NTPC LIMITED

1. NTPC LIMITED PERFORMANCE MANAGEMENT SYSTEM

2. Objectives of NTPC’sPMS-P A C E – Performance And Competence for Excellence To accomplish overall organisational vision and mission by linking individual performance to company objectives To facilitate fulfilment of individual aspirations To build a culture of performance To encourage two-way communication between appraiser and appraisee To evaluate the potential of the appraisee to assume higher responsibilities in the organisational hierarchy To translate future skill requirements of the organisation into individual development plans To identify high performers and recognise them through rewards and incentives

3. Strategy Plans & Memorandum of Understanding Linking Strategy With Performance Management Development of Strategic Goals At the Top Leadership Level Cascading Down of Goals at the Executive Director and General Manager/BUHs Level Cascading Down of Goals at the Head of Department Level and other levels below

4. PACE is a five step process • Joint review of performance • Document changes in KPAs if any • Document mid-year review discussions • Identify KPAs, constituents, weightages, measures and targets • Identify functional and managerial competencies for the appraisee Step 2 • Assessment of KPAs, Competencies, Values and Potential by appraiser • Training and Development Plans • Review by reviewing officer • Communication of score • Developmental feedback Step 5 Step 3 Step 4

5. PACE Cycle (Important Dates)

6. Step #1: Performance Planning Process Steps KPA Setting Process • Set KPAs • KPA setting for all appraisees in consultation with the reporting officer (appraiser) • KPAs to be set by referring to the KPA Directory and taking inputs from the MoU targets, functional plans, individual responsibilities and cascading of KPAs from the top • The KPAs, once finalised, to be signed off by the appraiser and the appraisee • Identify Competencies • Functional competencies for the appraisee to be identified and written in the PMS form by referring to the Competency Directory • Managerial competencies to be identified from the prescribed set on the PMS form MOUs Corporate Plan Company Goals Unit Goals Initiatives Functional / Departmental Goals Special Tasks Individual Goals Why is it critical? • Parameters for performance measurement are pre-defined • Objectives are prioritized • Individual performance is enhanced by clear definition of deliverables • Role of individuals is clarified within overall organizational context

7. Define Job Families Define Roles Develop KPAs Principles of Formulating Key Performance Areas • The critical few areas which define the employee’s contribution towards achievement of organizational objectives • They are to be derived from MoU, functional plan, plant level plan, supervisor’s priorities etc. • Select KPAs where there is greater element of control. • KPAs of managers in a chain are linked to a large extent. Thus, many managers have the interest to support a manager’s KPAs.

8. Define Job Families Define Roles Develop KPAs A KPA based Performance Management System plays a critical role in achieving business strategy • Achieve Business Strategy and Goals • Communicate the strategy, goals and management priorities to the organisation • Provide a vehicle to align the objectives, actions and behaviour of employees with the overall objectives of the organisation • Provide control to management • Track progress towards goals • Assign responsibility and accountability • Provide “early warning” to top management • Enable the organisational and individual improvement process • Gather data to measure performance • Identify areas that need improvement • Provide objective feedback and facilitate learning A KPA based Performance Management System provides the “rudder” which management requires to “steer the ship”

9. Define Job Families Define Roles Develop KPAs The Nature of KPAs EDs GM AGM Common Area Of Responsibility Self- Responsibility • Vertical & horizontal interdependence • Area of self-responsibility

10. Define Job Families Define Roles Develop KPAs The Nature of KPAs: Three Types of Areas at the Workplace NO CONTROL FULL CONTROL PARTIAL CONTROL

11. Define Job Families Define Roles Develop KPAs Type of KPAs • Numeric • PLF, Availability, Profit, Cost, Inventory • Time/ Deadline • Projects, Clearance, Maintenance, Land Acquisition, Accounts, Budgets, Engineering • Negative • Complaints, Grievance, Accidents, IR problems, man days lost, Rejection, etc.

12. The Nature of KPAs IMPORTANCE LOW HIGH ACTIVTY TRAP KPAs (20% Activities Lead to 80% Results) U R G E N C Y LOW HIGH FIRE FIGHTING EMERGENCY

13. NORMS FOR KPAs • TO BE DRAWN FROM THE BUSINESS PLANS AS FAR AS POSSIBLE. • THE NO. OF KPA INDICES SHOULD NOT BE MORE THAN EIGHT & THE NO. OF CONSTITUENTS OF KPAs SHOULD NOT EXCEED 24 IN ALL INCLUDING THE COMMON INDICES. • THE UNIT OF MEASUREMENT FOR ANY KPA CAN ONLY BE ONE OF THE THREE ,VIZ., % , TIME , Nos. • EACH KPA SHOULD CARRY AT LEAST 3 MARKS • NO KPA CONSTITUENT SHOULD HAVE MARKS IN DECIMALS SUCH AS 3.5 OR 4.5. • EVERY EXECUTIVE TO HAVE ATLEAST TWO COMMON INDICES. THE MINIMUM MARKS FOR COMMON INDICES AT VARIOUS LEVELS SHOULD BE AS FOLLOWS.

14. KPA Setting Process MOUs Corporate Plan Company Goals Unit Goals Initiatives Functional / Departmental Goals Special Tasks Individual Goals Performance Planning Performance Planning is done through a process of discussion between executive and the reporting officer to arrive at the performance targets for the Key Performance Areas (KPAs)

15. Performance Planning Identify the KPAs, their constituents (Activities), measures for each constituent, marks and three different performance (target) levels. While filling the form, the guidelines need to be kept in mind. KPA directory available for reference

16. Performance Planning Example of KPAs: Coal Mining – CBA Act 1957 (L3): Site

17. Assigning Weightage • Understanding the Relative Importance of Each Key Performance Area. • Understanding the Difficulty of Each Key Performance Area. • Understanding Superior’s Perspective. • Discussing Weightage with the Superior. • Convert the Weightage of Each KPA for the Different Levels of Performance.

18. PMS would comprise assessment on four parameters with different wieghtages for various levels • For executives in lower grades, there is higher weightage on KPAs and functional competencies as the there is higher focus on achieving the immediate functional tasks • The weightage on managerial competencies and values increases for an executive as the grade increases because the role requires achieving business goals by managing work of other employees

19. Competencies are defined under two heads: Functional and Managerial A combination of the skills, knowledge and behaviors that are critical to the success of the organization and the achievement of individual performance goals Competencies Functional Managerial Types of Competencies • Competencies that are required for success in a particular function or job family • Typically involve demonstrating technical/expert knowledge • Behavioral in nature • Generally relevant to all employees • The opportunity to link HR systems with business objectives • A common language to define the skills, knowledge and behaviors required for successful performance in positions across the organization • An integrated approach to people issues • Recruitment, PMS, Training etc. • Improved quality of information on people within the organization Benefits of defining Competencies for each role

20. Job families have been defined on the basis of the roles performed by different departments within a function Define Job Families Define Roles Define functional competencies Level Typical Grade (1) Electrical Maintenance (Head) Illustrative L1 E6 – E7 L2 E5 – E6 Transformers and switch yard maintenance Coal Handling Plant Electrical testing Main Plant L3 E1 – E5 Low tension Switch Gears High tension Switch Gears Transformers and switch yard maintenance High tension Switch Gears Electrical testing Motors ESP Low tension Switch Gears Motors Generator Note: (1) Actual grade varies from plant to plant depending up on size of the plant and experience of individual

21. Roles and functional competencies – Electrical Maintenance (Head) • Role • Ensure high availability of all electrical equipment and systems in the power plant • Minimise cost of electrical maintenance of the plant • Supervision of maintenance measures in electrical maintenance division and ensuring quality of maintenance • Ensure availability of spares and other infrastructure for maintenance • Minimise response time to the customer (i.e. Operations) for handling routine day-to-day problems • Optimise equipment lifecycle cost • Ensure compliance with safety requirements • Optimise Mean Time Between Failure (MTBF) and Mean Time To Repair (MTTR) • Plan resource requirements for electrical maintenance– manpower, materials and contracts • Network with other electrical maintenance teams in the plant and at other locations to capture learning • Coordination with R&M for equipment upgradation • Functional competence requirement • Technical knowledge of all electrical machines and equipment (e.g. generator, motors, transformers, switch gears, relays etc.) • Understanding of working and history of equipment • Knowledge of standard operating procedures with respect to maintenance of main plant, transformers, switch yard and coal handling plant • Technical trouble shooting • Knowledge of safety requirements • Awareness of suppliers of material and services for electrical maintenance • Knowledge of power generation process • Knowledge of modern maintenance management practices and of NTPC’s Maintenance Management Systems • Spares inventory management • Knowledge of statutory guidelines related to electrical equipment • Cross functional competence requirement • Knowledge of Engineering, Erection and Operations functions • Knowledge of Mechanical, C&I and Civil Maintenance • Knowledge of Finance, HR, IT and C&M Illustrative

22. Managerial Competencies M – Mandatory Competencies, Other shaded boxes – Optional Competencies of which 3 need to be selected for assessment

23. Performance Planning • Managerial/Executive Competencies • Reporting officer and executive to choose three competencies in addition to mandatory competencies based upon direct and significant relevance to the executive’s area of responsibilities • Mandatory competencies and the basket available depends on the level of executive

24. Performance Planning Core Values Assessment to be done at the end of the year

25. Potential Competencies

26. Competencies – assessment levels • Needs development ( 1-4); • Meets expectations (5-6); • Moderately above expectations (7-8); • Significantly exceeds expectations (9-10).

27. Step #2: Mid-year Review Why is it critical? Process Steps • Appraiser and appraisee to discuss changes in KPAs, if necessary • All KPAs to be re-filled in the form if any changes are made in either the KPAs, weightages or targets • Justification for change to be documented • Self appraisal to be completed • Appraiser to document mid year discussion • Performance management is not an event but an ongoing process • Helps in objective annual evaluation • Provides early warnings of non-performance; avoids year end surprises • Opportunity to revisit KPAs, change weightages or measures • Reinforces good performance in time • Provides an opportunity for appraisee to express his thoughts on progress made and roadblocks encountered Guidelines for changing KPAs in the mid year • Change in roles and responsibilities of appraisee (transfer, additional role etc.) • Changes in organisational goals • Unanticipated projects • Abandonment of project as per corporate directive • Situations beyond control of the appraisee such as accident or emergency situations

28. Step #3: Annual Assessment Why is it critical? • Formal process to ensure performance is assessed annually • Opportunity for reviewing officer to offset rating biases • Provides inputs for other HR systems: • Rewards and Incentives • Career Development • Training and Development Process Steps for Appraiser and Appraisee Process Steps for Revng Officer • Review the marks given for each section by the appraiser – check for overrating or underrating • Hold discussion with appraiser in case changes in scores are required • Rationale for changes in scores must be documented on PMS form • Reviewing officer and appraiser sign-off on the PMS form • Evaluate performance against KPAs by comparing actual performance to targets set • Evaluate • Functional/technical competencies (chosen at the beginning of the year) • Managerial competencies (3 mandatory and 3 optional) • Values & Potential • Complete section on Special Achievements • Transfer scores from all sections to the section on Total Marks for consolidation • Complete Individual Training and Development Plan

29. Annual Assessment The reporting officer is to invite the concerned executive to participate in the annual assessment.

30. Annual Assessment During annual assessment marks to be provided for the following: • KPAs • Functional/Technical competencies (to be evaluated on 10 point scale) • Managerial/Executive competencies (to be evaluated on 10 point scale) • Values (to be evaluated on 10 point scale) • Potential competencies (to be evaluated on 10 point scale) • Special achievements to be filled • Individual training & development plan also needs to be filled

31. Annual Assessment

32. Objectives of Normalization Process • Ensure parity and integrity by minimizing rater variation across various departments • Enhance objectivity and transparency in the appraisal system Step #4: Normalization Process Final Output Performance Management Committee Top 30% Middle 65% Bottom 05% PMS scores from Appraiser Reviewer to check integrity Process Steps of Normalization • Plot distribution of scores for the cluster to check for skewing within and across departments • Checks to be made whether employees have been overrated or underrated on various PMS parameters such as: • KPA assessment • Competencies, Values and Potential assessment • Make suitable adjustments to scores, where necessary, • Scores (revised and unchanged) and reasons for moderation to be documented in PMS form • All appraisees in the cluster must be categorized into Top 20%, Middle 70% and Bottom 10%

33. Depending upon the grade and location, employees would be normalized either at the Plant, RHQ or CC

34. Normalization • Principles of Normalization • Cluster of different departments have been created (at various levels) for effective normalization of performance • Minimum size of 15 executives in a cluster for performance normalization • Departments with affinities have been congregated to form clusters • Depending upon the level, location and the number of executives in the given level function, clusters would be either at the plant, RHQ or CC level • The PACE reports of executives who have been transferred during the course of an assessment year shall be normalized at the place of posting where he/she is working as on the last day of the relevant assessment cycle The performance scores finalized by the Performance Management Committee and the categorization at the end of the normalization process are final Example of Cluster

35. Linkage of PMS to other HR systems Linkage with other HR Systems Outputs of PMS • Rewards System - Differential individual rewards for each category • Career Development System – PMS scores and relative rankings are one of the key inputs for the CDS Top 30% Middle 65% Bottom 05% PMS • Training and Development System – Inputs for designing of training programmes • Career Development System – Competency profiles of employees would provide inputs for job rotation and placement decisions Competency Assessment and Development Plans

36. Step #5: Communication of Score and Developmental Feedback Process Steps Performance Management Committee Output • Performance Management Committee output to be sent to HR • Final individual scores • Relative ranking • Rationale for any changes made • HR to consolidate final scores, relative ranking and feedback from Performance Management Committee for all employees • HR to send final score sheet with relative ranking and feedback from Performance Management Committee (if any) to respective appraisers • Appraisers to communicate final score, relative performance as well as developmental feedback to appraisee Human Resources • Final Score • Relative Ranking (Top 20%; Middle 70%; Bottom 10%) • Developmental Feedback Appraiser Employee Appraisers to be provided training on performance feedback and counseling skills

37. Applicability: • PMS Policy would be applicable to: • All Executives of NTPC (E1-E9) • Executives on deputation joining NTPC or those retaining lien while in service of NTPC • For those joining in the middle of assessment period with minimum service of 3 months during the period Snapshot of the Contents of the PMS Policy Manual Objectives • PMS Process • Performance Planning -MYR • Annual Assessment -Normalisation • Feedback, Coaching and Counselling • PMS Linkage with Other HR Systems • PMS Form • Performance Planning • Mid-Year Review • Assessment • Normalisation Process, Clusters and Constitution of Performance Management Committees

38. PMS calendar for E1 to E5

39. System of Appeal • Incase of grievance on the individual performance scores finalized by the performance management committee (PMC), the grievance can be directly put up to an appellate authority (ies) which is one level above the PMC with a copy to concerned HR. • Only such cases where change of marks is equal to or more than 5% of that awarded by the Reporting Officer shall be eligible for appeal

40. THANK YOU

41. Location Level 2nd Review level Project/ Plants E1 – E4 Head of the department (PMC Member). Project/ Plants E5 Head of Plant/ Project to review RHQ E1 to E4 Same as in the case of Plant/ Project RHQ E5 Regional ED to review CC E1 to E4 Head of the department. CC E5 Head of the department of minimum E8 level. All locations E6 Head of the department of minimum E8 level. All locations E7/E7A ED of Region / Functional ED to review. Review by Head of Deptt.