. through success maps) enables consideration of conflicting
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priorities and trade-offs that need to be made in order to achieve overall objectives; The performance monitoring, review and action panning process should e structured around the strategic performance objectives of the organization; Processes and systems should be designed to extract and communicate insights rather than performance data; All systems and processes should be aligned with each other, driving behavior towards the performance objectives; Effort should be dedicated to developing an appropriate culture to engage the organization¶s employees and elicit commitment to performance objectives. Whilst many of the tools and frameworks proposed in the field of performance measurement and management have been designed for commercial organizations in the private sector, there is some evidence that some of these generic process focused principles are also applicable in the public and not for profit sectors. (b) Review by Eul-Kyoo Bae, Inha University: ³Major elements and Issues in Performance Management System´. Due to rapidly changing business environment, HRD practitioners are unprecedently demanded to activelyparticipate in improving organizational effectiveness as performance management specialist. The purpose of this study was to examine and discuss major elements and issues in performance management system through an extensive literature review and provide some considerations for designing and implementing effective performance management system in organizations. Presently, organizations are faced with new competitive conditions, and have to cope with dynamic environments,which lead them to the era of continuous
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improvement, value-addedness, doing more with less, and productivity. These developments have brought performance management to center stage.
Accordingly, organizations are beginning to implement performance management that reflects the new shape of the organization and its emphasis on integration of work, multidimensional influence, and flexible jobs (Mohrman & Cohen, 1995).
Basic Framework of Performance Management System
Defining Employee Performance
Defining performance is considered to be a critical part of performance management system and thus a number of performance evaluation research studies have focused on defining performance (Arvey, & Murphy, 1998). In the process of performance management, identifying performance measures required for appraisal determines performance standards as levels of performance that correspond to predesignated levels of individual and organizational effectiveness. From a rater¶s point of view, performance standards form the frame of reference within which to judge a ratee¶s performance.
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Evaluating Employee Performance
In general, as a critical part of a performance management system, performance evaluation is geared toward the attainment of performance information that can be used for administrative and development purposes. Organizations should realize that it is the employees¶ perceptions of the performance evaluation purpose that affects their attitudes toward it. It is generally predicted that ratings obtained for administrative purposes, such as promotions, transfers, termination, and compensation, are likely to be more lenient and less accurate than those obtained for research, feedback, or employee development purposes (Jawahar& Williams, 1997).
Providing Feedback on Employee Performance
Evaluations of performance are fed back to the individual and relevant decision-makers. In a performance management system, feedback plays an important role both for motivational and informational purposes and for improved rater-ratee communications.
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Conclusion
HRD practitioners concerned with improving individual and organizational performance must bear in mind the following things when designing and implementing a performance management system. The first thing is to decide what aspects of employee performance should be represented in measures of the degree to which they contribute to organizational objectives. The expectations of key internal and external customers must play a critical role in determining the dimensions and standards of job performance as performance measures, thereby eliminating the chance that employees are evaluated for performance that is irrelevant to the organization¶s mission, value, and objectives The second is to evaluate the performance of employees accurately and fairly. Fair and accurate evaluation of employee performance can be achieved through holding raters accountable for their ratings and setting a reward policy for accurate ratings. Finally, feedback is a way to improve job performance as well as to initiate further career development of employees. In particular, with regard to career development, some organizations require that employees take responsibility for their development. The organization may provide the enabling resources but does not take charge of the individual¶s career. Supportive and effective feedback can create conditions that encourage employees to find their own direction and guide their own activities.
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CHAPTER 2
________________________________________________________________
AN OVERVIEW OF THE ORGANIZATION
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PART-A: Brief profile of the organization
2.1 INDUSTRY PROFILE The engineering industry is the largest segment of the overall Indian industry. The engineering industry can be divided into electrical and non-electrical segments. The electrical segment depends upon the investments in power industry, while the prospects of the non-electrical segment are driven by industrial investment. Engineering equipment finds demand in sectors like cement, steel, power, chemicals and petrochemicals, all of which have been adversely affected by the general slowdown in the Indian economy in the past. Indian manufacturers are capable of catering to most of the customer¶s needs. There may be a supply constraint in some cases. For example, India has an installed capacity of 7000 MW in turbines. Some Indian manufacturers like BHEL and Larsen & Toubro have made a mark in the international markets, while some of the Indian arms of multinationals are a global base for outsourcing products and services including R&D. Along with its inability to be globally competitive in the past; the Indian engineering industry has also suffered from poor demand. The slowdown may just be over and the fortune of the Indian engineering industry is likely to look up.
India emerging as a major outsourcing hub for engineering services The engineering sector in India comprises basic industries such as Metal, Steel, Electrical Machinery, Non-Electrical Machinery and Transport Equipment. Manufacturers, exporters and suppliers of engineering machinery and equipment largely produce industrial machines, rolling mills machinery, plant machinery,
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plastic molding machines, construction machines and equipment, railway products, die casting equipment and other special purpose machines. Majority of Indian engineering firms are pursuing a systematic approach to quality control and standardization so as to curve out market positioning in the competitive world market place. Engineering industry in India has been constantly updating its technology base and diversifying its manufacturing range in tune with global market requirements. Many firms from the engineering sector have acquired ISO 9000 certification in areas such as casting and forging, automobile parts, machine tools, electrical machinery, primary iron and steel products, industrial machinery, IC engines, pumps, textile machinery, etc. to name a few. Indian exporters are well aware and do not lag behind in adopting eco-friendly manufacturing techniques which have become the new emerging requirements of the global development. Most companies in India have advanced capabilities and skill-sets, and have invested in technology to take advantage of this opportunity The automotive industry will start outsourcing 40 per cent of its engineering activities to the engineering service providers by 2015. Nearly 15 per cent of the total outsourced automotive engineering services were catered to by subsidiaries of Indian original equipment manufacturers (OEMs). This is where India needs to concentrate and take advantage by developing domain expertise to cater to the requirements of the OEMs, according to V. G. Ramakrishnan, Senior Director, Automotive and Transportation Practice, Frost & Sullivan, South Asia, Middle East and North Africa who presented the CEO 360 degree perspective on opportunities shaping in automotive engineering services in India.
Advanced capabilities
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India with its natural competitive advantage is likely to play a big role in various segments of the engineering services industry. The Indian engineering industry is rapidly growing as a major outsourcing hub with a compounded annual growth rate (CAGR) of more than 30 per cent. Automotive, telecom and aerospace are the major verticals that spend heavily on outsourcing engineering services. The growth in engineering services signifies the need for global companies to expand their R&D centers beyond their home countries. Global OEMs are increasing their R&D spend to meet regulatory and customer demands in India. Cost arbitrage along with increasing skill-sets is a major driver in channelizing business to India. Engineering services until recently had been aggregated either under information technology services (as research and development services) or under information technology engineering services - business process outsourcing (as engineering BPO). However, the evolution of market demand and increasing
maturity of the vendor landscape for engineering services has highlighted the need for examining this as a separate segment.
Future of India engineering industry The rate at which the Indian engineering sector is growing, its current size indicate a faster growth rate, employment opportunities and a good scope to become a global player. The Indian engineering sector can broadly be bifurcated into heavy engineering and light engineering. The former occupies 80 percent of the sector and spans across transport, equipment, capital goods, other machinery and equipment. The latter makes up the balance and spans low tech manufacturing sectors making castings, forgings, fasteners and highly sophisticated
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microprocessor-based process control equipment and diagnostic
medical
equipment. Players in this sector can also be categorized into equipment manufacturers, execution specialists and other niche players. Despite some slowdown in IT/ITES, aviation, hospitality, travel and tourism sectors, the engineering and manufacturing sector continues to hold on with auto and machinery units fuelling its growth. The future for an Indian engineering sector is certainly very bright considering India¶s high growth economic agenda. The latest talent management and recruitment trends in this sector have gone through a metamorphic transformation. The traditional methods of management of talents and recruitment have gone through a metamorphic transformation in recent times. As far as the industry numbers are concerned, the facts are available for all to see. India has emerged in No.1 spot amongst 33 countries in terms of hiring, as per the Manpower Employment Outlook Survey 2008. With strong economic fundamentals, Indian Inc. is on a steady growth path. Compensation markets have in the recent past been moving from different sectors in the range of 12-14 percent on a total cost to company basis. The cost for talent acquisition for top end talent even in engineering markets has been growing over a period of time. However, it is of course not moving at the same rate as that for investment banking or FMCG/retail markets. Some of the best retention techniques hover around offering huge project completion bonuses, short-term incentives programs, long term value creation bonuses, stock option programs and such other retention tools. Retention success is built around strong performance management system, which is closely linked, to total rewards management program. The differences that we see in the workforce of this sector now from what it was a decade back are notable. Higher mobility, upward migration to other higher sectors are some of the differences that can be seen. Arbitrage of talent from
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classical manufacturing sectors to infrastructure, mining and construction sectors can be seen as these are the new sunrise sectors of the new Indian economic development sector. Lots of sectors hire manpower from other sectors due to shrinking talent pools. Is that true for the engineering sector? Talent has now easily replaceable from sector to sector, unless at the absolute grass root levels, technical subject matter expertise, which now is shrinking. With the µGo-to Market¶ strategies and distribution channels in the market coming closer between Business-Business and Business Consumer markets skill transference from FMCG and retail sectors into the non-traditional B-B domains, is now very easy. The Indian economy is expected to see higher growth in the coming future, a fact that experts have been foreseeing for a very long time. However, if you thought that this growth will have its effects only on selected industries and sectors, then you are highly mistaken. Recent reports say that the engineering oil and gas, manufacturing, power transmission and construction sectors/industries will continue to see a rise in India, as these sectors are considered to be the backbone of the economy and are intricately linked with umpteen other core sectors, for its demand. Studies have proven that in the future, these industries will continue to grow. 2.2 COMPANY PROFILE - ABOUT LARSEN AND TOUBRO
Overview Larsen & Toubro Limited (L&T) is a technology, engineering, construction and manufacturing company. It is one of the largest and most respected companies in India's private sector. It is a technology-driven engineering and construction organization, and one of the largest companies in India¶s private sector. It has
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additional interests in manufacturing, services and Information Technology. A strong, customer-focused approach and the constant quest for top-class quality have enabled the Company to attain and sustain leadership in its major lines of business across seven decades. L&T has an international presence, with a global spread of offices and advanced manufacturing facilities in India, China, Oman and Saudi Arabia. L&T has an international presence, with a global spread of offices. A thrust on international business over the last few years has seen overseas earnings growing to 18 per cent of total revenue. With factories and offices located around the country, further supplemented by a wide marketing and distribution network, L&T¶s image and equity extends to virtually every district of India. Seven decades of a strong, customer-focused approach and the continuous quest for world-class quality have enabled it to attain and sustain leadership in all its major lines of business. L&T has an international presence, with a global spread of offices. A thrust on international business has seen overseas earnings grow significantly. It continues to grow its overseas manufacturing footprint, with facilities in China and the Gulf region. The company's businesses are supported by a wide marketing and distribution network, and have established a reputation for strong customer support. L&T believes that progress must be achieved in harmony with the environment. A commitment to community welfare and environmental protection are an integral part of the corporate vision. History The evolution of L&T into the country's largest engineering and construction organization is among the most remarkable success stories in Indian industry.
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L&T was founded in Bombay (Mumbai) in 1938 by two Danish engineers, Henning Holck-Larsen and Soren Kristian Toubro. Both of them were strongly committed to developing India's engineering capabilities to meet the demands of industry.
Henning Holck-Larsen (4.7.1907 - 27.7.2003)
Soren Kristian Toubro (27.02.1906 - 4.3.1982)
Beginning with the import of machinery from Europe, L&T rapidly took on engineering and construction assignments of increasing sophistication. Today, the company sets global engineering benchmarks in terms of scale and complexity.
Early-days Henning Holck-Larsen and Soren Kristian Toubro, school-mates in Denmark, would not have dreamt, as they were learning about India in history classes that they would, one day, create history in that land. In 1938, the two friends decided to forgo the comforts of working in Europe, and started their own operation in India. All they had was a dream. And the courage to dare. Their first office in Mumbai (Bombay) was so small that only one of the partners could use the office at a time! In the early years, they represented Danish manufacturers of dairy equipment for a modest retainer. But with the start of the Second World War in
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1939, imports were restricted, compelling them to start a small work-shop to undertake jobs and provide service facilities. Germany's invasion of Denmark in 1940 stopped supplies of Danish products. This crisis forced the partners to stand on their own feet and innovate. They started manufacturing dairy equipment indigenously. These products proved to be a success, and L&T came to be recognized as a reliable fabricator with high standards. The war-time need to repair and refit ships offered L&T an opportunity, and led to the formation of a new company, Hilda Ltd., to handle these operations. L&T also started two repair and fabrication shops - the Company had begun to expand. Again, the sudden internment of German engineers (because of the War) who were to put up a soda ash plant for the Tatas, gave L&T a chance to enter the field of installation - an area where their capability became well respected.
The Journey In 1945, L&T signed an agreement with Caterpillar Tractor Company, USA, for marketing earthmoving equipment. At the end of the war, large numbers of war-surplus Caterpillar equipment were available at attractive prices, but the finances required were beyond the capacity of the partners. This prompted them to raise additional equity capital, and on 7th February 1946, Larsen & Toubro Private Limited was born. Independence and the subsequent demand for technology and expertise offered L&T the opportunity to consolidate and expand. Offices were set up in Kolkata (Calcutta), Chennai (Madras) and New Delhi. In 1948, fifty-five acres of undeveloped marsh and jungle was acquired in Powai. Today, Powai stands as a
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tribute to the vision of the men who transformed this uninhabitable swamp into a manufacturing landmark. Public Limited Company In December 1950, L&T became a Public Company with a paid-up capital of Rs.2 million. The sales turnover in that year was Rs.10.9 million. Prestigious orders executed by the Company during this period included the Amul Dairy at Anand and Blast Furnaces at Rourkela Steel Plant. With the successful completion of these jobs, L&T emerged as the largest erection contractor in the country. In 1956, a major part of the company's Bombay office moved to ICI House in Ballard Estate. A decade later this imposing grey-stone building was purchased by L&T, and renamed as L&T House - its Corporate Office. The sixties saw a significant change at L&T - S. K. Toubro retired from active management in 1962. The sixties were also a decade of rapid growth for the company, and witnessed the formation of many new ventures: UTMAL (set up in 1960), Audco India Limited (1961), Eutectic Welding Alloys (1962) and TENGL (1963).
Expanding Horizons By 1964, L&T had widened its capabilities to include some of the best technologies in the world. In the decade that followed, the company grew rapidly, and by 1973 had become one of the Top-25 Indian companies. In 1976, Holck-Larsen was awarded the Magsaysay Award for International Understanding in recognition of his contribution to India's industrial development. He retired as Chairman in 1978.
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In the decades that followed, the company grew into an engineering major under the guidance of leaders like N. M. Desai, U. V. Rao, S. D. Kulkarni and A. M. Naik. Today, L&T is one of India's biggest and best known industrial organizations with a reputation for technological excellence, high quality of products and services, and strong customer orientation. It is also taking steps to grow its international presence. For an institution that has grown to legendary proportions, there cannot and must not be an 'end'. Unlike other stories, the L&T saga continues.
2011 Achievements at a Glance Major Awards Received by L&T in 2011 ICAI Bestows Top Honour on Mr. Y.M. Deosthalee, CFO, L&T The Institute of Chartered Accountants of India (ICAI) ± the country¶s apex body of Chartered Accountants ± has bestowed its highest honour, µBusiness Achiever ± Corporate¶ for the year 2010 on Mr. Y.M. Deosthalee, CFO, L&T, for his outstanding contribution to business leadership as a finance professional. The institute saluted his role in providing strategic direction to the business of financial services, development projects and Information Technology of the L&T Group. (January 30, 2011) Finance Minister Presents Coveted ET Company of the Year Award to Mr. A.M. Naik.
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Vision The L&T vision reflects the collective goal of the company. It was drafted through a large scale interactive process which engaged employees at every level, worldwide.
L&T¶s Signature of Excellence is Evident on: á Hydrocarbon projects executed in India, the Middle East and South East Asia. á Power projects executed in India, the Gulf and Sri Lanka.
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á The world's largest coal gasifier made in India and exported to China á The world¶s biggest EO reactor for a petrochemical complex in the Gulf á The world¶s largest FCC regenerator for a refinery á Asia¶s highest viaduct á The world¶s longest limestone conveyor á L&T played a critical role in building India¶s first nuclear powered submarine á L&T played a major role in India's maiden moon mission á The world's largest coal gasifier - supplied to China.
Companies of L&T: (a) Engineering & Construction- Projects: L&T¶s engineering & construction track record consists of successful implementation of turnkey projects in major core and infrastructure sectors of Indian industry. L&T has integrated its strengths in process technology, basic and detailed engineering, equipment fabrication, procurement, project management, erection, construction and commissioning, to offer single-point responsibility against stringent delivery schedules. L&T¶s core competencies in engineering include highly qualified and experienced personnel from various disciplines, stateof-the-art 2-D and 3-D CAD facilities with sophisticated plant design systems and basic engineering capabilities. L&T is the only Indian EPC company pre-qualified for executing large, process-intensive projects for oil & gas, refinery, petrochemical and fertilizer sectors.
(b) Heavy Engineering:
L&T is acknowledged as one of the top five fabrication companies in the world, with engineering and manufacturing capabilities that are among the most sought after in industry. Operating at the high end of the technological spectrum,
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L&T has led Indian industry in introducing new processes, products and materials in manufacturing. L&T also has the logistics capabilities of fabricating and supplying overdimensional equipment to tight delivery schedules. L&T¶s globally-benchmarked workshops are located in Mumbai, Hazira, Baroda and Kansbahal.
(c) Construction:
ECC ± the Engineering Construction & Contracts Division of L&T is India¶s largest construction organization. Many of the country¶s prized landmarks ± its exquisite buildings, tallest structures, largest industrial projects, longest flyovers, highest viaducts, and longest pipelines « have all been built by L&T. L&T¶s leading edge capabilities cover every discipline of construction ± civil, mechanical, electrical, and instrumentation. L&T has also expanded its focus to the Middle East, South East Asia, Russia, CIS, Mauritius, African and SAARC countries. L&T is also developing markets for its construction services in the Indian Ocean rim countries, Africa and Latin America.
(d) Electrical and electronics:
L&T is a major international manufacturer of a wide range of electrical and electronic products and systems. In the electrical segment, the Company is India¶s largest manufacturer of low tension switchgear, and is rapidly establishing itself in international markets. Its products are widely sold in markets in Europe and Australia. Recently, L&T set up a new manufacturing base for high-end air circuit breakers in China. L&T also manufactures custom-engineered
switchboards for industrial sectors like power, refineries, petrochemical, cement, etc.In the electronic segment, L&T offers a wide range of meters and provides complete control and automation systems for diverse industries. Medical
equipment and systems manufactured by L&T include advanced ultrasound scanners and patient monitoring systems.
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(e) Information Technology:
L&T InfoTech Limited, a 100 per cent subsidiary of L&T, offers comprehensive, end-to-end software solution and services with a focus on Manufacturing, BFSI and Communications & Embedded Systems. It
provides a cost cutting partnership in the realm of offshore outsourcing, application integration and package implementation. Leveraging the heritage and domain expertise of the parent company, its services encompass a broad technology spectrum, catering to leading international companies across the globe. It leverages the L&T parentage to also provide services in the embedded intelligence and e-Engineering space.
(f) Machinery and Industrial Products:
L&T manufactures markets and provides service support for critical construction and mining machinery. We offer surface miners, hydraulic
excavators, aggregate crushers, loader backhoes and vibratory compactors. Each of them incorporates innovative technologies that translate into higher performance on the field. The Division¶s broad spectrum of capabilities cover products that have established brand preference in major markets around the globe ± China, the Middle East, Europe and USA. The range includes industrial valves, tire curing presses, plastics processing machinery and protective maintenance welding alloys.
(g) Corporate Social Responsibility:
Beyond the corporate objectives of achieving growth and profitability, L&T is conscious of its larger social obligations. The Company¶s efforts have been widely recognized.
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LEADERSHIP BOARD OF DIRECTORS
A.M. Naik Chairman & Managing Director
J.P. Nayak Whole-time Director & President (Machinery & Industrial Products)
Y.M. Deosthalee Whole-Time Director & Chief Financial Officer
K. Venkataramanan Whole-time Director & President (Engineering & Construction Projects)
K.V. Rangaswami Whole-Time Director & President (Construction)
V.K. Magapu Whole-time Director & President (IT, Engineering Services & Corporate Initiatives)
M.V. Kotwal Whole-time Director & President (Heavy Engineering)
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Ravi Uppal Whole-time Director & President
2.3
SERVICE PROFILE - L&T PERSONAL AND ORGANIZATION
DEVELOPMENT HR in ECC Division: ECC recognizes that people are the real source of competitive advantage. It is through people that ECC delivers total customer satisfaction. These values are reflected in our Human Resources practices which have earned national recognition several times.
ECC-ites go through a process of continuous learning, assisted by training programmes. Apart from on-the-job training and technical training, over 100
programmes on general management and behavioural topics are conducted each year. Interactive CD-ROM based programmes have enabled employees learn at
their pace. Management Development Centre, Lonavala ECC has always believed in experimentation with and implementation of new ideas. HR practices such as collaborative performance appraisal, career & succession planning, team rewards have been institutionalized.
An extensive and rigorous recruitment process ensures quality induction. L&T's Graduate Engineer Trainee recruitment process covers India's major engineering colleges and institutions. Programmes, plant visits and comprehensive information-sharing facilitate induction.
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ECC Division has an ongoing organization development programme, which is one of the longest sustaining OD efforts in India.
ECC¶s Work Culture: Work culture emphasizes: á Freedom to experiment á Continuous learning and training á Transparency á Quality in all aspects of work á Rewards based on performance and potential ´If you feel like a seagull in the sky, If you feel you belong to the top and want to higher, you are ready for the ECC Challengeµ HR Policy: The basic principles of ECC's Human Resources policies include ? Recruitment based solely on merit by following well-defined and systematic selection procedures without discrimination ? Sustain motivated and quality work force through appropriate and fair performance evaluation, reward and recognition systems ? Identify training needs within the Organization and design and implement those need based training programmes resulting in continuous up gradation of knowledge, skills and attitudes of the employees ? Maintain a quality Human Resource Management System to meet the international standards as per ISO 9001. Plan, design, train, equip and motivate the department staff to meet this standard of expectation. ´Realize your dreams with usµ
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Awards for HR Practices: Asia Pacific HR Conclave Award for the company with ³Most Innovative HR practices´ National award for ³Best HRD Practices´ from Indian Society for Training and Development National Award for Outstanding Work in Human Resource Management from National HRD Network Award for Outstanding Human Resources Development from Confederation of Engineering Industry Integration of Information Technology with HR in ECC Division has been recognized by the National HRD Network.
India's largest construction organization. Join our team and realize your dreams with us.
The P&OD Division has 4 Sub-divisions:
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The Human Resource Department L&T-ECC renders specialized services to various business units/ services units/departments for their effective programs. The four sections in the department are 1. Manpower Planning and Recruitment. 2. Personnel Administration. 3. Training. 4. Systems.
Manpower Planning and Recruitment:
Requirement of manpower is based on Human resource Planning and it is done in accordance with manpower budget. The selection done based on the merit.
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Compensation and Benefits:
Having required the talented people it is important to provide them in invigorating environment. The endeavor of HR department is to keep the people motivate in spite of tough condition they work in. Having many practices traditional and modern as detailed below does this. y Leadership program. y Annual Performance analysis system. y Staff administration y Reward system.
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y Welfare. y Training: Every individual needs some skills to perform his/her job. In order to sharpen his/her skills for scheduling higher responsibilities and to keep his/her with technological changes training is essential. Many core development programs are conducted at regular intervals to increase overall efficiency of staff members.
y Systems:
Systems are backbone of all HR activities. All the details pertaining to Recruitment, Personnel administration and Training are maintained online in the HR Systems.
PART-B
2.3 SIGNIFICANCE OF THE TOPIC IN THE ORGANIZATION Performance management is the current buzzword and is the need in the
current times of cut throat competition and the organizational battle for leadership. Performance management is a much broader and a complicated function of HR, as it encompasses activities such as joint goal setting, continuous progress review and frequent communication, feedback and coaching for improved performance, implementation of employee development programmes and rewarding
achievements. The process of performance management starts with the joining of a
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new incumbent in a system and ends when an employee quits the organization. Performance management can be regarded as a systematic process by which the overall performance of an organization can be improved by improving the performance of individuals within a team framework. It is a means for promoting superior performance by communicating expectations, defining roles within a required competence framework and establishing achievable benchmarks. For several years in L&T, PMS was referred to as HRDS rather than Performance Appraisal System. This system was essentially perceived as a system meant to facilitate learning among the managers. It was envisaged that this system would clarify roles, focus more on performance and development, and strengthen dyadic relationships. Trust levels were expected to improve. Developmental needs would be identified clearly, communications both upward and downward would increase as seniors would get to know the difficulties of the juniors and the juniors would know what their bosses expected from them. Thus the system designed nearly 30 years ago at L&T is a great Performance Management System and had all the components of the most modern appraisal system. Later L&T ECC revised the same system and removed the word appraisal from it. The system was called µPADS¶- Performance analysis and Development System .Later, Company has put in place a robust performance evaluation system, appropriately christened µFAIR¶ for ³Framework for linking Appraisal with Incentives and Rewards´.
FAIR Process in L&T At L &T, performance appraisal is done at various levels in the organization. It consists of self-appraisal, appraisal by immediate supervisor, and appraisal by superiors. The appraisal processes initiate with each employee reviewing his past performance with respect to the objectives and targets and giving his overall
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assessment of the results delivered by him. He also carries out a self-review with regard to significant contributions made by him and important factors that facilitated or hindered his performance. The immediate supervisor, then, evaluates the achievement of his Subordinate by ranking his performance against objectives. The supervisor also assesses the critical attributes of his subordinates with respect to five important criteria-innovativeness, initiative, interpersonal and team relationship,
resourcefulness, and communication skills. Supervisor also notes down the areas of strengths and weaknesses and marks the areas of growth in which the employee has potential to make significant contribution. Supervisor assigns grades such as outstanding, very good, good, average, and inadequate to employees on the basis of the objectives achieved by the employees. After that, the superior along with the employee carries out performance planning and development planning for the next year. The Superior also analyzes the subordinate's past performance and pass on feedback on his performance. Finally the boss can suggest the areas in which training can be imparted to the employee. At the end of the exercise, the next higher supervisor makes an overall observation and gives his own specific development plans. The entire exercise of performance appraisal i.e. from self-review of an employee to final review by his superiors takes about three months. The overall performance report is handed over to HRD department, and then it decides various training needs and compiles various reports which are submitted to GMs and corporate management. At L&T, each employee is given opportunity to appraise his own performance. Performance appraisal for both temporary and permanent employees is done separately. Company gives equal importance to both permanent and temporary staff. This ensures that the employee's perspective of his performance is
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also considered. Moreover, the employee feels a sense of accountability and knows that his performance is being judged on the basis of goals set for him in the previous year. The success of performance appraisal system depends on the sincerity shown by the management and the existence of transparent link between performance and reward.
Components of the system y Identification of Key performance areas (Value drivers) and setting objectives in the beginning of the year jointly by the appraise and the appraiser. L&T introduced the term KPAs for the first time as a counter to key result areas (KRAs). KPA signified the inputs to be given by the candidates to achieve the output he is expected to give. Then the candidate plan what is in his control while focusing on the results he is expected to achieve. y Identification of attributes to be shown by all managers irrespective of the levels. (L&T identified Creativity, Initiative, Leadership and Teamwork as the most important attributes to be shown by all managers and were included in all appraisals.) y Self-Appraisal. y Performance analysis to identify factors facilitating and hindering performance and take corrective action. y Identification of training needs and preparation of development plans. y Assessment by the reporting officer and sharing the ratings with the appraise to arrive at mutually agreed ratings. The discussion was expected to focus on performance and expectation gaps and help bridge them.
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y Performance counseling to help the individual learn from the senior and improve his performance. y Review by reviewing officer. y Development actions by the HRD department. y De-linking appraisal from performance rewards (separate forms are to be used).
FAIR for Temporary Staff y Guidelines for increment for each year made and released to regional manager and Head of the Department along with details of temporary employees working under them. y Compile recommendation received from business/service unit wise and send same to JGMs, GMs and VPs for final recommendations. y Make proposal for increment in the salary/site allowances and submit to DMD¶s approval. y After obtaining the approval, process the increments papers as per final recommendation and release to RMs/Department head for distribution. FAIR process for Permanent Staff
Process Flow Diagram
Self-Review
Immediate Superior Review
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Next Superior Review
Recommendation by MG committe
Optional
Inter-tier Promotion Interview
Recommendation by Bu/Dept. head
Recommendation by SBG head
Process Flow explanation:
y
y
y
The content of Annual Performance Appraisal form of the previous year is reviewed by P&OD each year in consultation with Head P&OD department and changes required are incorporated. Draft guidelines in consultation with Head P&OD department are prepared and approved by DMD. Sufficient number of forms will be printed every year but this year company adopted a SAP system for µFAIR¶ process.
Separate login id is given to staff Using id employees can fill their appraisal forms. Filled appraisal forms will be forwarded to IS and NS. Both IS and NS will give their recommendations through on-line.
y
After this stage system turns into manual process. In this stage staff those who are recommended for Inter-tier promotions are called for interviews. Based on their performance panel will also give ratings and recommendations. y In this stage, Moderating committee review the past and present ratings and recommendations of the staff and also consider the FAIR guidelines -annual rewards/ increments/ promotions will be decided.
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Overall ratings and Distribution:
The comparative rating of performance was introduced by L&T i.e. Forced ranking method to clearly bring out thedifference in level of performance and potential. Such comparative rating needs to be done to give a clear message that good performance is recognized and a poor performance is discouraged. Ratings of outstanding performers and lower performers are elaborated in the FAIR form with specific Qualitative comments. Each band/Tier has its own requirements to fulfill. Based on percentage given in the norms for each rating scale, employee(s) performance is evaluated.It is desirable that the fair ratings of staff members are finalized as far as possible by mangers who have line of sight i.e. are personally aware of work and contribution of the staff member concerned. With the end as well as to have independent company ± centric process, moderating groups are being formed.
Primary functions
a) Ensure compliance with guidelines isDistribution of ratings Promotion Norms (b) Recommend ratings and promotion (c) Recommend to core committees Exceptions to guidelines, if any Seperation Based on recommendation and guidelines, Moderating group will distribute or fit into Bell curve.
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% AGE OF STAFF
Performance Rating Scale
Rating scale is based in 1 to 8 scales Rating
1 and 2 3,4,5 6,7 8 Promotion Recommendations:
Grade
Average Vital contributor Top Performer Outstanding performance
While recommending for promotions, following criteria should be considered Current and past performance Potential for further growth Personal attributes in discharging his responsibilities His own past history of job rotation.
Promotions can be either recommended either in July or January for all staff members except technical, commercial, secretary and technician cadre.
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Planned Seperation:
Performance is increasingly critical for the company¶s success. Hence staff members who are consistently rated 1 or 2 may be dealt with utmost care and recommended for separation after thorough evaluation.
y
The recommendations given by MG committee is forwarded to BU/Dept. heads and then again forwarded to SBG head. y Once SBG head approval comes, dispatch increments/ promotions letters to the respective Regional managers/ Department heads. y Finally, staff reviews/ Promotion letters/ increments details along with office copy will be filed in their respective folders.
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CHAPTER-2
________________________________________________________________
RESEARCH METHODOLOGY
2.1 TITLE OF THE STUDY
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³Analysis of performance management system´ in Larsen & Toubro Limited, ECC Division, B&F IC Chennai. 2.2 NEED FOR THE STUDY
³MACHINARY MUST BE THERE, BUILDINGS MUST BE THERE BUT WITHOUT THE PEOPLE«.. IT¶S ALL NOTHING. PEOPLE ARE OUR ONLY REAL ASSEST.´ Henning Holck Larsen Performance management system is in the place to track the achievements, strength of the employees to improve all the employees, so this research helps L&T-ECC to know the effectiveness of the system and greatly value the employee¶s contribution. It is the prime responsibility to offer the employee all the tools and techniques to facilitate performance and create competitive environment of excellence. The most challenging task of HR department is to reinforce the employee sense of belonging and sustain motivational levels. For this company believe that it is vital that the employees of the company perceive a clear linkage between their performance and reward they receive. The company has put in place a robust Performance evaluation system, appropriately christened µFAIR¶ for ³Framework for linking Appraisal with Incentives and Rewards.´
2.3
SCOPE FOR THE STUDY
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The scope of the study on ³ANALYSIS OF PERFORMANCE MANAGEMENT´ is to identify and evaluate the effectiveness of the Performance Management System from the employees, at LARSEN & TOUBRO LIMITED, ECCD. The study is focused on employees to whom this fair process (Appraisal Process) is carried out ± to observe its effectiveness among them. This research helps in finding the awareness and perception of employees towards the system and, so that suitable changes can be made to improve the current Appraisal system in work spot. The research would also help management to know the usefulness of the Performance Management system offered in the organization. The industry is booming currently, and this research will help us know the µEffectiveness of Performance Management System¶ in depth.
2.4
OBJECTIVES
Primary Objective
y To analyze the evaluation and effectiveness of Performance management system.
Secondary objectives
y To study the process and methods of existing Performance Management System in L&T.
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y To find out the strengths and weakness of current (180 degree) Performance Appraisal. y To support in bridging the gap between current performance and desired performance. y To identify the most challenging aspects for management in the system. y To suggest the ways and means to improve the existing Performance Management System. 2.5 HYPOTHESIS
The possible outcome of the survey in the organization may be:
y The concept Performance Management System may be understood in a better way and clearly. y PMS would be given more priority among the employees. 2.6 RESEARCH DESIGN ³Research design is the plan, structure, and strategy of investigation conceived so as to obtain answers to research questions and to control variance´ According to Kerlinger. The plan is an outline of the research scheme on which the researcher is to work. The structure of the research is a more specific outline or the scheme and the strategy shows how the research will be carried out, specifying the methods to be used in the collection and analysis of the data. Research design is the blueprint of the research it lays down the method and procedure for the collection of requisite
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information and its measurement and analysis with a view to arriving at certain meaningful conclusions at the end of the proposed study
Research design used in the project
The Research method followed in this project is µDescriptiveResearch¶. I chose the mentioned research method as the basic objective of the project was to examine Performance management system prevailing in the company, suggest some suitable changes in existing system in order to make it more positive and meaningful in achievement of desired organizational goals.
Descriptive studies
Descriptive studies are undertaken when the researcher is interested in knowing the characteristics of certain groups such as age, sex, education level, occupation or income. It can also be conducted when he wants to know the proportion of people in a given population who have behaved in a particular manner, making projections of a certain things; or determining the relationship between two or more variables. The objective of such a study is to answer the ³who, what, where, and how´ of the subject under investigation. Descriptive studies are well structured. It is therefore, necessary that the researcher gives sufficient thought to framing research questions and deciding the types of data to be collected and the procedure to be used for this purpose. If you are not careful in the initial stages you may find that either the data collected are inadequate or the procedure used is cumbersome and expensive. The data and records of the employees are also examined to understand the purpose well. Then the research was designed as a good research design facilitates the study and makes it an efficient as possible. A systematic research with
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structured and specified steps in specified sequence was designed and is as follows: Step1: The objective is specified with sufficient precision to ensure that data collected is relevant. Step 2: The data collection method to be used is questionnaires, interviews and observations. While designing data collection procedure, adequate safeguards against bias and unreliability are ensured. Step 3: The questions are prepared in a clear, understandable manner. Step 4: The sampling design used is stratified random sampling, under this sampling design; every item of the universe has an equal chance of inclusion in the sample.
2.7 ACTION PLAN FOR DATA COLLECTION
To obtain the data free from errors, I performed every step carefully while collecting and recording information and tried to get complete, comprehensible and consistent data The data for the present research study was collected through two methods: 1. Primary data collection method 2. Secondary data collection method
Primary data collection
The primary data are those which are collected afresh and for the first time. These data are obtained by a study specifically designed to fulfill the data needs of the
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problems at hand. Such data are original in character. The primary data has been collected through following methods: 1. Interview method: Direct personal interview method was used to collect the information from the respondents (employees) by personally visiting and meeting the people from whom data have to be collected. This method was used because the project includes an intensive study of a limited field. Moreover, the data needed for the purpose is more of personal nature which can be collected through directly communicating with the employees in order to increase its reliability. The information thus collected is original, accurate and in depth. The interview was unstructured as it was characterized by flexibility of approach to questioning and did not follow a system of pre-determined questions and standardized techniques of recording information. The method of unstructured interview was chosen so as to have greater freedom to ask, in case of need, supplementary questions or at times to change the sequence of questions. 2. Questionnaire method: In this method, a questionnaire was made consisting of a number of questions to be answered and filled by the respondents (employees) on their own. This method was used in order to enable the respondents to answer the questions as per their convenience and to provide those adequate to give well thought out answers. Thus this further increases accuracy.
Secondary data collection
The secondary data are those which have already been collected by someone else and which have already been passed through the statistical processes. Thus
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such data is not originally collected rather obtained from published or unpublished sources. Company Journals, Magazines, Internet, Books and newspapers. . The collection of the secondary data was done through published sources and Unpublished sources of Performance management. The methods of collecting primary and secondary data differ since primary data are to be originally collected, while in case of secondary data the nature of data collection work is merely that of compilation. 2.8 TOOLS USED FOR DATA COLLECTION
Percentage Analysis:
It refers to a special kind of ratio. Percentage is used in making comparison between two or more series of data. Percentage is used to describe relationships. Percentage can be used to compare the relative terms and the distribution of two or more series of data. Since percentage reduces everything to a common mean & therefore meaningful comparison can be made.
2.9
SAMPLE TECHNIQUE:
Non probability sampling:
In non- probability sampling, the chance of any particular unit in the population being selected is unknown.
Convenience Sampling:
In this method, the sample units are chosen primarily on the basis of the convenience to the investigator.
Sample Size:
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Population of this study consists of the employees of L&T, ECCD B&F IC. The total population of employees is 6000 but a sample 100 employees was taken for the study. 2.10DATA COLLECTION METHODOLOGY: Data was collected using Questionnaire. The study relied on primary data. 2.11 STATISTICAL ANALYSIS: The data was analyzed by applying statistical tools like pie charts, bar diagrams and tables.
2.12 LIMITATIONS OF THE STUDY The project is Limited to the L&T-ECCD, B&F IC and do not cover the entire L&T group. Short time of interaction with respondents because they were busy in their work. The study is very subjective in nature and not objective i.e. the results are based on the view, opinion and attitude of the respondents
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CHAPTER-4 DATA ANALYSIS AND INTERPRETATION
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DATA ANALYSIS AND INTERPRETATION
Table 4.1
Is Performance Management System is being implemented successfully?
Factors
Strongly Agree Agree Disagree Strongly Disagree Uncertain Total
No. of Respondents 46 38 12 2 2 100
Percentage 46% 38% 12% 2% 2% 100%
Chart 4.1
Is Performance Management System is being implemented successfully?
50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% 46% 38%
12% No. of respodents 2% 2%
Interference: From the above table it is interpreted that 46% of them Strongly agree, 38% of them Agreed, 12% of them Disagreed, 2% of them Strongly Disagreed and 2%
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of them said its Uncertain that Performance management system is being implemented successfully in the organization, thus maximum respondents Strongly agreed that system has implemented successfully. Table 4.2
Method of Appraisal System used
Factors
180 degree Behavior anchor scale Paired comparison Checklist method Forced distribution Others Total
No. of Respondents 22 12 12 18 33 19 100
Percentage 22% 12% 12% 18% 33% 19% 100%
Chart 4.2
Method of Appraisal System used
No. of Respondents
35% 30% 25% 20% 15% 10% 5% 0% 33% 22% 18% 12% 12% No. of Respondents
19%
Interference:
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From the above table it is interpreted that 22% of them said 180 degree and 33% of them said Forced distribution methods are following in the organization and also both are rating maximum.
Table 4.3
The system followed in your organization for appraisal process is
Factors
On-line Manual Both Total
No. of respondents 74 8 18 100
Percentage 74% 8% 18% 100%
Chart 4.3
The system followed in your organization for appraisal process is
No. of respondents
18%
8%
On-line Manual Both 74%
Interference: From the above table it is interpreted that 74% of them said Appraisal process is Online, 8% of them said it is Manual and 18% said it is Both. Thus the
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maximum respondents are agreed that the System followed for Appraisal process is On-line.
Reason for implementing Performance Management System Table 4.4(a)
(a)Retention Strategy
Factors
Strongly Agree Agree Disagree Strongly Disagree Neutral Total
No. of Respondents 30 46 14 6 4 100
Percentage 30% 46% 14% 6% 4% 100%
Chart 4.4(a)
No of Respondents
6% 14% 4% 30%
strongly Agree Agree Disagree 46% Strongly Disagree Neutral
Interference:
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From the above table it is interpreted that 30% of them Strongly agree,46% of them Agreed,14% of them Disagreed, 6% of them Strongly Disagreed and 4% of them said its Neutral that Performance management system is being implemented by the management for Retention Strategy, thus maximum respondents Agreed that system has implemented for ³Retention Strategy´.
Table 4.4(b)
(b) To identify High Performers
No. of Respondents Percentage Strongly Agree 57 57% Agree 25 25% Disagree 8 8% Strongly Disagree 2 2% Neutral 8 8% Total 100 100% Chart 4.4(b)
Factors
No of Respondents
2% 8% 8%
strongly Agree 25% 57% Agree Disagree Strongly Disagree Neutral
Interference:
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From the above table it is interpreted that 57% of them Strongly agree,25% of them Agreed,8% of them Disagreed, 2% of them Strongly Disagreed and 8% of them said its Neutral that Performance management system is being implemented by the management to identify High Performers, thus maximum respondents Strongly Agreed that system has implemented ³To identify High Performers´. Table4.4(c)
(c) Reward Allocation
Factors
Strongly Agree Agree Disagree Strongly Disagree Neutral Total
No. of Respondents 28 44 4 10 14 100
Percentage 28% 44% 4% 10% 14% 100%
Chart 4.4(c)
No of respondents
14% 28% 10% 4% strongly Agree Agree Disagree Strongly Disagree 44% Uncertain
Interference:
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From the above table it is interpreted that 28% of them Strongly agree,44% of them Agreed,4% of them Disagreed, 10% of them Strongly Disagreed and 14% of them said its Neutral that Performance management system is being implemented by the management for Reward Allocation, thus maximum respondents Agreed that system has implemented for ³Reward Allocation´.
Table 4.4(d)
(d) To identify Training and development needs.
Factors
Strongly Agree Agree Disagree Strongly Disagree Neutral Total
No. of Respondents 30 44 6 18 2 100
Percentage 30% 44% 6% 18% 2% 100%
Chart 4.4(d)
2%
No of respondents
30%
18% 6%
strongly Agree Agree Disagree Strongly Disagree 44% Neutral
Interference:
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From the above table it is interpreted that 30% of them Strongly agree,44% of them Agreed,6% of them Disagreed, 18% of them Strongly Disagreed and 2% of them said its Neutral that Performance management system is being implemented by the management To identify Training and developmental needs, thus maximum respondents Agreed that system has implemented ³To identify Training and developmental needs´.
Table 4.4(e)
(e)To facilitate Promotion & Transfers & Termination decisions
Factors
Strongly Agree Agree Disagree Strongly Disagree Neutral Total
No. of Respondents 32 44 8 2 14 100
Percentage 32% 44% 8% 2% 14% 100%
Chart 4.4(e)
No of respondents
2% 8% Strongly Agrre Agree Disagree Strongly Disagree 44% Neutral 14% 32%
Interference: From the above table it is interpreted that 32% of them Strongly agree, 44% of them Agreed, 8% of them Disagreed, 2% of them Strongly Disagreed and 14%
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of them said its Neutral that Performance management system is being implemented by the management to facilitate Promotion & Transfers & Termination decisions, thus maximum respondents Agreed that system has implemented ³To facilitate Promotion & Transfer & Termination decision´
Table 4.4(f)
(f) Periodic Checks
Factors
Strongly Agree Agree Disagree Strongly Disagree Neutral Total
No. of Respondents 20 44 14 12 10 100
Percentage 20% 44% 14% 12% 10% 100
Chart 4.4(f)
No of respondents
10 12 20
14
44
Interference:
Strongly Agreed Agree Disagree Strongly Disagree Neutral
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From the above table it is interpreted that 20% of them Strongly agree,44% of them Agreed,14% of them Disagreed,12% of them Strongly Disagreed and 10% of them said its Neutral that Performance management system is being implemented by the management for Periodic Checks, thus maximum respondents Agreed that system has implemented for ³Periodic Checks´.
Table 4.4(g)
(g) For Fixing Targets
Factors
Strongly Agree Agree Disagree Strongly Disagree Neutral Total
No. of Respondents 24 42 12 22 100
Percentage 24% 42% 12% 22% 100%
Chart 4.4(g)
No of Respondents
22% 0 12% Strongly Agree Agree Disagree Strongly Agree 42% Neutral 24%
Interference:
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From the above table it is interpreted that 24% of them Strongly agree,42% of them Agreed,12% of them Disagreed, 0% of them Strongly Disagreed and 22% of them said its Neutral that Performance management system is being implemented by the management for Fixing targets, thus maximum respondents Agreed that system has implemented for ³Fixing Targets´.
Table 4.4(h)
(h) To identify barrier(s) to Performance.
Factors
Strongly Agree Agree Disagree Strongly Disagree Neutral Total
No. of Respondents 28 34 16 2 20 100
Percentage 28% 34% 16% 2% 20% 100
Chart 4.4(h)
No of Respondents
20% 2% Strongly Agree 16% Agree Disagree Strongly Disagree 34% Neutral 28%
Interference:
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From the above table it is interpreted that 28% of them Strongly agree,34% of them Agreed,16% of them Disagreed, 2% of them Strongly Disagreed and 20% of them said its Neutral that Performance management system is being implemented by the management To identify Barrier(s) to Performance , thus maximum respondents Agreed that system has implemented ³To Identify Barrier(s) to Performance´.
Table 4.4(i)
(i) Motivational strategy.
Factors
Strongly Agree Agree Disagree Strongly Disagree Neutral Total
No. of Respondents 28 52 4 2 14 100
Percentage 28% 52% 4% 2% 14% 100%
Chart 4.4(i)
No of Respondents
2% 4% Strongly Agree Agree Disagree Strongly Disagree 52% Neutral 14% 28%
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Interference: From the above table it is interpreted that 28% of them Strongly agree,52% of them Agreed,4% of them Disagreed, 2% of them Strongly Disagreed and 14% of them said its Neutral that Performance management system is being implemented by the management for Motivational Strategy, thus maximum respondents Agreed that system has implemented for ³Motivational Strategy´.
Table 4.5
Success of Performance Management System depends on:
Factors
Alignment of individual goals to organizational goals Choosing the right method of Appraisal Total
No. of respondents
78 22 100
Percentage
78% 22% 100%
Chart 4.5
Success of Performance Management System depends on:
No of respondents
80% 60% 78% 40% 20% 0% Alignment of individual goals to organizational goals Choosing the right method of Appraisal 22%
Interference:
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From the above table it is interpreted that 78% of them said Success of PMS depends on Alignment of individual goals to Organizational goals and 22% of them said success depends on Choosing the right method of Appraisal. Thus the maximum respondents are strongly agreed that the success of Performance Management System depends on ³Alignment of Individual goals to Organizational goals´.
Table 4.6
Performance Management System should be owned by
Factors
Line Managers HR Managers Employees Total
No. of respondents
44 40 16 100
Percentage
44% 40% 16% 100%
Chart 4.6
Performance Management System should be owned by
45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Line Managers HR Managers Employees 16% 44% 40% No of respondents
Interference:
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From the above table it is interpreted that 44% of them said PMS should be owned by Line Managers, 40% of them said PMS should be owned by HR Managers and 16% said it should be owned by Employees. Thus the maximum respondents are agreed that the Performance Management System owned by ³Line Managers´.
Table 4.7
Most challenging aspects of Performance Management System is
Factors
Determining the evaluation criteria Creating a rating instrument Rating distribution. Errors in rating and evaluation Total
No. of respondents 15 14 55 10 100
Percentage 15% 14% 55% 10% 100%
Chart 4.7
Most challenging aspects of Performance Management System is
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No of respondents
Errors in rating 10%
Rating distribution.
55%
Creating a rating
14%
Determining the
15%
0%
10%
20%
30%
40%
50%
60%
Interference: From the above table it is interpreted that 30% of them said is Determining the evaluation criteria, 14% of them said Creating a rating instrument, 40% said Rating distribution and 10% said errors in rating and evaluation are the most challenging aspects of Performance Management System. Thus the maximum respondents are agreed that ³Rating Distribution´ is one of the most challenging aspects of the Performance Management System. Table 4.8
Performance Planning is carried
Factors
At the time of Hiring or Transferring employees When Business plans are newly developed Annual performance and development reviews have been completed Not been undertaking Total
No. of respondents
2 6 62
Percentage
2% 6% 62%
30 100
30% 100%
Chart 4.8
Performance Planning is carried
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No of Respondents
Not been Annuak per.. When Business.. At the time 0% 2% 6% 30% 62%
10%
20%
30%
40%
50%
60%
70%
Interference: From the above table it is interpreted that 2% said Performance planning is carried at the time of hiring and transferring employees, 6% said when business plans are newly developed, 62% said annual performance and development reviews have been completed and 30% said system not been undertaken. Thus the maximum respondents are agreed that the Performance planning is carried out when ³Annual performance and development reviews have been completed´.
Table 4.9
Base for reducing subjectivity and bias in the System
Factors
Multiple level of reviews Critical Incident(s) Continuous Observation Peer review outcomes Total
No. of respondents
34 12 52 2 100
Percentage
34% 12% 52% 2% 100%
Chart 4.9
Base for reducing subjectivity and bias in the System
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No of respondents
60% 50% 40% 30% 20% 10% 0% Multiple level of Critical Incident(s) reviews Continuous Observation 12% 2% Peer review outcomes 52% 34%
Interference: From the above table it is interpreted that 52% said Multiple level of reviews, 12% said Critical Incident(s), 34% said continuous observation and 2% said Peer review outcomes are the base for reducing subjectivity and bias in the system. Thus the maximum respondents are agreed that ³Multiple levels of reviews´ is the base for reducing subjectivity and bias in the system.
Table 4.10
Post appraisal feedback mechanism is adopted or not
Factors
Yes No Uncertain Total
No. of respondents
48 42 10 100
Percentage
48% 42% 10% 100
Chart 4.10
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Post appraisal feedback mechanism is adopted or not
No of respondents
10% 48% Yes No Uncertain
42%
Interference: From the above table it is interpreted that 48% said feedback mechanism is adopted, 42% said it is not adopted and 10% said it is uncertain. Thus the maximum respondents are agreed Post Appraisal Feedback Mechanism is adopted in the Performance Management System.
Table 4.11
To whom feedback Mechanism is applicable
Factors
Top Performers Low performers All the employees Total
No. of respondents
24 16 60 100
Percentage
24% 16% 60% 100%
Chart 4.11
To whom feedback Mechanism is applicable
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60% 60% 50% 40% 30% 20% 10% 0% Top Performers Low performers All the employees 24% 16% No of Respondents
Interference: From the above table it is interpreted that 24% said that Feedback Mechanism is applicable to top performers, 16% said it is for Low performers and 60% said it is applicable to all the employees. Thus the maximum respondents are agreed that the Post Review Feedback Mechanism is applicable to ³All the Employees´.
Table 4.12
Action taken when low performers are identified
Factors
Training Improvement coaching Relocation Dismissal / Discharge Feedback mechanism Total
No. of respondents
28 26 4 1 45 100
Percentage
28% 26% 4% 1% 45% 100%
Chart 4.12
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Action taken when low performers are identified
Feedback M.. 1%
45%
Dismissal..
Relocation
4%
No of Respondents 26%
Improvement c..
Training
28%
0%
10%
20%
30%
40%
50%
Interference: From the above table it is interpreted that 28% said low performers are send to Training, 26% said Improvement Coaching, 4% said as Relocation,1% said as Dismissal/Discharge and 45% said they are send for Feedback Mechanism. Thus the maximum respondents are agreed that when low performers are identified, they are sent to ³Feedback Mechanism´.
Table 4.13
Appraisal process brings clear differentiation between high and low performers or not
Factors
Yes No Uncertain Total
No. of respondents
66 22 12 100
Percentage
66% 22% 12% 100%
Chart 4.13
Appraisal process brings clear differentiation between high and low performers or not
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No of Respondents
12%
22% Yes No 66% Uncertain
Interference: From the above table it is interpreted that 66% of the respondents said appraisal process brings clear differentiation between high and low performers, 22% said no clear differentiation can be observed and 12% said it is uncertain. Thus, the maximum respondents are agreed that the Performance Appraisal System bringing clear differentiation between high and low performers.
Table 4.14
In which situation you feel uncomfortable while rating ««
Factors
Appraising distant subordinate Appraising technically superior subordinate The older, highly experienced subordinates The highly compensated individual Dealing with unrealistic expectations Coping with employee defensiveness Forced Distribution Total
No. of respondents
10 6 2 18 20 12 32 100
Percentage
10% 6% 2% 18% 20% 12% 32% 100%
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Chart 4.14
In which situation you feel uncomfortable while rating ««
No of Respondents
35% 30% 25% 20% 20% 15% 10% 10% 5% 0% Appraising d Appraising techn.. The older, highly.. highly... Dealing w The Coping with.. Forced Dist 6% 2% 18% 12% 32%
Interference: From the above table it is interpreted that the most difficult task in Performance Management System is ³Forced Distribution´ and ³Dealing with unrealistic expectations´
Table 4.15
Psychological barriers to effective Performance Appraisal
Factors
Feelings of insecurity Being too Skeptical or modest Worrying that performance appraisal might cause resentment to subordinates Total
No. of respondents
18 12 70 100
Percentage
18% 12% 70% 100%
Chart 4.15
Psychological barriers to effective Performance Appraisal
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No of respondents
18%
12% Feelings .. Being too.. 70% Worrying that p .
Interference: From the above table it is interpreted that 70% worrying that PMS might cause resentment to subordinates, 18% said feelings of insecurity and 12% said being too skeptical and modest. Thus, the maximum respondents are agreed that ³Worrying that Performance Appraisal might cause resentment to subordinates´ is the Psychological barrier to effective Performance Management System.
Table 4.16
Linking rewards to performance would
Factors
Motivate employees Encourage superior performers Compound problems Total
No. of respondents
66 30 4 100
Percentage
66% 30% 4% 100
Chart 4.16
Linking rewards to performance would
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70% 60% 50% 40% 30% 20% 10% 0%
66%
30% No of Respondents
4%
Motivate employees
Encourage superior performers
Compound problems
Interference: From the above table it is interpreted that 66% said Linking rewards to performance would Motivate Employees, 30% said it encourages superior performers and 4% said it compound problems. Thus the maximum respondents are agreed that Linking rewards to performance would ³Motivate Employees´.
Table 4.17
System helps to develop better understanding between the superior and Subordinate
Factors
Strongly Agree Agree Disagree Strongly Disagree Uncertain Total
No. of Respondents
30 56 4 6 4 100
Percentage
30% 56% 4% 6% 4% 100%
Chart 4.17
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System helps to develop better understanding between the superior and Subordinate
Uncertain
4%
Strongly Disagree
6%
Disagree
4%
No of Respondents 56%
Agree
Strongly Agree 0% 10% 20% 30%
30%
40%
50%
60%
Interference: From the above table it is interpreted that 30% of them Strongly agree, 56% of them Agreed, 4% of them Disagreed, 6% of them Strongly Disagreed and 4% of them said its Uncertain that Performance management system helps to develop better understanding between the superior and Subordinate. Thus, maximum respondents agreed that system creating better understanding between Superior and Subordinate.
Table 4.18
Does reporting authorities recognizing achievements
Factors
Strongly Agree Agree Disagree Strongly Disagree Uncertain Total
No. of Respondents
52 36 4 6 2 100
Percentage
52% 36% 4% 6% 2% 100%
Chart 4.18
Does reporting authorities recognizing achievements
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No of respondents
60% 50% 40% 30% 20% 10% 0% Strongly Agree Agree Disagree Strongly Disagree Uncertain 4% 6% 2% 36% 52%
Interference: From the above table it is interpreted that 52% of them Strongly agree, 36% of them Agreed, 4% of them Disagreed, 6% of them Strongly Disagreed and 2% of them said it¶s Uncertain that the reporting authorities recognizing the achievements of subordinates. Thus, maximum respondents Strongly agreed that ³Reporting authorities recognizes the achievements´.
Table 4.19
Post appraisal outcomes aligned with your achievements
Factors
Highly Satisfied Satisfied Dissatisfied Highly Dissatisfied Uncertain Total
No. of Respondents
24 56 6 8 6 100
Percentage
24% 56% 6% 8% 6% 100%
Chart 4.19
Post appraisal outcomes aligned with your achievements
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60% 50% 40% 30% 20% 10% 0% Highly Satisfied 24%
56%
No of respondents 8%
6%
6%
Satisfied
Dissatisfied
Highly Uncertain Dissatisfied
Interference: From the above table it is interpreted that 24% of them Highly satisfied, 56% of them Satisfied, 6% of them Dissatisfied, 8% of them Highly Dissatisfied and 6% of them said it¶s Uncertain that the Post appraisal outcomes are aligned with individual achievements. Thus, maximum respondents Satisfied with the Post appraisal outcomes.
Table 4.20
Performance Management System Effective or not
Factors
Effective Moderately Effective Ineffective Don¶t know Total
No. of Respondents
34 52 10 2 100
Percentage
34% 52% 10% 2% 100%
Chart 4.20
Performance Management System Effective or not
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60% 50% 40% 30% 20% 34%
52%
No of respondents 10%
10% 0% Effective Moderately Effective Ineffective
2%
Don't Know
Interference: From the above table it is interpreted that 34% said PMs is Effective, 52% said it is Moderately Effective, 10% said it is Ineffective and 2% said No idea. Thus, Maximum respondents agreed that the Performance management system is Moderately Effective in improving the overall performance.
Table 4.21
Rate of the Performance Management System
Factors
Upto Standard Ambiguous Confusing Too Adequate Adequate Total
No. of Respondents
52 13 15 2 18 100
Percentage
52% 13% 15% 2% 18% 100%
Chart 4.21
Rate of the Performance Management System
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18% 2% Upto Standard 15% 52% Ambiguous Confusion Too Adequate 13% Adequate
Interference: From the above table it is interpreted that 52% of them rated PMS working Upto Standard, 13% rated it is Ambiguous, 15% rated it is Confusion,2% rated it is Too Adequate and 18% said it is Adequate.. Thus the maximum respondent rated Performance Management System working Upto Standard in the Organization.
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CHAPTER-5 RECOMMENDATIONS AND CONCLUSION
5.1 FINDINGS y The Analysis shows that 46% of the employees were Strongly Agreed that the Performance Management System is implemented successfully in the organization.
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y
It can be concluded that the 180 degree and Forced Distribution methods of Performance Appraisal System is followed in the organization.
y
It can be found that the majority (74%) of the respondents feel that the Performance Management System carried through On-line.
y
It is inferred that the majority (57%) of the respondents feel that the reason for having Appraisal system is mainly to identify high performers and as motivational strategy.
y
The majority of the employees felt that the success of Performance Management System depends on Alignment of individual goals to organizational goals.
y
It is found that the majority of employees felt Performance Management System should be owned by either Line managers (44%) or Hr managers (40%).
y
It can be concluded that maximum number of respondents (55%) were agreed that the most challenging aspect of performance management system is Rating Distribution.
y
It is inferred that the majority (62%) of the respondents feel that the performance planning in the organization is carried when Annual performance and development reviews have been completed.
y
It is concluded that maximum (52%) of the respondents felt that Continuous observation is the base for reducing subjectivity and bias in the system.
y
The majority of the employees felt that the Post appraisal feedback mechanism is adopted in the Organization.
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y
It is inferred that maximum (62%) of the employees felt that the feedback mechanism is applicable to all the employees.
y
It can be concluded that maximum respondents agreed that feedback mechanism is the action mostly taken by management when they identify low performers.
y
The analysis shows that 66% of the employees were felt that the Appraisal process bringing clear differentiation between high and low performers.
y
It is found that management feel uncomfortable mostly in the following situations: When employees are being forcefully distributed in the bell curve. While dealing with unrealistic expectations. When they appraising highly compensated individual. It is inferred that the majority (70%) of the employees Psychological barriers to effective PMS is worrying that performance appraisal might cause resentment to subordinates.
y
y
It is found that linking rewards to performance would: Motivate employees Encourage superior performers.
y
From the analysis, most of the respondents 56% are agreed that the appraisal system helps to develop a better understanding between superior and subordinate.
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y
It can be concluded that maximum respondents 52% were Strongly agreed that the Reporting authority recognizes the achievements stated by them.
y
The majority of the employees satisfied with their Post appraisal outcomes which are aligned with their achievements.
y
It is inferred that maximum 52% of the employees felt that the Performance Management System is effective in improving the overall performance of the employees.
y
The majority of the employees felt that the rating of Appraisal System is Up to standard.
5.2 RECCOMMENDATIONS: (a) The performance appraisal process at L&T is very much time consuming
and tedious. As a result of evaluation of large number of employees in the organization, there is possibility that superior may not able to provide a report reflecting the actual performance of employees. Furthermore, a lot of employees experience that this is a mere paper work which does not have much implication. (b) The performance appraisal process not helps in identifying Key Performance
Areas (KPAs) for the employees. The performance appraisal process should help identify KPAs and then communicate it to the employees to make the employee more focused and effective to achieve the desired targets.
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(c)
The general feedback of the employees is that performance appraisal process
is a formality. Further, one view of employees is that there is no transparent link between the performance and the reward. (d) The current Appraisal method or degree of Appraisal can be changed
according to the employees preference because many employees expecting to have 360 degree feedback. (e) Most of the employees felt that - Midterm review is required, which will
help to maintain the potential of the staff throughout the year. (f) The most integral part of Performance management system is Performance
planning, since it is essential for growth and development of individual as well as Organization, so it also can be followed systematically. (g) Feedback mechanism is adopted successfully in the organization. But
counseling process is not implementing if both are adopted simultaneously company can achieve more results. (h) Therefore the present Performance management System should be improved
further to increase the standard of FAIR Process.
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5.3 CONCLUSION
No system is absolutely fool-proof nor can we develop an ideal system. What would make any appraisal µideal¶ is the honesty and integrity with which it is administered both the company and the appraiser. And, where return with honest intentions any human deficiencies that creep in also be corrected or counter balanced by the system itself. This research helps to the researcher to find out how the Performance Management System is followed and implemented in the organization.
The FAIR Process followed by ³Larsen & Toubro Limited´, Ecc Division, B&F-IC is showing a better result i.e. the present system is effective. Therefore, everyone have to take active part in the Performance Management System for doing further improvements which helps to make the system best.
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_________________________________________________________________________
BIBLIOGRAPHY
References
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1) ³Literature Review on Performance Measurement and Management´ Prepared by The Centre for Business Performance, Cranfield School of Management. 2) ³Major Elements and Issues in Performance Management System´- A Literature Review by Eul-KyooBae, INHA University. 3) Rao T.V( Performance Management and appraisal system) 2005 fourth printing 4) Sahu R.K (Performance Management System) 2007 edition. 5) Michael Armstrong and angela Baron(Managing Performance Management in action) 2005 first edition 6) Decenzo ,A David , Robbins P Stephens ( Personnel and human Resource Management) Ashok K Ghosh Publications 2007 Edition 7) C.B. Gupta, Human Resources Management, Sultan and Chand Publications, New Delhi, Sixth edition, 2003. 8) C.R.Kothari, Research Methodology, Methods and Techniques, New Delhi, Vishwas Prakash, 2nd edition, 2006. 9) ³Performance appraisal reactions: Measurement, Modeling, and Method bias´ Lisa m & Levy, Paul E, vol.85, Oct 2000. 10) ³Utilizing feedback to increase Performance Appraisal´ Wayne
F.Nemeroff(State university of NewYork), vol 22, 1979.
Websites
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www.larsen&toubro.com www.hr-guide.com www.citehr.com www.Performanceappraisal.com www.123manage.com www.tvrls.com www.humanresourceabout.com www.chrmglobal.com www.managementparadise.com www.projectparadise.com www.google.com
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________________________________________________________________________
APPENDIX
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ANALYSIS OF PERFORMANCE MANAGEMENT SYSTEM.
QUESTIONNAIRE
Dear Sir/Madam, I am URMILA ITAM pursuing M.H.R.M course from Andhra University. I have undertaken a project on Analysis of performance management system in Larsen & Toubro Limited, ECCD, B&F IC Chennai. I humbly request you to fill up this questionnaire for my research purpose. For your information, this data will be used purely for academic purpose and will be treated strictly confidential. ______________________________________________________________________________ PERSONAL DETAILS AGE : 18 ± 25 ( ( ) ) 26 ± 34 ( ) 35 ± 46 ( )
47 and ABOVE
GENDER
:
Male (
)
Female (
)
EXPERIENCE IN L&T : Years (
)
Months (
)
CADRE
: _____________________________
______________________________________________________________________________ 1. Performance Management System implementing successfully in your organization? a) Strongly Agree c) Disagree e) Uncertain b) Agree d) Strongly Disagree
2. What type of Appraisal method is being adopted in your organization?
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a) 180 degree method c) Paired comparison e) Forced Distribution
b) Behavior anchor scale d) Checklist method others, please specify
__________________________________________ 3. The system followed in your organization for appraisal process is a) On-line b) Manual c) Both
4. In your opinion, why the management is implementing Performance Management System in your Organization? Kindly tick your response for the following statements
STATEMENT
Strongly Agree
Agree
Neutral
Disagree
Strongly Disagree
Retention Strategy. To identify High Performers Reward allocation To identify Training and development needs. To facilitate Promotion & Transfers & Termination decisions Periodic Checks For Fixing Targets
To identify barrier(s) to Performance. Motivational strategy.
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5. Success of Performance Management System depend on: a) Alignment of individual goals to organizational goals b) Choosing the right method of Appraisal
6. Who should own the Performance Management System? a) Line Managers b) HR Managers c) Employees
7. What according to you is the most challenging aspect of Performance Management System? a) Determining the evaluation criteria b) Creating a rating instrument c) Rating distribution. d) Errors in rating and evaluation
8. Do you undertake Performance Planning? If yes, when it is carried out? a) Hiring or Transferring employees b) Business plans are newly developed c) Annual performance and development reviews have been completed d) Not been undertaking 9. What would you prefer from the following to reduce subjectivity and bias in the Performance Management System? a) Multiple level of reviews c) Continuous Observation b)Critical Incident(s) d) Peer review outcomes
10. Do you have post appraisal feedback mechanism in your organization? a) Yes b) No c) Uncertain
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11. If yes, to whom feedback mechanism is applicable? a) Top Performers c) To all the employees b) Low Performers
12. What do you do when you identify poor performers post your review session? a) Training c) Relocation e) Feedback mechanism b) Improvement coaching d) Dismissal / Discharge
13. Does your appraisal process bring clear differentiation between high and low performers? a) Yes b) No c) Uncertain
14. In which of the following situations you find yourself uncomfortable: (Pls. tick as many options as appropriate) a) Appraising distant subordinate b) Appraising technically superior subordinate c) The older, highly experienced subordinates d) The highly compensated individual e) Dealing with unrealistic expectations f) Coping with employee defensiveness g) Forced Distribution
15. What according to you would constitute psychological barriers to effective Performance appraisal? a) Feelings of insecurity b) Being too Skeptical or modest c) Worrying that performance appraisal might cause resentment to subordinates. 16. Do you believe that linking rewards to performance would:
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a) Motivate employees
b) Encourage superior performers
c) Compound problems
17. Does the system helps to develop better understanding between the superior and subordinate? a) Strongly Agree c) Disagree e) Uncertain 18. Does your reporting authority recognize your achievements? a) Strongly Agree c) Disagree e) Uncertain b) Agree d) Strongly Disagree b) Agree d) Strongly Disagree
19. Do you feel the post appraisal outcomes aligned with your achievements? a) Highly Satisfied c) Dissatisfied e) Uncertain b) Satisfied d) Highly Dissatisfied
20. In general, how effective has your organizations performance Management processes proved in improving overall performance? a) Effective c) Ineffective b) Moderately effective d) don¶t know
21. How would you rate your performance Management System? a) Up to Standard c) Confusion e) Adequate b) Ambiguous d) Too Adequate
22. Are there any other comments you would like to make about your Performance Management arrangements not covered in the questions above? ________________________________________________________________________
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________________________________________________________________________ ________________________________________________________________________ ________________________________________________________________________
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