Performance Management System in BHEL

Workshop on PMS organised by DPE 21st September, 2010

The e-enabled Performance Management System for Executives

ABOUT BHEL
Indias Largest Engineering & Manufacturing Enterprise in the Infrastructure Sector > 50 years old Government owned Navaratna PSE 2009-10 revenues of Rs.34000 cr, PBT of Rs. 6591 cr. 65% share of Indias installed generation capacity Power Generation & Transmission, Industry, Transportation, Defence etc. 180 products Presence in more than 70 countries

ABOUT BHEL
Large employee base 46,000 total employees 11,000 executives All-India manufacturing, sales, support and projects operations 15 manufacturing locations 4 Power sector regions 36 Regional offices and sales & service centres > 100 sites

STRUCTURE OF PRESENTATION

BACKGROUND KEY FEATURES OF MAP MAP TOOLS ISSUES FACED ISSUES IN IMPLEMENTING PRP

BACKGROUND OF MAP
ACR system was in operation upto 2000-01. Lack of objectivity in appraisal was a common complaint. This was mainly on account of the following: No provision for performance planning at beginning of year to define WHAT is to be done and HOW MUCH? No visible co-relation between actual performance and final assessment which was done basically on Traits & Competencies. No provision for feedback since the system was Confidential. Individuals did not know where they stood until the time of promotions.

STRUCTURE OF PRESENTATION

BACKGROUND KEY FEATURES OF MAP MAP TOOLS ISSUES FACED ISSUES IN IMPLEMENTING PRP

KEY FEATURES OF MAP

Alignment & focus

Employees performance aligned to the goals of BHEL.

Objectivity

Measuring performance objectively based on targets defined at the beginning of the year.
Transparency

Clear, transparent process of target setting and

KEY FEATURES OF MAP

Consistency

Consistent application of MAP tools across the organisation (standard KRAs, Unit of measurement)
Differentiation

Identifying & rewarding high performers .

Development

Developing individual competence & capability required for the role

STRUCTURE OF PRESENTATION

BACKGROUND KEY FEATURES OF MAP MAP TOOLS ISSUES FACED ISSUES IN IMPLEMENTING PRP

MAP TOOLS
Balanced Scorecards KRA Masters Rating Scales Differentiation Tool Normalisation e-Enabling MAP

TOOLS SUPPORTING VARIOUS FEATURES OF MAP

FEATURES OF MAP Alignment MAP TOOL 1.Scorecards: Cascading of parameters & targets from Scorecards to individual plans. 2.KRA Masters : Enables selection of appropriate KRAs linked to objectives of Company / Unit/ Deptt. Scorecard. 1.Performance Plan clearly defines KRAs & targets at begining of year. 2.Rating Scales : Defining five levels of performance during target setting. 3. Final assessment based on achievements against pre-defined targets.

Objectivity

TOOLS SUPPORTING VARIOUS FEATURES OF MAP

FEATURES OF MAP Consistency MAP TOOL KRA MASTERS: Standard KRAs & their unit of measurement. Used by all executives across the company. RATING SCALES: 5-point scale with targets set at all levels. E-enablement: Sharing of entire process from Performance Planning to Final Review including final rating.

Transparency

Differentiation Differentiating Tool (A2): To account for stretch in in performance targets & Contribution to Group Objectives levels Normalisation Tool: To convert scores into Ratings

TOOLS SUPPORTING VARIOUS FEATURES OF MAP

FEATURES Developing Individual Competencies MAP TOOL Development Plan Section: Identifies role based competencies for development

Centralised monitoring

E- enablement: Enables centralised monitoring & follow up for completion of activities at each level (Appraisee, Appraiser, Reviewer etc.)

THE MAP CYCLE

THE MAP CYCLE

April-May

Performance Planning
(Target setting) Appraiser

Normalisation
May

Ongoing Feedback
Appraisee

Mid-year Review
October

Final Review
April

STRUCTURE OF PRESENTATION

BACKGROUND KEY FEATURES OF MAP MAP TOOLS ISSUES FACED ISSUES IN IMPLEMENTING PRP

ISSUES FACED
PRP has made differentiation mandatory however, Managers are uncomfortable as transparency makes them answerable. 1. Tendency to give same score to majority 2. More vocal employees get better scores 3. People with softer targets get better scores 4. Assessment on absolute performance vs relative ranking in relation to other employees.

STRUCTURE OF PRESENTATION

BACKGROUND KEY FEATURES OF MAP MAP TOOLS ISSUES FACED ISSUES IN IMPLEMENTING PRP

SOME ISSUES IN IMPLEMENTING PRP

Difficult to justify NIL payment to lowest performer as he also contributes to overall Target. PRP Kitty could be distributed in two parts: 1. Company performance 2. Individual performance. Grade factor has large variation at the higher levels. Performance Factor across 5 levels will create huge difference in pay-out within same grade affecting Team work. Performance Rating of Directors & CMD. Being a huge cultural shift PRP differentials should be increased gradually

Thank you

Eg. KRA- Order Booking (Rs. Crs.)

EMPLOYEEA EMPLOYEEB EMPLOYEEC TARGET ACHIEVEMENT Assessment on absolute performance Relative ranking Rs. 5000 Crs Rs. 4800 Crs Below expectation Rs. 3000 Crs Rs. 3000 Crs Met expectation Rs. 1200 Crs Rs. 1250 Crs Exceeded expectation

CASCADE OF PERFORMANCE MEASURES THRU BALANCED SCORECARDS STRATEGY MAP & MOU
BHELs Performance Measures and Targets
Financial Process
Sector Performance Measures & Targets Financial Process Customer Capability

Customer Capability

Company BSC

Unit Performance Measures & Targets Financial Process Customer Capability

Corporate Department & Function Performance Measures & Targets Financial Process Customer Capability

Unit BSC

Departmental Measures & Targets

Product Groups
Financial Process Customer Capability

Materials
Financial Process Customer Capability

Planning
Financial Process Customer Capability

Support Services
Financial Process Customer Capability

Other Services
Financial Process Customer Capability

Deptt. BSC

Individual & Team Measures

Measures Targets Measures Targets 1. 1. Measures Targets 2. 1. 2. 1. 3. 2. 1. 3. 2. 1. 4. 3. 2. 4. 3. 2. 4. 3. 4. 3. 4. 4. Measures Targets Measures Targets 1. 1. Measures Targets 2. 1. 2. 1. 3. 2. 1. 3. 2. 1. 4. 3. 2. 4. 3. 2. 4. 3. 4. 3. 4. 4. Measures Targets Measures Targets 1. 1. Measures Targets 2. 1. 2. 1. 3. 2. 1. 3. 2. 1. 4. 3. 2. 4. 3. 2. 4. 3. 4. 3. 4. 4. Measures Targets Measures Targets 1. 1. Measures Targets 2. 1. 2. 1. 3. 2. 1. 3. 2. 1. 4. 3. 2. 4. 3. 2. 4. 3. 4. 3. 4. 4. Measures Targets Measures Targets 1. 1. Measures Targets 2. 1. 2. 1. 3. 2. 1. 3. 2. 1. 4. 3. 2. 4. 3. 2. 4. 3. 4. 3. 4. 4.

Indl. Plans

MAP TOOLS

KRA MASTERS

What gets measured get done

1. Exhaustive list of Key Result Areas identified in 24 functions to enable executives prepare their plans. 2. Standard unit of measurement fixed for each KRA for uniformity in measurement. 3. KRAs classified into Operational and Capability building categories.

MAP TOOLS

TOOL FOR DIFFERENTIATION

Factoring in softer & intangible aspects of Performance in the overall assessment Quality of work Cost Consciousness Process Orientation Contribution to overall objectives of the Group No two individuals within a group can have the same aggregate score on the above factors system driven check

MAP TOOLS

RATING SCALES A 5-point scale to assess the extent of achievement on KRA targets. Used during Target Setting for each KRA. The required level of achievement for each of the other four ratings are also defined.

5
Significantly Above Expectations

4
Moderately Above Expectations

3
Meets Expectations

2
Moderately Below Expectation

1
Significantly Below Expectations

MAP TOOLS

NORMALISATION
Process of categorising individuals within a department into E / VG / G / F / P, based on Performance Scores. Principle of Normal distribution used to define the percentage in each category.
NORMALISATION MATRIX
Company /Unit /Department Ratings

1
Indivadual Rating

2 10% 15% 35% 25% 15% 100%

3 10% 20% 40% 20% 10% 100%

4 15% 25% 35% 15% 10% 100%

5 20% 30% 35% 10% 5% 100%

E G F P

5% 35% 30% 20% 100%

VG 10%

MAP TOOLS

NORMALISATION
It ensures alignment between individual ratings and performance of the Company, Unit & Deptt. - Percentage of high performers (Rating E) in a Deptt. that has achieved its performance objectives is greater than the percentage of high performers in a Deptt. which has not fully achieved its performance objectives. - Percentage of high performers in a year in which the company has met its objectives is greater than the year when the company has not fully achieved its objectives.

KRA Implementation of Special Improvement Projects taken under IMPRESS Level Target 5 0.0 4 30.0 Scheduled Date 3 45.0

Item Weightage 5 (%)

2 60.0

1 75.0 31-03-11

Unit of Measurement No. of days delayed from scheduled date Action Plan, Resources, AssumptionsTo complete and sucessfully implement the project within and Milestones schedule date. MILESTONE: 31st MARCH 2011 Special Improvement Project Conversion of Long seam welding machine to Cirseam welding machine(OD3) KRA Shop turnover (Physical & / or Financial) Level Target 5 10169.0 4 8000.0 3 7000.0 Item Weightage 20 (%) 2 6000.0 1 5000.0

Unit of Measurement Money value/ Numbers/ Tonne. Action Plan, Resources, Assumptions1.Proper planning of men, machine & materials. 2. and Milestones Preparation of weekly schedule and adherence to it. 3. Conducting periodic review. 4. Monitoring the daily output. RESOURCES: 1.Availablity of materials. 2. Skilled manpower. 3. Availability of documents. ASSUMPTIONS: 1.All MCL in time. 2. All the documents in time. 3. All the machines will work effectively.

Performance Cycle Tracker Unit-wise Summary

Unit Name Plan Plan Plan Self Mid year Self Final Final Final Part-B submitte approve approve Appraisa Review Appraisa Review Review Review complet d by d by d by l discussi l done by accepted accepted ed by AA Appraise Appraise Reviewe submitte on submitte Appraise by by e r r d by docume d by r appraise Reviewe Appraise nted by Appraise e r e for Mid Appraise e for year r Final review review

(No.)

(No.)

(No.)

(No.)

(No.)

(No.)

(No.)

(No.)

(No.)

(No.)

CORPORATE 297 OFFICE BHOPAL 1309 EDN 686 BANGALORE CMG CENTRAL STAMPING UNIT 4 26

297 1309 686

297 1309 686

0 0 0

0 0 0

2 8 2

0 7 2

0 3 2

0 2 0

0 0 0

4 26

4 26

0 0

0 0

0 1

0 0

0 0

0 0

0 0

EPD 94 BANGALORE

94

94

Performance Cycle Tracker Report

Staff No Staff Name Current Phase Current Status Pending With Accepting Authority (AA)

3793257

P.K. Biswas

PLANNING

Performance Plan approved by reviewer

2104709, E9, Shri A V Krishnan, GENERAL MANAGEMENT, HPBP TRI 2104709, E9, Shri A V Krishnan, GENERAL MANAGEMENT, HPBP TRI

2171880

SHRI Nirmal Kumar Narjari

PLANNING

Performance Plan approved by reviewer

2067080

SHRI ENDYEAR Ramacha ndran

Final Review is SHRI KUMAR R null under final (E8) approval by reviwer

KRA Cycle time reduction for a product / assembly/Proces Level Target 5 10.0 4 8.0 3 6.0

Item 10 Weightage (%) 2 4.0 1 2.0

Unit of Measurement % reduction Action Plan, Resources,1. To study the cir seam welding Process. 2. To Assumptions and Milestones train the existing welders for tandem welding. 3. To arrange necessary facilities and resources in time with the help of WTC KRA Number of fresh welders qualified for additional position and customers Level Target 5 15.0 4 10.0 3 8.0 Item 10 Weightage (%)

2 6.0

1 4.0

Unit of Measurement Number Action Plan, Resources,Action plan: Planned to qualify 15 welders in Assumptions and Milestones IBR. Resources: WTC with all facilities to impart training. Milestone: 31st March 2011

Assigning ratings to Units

Bucket I Unit Name Unit Score Unit Rating 1 Unit 1 4.85 5

2 Unit 2
3 Unit 3 4 Unit 4 5 Unit 5 6 Unit 6 7 Unit 7 8 Unit 8 9 Unit 9 10 Unit 10 11 Unit 11 12 Unit 12

4.85
4.75 4.74 4.74 4.68 4.68 4.67 4.45 4.40 4.35 4.30

5
4 4 4 4 4 3 3 3 3 3 Level 5=1.2 = 2 units Level 4=4.8 = 5 units Level 3=4.8 = 5 units

Assigning ratings to NCs within Units

Distribution of NCs Unit Total No. Level 5 Level 4 Level 3 Level 2 of NCs

Performance Cycle Unit Score Unit Rating

Unit 2

16

3.2 4 NCs

7.2 8 NCs

4.8 4 NCs

0.8 -

4.85

Rounded off to

Unit 2 : Rating 5 Sl. No. NC 1 2 3 4 5 6 NC 1 NC 2 NC 3 NC 4 NC 5 NC 6 NC Score NC Rating 4.95 4.95 4.94 4.92 4.91 4.91 5 5 5 5 4 4

Assigning ratings to NCs within Units.contd

Level 5=3.2 = 4 NCs Level 4=7.2 = 8 NCs Level 3=4.8 = (5) 4 NCs Level 2=0.8 = (1) Nil

7
8 9 10 11 12

NC 7
NC 8 NC 9 NC 10 NC 11 NC 12

4.91
4.91 4.9 4.9 4.9 4.89

4
4 4 4 4 4

Creating the BSC holders NC

NC 7 : NC Score 4.91; NC Rating 4
BSC Holders NC Name 1 2 3 4 5 6 7 8 9 10 Mr A Mr B Ms C Ms D Mr E Mr F Mr G Ms H Mr I Mr J Grade E6A E6 E& E7 E6 E6 E6A E7 E6A E7 MAP Score 4.92 4.9 4.89 4.88 4.85 4.85 4.8 4.8 4.752 4.704 Final Rating A+ A+ A A A A B+ B+ B+ B Level 5 = 2 executives Level 4 = 4 executives Level 3 = 3 executives Level 2 = 1 executive The system cannot run Normalisation rationally for small populations. Hence distribution into Ratings has been done manually using standard tables for BSC NCs.

NC 7 : NC Score 4.91; NC Rating 4

NC for KRA population Name 1 .. 6 7 16 17 30 31 36 37 38 Mr A Mr B Ms D Ms E Mr J Mr L Mr M Ms Q Mr S Mr T Mr U Mr X Mr Y Mr Z Grade E4 E6 E1A E3 E4 E2 E2 E2 E6A E5 E5 E2 E3 E1A MAP Score 5 5 5 5 5 4.993 4.94 4.925 4.915 4.91 4.7916 4.35 3.5145 3.5 Final Rating A+ A+ A+ A A A B+ B+ B+ B B B C C

Normalisation of KRA holders

A+ = 6 executives A = 10 executives B+ = 14 executives B = 6 executives C = 2 executives

Ratings are assigned by the system