Punjab Technical University

Asian Business School (ABS)

EFFECTIVENESS OF PERFORMANCE MANAGEMENT SYSTEM & ITS EFFECT ON EMPLOYEE PERFORMANCE

This Report was completed in partial fulfilment of the requirement for the degree Master of Business Administration Punjab Technical University Asian Business School, Noida Campus

SUBMITTED TO DR. VENKATA SUBRAMANIAN CHADHA [Faculty Guide] (MARKETING)

PRESENTED BY AJAY MBA

ACKNOWLEDGEMENT
One of the most pleasant aspects of writing an acknowledgement is the opportunity to thank all those who have contributed to it. Unfortunately, the list of expression of gratitude- no matter how extensive is always incomplete and inadequate. This acknowledgement is no exception. First of all, I wish to express my sincere gratitude to Latika Sahni (Dean) ABS, FILM City, Noida, for giving me opportunity to do research under her profound guidance. Because of her inspiring guidance, motivation, positive criticism, continuous encouragement and untiring supervision this work could be brought to its present shape. I would like to thank all of them who in one way or the other have helped me.

NEERAJ BHATI

PREFACE
The success of any business entity solely depends on how effectively does it utilizes its optimum resources and how soon does it make arrangements for the removal of the customers grievances. Moreover, the company should always be ready to make necessary changes according to the requirement in order to attract more customers so as to maintain a substantial growth in the market. The topic given to me was:

EFFECTIVENESS OF PERFORMANCE MANAGEMENT SYSTEM AND ITS EFFECT ON EMPLOYEE PERFORMANCE

I have tried to put my best efforts to complete this task on the basis of skill that I have achieved during my studies in the institute.

I have tried to put my maximum effort to get the accurate statistical data. If there is any error or any mistake in collecting the data, please ignore it.

CONTENTS
Executive Summary.. Chapter 1 Introduction... Chapter 2 - Objectives and Rationale of the study.. Chapter 3 - Review of Literature.. Chapter 4 PMS at cocac Chapter 5 - Research Methodology.. 5.1 Research Design..... 5.2 Sample Size 5.3 Research Tools and Questionnaire..... 5.4 Action Plan for Data Collection. 5.5 Data Analysis ... Chapter 6 Research Findings . Chapter 7 Recommendations and Conclusion Select Bibliography References. Company Profile... Questionnaire

EXECUTIVE SUMMARY
The study conducted on EFFECTIVENESS OF PMS AT COCACOLA aims at highlighting its impact on the performance levels of the employees. Through this research, I have studied the performance management system being followed by COCACOLA across India and tried to find out the shortcomings of the current system by getting a questionnaire filled up by 30 employees from the Gurgaon Regional branch. The analysis is done with the help of pie charts depicting the percentage of employees satisfied with the PMS of COCACOLA. From these questionnaires, it has been identified that major issues that affect the success or failure of PMS .Finally, it makes recommendations on how managers can better manage PMS to enhance employee performance there by improving organizational performance, by aligning personal goals with organizational goals.

The findings reveal that entire PMS of Unilever is scientific and integrated approach in achieving outstanding performance. The gap/ shortcoming are in the mentoring/ feedback mechanism which is not held regularly. There are no interim discussions held but just once, i.e. end of year when appraisals happen. 5

Chapters 1 to 3 discuss about the topic and give a brief insight of the basic concepts and need for the involvement of HR, prerequisites which determine a success or failure of any PMS and the objective behind the study and its rationale. Chapters 4 deals with the PMS followed by COCACOLA , the organization under study. Chapter 5 deals with the research methodology and highlights the methodology used and action plan for data collection. Findings have been dealt in Chapter 6.

While concluding the report, it has been summarized and recommendations are given in the Chapter-7

CHAPTER 1 INTRODUCTION
Why Performance Appraisals Don't Work???

The Traditional Performance Appraisal Process In the conventional performance appraisal or review process, the manager annually writes his opinions of the performance of a reporting staff member on a document supplied by the HR department. In some organizations, the staff member is asked to fill out a self-review to share with the supervisor. Most of the time, the appraisal reflects what the manager can remember; this is usually the most recent events. Almost always, the appraisal is based on opinions as real performance measurement takes time and follow-up to do well. The documents in use in many organizations also ask the supervisor to make judgments based on concepts and words such as excellent performance (what's that?), exhibits enthusiasm (hmmm, laughs a lot?) and achievement oriented (likes to score?). Many managers are uncomfortable in the role of judge, so uncomfortable, in fact, that performance appraisals are often months overdue. The HR professional, who manages the appraisal system, finds his most important roles are to develop the form and maintain

an employee official file, notify supervisors of due dates, and then nag, nag, nag when the review is long overdue. Despite the fact that annual raises are often tied to the performance evaluation, managers avoid doing them as long as possible. This results in an unmotivated employee who feels his manager doesnt care about him enough to facilitate his annual raise. Employee Performance Appraisal is Painful and It Doesnt Work Why is this established process so painful for all participants? The manager is uncomfortable in the judgment seat. He knows he may have to justify his opinions with specific examples when the staff member asks. He lacks skill in providing feedback and often provokes a defensive response from the employee, who may justifiably feel he is under attack. Consequently, managers avoid giving honest feedback which defeats the purpose of the performance appraisal. In turn, the staff member whose performance is under review often becomes defensive. Whenever his performance is rated as less than the best, or less than the level at which he personally perceives his contribution, the manager is viewed as punitive. Disagreement about contribution and performance ratings can create a conflict ridden situation that festers for months. Most managers avoid conflict that will undermine work place harmony. In todays team-oriented work environment, it is also difficult to ask people who work as colleagues, and sometimes even friends, to take on the role of judge and defendant.

Further compromising the situation, with salary increases frequently tied to the numerical rating or ranking, the manager knows he is limiting the staff members increase if he rates his performance less than outstanding. No wonder managers waffle, and in one organization with whom I worked, ninety-six percent of all employees were rated one". Am I completely against performance appraisals? Yes, if the approach taken is the traditional one I have described in this article. It is harmful to performance development; damages work place trust, undermines harmony and fails to encourage personal best performance. Furthermore, it underutilizes the talents of HR professionals and managers and forever limits their ability to contribute to true performance improvement within your organization. A performance management system, which I would propose to replace the old approach, is a completely different discussion. And, I dont mean renaming performance appraisal as performance management because the words are currently in vogue. Performance management starts with how a position is defined and ends when you have determined why an excellent employee left your organization for another opportunity. Within such a system, feedback to each staff member occurs regularly. Individual performance objectives are measurable and based on prioritized goals that support the accomplishment of the overall goals of the total organization. The vibrancy and performance of your organization is ensured because you focus on developmental plans and opportunities for each staff member.

Performance Feedback In a performance management system, feedback remains integral to successful practice. The feedback, however, is a discussion. Both the staff person and his manager have an equivalent opportunity to bring information to the dialogue. Feedback is often obtained from peers, direct reporting staff, and customers to enhance mutual understanding of an individuals contribution and developmental needs. (This is commonly known as 360 degree feedback.) The developmental plan establishes the organizations commitment to help each person continue to expand his knowledge and skills. This is the foundation upon which a continuously improving organization builds. The HR Challenge Leading the adoption and implementation of a performance management system is a wonderful opportunity for the HR professional. It challenges your creativity, improves your ability to influence, allows you to foster real change in your organization, and it sure beats the heck out of nag, nag, nag".

PERFORMANCE MANAGEMENT SYSTEMS Performance management encompasses the most important people issues in your organization. Performance management includes the entire relationship you have with the people you employ. Performance management is the process of creating a work environment or setting in which people are enabled to perform to the best of their abilities. Performance management is a whole work system that begins when a job is defined as needed and expectations are clearly communicated to the employee. It ends when an employee leaves your organization.

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Many writers and consultants are using the term performance management as a substitution for the traditional performance appraisal system. I encourage you to think of the term in this broader work system context.

A performance management system includes the following components. * Develop clear job descriptions. * Select appropriate people with an appropriate selection process. * Negotiate requirements and accomplishment-based performance standards, outcomes, and measures. * Provide effective orientation, education, and training. * Provide on-going coaching and feedback. * Conduct quarterly performance development discussions. * Design effective compensation and recognition systems that reward people for their contributions. * Provide promotional/career development opportunities for staff. * Assist with exit interviews to understand WHY valued employees leave the organization.

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CHAPTER 2 OBJECTIVES AND RATIONALE BEHIND THE STUDY

OBJECTIVES OF THE STUDY: 1. To study the current PMS followed by Hindustan Lever Ltd. and To find out its effectiveness. 2. To find out if its a performance driven organisation. 3. To find its impact on improving its employees performance. 4. To make recommendations regarding the same .

NEED FOR A PARADIGM SHIFT: In most modern organizations, the performance appraisal systems have been subjected to fine tuning and a number of modern concepts like Management by Objectives, Pay for performance, 360 the degree concept of HYPERLINK feedback, performance "http://mmg.name/feedback360.html" focus should be on understanding

Competency based performance management etc., have been adopted. The management and identifying the requirements to design it. A paradigm shift is defined as one where we look at things differently and when the perception of the situation changes to the opposite, though the situation has remained the same. There is a need for a paradigm shift 12

as far as PMS is concerned. It should not stop after carrying out the performance appraisals. It is just not a reward and punishment exercise. Performance appraisals indicate what has been done against what should have been done. It is an audit of the performance of the people. They also enable management's to set future goals and objectives. Unfortunately, in practice the performance appraisal exercise turns out into one of reward and punishment. It should lead to a system of managing performance and to that extent the performance appraisals are a beginning and not an end

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CHAPTER 3 REVIEW OF LITERATURE

Performance Management System: Most people associate performance management with performance appraisals, performance related pay, achievement of targets, motivating people and enforcing discipline. Unfortunately the above is not what performance management is all about, though they do form a fundamental part of it.

THEN WHAT IS A PERFORMANCE MANAGEMENT SYSTEM? Performance management system is a principal tool in achieving

corporate objectives in that it links those objectives with employee goals and achievements. It focuses on improving performance through matching outcomes against individual, departments and organisational objectives, and to the training and development needs of employees at all organisational levels. Managers using performance management system effectively are generally more concerned with performance planning and improvement and performance assessment. Performance management system is an accepted management practice operating within organizations because it can be a valuable process for employees and employers alike. It provides for both recognition of high performance and early detection of performance that is not meeting expectations, allowing prompt remedial action to be taken. Performance management system (PMS) has to evolve from the performance appraisals. A well designed performance appraisal system 14

tells you the status of the health of an organization, but it indicates only the symptoms of any ills. It is like a medical checkup. It tells you what is right or wrong. However, it does not lead you to the cure of the organizational ills. Performance Management System has to be evolved for cure and to keep the organization healthy. Most often, we attack the symptoms rather than attacking the root cause of the problem. A properly designed performance management system helps us to take action for curing the organizational ills. PMS has to be designed in such a manner that it leads to achievement of organization's goals and objectives and at the same time it enables people to achieve their full potential, lead to job enrichment and job satisfaction. Ideally, all the peoples' functions, goals and objectives should be interlinked in such a manner that it leads to achievement of desired organizational results. Performance management is the process of creating a work environment or setting in which people are enabled to perform to the best of their abilities. Performance management is a whole work system that begins when a job is defined as needed. It ends when an employee leaves your organization. Many writers and consultants are using the term performance management as a substitution for the traditional appraisal system. I encourage you to think of the term in this broader work system context Managers cite performance appraisals or annual reviews as one of their most disliked tasks. Performance management eliminates the performance appraisal or annual review as the focus and concentrates on the entire spectrum of performance management and development issues. Employee performance development, training, cross-training, the provision of challenging assignments and regular performance feedback are included in an effective performance management system.

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Definition & Focus : Performance management is about getting results. It is concerned with getting the best from people and hiring them to achieve their full potential by enabling them to recognize their roles and contributing to the goals of the organization. The focus should be on how do we improve the performance of the organization, how do we get the best out of the people, how do we help them in achieving their objectives, thereby achieving the organizational objectives. How do we relate their personal goals with the organizational goals? Is it possible to chart out a reasonable career path for performers ? How do we retain good people? How to keep the attrition rate as low as possible? How to improve the performance of average performers? What do we do with poor performers? Why are they performing poorly? Where are we? Why are we there? Who is responsible? When and what actions are to be taken? Where do we want to go? How do we get there? The above questions need to be addressed and answered and for that organizational soul searching is necessary. As a Human Resources or management professional, one of your major goals is to develop the capacity of your organization and its members to perform; you want to create a high performance organization. You lead company efforts to create a workplace in which people can develop their full potential. An effective performance management system, which line managers lead and own, guarantees you will achieve your goals.

Performance Management: Both a Process and a System Performance management is the process of creating a work environment or setting in which people are enabled to perform to the best of their 16

abilities. Performance management is a whole work system that begins when a job is defined as needed. It ends when an employee leaves your organization. Many writers and consultants are using the term "performance management" as a substitute for the traditional appraisal system. Id like to think of the term in this broader work system context. The goal of performance is to achieve the company mission and vision. Almost no one performs, for the organization, however, if his or her own mission and vision are not accomplished as well. As Fred Nickols, Senior Consultant with the Distance Learning Company, says, "The blunt truth is that, if they have any work objectives at all, most people set their own. This is the era of knowledge work and the knowledge worker " Many so-called "bosses" (if That term has any utility at all) are in no position to set work objectives, to monitor their accomplishment, or to supervise their pursuit. The work, especially at the task level, is in the hands and the heads of the workers. To be sure, a manager could formulate goals and objectives having to do with improvement in work processes and the like, but if these must be left to the workers to realize, who needs the manager? An even better question is "Who needs work objectives?" An effective performance management system sets new employees up to succeed, so they can help your organization succeed. An effective performance management system provides enough guidance so people understand what is expected of them. It provides enough flexibility and wiggle room so that individual creativity and strengths are nurtured. It provides enough control so that people understand what the organization is trying to accomplish.

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Nickols summarizes, "Now, in the era of knowledge work and knowledge workers, where work is information-based and working is a mental activity, work routines are configured by the workers in response to fluid, changing requirements. The task of management in this new world of work is to enable and elicit employee contributions of value to the organization. To continue with a system designed to exact and enforce compliance is folly."

Benefits of performance management system At a macro level performance management assists organisations to match outcomes with COMPANY objectives. It provides a system for improving ORGANIZATION performance and outcomes, within the COMPANYs OBJECTIVES and policy framework, while maintaining good industrial relations. It generates benefits throughout organisational functions and processes. Performance management system recognises that people are the organisations most valuable resource, and that people are the key to an innovative, professional and service-oriented public service. Performance management emphasises the relationship between the management and development of people and an effective organisation, and provides a fair and equitable environment for improving performance. Performance management SYSTEM reflects the value of people to organisational performance, including: 1. performance of individuals / departments

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2. employee skill levels / gaps if any. 3. employee position in the development plans. 4. corporate values, goals and ethical standards are clearly reflected in the performance management system; 5. Clear identification of expectations and responsibilities of individuals 6.employee allocated responsibility for ensuring improvement and performance strategies at all levels of the organisation. 7.specific expectations and responsibilities of managers, supervisors, teams and individuals for their role in the process. 8. Linking the individuals contribution to organisational objectives 9. training and development are linked to the achievement of optimal organisational and individual performance; 10. the system is regularly reviewed, with particular attention given to key elements (eg process of reviewing individual performance; provision of helpful feedback; updating of key accountabilities, criteria and indicators; and training and development plans); 11. accountability is assigned to senior managers to ensure that performance, outcomes and training and development activities (relating to individuals, teams or units) are appropriate . 12. employee workplans contain agreed, clear and measurable performance criteria which are modified as changes occur in organisation policies, priorities or

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environment; 13. the system enables assessment of the individuals contribution to the achievement of corporate goals; 14. transparent links exist between performance assessment and performance reward;

15. the system is clearly linked to the organisations strategic management framework and is not treated as an isolated function;

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PERFORMANCE LINKED PAY

In todays competitive market, the importance of retaining top performers, improving productivity and driving bottom line results requires a coordinated effort. Creating clear organizational goals, facilitating alignment with these goals and ensuring employees possess the necessary skills, are significant steps towards creating a high performance environment. This paper will outline why aligning pay with performance is so important. It will discuss steps to consider and provide a snapshot of todays marketplace options as well as suggest strategies to overcome common obstacles for making pay for performance a success. Pay for performance is a strategic business initiative to which more and more organizations are turning to drive bottom line business value. A recent Mercer survey showed that 42% of organizations have set "improving the linkage between performance and reward" as one of their top two reward priorities for the coming year. This supports the need for a close link between employee performance management and compensation management. The need for integration is echoed from a number of sources. In Mercers August 2004 Perspective, it is suggested that "the primary objective of most incentive plans is to drive performance so that over the long term the value of the entity to shareholders will increase." In his book, Rewarding Excellence, Edward Lawler stresses that "...the key to using rewards as motivators is the line of sight between the behavior of individuals and their rewards...."

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An effective employee performance management solution facilitates both the cascading of organizational goals, as well as allowing employees to link individual goals to those of the corporation. Linking rewards to desired outcomes solidifies an organizations commitment to providing individuals with a clear sense of purpose and direction. This helps avoid situations where employees are compensated for efforts that do not contribute to the organizations bottom line. Clear job expectations attract individuals to jobs that best suit their abilities, while processes that reward high performers appropriately help support employee retention. Overcoming Common Roadblocks for Successful Pay for Performance Linking compensation and performance management processes can be quite powerful if done correctly. However, some of the consequences of poor implementation can include: misdirected effort of employees, loss of trust and resulting difficulty retaining these employees or a decrease in their motivation level. These can all contribute to lost time, money and competitive advantage. Some common roadblocks to avoid include: Lack of sound performance management processes Manager training; proper goal planning, regular feedback and communication are essential elements upon which to build. Other essential elements include a clear job description and a reliable method to measure performance. Without these elements, there is no basis for consistent evaluation. Take the necessary time to ensure these processes are sound. Poor communication without proper communication, everyone involved in the process may view a pay for performance program as threatening. Effective communication will serve to clarify expectations around what is expected of employees and managers, what level of

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performance is required and what the rewards attached to certain levels of achievement will be. In addition, it is important to ensure that individuals performing at the same level receive the same rewards. Organizations must make certain that policies are followed consistently throughout the company. Build in transparency with the necessary checks and balances. It is important to communicate what the organization hopes to gain by implementing a pay for performance system. Employees need to feel that the decision-maker is objective and knowledgeable to ensure fairness. To support pay for performance decisions, plan ahead to ensure the necessary resources are available. Summary When implementing a pay for performance system, performance management and compensation management solutions must be tightly integrated to ensure success. Integrating these processes can help drive alignment between organizational goals and individual work, provide clarity around what to reward, when to provide rewards, and why an achievement is worthy of reward. The good news is, there are options available in todays marketplace that can help overcome some common roadblocks and allow you to implement a successful pay for performance program. By doing it successfully, you will reap the rewards of increased employee retention, identification of top performers and an overall increase in your workforce productivity.

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CHAPTER 4 PERFORMANCE MANAGEMENT SYSTEM AT COCACOLA

PERFORMANCE MANAGEMENT SYSTEM An Integrated Approach to Achieving Outstanding Performance Overview Performance Development Planning is a key element of the 'Integrated Approach to Achieving Outstanding Performance'. Just as the 'Integrated Approach' is rooted in Unilever's Corporate Purpose and Business Principles, Performance Development Planning is intended to make a significant contribution to developing a high performance organisation by equipping managers with a powerful tool to deliver and manage outstanding individual performance.

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Performance Development Planning is an integrated process which brings together three key elements: Target Setting and Review Personal Development Overall Performance Assessment and Career Planning The process encompasses the Unilever Competencies and Professional Skills as the basis for building individual capability, and supports other key processes including career planning and the identification of high potential managers. Performance Development Planning also links to other elements of the Integrated Approach such as Variable Pay and Work Levels.

Performance Development Planning is relevant for all managers, whatever their profession, location or nationality. It is designed for those of both high and moderate potential, for those starting their careers and for those nearing retirement. By using the

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Performance Development Planning process well, managers can help each other to raise performance across Unilever.

OBJECTIVES OF PDP If the employees are truly perceived as the assets of the Organization and not merely as a resource to be deployed and used, then the Employee PDPs can serve a useful purpose of improving the productivity of this asset by sharpening and enhancing the capabilities of individual employees and utilizing their potential for improved performance. In the Organizational matrix the various jobs are invariably related to and complimentary to one another. It, therefore, stands to reason that if a properly carried out appraisal exercise is expected to lead to improved individual performances then it should also result in an overall improvement in the Organizational performance. Additionally, by linking the individual objectives to the Organizational objectives and with proper management of the entire Appraisals Exercise leading to continuous employee development, it should be possible to bring about a quantum jump in the Organizational performance. If properly designed and applied the PDP system can: 1. help each employee to understand with clarity his / her role and functions. 2. be instrumental in helping the employee understand his / her own strengths and weaknesses. 3. help in identifying training and development needs of each employee. 4. help increase mutual understanding between the appraiser and the appraisee leading to healthy and productive work environment. 26

5. provide an opportunity for the employee for goal setting and self-appraisal leading to increased work involvement. 6. help the individual to identify himself / herself with the organisation, its objectives and culture leading to increased sense of belonging and commitment. 7. help identify the potential of employees for future requirements. 8. help the organisation to note, recognise and reward achievements. 9. help in the identification and analysis of problems in achieving the objectives, thus leading to finding solutions. 10. assist in a variety of personnel / personal decisions by generating data for each employee periodically.

A good appraisal system will have as its basis clearly defined and communicated Key Result Areas (KRAs) or Key Performance Areas (KPAs) and will lead to improved Organisational Performance through improved understanding, role clarity, team work, leadership and employee satisfaction. PDP is about managing and improving performance and not about completing forms. The forms, however, serve a useful purpose of recording views and decisions which are then used to manage several processes such as deciding on rewards, working out development inputs, career moves etc. These records are only a means and not an end in themselves. It is , however, necessary that these records are created with proper understanding and with due diligence as the validity and quality of future decisions will depend on the information contained in these forms.

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THE PERFORMANCE DEVELOPMENT PLANNING PROCESS The Performance Development Planning process has been designed to be systematic but non-bureaucratic and is fully integrated with Unilevers career development and remuneration systems. The Process follows an annual cycle, beginning and ending with a Performance Development Planning discussion consisting of four steps:-

Target setting for the year ahead; Building a development plan for skills and competencies; Establishing foundations for career planning; A review of the previous years targets, performance and progress against development plans.

The Company considers that individual performance and potential appraisal forms the foundation of the development process, wherein the manager reviews with the subordinate his / her work and progress, normally against defined targets and provides help and guidance. This process provides feedback; it forms a basis for counseling or coaching. It also points to training needs and it is one major determinant of salary progress.

It is our policy to document such appraisal once a year through written annual reports and reviews. This annual event serves the purpose of bringing together of a continuous process of appraisal and counseling throughout the year.

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The target setting process is a JOINT one. The objective / targets are set with a joint understanding and agreement by the manager and subordinate. The targets are drawn from the Key Result Areas of the Department / Unit. They are linked vertically (i.e., with the objectives of Managers and subordinates) and horizontally (i.e. with the objectives of peers). The agreed objectives are documented and both the manager and the subordinate retain a copy of the objectives. They are signed off by both the manager and subordinate.

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MECHANICS OF APPRAISAL WRITING

At the end of the year under review, appraisal forms are sent to the departments / units along with a circular that provides the guidelines to be followed and the time plan. The appraisal form (attachment appraisalform.doc) has SIX pages

Page 1: Work plan page Page 2: Job skill Profiling Page 3: Competency profiling Page 4: On the basis of the gaps identified in Skill and Competency areas, prepare Development Action Plan. Page 5: Overall assessment and career planning To record summary of the discussion between the Appraiser and the Appraisee, appraisees own wishes for Career progress and the Units response to Appraisees wishes. Page 6: Nomination report

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Page 1: Work plan page: Work Plan is a focused list of key tasks for the year, which is planned to be done by the subordinate in the next twelve months. It will include the following: Important basic job requirements, which may not be fully captured by the current three priority targets functional/cross functional projects, objectives which will result in slightly longer term benefits, team targets

A work plan will not be restricted to three key priorities. This addresses the business need for documenting more than three deliverables. The work plan is agreed jointly between the appraiser and the appraisee. It acknowledges efficiency in routine work. It acknowledges that each one of these deliverables could be important in isolation/ or taken together with other deliverables. It acknowledges that there could be work priorities that need not stretch to a whole year or a significant part thereof but is of significant importance to the delivery in the job. As and when the business priorities change, the Work Plan must be modified and updated, based on the agreed priorities between the manager and the subordinate, to ensure that there is ongoing clarity on the priority at all the times during the year. At the end of every year, the manager will use the Work Plan in writing the subordinates Summary of Performance. Thus the review of the Work Plan will form a significant portion of the subordinates Summary of Performance for the Assessment year and shall play a significant role in determining the performance rating of a subordinate. Workplan Rating Based on what subordinates have achieved, as captured in the Work Plan, the manager will rate every subordinate as PLUS (+) or MINUS (-) or EQUAL TO (=) or N (Not Met)

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For his Delivery against each of the workplan items (tasks) Plus = Exceeding on that particular work plan item Equal To = Meeting Expectations on the particular work plan item Minus = A significant part of the work plan item delivered, small gaps remain N = Significant/ Large gap exists between Delivery and Expectations on the work plan item

AND, For overall delivery on the total workplan, called Workplan Rating Plus = Exceeding or Delivering Fully on all aspects/ items of the work plan Equal To = Meeting Expectations and largely delivering on the work plan Minus = Inconsistent in meeting delivery expectations. N = Significantly Large Gaps on majority of items

Maximum 10 work plans per employee are made in the beginning of the year . The format is : Strategic action rating Eg. Recruitment + = <=7 days <=10 days <= 15days Activities KPI Targets Milestones Achievement

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N Page 2: Job skill profiling The format is: Activity Job profile Personal profile

1 mth.

Gap

Priority

Under the category of job profile and personal profile, we fill up : LE: leading edge FO: fully operational WK:working knowledge BA: Basic appreciation According to the knowledge he/she has about the job.

Page 3: Competency profiling Unilever has 11 competencies across, which have been clearly mentioned in the Unilever competency model* Acc. To the 11 competencies, the employee is rated +,=, - corresponding to the behavior displayed against each competency. The format is: Competencies Examples of behavior Ratings Gap Priority

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Page 4: Gap analysis of professional skills and competencies On the basis of the gaps identified in Skill and Competency areas, prepare Development Action Plan. Then DAP led training * is imparted to the employee. e.g. Area of development T and D Improvement and action plan workshop milestones completed

Page 5: Overall assessment and career planning Summary of performance Assessment on values ( ACCT) Career planning- own wishes Career planning- companys view (including potential) Page 5 of the form has space to record summary of the discussion between the appraiser and the appraisee, the date on which the discussion took place, appraisees own wishes for career progress and the proposed action plan as agreed with the appraisee. It is the Organisational culture that the appraisal report once finalised is read out verbatim to the appraisee. Conducting a proper appraisal discussion is sometimes neglected but is another extremely important aspect of the Appraisal Exercise and has a direct bearing on the overall development process. If conducted properly the discussion can yield further valuable data on the appraisee, the appraisees participation in it can lead to a willing involvement in the future development process and it can also help identify impediments

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to the process thereby making corrective actions possible. In view of the crucial importance of the appraisal discussion it has been dealt with in some detail in the next section. Page 6: Nomination Report Not only does the rating have a bearing on the performance related pay of the individual for the year but important career decisions would be based on the ratings in future. O : Outstanding - Performance is truly exceptional in relation to the required standards of the job. Has far surpassed the targets set in an ambitious work plan reflecting a high degree of innovation, complexity and contribution. V : Clearly Higher Performer - Performance clearly above the required standards of the job. Has achieved or just exceeded the targets set in an ambitious work plan. G+ : Performance up to the normal high standards expected of an Cocacola Officer. Has surpassed targets in a normal work plan reflecting a considerable degree of innovation, complexity and challenges in the contribution. G : Performance up to the required standards. Has achieved targets set in a normal work plan. R : Performance just adequate to meet minimum requirements of the job with a work plan of medium to low degree of innovation, complexity and challenge in the contribution but not up to the full scope which the job offers. Does not meet all the targets set in the plan. U : Does not meet even the minimum requirements of the job and has fallen well short in the objectives of the job, set even in a normal work plan.

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: Formal appraisal would not be possible for a newly appointed Officer or for one whose job content has subsequently changed or who has a prolonged period of absence due to illness. All such Officers are regarded as not appraised. Their

salary increases are determined according to circumstances on a case to case basis. From this rating scale being used by us it can be seen that exceeding the targets in an Ambitious work plan puts the performance at the higher levels (O & V- between 15 and 20 % of the population) whereas exceeding or meeting the targets in a Normal work plan is the general expectation (G+ & G - around 70% of the population). Categories R & U denote an unacceptable level of performance requiring immediate corrective measures. This further underscores the importance of Objective Setting, as the validity of the conclusions drawn from the Performance Ratings as well as the outcome of the subsequent decisions based on them would depend to a very large extent on how rigorous the original Objective Setting process had been.

This Page of the form has space for recommendations for a Cash Award. Cash Awards are in addition to the Performance increase and are in recognition of some exceptional achievement during the year under the review. The amount may be revised from time to time.

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NOMINATION REPORT 2008

Cash Award: Recommended Performance Category: Can move to the next grade: Can move within grade:

Appraisees signature

Read out to appraisee on

Date

Appraised by manager

Name of manager

Name of officer Reviewed by (Deptt. Head)

Officers signature Name of deptt. Head Potential performance matrix:

To gauge the performance of consecutive three years:

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5 pts. -O rating 4 pts.- V rating 3 pts.- G+ rating 2pts.- G rating 1 pt - R rating 0 pt - U rating To gauge the Potential: Years required for promotion 5pts: can be promoted within a year or a month 4pts: can be promoted within 2yrs 3pts: can be promoted within 3yrs 2pts: can be promoted within 4 yrs 1pt: can be promoted within 5yrs According to the above, a matrix is formed. ML: Major Leaguer SP: Solid Pro

SP

ML

SP Potential

SP

ML

FAILURE

SP

SP

Performance

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Introduction to the Competencies Summary

This document provides a summary of the Unilever competency framework. It is designed for use in the Performance Development Planning process and is intended to complement the Competency Dictionary - With Examples drawn from the businesses, which contains background to the Unilever competency model, rationales for each of the eleven competencies and expanded behavioral descriptions at each Work Level, together with behavioral examples taken from the businesses. This document contains definitions of each of the eleven Unilever competencies, grouped under the five cluster headings. Each competency progresses through the four Work Levels from 2 to 5. Each successive Level assumes competency at the lower Level(s). For each competency, two descriptions of the types of behaviour commonly demonstrated at each Work Level are provided. As it is not possible to describe all the behaviors which may be illustrative of each competency, the examples given are intended as a starting point rather than as a definitive list. Similarly, cultural differences may lead people to express the competencies in different way

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The Unilever Competency Model Eleven Competencies have been found to be associated with excellent performance within Unilever. These competencies can logically be grouped under five clusters:The effective Unilever manager possesses the intellectual power to determine direction; ensures that direction is market driven; acts decisively to improve performance; delivers through people; and achieves through integrity, teamwork and learning.

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Competency Summaries by Cluster:

Possesses the intellectual power to determine direction

Sees the whole picture and what it will take to reach the goals, creatively developing realistic plans and accurate, objective assessments.

Clarity of Purpose

Understands the totality of a business situation and sees clearly what needs to be done, and how to achieve it.

Practical Creativity

Demonstrates flexibility of thinking. Creates new business insights which can be turned into realistic plans.

Objective Analytical Power

Develops accurate, objective assessments of the issues even in complex or difficult situations.

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Ensures that direction is market driven

Focuses on the needs of consumers and customers and understands developments in the external world and how these impact on Unilever. Leverages this knowledge to create value.

Market Orientation

Understands developments in the external world and elsewhere in Unilever. Anticipates, understands and addresses the changing needs of consumers and custo

Acts decisively to improve performance

Takes the initiative to improve business results, assessing and taking risks and persistently overcoming obstacles.

Entrepreneurial Drive

Is energetic and tenacious in improving business results. Takes initiatives often involving calculated risks.

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Delivers through people

Leads, motivates and influences people to achieve desired results, regardless of reporting lines. Demonstrates commitment to developing others.

Leading Others

Inspires others to higher standards of performance. Is enthusiastic to get the best out of people.

Developing Others

Builds the skills and competencies of others and guides appropriate behaviours. Creates opportunities for the development and growth of others.

Influencing Others Successfully builds support for ideas without the use of hierarchical power. Builds effective relationships with colleagues, clients and customers.

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Achieves through integrity, teamwork and learning

Our long term success as a business is founded on common standards of behaviour which are demonstrated by successful managers.

Self Confident Integrity

Acts with integrity. Stands up for convictions and values and takes difficult decisions.

Team Commitment

Works co-operatively as a member of a team and is committed to the overall team objectives rather than own interests.

Learning from Experience Actively learns from own failures and successes and those of others on a continuous basis.

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* DAP Led Training

Sustaining profitable growth for business and long-term value creation for our shareholders and people requires a total commitment to: Exceptional standards of performance; working together effectively; A willingness to embrace new ideas and learn continuously. To do this we need to develop a high performance organisation in which people develop, grow and thrive, and by working together, deliver outstanding business performance.

Thus, the Performance Development planning process has been designed.

DAP is a Development Action Plan which is chalked out during the PDP process in line with identified skill gaps. A specific and realistic DAP can help the FF bridge skill gaps as well as improve upon his understanding of concepts. The Field Force Learning Academy provides for up gradation of FF capabilities with a sharper focus, higher frequency and expanded reach of learning.

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CHAPTER 5 RESEARCH METHODOLOGY

5.1 RESEARCH DESIGN: The type of research conducted is basically descriptive research, because we are studying the effectiveness of PMS which deals with describing and studying the various essential components of PMS and its effect on employee performance. Descriptive research

Descriptive research is used when the objective is to provide a systematic description that is as factual and accurate as possible. It provides the number of times something occurs, or frequency, lends itself to statistical calculations such as determining the average number of occurences or central tendencies This type of research is also a grouping that includes many particular research methodologies and procedures, such as observations, surveys, self-reports, and tests. The four parameters of research will help us understand how descriptive research in general is similar to, and different from, other types of research. Descriptive research may focus on individual subjects and go into great depth and detail in describing them. Individual variation is not only allowed for but studied. Descriptive research is a general term to describe a research project that does not manipulate variables and does not try to establish causal relationships between events. Rather, events are simply described. Ethnographic research involving the observation of animals in natural settings is a type of descriptive research

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5.2 SAMPLING When undertaking any survey, it is essential that you obtain data from people that are as representative as possible of the group that you are studying. Sampling is the process of selecting units (e.g., people, organizations) from a population of interest so that by studying the sample we may fairly generalize our results back to the population from which they were chosen.

Ive used the Sampling technique in this research, since I am considering the employees of Hindustan Lever Limited

CONVENIENCE SAMPLING It isn't always possible to undertake a probability method of sampling, such as in random sampling. For example, there is not a complete sampling frame available for certain groups of the population e.g. the elderly; people who are attending a football match; people who shop in a particular part of town. Another factor to bear in mind is that many of the probability sampling methods described above may mean that researchers would have to undertake a postal or telephone survey delivery or might be expected to go from house to house.

In convenience sampling, the selection of units from the population is based on easy availability and/or accessibility. The trade-off made for ease of sample obtaining.A convenience sample is a sample where the participants are selected, in part or in whole, at the convenience of the researcher. The researcher makes no attempt, or only a limited

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attempt, to insure that this sample is an accurate representation of some larger group or population.

In this research Ive used Convenience sampling as it was convenient for me to be going and distributing the questionnaires and also for obtaining appointments with the managers. For the purpose of this research, I have collected data through both primary and secondary resources. This data collection was done for 30 employees of Cocacola , which are the research samples.

5.3 DATA COLLECTION TECHNIQUES Primary data Primary data collection is necessary when a researcher cannot find the data needed in secondary sources. Market researchers are interested in primary data about demographic/socioeconomic characteristics, attitudes/opinions/interests, awareness/knowledge, intentions, motivation, and behavior. Three basic means of obtaining primary data are observation, surveys, and experiments. The choice will be influenced by the nature of the problem and by the availability of time and money.

Primary data collection tools used by us: 1) Questionnaires: We formulated a questionnaire which included questions in accordance with our hypothesis and objectives and for them filled by 30 employees of the sample companies. Total 50 questionnaires were filled out of which 20 were discarded because they were incomplete. These 30 questionnaires were then studied

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thoroughly to get to our research and conclusions were drawn on the basis of the information provided in the questionnaires.

2) Personal Interviews:: Personal interviews were conducted by me with the line managers of these agents. I took an appointment with these managers and went to their workplace for a brief interview to understand their point of view, and what in their opinion are the dissatisfiers in their current PMS. They were able to give an overview . Secondary data - collected by others to be "re-used" by the researcher. Secondary data is data which has been collected by individuals or agencies for purposes other than those of our particular research study. For example, if a government department has conducted a survey of, say, family food expenditures, then a food manufacturer might use this data in the organization's evaluations of the total potential market for a new product. * Researches already conducted on PMS effectiveness (from the internet) * Articles from magazines and journals. Articles from websites.

5.4 DATA ANALYSIS The questionnaire which was circulated among 30 employees had 26 questions. The follg. are the responses corresponding to each question. For every question, the percentage of employees is depicted through pie charts. Q 1 Q 4 had homogenous replies so have not been depicted through pie charts. Q 5- Q 9 are related to the requirements and accomplishment-based performance standards, outcomes, and measures. 49

Q 10- Q 13 are related with the identification of training needs and the chalking out of a developmental action plan to fill up the Q 14- Q 18 are related with ongoing coaching and mentoring program, also it reflects the feedback process followed by supervisors. Q19-Q22 are related with performance linked with compensation. It demonstrates the effect of performance linked pay with employee performance Q23-Q26 are related to general PMS of the org. whether it is free from biases and do the employees find it beneficial for them.

Q1. Do you have a scientific PMS in place? Q2. Since how long is the performance management system in place? Q3. How often do reviews take place? Q4. Since when is the PMS not altered? Q5. There is clarity in the role that I perform in my organization?

Yes 10 yr. Annually 1 yr.

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ROLE CLARITY
0% 0% 7%

33%

strongly disagree disagree somewhat agree agree strongly agree

60%

Q6. I am clear with the main purpose of the job that I am performing?

strongly disagree job clarity 0% strongly agree 13% disagree 0%

somewhat agree 40% strongly disagree disagree somewhat agree agree strongly agree

agree 47%

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Q7. The level of involvement of employees in the organization is clearly defined?

strongly disagree EMPLOYEE INVOLVEMENT 0% disagree 0% strongly agree 20% somewhat agree 23%

strongly disagree disagree somewhat agree agree strongly agree

agree 57%

Q8. The KRAs/ targets set for me are realistic and are defined in the beginning.
strongly disagree 0% disagree 0% somewhat agree 0%

Defined KRA's

agree 47% strongly agree 53%

strongly disagree disagree somewhat agree agree strongly agree

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Q9. The KRAs are quantified for each level of employees? Q10. The training needs of the employees are identified through the current PMS?

strongly disagree 0% disagree 0% somewhat agree 0%

TRAINING NEED IDENTIFICATION BY THE PMS

strongly agree 43%

strongly disagree disagree somewhat agree agree 57% agree strongly agree

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Q11. The training needs identified at review are rolled up into an Organisational Training Plan.

strongly disagree 0% disagree 0% somewhat agree 0%

PMS LED TRAINING

strongly agree 43%

strongly disagree disagree somewhat agree agree 57% agree strongly agree

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Q12. PMS led training fills up the gaps identified. and enhances my performance.
strongly disagree 0% disagree 0% somewhat agree 0%

GAP IDENTIFICATION

agree 33% strongly disagree disagree somewhat agree agree strongly agree strongly agree 67%

Q13. PMS led Training also improves the quality of my work.

strongly disagree 0% disagree 0% somewhat agree 0%

Quality enhancement by PMS led training

agree 47% strongly agree 53%

strongly disagree disagree somewhat agree agree strongly agree

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Q14. There is a buddy or mentoring system in place. It provides on-going coaching and feedback.
Mentoring Program
agree 0% somewhat agree 3% strongly agree 0%

strongly disagree 43%

strongly disagree disagree somewhat agree agree strongly agree

disagree 54%

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Q15. My supervisor holds interim discussions and provides feedback about my performance frequently.

FEEDBACK DISCUSSIONS
agree 0% somewhat agree 13% strongly agree 0% strongly disagree 30%

strongly disagree disagree somewhat agree agree strongly agree

disagree 57%

Q16. They maintain a record of performance through critical incident reports. (Jot notes about contributions or problems throughout the quarter, in an employee file.)
strongly disagree 0% disagree 0% somewhat agree 0%

PERFORMANCE RECORDS

agree 37% strongly disagree disagree somewhat agree agree strongly agree strongly agree 63%

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Q17. They also provide the opportunity for broader feedback. Use a 360 degree performance feedback system that incorporates feedback from the employee's peers, customers, and people who may report to him.
360 feedback
agree 0% somewhat agree 3% strongly agree 0%

disagree 33%

strongly disagree disagree somewhat agree agree strongly agree strongly disagree 64%

Q 18. My supervisor is genuinely interested in my appraisal.

superior's interest in appraisal
strongly disagree 0% disagree 0% somewhat agree 13%

strongly agree 23%

strongly disagree disagree somewhat agree agree strongly agree

agree 64%

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Q 19.The current PMS is connected with variable part of compensation. In other words, there is a performance based pay in my organisation?

strongly disagree 0% disagree 0% agree 0%

performance based pay

somewhat agree 0%

strongly disagree disagree somewhat agree agree strongly agree

strongly agree 100%

Q 20. Performance based pay helps in increasing my productivity.

PERFORMANCE BASED PAY ENHANCES PRODUCTIVITY

strongly disagree 0% disagree 0% somewhat agree 23%

strongly agree 30%

strongly disagree disagree somewhat agree agree strongly agree

agree 47%

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Q21.My Performance appraisal motivates me to show better performance next time.

MOTIVATION LEVEL strongly disagree
0% disagree 0% somewhat agree 0%

agree 47% strongly agree 53%

strongly disagree disagree somewhat agree agree strongly agree

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Q22. . The current PMS is capable of differentiating between the performers and non performers?
distinguish performers from non performers strongly disagree
0% disagree 0% somewhat agree 0%

agree 47% strongly agree 53%

strongly disagree disagree somewhat agree agree strongly agree

Q23. My organisation provides promotional/career development opportunities for staff.

somewhat agree strongly disagree disagree 0% 0% 0%

agree 17%

strongly disagree disagree somewhat agree agree strongly agree

strongly agree 83%

PROMOTION AND CAREER DEVELOPMENT

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Q24. The PMS of my organisation is free from biases.

strongly disagree 0% somewhat agree 0% disagree 0% agree 17%

strongly disagree disagree somewhat agree agree strongly agree

BIAS free PMS

strongly agree 83%

Q25. I am satisfied with the current PMS?

Employee satisfaction with current PMS
strongly disagree 0% disagree 0% somewhat agree 27%

strongly agree 43%

strongly disagree disagree somewhat agree agree strongly agree

agree 30%

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Q26. I benefit from the PMS of my organization?

employee's benefit from the current PMS

strongly disagree 0% disagree 0% somewhat agree 7%

strongly agree 40%

strongly disagree disagree somewhat agree agree strongly agree agree 53%

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CHAPTER 6 RESEARCH FINDINGS

From the questionnaire that has been circulated in the organization, and from the responses of the sample, one can see that COCACOLA has a scientific PMS in place which is not obsolete and is an integrated approach of achieving outstanding performance. There is job clarity and role clarity among employees. They are well aware of requirements and accomplishment-based performance standards, outcomes, and measures. The KRAs are well defined and quantified at the initial level only. Employees know what theyre supposed to do.

The training needs are also identified through the results of the appraisals and an action plan is chalked out for them accordingly. Individual training needs are well aligned with the organizations needs. Employees feel that DAP led training identifies the gaps in their actual performance viza- viz their expected performance and also focuses on filling up these gaps.

As for the mentoring and coaching program is concerned, there is no such program present in the organization. PMS , here is an annual activity and takes place at the end of year ( December January). No interim discussions are held to discuss the ongoing performance of employees. If supervisors are giving employees frequent feedback and coaching, performance reviews

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can change from negative, evaluative, one-sided presentations to positive, planning meetings. Held quarterly, employees always know how they are performing and their next goals and challenges. There is no 360 degree feedback prevailing in the organization. As for the compensation is concerned, there is a link between performance and compensation. The organization is highly performance driven. It also Provide promotional/career development opportunities for staff. There is a distinction that can be made between performers and non performers. The PMS is free from biases and effects the employee performance due to the incentives attached.

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CHAPTER 7 RECOMMENDATIONS
Provide on-going coaching and feedback. People need ongoing, consistent feedback that addresses both their strengths and the weaker areas of their performance. Effective feedback focuses more intensely on helping people build on their strengths. Feedback is a two-way process that encourages the employee to seek help. Feedback is usually more effective when requested. Create a work environment in which people feel comfortable asking, "How do you think Im doing?" Provide the opportunity for broader feedback. Use a 360 degree performance feedback system that incorporates feedback from the employee's peers, customers, and people who may report to him. Conduct quarterly performance development discussions. If supervisors are giving employees frequent feedback and coaching, performance reviews can change from negative, evaluative, one-sided presentations to positive, planning meetings. Held quarterly, employees always know how they are performing and their next goals and challenges.

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Challenging Assignments / Projects: The objective behind assigning challenging tasks or assignments is to enable an individual to enrich / broaden his or her experience, while working with others or individually. These assignments also provide an opportunity for employees to network with other employees, who may be helpful in solving future business problems.

Job Rotation: The main objective of job rotation is to add to the capabilities of an individual by: Assigning him / her a new role in the same function;

Assigning him / her new role in a different function.

Job Enrichment / Enlargement: Job enrichment/ enlargement involves expanding an employee's responsibilities beyond their normal scope. This approach is appropriate for employees who are exceeding the performance expectations of their current position and who will benefit from expanded responsibilities not involving a job change. An example of job enrichment would be an assignment as a mentor or coach to a less experienced person. Apart from the above mentioned recommendations, I also have Eight Performance Management Tips If the organization is engaged in getting more from performance management, here are some tips that are sure fire ways to get a better performance management result:

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1. Define "Performance" Clearly. Whats performance in your organization? How do you want to judge the performance of your employees? This may depend on what you are going to do with the results of performance management. Some choices are identification of development and training needs, eligibility for promotion and transfer, pay adjustments, incentive awards, eligibility for new temporary assignments, and the like. Are you going to pay for only objective performance that is quantitative? Sales? Costs? Quality and accuracy? Customer care?

2. Engage Managers in Helping You Improve Present Practices . Managers will become more involved in performance management if they have input into how the process works. Have them involved in the performance management process and part of the solution your organization delivers. Managers can help you make the program more workable and meaningful to them and employees as well as the organization.

3. Customize to Your Organization. Now, organizations are different. The messages about performance will differ from organization to organization. Its not a one-size-fitsall situation, and you must match the solution to where your organization is now, where it wants to go, and how managers and employees feel about performance management. The solution needs to be owned by your organization. Its great to have a solution that has a track record of success, but your organization most certainly will have different results with the same solution than will other organizations.

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4. Provide Role Models. Performance management needs examples and sponsors. And those who sponsor performance management must be involved in the process. The most senior executive needs Board review. This executive must review the performance of direct reports. The performance management process must cascade from top to bottom. The person who is the champion of performance management must be a user and customer of performance management. The measures and goals need to cascade from the top of the organization to the bottom. Leaders need to use the process on their managers, and managers must have experience with the measurement process.

5. Update and Post Performance Goals as Directions Change. Make sure performance management forms dont stay in the drawer until the end of the year by providing a process to revise and update measures and goals as situations change. Posting organizational, departmental, team and individual goals on department bulletin boards or on your organizations Intranet keeps goal achievement at the forefront. People like to track how they are doing, and updating performance progress keeps the focus.

6. Engage Employees in the Performance Management Process . Engage employees through their participation in the process. A self-evaluation before the performance review helps employees get a better perspective of their performance. Employees also increase their ownership in the process by scheduling their performance update sessions that involve discussing progress, resources needed to achieve goals, and development ideas. Encourage employees to take the lead on preparing and implementing development plans.

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7. Train Raters and Ratees. Performance management is only as effective as those who apply them are. Its a two-way-street to get good performance management. Everyone is a ratee, and many are both raters and ratees. So, you must give people experience on both ends of the process. It takes education on the why and how of performance management. Understanding the measures and criteria to be used, how to use the tools of the process, and perhaps most important experience with the performance management process. Actually doing the performance management is what is critical. Getting feedback and help as the process goes on. Coaching the coaches. Managers who are good at performance management and coaching can help train other managers.

8. Communicate and Coach. If you dont communicate why this process is used and why it adds value, it wont work. And this must be ongoing communications. Not just getting everyone into an auditorium and showing them a slick presentation. Day by day and week after week. Why the measures are important, and how an employee is doing. Where they can improve, and whats in it for them if they do. And coaching is critical. The goal of performance management is to improve the performance of the entire organization. It is not just a performance documentation solution; it is a way to provide the information upon which real organizational performance improvement shall occur. Research on performance management effectiveness suggests that these suggestions would save organizations a lot of time during the performance-management repair process.

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PERFORMANCE MANAGEMENT MODEL

Performance Planning/ Objective setting Understanding & agreeing of role Defining performance objectives Linkage to company goals Performance Development Development Planning

Rewards/ Recognition Recognition monetary / non monetary Compensation (increments, incentives, bonus, etc.)

Performance Assessment Self Review Assess performance against objectives Assess how the individual exhibited behaviours in support of

Vision /Mission Business goals, strategy & Competency development budget Regular counseling and

feedback Annual Business Plan Mentoring Coaching

The Performance Planning Process should be as follows: Organizations Objectives

Functional Objectives

Role/Individual Objectives 72 Key Result Areas (KRAs)

BEST PRACTICES
Also I have some of the best practices followed by companies like BHARTI AIRTEL , that could also be incorporated.

What is the Balanced Scorecard?

Bharti Performance Management System is based on the concept of Balanced Scorecard.It is a new approach to strategic management which was developed in the early 1990's by Drs. Robert Kaplan (Harvard Business School) and David Norton. They 73

named this system the 'balanced scorecard'. Recognizing some of the weaknesses and vagueness of previous management approaches, the balanced scorecard approach provides a clear prescription as to what companies should measure in order to 'balance' the financial perspective. The balanced scorecard is a management system (not only a measurement system) that enables organizations to clarify their vision and strategy and translate them into action. It provides feedback around both the internal business processes and external outcomes in order to continuously improve strategic performance and results. When fully deployed, the balanced scorecard transforms strategic planning from an academic exercise into the nerve center of an enterprise. Kaplan and Norton describe the innovation of the balanced scorecard as follows: "The balanced scorecard retains traditional financial measures. But financial measures tell the story of past events, an adequate story for industrial age companies for which investments in long-term capabilities and customer relationships were not critical for success. These financial measures are inadequate, however, for guiding and evaluating the journey that information age companies must make to create future value through investment in customers, suppliers, employees, processes, technology, and innovation." The balanced scorecard suggests that we view the organization from four perspectives, and to develop metrics, collect data and analyze it relative to each of these perspectives:

The Learning and Growth Perspective The Business Process Perspective The Customer Perspective The Financial Perspective

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The Balanced Scorecard and Measurement-Based Management The balanced scorecard methodology builds on some key concepts of previous management ideas such as Total Quality Management (TQM), including customerdefined quality, continuous improvement, employee empowerment, and -- primarily -measurement-based management and feedback. Double-Loop Feedback In traditional industrial activity, "quality control" and "zero defects" were the watchwords. In order to shield the customer from receiving poor quality products, aggressive efforts were focused on inspection and testing at the end of the production line. The problem with this approach -- as pointed out by Deming -- is that the true causes of defects could never be identified, and there would always be inefficiencies due to the rejection of defects. What Deming saw was that variation is created at every step 75

in a production process, and the causes of variation need to be identified and fixed. If this can be done, then there is a way to reduce the defects and improve product quality indefinitely. To establish such a process, Deming emphasized that all business processes should be part of a system with feedback loops. The feedback data should be examined by managers to determine the causes of variation, what are the processes with significant problems, and then they can focus attention on fixing that subset of processes. The balanced scorecard incorporates feedback around internal business process outputs, as in TQM, but also adds a feedback loop around the outcomesof business strategies. This creates a "double-loop feedback" process in the balanced scorecard

Outcome Metrics You can't improve what you can't measure. So metrics must be developed based on the priorities of the strategic plan, which provides the key business drivers and criteria for metrics that managers most desire to watch. Processes are then designed to collect information relevant to these metrics and reduce it to numerical form for storage, display, and analysis. Decision makers examine the outcomes of various measured

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processes and strategies and track the results to guide the company and provide feedback. So the value of metrics is in their ability to provide a factual basis for defining:

Strategic feedback to show the present status of the organization from many perspectives for decision makers Diagnostic feedback into various processes to guide improvements on a continuous basis Trends in performance over time as the metrics are tracked Feedback around the measurement methods themselves, and which metrics should be tracked Quantitative inputs to forecasting methods and models for decision support systems

Management by Fact The goal of making measurements is to permit managers to see their company more clearly -- from many perspectives -- and hence to make wiser long-term decisions. The Baldrige Criteria (1997) booklet reiterates this concept of fact-based management: "Modern businesses depend upon measurement and analysis of performance. Measurements must derive from the company's strategy and provide critical data and information about key processes, outputs and results. Data and information needed for performance measurement and improvement are of many types, including: customer, product and service performance, operations, market, competitive comparisons, supplier, employee-related, and cost and financial. Analysis entails using data to determine trends, projections, and cause and effect -- that might not be

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evident without analysis. Data and analysis support a variety of company purposes, such as planning, reviewing company performance, improving operations, and comparing company performance with competitors' or with 'best practices' benchmarks." "A major consideration in performance improvement involves the creation and use of performance measures or indicators. Performance measures or indicators are measurable characteristics of products, services, processes, and operations the company uses to track and improve performance. The measures or indicators should be selected to best represent the factors that lead to improved customer, operational, and financial performance. A comprehensive set of measures or indicators tied to customer and/or company performance requirements represents a clear basis for aligning all activities with the company's goals. Through the analysis of data from the tracking processes, the measures or indicators themselves may be evaluated and changed to better support such goals

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REFERENCES
www.cocacola.com, www.humanresources.about.com, www.citehr.com www.library.puchd.ac.in Cocacola intranet, Airtel intranet
Taylor and Francis online journal Performance management and appraisal systems by T.V.Rao

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Questionnaire
Personal Details: NAME : ORGANIZATION : DATE :

DESIGNATION / JOB TITLE : BRANCH : SIGNATURE :

1.

Do you have a scientific PMS in place?

YES/ NO

2. How long is the current performance management system in place? Qtrly 3. How often do reviews take place? Half yrly Yrly

4. Since when is the PMS not altered?

1. . There is clarity in the role that I perform in my organization? strongly disagree disagree somewhat agree agree agree strongly

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2. . I am clear with the main purpose of the job that I am performing? strongly disagree disagree somewhat agree agree agree strongly

7. The level of involvement of employees in the organization is clearly defined? strongly disagree disagree somewhat agree agree strongly agree

8. The KRAs/ targets set for me are realistic and are defined in the beginning. strongly disagree disagree somewhat agree agree agree strongly

9. The KRAs are quantified for each level of employees? strongly disagree disagree somewhat agree agree agree strongly

10. The training needs of the employees are identified through the current PMS? strongly disagree disagree somewhat agree agree agree strongly

11. The training needs identified at review are rolled up into an Organisational Training Plan. strongly disagree agree disagree somewhat agree agree strongly

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12. PMS led training fills up the gaps identified. And enhances my performance. strongly disagree disagree somewhat agree agree agree strongly

13. PMS led Training also improves the quality of my work. strongly disagree disagree somewhat agree agree agree strongly

14. There is a buddy or mentoring system in place. It provides on-going coaching and feedback. strongly disagree agree 15. My supervisor holds interim discussions and provides feedback about my performance frequently. strongly disagree agree disagree somewhat agree agree strongly disagree somewhat agree agree strongly

16. They maintain a record of performance through critical incident reports. (Jot notes about contributions or problems throughout the quarter, in an employee file.) strongly disagree disagree somewhat agree agree agree strongly

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17. They also provide the opportunity for broader feedback. Use a 360 degree performance feedback system that incorporates feedback from the employee's peers, customers, and people who may report to him. strongly disagree agree disagree somewhat agree agree strongly

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18. My supervisor is genuinely interested in my appraisal. strongly disagree disagree somewhat agree agree strongly agree

19. The current PMS is connected with variable part of compensation. In other words, there is a performance based pay in my organization? strongly disagree disagree somewhat agree agree strongly agree

20. Performance based pay helps in increasing my productivity. strongly disagree disagree agree somewhat agree agree strongly

21. The Performance appraisal motivates me to show better performance next time. strongly disagree agree disagree somewhat agree agree strongly

22. The current PMS is capable of differentiating between the performers and non performers? strongly disagree disagree somewhat agree agree agree strongly

23. My organization provides promotional/career development opportunities for staff. strongly disagree agree disagree somewhat agree agree strongly

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24. The PMS of my organisation is free from biases. strongly disagree disagree somewhat agree agree strongly agree

25. I am satisfied with the current PMS? strongly disagree disagree somewhat agree agree agree strongly

26. I benefit from the PMS of my organisation strongly disagree disagree somewhat agree agree agree strongly

Thank you!

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