PERFORMANCE MANAGEMENT AND REWARD SYSTEM OF

LARSEN AND TOUBRO

SUBMITTED BY :
JUHI BHATTACHARJEE – 18PGDM074
CHIRAG SAHA – 18PGDM066
TANIA MUKHERJEE – 18PGDM168
ANKITA MISRA – 18PGDM004

ABOUT L&T :

▪ Larsen & Toubro is a major technology, engineering, construction, manufacturing and financial
services conglomerate, with global operations.
▪ L&T addresses critical needs in key sectors - Hydrocarbon, Infrastructure, Power, Process
Industries and Defence - for customers in over 30 countries around the world.
▪ L&T is engaged in core, high impact sectors of the economy and our integrated capabilities
span the entire spectrum of ‘design to deliver’.
▪ Every aspect of L&T's businesses is characterised by professionalism and high standards of
corporate governance.
▪ Sustainability is embedded into their long-term strategy for growth.

PERFORMANCE MANAGEMENT AND REWARD SYSTEM :

Performance Management is a process of ensuring that set of activities and outputs meets an
organization's goals in an effective and efficient manner. Performance management can focus on
the performance of an organization, a department, an employee, or the processes in place
to manage particular tasks.
Reward System refers to programs set up by a company to reward performance and motivate employees
on individual and/or group levels. They are normally considered separate from salary but may be
monetary in nature or otherwise have a cost to the company. It is a tool to lure top employees in a
competitive job market as well as to increase employee performance. It also helps to attract talented
individuals, motivate and retain them.

GROWING WITH L&T :

At L&T Learning & Development is a strategic business function contributing significantly to
organisational, group and individual effectiveness & growth by fostering a strong learning culture.

WHAT L&T FOCUSES ON :

 ● Deliver results and impact organisational performance
● Constantly scan the rapidly changing environment and equip employees at all times with the
required knowledge, skills and qualities
● Leadership development
● Develop corporate citizens
● Deliver a global MNC and global leaders
● Focus on action-oriented training
● Synergise & optimise efforts - avoiding overlap and duplication and build a uniform
curriculum.

L&T’S PERFORMANCE MANAGEMENT AND IMPROVEMENT :

The purpose of Performance management and improvement is to improve the efficiency of the
employees. The company encourages the employees to give feedback to the management. The company
employees undergo a formal performance review by their immediate managers based on the
performance of that employee for a particular period 4 times in a year.
The company follows the Critical Incident Method where the manager keeps a record of positive and
negative contribution of the subordinates' work related behaviour.
Based on the performance of the employee, training would be given to the employee for improvement,
if required. The employment of the employee depends on his performance.
L&T requires a minimum standard of performance and the appraisal of the employees is dependent on
this minimum standard of performance. If the employee fails to meet the standards of the company,
appropriate action is taken and in cases of serious misconduct or breach of policy, the employee may
be dismissed by the company.

CRITICAL ANALYSIS :
The Performance Management System has a lot of advantages for the company as well as the
employees. The employees will be working for themselves as well as for their individual teams, thus,
improving the levels of communication. This type of performance evaluation in the organisation would
help workflow, process control and return on investment.
Performance improvement is required for the following reasons :
● They serve as a useful career planning purpose and provide an opportunity to review the
employee’s career plan in light of his or her strength or weakness.
● It helps the manager and his/ her subordinate to develop a proper plan to identify the
subordinates deficiency and reinforce the right strategy in overcoming that deficiencies.
● It helps the employer to turn their strategic goals into specific goals of employees. This can be
done only if the performance is reviewed periodically.

CRITICAL INCIDENT METHOD ADVANTAGES :

 ● The supervisor reviews the performance throughout the year which helps them to take appraisal
related decisions of the subordinates.
● It also provides examples of good and poor performance that the supervisor can use to explain
the person’s rating.
● It helps in setting the organisational and departmental goals.
● Define expected results.
● Helps in performance review.
● Helps in providing feedback.

CRITICAL INCIDENT METHOD DISADVANTAGES :

● The manager cannot use this for comparing employees’ performance with others.
● Standards may be unclear and biased.
● Difficult to develop.
● Can cause disagreement among employee and may be unfair.
● Time consuming.
● Difficult to rate or rank employees relative to one another.

REWARD SYSTEM IN L&T :

There is a rating system in place at L&T similar to the system based upon bell curve used in most of
the MNC's . An employee's rating is dependent upon his performance in that year & also on his previous
year’s ratings. Performance Linked Reward i.e., bonus is given each year based upon his rating.

RECOGNITION AND MOTIVATION:

RECOMMENDATIONS:
A study conducted in 2015 shows that there are several changes that companies are adopting in terms
of performance management. The figure below shows the percentage of companies who adopted
different changes. Of these, 47% companies opted for shorter appraisals and 36% made the appraisals
more frequent. L & T can also follow in their footsteps for an improved performance management
system. shorter system will ensure greater motivation is the expected rewards will closely follow the
good work apprised. More frequent appraisals will ensure that any corrective measure needed is soon
implemented. this will improve productivity of the company.

The following are some examples of new trends in performance management which L & T can also
adopt.
Lafargeholcim Group
They have joined the world-class organizations in rethinking their performance measurement approach
because years of research have found that performance management practice is ineffective at boosting
performance. However, the focus areas now are; identifying what to do and how to do it, the how
is linked to employees behavior expected to exhibit in achieving what to do. The new thing is the
introduction of how to do it. This is yielding a positive result on performance. The second change is
the introduction of regular informal conversations (Individual Check-ins and Team Touch Point)
between an employee and his/her line manager (Individual Check-ins), and between team and their
line manager (Team Touch Point) this development is impacting positively on the business as
employees know where they stand and can adjust.

Cargill
Cargill, the US food producer and distributor, started to transform its traditional performance
management processes back in 2012 when it introduced what it called ‘Everyday Performance
Management’. It removed performance ratings and annual review forms and instead focused on
managers having frequent, on-the-job conversations and giving regular, constructive feedback
References
1. Essays, UK. Performance Management And Improvement In Larsen And Toubro Management
Essay. 2018
2. Employee Development. Larsen and Toubro website. Available at:
https://www.ltts.com/careers/employee-development
3. Mastufa Ahmed. The new performance review is shorter and more than once a year: Survey.
People matters, 2018.
4. Murtala Zakari. New Performance Measurement Trends: Evidence from Selected Multinational
Corporations. Journal of World Economic Research., 2017. Available at:
https://www.ukessays.com/essays/management/performance-management-and-improvement-
in-larsen-and-toubro-management-essay.php#citethis