Performance Appraisal 008191039909 Summer Project Report On PERFORMANCE MANAGEMENT SYSTEM in GAIL Submitted by: Savita Sharma MBA

(HR) GITARATAN INTERNATIONAL BUSINESS SCHOOL Delhi (Training Period: 1st June31st July 2010) Guided by- Mr. Surender Singh (A Government of India Undertaking-A Navratna Company) B-35, 36, Sector-1, Noida Gitaratan International Business School 1

Performance Appraisal 008191039909 PROJECT REPORT APPROVAL SHEET It is certified that the Project entitled, PERFORMANCE MANAGEMENT SYSTEM IN GAIL w as completed by Ms. SAVITA SHARMA under my guidance during the period i.e. 1th J une to 31st July. The same is hereby approved. Mr. Surender Singh Chief Manager (HR) GAIL INDIA (LTD) Gitaratan International Business School 2

Performance Appraisal 008191039909 DECLARATION I hereby declare that the project work entitled Performance Appraisal submitted t o the Gitaratan International Business School, Guru Gobind Singh Indraprastha Un iversity, is a record of an original work done by me under the guidance of Shri M. Baa, Mr. Surender Kumar, Mr. U.K.De, GAIL (India) Limited, and our respective faculty members,. Gitaratan International Business School Savita Sharma 0081910 39909 Gitaratan International Business School 3

Performance Appraisal 008191039909 ACKNOWLEDGEMENT Vital to every operation is co-operation I really agree to this wonderful quotatio n put forth by Mr. Frank Tyger. This project was successful due to the co-operat ion extended by people who have truly contributed towards it. Words arent enough to express my gratitude to all those who helped me through out my training perio d. With deep regards and humble respect I would like to thanks Shri M. Baa DGM ( HR), Mr. Surender Kumar Chief Manager, (HR) GAIL (India) Limited who provided me an distinctive opportunity to work at GAIL(India) Limited. I would like to expr ess my humble thanks and regards to my guide Mr. U.K.DE Senior Officer,(HR) Depa rtment, GAIL(India) Limited, whose kind supervision and interest went all way in successful completion of this work. I would like to thanks all the members of G AIL (India) Limited who directly or indirectly helped me during my project work. Savita Sharma Gitaratan International Business School 4

Performance Appraisal 008191039909 TABLE OF CONTENTS Sr. Title Page No. 6 8 9 12 13 14 15 28 37 48 77 81 82 82 111 114 116 118

No. 1 Executive Summary 2 Introduction 3 4 5 Introduction Objectives of Study S ope of Study Limitations of the Study Company Profile Business of GAIL (India) L imited Overview of the Industry Review of Literature Research Methodology and Design Data Analysis Data Represen tation Data Interpretation 6 7 8 9 Major Findings and Discussion Conclusions Bibliography Annexure Gitaratan International Business School 5

Performance Appraisal 008191039909 EXECUTIVE SUMMARY Gitaratan International Business School 6

Performance Appraisal 008191039909 As a distinct and formal management procedure used in the evaluation of work per formance, appraisal really dates from the time of the Second World War - not mor e than 60 years ago. In many organizations - but not all - appraisal results are used, either directly or in-directly, to help determine reward outcomes. That i s, the appraisal results are used to identify the better performing employees wh o should get the majority of available merit pay increases, bonuses and promotio ns. By the same token, appraisal results are used to identify the poorer perform ers who may require some form of counseling, training or in extreme cases, demot ion, dismissal or decreases in pay. (Organizations need to be aware of laws in t heir country that might restrict their capacity to dismiss employees or decrease pay.) The purpose of this study has been to determine whether the performance a ppraisal helps the employees to know where they are lacking in their performance and also to know how performance appraisal helps the management to take adminis trative decisions of promotions, transfers, training and development and wage an d salary administration. Gitaratan International Business School 7

Performance Appraisal 008191039909 INTRODUCTION Gitaratan International Business School 8

Performance Appraisal 008191039909 Almost every organization in one way or another goes through a periodic ritual, formally or informally, known as performance appraisal. Performance appraisal ha s been called many things. The formal performance appraisal has been called a to ol of management, a control process, an activity and a critical element in human resources allocation. Uses for performance appraisal have included equal employ ment opportunity considerations, promotions, transfer and salary increases. Prim arily performance appraisal has been considered an overall system for controllin g an organization. Performance appraisal has also been called an audit function of an organization regarding the performance of individuals, groups and entire d ivisions. Performance appraisal may be defined as a structured formal interactio n between a subordinate and supervisor, that usually takes the form of a periodi c interview (annual or semi-annual), in which the work performance of the subord inate is examined and discussed, with a view to identifying weaknesses and stren gths as well as opportunities for improvement and skills development. Need of pe rformance appraisal The performance appraisal is needed to achieve two objective s: 1. Administrative 2. Self-improvement 1. Administrative Objectives (i) Promot ions: This is the most important use of performance appraisal. It is to the comm on interests of both the management and employees to promote employees into posi tions where they can most effectively utilize their abilities. (ii) Transfers: I n an organization, it may be necessary to consider various types of personnel ac tions such as transfers, layoffs, demotions and discharges. Such actions can be justified if they are based on performance appraisal (iii)Training & Development : An appropriate system of performance appraisal can be helpful in identifying t he areas of skills or knowledge in which certain employees are not Gitaratan International Business School 9

Performance Appraisal 008191039909 up to par, thus pointing out general training deficiencies, which presumable sho uld be corrected by additional training, discussions or counseling. (iv)Wage and Salary Administration: In some cases, the wage increases are based on the perfo rmance appraisal reports. In some cases appraisals and seniority are used in com bination. 2. Self Improvement Objectives The system allows the employee to evalu ate his performance, identify the areas which he finds need Improvement and base d on his personal assessment, take the steps he feels are necessary to improve h is performance. Periodicity of appraisals Appraisals typically are conducted onc e or twice a year, most often annually. For new employees, common timing is to c onduct an appraisal 90 days after employment, again at six months, and annually thereafter. Probationary or new employees, or those who are new and in a trial per iod, should be evaluated frequently perhaps weekly for the first month and monthl y thereafter until the end of the introductory period for new employees. Perform ance appraisals can be done by anyone familiar with the performance of individua l employees: Supervisors who rate their employees. Employees who rate their supe rvisors. Team members who rate each other. Employees self-appraisal. Elements of an effective appraisal system Gitaratan International Business School 10

Performance Appraisal Use of an appraisal system that is job-related and unde andable. Clear instructions and training for performance raters. 008191039909 Performance-rater familiarity with the nature and importance of job duties on wh ich employee is being rated. Clear identification of standards by which performa nce will be measured Scheduled, periodic reviews. Objective measurement (excelle nt//fair/ unacceptable) if the employee is meeting performance standards. Future action plan. Precautions against improper bias by raters. Gitaratan International Business School 11

Performance Appraisal 008191039909 OBJECTIVE OF THE STUDY The objective of my study of Performance appraisal in GAIL (India) Limited is To study the Appraisal system of GAIL and evaluate its benefits in context of GAIL . To study the effectiveness of the existing system of performance appraisal at GAIL. To study whether performance appraisal actually helps the employees to und erstand their own strengths and weaknesses with respect to their role and functi ons of the company. To study the effect of performance appraisal on the relation of employee and his superiors. To determine that whether performance appraisal system really provides an opportunity to the employees for self reflection and i ndividual goal Settings. Gitaratan International Business School 12

Performance Appraisal 008191039909 SCOPE Of STUDY The present study intends to provide an integrated picture of the level of emplo yment attitude toward performance appraisal system in GAIL (India) Limited. The study was conducted in GAIL (India) Limited, Noida, in different departments. Th e study covers the feedback from different employees of GAIL (India) Limited, No ida towards the performance appraisal system of the firm. Gitaratan International Business School 13

Performance Appraisal 008191039909 LIMITATIONS OF STUDY The biggest limitation of my study was the two months time period of internship which was not enough to understand performance appraisal of a company. Another L imitation of this study was I have made this project in GAIL (India) Limited. In such a small period Getting the views and opinions of the interviewee (HR manag er) was a difficult task . Gitaratan International Business School 14

Performance Appraisal 008191039909 COMPANY PROFILE GAIL (India) Limited is Indias flagship Natural Gas company, integrating all as pects of the Natural Gas value chain (including Exploration & Production, Proces sing, Transmission, Distribution and Marketing) and its related services. GAIL i s also expanding its business to become a player in the International Market. Th e company dominates the gas sector, transporting 95% of the total piped gas. It also operates seven plants to process natural gas into LPG, apart from having a small presence in the petrochemicals and oil & gas exploration sectors. Company has expanded its operations into gas processing, petrochemicals, liquefied petro leum gas transmission and telecommunications. It has also extended its presence in power, liquefied natural gas regasification. Company has set up Gas Technolog y Institute near Delhi. This Institute is fully functional with well-equipped la boratories for research and development (R&D) related mainly to the gas sector. It would pursue joint R&D projects in India and abroad in association with oil a nd gas companies, research institutions and universities. COMPANY OVERVIEW The c ompany was previously known as Gas Authority of India Ltd. It is Indias princip al gas transmission and marketing company. It was set up by the Government of In dia in August 1984 to create gas sector infrastructure. GAIL India is the countr ys largest gas transmission company and handled 82 million standard cubic meters per day (mmscmd) out of the 111 mmscmd of gas supplies in FY08. The company has a pipeline network of 7,000 kms in place. Its pipeline is the lifeline for major gas consumers from the power and fertilizer sectors. It has also ventured into upstream gas exploration business in order to reduce dependency on a single sour ce of supply and has secured 30 exploration blocks. GAIL is a significant player in downstream petrochemicals business with a production capacity of 410,000 ton s per annum. It is also an early mover in city gas distribution with 8 joint ven tures and a wholly owned subsidiary, GAIL Gas, is being incorporated. The Gitaratan International Business School 15

Performance Appraisal 008191039909 company has plans to enter into more than 230 cities. GAIL is listed by Forbes a s one of the worlds 2,000 largest public companies in 2007. GAIL commissioned t he 2800-km Hazira-Vijaipur- Jagdishpur (HVJ) pipeline in 1991. During 1991-93, t hree liquefied petroleum gas (LPG) plants were constructed and some regional pip elines acquired, enabling GAIL to begin its gas transportation in various parts of India. GAIL began its city gas distribution in New Delhi in 1997 by setting u p nine compressed natural gas (CNG) stations. In 1999, GAIL set up northern Indi as only petrochemical plant at Pata. VISION Be a leading company in natural gas and beyond, with global focus, commit ted to customer care, value creation for all stakeholders and environmental resp onsibility. MISSION Accelerating and optimizing the effective and economic use of natural ga s and its fractions to the benefit of national economy Business description in brief Gitaratan International Business School 16

Performance Appraisal 008191039909

Currently the business set up is as such 7 LPG Gas Processing Units to produc .2 MMTPA of LPG and other liquid Hydrocarbons. 1,922 km of LPG Transmission pipe line network with a capacity to transport 3.8 MMTPA of LPG. 13,000 km of OFC net work offering highly dependable bandwidth for telecom service providers. 6,700 k m of Natural Gas high pressure trunk pipeline with a capacity to carry 148 MMSCM D of natural gas across the country. North Indias only gas based integrated Pet rochemical complex at Pata with a capacity of producing 4,10,000 TPA of Polymers . 27 oil and gas Exploration blocks and 3 Coal Bed Methane Blocks. 13,000 km of OFC network offering highly dependable bandwidth for telecom service providers. Joint venture companies in Delhi, Mumbai, Hyderabad, Kanpur, Agra, Lucknow, Bhop al, Agartals and Pune, for supplying Piped Natural Gas (PNG) to households and c ommercial users, and Compressed Natural Gas (CNG) to the transport sector. Parti cipating stake in the Dahej LNG Terminal and the upcoming Kochi LNG Terminal in Kerala. GAIL has been entrusted with the responsibility of reviving the LNG term inal at Dabhol as well as sourcing LNG. Established presence in the CNG and City Gas sectors in Egypt through equity participation in three Egyptian companies: Fayum Gas Company SAE, Shell CNG SAE and National Gas Company SAE. Stake in Chin a Gas Holding to explore opportunities in the CNG sector in mainland China. GROWTH Gitaratan International Business School 17

Performance Appraisal 1990-91 008191039909 2800Kms Hazira-Vijaipur Jagdishpur (HVJ) pipeline becomes operational in 1991. L PG phase-I plant at Vijaipur commissioned in February 1991. 1991-92 1992-93 1994 -95 Phase-2 at LPG Vijaipur plant commissioned in Feb 1992. LPG project at Vagho dia commissioned in Feb 1993. Joint venture Agreement signed with British Gas on December 6, 1994.Mahanagar Gas Limited Incorporated to implement Bombay City Ga s Distribution project. 1997-98 Government of India grants Navratna status to Ga il, herby entrusting greater autonomy to Gail after restructuring of the Board. Gas processing units (GPU), offsite utilities of the petrochemical plant at Pata , commissioned. 1999-00 GAIL participates in NELP bidding by submitting offer fo r 7 blocks in association with ONGC & IOC and Russian company Gazprom.Government of India approved award of 2 blocks to GAIL, One with ONGC in Orissa offshore a nd another with Gazprom in Bengal Offshore. LPG plant at Pata with a designed ca pacity of 2.58 lacs TPA of LPG commissioned for commercial production in March 2 000. 2000-01 GAIL conceptualizes a National Gas Grid to connect the supply and d emand centres in the country with high pressure cross country pipelines networks . The gas processing complex, Gandhar begins production in March 2001.The proces s LPG, 0.43 Lacs MT of Pentane and SBP solvent. Gitaratan International Business School 18

Performance Appraisal 008191039909 Jamnagar-Loni LPG Pipeline project, the worlds longest and Indias first cross cou ntry LPG 1296 Km long pipeline, which passes through Gujrat,Rajasthan,Haryana an d Delhi is completed. 2001-02 GAIL picks up 12% equity in GSEGs 156 MW power proj ect in Gujarat as a strategic investment. Marketing functions is restructured an d decentralize at zonal levels. GAILTEL phase-I commissioned, creating an OFC ba sed DWDM network connecting Delhi-Mumbai, Delhi-Jaipur, Delhi-Ahemdabad, Delhi-V ijaipur, Meerut-Agra. 2003-04 GAIL has an initial success in the form of signifi cant gas find in the block A-1 in Myanmar and discovery of oil and gas in the Ca mbay block. GAIL successfully secures participation in 2 retail gas companies in Egypt, Fayum Gas Company and Shell CNG. Vizag Secundrabad LPG pipeline. the 580 km pipeline with the maximum throughput of 1.16 MMPTPA completed in June 2003 B hagyanagar Gas Limited, a joint venture of GAIL and HPCL, incorporated in August 2003, in the field of distribution and marketing of auto LPG, CNG for vehicles and retailing of natural gas in the cities of Andhra Pradesh. Phase I and II of 8000 km network GAILTEL projects connecting Delhi, Mumbai and 71 other cities, c ompleted. This network provides a national communication backbone. 2004-05 Incor poration of GAIL Global Singapore PVT.LTD Acquisition of 15 % equity stake in Na tural Gas, Egypt. Agreement signed for acquisition of 9 % equity stake in China Gas Holding LTD, a joint venture for city gas projects in 42 cities of China. Tr ipura Natural gas Co.Ltd, a joint venture for city gas project in Tripura, incor porated UP central gas Ltd, a joint venture for city gas project with BPCL in Ka npur, incorporated De-bottlenecking of LLDPE swing unit from 150000 MT to 210000 MT at Gitaratan International Business School 19

Performance Appraisal 008191039909 GAIL Pata. Gas management system commissioned for HVJ, DVPL and SGPL. Commission ing of South Gujarat pipeline network .Commissioning of VizagSecundrabad LPG pip eline. Oman. GAIL was ranked 11th among top 15 of the worlds largest listed gas utilities firms in the oil and gas industry ,in terms of market capitalization , for the year 2005. GAIL gets Golden Icon award for e-governance Inauguration of the National gas management centre (NGMC) of GAIL at NOIDA. GAIL bagged two awar ds for excellence in cost management from the Institute of Cost and Works Accoun ts of India (ICWAI). 2006-07 Mechanical completion of new HDPE (High Density Pol yethylene) plant with a capacity of 100,000 TPA at Petrochemical complex at PATA Commissioning of Dahaj-Panvel pipeline Brahmaputra cracker and polymer LimitedJoint Venture Company led by GAIL, formed for implementing Assam gas cracker pro jects GAIL acquires stake in A7 Myanmar block GAILs Vijaipur- Kota pipeline commi ssioned. GAILs Kailaras- Malanpur pipeline commissioned GAILs consortium wins 3 CB M blocks in 3rd round of bidding GAIL HPCL joint venture-Avantika gas limited in corporated GAIL ONGC ink gas supply agreement GAIL brings Indias first spot LNG c argo at Dahej. Subsidiaries and Joint ventures Company has been the pioneer for City Gas Projects in India. With natural gas emerging as the fuel of choice in t he country, Company believes that the next decade will belong to the city gas. I t was the first Company to introduce City Gas Projects in India for supplies to households, commercial users and for the transport sector by forming Joint Ventu re Companies. 2005-06 GAIL, ilex Australia, Videocon, HPCL and BPCL consortium a warded Blocks no 56 in Gitaratan International Business School 20

Performance Appraisal Subsidiaries are as follow: GAIL Gas limited 008191039909 Company has formed a wholly owned subsidiary named GAIL Gas Limited for implementi ng City Gas Projects and CNG corridor in the country. The subsidiary company wil l act as a vehicle for bidding for laying pipeline infrastructure in the country . GAIL Global (Singapore) Pte . Limited Company has a wholly owned subsidiary, n amely, GAIL Global (Singapore) Pte . Ltd. to manage investments abroad .Company is looking for further business opportunities through this subsidiary company. B rahmaputra Cracker and Polymer Limited Company has 70% equity share with Oil Ind ia Limited (OIL), Numaligarh Refinery Limited (NRL), and Govt. of Assam, each ha ving 10% equity share . The authorized capital of the company is Rs. 1,200 Crore s. A Feedstock Supply Agreement has been signed between Brahmaputra Cracker and Polymer Limited (BCPL), and all the three suppliers viz., Oil and Natural Gas Co mpany Limited, Oil India Limited and Numaligarh Refinery Limited. Financial clos ure for the project is likely to be completed during the year 2008-09. Joint Ventures Aavantika Gas Limited (AGL) GAIL and Hindustan Petroleum Corporat ion Limited (HPCL) for implementation of City Gas Projects in the cities of Madh ya Pradesh. AGL has started project implementation activities in the city of Ind ore . Company has 22.5% stake in the Company with HPCL as equal partner. Gitaratan International Business School 21

Performance Appraisal Bhagyanagar Gas Limited (BGL) 008191039909 BGL is currently operating three Auto LPG stations in Hyderabad and one Auto LPG station in Tirupathi. It is currently operating six CNG stations in Vijayawada and three CNG stations in Hyderabad. Company has 22.5% stake in the company alon g with HPCL as equal partner. Central U.P. Gas Limited (CUGL): CUGL is currently operating five CNG stations in Kanpur, one CNG station in Bareilly and one CNG station in Kanpur is under commissioning. CUGL is building MDPE network for supp ly of PNG to domestic, commercial and industrial sectors in the city of Kanpur. Company has 22.5% stake in the company along with BPCL as equal partner. Green Gas Limited (GGL): GGL is currently operating four CNG stations in Lucknow and three CNG stations in Agra. GGL will also take up project implementation in other cities of Western UP on the basis of gas availability and project viabili ty. Your Company has 22.5% stake in the company along with IOC as equal partner. Indraprastha Gas Limited (IGL) IGL is supplying piped gas to around 1 Lac domes tic, 276 commercial, 16 small industrial consumers and CNG to over 1.35 Lacs veh icles through 153 CNG stations. IGL is catering to worlds largest CNG bus fleet o f over 11,000 buses in Delhi. Company has 22.5% stake in the company along with BPCL as equal partner. Gitaratan International Business School 22

Performance Appraisal 008191039909 Maharashtra Natural Gas Limited (MNGL) MNGL is a Joint Venture of your Company a nd Bharat Petroleum Corporation Limited (BPCL) for implementation of City Gas Pr ojects in Pune city. MNGL is developing necessary infrastructure for supply of C NG and PNG in the city. Company has 22.5% stake in the company along with BPCL a s equal partner. Petronet LNG Limited (PLL) PLL was formed for setting up of LNG import and regasification facilities. PLL has a long term LNG supply contract w ith Ras Gas, Qatar for import of 7.5 MMTPA. PLL Dahej terminal is being expanded to 10 MMTPA capacity. Company has 12.50% stake in the company along with BPCL, IOC and ONGC as equal partners. Ratnagiri Gas and Power Private Limited (RGPPL) RGPPL is a Joint Venture Company between your Company, NTPC, Financial Instituti ons and MSEB. Your Company has 28.33% stake in the company along with NTPC as eq ual partner. The capacity of the Ratnagiri Gas & Power Station is 2,150 MW. Comp any has made an investment of Rs. 500 Crores and has approved additional equity of Rs. 475 Crores to RGPPL, out of the Rs. 475 Crores; an amount of Rs. 92.90 Cr ores has been paid during the month of May, 2008. Tripura Natural Gas Company Li mited (TNGCL) TNGCL is presently supplying gas to 6600 domestic, 104 commercial, 21 industrial consumers and has set up one CNG station in Agartala city. Compan y has 29% stake in the company. Company has approved formation of JV for City Ga s Projects in Vadodara with Vadodara Gitaratan International Business School 23

Performance Appraisal 008191039909 Mahanagar Seva Sadan (VMSS) with 26 percent equity, while VMSS will have 24 per cent equity. The balance 50 per cent equity will be held by strategic investors and public. A JV agreement has also been signed with HPCL for city gas projects in Rajasthan. Business operation 1) Upstream Operation Every cloud has a silver lining and every adversity hides an opportunity. GAILs Exploration and Producti on (E&P) unit was born in just such a scenario. As the Indian Economy opened up around the year 2000, the business environment changed dramatically. For GAIL, l iberalization meant competition in core business i.e. midstream and downstream n ational gas distribution No longer could they rely on statutory support mandatin g secured sources of Natural Gas. The reserves contained in existing contracted fields were fast depleting. Apart from securing sources for Natural Gas, there w ere other compelling reasons for GAIL to get into E&P: Integration in supply-cha in Large gap in Gas demand and supply National Gas security Balancing of Busines s portfolio So that GAIL ventured into E&P in 2001. At the end of 2007-08, it ha s invested Rs. 11.5 billion in this segment. It is involved in oil & gas explora tion activities over acreage of 1.7 square km. It has participating interest ran ging from 10 to 80 percent in following: 24 domestic blocks 3 overseas blocks 3 CBM GAIL is currently participating in 27 exploration blocks, in Basins such as Mahanadi, Mumbai, Cambay, Assam-Akaran , Tripura Fold Belt and Cauvery. GAIL has Gitaratan International Business School 24

Performance Appraisal 008191039909 partnership in these blocks with various companies such as ONGCL, GSPCL, OIL, Ha rdy Exploration & Production, Petrogas, JOGPL, Daewoo, OVL, IOCL, Korea Gas Corp oration, Hallworthy, BPCL, HPCL and Silver wave. GAIL also has stake in 3 overse as blocks (A-1 and A-3 blocks in Myanmar and Block-56 in Oman).Of these, nine ar e offshore blocks and eighteen onshore blocks, of which 13 are deepwater and 5, are shallow water. Coal Bed Methane (CBM) is stored in coal seams and was genera ted during the process of coalification. It occurs within these seams either as free gas in fractures or in dissolved form in water. The consortium of GAIL (Ind ia) Ltd., Arrow Energy (India) Pty Ltd., EIG Energy Infrastructure Group AB has been awarded 3 CBM Blocks in CBM-III Bidding round. The Tata Power Company is al so a consortium partner in two of the awarded blocks. These blocks are in Rajmah al (Jharkhand), Mand Raigarh (Chattisgarh) and Tata Pani Ramkola (Chhattisgarh). 2) Midstream Operation a) Petrochemicals The company has seven gas LPG processi ng plant with total capacity of 1.2 mtpa 4 plants are situated along the Hazira Vijaipur Jagdishpur pipeline (two at Vijaipur in Madhya Pradesh , one at vaghodi a in Gujarat, and one at oriya in Uttar Pradesh ,and one each in Lakwa Assam , U sar , Maharashtra an d Gandhinagar Gujarat). The total liquid hydrocarbon produc tion was over 1.348 million tonnes, which included 1.043 MT of LPG 0.156 tm of p ropane and 0.074 tm of pentane the companys board of director has recently approv ed them doubling capacity of its pata petrochemical complex in UP to 0.8 mtpa .t he installed polymer capacity at pata is 0.41 mta, which will be increased by le veraging existing facility and augmenting them. Company is setting up 280000 tpa petrochemical plant in Assam at an investment of Rs 54.6 billion. It has also s igned an agreement with HPCL, OIL, Mittal investment and France total to set up another petrochemical complex and crude oil refinery at Vishakhapatnam in AP.GAI L has a 70% Gitaratan International Business School 25

Performance Appraisal 008191039909 equity stake in Brahmaputra cracker and polymer limited. The other equity partne rs are OIL, Numaligarh Refinery Limited and the Govt of Assam is having a 10% eq uity stake. b) Pipeline Operation Interstate pipelines provide open access for s hipment of natural gas. Gas enters an interstate pipeline from gathering systems and from interconnecting pipelines. Beginning at individual wellheads, gatherin g systems usually consist of smaller diameter pipe operating at lower pressure. Gas conditioning is usually performed to reduce contaminants such as water from gathered gas before it is compressed into the transmission system. Gas leaves th e transmission system through delivery points to other interstate pipelines, loc al distribution companies and directly to end users such as industrial facilitie s and power plants. Local distribution systems deliver gas to residential, comme rcial and industrial end users. The basic components of an interstate pipeline i nclude steel pipe, valves, and compression, processing and storage facilities. P ipe sizes vary widely with much of the pipe in the 20-inch to 36-inch diameter r ange and wall thickness of about one quarter to one-half inch. A typical range o f operating pressures for a transmission system is 300 to 1440 psig. Powered by natural gas or electricity, compression is one of two types: reciprocating or ce ntrifugal. Processing facilities extract undesirable contaminants (such as hydro gen sulfide and water) and marketable hydrocarbons (such as propane and gasoline ). Storage facilities have been developed from depleted oil fields, coal mines, salt domes, aquifers and reefs. These facilities can be used for peak-shaving ho urly demands and short-term, as well as, seasonal storage of gas. Much of the ga s that is transported on interstate pipelines is nominated, that is, scheduled i n advance of actual gas flow. Deliveries into local distribution companies that serve weather-sensitive markets, however, cannot be known with absolute certaint y. Such demand is met in part with "no-notice" service, which is usually supplie d from inventories of the customers gas, which is stored in the pipelines stor age facilities. 3) Downstream operation Gitaratan International Business School 26

Performance Appraisal 008191039909 Natural Gas usage in Indian cities has been limited primarily due to the scarcit y of supply. However this scenario is undergoing change with several LNG project s/transnational pipelines under implementation, which together with new domestic Gas finds are expected to shore up the supply deficit in the next few years. Me anwhile the market for city gas distribution is also set to grow at an accelerat ed pace. The CNG demand got a boost with the Supreme Court directive on pollutio n reduction in 12 major cities in India. The domestic segment is also expected t o grow with the governments intentions to remove the subsidy on LPG cylinders i n a phased manner in 3-5 years making piped gas even more economical. 4) Oversea s Operation GAIL has a 10 % equity stake in block A! Ink Myanmar where huge gas reserve has been discovered recently. It also has a 10 % stake in block A3. It h as stake in block56 in Oman. However GAILS share in the blocks has been reduced f ollowing Myanmars national oil company exercising its step in rights to 8.5%. In 200 3 -04 GAIL acquired equity stakes in CGD project of fayum gas and shell gas in t he Egypt. GAIL has setup a wholly owned subsidiary on Singapore, christened GAIL Global private limited, two undertake overseas investment, the subsidiary a 15% equity stake in the Egyptian national gas company- one of the largest natural g as distributing companies in the private sector in Egypt. The company also has a 50% stake in a JV formed with china gas holding limited to undertake projects i n china, India and other countries. Gitaratan International Business School 27

Performance Appraisal 008191039909 Business of GAIL (India) Limited Natural gas Petrochemicals Exploration and production LPG and other Liquid hydro carbons Telecommunication 1. Natural gas With only one carbon and four hydrogen atoms per molecule, Natura l Gas has the lowest carbon to hydrogen ratio, hence it burns completely, making it the cleanest of fossil fuels. Natural Gas satisfies most of the requirements for fuel in a modern day industrial society, being efficient, non-polluting and relatively economical. The periodic uncertainties and volatility in both the pr ice and supply of oil, have also helped Natural Gas emerge as a major fuel in th e energy basket across countries. Natural Gas comes in 4 basic forms: Liquefied Natural Gas, LNG - Natural Gas which has been liquefied at -160 Natural Gas is l iquefied to facilitate transportation in cryogenic tankers across sea Regasified Liquefied Natural Gas, RLNG Compressed Natural gas, CNG - Natural Gas compresse d to a pressure of 200-250 kg/cm2 used as fuel for transportation, CNG decreases vehicular pollution Piped Natural gas, PNG - Natural Gas distributed through a pipeline network that has safety valves to maintain the pressure assuring safe, uninterrupted supply to the domestic sector Gitaratan International Business School 28

Performance Appraisal Sector Generation of electricity by utilities Fertilizer I ndustry Industrial Domestic and commercial Automotive Petrochemicals Natural Gas is used As fuel for base 008191039909 load power plants In combined cycle/co-generation power plants As feed stock in the production of ammonia and urea As an under boiler fuel for raising steam As fuel in furnaces a nd heating applications For heating of spaces and water For cooking As a non-pol luting fuel As the raw material from which a variety of chemical e.g. methanol, are derived products

2. LPG & Allied Products: LPG GAIL produces LPG through fractionation, known as Straight Run (SR). GAIL LPG is an eco-friendly fuel and provides a cheaper and e ffective means of reducing pollution and increasing productivity. Characteristic s of GAIL LPG: Processed from Natural Gas. Clean fuel with almost nil unsatur d compounds Has a higher calorific value than Refinerys LPG and hence gives mor e value for money Its homogeneous composition results in more efficient combusti on The air fuel ratio need not be changed with every batch No Impurities like su lphur, carbon dioxide, traces of oxides of nitrogen. Hence lower corrosion. Has nil moisture content Customer-friendly fuel as it is easy to transport, store an d use Gitaratan International Business School 29

Performance Appraisal LPG : Applications Domestic: For use in household Commerci al: For use in hotels, bakeries, canteens, etc Auto: For use as fuel in automobi les Industrial: For use in production process, details of which are as under: IN DUSTRY Agriculture 008191039909 APPLICATION Grain drying/ Weed killing/ Preservation of fruits/ Tobacco curing/ Tea drying Automobile Heat treatment/ Paint baking Ceramics Biscuit and Gloss firing of porcelain & stoneware Chemicals and Drugs Heating and Drying Bul bs and Tubelights manufacturing/ Filament manufacturing/ Electrical Battery manu facturing Food Baking/ Boiling/ frying/ milk drying Glass Melting/ holding/ feed ing/ working/ Fire polishing Annealing/ Billet heating/ Melting/ Descaling/ Stre ss relieving/ Metallurgical Mould/ Cupola/ Laddle heating Metal Working Steel cu tting/ Hole piercing/ Welding of non ferrous metals Packaging Metal box solderin g Drying/ Singeing/ Velvet processing calendaring / Print drying/ Textile Dyeing Transport Engine fuel Aerosols propellant/ Amarjyotis / Torches/ Bird scarers / Miscellaneous Bitumen Melting in water proofing industry and road making GAIL L PG is valued in Industry because of its high energy heat, homogeneous content, c leanliness and easy availability. Industries prefer to use GAIL LPG to power pro cess furnaces, dryers, ovens, kilns, paint shops, etc. Process Heating: Homogene ous composition leads to no residue on combustion and accurate temperature contr ol. Air Fuel ratio need not be changed with every batch. Excellent application i n manufacture of textiles, glass, picture-tubes, automobile, bearings, etc. Gitaratan International Business School 30

Performance Appraisal 008191039909 Metal Processing: Clean burning. No residue of Sulphur, Lead & Carbon leads to m inimum scaling losses. Melting operations are homogeneous due to constant temper ature control. Excellent applications in forging, wire drawing, casting, melting industry Paintings nits: No unburned fuel and residues. Ability to have constan t temperature control results in effective and uniform heating with minimum fuel . ink printing, etc. Kilns & Furnaces: Accurate temperature control leads to enh anced productivity, reduces costs & pollution. No deposits of carbon lead to red uction in downtime and contamination. Excellent application in ceramics, heat tr eatment units. Drying Ovens: Finds excellent application in drying ovens due to less maintenance than oil systems because of one step heat transfer. Metal Indus try: Usage of GAIL LPG leads to greater flame stability. No risk for overheating or blow back. Preferred over oxyacetylene fuel due to greater flame stability a nd efficiency LPG : Production GAIL produces LPG at its seven fractionating unit s. Detail of locations and their and their production capacity are given below V ijaipur(2 Nos) , Madhya Pradesh Auraiya Pata, UP Gandhar & Vaghodia, Gujarat Usa r, Maharasthra Lakwa, Assam Major car manufacturers use GAIL LPG for paint shops . Also finds applications in food processing, GAIL is one of the largest indigenous producer of LPG. During 2006-2007 GAIL had produced about 10,25,900 MT (12 %) LPG against total all-India indigenous LPG p roduction of 84,04,000 MT Gitaratan International Business School 31

Performance Appraisal 008191039909 GAIL LPG is being supplied to PSU Oil Marketing Companies namely IOCL, BPCL, HPC L and IBP Ltd ex-Production Units at Import Parity Price. 3. Petrochemicals GAIL s the countrys premier Natural Gas Marketer & Transporters , diversified into the manufacturing and marketing of downstream HDPE & LLDPE from natural gas crac king at its Pata (Uttar Pradesh state, India) unit from 19th April 1999. The beg inning was with a name plate capacity of 2,60,000 MTPA of HDPE and LLDPE. In FY 2007-08, the petrochemical business portfolio contributed over 32% of the segmen t gross profit. GAIL is the only HDPE/LLDPE plant operating in Northern India an d has a dominant market share in North India. The primary thrust markets for the polymers had been Western India, but, with the entry of GAIL in the HDPE & LLDP E market segments, today north India has also witnessed a rapid and significant growth in the polymer downstream processing segments. In a successful span of ab out a decades of establishing and marketing its grades under the brand names G-L ex & G-Lene, GAIL has along side augmented its name plate capacity of HDPE & LLD PE to 4,10,000 MTPA by adding another dedicated HDPE downstream polymerization u nit of 1,00,000 MTPA. Polyethylene in India represents over 43% of thermo plasti c Demand 4. Power Gujarat State Energy Generation Ltd was incorporated on Decemb er 13, 1998, with Gujarat State Petroleum Corporation Ltd (GSPCL) as the main pr omoter, to set up a Natural Gas-based power project at Hazira . The project was planned with a generation capacity of 156 MW by utilising natural gas from Hazir a gas fields jointly owned by GSPCL and NIKO Resources, Canada, at an estimated cost of Rs. 576 crore with a 70:30 Debt to Equity ratio within 21 months from Ju ne 1, 2000. Fuel Supply Agreement with GSPCL / NIKO and Fuel Transportation Agre ement with Gujarat State Petronet Ltd were entered into to securitize fuel suppl y. An arrangement is in place to sell power to the Gujarat Electricity Board thr ough a Power Purchase Gitaratan International Business School 32

Performance Appraisal 008191039909 Agreement signed on February 28, 2000, for 20 years. Commercial production was d eclared with the commissioning of the Gas Turbines in open cycle mode in Decembe r 2001. Subsequent to successful completion of performance tests, Combined Cycle operation commenced from June 2002.The plant is running smoothly with high Avai lability and Plant Load Factor. 5. Gailtel The GAILTEL service arm of GAIL, is e ngaged in providing GAILTEL services to mission critical in-house SCADA and ERP services apart from commercially leasing services to GAILTEL Operators and ISPs a cross India. GAILTEL has been operating commercially in the Indian GAILTEL secto r since June 2001. It is also responsible for meeting the captive communication requirements of GAILs pipeline installations. GAILTEL, today serves most of the G AILTEL operators of the country, which include HUTCH, VSNL, Airtel , Idea Cellul ar, Reliance Infocom, Tata Tele services, to name a few. Its high speed optic-fi bre network extends to well over 13,000 Km connecting around 200 cities across v arious states like: Rajasthan, Gujarat, Madhya Pradesh, Maharastra , Uttar Prade sh, Andhra Pradesh, Haryana, Chandigarh, Delhi, Karnataka, Tamil Nadu and Kerela . With SDH & DWDM as the core layer, the network is built largely along the high ly secured GAILs cross country pipeline corridor and also configured in "self-hea ling" rings to ensure highly reliable and error free service to its esteemed cus tomers. The network is managed centrally on round the clock basis from a state-o f-art Network Management Centre at Noida 6. Exploration and Production Every clo ud has a silver lining and every adversity hides an opportunity. GAILs Explorat ion And Production (E&P) unit was born in just such a scenario.As the Indian Eco nomy opened up around the year 2000, the business environment changed dramatical ly. For GAIL, liberalisation meant competition in our core business i.e. midstre am and downstream national gas distribution No longer could we rely on statutory support mandating secured sources of Natural Gas for GAIL. The reserves contain ed in Gitaratan International Business School 33

Performance Appraisal 008191039909 existing contracted fields were fast depleting. The writing was on the wall that we had to find new sources. Apart from securing sources for Natural Gas, there were other compelling reasons for GAIL to get into E&P: Integration in supply-ch ain Large gap in Gas demand and supply National Gas security Balancing of Busine ss portfolio Global opportunity August 2001, therefore, saw the launch of GAILs Exploration & Production (E&P) unit. Initially, NELP rounds were targeted, and we won 12 blocks under four NELP rounds. GAIL also clinched a chunk of the much sought after A-1 block in Myanma r, in its maiden international E&P venture. The year 2004 placed GAIL firmly on Indias E&P map, with the dual strike of gas in Myanmar and oil in Cambay. We ar e also acquiring international acreages and actively pursuing various internatio nal E&P opportunities.We knows that the future will be demanding. And we are rea dy to embrace it, acquiring the suitable technological equipment and expertise, and enhancing our manpower strength. GAIL is currently participating in 27 explo ration blocks, in Basins such as Mahanadi, Mumbai, Cambay, Assam-Arakan, Tripura Fold Belt, Krishna Godavari, Cauvery and Cauvery Palar. GAIL has partnership in these blocks with various companies such as ONGCL, GSPCL, Hardy Exploration & P roduction, Petrogas, JOGPL, Eni, Oilex and Daewoo as Operators. Out of these 27 E&P, 3 blocks are overseas (A-1 and A-3 blocks in Myanmar and Block-56 in Oman). GAIL is participating in three CBM blocks awarded to the consortium under CBM-I II bidding round. Arrow Energy is the Operator of all the three CBM blocks. GAIL is a member of National Gas Hydrate Programme being coordinated by DGH and is a ctively involved in activities related to Gas Hydrate exploration.A list of curr ent Exploration blocks in which GAIL is participating is on the Gitaratan International Business School 34

Performance Appraisal 008191039909 link E&P and CBM Blocks showing Participating Interest (PI) of GAIL. 3 of thes e blocks were awarded during NELP-II, 2 during NELP-IV, 3 during NELP-V, 15 duri ng NELP-VI and 1 during NELP-VII. GAIL has farmed-in three blocks. The total are a for E&P Blocks is 172,275 KM2. GAS TRANSMISSION 7000 KM (148) E&P 27BLOCKS CBM 3 BLOCKS MMSCMD) LPG TRANSMISSION 1922 KM (3.8 MMTPA) LNG PLL, RGPPL 10MMTPA GAS PROCESSING 7 PLANTS (1.2)))MMTPA ) GAS & POWER GSEG, RGPPL (2250MW) PETROCHEM POLYETHYLEN E (410,000 TPA) TELECOM OFC (13000 KM) GAS RETAILING IGL, BGL, MGL, CUGL, GGL, TNGCL, MNGL, AGL Gitaratan International Business School 35

Performance Appraisal 008191039909 OVERVIEW OF INDUSTRY The Indian oil and gas sector is one of the six core industries in India and has very significant forward linkages with the entire economy. India has been growi ng at a decent rate annually and is committed to accelerate the growth momentum in the years to come. This would translate into Indias energy needs growing man y times in the years to come. Hence, there is an emphasized need for wider and m ore intensive exploration for new finds, more efficient and effective recovery, a more rational and optimally balanced global price regime - as against the rath er wide upward fluctuations of recent times, and a spirit of equitable common be nefit in global energy cooperation. The Indian oil and gas sector is of strategi c importance and plays a predominantly pivotal role in influencing decisions in all other spheres of the economy. The annual growth has been commendable and wil l accelerate in future consequently encouraging all round growth and development . This has necessitated the need for a wider intensified search for new fields, evolving better methods of extraction, refining and distribution, the constituti on of a national price mechanism - keeping in mind the alarming price fluctuatio n in the recent past and evolving a spirit of equitable global cooperation. Oil and Gas Sector: An Overview Exploration and Production (E&P) Gitaratan International Business School 36

Performance Appraisal 008191039909 The growing demand for crude oil and gas in the country and policy initiative of Government of India towards increased E&P activity, have given a great impetus to the Indian E&P industry raising hopes of increased exploration. Oil and Natur al Gas Corporation Limited (ONGC) and Oil India Ltd. (OIL), the two National Oil Companies (NOCs) and private and joint-venture companies are engaged in the exp loration and production (E&P) of oil and natural gas in the country. During the year 2008-09, crude oil production has been 33.51 million metric tonnes (MMT) wi th natural gas at 32.85 billion cubic metre (BCM).Natural gas production in 2009 -10 is targeted to be about 52.116 BCM. Imports and Exports of crude oil and pet roleum products During the financial year 2008-09, imports of crude oil has been 128.16 MMT valued at US$ 73.97 billion. Imports of crude oil during 2007-08 was 121.67 MMT valued at US$ 58.98 billion. This marked an increase of 5.33 per cen t during 2008-09 in quantity terms and increased by 25.37 per cent in value term s. During the financial year 2008-09, exports of petroleum products in quantity terms is 36.93 MMT valued at US$ 25.41 billion marking an increase of 6.02 per c ent in value terms compared to 2007-08. New Exploration Licensing Policy (NELP) New Exploration Licensing Policy (NELP) provides an international class fiscal a nd contract framework for Exploration and Production of Hydrocarbons. In the fir st seven rounds of NELP spanning 2000-2009, Production Sharing Contracts (PSCs) for 203 exploration blocks have been signed. Under NELP, 70 oil and gas discover ies have been made by private/joint venture (JV) companies in 20 blocks. With a view to accelerate further the pace of exploration, the eighth round of NELP was launched in April 2009.In the eighth round of NELP,70 exploration blocks compri sing of 24 deepwater blocks,28 shallow water blocks and 18 onland blocks will be offered. Natural Gas Gitaratan International Business School 37

Performance Appraisal 008191039909 Natural Gas has emerged as one of the most preferred fuel due to its environment ally benign nature, greater efficiency and cost effectiveness. At present, the m ain producers of natural gas are Oil and Natural Gas Corporation Limited (ONGC), Oil India Limited (OIL) and the Joint Ventures of Panna Mukta & Tapti, and Ravv a. Out of the total production of around 96 MMSCMD, after internal consumption, LPG extraction and unavoidable flaring, around 73 MMSCMD is available for sale t o various consumers. In addition, around 7 MMTPA of re-gasified LNG (about 23 MM SCMD) is also being supplied to domestic consumers. Gas produced by ONGC and OIL from the existing nominated blocks is sold at administered prices fixed by the Government. As against a total allocation of 150 MMSCMD of gas, actual supply un der APM is presently around 53 MMSCMD. Public Sector Undertakings Oil & Natural Gas Corporation Limited (ONGC) Oil & Natural Gas Commission (then Commission) wa s established on 14th August, 1956 as a statutory body under Oil & Natural Gas C ommission Act (The ONGC Act), for the development of petroleum resources and sal e of petroleum products. ONGC was converted into a Public Limited Company under the Companies Act, 1956 and named as Oil and Natural Gas Corporation Limited with effect from February 1, 1994. Oil India Limited (OIL) Oil India Limited (OIL), a Government of India Enterprise, under the administrative setup of Ministry of P etroleum and Natural Gas, is engaged in the business of exploration, production and transportation of crude oil and natural gas. The authorized capital of the c ompany is Rs. 500.00 crores and the paid up capital of the company is Rs. 214.00 crore. OIL produces crude oil and natural gas from its oilfields in Assam and A runachal Pradesh, non-associated gas from its fields in western Rajasthan and pr ocesses LPG from the natural gas in Assam. The Company presently has operational areas in Assam, Arunachal Pradesh, Mizoram, Orissa, Uttar Pradesh, Uttarakhand and Rajasthan in the country. Gitaratan International Business School 38

Performance Appraisal 008191039909 OIL is operating in 19 nominated ML and 19 nominated PELs. The Company has acqui red participating interest in a total of 21 NELP blocks up to the end of NELP-VI bidding round with the right of Operatorship in respect of 12 blocks. The Compa ny also holds Participating Interests (Pis) in another four Pre-NELP JV blocks i n India and Production Sharing Interest (PSI) in one Joint Venture Contract with other partners in Arunachal Pradesh. OIL is presently active overseas in seven countries, viz. Libya, Gabon, Iran, Nigeria, Yemen, Sudan and Bangladesh, pursui ng various upstream E&P activities. In addition, the Company is continuously sco uting for suitable E&P opportunities in other countries like Syria, Indonesia, O man, Kazakhastan, Russia, etc., either alone or with suitable partners. GAIL (In dia) Limited GAIL (India) Limited, Indias principal Gas Transmission and Marketin g Company, was created in 1984 with the objective of accelerating and optimizing the effective and economic use of natural gas and its fractions to the benefit of national economy. In line with core objective of its incorporation, GAIL has, over the years, developed natural gas infrastructure for sustained development of gas market in the country. GAIL, in the last two decades of its existence, ha s created a sizeable natural gas market in the country and presently markets aro und 25 BCM of Natural Gas. GAIL handles around 28 BCM of Natural Gas through its Transmission Network. Currently, GAILs market share in gas transmission and mark eting is 79% and 70% respectively. Refining Capacity During the year 2008-09, do mestic refinery production was 160.77 MMT. By the end of XI plan, refinery capac ity is expected to reach 240.96 MMT per annum. The country is net exporter of pe troleum products, and products like naphtha, petrol, diesel and Aviation Turbine Fuel (ATF) etc. were also exported during the year. At present, there are 20 re fineries operating in the country, out of which 17 are in the public sector and 3 in the private sector. Out of 17 public sector refineries, 8 are owned by Indi an Oil Corporation Limited (IOCL), 2 each by Chennai Petroleum Corporation Limit ed (a subsidiary of IOCL), Hindustan Petroleum Corporation Limited (HPCL), Gitaratan International Business School 39

Performance Appraisal 008191039909 Bharat Petroleum Corporation Limited (BPCL) and Oil and Natural Gas Corporation Limited, and 1 by Numaligarh Refinery Limited (a subsidiary of BPCL). The privat e sector refineries belong to Reliance Industries Limited and Essar Oil Limited. Chennai Petroleum Corporation Limited (CPCL) Chennai Petroleum Corporation Limi ted (CPCL) formerly known as Madras Refineries Limited was formed as a joint ven ture in 1965 between the Government of India (GOI), AMOCO India Inc., U.S.A. and National Iranian Oil Company (NIOC) having a share holding in the ratio 74%: 13 %: and 13% respectively. In 1985, AMOCO disinvested in favor of GOI and the shar eholding percentage of GOI and NIOC stood revised at 84.62 and 15.38 respectivel y. Later, GOI disinvested 16.92% of the paid up capital in favor of Unit Trust o f India, Mutual Funds, Insurance Companies and Banks on 19th May 1992, thereby r educing its holding to 67.7%. A public issue of CPCL shares was also made in 199 4. As a part of the restructuring steps taken up by the Government of India, Ind ian Oil Corporation Limited (IOCL) acquired equity from GOI in 2000-01. Currentl y, IOCL holds 51.88% while Naftiran Inter-trade Company Limited (an affiliate of NIOC) continued its holding at %.CPCL has two refineries, with a combined refin ing capacity of 10.5 million metric tonnes per annum (MMTPA). The Manali Refiner y in Chennai has a capacity of 9.5 MMTPA and is one of the most complex refineri es in India with Fuel, Lube, Wax and Petrochemical feedstocks production faciliti es. The second refinery at Cauvery Basin, Nagapattinam was set up initially with a capacity of 0.5 MMTPA in 1993 and later its capacity was enhanced to 1.0 MMTP A in 2002. Bongaigaon Refinery & Petrochemicals Limited (BRPL) BRPL was incorpor ated on February 20,1974 , with the objective of installation of Refinery having crude processing capacity of 1 MMTPA and a Petrochemical Complex consisting of Xylene Dimethyl Terephthalate (DMT) and Polyester Staple Fibre (PSF) units. The crude processing capacity of the Refinery was enhanced to 2.35 MMTPA in 1995-96 by commissions of its Refinery Expansion Units. The authorized equity capital an d the paid-up capital of the Company is Rs.200 crore and Rs.199.82 crore respect ively. The Government of India disinvested its equity share of 74.46% to Indian Oil Gitaratan International Business School 40

Performance Appraisal 008191039909 Corporation Limited (IOCL) in March, 2001 and hence BRPL became the subsidiary C ompany of IOCL on 29th March, 2001. Numaligarh Refinery Limited (NRL) Numaligarh Refinery, Popularly known as Assam Accord Refinery had been set up as a grass-roo t refinery at Numaligarh in the District of Golaghat (Assam) in fulfillment of t he commitment made by Government of India in the historic Assam Accord, signed on 15th august, 1985 for providing the required thrust towards industrial and econo mic development of Assam. Both the Refinery and its adjacent Marketing Terminal were completed within the approved project cost of Rs.2724 crore. Commissioning process of Numaligarh Refinery was completed in June 2000 and commercial product ion commenced from 1st October, 2000. Mangaore Refinery & Petrochemicals Limited (MRPL) Mangalore Refinery and Petrochemicals Limited (MRPL), first joint ventur e company for setting up a crude petroleum Refinery in India was formed in 1987 jointly by Hindustan Petroleum Corporation Limited along with Indian Rayon and I ndustries Limited and its associate companies (A.V. Birla Group). The refinery p roject was commissioned in March, 1996 with an actual capacity of 3.69 MMTPA. Th e expansion project of MRPL, having capacity of 9.69 MMTPA, was commissioned in April, 2001. The refinery is located at Mangalore on the western coast of India, primarily conceived to maximize middle distillates, such as kerosene and diesel . The refinery is designed to process light to heavy and sour to sweet crude. Th e performance of MRPL started deteriorating after dismantling of APM for refiner ies in April, 1998 and the Company came very close to becoming a sick company by 2002-03. With the approval of the Government, ONGC acquired the entire stake of Aditya Birla Group in MRPL for Rs.59.43 crore and also infused additional equit y capital of Rs.600 crore in March, 2003 as part of the approved debt restructur ing plan. With this, ONGC acquired 51% stake in the equity of MRPL. Thus, MRPL b ecame a Government company within the meaning and scope of Section 617 of the Co mpanies Act, 1956 and also a subsidiary company of ONGC. In June / July 2003, ON GC acquired 35.80 crore Gitaratan International Business School 41

Performance Appraisal 008191039909 equity shares held by banks and financial institutions issued against part conve rsion of their loans in terms of debt restructuring plan, increasing its stake i n MRPL to 71.62%. MRPL is the first refinery in India to produce Euro-III High S peed Diesel (HSD) and Euro-III Motor Spirit (Petrol). Other Undertakings/organiz ations Directorate General of Hydrocarbons (DGH) The Directorate General of Hydr ocarbons (DGH) was established under the administrative control of Ministry of P etroleum & Natural Gas by Government of India Resolution in 1993. Objectives of DGH are to promote sound management of the oil and natural gas resources having a balanced regard for environment, safety, technological and economic aspects of the petroleum activity. DGH has been entrusted with certain responsibilities co ncerning the Production Sharing Contracts for discovered fields and exploration blocks, promotion of investment and monitoring of E&P activities including revie w of reservoir performance of major fields. In addition, DGH is also engaged in opening up of new/unexplored areas for future exploration and development of non conventional hydrocarbon energy sources. Engineers India Limited (EIL) Engineers India Limited (EIL) was established in 1965 to provide engineering and related technical services for petroleum refineries and other related projects. Over the years, it has diversified into and excelled in various fields. EIL has emerged as Asias leading design, engineering and turnkey contracting company in Petroleum Refining, Petrochemicals, Chemicals & Fertilizers, Pipelines, Offshore Oil & Ga s, Onshore Oil & Gas, Terminals & Storages, Mining & Metallurgy and Infrastructu re Engineers India is an ISO 9001:2000 accredited Company. Balmer Lawrie & Co. L td. (BL) Balmer Lawrie & Co. Ltd. (BL) was established in 1867 as a Partnership Firm and was incorporated as Private Limited Company in 1924. It was subsequentl y converted into a Public Limited Company in the year 1936 with its Registered O ffice at Kolkata. Biecco Lawrie Limited (BLL), a Government of India Enterprise, under the administrative Gitaratan International Business School 42

Performance Appraisal 008191039909 control of the Ministry of Petroleum & Natural Gas (MOP&NG), was established in 1919 and became a Government Company in 1972. This is a medium sized Engineering Unit with diversified activities having two factories located at Kolkata. Oil I ndustry Development Board (OIDB) The Oil Industry (Development) Act, 1974 was en acted following successive and steep increase in the international prices of cru de oil and petroleum products since early 1973, when the need of progressive sel f-reliance in petroleum and petroleum based industrial raw materials assumed gre at importance. Oil Industry Safety Directorate (OISD) The Oil Industry Safety Di rectorate (OISD) assists Safety Council under Ministry of Petroleum & Natural Ga s (MOP&NG) headed by Secretary, P&NG as Chairman and includes Additional / Joint Secretaries, Advisors in MOP&NG, Chief Executives of all Public Sector Undertak ings (PSUs) under the Ministry, Chief Controller of Explosives (CCE), Advisor (F ire) of the Govt. of India, DGMS and the Director General of Factory Advice Serv ice & Labour Institute etc. as members. Centre for High Technology (CHT) Centre for High Technology (CHT) was established in 1987 as a specialized agency of the oil industry to assess futuristic requirements, acquire, develop and adopt tech nologies in the field of refinery processes, petroleum products, additives, stor age and handling of crude oil, products and gas. Petroleum India International ( PII) Petroleum India International (PII) is a consortium of Public Sector Compan ies in the petroleum, Petrochemicals and engineering sector. The member companie s include Indian Oil Corporation Ltd., Bharat Petroleum Corporation Ltd., Bongai gaon Refinery & Petrochemicals Ltd., Chennai Petroleum Corporation Ltd., Enginee rs India Ltd., Hindustan Petroleum Corporation Ltd, Oil India Ltd and Indian Pet rochemicals Corporation. Gitaratan International Business School 43

Performance Appraisal Petroleum Planning & Analysis Cell (PPAC) 008191039909 The Petroleum Planning & Analysis Cell (PPAC) was created w.e.f. 1st April 2002 after dismantling of the Administered Pricing Mechanism (APM) in the petroleum s ector and abolition of the erstwhile Oil Coordination Committee (OCC). The Gover ning Body under the chairmanship of Secretary (PNG) and senior officials of MOPN G and Chief Executives of major oil and gas PSUs as members provides necessary s upervision, guidelines in the functioning of PPAC. Investment Opportunities Petr oleum products are the single largest merchandise export from India. Improved Oi l Recovery (IOR) / Enhanced Oil Recovery (EOR) techniques Crude oil production f rom the deepwater block D6 in KG Basin Use of improved technology Extended oil ield acquisition activities Capacity utilization of refineries Foreign company c ollaboration End-user market and Infrastructure development Setting up oil & gas courses at universities and training institutes Opportunities for world-class s ervice providers Initiatives National Auto Fuel Policy The Auto Fuel Policy aims to comprehensive ly and holistically address the issues of vehicular emissions, vehicular technol ogies, and auto fuel quality in a cost-efficient manner while ensuring the secur ity of fuel supply. The policy objectives are: (i) Ensure sustainable, safe, aff ordable and uninterrupted supplies of auto fuels of right quality to support soc ial and economic development. One of the key factors for meeting this policy obj ective is to diversify the sources and reduce dependence on any single source of supply. Gitaratan International Business School 44

Performance Appraisal 008191039909 (ii) Over the years, infrastructure for the import of crude and crude products, their processing and production, and storage and transportation has been created in the country. Considerable investment has been made in developing this infras tructure and the logistics for the distribution of petroleum products in the cou ntry. The Auto Fuel Policy is committed to an optimal utilization of such an inf rastructure. (iii) Assess the future trends in emission and air quality requirem ents from the view point of public health, and establishment of a consistent fra mework within which different policy options to reduce emissions can be assessed . It is, therefore, required that environmental objectives for air quality be de termined, emission reduction targets be established, input data on costs and ben efits be collected and cost effective measures to reduce emissions be identified .Appropriate institutional arrangements to be put in place to where such activi ties can be handled effectively. (iv) Adopt such vehicular emission standards th at they together with other measures, will be able to make a decisive impact on air quality, without placing an undue burden on the people. (v) Vehicular emissi on standards and auto fuel quality should offer choice to the citizens and equal ly a choice to automobile manufactures in matters of technology selection. Princ iples of widening the choice and promoting competition amongst automobile techno logies, within the limits that are imposed by the availability of auto fuels and security of their supplies. (vi) As elsewhere in the world, the Government shou ld decide only the vehicular mission standards and the corresponding fuel specif ications without specifying vehicle technology and the type of fuel. (vii) The r equirement of investments to reach vehicular technology and fuel quality of Euro III equivalent levels throughout the country is estimated in the range of Rs. 5 0,000 Rs. 60,000 crore. Therefore, to achieve the air quality targets by gradual ly improving emission standards and a phased up gradation of fuel quality and ve hicular technology, taking note of the financial, technical and institutional co nsiderations as also the absorptive capacity is required. Gitaratan International Business School 45

Performance Appraisal FDI Policy 008191039909 The present policy on FDI in the Petroleum & Natural Gas sector vide Press Note No 5 (2008) permits FDI up to 100% under the automatic route in all activities o ther than refining and including market study and formulation, investment/financ ing, setting up infrastructure for marketing in Petroleum and Natural Gas Sector subject to sectoral policy. In Refining, FDI up to 49% in case of Public Sector Undertakings, without involving any divestment or dilution of domestic equity i n existing public sector undertakings through Foreign Investment Promotion Board (FIPB) and FDI up to 100% is permitted in case of Private Companies under Autom atic route subject to sectoral policy. Key Players : Indian Oil , Reliance, Bhar at Petroleum, HP, ONGC , BP, BG Group , Gaz de France, Chevron Foreign Direct In vestment (FDI) Policy The present policy on FDI in the petroleum & natural gas s ector vide press note no 5 (2008) permits FDI up to 100% under the automatic rou te in all activities other than refining, investment/financing, setting up infra structure for marketing in petroleum and natural gas sector subject to sectoral policy including market study and formulation. Gitaratan International Business School 46

Performance Appraisal 008191039909 LITERATURE REVIEW Gitaratan International Business School 47

Performance Appraisal 008191039909 The concept of Performance Appraisal dates back to the First World War and was t hen called Merit Rating Program. Over a period of time, this concept has been thro ugh an ocean of change. The areas of evaluation have also changed. According to Carl Heyel, author/editor on management, philosopher and teacher, performance app raisal is the process of evaluating the performance and qualifications of the em ployees in terms of job requirements, for administrative purposes such as placem ent, selection and promotion, to provide financial rewards and other actions whi ch require differential treatment among the members of a group as distinguished from actions affecting all members equally. Performance measurement (appraisal) i s defined in many different ways. Neely et al. (1995) define PM as the process of quantifying the efficiency and effectiveness of action. They defined a PMS as the set of metrics used to quantify both the efficiency and effectiveness of action s. Rouse and Putterill (2003) define PM (Performance measurement) as the compariso n of results against expectations with the implied objective of learning to do b etter. In their view, the main reason for setting up a PMS is the objective of be coming better. This is supported by Dumond (1994), who considers performance meas ures to be established to support the achievement of goals with the intent to mo tivate, guide and improve an individuals decision making. That is the reason why m any authors refer to a Performance Management System rather than a Performance M easurement System. In the eyes of Lebas (1995) and Amaratunga and Baldry (2002), measurement is not an end in itself, but a tool for more effective management. Results of performance measurement indicated what happened, not why it happened, or what to do about it. In order for an organisation to make effective use of i ts performance measurement outcomes, it must be able to make the transition from measurement to management. Within the literature however, the term performance m easurement is used most frequently, which is why we also adopt this terminology i n this paper. We acknowledge the importance of using PM as a tool for management , and Gitaratan International Business School 48

Performance Appraisal 008191039909 define performance measurement as the process of quantifying the efficiency and e ffectiveness of actions, in order to compare results against expectations, with the intent to motivate, guide and improve decision making. We define a performanc e measurement system as the set of metrics used to quantify the efficiency and ef fectiveness of actions, and the corresponding guidelines for linking these metri cs to strategy and improvement. In this paper, we will review performance measure ment systems for purchasing, which mean we will focus on metrics that can be use d to quantify the efficiency and effectiveness of purchasing actions, and the co rresponding guidelines for linking these metrics to purchasing strategy and cont inuous improvement in purchasing. The evolution of performance measurement Finan cial measures have long been used as the sole criteria to evaluate performance o f organisations. According to Lebas (1995), the traditional managerial accountin g model of the firm is focused on product-costing and defines performance as inc ome, that is, the difference between sales and costs. Bourne and Neely (2003) st ate: Traditional accounting based performance measures have been characterised as being financially based, internally focused, backward looking and more concerne d with local departmental performance than with the overall health or performanc e of the business. Also within purchasing, the traditional approach to performanc e measurement is an efficiency-based PMS, focused on minimizing costs and maximi zing functional operating efficiency (Dumond, 1994). In the early 1980s, however , several academics and practitioners realised that due to increased complexity of organisations and the markets in which they compete, it was no longer appropr iate to use financial measures as the sole criteria for assessing success. Johns on and Kaplan (1987), for example, highlighted the failure of financial performa nce measures to reflect changes in the competitive circumstances and strategies of modern organisations. While profit remains the overriding goal, it is conside red an insufficient performance measure, as measures should reflect what organis ations have to manage in Gitaratan International Business School 49

Performance Appraisal 008191039909

order to profit. Kaplan and Norton (1992) show that traditional financial measur es fail to provide information on what customers want and how competitors are pe rforming. This is one of the reasons why a Performance Measurement Revolution st arted in the early 1990s. Many authors started to design and implement PMSs, whi ch were able to overcome the shortages of the traditional PMSs. According to Nee ly (1999), there are seven main reasons for the performance measurement revolutio n: The changing nature of work, making traditional accounting systems with the emphasis on direct labour obsolete. Increasing competition, driving a need for m easures of quality of service, flexibility, customisation, innovation and rapid response. Specific improvement initiatives that rely on performance measurement, such as Total Quality Management, Lean Production or World Class Manufacturing. The establishment of national and international quality awards. Changing organi sation roles for performance measurement from accounting to human resource manag ers. Changing external demands on performance accountability, such as the demand s from regulators in newly deregulated industries. The power of information tech nology, making the capture and analysis of data far easier, and opening up new o pportunities for data review and subsequent action. During this performance measu rement revolution, many PMSs were developed such as the Balanced Scorecard (Kapla n, Norton, 1992), Performance Pyramid (Lynch, Cross, 1991), and the Performance Prism (Neely, Adams, 2000). The objective of such systems is to help organisatio ns define a set of measures that reflect their objectives and assess their perfo rmance accordingly. These systems are usually multidimensional, explicitly balan cing financial and non-financial measures. A wide range of criteria has also bee n developed, indicating the functions and elements of effective performance meas ures and measurement systems. Gitaratan International Business School 50

Performance Appraisal 008191039909 Functions and elements of effective performance measurement systems depending on the organisational context, the organisational culture and managerial intention s, performance measurement systems can fulfil different functions. There are, ho wever, five main functions, which all PMSs should address: Assessing, managing a nd improving performance, on all relevant factors (financial and non-financial) that drive profitability (Butler et al., 1997). Strategy formulation and clarifi cation (Kaplan, Norton, 1996b; De Haas, Kleingeld, 1999). Enhancing strategic di alogue (De Haas, Kleingeld, 1999; Bessire, Baker, 2004; Neely, 1999). Besides th ese functions, a wide range of factors have been developed that distinguish effe ctive performance measurement systems from less effective PMSs. First of all, th e performance measures on which the system is based, should be relevant, balance d, and related to the companys strategy. Performance measurement should be based on financial as well as non-financial PIs, because quality or other non-financial goals are often part of a companys strategy. According to Evans (2004), one of t he limitations of traditional accounting measures is that they are often not abl e to translate strategy into measures that uniquely communicate an organisations vision. Measures need to be related directly to the organisations mission and obj ectives in order to reflect the companys external competitive environment, custom er requirements and internal objectives (Kennerley, Neely, 2002). Performance me asures need to be balanced in terms of financial and non-financial measures, rel ated to internal and external stakeholders, and consisting of leading and laggin g indicators (Evans, 2004). In order to ensure that PMSs remain relevant, they s hould be reviewed periodically (Lynch, Cross, 1991). Yet few organisations appea r to have systematic processes in place for managing the evolution of their meas urement systems (Kennerley, Neely, 2002). Bititci et al. (2000) propose audit to ols that enable organisations to identify whether their existing measurement sys tems are appropriate given their environment and objectives. Gitaratan International Business School 51

Performance Appraisal 008191039909 Many authors point out that a proper organisational and information system struc ture is a prerequisite for an effective PMS. According to Amaratunga and Baldry (2002), a proper organisation structure includes involved leadership, open commu nication, and a reward system that is linked to performance measures. A highly d eveloped information system is also an important part of the organisation struct ure. Bourne et al. (2000) show that performance measurement systems requiring re gular reporting are best automated. Bititci et al. (2000) point out that the mai n benefit of using an IT platform for managing the PMS within an organisation is that the maintenance of the information contained within the systems becomes mu ch simpler. They also set up some requirements for an IT platform, which is suit able in such a situation. Finally, effective PMSs are linked to elements of huma n resource management, such as competence management; goal setting and sharing; feedback; and reward (Neely, 1999). Especially reward has been a hot topic recen tly and there is considerable debate as to whether performance measures should b e linked to reward. According to Dumond (1994), providing feedback to individual s with regard to where they stand on the performance measures is essential. This can enhance performance by providing motivation or information about the correc tness and adequacy of work behaviour, and can also provide workers with a sense of accomplishment, competence and control. Five performance measurement systems in practice During the Performance Measurement Revolution, many Performance Meas urement Systems have been developed to overcome the drawbacks of traditional per formance measurements systems, described earlier in this paper. According to Fri go and Krumwiede (1999), survey data suggest that between 40 and 60 percent of c ompanies significantly changed their measurement systems between 1995 and 2000. In this paper, we review five influential PMSs, and assess their suitability as performance measurement system for purchasing: the Balanced Scorecard (Kaplan, N orton, 1992), the Tableau de Bord (a French approach developed in the 1930s), th e Performance Prism (Neely, Adams, 2000), the Performance Pyramid (Lynch, Cross, 1991), and the Productivity Measurement and Enhancement System (Pritchard, 1990 ). Gitaratan International Business School 52

Performance Appraisal The Balanced Scorecard (BSC) 008191039909 The best known performance measurement system is undoubtedly the balanced scorec ard (BSC), developed by Kaplan and Norton (1992; 1996a; 1996b). Kaplan and Norto n (1996b) define the BSC as a multidimensional framework for describing, implemen ting and managing strategy at all levels of an enterprise by linking, through a logical structure, objectives, initiatives, and measures to an organisations stra tegy. The balanced scorecard provides an enterprise view of an organizations overa ll performance: it complements the traditional financial performance measures wi th key performance indicators (KPIs) in three non-financial areas. The four buil ding blocks of the BSC are: Financial Perspective. This perspective answers the question: To succeed financially, how should we appear to our shareholders? and is typically related to profitability. It is measured, for example, by the Return on Investment (ROI), Return on Capital Employed (ROCE), and Economic Value Added (EVA). Customer Perspective. This perspective answers the question: To achieve o ur vision, how should we appear to our customers?. It includes several core or ge neric measures of successful outcomes from the company, like, customer satisfact ion, and market share in targeted segments. Internal Processes. In this perspect ive, the following question is answered: To satisfy our shareholders and customer s, what business processes must we excel at?. This perspective focuses on the int ernal processes that will have the greatest impact on customer satisfaction and on achieving the organisations financial perspectives. Learning and Growth. The q uestion: To achieve our vision, how will we sustain our ability to change and imp rove? is answered in this perspective. The infrastructure the organization has to build and manage to create long-term growth and improvement through people, sys tems and organizational procedures, is identified in this perspective. Gitaratan International Business School 53

Performance Appraisal 008191039909 The BSC is not a static list of measures, but rather a logical framework for imp lementing and aligning complex programs of change, and, indeed, for managing str ategy-focused organizations (Abran, Buglione, 2003). The scorecard translates th e vision and strategy of a business unit into objectives and measures in the fou r different areas. This is also depicted in Figure 1. Figure 1 - The four perspe ctives of the BSC Source: Kaplan and Norton (1996a) The execution of this strategy is then monitored through an internal performance measurement framework with a set of goals, drivers and indicators grouped into each of the four perspectives (Abran, Buglione, 2003). According to Norreklit (2 000), a good balanced scorecard should have a mix of outcome measures (lag indic ators) and performance drivers (lead indicators). An example of a lag indicator is increased turnover, while order execution time is a lead indicator. Each of t he four strategic areas in the BSC should have both lead and lag indicators. Gitaratan International Business School 54

Performance Appraisal 008191039909 Many authors, including Kaplan and Norton (1996b), assume the following causal r elationship: improvements in organizational learning and growth precede improvem ents in internal business processes, which precede improvements in the customer perspective, which in turn precede improvements in financial measures. The measu res of organizational learning and growth are therefore the drivers of the measu res of the internal business processes. This allows the measurements in non-fina ncial areas to be used to predict future financial performance. Although there i s some criticism on the BSC (e.g., Norreklit 2000) it has, according to Abran an d Buglione (2003), the largest market penetration of all PMSs and tackles perfor mance at several levels, from the organizational level to the small business uni t, and to the individual level. Butler et al. (1997) state that it has been adop ted by many companies and its format and content appear to meet several manageme nt needs . Silk (1998) estimated that 60% of Fortune 1000 companies in the USA h ave had experience with Balanced Scorecards. In Europe, however, the BSC seems t o be less popular. Speckbacher et al. (2003), in a study conducted in Germany, A ustria and Switzerland, find that only 26% of their sample of 174 firms used som e form of a BSC, and then usually only a limited or incomplete version. Also in France, the BSC has not received a particularly warm welcome, where the Tableau de Bord has been used for at least 50 years. According to Bourguignon et al. (20 04), the BSC was known to only 41% of the responding firms and only 3% aimed to implement one. The Tableau de Bord is in many ways similar to the BSC, and some authors have even suggested that, being a precursor of the Balanced Scorecard, i t may have inspired its development (Chiapello, Lebas, 2001). The Tableau de Bor d is discussed in the next subsection. From a purchasing perspective, a supplier , or organisational input, perspective is noticeably lacking in the BSC. In prac tice, this has lead many purchasing organisations to adding a fifth, supplier pe rspective to the BSC in order to make it useable for purchasing (e.g., Aich, Fie dler, 2002). As purchased inputs may account for 60-80% of business Gitaratan International Business School 55

Performance Appraisal 008191039909 turnover, it is in fact rather difficult to understand that the BSC is so widely used as a performance measurement system for the total business. The Tableau de Bord (TdB) The Tableau de Bord (TdB) has gained widespread acceptance throughout the French business community. The TdB was introduced in France in the 1930s and was descr ibed as being similar to a dashboard (i.e. the literal translation of tableau de bor d) used by pilots (i.e. managers) to guide organisations to their destinations (Bess ire, Baker, 2004). It was first developed by process engineers who were looking for ways to improve their production process by better understanding cause-and-e ffect relationships (the relationships between actions and process performance). The same principle was then applied at the top management level, to give senior managers a set of indicators allowing them to monitor the progress of business, compare it to the goals that had been set, and take corrective actions. Accordi ng to Epstein and Manzoni (1998), this initial objective - giving managers a bri ef and to the point overview of key parameters to support decision making - has two important implications: First, the TdB cannot be a single document applying equally well to the whole firm; because each sub-unit, and in fact each manager, has different responsibilities and objectives, there should be one TdB for each sub-unit. These dashboards should be integrated in a nested structure, as illustr ated in Figure 2. In this context, the firms overall TdB would be translated into a series of documents supporting local decision making (cf. Chiapello, Lebas, 2 001). Secondly, the various TdBs used within the firm should not be limited to f inancial indicators. Operational measures often give better information on the i mpact of local events and decisions, and thus on cause-and-effect relationships, than overall financial indicators. From its origin, the TdB was conceived of as a balanced combination of financial and non-financial indicators and many authors have emphasized the need to use non-financial indicators (e.g., Epstein, Manzon i, 1998). The development of a Tableau de Bord involves translating the units mis sion and vision into a set of objectives, from Gitaratan International Business School 56

Performance Appraisal 008191039909 which the unit identifies its Key Success Factors, which then get translated int o a series of quantitative Key Performance Indicators (KPIs). According to Epste in and Manzoni (1998), the TdB should primarily contain KPIs that are largely co ntrollable by the sub-unit. At the same time, sub-units often need to collaborat e on interdependent tasks and projects. Such areas of interdependence should be identified, and then reflected by choosing indicators that capture the interdepe ndence and encourage sub-units to collaborate more effectively. Furthermore, Bou rguignon et al. (2004) state that most authors insist on including a learning pe rspective in the TdB, according to which the measures represent a basis for lear ning about the cause-and-effect relationships of actions. The basic idea is that , if realised performance does not meet the standard, the cause for this should be found and the problem solved (single-loop learning), but the path should also be questioned (double-loop learning). Figure 2 - The nested structure of the Ta bleau de Bord Source: De Guerny et al. (1990) Gitaratan International Business School 57

Performance Appraisal 008191039909 The TdB is mainly used in France, the country where it has originated. Although there are clear similarities between the TdB and the BSC, there is a considerabl e French reluctance to the BSC. They state that the practice of the TdB has been far more developed in 60 years than the BSC, which only exists for 10 years. Al so, reluctance is created by translation problems, caused by the French translat ion of BSC into Tableau de Bord Prospectif, which likely creates confusion (Bour guignon et al., 2004). The biggest drawback perhaps of the TdB is its undefined structure. Because of its lack of predefined performance areas, there is a risk of managers implementing the TdB with a set of performance indicators that is no t balanced in terms of financial and non-financial, lead and lag, strategic and operational, and related to effectiveness and efficiency. The Performance Prism (PPR) The Performance Prism (PPR), developed by Neely and Adams (2000), is a PMS organised around five distinct but linked perspectives of performance: stakehol der satisfaction, strategies, processes, capabilities, and stakeholder contribut ions (see also Kennerley, Neely, 2002). These perspectives are visualised by a t hree dimensional model in the shape of a prism, which can be seen in Figure 3. Source: Neely & Adams (2000) Gitaratan International Business School 58

Performance Appraisal 008191039909 The top and bottom facets are stakeholder satisfaction and stakeholder contribut ion respectively and the three side facets are strategies, processes and capabil ities. These five distinct, but logically interlinked, perspectives on performan ce have been identified by Neely and Adams (2000) together with five key questio ns for measurement design. Stakeholder Satisfaction. The key question in this pe rspective is: who are the key stakeholders and what do they want and need? Those organisations aspiring to be successful in the long term within todays business environment have an exceptionally clear picture of who their key stakeholders ar e and what they want. This perspective is deliberately broader than the balanced scorecard view of stakeholders, which encompasses only shareholders and custome rs (Neely et al., 2001). Strategies. The key question here is: what strategies d o we have to put in place to satisfy the wants and needs of these key stakeholde rs? These organisations have defined what strategies they will pursue to ensure that value is delivered to these stakeholders. The Performance Prisms strategy me asures monitor whether goals are being met and provide the data for informed exe cutive decisions. Processes. What critical processes do we require if we are to execute these strategies? Companies have to understand what processes the enterp rise requires if the strategies defined before are to be delivered. Capabilities . The main question in this perspective is: what capabilities do we need to oper ate and enhance these processes? Capabilities are the combination of people, pra ctices, technology and infrastructure that together enable the execution of the organisations business processes (both now and in the future). Companies must con sider which capabilities are needed to execute the processes defined before. The se are the fundamental building blocks of a corporations ability to compete. Stak eholder contribution. What contributions do we require from our stakeholders, if we are to maintain and develop these capabilities? This facet has been included as a separate component since it recognises the fact that not only Gitaratan International Business School 59

Performance Appraisal 008191039909 organisations have to deliver value to their stakeholders, but also that organis ations enter into a relationship with their stakeholders, which should involve t he stakeholders contributing to the organisation. The PPR distinguishes itself f rom other PMSs by not only taking into account shareholders like customers and e mployees, but also suppliers, regulators, local communities or pressure groups, who are nowadays essential stakeholder groups to consider. Especially suppliers are important because companies become more and more dependent on their supplier s since they outsource non-core business. Regarding experience of companies with the PPR, there is only little evidence the PPR works in practice. Neely et al. (2001) present three case studies. They conclude that the feedback of the compan ies involved was overwhelmingly positive. It seemed that the PPRs principal appea l lies in the logical interrelationships between the five perspectives; its comp rehensiveness and adaptability, allowing different entry points; and the fact th at stakeholders are addressed in a wholly original and radical way (Neely et al. , 2001). Performance Pyramid System (PPS) The Performance Pyramid System (PPS) was one of the first new PMSs, developed by L ynch and Cross (1991) during the Performance Measurement Revolution. In short, i t is Gitaratan International Business School 60

Performance Appraisal 008191039909 an interrelated system of different performance variables, which are controlled at different organisational levels. Strategic objectives flow down through the o rganisation with a reverse flow of information flowing upwards. Lynch and Cross use a pyramidshaped map for understanding and defining the relevant objectives and measures for each level of the business organisation. The four levels of the PP S embody the corporate vision, accountability of the business units, competitive dimensions for business operating systems, and specific operational criteria. A ccording to Laitinen (2002), the purpose of the PPS is to link an organisations st rategy to its operations by translating objectives from the top down (based on c ustomer priorities) and measures from the bottom up. According to him, the develop ment of a firms performance pyramid starts with the definition of an overall corp orate vision (the highest or first level of objectives), which is then translate d into individual business unit objectives at the second level. At the second le vel of objectives key market and financial measures are identified as ways of mo nitoring performance in achieving the vision. In order to attain these market an d financial objectives, key measures of customer satisfaction, flexibility and p roductivity are also derived. These key measures at the third level are further converted into specific operational measures, which form the base of the pyramid . These measures (quality, delivery, cycle time and waste) relate to individual departments. Lynch and Cross (1991) claim that the performance pyramid is useful for describing how objectives are communicated down to the operational level and how measures are conveyed back up to higher levels. They also identify the use of the PPS in a feedback context, whereby it is used explicitly to monitor organ izational performance. Finally, they argue that this model is equally useful for monitoring performance at the corporate, the SBU, the Business Operating System s, and the departmental and work-centre levels of the organization. Although the original version of the PPS was not designed to cope with performance measureme nt at the individual level, later adaptations do specify its potential for measu ring the performance of individuals and teams. Gitaratan International Business School 61

Performance Appraisal 008191039909 Stakeholders other than customers and shareholders do not feature prominently in the PPS. The user will have to make sure that measures at the different levels of the pyramid relate to other principal stakeholders, such as suppliers in the case of purchasing performance. Productivity Measurement and Enhancement System (ProMES) The productivity measurement and enhancement system (ProMES) was originally deve loped by Pritchard (1990). ProMES is a participative development method for perf ormance management systems, designed to be a practical method of measuring organ isational productivity. In essence, ProMES is a formal, step-by-step process tha t identifies organisational objectives, develops a measurement system to assess how well the unit is meeting those objectives, and develops a feedback system wh ich gives unit personnel and managers information on how well the unit is perfor ming (Pritchard et al., 2002). As can be seen in Figure 4, the ProMES system is built up around the concept of motivational force. Figure 3 - ProMES Source: Pritchard (1990) According to Pritchard et al. (2002), ProMES is based o n the theory of work behaviour (see also Naylor et al., 1980). Motivation in thi s theory is seen as a resource allocation process where the resource is a persons time and energy, which is allocated across possible actions or tasks. Motivatio nal force is defined as the degree to which a person Gitaratan International Business School 62

Performance Appraisal 008191039909 believes that changes in the amount of personal resources in the form of time an d energy (effort) devoted to different acts (tasks) over time will result in a c hange in anticipated need satisfaction (Pritchard et al., 2002). Pritchard et al . (2002) declare that the motivational force of a person is the result of his ac ts, products, evaluations, outcomes and need satisfaction (see Figure 4). An act is the doing of something, for example running or talking, which is characterized by amplitude and direction. Products are the results of acts and often the pers ons output. When products are observed and evaluated, this results in evaluations where an evaluator places the measured product on a good to bad evaluative cont inuum. After evaluations are made, outcomes occur. These are intrinsic such as a feeling of accomplishment from writing a good paper, or extrinsic such as forms of recognition. Outcomes get their motivating power because of their ties to ne ed satisfaction. Positive affect occurs when needs are satisfied and negative af fect occurs when needs are not satisfied. Between each of these elements determi ning motivational force, relationships consist called contingencies (see Figure 4). These contingencies can be linear as well as non-linear. The ProMES system c an be developed and implemented with the following seven step process (Pritchard et al., 2002): Form a design team, composed of those who will be measured, one or two supervisors, and one or two facilitators who familiar with ProMES. Identi fy objectives for the unit. For each objective, identify one of more quantitativ e measures, called indicators, that measure how well these objectives are being met. Indicators have to be largely under control of the people being measured. D efine contingencies. A contingency is a function that defines how much of an ind icator is how good for the organisation. Design the feedback system. Give and re spond to feedback. Monitor the project over time and adjust if needed. Gitaratan International Business School 63

Performance Appraisal 008191039909 Although ProMES is not as popular as the BSC, up to 2002, about 120 ProMES proje cts have been executed in various types of organisations in nine different count ries (Pritchard et al., 2002). One of the most interesting features of ProMES is the bottom-up approach. People are really involved in the design of the system which increases the acceptance of the system. Another interesting feature of the system is the use of contingencies. By using these contingencies, priorities fo r improvement can be set. Also, non-linearity can be captured between an indicat or and the amount of contribution that level of indicator makes to the overall f unctioning of the organisation (Pritchard et al., 2002). However, these continge ncies make the system more difficult to develop and more effort has to be put in to explaining the system. Another disadvantage of ProMES is that the indicators do not necessarily need to be balanced if the objectives are not balanced. Becau se of its bottom-up approach, operational purchasing is really involved in the d esign of the system. The risk of this bottom-up approach however is that vertica l consistency can not be taken for granted (Algera, De Haas, 2002), which could result in a Business Units PMS being not in line with the companys PMS. The five p erformance measurement systems assessed BSC Strategic and operational + ++ measu res All stakeholders considered Lead and lag indicators Individual-level measure d Effectiveness measures and efficiency + +/+ +/+/TdB + +/+/+/PPR + + ++ PPS ++ + +/ProMES + +/+/++ performance +/Gitaratan International Business School 64

Performance Appraisal 008191039909 According to Flippo, a prominent personality in the field of Human resources, "p erformance appraisal is the systematic, periodic and an impartial rating of an e mployees excellence in the matters pertaining to his present job and his potentia l for a better job." Performance appraisal is a systematic way of reviewing and assessing the performance of an employee during a given period of time and plann ing for his future. It is a powerful tool to calibrate, refine and reward the pe rformance of the employee. It helps to analyze his achievements and evaluate his contribution towards the achievements of the overall organizational goals by fo cusing the attention on performance, performance appraisal goes to the heart of personnel management and reflects the managements interest in the progress of t he employees. Performance appraisal is the process of obtaining, analyzing and r ecording information about the relative worth of an employee. The focus of the p erformance appraisal is measuring and improving the actual performance of the em ployee and also the future potential of the employee. Its aim is to measure what an employee does. Organizations exist to achieve goals. Goals are only met when individual employees efforts matches with policy of the organization and thus b ringing out success and effectiveness. The assessment of how successful employee s have been at meeting their individual goals therefore becomes a critical part of HRM and here comes Performance Appraisal System. Performance appraisal is an important component of the information and control system. In todays flexible org anizations, performance evaluation provides an important way for managers to cla rify performance goals and standards and to enhance future individual performanc e. Thus the purpose of performance appraisal is to improve the organizations perf ormance through the enhanced performance of individuals. The performance apprais al system: Is an organizational necessity Gitaratan International Business School 65

Performance Appraisal Is based on well defined objective criteria Is based on c reful job analysis Uses only job related criteria Is supported by adequate studi es Is applied by trained qualified raters Is applied objectively throughout the organization Can be shown non discriminatory as defined by law. 008191039909 Operational Definition of Concepts Performance Appraisal Performance appraisal is the assessment of an individuals performance in an per formance in a systematic way, the performance being measured against such factor s as job knowledge, quality and quantity of output, initiative, leadership abili ties, supervision, dependability, co-operation, judgment, versatility etc. asses sment should not be confined to the past performance alone. Potentials of the em ployee for the future performance must also be assessed. Performance appraisal c an be defined as "the systematic evaluation of the individual with respect to hi s or her performance on the job and his or her potential for development". A mor e comprehensive definition is, Performance appraisal is a formal structured syste m of measuring and evaluating an employees job and how the employee can perform effectively in future so that the employee, organization all be benefited." Objectives of Performance Appraisal Performance appraisal system can serve the following purposes if designed proper ly Help each employee to understand more and more about his role and become clea r about his functions. Helps each employee to understand his own strengths and w eaknesses with respect to his role and functions of the company. Gitaratan International Business School 66

Performance Appraisal Helps identifying the developmental needs of employees. He lps increase mutuality between employee and his superiors. 008191039909 Provides an opportunity to the employees for self reflection and individual goal setting Helps in preparing employees for performing at high levels by continuou sly enforcing the required qualities. Creates a healthy environment in the organ ization. Measuring Performance In many organizations, the feedback on job performance is ambiguous or is given annually as a ritualistic exercise. Many subordinates therefore have trouble in gasping how their efforts are perceived by the organization. Almost every one wh o has worked at a job can remember times when they were unclear on how their per formance was being judged. The annual performance appraisal system tends to serv e only a little purpose: salary administration, training and succession planning . But this is not the sole objective of performance appraisal. These objectives will only dilute and weaken the clarity and validity of any appraisal system. Mo st organization ties the formal appraisal system directly to salary increase, wh ich decrease their validity. It is therefore very important for organizations to : (a) Link Salary and Status Realistically to the Performance Appraisals Most pe rsonnel departments have a very narrow outlook to appraisals. The general view i s to receive the appraisal forms at a date (which usually is the deadline), issu e instructions regarding increments and promotions, receive the data regarding t he same and they issue letters to the concerned employee informing of their sala ry increase. The appraisal process gets polluted as the appraiser and appraise h ave at the back of their minds promotion and salary increase, rather than perfor mance plans and participative reviews. This dilutes the objectives of appraisal to great extent. In fact, if organizations create, a culture of continuous feedb ack on the performance they would be making the Gitaratan International Business School 67

Performance Appraisal 008191039909

appraisal system more relevant. Several organizations have already started delin king performance appraisal from salary increase. (b) Making Objectives of Perfor mance Appraisals Clear to All Employees If performance appraisal should not dire ctly be linked to salary increase the question then arises, what should the obje ctives of performance appraisals be that could be realistically achieved? Some s uggestions: To do joint goal setting, and link the goals to the organizational jectives To provide role clarity by defining Key Result areas for Accounting. To e stablish a level of performance in the current job and seek ways of improving it . To identify potential for development and to support the total process of plann ing To increase communication between the appraiser and the appraise. To identify factors that facilitate performance and other factors that hinder performance. To help the employees identify and recognize their own strengths and weaknesses. T o make them assess their own competencies and how the same can be multiplied and improved. To generate data about the employee for various decisions like transfe rs, rewards, job-rotation, etc. (c) Focus on Developmental Appraisals Managers s hould develop part ownership in the employees future. Any good appraisal system should focus on developmental appraisal. Developmental appraisal mean that an o rganization needs to develop not just isolated performance appraisal tool/system , but the total frame work for the individuals development, improvement in job a nd level of competence and preparing employees for future jobs. Thus, appraisal of people, which is a part of the total HRD system, lies to be linked to long-te rm development activity and carrier planning. Organizations have to show vision for the future. Vision, strategies and objectives will give rise to individual o bjectives and performance standards. The immediate rewards and Gitaratan International Business School 68

Performance Appraisal 008191039909 recognition do not lead to enduring performance and upgrading of competence and therefore are not real motivators. The appraisal as a tool not only gives the in dividual and the organization the idea of where the individual stands in terms o f his skills, competencies and abilities, but also monitors the process of growt h and development, together with the inputs that are required to develop a high level of competence by individuals. (d) Let Employees Appraise Their Own Performance Subordinates need feedback more often on their performance. The best way to do it is to let them appraise their own performance. Self-appraisal would - 1) Motivate the employee to take more r esponsibility for his/her own performance. 2) Focus on the job behaviour only. 3 ) Reduce ambiguity in performance and focus on change in job behaviour. When sub ordinates undertake self-appraisal, they analyze their job duties and how key is sues in a job they handle. Each individual may rate himself or herself. Self-app raisal may focus on cost control, communication, planning, training, delegation and decisionmaking. After self-appraisal, the subordinate discusses the ratings with his/her direct report or superior to get a feed back on performance. Both t hen come to an agreement in areas of convergence and draw a job improvement plan . (e) Create a Climate for Open Appraisals in Organizations In most organization s, the concept of open appraisal is misunderstood. Open appraisal does nut mean that the appraisal ratings are shown by the subordinate and his/her signature is then obtained. What it does mean that both the appraiser and the appraise share their views on performance with each other, identify the areas of improvement a nd work towards it. One of the objectives of open communication between the appr aiser and appraise is to bring them together to solve organizational problems an d performance related problems. The quality of ratings is likely to improve if t here is shared understanding between the appraiser and appraise. Gitaratan International Business School 69

Performance Appraisal (f) Muscle Builds the Organization 008191039909 In todays competitive world, raising performance goals is essential. This entai ls analyzing the companys current situation, projecting the future, establishin g higher expectations, and selling the top management on the upgrading process a nd developing an action plan. Muscle builds the organization by 1) Enhancing you r own performance 2) Accelerating the professional growth of the best performers 3) Not tolerating managerial performers. One cannot muscle build the organizati on, unless marginal performers are replaced. 4) Developing multiple skills and c ompetencies by worshiping success and potential. (g) Build Commitment in the Wor kplace Change is an inevitable part of managers job. As conditions change, indi vidual responsibilities are also expected to change. In commitment-based approac h, the workplace, jobs are designed to be broader than before, team accountabili ty is as important as individual accountability for performance. The performance expectations are high and emphasize continuous important in the workplace. Mana gers have to stop being my topic to performance appraisals. No personnel profess ional in the 90s will be able to afford the luxury of myopia. We have to see ou r way to the various changes in environment that are taking place and those chan ges that will revolutionize our organization culture in the out coming years. We must help our organizations triumphant progress through the 90s, by recognizin g and rewarding performance. APPRAISAL ERRORS None of the methods for appraising performance is absolutely valid or reliable; each method has its own strengths and weakness. Let us try to understand the mos t commonly occurring errors within performance appraisal methods. 1. Error of Central Tendency: This refers to the tendency of not using extreme scale scores on the judgment sc ale; most of the rates are clustered in the middle. Gitaratan International Business School 70

Performance Appraisal 008191039909 2. Error of Leniency: This is caused by the tendency of the lenient ratter to put most of the rates on the higher side of the scale, while a tough ratter places them on the lower sid e of the scale. 3. Halo Effect: In other words, it is tendency to allow the assessment on one trait to influence assessment on others. This usually arises when traits are unfamiliar, ill defin ed and involved personal reactions. 4. Error in Unreliability: This error occurs when there is the existence of inconsistency in the evaluation s of a group of employees by two / more appraisers. 5. Personal Bias: This error occurs when there exists a close relationship between appraiser and a ppraisee. This tends to influence the evaluation. The scores could be on the hig her when there would be a bias on the side of the appraiser. Therefore, the scor es given could tend to be higher then what appraise deserves. This would give ap praise an undue advantage for appraisee during the times of promotions, pay rise etc. the same could happen vice versa too if an appraiser does not share a good relationship with appraisee, he could tend to give absolutely low scores for ap praisee. 5. No Consultation There would tend to be an error in the scores if the appraiser just goes on givi ng scores without discussing with appraise. If the appraise would not be given h is say in the matter, the score will not reflect the actual capability of apprai se. 6. Spill over Effect This refers to allowing past performance appraisal ratings to unjustifiably infl uence current ratings. 7. Status Effect: It refers to over rating of employed in higher level job or jobs held in high es teem, and under rating employees in lower level job at job held in low esteem. Gitaratan International Business School 71

Performance Appraisal 008191039909 Performance appraisal in GAIL Performance Appraisal The Performance Appraisal System in the Organisation has been designed to evalua te employee performance with a view to enhance individual contribution, greater job responsibility and build an overall achievement oriented organisational cult ure OBJECTIVES: The objective of the Performance Appraisal System are : To set n orms and targets of work performance as well as monitor the work progress of emp loyees. To facilitate placement of employees in accordance with their suitabilit y for different types of assignments. To provide and objective basis for determi nation of merit, efficiency and suitability for purposes of promotion. To identi fy areas requiring exposure for Training / Development. To plan the career growt h of employees. EVALUATION: The Performance Appraisal System seeks to evaluate: The work perform ance of an employee on the present job in relation to the expected level of perf ormance, both qualitative and quantitative. Gitaratan International Business School 72

Performance Appraisal 008191039909 The extent of development achieved by the employee during the period under revie w. Evaluation of behavioural attributes attitudes and abilities. Evaluation of p otential for assuming higher responsibilities. Performance Appraisal System in GAIL The Performance Appraisal in GAIL is done during the financial year i.e. for the 12 months period from 1st April to 31st March. Self S0-S3 S4-S7 Appraisal NA Ap praisal Reporting Officer Immediate Superior S4 & above : E1 & above S5 & above : E0-E3 Appraisal E2 & above Immediate Superior Immediate Superior Executive of Reporting officer superior than Reviewing officer E4-E9 Appraisal Immediate Supe rior Operation Administrative Head and Functional Director/Chief Managing Direct or The Appraisal is done of all regular employees of the Company The Appraisal f orm is filled in respect of all employees who have served for a period of atleas t 3 months in the organization during the relevant year. E D Reviewing Officer A ccepting Annexure B C Officer Immediate Superior of reporting officer Immediate Superior of reporting officer Gitaratan International Business School 73

Performance Appraisal 008191039909 Time schedule followed for the completion of Annual Confidential Reports for Exe cutives: 15th March a) Blank Forms will be sent by the Personnel Department to the concerned head of the Department / Branch. b) Forms to be given by Head of the Department to the concerned Executive for Self Appraisal. c) Completion of Self Appraisal by conce rned officer and submission to Reporting Office. d) Reporting Officer will compl ete his assessment and submit to the Reviewing / countersigning officer. e) Revi ewing/ Countersigning Officer will countersign the Annual Confidential Reports / PAF with or without his remarks and send to Accepting Authority. f) Annual Confi dential Report to be returned to Personnel Department of Region / Corporate Offi ce after perusal / remarks of Accepting Authority. a) Personnel Department of Re gional Office will send the Annual Confidential Reports of all Executives to Cor porate Office. 25th March 10th April 20th April 30th April 10th May 20th May Submission of Annual Confidential Reports / Performance Appraisal Form in respec t of Executives: Annual Confidential Reports / Performance Appraisals in respect of Executives in the level of E-3 and E-4 are submitted to the General Manager and the Director concerned wherever such authority is not the Reviewing / Gitaratan International Business School 74

Performance Appraisal Accepting Authority. 008191039909 The Reports in respect of Executives in the level of E-5 is submitted to concern Director wherever he is not the Reviewing / Accepting Authority. The Reports in respect of Executives in the level of E-6 and above will be put up to the Chief Managing Director. In the event of the overall assessment being not satisfactor y or carrying some adverse remarks, a communication will need to be issued to the concerned af ter the report has been accepted by the concerned authority. The adverse remark will be conveyed to the concerned employee by the personnel Department and this activity shall be completed by 30th June. Gitaratan International Business School 75

Performance Appraisal 008191039909 RESEARCH METHODOLOGY Gitaratan International Business School 76

Performance Appraisal 008191039909 In order to accomplish the objectives of the study, it is essential to articulat e the Manner in which it is to be conducted, i.e., the research process is to be carried-out in a certain framework. The research methodology, which follows, is the backbone of the study. Data Collection Sources Research work was done from two sources: (1) Primary data (2) Secondary data Primary data was collected by q uestionnaire and interview in the organizations. The questionnaire comprised of closed and attitude questions. The opinion on existing Performance Appraisal pra ctices and their affectivity were collected through questionnaire which was circ ulated to all the employees at all levels and the results have been analyzed on the basis of agree and disagree. The methodology for collection of data also inc luded interviews and discussion with the top management of the organization. Sec ondary data: It was collected by reviewing different literatures, from published books, management journals, articles published by the other researchers on 360 Degree Appraisal. Sampling: The total sample size for this project was 100 emplo yees at Jindal Brothers. The information collected through above methods has bee n tabulated, analyzed and interpreted. Finally an overall assessment of the cont ribution of top management, supervisory staff has been made towards improving th e effectiveness of the organization. Gitaratan International Business School 77

Performance Appraisal 008191039909 TYPES OF RESEARCH Research methodology is a way to systematic solve the Research Problem. It is a procedure, which is followed step by step to solve a particular research problem . There are basically four types of researches: 1 EXPLORATIVE RESEARCH 2 DESCRIP TIVE RESEARCH 3 DIAGNOSTIC RESEARCH 4 HYPOTHESIS TESTING RESEARCH Explorative Re search: To gain familiarity with phenomenon or to achieve an insight into it. De scriptive Research: To poetry accurately the characteristics of the particular i ndividual situation or a group . Diagnostic Research: To determine the frequency with which something occurs or with which it is associated with something else. Hypothesis Testing Research: To test a hypothesis of casual relationship betwee n variables . The present project is Descriptive cum Explorative in nature. It i s done to poetry accurately the characteristics of a particular individual situa tion or a group. The major purpose of the descriptive research is the descriptio n of the state of the affairs as it exits at resent. The main characteristics of this method are that the researcher has no control over the variables; he can o nly report what has happened or what is happening. Gitaratan International Business School 78

Performance Appraisal 008191039909 SAMPLING TECHNIQUE The sampling technique adopted for the study is non-probability Random sampling technique according to the convenience of the researcher. A questionnaire was ad ministered to employees of GAIL Infohub of different Departments like Finance De partment ,HR Department ,G.P.C.T. Department , O & M Department, Business Inform ation System Department and Gailtel Department. SAMPLE SIZE Data is collected using a sample of 60 employees of GAIL Infohub. SAMPLE DESCRIPTION The sample mainly consists of data from the primary sources that are utilized fo r the purpose of this study. This is done by means of administrating questionnai re to employees in different Departments. Secondary data like company journals, newsletters, records etc. were also relied on for retrieving further information . INSTRUMENTATION TECHNIQUE Questionnaire ACTUAL COLLECTION OF DATA Both secondary and primary sources of data are utilized for the purpose of this study. Primary data is collected by means of administering a questionnaire to th e employees of GAIL Infohub of different Departments like Finance Department, HR Department, G.P.C.T. Department, O & M Department, Business Information System Department and Gailtel Department. Secondary data is collected from various reco rds, manuals and other sources of the HR Department. Gitaratan International Business School 79

Performance Appraisal 008191039909 ANALYSIS AND INTERPRETATION Gitaratan International Business School 80

Performance Appraisal 008191039909 I have presented my results of survey in tabular form and their analysis. For th e purpose of easy reading the section has been divided into two parts. Tabular f orm of Response Analysis Table 1: The current system of appraisal in GAIL (India) is time consuming. Levels Strongly Agree Agree Neither Agree nor Disagree 10 3 10 5 Disagree Strongly Disagree S0-S3 S4-S7 E0-E3 E4-E9 0 0 1 0 0 2 2 5 2 2 5 10 1 0 2 0 10 9 8 7 6 5 4 3 2 1 0 S0-S3 S4-S7 E0-E3 E4-E9 Strongly Agree Agree Neither Disagree Strongly Agree nor Disagree Disagree Analysis: Gitaratan International Business School 81

Performance Appraisal 008191039909 10% staff members agree that current system of appraisal in GAIL (India) is time consuming. 65% staff members have no comments that current system of appraisal in GAIL (India) is time consuming. 25% staff members disagree that current syste m of appraisal in GAIL (India) is time consuming. 20% members agree that current system of appraisal in GAIL (India) is time consuming. 37.5% executive members have no comments that current system of appraisal in GAIL (India) is time consum ing. 42.5% executive members disagree that current system of appraisal in GAIL ( India) is time consuming. Table2: The current process can be simplified by following same steps in Probati on Approval and Annual Confidential Report. Levels Strongly Agree Agree Neither Agree nor Disagree 5 7 15 3 Disagree Strongly Disagree S0-S3 S4-S7 E0-E3 E4-E9 0 0 2 1 4 2 9 8 2 0 1 1 0 0 0 0 16 14 12 10 8 6 4 2 0 S0-S3 S4-S7 E0-E3 E4-E9 Strongly Agree Agree Neither Disagree Strongly Agree nor Disagree Disagree Gitaratan International Business School 82

Performance Appraisal Analysis: 008191039909 30% staff members agree that current process can be simplified by following same steps in Probation Approval and Annual Confidential Report. 60% staff members h ave no comments that current process can be simplified by following same steps i n Probation Approval and Annual Confidential Report. 10% staff members disagree that current process can be simplified by following same steps in Probation Appr oval and Annual Confidential Report. 50% executive members agree that current pr ocess can be simplified by following same steps in Probation Approval and Annual Confidential Report. 45% executive members have no comments that current proces s can be simplified by following same steps in Probation Approval and Annual Con fidential Report. 5% executive members disagree that current process can be simp lified by following same steps in Probation Approval and Annual Confidential Rep ort. Table3: Objective setting will complicate the process further and will not add v alue to performance Assessment system in GAIL. Levels Strongly Agree Agree Neither Agree nor Disagree 5 6 3 3 Disagree Strongly Disagree S0-S3 S4-S7 E0-E3 E4-E9 0 0 2 1 2 3 4 10 2 0 10 4 2 0 2 1 Gitaratan International Business School 83

Performance Appraisal 008191039909 10 9 8 7 6 5 4 3 2 1 0 S0-S3 S4-S7 E0-E3 E4-E9 Strongly Agree Agree Neither Disagree Agree nor Disagree Strongly Disagree Analysis: 25% staff members agrees that Objective setting will complicate the pr ocess further and will not add value to performance Assessment system in GAIL 55 % staff members have no comments that Objective setting will complicate the proc ess further and will not add value to performance Assessment system in GAIL 20% staff members disagree that Objective setting will complicate the process furthe r and will not add value to performance Assessment system in GAIL 42.5% executiv e members agree that Objective setting will complicate the process further and w ill not add value to performance Assessment system in GAIL 15% executive members have no comments that Objective setting will complicate the process further and will not add value to performance Assessment system in GAIL 42.5% executive mem bers disagree that Objective setting will complicate the process further and wil l not add value to performance Assessment system in GAIL Table 4: Self Assessmen t is a useful tool/step in the overall Performance. Levels Strongly Agree Agree Neither Agree nor Disagree Strongly Disagree Gitaratan International Business School 84

Performance Appraisal Disagree 6 0 2 6 008191039909 S0-S3 S4-S7 E0-E3 E4-E9 1 2 5 6 5 4 15 6 1 0 0 0 1 0 0 0 16 14 12 10 8 6 4 2 0 S0-S3 S4-S7 E0-E3 E4-E9 Strongly Agree Agree Neither Disagree Agree nor Disagree Strongly Disagree Analysis: 60% staff members agree that Self Assessment is a useful tool/step in the overall Performance. 30% staff members have no comments that Self Assessment is a useful tool/step in the overall Performance. 10% staff members disagree th at Self Assessment is a useful tool/step in the overall Performance. 80% executi ve members agree that Self Assessment is a useful tool/step in the overall Perfo rmance. 20% executive members have no comments that Self Assessment is a useful tool/step in the overall Performance. 0% executive members disagree that Self As sessment is a useful tool/step in the overall Performance. Gitaratan International Business School 85

Performance Appraisal 008191039909 Table 5: Annual Confidential report has no scope for bias. Levels Strongly Agree Agree Neither Agree nor Disagree 6 3 7 10 Disagree Strongly Disagree S0-S3 S4-S7 E0-E3 E4-E9 0 0 2 0 0 3 0 3 5 0 5 11 3 0 0 2 12 10 8 6 4 2 0 Strongly Agree Agree Neither Disagree Strongly Agree nor Disagre e Disagree S0-S3 S4-S7 E0-E3 E4-E9 Analysis: 15% staff members agrees that Annual Confidential report has no scope for bias Gitaratan International Business School 86

Performance Appraisal 008191039909 45% staff members have no comments that Annual Confidential report has no scope for bias 40% staff members disagree that Annual Confidential report has no scope for bias 12.5% executive members agree that Annual Confidential report has no s cope for bias 42.5% executive members have no comments that Annual Confidential report has no scope for bias 45% executive members disagree that Annual Confiden tial report has no scope for bias Table 6: There is a transparent linkage between Performance Management System in GAIL & other HR processes like promotion & transfer. Levels Strongly Agree Agree Neither Agree nor Disagree 4 4 7 10 Disagree Strongly Disagree S0-S3 S4-S7 E0-E3 E4-E9 0 0 3 0 5 5 10 2 1 0 2 3 1 0 1 2 10 8 6 4 2 0 Strongly Agree Agree Neither Disagree Agree nor Disagree Strongly D isagree S0-S3 S4-S7 E0-E3 E4-E9 Gitaratan International Business School 87

Performance Appraisal Analysis: 008191039909 50% staff members agree that there is a transparent linkage between Performance Management System in GAIL & other HR processes like promotion & transfer. 40% st aff members have no comments that there is a transparent linkage between Perform ance Management System in GAIL & other HR processes like promotion & transfer. 1 0% staff members disagree that there is a transparent linkage between Performanc e Management System in GAIL & other HR processes like promotion & transfer. 37.5 % executive members agree that there is a transparent linkage between Performanc e Management System in GAIL & other HR processes like promotion & transfer. 42.5 % executive members have no comments that there is a transparent linkage between Performance Management System in GAIL & other HR processes like promotion & tra nsfer. 20% executive members disagree that there is a transparent linkage betwee n Performance Management System in GAIL & other HR processes like promotion & tr ansfer Table 7: Your training needs are identified on the basis of your annual confiden tial report. Levels Strongly Agree Agree Neither Agree nor Disagree 4 4 3 2 Disagree Strongly Disagree S0-S3 S4-S7 E0-E3 E4-E9 1 0 3 2 1 4 9 16 4 0 0 3 2 0 2 0 Gitaratan International Business School 88

Performance Appraisal 008191039909 16 14 12 10 8 6 4 2 0 S0-S3 S4-S7 E0-E3 E4-E9 Strongly Agree Agree Neither Agree nor Disagree Disagree Strongly Disagree Analysis: 30% staff members agree that training needs are identified on the basi s of your annual confidential report. 40% staff members have no comments that tr aining needs are identified on the basis of your annual confidential report. 30% staff members disagree that training needs are identified on the basis of your annual confidential report. 75% executive members agree that training needs are identified on the basis of your annual confidential report. 12.5% executive memb ers have no comments that training needs are identified on the basis of your ann ual confidential report. 12.5% executive members disagree that training needs ar e identified on the basis of your annual confidential report Gitaratan International Business School 89

Performance Appraisal 008191039909 Table 8: Personal Development Plans (PDP) would be helpful in coaching for bette r performance. Levels Strongly Agree Agree Neither Agree nor Disagree 10 0 3 3 Disagree Strongly Disagree S0-S3 S4-S7 E0-E3 E4-E9 1 2 7 2 2 4 17 8 1 0 0 0 0 0 0 0 10 9 8 7 6 5 4 3 2 1 0 S0-S3 S4-S7 E0-E3 E4-E9 Strongly Agree Agre e Neithe r Disagree Strongly Agre e nor Disagre e Disagree Analysis: 45% staff members agree that Personal Development Plans (PDP) would be helpful in coaching for better performance. 50% staff members have no comments that Personal Development Plans (PDP) would be helpful in coaching for better pe rformance. 5% staff members disagree that Personal Development Plans (PDP) would be helpful in coaching for better performance. Gitaratan International Business School 90

Performance Appraisal 008191039909 85% executive members agree that Personal Development Plans (PDP) would be helpf ul in coaching for better performance. 15% executive members have no comments th at Personal Development Plans (PDP) would be helpful in coaching for better perf ormance. 0% executive members disagree that Personal Development Plans (PDP) wou ld be helpful in coaching for better performance. Table 9: Appraisal should essentially have a step of meeting with the reporting officer, with the purpose of giving feedback on performance. Levels Strongly Agree Agree Neither Agree nor Disagree 5 0 0 0 Disagree Strongly Disagree S0-S3 S4-S7 E0-E3 E4-E9 2 2 6 8 6 2 19 5 0 0 0 0 3 0 0 0 20 18 16 14 12 10 8 6 4 2 0 S0-S3 S4-S7 E0-E3 E4-E9 Strongly Agree Agree Neither Disagree Strongly Agree nor Disagre e Disagree Gitaratan International Business School 91

Performance Appraisal Analysis: 008191039909 60% staff members agree that Appraisal should essentially have a step of meeting with the reporting officer, with the purpose of giving feedback on performance 25% staff members have no comments that Appraisal should essentially have a step of meeting with the reporting officer, with the purpose of giving feedback on p erformance 15% staff members disagree that Appraisal should essentially have a s tep of meeting with the reporting officer, with the purpose of giving feedback o n performance 100% executive members agree that Appraisal should essentially hav e a step of meeting with the reporting officer, with the purpose of giving feedb ack on performance 0% executive members have no comments that Appraisal should e ssentially have a step of meeting with the reporting officer, with the purpose o f giving feedback on performance. 0% executive members disagree that Appraisal s hould essentially have a step of meeting with the reporting officer, with the pu rpose of giving feedback on performance. Table 10: There should be a dedicated cell focused on improving as well as imple menting the performance appraisal process centrally for all work centers. Levels Strongly Agree Agree Neither Agree nor Disagree 8 0 4 Disagree Strongly Disagree S0-S3 S4-S7 E0-E3 0 1 3 4 5 20 1 0 0 1 0 0 Gitaratan International Business School 92

Performance Appraisal E4-E9 2 9 2 0 008191039909 0 20 18 16 14 12 10 8 6 4 2 0 S0-S3 S4-S7 E0-E3 E4-E9 Strongly Agree Agree Neither Disagree Strongly Agree nor Disagree Disagree Analysis: 50% staff members agree that there should be a dedicated cell focused on improving as well as implementing the performance appraisal process centrally for all work centers 40% staff members have no comments that there should be a dedicated cell focused on improving as well as implementing the performance appr aisal process centrally for all work centers 10% staff members disagree that the re should be a dedicated cell focused on improving as well as implementing the p erformance appraisal process centrally for all work centers 85% executive member s agree that there should be a dedicated cell focused on improving as well as im plementing the performance appraisal process centrally for all work centers 15% executive members have no comments that there should be a dedicated cell focused on improving as well as implementing the performance appraisal process centrall y for all work centers 0% executive members disagree that there should be a dedi cated cell focused on improving as well as implementing the performance appraisa l process centrally for all work centers Gitaratan International Business School 93

Performance Appraisal 008191039909 Table 11: Annual confidential report in GAIL is on the basis of pre defined comp etencies and not on actual work done. Levels Strongly Agree Agree Neither Agree nor Disagree 6 3 6 9 Disagree Strongly Disagree S0-S3 S4-S7 E0-E3 E4-E9 0 0 2 0 5 4 4 12 1 1 3 3 0 0 1 0 12 10 8 6 4 2 0 Strongly Agree Agree Neither Disagree Strongly Agree nor Disagre e Disagree S0-S3 S4-S7 E0-E3 E4-E9 Analysis: 45% staff members agree that Annual confidential report in GAIL is on the basis of pre defined competencies and not on actual work done. Gitaratan International Business School 94

Performance Appraisal 008191039909 45% staff members have no comments that Annual confidential report in GAIL is on the basis of pre defined competencies and not on actual work done. 10% staff me mbers disagree that Annual confidential report in GAIL is on the basis of pre de fined competencies and not on actual work done. 45% executive members agree that Annual confidential report in GAIL is on the basis of pre defined competencies and not on actual work done. 37.5% executive members have no comments that Annua l confidential report in GAIL is on the basis of pre defined competencies and no t on actual work done. 17.5% executive members disagree that Annual confidential report in GAIL is on the basis of pre defined competencies and not on actual wo rk done. Table 12: Annual confidential report in GAIL is on the basis of pre defined comp etencies and not on actual work done. Levels Strongly Agree Agree Neither Agree nor Disagree 5 5 12 5 Disagree Strongly Disagree S0-S3 S4-S7 E0-E3 E4-E9 0 0 3 0 3 4 4 10 1 0 3 3 2 0 0 0 Gitaratan International Business School 95

Performance Appraisal 008191039909 6 5 4 3 2 1 0 Strongly Agree Agree Neither Disagree Agree nor Disagree Strongly Disagree S0-S3 S4-S7 E0-E3 E4-E9 Analysis: 35% staff members agree that Annual confidential report in GAIL is on the basis of pre defined competencies and not on actual work done. 50% staff mem bers have no comments that Annual confidential report in GAIL is on the basis of pre defined competencies and not on actual work done. 15% staff members disagre e that Annual confidential report in GAIL is on the basis of pre defined compete ncies and not on actual work done. 42.5% executive members agree that Annual con fidential report in GAIL is on the basis of pre defined competencies and not on actual work done. 42.5% executive members have no comments that Annual confident ial report in GAIL is on the basis of pre defined competencies and not on actual work done. 15% executive members disagree that Annual confidential report in GA IL is on the basis of pre defined competencies and not on actual work done. Table 13: You seldom escalate your disagreement on Annual confidential report ra ting provided by your reporting officer to the level of reviewing /accepting off icer. Gitaratan International Business School 96

Performance Appraisal 008191039909 Strongly Agree S0-S3 S4-S7 E0-E3 E4-E9 0 0 3 2 Agree Neither Agree nor Disagree 10 3 12 3 Disagree Strongly Disagree 2 1 10 5 1 2 2 3 1 0 0 0 12 10 8 6 4 2 0 Strongly Agree Agree Neither Agree nor Disagree Disagree Strongl y Disagree S0-S3 S4-S7 E0-E3 E4-E9 Analysis: Gitaratan International Business School 97

Performance Appraisal 008191039909 15% staff members agree that You seldom escalate your disagreement on Annual con fidential report rating provided by your reporting officer to the level of revie wing /accepting officer 65% staff members have no comments that You seldom escal ate your disagreement on Annual confidential report rating provided by your repo rting officer to the level of reviewing /accepting officer 20% staff members dis agree that You seldom escalate your disagreement on Annual confidential report r ating provided by your reporting officer to the level of reviewing /accepting of ficer. 50% executive members agree that You seldom escalate your disagreement on Annual confidential report rating provided by your reporting officer to the lev el of reviewing /accepting officer 37.5% executive members have no comments that You seldom escalate your disagreement on Annual confidential report rating prov ided by your reporting officer to the level of reviewing /accepting officer 12.5 % executive members disagree that You seldom escalate your disagreement on Annua l confidential report rating provided by your reporting officer to the level of reviewing /accepting officer Table 14: Once the process of Performance Appraisal is complete the form are sim ply filed away. Levels Strongly Agree Agree Neither Agree nor Disagree 7 2 6 2 Disagree Strongly Disagree S0-S3 S4-S7 E0-E3 E4-E9 0 0 2 0 3 2 16 7 4 2 1 5 0 0 1 0 Gitaratan International Business School 98

Performance Appraisal 008191039909 16 14 12 10 8 6 4 2 0 S0-S3 S4-S7 E0-E3 E4-E9 Strongly Agree Agree Neither Disagree Strongly Agree nor Disagree Disagree Analysis: 25% staff members agree that once the process of Performance Appraisal is complete the forms are simply filed away. 45% staff members have no comments that once the process of Performance Appraisal is complete the forms are simply filed away. 30% staff members disagree that once the process of Performance App raisal is complete the form are simply filed away. 62.5% executive members agree that once the process of Performance Appraisal is complete the forms are simply filed away. 20% executive members have no comments that Once the process of Per formance Appraisal is complete the form are simply filed away. 17.5% executive m embers disagree that once the process of Performance Appraisal is complete the f orm are simply filed away. Gitaratan International Business School 99

Performance Appraisal 008191039909 Table 15: The system of 360 degree appraisal should be implemented in GAIL, by w hich you can appraise your superior as well. Levels Strongly Agree Agree Neither Agree nor Disagree 10 1 2 2 Disagree Strongly Disagree S0-S3 S4-S7 E0-E3 E4-E9 2 0 3 4 1 4 20 7 0 1 0 1 1 0 1 0 20 18 16 14 12 10 8 6 4 2 0 S0-S3 S4-S7 E0-E3 E4-E9 Strongly Agree Agree Neither Disagree Strongly Agree nor Disagree Disagree Analysis: 35% staff members agrees that the system of 360 degree appraisal shoul d be implemented in GAIL, by which you can appraise your superior as well. 55% s taff members have no comments that the system of 360 degree appraisal should be implemented in GAIL, by which you can appraise your superior as well. Gitaratan International Business School 100

Performance Appraisal 008191039909 10% staff members disagree that the system of 360 degree appraisal should be imp lemented in GAIL, by which you can appraise your superior as well. 85% executive members agree that the system of 360 degree appraisal should be implemented in GAIL, by which you can appraise your superior as well. 12.5% executive members h ave no comments that the system of 360 degree appraisal should be implemented in GAIL, by which you can appraise your superior as well. 2.5% executive members d isagree that the system of 360 degree appraisal should be implemented in GAIL, b y which you can appraise your superior as well. Table 16: Performance appraisal process in GAIL is totally transparent. Levels Strongly Agree Agree Neither Agree nor Disagree 6 0 8 6 Disagree Strongly Disagree S0-S3 S4-S7 E0-E3 E4-E9 0 0 1 0 5 5 9 8 3 1 3 3 0 0 2 0 9 8 7 6 5 4 3 2 1 0 S0-S3 S4-S7 E0-E3 E4-E9 Strongly Agree Agree Ne ither Agree nor Disagree Disagre e Strongly Disagree Gitaratan International Business School 101

Performance Appraisal Analysis: 008191039909 50% staff members agrees that Performance appraisal process in GAIL is totally t ransparent 30% staff members have no comments that Performance appraisal process in GAIL is totally transparent 20% staff members disagree that Performance appr aisal process in GAIL is totally transparent 45% executive members agree that Pe rformance appraisal process in GAIL is totally transparent 35% executive members have no comments that Performance appraisal process in GAIL is totally transpar ent 20% executive members disagree that Performance appraisal process in GAIL is totally transparent Table 17: Annual Confidential Report does not enable the potential assessment of an employee. Strongly Agree S0-S3 S4-S7 E0-E3 E4-E9 0 1 3 2 Agree Neither Agree nor Disagree 6 0 10 4 Disagree Strongly Disagree 4 5 8 10 4 0 1 2 0 0 0 0 10 8 6 4 2 0 Strongly Agree Agree Neither Agree nor Disagree Disagree Strongly D isagree S0-S3 S4-S7 E0-E3 E4-E9 Gitaratan International Business School 102

Performance Appraisal 008191039909 Analysis: 50% staff members agrees that Annual Confidential Report does not enab le the potential assessment of an employee. 30% staff members have no comments t hat Annual Confidential Report does not enable the potential assessment of an em ployee. 20% staff members disagree that Annual Confidential Report does not enab le the potential assessment of an employee. 57.5% executive members agree that A nnual Confidential Report does not enable the potential assessment of an employe e. 35% executive members have no comments that Annual Confidential Report does n ot enable the potential assessment of an employee. 7.5% executive members disagr ee that Annual Confidential Report does not enable the potential assessment of a n employee. Table 18: Appraisal rating should be linked to pay. Levels Strongly Agree Agree Neither Agree nor Disagree 6 4 4 2 Disagree Strongly Disagree S0-S3 S4-S7 E0-E3 E4-E9 0 2 3 2 3 3 18 7 1 0 2 2 1 0 0 0 Gitaratan International Business School 103

Performance Appraisal 008191039909 18 16 14 12 10 8 6 4 2 0 S0-S3 S4-S7 E0-E3 E4-E9 Strongly Agree Agree Neither Disagree Strongly Agree nor Disagree Disagree Analysis: 40% staff members agrees that Appraisal rating should be linked to pay . 50% staff members have no comments that Appraisal rating should be linked to p ay. 10% staff members disagree that Appraisal rating should be linked to pay. 75 % executive members agree that Appraisal rating should be linked to pay. 15% exe cutive members have no comments that Appraisal rating should be linked to pay. 1 0% executive members disagree that Appraisal rating should be linked to pay. Table 19: Probation Appraisal process after Promotion is merely customary and a time consuming exercise with no significant outcome. Levels Strongly Agree S0-S3 S4-S7 E0-E3 E4-E9 0 1 2 1 5 3 5 2 Agree Neither Agree Disagree 5 4 15 7 nor 1 1 3 2 Disagree Strongly Disagree 0 0 3 0 Gitaratan International Business School 104

Performance Appraisal 008191039909 16 14 12 10 8 6 4 2 0 Strongly Agree Agree Neither Disagree Strongly Agree nor D isagree Disagree S0-S3 S4-S7 E0-E3 E4-E9 Analysis: 45% staff members agrees that Probation Appraisal process after Promot ion is merely customary and a time consuming exercise with no significant outcom e 45% staff members have no comments that Probation Appraisal process after Prom otion is merely customary and a time consuming exercise with no significant outc ome 10% staff members disagree that Probation Appraisal process after Promotion is merely customary and a time consuming exercise with no significant outcome 25 % executive members agree that Probation Appraisal process after Promotion is me rely customary and a time consuming exercise with no significant outcome 55% exe cutive members have no comments that Probation Appraisal process after Promotion is merely customary and a time consuming exercise with no significant outcome 2 0% executive members disagree that Probation Appraisal process after Promotion i s merely customary and a time consuming exercise with no significant outcome Gitaratan International Business School 105

Performance Appraisal 008191039909 Table 20: By making changes to the Annual Confidential Report in GAIL we can imp act employee retention positively. Levels Strongly Agree Agree Neither Agree nor Disagree 11 1 14 3 Disagree Strongly Disagree S0-S3 S4-S7 E0-E3 E4-E9 0 3 3 3 2 2 10 7 1 0 0 0 0 0 0 0 14 12 10 8 6 4 2 0 S0-S3 S4-S7 E0-E3 E4-E9 Strongly Agree Agree Neither Disagree Strongly Agree nor Disagree Disagree Analysis: 35% staff members agrees that By making changes to the Annual Confiden tial Report in GAIL we can impact employee retention positively 60% staff member s have no comments that By making changes to the Annual Confidential Report in G AIL we can impact employee retention positively Gitaratan International Business School 106

Performance Appraisal 008191039909 5% staff members disagree that By making changes to the Annual Confidential Repo rt in GAIL we can impact employee retention positively 57.5% executive members a gree that By making changes to the Annual Confidential Report in GAIL we can imp act employee retention positively 42.5% executive members have no comments that By making changes to the Annual Confidential Report in GAIL we can impact employ ee retention positive Gitaratan International Business School 107

Performance Appraisal 008191039909 MAJOR FINDINGS Gitaratan International Business School 108

Performance Appraisal 008191039909 From the survey results its evident that both the appraisees and appraisers expec tation from Performance appraisal system are almost same i.e. Determination of Pr omotion or Transfer and Salary Administration and Benefits. Hence a single performa nce appraisal system can satisfy needs of both the Appraiser and appraisee. Ther efore the Performance appraisal program would be designed in such a way that the appraiser would be able to analyze the contribution of the employee to the orga nization periodically and all the employees who have been performing well would be rewarded suitably either by an increase in the salary or a promotion. Through this the appraiser can also motivate the employees who felt that they had no gr owth in the organization and serves the purpose of employee development. Thus pe rformance appraisals can be used as a significant tool for career planning. Anal yzing ones own strengths and weaknesses is the best way of identifying the poten tials available, rather than the other person telling. Self-appraisal is a tool to analyze oneself. One of the most important findings was that almost all the e mployees are satisfied with their self-rating to be a part of performance apprai sal program carried out by the GAIL. The results also indicate that the there is no communication of top management plans and business goal to the appraisee. Th e appraisers on the other hand feel that the goals and plans have been clearly c ommunicated to the appraisees. Communication is very essential for any system to function efficiently. Therefore the appraisers should look into this matter and see to it that the goals and plans are communicated effectively. The findings s uggest that for success of Appraisal system the credibility of appraiser is of u tmost importance. As per the Appraiser, a poorly conducted appraisal system woul d lead to demotivation and ineffective team work which will result in inefficien t functioning and low productivity in the organization. Therefore, if at all the y feel there is dissatisfaction among the appraisees they should motivate them. A chievement, recognition, involvement, job satisfaction and Gitaratan International Business School 109

Performance Appraisal development can motivate the employees to a large extent. 008191039909 Along with this satisfactory working conditions and appropriate awards also play an important role. Also a majority of employees were satisfied with th e current appraisal system although they requested for some changes. Most of the employees were also not clear about the criteria on which ratings were given to each employee while conducting the performance appraisal. Instead of secrecy th ere should be openess. Because of lack of communication, employees may not know how they are rated. The standards by which employees think they are being judged are sometimes different from those their superiors actually use. Proper communi cation of these ratings can help the employers achieve the level of acceptabilit y and commitment which is required from the employ. From the survey we can also derive that the appraisees expect a post appraisal interview to be conducted wher ein they are given a proper feedback on their performance and they can also put forward their complaints if any. The appraisal should also be followed up with a session of counseling which is often neglected in many organizations. Counselin g involves helping an employee to identify his strengths and weaknesses to contr ibute to his growth and development. Purpose is to help an employee improve his performance level, maintain his morale, guide him to identify and develop his st rong points, overcome his weak points, develop new capabilities to handle more r esponsibilities, identify his training needs. Gitaratan International Business School 110

Performance Appraisal 008191039909 CONCLUSION Gitaratan International Business School 111

Performance Appraisal 008191039909 Performance appraisal is the process of reviewing employee performance vis--vis t he set expectations in a realistic manner, documenting the review, and deliverin g the review verbally in a face-to-face meeting, to raise performance standards year over year through honest and constructive feedback. In the process manageme nt expects to reinforce the employees strengths, identify improvement areas so th at one can work on them and also set stretched goals for the coming year. Effect ive performance management requires a good deal of face-to-face supervisoremploy ee interaction. By knowing the subordinates, a supervisor can steer them onto a path of greater productivity and optimized output. It is one of the most signifi cant and indispensable tool for an organization as it helps in getting to know t he people, who work for them, provides information, which helps in taking import ant decisions for the development of an individual and the organization. Gitaratan International Business School 112

Performance Appraisal 008191039909 BIBLIOGRAPHY Gitaratan International Business School 113

Performance Appraisal 008191039909 Personal Manual of GAIL(India) Limited DEW Magazine C.R. Kothari http://www.scri bd.com/doc/2918255/PPTPerformance-Appraisal http://www.wikipedia.com Gitaratan International Business School 114

Performance Appraisal 008191039909 ANNEXURE Gitaratan International Business School 115

Performance Appraisal 008191039909 Annexure -A Questionnaire on Performance Management System in GAIL (India) Limit ed Name: Designation: Date of joining: Department : 1 Strongly Agree 2 Agree 3 Neither Agree nor disagree 4 Disagree 5 Strong disagree Instruction: Please answer all the statements. You are requested to be honest an d frank in your replies. You are not required to write your name. The answers gi ven by you will be kept confidential. Please assess the extent to which each sta tement describes. Performance Management System in GAIL using the above five poi nt rating scale; darken the most appropriate rating. 1 2 3 4 5 Gitaratan International Business School 116

Performance Appraisal 1 2 The current system of appraisal in GAIL (India) is tim e consuming. The current process can be simplified by following same steps in Pr obation Approval and Annual Confidential Report. 3 Objective setting will compli cate the process further and will not add value to performance Assessment system in GAIL. 4 5 6 Self Assessment is a useful tool/step in the overall Performance . Annual Confidential report has no scope for bias. There is a transparent linka ge between Performance Management System in GAIL & other HR processes like promo tion & transfer. 7 Your training needs are identified on the basis of your annua l confidential report. 8 Personal Development Plans (PDP) would be helpful in co aching for better performance. (Definition: PDP is a process of individual selfd evelopment and the development of others.) 9 Appraisal should essentially have a step of meeting with the reporting officer, with the purpose of giving feedback on performance. 10 There should be a dedicated cell focused on improving as wel l as implementing the performance appraisal process centrally for all work cente rs. 008191039909

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Performance Appraisal 11 Annual confidential report in GAIL is on the basis of p re defined competencies and not on actual work done. 12 There is a uniform under standing & connotation of ratings used in Annual Confidential Report all across di fferent work centers as well as functions. In other words what outstanding means f or work centre A is the same for work centre B. 13 You seldom escalate your disagree ment on Annual confidential report rating provided by your reporting officer to the level of reviewing /accepting officer. 14 Once the process of Performance Ap praisal is complete the form are simply filed away. 15 The system of 360 degree appraisal should be implemented in GAIL, by which you can appraise your superior as well. 16 Performance appraisal process in GAIL is totally transparent. 17 An nual Confidential Report does not enable the potential assessment of an employee . (Potential appraisal refers to the identification of the hidden talents and sk ills of a person. The person might or might not be aware of them). 18 Appraisal rating should be linked to pay. 008191039909

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Performance Appraisal 19 Probation Appraisal process after Promotion is merely c ustomary and a time consuming exercise with no significant outcome. 20 By making changes to the Annual Confidential Report in GAIL we can impact employee retent ion positively. 008191039909 Gitaratan International Business School 119