Welcome

NMDC Limited
Presentation on

Performance Management
System

Performance Related Pay, being an important component

of Executives compensation, developing a Robust and
Transparent PMS has assumed significance. When a CPSE
has to bring in/strengthen Performance Oriented
Culture, it is essential to correctly evaluate the
performance of executives for appropriately rewarding
the different levels of performers.

Congratulations and sincere thanks to Secretary,

DPE for conducting this Workshop on
Performance Management System. Learning
from this workshop would surely help in fine
tuning the PMS already in vogue in CPSEs.

DPEs Initiative

contd

In this context, recent initiative of DPE in revising the

procedure and guidelines for recording of Performance
Appraisal Report of Chief Executives, Functional Directors,
Executive Directors (E9) and General Managers (E8) of
CPSEs, is comprehensive and timely;
NMDC has, by and large, already been following the spirit of
these revised guidelines even for other levels of Executives;

The Existing Performance Appraisal System in NMDC

It is in vogue since 1998-99;
It is on an annual basis;
It has a mid-year review mechanism;
It is divided into three categories:
Category-I

- Jr Officers, Executives of E0 & E1

Category-II

- Executives of E2, E3 & E4

Category-III

- Executives of E5, E6 & E7

For Sr Management (GMs & above) the Performance

Appraisal System as prescribed by DPE is followed.

Performance Appraisal System in NMDC

Performance dimensions are categorized into five

Sections viz
Purpose of Job & Objectives for the year
Assessment of the Appraisee on behavioural dimensions
Overall assessment based on achievements of objectives &
behavioural dimensions
Identification of strengths, areas needing improvement &
Development Plan
Potential appraisal

Existing System contd

Procedure followed for appraisal

Based on Key Performance Areas Objectives are set at
the beginning of the year keeping in view the organizational
objectives;
Objectives are reviewed & modified according to changing
situation during middle of appraisal period, if needed;
At the end of the appraisal period, self appraisal is recorded
by the Appraisee indicating his achievements, performance
areas on which he could have done better, constraining and
facilitating factors, training & development needs etc.

Existing System contd

Achievements are then analysed by both the Appraiser and

the Appraisee together and performance rating arrived at.
Appraiser
follows critical Incident Method to decide the performance

rating;

records critical incidents about the performance of the

Appraisee while arriving at the rating;

takes into account job performed as recorded in the diary

maintained by individual executive;

Existing System contd

Performance rating is reviewed by Reviewer Reviewer looks for objectivity in assessment in over- all
performance and can modify the rating of the Appraiser.
In order to ensure that PAS is administered fairly & without any
individual biases/prejudices the PARs are further reviewed by
Review Committees;
PARs of Executives upto E4 & JOs are reviewed by Project Level
Review Committee.
PARs of E5 and above executives are reviewed by Corporate
Level Review Committee.

Existing System contd

Existing System contd

Corporate level Review Committee also monitors: Trends; Process of appraisal; Objectivity; Standards;
Acts as a conscience keeper for the process, with focus on

the end objectives;

Counsels the various Project Heads/GMs to ensure the

success of the process both in letter and spirit;

Performance Factors/Basis
for Evaluating Performance

Existing System contd

Outstanding Performance
Has exhibited thorough performance, complete mastery of
the present job
Is a resource to the organisation beyond his present
assignment particularly in the building of people and systems
A high level contributor to organisational results and
displaying outstanding leadership qualities
Very Good Performance
Performance which is over and above the allotted
responsibilities and expected standards
Something extra in the form of a higher output or efforts,
better quality or insight and improvement in systems

Existing System contd

Good Performance
Exhibits a good amount of self-reliance and can be
depended on for results without any supervision
Satisfactory Performance
This implies full performance of allotted responsibilities and
achievements of expected standards
Barely Adequate Performance
Has only partially achieved objectives and not with
effective utilization of resources
Needs to be pushed
Can improve substantially

Transparent System

System System
is transparent since
Transparent
deciding KPAs clearly spelling out objectives, analysis of
achievements, discussion of the overall rating including
recording of differences in perception with reasons thereof
are done mutually by the Appraiser and Appraisee;
Communication to the under performers is invariably made
and representation, if any, received is considered for
appropriate decision.

Robustness

Robustness

The behavioural related parameters do not allow different

interpretation in view of clear-cut guidelines and hence the
task of obtaining true and objective assessment of the
Appraisee has become easy. Hence, the present system is
rational and Robust.

Ownership
The activity of appraisal starts at the beginning of the year with
mid-course review of the objectives if necessary and concluded
with due process at the end of the year.
The existing system is self defined and assessed using personality
traits achievements, at the end of the year.
Appraiser, if necessary, counsels the Appraisee when shortcomings
are noticed in personality traits, efforts made to achieve objectives
set etc.
Such counseling and discussions ensure performance on specific
parameters towards which there is an effort by the Appraisee
during the year.
Thus, it is owned by the Appraiser and the Appraisee.

Bell Curve - Distribution

Bell Curve distribution

PMS followed has the capability of giving Bell Curve in

performance rating of executives;

Bell Curve Distribution - Issues

Paying lesser PRP to bottom 10%, especially when it includes
good executives who have performed adequately, not only acts
as a demotivator but it also may create feeling of survivor guilt
in the remaining high performers;
Forced ranking may also encourage Executives to work against
other Executives in an effort to supplant them in rankings;
***
These and such other issues also need to be addressed for
finding solutions in the interest of effective working of the
Performance Management System

Conclusions

Existing Performance Appraisal System in NMDC meets the

requirements for payment of PRP to the Executives & JOs;
Remuneration Committee headed by an Independent
Director has been formed to decide policy for payment of PRP
it is under its consideration;

Thank You