PERFORMANCE MANAGEMENT SYSTEM & PRP IN MMTC LIMITED

COMPANYS PROFILE
MMTC Limited is a Miniratna Company under the
administrative control of Department of Commerce, Ministry of Commerce & Industry, Government of India.

Set up in 1963, MMTC Limited is the largest

International Trading Company of Govt. of India and the first Public Sector Enterprise to be accorded the status of FIVE STAR EXPORT HOUSE.

Its vast International Trade Network spans almost in all

countries in Asia, Europe, Africa, Oceania and America giving MMTC a global market coverage.

MMTCS TRADE PROFILE

The major items of trade include Minerals, Non-Ferrous Metals,
Precious Metals, Coal & Hydro Carbon, Agro Products, Fertilizers and Fertilizer raw material.

MMTC is major player in the minerals trade and is the single

largest exporter of minerals from India.

MMTC is the largest importer of gold and silver in the Indian

sub continent.

MMTC is also engaged in manufacture/and retail sale of

silverwares and artifacts made of silver in the brand name SANCHI.
3

PERFORMANCE MANAGEMENT SYSTEM

To link individual performance to company objectives To build a culture of performance To encourage two-way communication To make evaluation objective and reduce subjectivity To identify high performers and provide career progression opportunities to them.
4

Draft of plans and Signing of Memorandum of Understanding

Creating Strategy Linked Performance Management

Development of Strategic Goals At the Top Level

Cascading Down of Goals at various Division Level and other levels below

Cascading Down of Goals at the Regional Level

5

KPA based Performance Appraisal process

Identify KPAs, constituents, weightages, measures and targets
Step 1 Step 2

Joint review of performance Document changes in KPAs if any

PMS Process

Step 4 Step 3

Assessment of KPAs, Competencies, Values and Potential by appraiser Training and Development Plans Review by reviewing officer
6

TIME SCHEDULE (Up to E-7

Level)
S. No. 1 2 3 4 Month March April September/ October April (Next Year) Stages in Appraisal Distribution of Appraisal Forms Finalization of KPAs and targets/ weightage Mid- year review of KPAs Submission of Appraisal report by appraisee to appraiser & forwarding to report by appraiser to reviewing officer after giving the rating. Final submission of Appraisal reports after signing by reviewing and counter signing authority. Moderation of reports by the moderation committee

May(Next Year)

June/ July

TIME SCHEDULE (E-8 Level &

Above)
Sl. No. Activity 1 2 3 4 5 6 7 8 Finalization of Targets, weightage Circulation of PAR Cut-off Date 30th June (Reporting Yr.) 30th September

Submission of PAR after self- appraisal by the 31st October Officer to Reporting Authority Submission of PAR after appraisal by Reporting Authority to Reviewing Authority 15th November

Submission of PAR after review by Reviewing 30th November Authority to Accepting Authority Furnishing of PAR after appraisal by Accepting Authority to Nodal Officer Disclosure of PAR Submission of Representation, if any 15th December 31st December 15th January
8

Components of Performance Appraisal (Up to E-7 Level)

Sl. No. 1 2 3 4 Component Performance Competencies Values Potential Weightage 50% 20% 15% 15%
9

Components of Performance Appraisal (E-8 & above)

Designation
MOU Targets

Weightage
Individual targets flowing from MOU targets Personal Total Attributes & functional Competencies

Chief Executives Functional Directors E8 & E9

75 40 25

35 50

25 25 25

100 100 100

10

Features of KPA based PMS

Covers all Executives below Board level. Drawn from the business plans, objectives and functions of Division . Number of KPA indices not more than eight, out of which development of subordinate, a mandatory field. The unit of measurement based on SMART principle (Specific, Measurable, Attainable, Relevant & time- bound).
11

GUIDELINES
KPAs are determined along with target of performance and their weightage in beginning of the year. As far as possible targets are based on SMART principle (Specific, Measurable, Attainable, Relevant & time-bound). Decided by one to one discussions held between the appraisee & appraiser. Competencies, Potential & value is assessed by the appraiser on the basis of his/ her observations. The appraiser recommends for training for the development of appraisee.
12

Benchmark Norms for Rating Scale(1 to 5)

Rating Qualitative 5 4 3 2 1 Quantitative Significantly above On achieving 100% expectations Moderately above expectations Meets the expectations Moderately below expectations On achieving 80% or more On achieving 60% or more On achieving 40% or more

Significantly below On achieving less than expectations 40%

13

PERFORMANCE RELATED PAY(PRP)

14

CONDITIONS FOR IMPLEMENTING PRP

1. MMTC is MOU signing Company and has earned profit in 2007-08, 2008-09 & 2009-10. 2. MMTC has a robust and transparent Performance Management System, which includes KPA based appraisal system. 3. MMTC has Independent Directors on its Board. Remuneration Committee : MMTC has formed a Remuneration Committee headed by an Independent Director.
15

PRP
Variable Pay / Performance Related Pay (PRP) is made integral part of compensation package w.e.f. 2007-08. PRP depends on several factorsPRP is paid on the basis of MOU rating of the Company ranging from 100% for Excellent to no PRP for Poor rating of the Company.

MOU rating of MMTC was Excellent in last 3 years.

CONTD.
16

PRP
PRP is directly linked to profit of MMTC

60% of PRP with a ceiling of 3% of PBT comes from profit of the company and 40% of PRP comes from 10% of incremental profit. Total PRP limited to 5% of PBT exclusively for executives. As 2007-08 was base year and there was no incremental profit in year 2008-09 only 60% of the PRP was distributed to Executives during these 2 years. During 2009-10 Company achieved highest ever net profit. PRP with in maximum 5% PBT ceiling has been disbursed to Executives Percentage ceiling increases from 40% at junior level to 200% for CMD. CONTD.
17

PRP depends on the grade of the Executives

PRP
PRP also depends on performance of executive. Executives with ratingsOutstanding, Very Good, Good, Above Average and Average performance ratings get PRP up to 100%, 80%, 60%, 50% and 40% . No PRP for Poor Rating. From financial year 2011-12 Above Average performance rating (50% PRP) has been removed to make PRP scheme at par with DPE 5 tier rating system.
18

Constraints faced
Implementation of new Appraisal System

Apprehension among Executives for new SystemWorkshop organized to explain importance, benefits of new KPA based Appraisal System.

Implementation of Bell Curve Regulation of PRP in case of less than 3 months appraisal period.

19

20

PRP FACTORS

1)

MOU RATING EXCELLENT VERY GOOD GOOD FAIR POOR GRADE INCENTIVE E0 TO E3 E4 TO E5 E6 TO E7 E8 TO E9 DIRECTORS CMD

100% 80% 60% 40% NIL

2)

40% 50% 60% 70% 150% 200%

21

Percentage of Bell Curve

S. No. 1 2 3 4 5 Rating Outstanding Very Good Good Above Average Average % Of Employees Up to 15% 30% 30% 15% 10%
22