Performance Management System in BHEL

1. Performance Management System in BHEL Workshop on PMS organised by DPE 21st September, 2010

2. The e-enabled Performance Management System for Executives

3. ABOUT BHEL • India’s 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 India’s installed generation capacity • Power Generation & Transmission, Industry, Transportation, Defence etc. • 180 products • Presence in more than 70 countries

4. 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

5. STRUCTURE OF PRESENTATION • BACKGROUND • KEY FEATURES OF MAP • MAP TOOLS • ISSUES FACED • ISSUES IN IMPLEMENTING PRP

6. 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.

7. STRUCTURE OF PRESENTATION • BACKGROUND • KEY FEATURES OF MAP • MAP TOOLS • ISSUES FACED • ISSUES IN IMPLEMENTING PRP

8. 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 sharing of assessment with individual.

9. KEY FEATURES OF MAP • Consistency Consistent application of MAP toolsacross the organisation (standard KRAs, Unit of measurement) • Differentiation Identifying & rewarding high performers . • Development Developing individual competence & capability required for the role • e-Enablement Web-based system linking over 100 locations, covering around 11,000 executives. Centralised monitoring for effective implementation

10. STRUCTURE OF PRESENTATION • BACKGROUND • KEY FEATURES OF MAP • MAP TOOLS • ISSUES FACED • ISSUES IN IMPLEMENTING PRP

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

12. TOOLS SUPPORTING VARIOUS FEATURES OF MAP

13. TOOLS SUPPORTING VARIOUS FEATURES OF MAP

14. TOOLS SUPPORTING VARIOUS FEATURES OF MAP

15. THE MAP CYCLE

16. Mid-year Review Normalisation Final Review THE MAP CYCLE April-May PerformancePlanning (Target setting) Appraiser Ongoing Feedback May October Appraisee April

17. STRUCTURE OF PRESENTATION • BACKGROUND • KEY FEATURES OF MAP • MAP TOOLS • ISSUES FACED • ISSUES IN IMPLEMENTING PRP

18. 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.

19. STRUCTURE OF PRESENTATION • BACKGROUND • KEY FEATURES OF MAP • MAP TOOLS • ISSUES FACED • ISSUES IN IMPLEMENTING PRP

20. 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

21. Thank you

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

23. Measures 1. 2. 3. 4. Measures 1. 2. 3. 4. Measures 1. 2. 3. 4. Measures 1. 2. 3. 4. Measures 1. 2. 3. 4. Measures 1. 2. 3. 4. Measures 1. 2. 3. 4. Measures 1. 2. 3. 4. Measures 1. 2. 3. 4. Measures 1. 2. 3. 4. Measures 1. 2. 3. 4. Measures 1. 2. 3. 4. Targets 1. 2. 3. 4. Targets 1. 2. 3. 4. Targets 1. 2. 3. 4. Targets 1. 2. 3. 4. Targets 1. 2. 3. 4. Targets 1. 2. 3. 4. Targets 1. 2. 3. 4. Targets 1. 2. 3. 4. Targets 1. 2. 3. 4. Targets 1. 2. 3. 4. Targets 1. 2. 3. 4. Targets 1. 2. 3. 4. Targets 1. 2. 3. 4. Targets 1. 2. 3. 4. Targets 1. 2. 3. 4. Measures 1. 2. 3. 4. Measures 1. 2. 3. 4. Measures 1. 2. 3. 4. Financial Financial Financial Financial Financial Customer Customer Customer Customer Customer Process Process Process Process Process Capability Capability Capability Capability Capability CASCADE OF PERFORMANCE MEASURES THRU’ BALANCED SCORECARDS STRATEGY MAP & MOU BHEL’s Performance Measures and Targets Financial Customer Company BSC Process Capability Sector Performance Measures & Targets Unit Performance Measures & Targets Corporate Department & Function Performance Measures & Targets Financial Customer Financial Customer Financial Customer Unit BSC Process Capability Process Capability Process Capability Departmental Measures & Targets Product Groups Materials Planning Support Services Other Services Deptt. BSC Individual & Team Measures Indl. Plans

24. 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.

25. 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

26. MAP TOOLS 2 Moderately Below Expectation 3 Meets Expectations 4 Moderately Above Expectations 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 1 Significantly Below Expectations

27. 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

28. 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.

30. Performance Cycle Tracker – Unit-wise Summary

31. Performance Cycle Tracker Report

33. Assigning ratings to Units

34. Assigning ratings to NCs within Units

35. Assigning ratings to NCs within Units….contd

36. Creating the BSC holders NC The system cannot run Normalisation rationally for small populations. Hence distribution into Ratings has been done manually using standard tables for BSC NCs.

37. Normalisation of KRA holders Ratings are assigned by the system