IMPLEMENTATION OF STRETCH

1. IMPLEMENTATION OF STRETCH Workshop for Executives of Industry Sector & International Operations Division From 30th November

2. OBJECTIVES OF THE WORKSHOP • To re-enforce understanding of the concept & need for ‘Stretch’. • To share the modified Stretch Tool & the proposed scheme for implementation. • To gain hands-on experience in usage of ‘Stretch Calculator’.

3. STRUCTURE OF THE PRESENTATION • Scoring Patterns 2005-06 • The Modified Stretch Tool & it’s application • The Road Map: Implementation Methodology & Communication Process

4. Scoring Patterns Some Statistics Performance Cycle 05-06

5. 55% 2954 2678 2302 1016 277

6. 3 3 10 8 11 22 22 28 32 35 50 40 55 35 22 25

8. 53 52 60 56 40 54 54 45

14. Presentation on the modified Stretch Tool and the proposed scheme for implementation.

15. STRUCTURE OF THE PRESENTATION • Scoring Patterns 2005-06 • The Modified Stretch Tool & its Application • The Road Map: Implementation Methodology & Communication Process

16. BACKGROUND • Sr. Committee constituted in 2005 to review Stretch Tool. • Two Task Forces appointed during KRA T/F workshop in April to: - To simplify Tool & suggest Implementation methodology - To improve Acceptability of Concept & Tool • Teams of Unit MAP Champions – recommendations given to above T/Fs • Senior Committee on Stretch finalised recommendations of Task Forces on 6th Sept.’06 and modified Tool & scheme for implementation approved by MAP Steering Committee on 9th Oct.’06 for trial run.

17. SALIENT FEATURES OF MODIFIED TOOL • The existing Six Dimensions clubbed into Three factors. • Simplified Tool will comprise only three dimensions. • Each dimension will be rated on a running scale of 1 to 10. • Tool to be renamed : suggestions invited

18. SALIENT FEATURES OF MODIFIED TOOL • Rating of all three dimensions will be added & divided by 30 to get the Stretch Score for each KRA target. • Stretch Score will range between 0.1 and 1.0. (Min. score 3 and max. score 30 out of 30)

19. SALIENT FEATURES OF MODIFIED TOOL APPLICATION OF STRETCH • Will be used for calculating final performance scores at BSC and Individual Plan level. • Weighted Stretch score of each KRA will be averaged to get overall stretch score of the performance plan. (option to assign stretch for plan directly) • This score will be factored in while calculating the Final Performance Score of the individual/BSC.

20. STRUCTURE OF THE PRESENTATION • Scoring Patterns 2005-06 • The Modified Stretch Tool & it’s Application • The Road Map for Implementation: Methodology & Communication Process

21. Methodology Revised Scheme will be implemented on a trial basis across the company during current cycle (06-07) • Stretch will be calculated for BSCs & Individual Plans • For BSC level use of Stretch Tool is compulsory • For Individual Plans use of Stretch Tool is optional

22. The Road Map for Implementation: Methodology & Communication Process STEPS • Stretch of Company & Unit level BSCs will be assessed by Corporate level Committee using the Stretch Tool. • While assigning Stretch, Committee will ensure that the average stretch of all Unit level BSCs does not exceed stretch of the Company level BSC. • Stretch for BSCs of NC/Function Head, HOD and HOS will be assessed by unit level Committees using the Stretch Tool. • While assigning Stretch, Committees will ensure that the average stretch of all BSCs under the respective NC/Function and Deptt. does not exceed stretch of the concerned NC/Function and Deptt.

23. The Road Map for Implementation: Methodology & Communication Process STEPS ….contd. • The Section Head will assign Stretch to every individual plan using appropriate mechanism. Stretch Tool can be used as a guide off-line. • While assigning Stretch, HOS to ensure that the average stretch of all individual plans does not exceed stretch of the Section BSC. • Stretch will be assessed for the targets at L-5 for BSC and Individual Plans. • A Stretch Calculator has been developed to facilitate the process .

24. The Road Map for Implementation: Methodology & Communication Process COMPOSITION OF COMMITTEES

25. CASCADING OF STRETCH Co. level BSC Corporate Committee Unit BSC-4 Unit BSC-1 Unit BSC-2 Unit BSC-3 Unit Committee (GMs/DROs) NC BSC-1 (PG/Fn.) NC BSC-2 NC BSC-3 NC BSC-4 NC BSC-5 Dept 1 Dept 2 Dept 3 Dept 4 Unit Committees (HODs) Sectn Sectn Sectn Sectn Sectn 4 Exec Exec Exec HOS Exec Exec 4 L-1 BSC L-2 BSC L-3 BSC L-4 BSC L-5 BSC L-6 Indl. Plans

26. Communication

27. The Road Map for Implementation: Methodology & Communication Process • Sharing scheme with core MAP Champions from all units in a workshop (by 15th Nov) • Hosting the new scheme on the Intranet for wide communication across units (by 18th Nov) • MAP Champions to communicate scheme in the units through workshops (by 10th Dec.) • Core group to first hold w/shop for all MAP Champions of unit. • MAP Champions to hold workshops to cover all executives of the unit.

28. SCHEDULE OF ACTIVITIES Following activities will be taken up immediately in parallel by concerned committees for completion as per dates mentioned: • Corporate level Committee to assign stretch of the Company and Unit Scorecards (30th Nov) • Committees to assign stretch of the NC Scorecards (by 10th Dec) • Committees to assign stretch of the Dept. and Section Scorecards (by 12th Dec) • HoS to assign stretch for individual plans and share with individual executives (by 15th Dec) (Unit committees/HOS will complete 1st round of calculations which will be finalised once stretch of higher level is available)

29. Thank You

30. LINKAGE TO EXISTING DIMENSIONS & FACTORS INVOLVED

31. The Stretch Tool

32. EXAMPLE OF STRETCH TOOL APPLICATION AT FINAL REVIEW STAGE Final Performance Score = Level Achieved X Weighted Average Stretch of achieved level Example STEP-1 : CALCULATION OF STRETCH OF PLAN FOR L-5 TARGETS Let there be 5 KRAs in the plan: KRA Wt. Stretch Wt. Str. 1 20 0.8 16 2 30 1 30 3 10 0.9 9 4 20 .85 19 5 20 .85 19 Total = 93 Aggregate Wt. stretch of Plan for L-5 targets= 93/ 100 = 0.93 This stretch can also be assigned by the Section head without doing the above calculation based on his judgement.

33. STEP-2: ASSESSMENT OF ACHIEVEMENT LEVEL KRA Wt. Ach. Level Wtd. Ach. 1 20 4.5 90 2 30 4 120 3 10 5 50 4 20 3.5 70 5 20 4 80 Total = 410 Wtd. Achievement of Plan 410/ 100 = 4.1 STEP-3: CALCULATING STRETCH FOR ACHIEVEMENT LEVEL 4.1 = (0.93 / 5) X 4.1 = 0.76 STEP-4: CALCULATING FINAL PERFORMANCE SCORE = 4.1 X 0.76 = 3.116

34. Stretch Score of KRA= 21/30 = 0.7

35. EXAMPLE OF STRETCH TOOL APPLICATION Example 2 Targets : L-1 L-2 L-3 L-4 L-5 60 70 80 90 100 Case 3: Stretch at L-5 (Target) : 0.9 Actual Achievement 95 i.e. L-4.5 Stretch for L-4.5 = 0.9 / 5 (X 4.5) = 0.81 Final Score = 4.5 X 0.81 = 3.645 Case 4: Stretch at L-5 (Target) : 1.0 Actual Achievement 85 i.e. L-3.5 Stretch for L-3.5 = 1 / 5 (X 3.5) = 0.7 Final Score = 3.5 X 0.7 = 2.45

36. DESCRIPTION OF DIMENSIONS TARGET: Comparison of target for current year with BENCH MARK DEPENDENCE ON UNCONTROLLABLES: Uncertainty arising out of input availability from agencies outside BHEL which would impact achievement of target eg. Customers/Vendors/Govt/Collaborators etc. COMPLEXITY: Difficulty associated with planning, integrating & executing the job including coordination amongst various BHEL units / functions / internal resources & other variables. SKILL REQUIREMENT: Whether the existing skill sets would be sufficient to achieve the target or new skills sets would need to be developed. PROCESS RELATED UNCERTAINITY: Uncertainty about achieving target on account of the process adopted not being fully established/proven. NEED FOR INNOVATION: Need for evolving new processes/ methods/ tools/ technology etc for achieving the target.