BHARAT DYNAMICS LIMITED

1. BHARAT DYNAMICS LIMITED Executives Performance Management System (EPMS)

2. Genesis… • PRP is a new element in revised pay in Justice Jaganadha Rao committee report; • DPE guidelines on pay revision among others insists of PRP to be linked to PMS; • DPE has also instructed that PSUs which did not have a PMS in place should have one by 31 March 2009; • DPE guidelines also states that PMS should be ‘robust’ and ‘transparent’;

3. Discussions • We have discussed on the issues & following emerged: • Whether we need a new PMS only because of PRP; • Whether the present appraisal system is not ‘transparent’ and ‘robust’ enough; • Whether we can continue with present appraisal system suitably modifying to suit PRP requirement; • This is an opportunity for us to create a brand new PMS to suit the present and future organisational requirements;

4. Presently… • As First Step we compiled Job Descriptions of Executives in order to design a new PMS; • We also studied PMS systems of other PSUs- BHEL, BEL and HAL ; • Based on discussions and studies of different a draft PMS was made and submitted to the remuneration committee; • Committee suggested to have a professional touch and hence engaged IIM Bangalore for further study;

5. Draft New PMS -Its Scope It covers Executives upto AGM (Gr VII) level; In respect of Gr VIII and IX, the PMS of Ministry will be followed; The EPMS will serve the following purposes: • Tool for Career Growth (Promotions) • Tool for Potential Appraisal; • Tool for Development (Training Needs) • Tool for deciding Performance Related Pay

6. Gradation of Executives The Executives grades are divided into 3 zones; Zone of Rotation (Gr 1- 4) Zone of Specialisation (Gr 5-6 ) Zone of General Management (Gr 7 & above)

7. Generalised Job Descriptions • Each of these zones have been given generalised Job Descriptions which is contained in PMS format; • The generalised Job Descriptions is based on study of individual job Descriptions; • Attributes & Competencies have been arrived based on Job Descriptions;

8. Job Description – Zone 1 • Initiating Proposals and executing tasks within frame work of organisations policies and rules; • Co-ordination with different agencies to meet targets quantitatively and qualitatively; • Meeting deadlines and commitments; • To collect data related to job assigned and provide feedback to management; • Effective planning and forecasting requirements in relation to task in hand;

9. Job Description – Zone 1 (contd.) • To allocate resources properly and effect optimum utilisation of given resources; • To identify problems relating to his work area and suggest alternative remedies / solutions; • To be able to effectively prioritize the various tasks assigned to him / her ;

10. Job Description – Zone 2 • To set tasks for his team down the line; • To monitor the jobs assigned to the team; • Preparation and utilisation of budget; • Bringing about continuous improvements in work systems;

11. Job Description – Zone 2 Cont d • Identify key issues and explore options to generate solutions; • Focusing, guiding and motivating team members to implement creative and innovative ideas; • Effectively managing resources in a ‘doing more with less environment

12. Job Description – Zone 2 Cont d • To collect data related to job assigned and provide feedback to management; • Effective planning and forecasting requirements in relation to task in hand; • Develop and design MIS for periodic appraisal of top management;

13. Job Description – Zone 3 • To transform the ‘VISION OF COMPANY’ into reality by setting achievable goals and targets; • To make customer and their needs a primary focus of his actions as well as developing and sustaining productive customer relationships; • Delegating to accomplish Organisational Goal and adopt a suitable reward & recognition system to create motivated environment;

14. Job Description – Zone 3 (Contd..) • To create an agile Work Culture which initiates a learning organisation adopting new manufacturing/ management practices; • Exhibiting strong leadership qualities by keeping communication open across hierarchy, managing conflicts and setting personal examples;

15. Introduction to New EPMS The Draft PMS assesses performance in 3 parts: • Assessment of Tasks ( Half Yearly/Annually ) (Part-A) • Assessment of Attributes (Annually ) (Part-B) • Assessment of Competencies (Annually ) (Part-C) (Each part will be assessed separately and the marks obtained will be clubbed to obtain the Final Score for EPMS. )

16. Weightages for different Sections

17. Performance Tasks ( Zone 1) Each Officer will identify one work related Tasks for each half year and one improvement Task annually Two tasks will relate to work on hand; One task will relate to improvements; The Task will be allotted weightage on mutual discussion between appraiser and appraisee with measuring parameters Weightage of two task will be 60% and that of improvement task will be 40%, The Annual weightage for tasks will be 80%

18. Example for Work Task • Completion of 1000 sets of components / sub-assemblies during quarter: • This will involve preparing an action plan as follows: • Evaluation of resources: men & material • Evaluation based on availability of machine & tools; • Evaluation based on availability of material/components; • Identification of constraints that will be overcome

19. Example for Work Task • Measuring Parameters: • 90% achievement full marks • 80% achievement 75% of marks allotted • 70% achievement 50% of marks allotted • 60% achievement 25% of marks allotted (However if output falls due to unforeseen reasons appraiser can give grace marks upto 25%)

20. Example for Improvement task • Making the Work Area a Safe Working Zone • Identify & Document history of unsafe acts; (10%) • Identify & Document Potential Hazards; (15%) • Identify & Document Safety compliances ; (15%) • Identify and provide safety appliance & gears; (20%) • Motivate employees to follow safety precautions (40%)

21. Performance Tasks ( Zone 2) Each Officer will identify one work related Task for each half year And one Annual Improvement Task One will be be Work Oriented Task; One will be an Improvement Oriented Task; The Task will be allotted weightage on mutual discussion between appraiser and appraisee with measuring parameters Weightage of all the 2 tasks put together will be 60%. The Annual weightage for tasks will be 70%.

22. Example for Work Task ( Zone 2) • To reduce the percentage of rejection in a group of components: • Quantify the present rejection rates; (10%) • Identify the major & minor reasons • for increased rejections; (15%) • Chart out corrective action plans; (15%)

23. Example for Work Task ( Zone 2)(Cont d) • Implement the corrective action plan; (20%) • Quantify and compare rejections % age (40%)

24. Example for Improvement Task (Zone 2) • Reducing the Cycle Time for Producing a component or a group of components: • Study the present cycle time taken and bring out a schematic plan; (20%) • Identify impediments, road-blocks and major time consuming activities in the path; (20%)

25. Example for Improvement Task (Zone 2)(Cont d) • Study the major time consuming activities and bring out suggestions for reduction in time; (20%) • Implement suggestions and reduce cycle time (40%)

26. Performance Tasks ( Zone 3) Every Officer will have to take 2 such projects on anually basis The Weightage will be given based on mutual discussion between appraiser and appraisee. At the time of weightage allocation an action plan will be submitted which will details activities budget if any and date of completion. The Total Annual weightage will be 60%

27. Example for Improvement task ( Zone 3) Achieving 20% reduction in overheads costs during the year. Identify different overheads effecting revenue. (10% marks) Prioritise based on volume of expenditure . (10% Marks) Identify cost effective measures for reducing expenditure (20% marks) Achieving the targeted result (60% marks)

28. Example for Work Task ( Zone 3) Finalizing Annual Rate Contract for standard components Identifying all standard components (10%) Categorize them based on cost (10%) Identify parties expected to produce (20%) Finalize different rate contracts (60%)

29. Evaluation of Attributes (Part-B) Attributes are the inherent quality of an individual which become cause for the action taken by the individual to solve a problem or react in a particular situation. A specific set of attributes are belong to a specific Group. The Rating for attributes should be based on point 5 scale. The highest rating will get 5 marks and the lowest rating will get 1 mark.

30. Attributes for Zone of Rotation • System & Quality Orientation • Attendance & Punctuality • Attitude towards work • Reliable & Dependable • Man Management Abilities

31. Attributes for Zone of Specialisation • Motivate a Team • Work Independently • Identifies key issues & explore options & Perspectives • Continuous Improvements • Customer Focus • Emotional Balance

32. Attributes for Zone of General Management • Customer Focus • Leading the Vision & Values • Reasoning • Development Orientation • Influential, Flexible & Adaptable

33. Competencies for Zone of Rotation • Initiative & Drive • Technical / Professional Knowledge • Creativity & Innovation • Analytical Ability & Problem Solving Skills • Planning & Forecasting Abilities (To be assessed on 5 point scale)

34. Competencies for Zone of Specialisation • Professional Competence • Aligning Performance for Success • Cost & Time Consciousness • Developing Subordinates • Potential to shoulder Higher Responsibilities (To be assessed on 5 point scale)

35. Competencies for Zone of General Management • Knowledge of the Business • Planning, Organising & Problem Solving • Strategic Decision Making & Negotiating Skills • Leadership & Management of Culture • Building Successful Team (To be assessed on 5 point scale)

36. Overview of EPMS Framework in BDL SECTION A Job Descriptions of all executives Task setting with weightage Measuring Parameter for each Task Evaluation of Task based on accomplishment Recording of feedback and counseling Calculation for Final Score Evaluation of Competencies Evaluation of Attributes SECTION C SECTION B

37. EPMS-Summary of Scores The scores of individual performance is also added to the APRs of the individual for the purpose of DPC and training, weightage as follows:

38. Bell Curve approach The moderation committee as constituted by the management will assess the task performed and the marks of Attributes and competencies and on need basis moderate the same to bring about the bell curve.

39. Linkage to PRP • PRP will be based on following parameters: • Individual Performance and Improvement Tasks • Man & Machine Utilization - MOU Performance • Saleable SMH • Sales • Operating Profits

40. Executive Performance Related Pay (EPRP) (Part-A) • Assessment of Tasks ( Half Yearly/Annually ) (Part-A)

41. Linkage to PRP • The PRP will have two components: (Weightage to vary for each zone) • Fixed Component based on MOU, Saleable SMH, Sales & Operational Profits (Fixed Component will be moderated by Attendance Factor) • Variable Component based on Individual Performance and Man & Machine Utilization

42. Linkage to PRP • Break up of Fixed & Variable component Zone Fixed Variable Zone 1 40% 60% Zone 2 50% 50% Zone 3 65% 35% For PRP Purpose Zones will be as follows: Zone 1 = Grade I to IV Zone 2 = Grade V & VI Zone 3 = Grade VII & above

43. Linkage to PRP – FIXED COMPONENT

44. Linkage to PRP – VARIABLE COMPONENT

45. Linkage to PRP – Attendance Factor • Attendance Factor for Fixed Component Attendance Means – Clocked Attended Hours / Available Hours

46. Basis of measurement of Performance Parameters for PRP Annual Individual Rating will be composite annual score (weighted average) of all the above parameters

47. Example of PRP for Zone 1

48. Example of PRP for Zone 1 ( Contd…….) As per DPE guidelines, Annual PRP amount will be calculated as { say Component of PRP = 0.6 (for current year’s profit), Annual Basic Pay = Rs.154800 Company MOU Rating = Very Good = 0.8 Grade Factor for Grade I = 0.4 Individual Rating = 0.73 (as shown in the previous slide) Ratio of Available amount to Required amount = 1 Formula: Annual PRP Amount = (Component of PRP) X (Annual Basic Pay) X (Company MOU Rating) X (Grade Factor) X (Individual Rating) X (Ratio of Available amount to Required amount) PRP from Current Year’s Profit for Grade I Executive : • 0.6 X 154800 X 0.8 X 0.4 X 0.73 X 1 • = Rs.21697.00

49. PRP AT A GLANCE

50. A generalized job description for each individual/group has to be designed. Based on the same KRAs has to be identified to each Department/Division to facilitate identification of Tasks by the individual in consultation with immediate Head.