Performance Appraisal
Summer Project Report On PERFORMANCE MANAGEMENT SYSTEM in GAIL
1
Performance Appraisal
PROJECT REPORT APPROVAL SHEET
It is certified that the Project entitled,” PERFORMANCE MANAGEMENT SYSTEM IN GAIL” was completed by Ms. XYZ under my guidance during the period i.e. 1th June to 31st July. The same is hereby approved.
XYZ
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Performance Appraisal
DECLARATION I hereby declare that the project work entitled “Performance Appraisal “ submitted to the Gitaratan International Business School, XYZ University, is a record of an original work done by me under the guidance of Shri XYZ, GAIL (India) Limited, and our respective faculty members,. Gitaratan International Business School XYZ
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Performance Appraisal
ACKNOWLEDGEMENT “Vital to every operation is co-operation” I really agree to this wonderful quotation put forth by Mr. Frank Tyger. This project was successful due to the co-operation extended by people who have truly contributed towards it. Words aren’t enough to express my gratitude to all those who helped me through out my training period. With deep regards and humble respect I would like to thanks XYZ (HR) GAIL (India) Limited who provided me an distinctive opportunity to work at GAIL(India) Limited. I would like to express my humble thanks and regards to my guide Mr. XYZ Senior Officer,(HR) Department, GAIL(India) Limited, whose kind supervision and interest went all way in successful completion of this work. I would like to thanks all the members of GAIL (India) Limited who directly or indirectly helped me during my project work.
XYZ
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Performance Appraisal
TABLE OF CONTENTS
Sr.
Title
Page
No. 1 Executive Summary
No. 6
2
8
Introduction •
Introduction
9
•
Objectives of Study
12
•
Scope of Study
13
•
Limitations of the Study
14
•
Company Profile
15
•
Business of GAIL (India) Limited
28
•
Overview of the Industry
37
3
Review of Literature
48
4
Research Methodology and Design
77
5
Data Analysis
81
•
Data Representation
82
•
Data Interpretation
82
6
Major Findings and Discussion
111
7
Conclusions
114
8
Bibliography
116
9
Annexure
118
5
Performance Appraisal
EXECUTIVE SUMMARY
6
Performance Appraisal As a distinct and formal management procedure used in the evaluation of work performance, appraisal really dates from the time of the Second World War - not more than 60 years ago. In many organizations - but not all - appraisal results are used, either directly or in-directly, to help determine reward outcomes. That is, the appraisal results are used to identify the better performing employees who should get the majority of available merit pay increases, bonuses and promotions. B y the same token, appraisal results are used to identify the poorer performers who may require some form of counseling, training or in extreme cases, demotion, dismissal or decreases in pay. (Organizations need to be aware of laws in their country that might restrict their capacity to dismiss employees or decrease pay.) The purpose of this study has been to determine whether the performance appraisal helps the employees to know where they are lacking in their performance and also to know how performance appraisal helps the management to take administrative decisions of promotions, transfers, training and development and wage and salary administration.
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Performance Appraisal
INTRODUCTION
8
Performance Appraisal Almost every organization in one way or another goes through a periodic ritual, formally or informally, known as performance appraisal. Performance appraisal has been called many things. The formal performance appraisal has been called a tool of management, a control process, an activity and a critical element in human resources allocation. Uses for performance appraisal have included equal employment opportunity considerations, promotions, transfer and salary increases. Primarily performance appraisal has been considered an overall sys tem for controlling an organization. Performance appraisal has also been called an audit function of an organization regarding the performance of individuals, groups and entire divisions. Performance appraisal may be defined as a structured formal interaction between a subordinate and supervisor, that usually takes the form of a periodic interview (annual or semi-annual), in which the work performance of the subordinate is examined and discussed, with a view to identifying weaknesses and strengths as well as opportunities for improvement and skills development . Need of performance appraisal The performance appraisal is needed to achieve two objectives: 1. Administrative 2. Self-improvement 1. Administrative Objectives (i) Promotions: This is the most important use of performance appraisal. It is to the common interests of both the management and employees to promote employees into positions where they can most effectively utilize their abilities. (ii) Transfers: In an organization, it may be necessary to consider various types of personnel actions such as transfers, layoffs, demotions and discharges. Such actions can be justified if they are based on performance appraisal (iii)Training & Development: An appropriate system of performance appraisal can be helpful in identifying the areas of skills or knowledge in which certain employees are not
9
Performance Appraisal up to par, thus pointing out general training deficiencies, which presumable should be corrected by additional training, discussions or counseling. (iv)Wage and Salary Administration: In some cases, the wage increases are based on the performance appraisal reports. In some cases appraisals and seniority are used in combination. 2. Self Improvement Objectives The system allows the employee to evaluate his performance, identify the areas which he finds need Improvement and based on his personal assessment, take the steps he feels are necessary to improve his performance. Periodicity of appraisals Appraisals typically are conducted once or twice a year, most often annually. For new employees, common timing is to conduct an appraisal 90 days after employment, again at six months, and annually thereafter. “Probationary” or new employees, or those who are new and in a trial period, should be evaluated frequently –perhaps weekly for the first month and monthly thereafter until the end of the introductory period for new employees. Performance appraisals can be done by anyone familiar with the performance of individual employees: •
Supervisors who rate their employees.
•
Employees who rate their supervisors.
•
Team members who rate each other.
•
Employee’s self-appraisal.
Elements of an effective appraisal system
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Performance Appraisal •
Use of an appraisal system that is job-related and understandable.
•
Clear instructions and training for performance raters.
•
Performance-rater familiarity with the nature and importance of job duties on which employee is being rated.
•
Clear identification of standards by which performance will be measured
•
Scheduled, periodic reviews.
•
Objective measurement (excellent//fair/ unacceptable) if the employee is meeting performance standards.
11
•
Future action plan.
•
Precautions against improper bias by raters.
Performance Appraisal
OBJECTIVE OF THE STUDY The objective of my study of Performance appraisal in GAIL (India) Limited is •
To study the Appraisal system of GAIL and evaluate its benefits in context of GAIL.
•
To study the effectiveness of the existing system of performance appraisal at GAIL.
•
To study whether performance appraisal actually helps the employees to understand their own strengths and weaknesses with respect to their role and functions of the company.
•
To study the effect of performance appraisal on the relation of employee and his superiors.
•
To determine that whether performance appraisal system really provides an opportunity to the employees for self reflection and individual goal Settings.
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Performance Appraisal
SCOPE Of STUDY The present study intends to provide an integrated picture of the level of employment attitude toward performance appraisal system in GAIL (India) Limited. The study was conducted in GAIL (India) Limited, Noida, in different departments. The study covers the feedback from different employees of GAIL (India) Limited, Noida towards the performance appraisal system of the firm.
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Performance Appraisal
LIMITATIONS OF STUDY The biggest limitation of my study was the two months time period of internship which was not enough to understand performance appraisal of a company. Another Limitation of this study was I have made this project in GAIL (India) Limited. In such a small period Getting the views and opinions of the interviewee (HR manager) was a difficult task .
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Performance Appraisal
COMPANY PROFILE GAIL (India) Limited is India's flagship Natural Gas company, integrating all aspects of the Natural Gas value chain (including Exploration & Production, Processing, Transmission, Distribution and Marketing) and its related services. GAIL is also expanding its business to become a player in the International Market. The company dominates the gas sector, transporting 95% of the total piped gas. It also operates seven plants to process natural gas into LPG, apart from having a small presence in the petrochemicals and oil & gas exploration sectors. Company has expanded its operations into gas processing, petrochemicals, liquefied petroleum gas transmission and telecommunications. It has also extended its presence in power, liquefied natural gas regasification. Company has set up Gas Technology Institute near Delhi. This Institute is fully functional with well-equipped laboratories for research and development (R&D) related mainly to the gas sector. It would pursue joint R&D projects in India and abroad in association with oil and gas companies, research institutions and universities. COMPANY OVERVIEW The company was previously known as Gas Authority of India Ltd. It is India's principal gas transmission and marketing company. It was set up by the Government of India in August 1984 to create gas sector infrastructure. GAIL India is the country’s largest gas transmission company and handled 82 million standard cubic meters per day (mmscmd) out of the 111 mmscmd of gas supplies in FY08. The company has a pipeline network of 7,000 kms in place. Its pipeline is the lifeline for major gas consumers from the power and fertilizer sectors. It has also ventured into upstream gas exploration business in order to reduce dependency on a single source of supply and has secured 30 exploration blocks. GAIL is a significant player in downstream petrochemicals business with a production capacity of 410,000 tons per annum. It is also an early mover in city gas distribution with 8 joint ventures and a wholly owned subsidiary, GAIL Gas, is being incorporated. The
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Performance Appraisal company has plans to enter into more than 230 cities. GAIL is listed by Forbes as one of the world's 2,000 largest public companies in 2007. GAIL commissioned the 2800-km Hazira-Vijaipur- Jagdishpur (HVJ) pipeline in 1991. During 1991-93, three liquefied petroleum gas (LPG) plants were constructed and some regional pipelines acquired, enabling GAIL to begin its gas transportation in various parts of India. GAIL began its city gas distribution in New Delhi in 1997 by setting up nine compressed natural gas (CNG) stations. In 1999, GAIL set up northern India's only petrochemical plant at Pata.
VISION Be a leading company in natural gas and beyond, with global focus, committed to customer care, value
creation
for
all
stakeholders
and
environmental responsibility.
MISSION Accelerating and optimizing the effective and economic use of natural gas and its fractions to the benefit of national economy
Business description in brief
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Performance Appraisal
Currently the business set up is as such •
7 LPG Gas Processing Units to produce 1.2 MMTPA of LPG and other liquid Hydrocarbons.
•
1,922 km of LPG Transmission pipeline network with a capacity to transport 3.8 MMTPA of LPG.
•
13,000 km of OFC network offering highly dependable bandwidth for telecom service providers.
•
6,700 km of Natural Gas high pressure trunk pipeline with a capacity to carry 148 MMSCMD of natural gas across the country.
•
North India's only gas based integrated Petrochemical complex at Pata with a capacity of producing 4,10,000 TPA of Polymers.
•
27 oil and gas Exploration blocks and 3 Coal Bed Methane Blocks.
•
13,000 km of OFC network offering highly dependable bandwidth for telecom service providers.
•
Joint venture companies in Delhi, Mumbai, Hyderabad, Kanpur, Agra, Lucknow, Bhopal, Agartals and Pune, for supplying Piped Natural Gas (PNG) to households and commercial users, and Compressed Natural Gas (CNG) to the transport sector.
•
Participating stake in the Dahej LNG Terminal and the upcoming Kochi LNG Terminal in Kerala.
•
GAIL has been entrusted with the responsibility of reviving the LNG terminal at Dabhol as well as sourcing LNG.
•
Established presence in the CNG and City Gas sectors in Egypt through equity participation in three Egyptian companies: Fayum Gas Company SAE, Shell CNG SAE and National Gas Company SAE.
•
Stake in China Gas Holding to explore opportunities in the CNG sector in mainland China.
GROWTH
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Performance Appraisal •
1990-91
2800Kms Hazira-Vijaipur Jagdishpur (HVJ) pipeline becomes operational in 1991. LPG phase-I plant at Vijaipur commissioned in February 1991. •
1991-92
Phase-2 at LPG Vijaipur plant commissioned in Feb 1992. •
1992-93
LPG project at Vaghodia commissioned in Feb 1993. •
1994-95
Joint venture Agreement signed with British Gas on December 6, 1994.Mahanagar Gas Limited Incorporated to implement Bombay City Gas Distribution project. •
1997-98
Government of India grants Navratna status to Gail, herby entrusting greater autonomy to Gail after restructuring of the Board. Gas processing units (GPU), offsite utilities of the petrochemical plant at Pata, commissioned. •
1999-00
GAIL participates in NELP bidding by submitting offer for 7 blocks in association with ONGC & IOC and Russian company Gazprom.Government of India approved award of 2 blocks to GAIL, One with ONGC in Orissa offshore and another with Gazprom in Bengal Offshore. LPG plant at Pata with a designed capacity of 2.58 lacs TPA of LPG commissioned for commercial production in March 2000. •
2000-01
GAIL conceptualizes a National Gas Grid to connect the supply and demand centres in the country with high pressure cross country pipelines networks. The gas processing complex, Gandhar begins production in March 2001.The process LPG, 0.43 Lacs MT of Pentane and SBP solvent.
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Performance Appraisal Jamnagar-Loni LPG Pipeline project, the worlds longest and India’s first cross country LPG 1296 Km long pipeline, which passes through Gujrat,Rajasthan,Haryana and Delhi is completed. •
2001-02
GAIL picks up 12% equity in GSEG’s 156 MW power project in Gujarat as a strategic investment. Marketing functions is restructured and decentralize at zonal levels. GAILTEL phase-I commissioned, creating an OFC based DWDM network connecting Delhi-Mumbai, Delhi-Jaipur, Delhi-Ahemdabad, Delhi-Vijaipur, Meerut-Agra. •
2003-04
GAIL has an initial success in the form of significant gas find in the block A-1 in Myanmar and discovery of oil and gas in the Cambay block. GAIL successfully secures participation in 2 retail gas companies in Egypt, Fayum Gas Company and Shell CNG. Vizag – Secundrabad LPG pipeline. the 580 km pipeline with the maximum throughput of 1.16 MMPTPA completed in June 2003 Bhagyanagar Gas Limited, a joint venture of GAIL and HPCL, incorporated in August 2003, in the field of distribution and marketing of auto LPG, CNG for vehicles and retailing of natural gas in the cities of Andhra Pradesh. Phase I and II of 8000 km network GAILTEL projects connecting Delhi, Mumbai and 71 other cities, completed. This network provides a national communication backbone. •
2004-05
Incorporation of GAIL Global Singapore PVT.LTD Acquisition of 15 % equity stake in Natural Gas, Egypt. Agreement signed for acquisition of 9 % equity stake in China Gas Holding LTD, a joint venture for city gas projects in 42 cities of China. Tripura Natural gas Co.Ltd, a joint venture for city gas project in Tripura, incorporated UP central gas Ltd, a joint venture for city gas project with BPCL in Kanpur, incorporated De-bottlenecking of LLDPE swing unit from 150000 MT to 210000 MT at
19
Performance Appraisal GAIL Pata. Gas management system commissioned for HVJ, DVPL and SGPL. Commissioning of South Gujarat pipeline network .Commissioning of VizagSecundrabad LPG pipeline. •
2005-06
GAIL, ilex Australia, Videocon, HPCL and BPCL consortium awarded Blocks no 56 in Oman. GAIL was ranked 11th among top 15 of the worlds largest listed gas utilities firms in the oil and gas industry ,in terms of market capitalization ,for the year 2005. GAIL gets Golden Icon award for e-governance Inauguration of the National gas management centre (NGMC) of GAIL at NOIDA. GAIL bagged two awards for excellence in cost management from the Institute of Cost and Works Accounts of India (ICWAI). •
2006-07
Mechanical completion of new HDPE (High Density Polyethylene) plant with a capacity of 100,000 TPA at Petrochemical complex at PATA Commissioning of Dahaj-Panvel pipeline Brahmaputra cracker and polymer Limited-Joint Venture Company led by GAIL, formed for implementing Assam gas cracker projects GAIL acquires stake in A7 Myanmar block GAIL’s Vijaipur- Kota pipeline commissioned. GAIL’s Kailaras- Malanpur pipeline commissioned GAIL’s consortium wins 3 CBM blocks in 3rd round of bidding GAIL HPCL joint venture-Avantika gas limited incorporated GAIL ONGC ink gas supply agreement GAIL brings India’s first spot LNG cargo at Dahej. Subsidiaries and Joint ventures Company has been the pioneer for City Gas Projects in India. With natural gas emerging as the fuel of choice in the country, Company believes that the next decade will belong to the city gas. It was the first Company to introduce City Gas Projects in India for supplies to households, commercial users and for the transport sector by forming Joint Venture Companies.
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Performance Appraisal Subsidiaries are as follow: GAIL Gas limited Company has formed a wholly owned subsidiary named ‘GAIL Gas Limited’ for implementing City Gas Projects and CNG corridor in the country. The subsidiary company will act as a vehicle for bidding for laying pipeline infrastructure in the country. GAIL Global (Singapore) Pte . Limited Company has a wholly owned subsidiary, namely, GAIL Global (Singapore) Pte . Ltd. to manage investments abroad .Company is looking for further business opportunities through this subsidiary company. Brahmaputra Cracker and Polymer Limited Company has 70% equity share with Oil India Limited (OIL), Numaligarh Refinery Limited (NRL), and Govt. of Assam, each having 10% equity share . The authorized capital of the company is Rs. 1,200 Crores. A Feedstock Supply Agreement has been signed between Brahmaputra Cracker and Polymer Limited (BCPL), and all the three suppliers viz., Oil and Natural Gas Company Limited, Oil India Limited and Numaligarh Refinery Limited. Financial closure for the project is likely to be completed during the year 2008-09.
Joint Ventures Aavantika Gas Limited (AGL) GAIL and Hindustan Petroleum Corporation Limited (HPCL) for implementation of City Gas Projects in the cities of Madhya Pradesh. AGL has started project implementation activities in the city of Indore . Company has 22.5% stake in the Company with HPCL as equal partner.
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Performance Appraisal Bhagyanagar Gas Limited (BGL) BGL is currently operating three Auto LPG stations in Hyderabad and one Auto LPG station in Tirupathi. It is currently operating six CNG stations in Vijayawada and three CNG stations in Hyderabad. Company has 22.5% stake in the company along with HPCL as equal partner. Central U.P. Gas Limited (CUGL): CUGL is currently operating five CNG stations in Kanpur, one CNG station in Bareilly and one CNG station in Kanpur is under commissioning. CUGL is building MDPE network for supply of PNG to domestic, commercial and industrial sectors in the city of Kanpur. Company has 22.5% stake in the company along with BPCL as equal partner.
Green Gas Limited (GGL): GGL is currently operating four CNG stations in Lucknow and three CNG stations in Agra. GGL will also take up project implementation in other cities of Western UP on the basis of gas availability and project viability. Your Company has 22.5% stake in the company along with IOC as equal partner. Indraprastha Gas Limited (IGL) IGL is supplying piped gas to around 1 Lac domestic, 276 commercial, 16 small industrial consumers and CNG to over 1.35 Lacs vehicles through 153 CNG stations. IGL is catering to world’s largest CNG bus fleet of over 11,000 buses in Delhi. Company has 22.5% stake in the company along with BPCL as equal partner.
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Performance Appraisal
Maharashtra Natural Gas Limited (MNGL) MNGL is a Joint Venture of your Company and Bharat Petroleum Corporation Limited (BPCL) for implementation of City Gas Projects in Pune city. MNGL is developing necessary infrastructure for supply of CNG and PNG in the city. Company has 22.5% stake in the company along with BPCL as equal partner. Petronet LNG Limited (PLL) PLL was formed for setting up of LNG import and regasification facilities. PLL has a long term LNG supply contract with Ras Gas, Qatar for import of 7.5 MMTPA. PLL Dahej terminal is being expanded to 10 MMTPA capacity. Company has 12.50% stake in the company along with BPCL, IOC and ONGC as equal partners. Ratnagiri Gas and Power Private Limited (RGPPL) RGPPL is a Joint Venture Company between your Company, NTPC, Financial Institutions and MSEB. Your Company has 28.33% stake in the company along with NTPC as equal partner. The capacity of the Ratnagiri Gas & Power Station is 2,150 MW. Company has made an investment of Rs. 500 Crores and has approved additional equity of Rs. 475 Crores to RGPPL, out of the Rs. 475 Crores; an amount of Rs. 92.90 Crores has been paid during the month of May, 2008. Tripura Natural Gas Company Limited (TNGCL) TNGCL is presently supplying gas to 6600 domestic, 104 commercial, 21 industrial consumers and has set up one CNG station in Agartala city. Company has 29% stake in the company. Company has approved formation of JV for City Gas Projects in Vadodara with Vadodara
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Performance Appraisal Mahanagar Seva Sadan (VMSS) with 26 percent equity, while VMSS will have 24 per cent equity. The balance 50 per cent equity will be held by strategic investors and public. A JV agreement has also been signed with HPCL for city gas projects in Rajasthan. Business operation 1) Upstream Operation Every cloud has a silver lining and every adversity hides an opportunity. GAIL's Exploration and Production (E&P) unit was born in just such a scenario. As the Indian Economy opened up around the year 2000, the business environment changed dramatically. For GAIL, liberalization meant competition in core business i.e. midstream and downstream national gas distribution No longer could they rely on statutory support mandating secured sources of Natural Gas. The reserves contained in existing contracted fields were fast depleting. Apart from securing sources for Natural Gas, there were other compelling reasons for GAIL to get into E&P: Integration in supply-chain Large gap in Gas demand and supply National Gas security Balancing of Business portfolio So that GAIL ventured into E&P in 2001. At the end of 2007-08, it has invested Rs. 11.5 billion in this segment. It is involved in oil & gas exploration activities over acreage of 1.7 square km. It has participating interest ranging from 10 to 80 percent in following: 24 domestic blocks 3 overseas blocks 3 CBM GAIL is currently participating in 27 exploration blocks, in Basins such as Mahanadi, Mumbai, Cambay, Assam-Akaran , Tripura Fold Belt and Cauvery. GAIL has
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Performance Appraisal partnership in these blocks with various companies such as ONGCL, GSPCL, OIL, Hardy Exploration & Production, Petrogas, JOGPL, Daewoo, OVL, IOCL, Korea Gas Corporation, Hallworthy, BPCL, HPCL and Silver wave. GAIL also has stake in 3 overseas blocks (A-1 and A-3 blocks in Myanmar and Block-56 in Oman).Of these, nine are offshore blocks and eighteen onshore blocks, of which 13 are deepwater and 5, are shallow water. Coal Bed Methane (CBM) is stored in coal seams and was generated during the process of coalification. It occurs within these seams either as free gas in fractures or in dissolved form in water. The consortium of GAIL (India) Ltd., Arrow Energy (India) Pty Ltd., EIG Energy Infrastructure Group AB has been awarded 3 CBM Blocks in CBM-III Bidding round. The Tata Power Company is also a consortium partner in two of the awarded blocks. These blocks are in Rajmahal (Jharkhand), Mand Raigarh (Chattisgarh) and Tata Pani Ramkola (Chhattisgarh). 2) Midstream Operation a) Petrochemicals The company has seven gas LPG processing plant with total capacity of 1.2 mtpa 4 plants are situated along the Hazira Vijaipur Jagdishpur pipeline (two at Vijaipur in Madhya Pradesh , one at vaghodia in Gujarat, and one at oriya in Uttar Pradesh ,and one each in Lakwa Assam , Usar , Maharashtra an d Gandhinagar Gujarat). The total liquid hydrocarbon production was over 1.348 million tonnes, which included 1.043 MT of LPG 0.156 tm of propane and 0.074 tm of pentane the company’s board of director has recently approved them doubling capacity of its pata petrochemical complex in UP to 0.8 mtpa .the installed polymer capacity at pata is 0.41 mta, which will be increased by leveraging existing facility and augmenting them. Company is setting up 280000 tpa petrochemical plant in Assam at an investment of Rs 54.6 billion. It has also signed an agreement with HPCL, OIL, Mittal investment and France total to set up another petrochemical complex and crude oil refinery at Vishakhapatnam in AP.GAIL has a 70%
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Performance Appraisal equity stake in Brahmaputra cracker and polymer limited. The other equity partners are OIL, Numaligarh Refinery Limited and the Govt of Assam is having a 10% equity stake. b) Pipeline Operation Interstate pipelines provide open access for shipment of natural gas. Gas enters an interstate pipeline from gathering systems and from interconnecting pipelines. Beginning at individual wellheads, gathering systems usually consist of smaller diameter pipe operating at lower pressure. Gas conditioning is usually performed to reduce contaminants such as water from gathered gas before it is compressed into the transmission system. Gas leaves the transmission system through delivery points to other interstate pipelines, local distribution companies and directly to end users such as industrial facilities and power plants. Local distribution systems deliver gas to residential, commercial and industrial end users. The basic components of an interstate pipeline include steel pipe, valves, and compression, processing and storage facilities. Pipe sizes vary widely with much of the pipe in the 20-inch to 36-inch diameter range and wall thickness of about one quarter to one-half inch. A typical range of operating pressures for a transmission system is 300 to 1440 psig. Powered by natural gas or electricity, compression is one of two types: reciprocating or centrifugal. Processing facilities extract undesirable contaminants (such as hydrogen sulfide and water) and marketable hydrocarbons (such as propane and gasoline). Storage facilities have been developed from depleted oil fields, coal mines, salt domes, aquifers and reefs. These facilities can be used for peak-shaving hourly demands and short-term, as well as, seasonal storage of gas. Much of the gas that is transported on interstate pipelines is nominated, that is, scheduled in advance of actual gas flow. Deliveries into local distribution companies that serve weather-sensitive markets, however, cannot be known with absolute certainty. Such demand is met in part with "no-notice" service, which is usually supplied from inventories of the customers' gas, which is stored in the pipeline's storage facilities. 3) Downstream operation
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Performance Appraisal Natural Gas usage in Indian cities has been limited primarily due to the scarcity of supply.
However
this
scenario
is
undergoing
change
with
several
LNG
projects/transnational pipelines under implementation, which together with new domestic Gas finds are expected to shore up the supply deficit in the next few years. Meanwhile the market for city gas distribution is also set to grow at an accelerated pace. The CNG demand got a boost with the Supreme Court directive on pollution reduction in 12 major cities in India. The domestic segment is also expected to grow with the government's intentions to remove the subsidy on LPG cylinders in a phased manner in 3-5 years making piped gas even more economical. 4) Overseas Operation GAIL has a 10 % equity stake in block A! Ink Myanmar where huge gas reserve has been discovered recently. It also has a 10 % stake in block A3. It has stake in block56 in Oman. However GAIL’S share in the blocks has been reduced following Myanmar’s national oil company exercising its “step in” right’s to 8.5%. In 2003 -04 GAIL acquired equity stakes in CGD project of fayum gas and shell gas in the Egypt. GAIL has setup a wholly owned subsidiary on Singapore, christened GAIL Global private limited, two undertake overseas investment, the subsidiary a 15% equity stake in the Egyptian national gas company- one of the largest natural gas distributing companies in the private sector in Egypt. The company also has a 50% stake in a JV formed with china gas holding limited to undertake projects in china, India and other countries.
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Performance Appraisal
Business of GAIL (India) Limited •
Natural gas
•
Petrochemicals
•
Exploration and production
•
LPG and other Liquid hydrocarbons
•
Telecommunication
1. Natural gas With only one carbon and four hydrogen atoms per molecule, Natural Gas has the lowest carbon to hydrogen ratio, hence it burns completely, making it the cleanest of fossil fuels. Natural Gas satisfies most of the requirements for fuel in a modern day industrial society, being efficient, non-polluting and relatively economical. The periodic uncertainties and volatility in both the price and supply of oil, have also helped Natural Gas emerge as a major fuel in the energy basket across countries. Natural Gas comes in 4 basic forms: Liquefied Natural Gas, LNG - Natural Gas which has been liquefied at -160 Natural Gas is liquefied to facilitate transportation in cryogenic tankers across sea Regasified Liquefied Natural Gas, RLNG Compressed Natural gas, CNG - Natural Gas compressed to a pressure of 200-250 kg/cm2 used as fuel for transportation, CNG decreases vehicular pollution Piped Natural gas, PNG - Natural Gas distributed through a pipeline network that has safety valves to maintain the pressure assuring safe, uninterrupted supply to the domestic sector
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Performance Appraisal Sector Generation of electricity by utilities Fertilizer Industry Industrial Domestic and commercial
Natural Gas is used As fuel for base
load
power
plants
In combined cycle/co-generation power plants As feed stock in the production of ammonia and urea As an under boiler fuel for raising steam As fuel in furnaces and heating applications For heating of spaces and water
Automotive
For cooking As a non-polluting fuel As the raw material from which a variety of
Petrochemicals
chemical
products
e.g. methanol, are derived
2. LPG & Allied Products: LPG GAIL produces LPG through fractionation, known as Straight Run (SR). GAIL LPG is an eco-friendly fuel and provides a cheaper and effective means of reducing pollution and increasing productivity. Characteristics of GAIL LPG: •
Processed from Natural Gas.
•
Clean fuel with almost nil unsaturated compounds
•
Has a higher calorific value than Refinery's LPG and hence gives more value for money
•
Its homogeneous composition results in more efficient combustion
•
The air fuel ratio need not be changed with every batch
•
No Impurities like sulphur, carbon dioxide, traces of oxides of nitrogen. Hence lower corrosion.
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•
Has nil moisture content
•
Customer-friendly fuel as it is easy to transport, store and use
Performance Appraisal
LPG : Applications Domestic: For use in household Commercial: For use in hotels, bakeries, canteens, etc Auto: For use as fuel in automobiles Industrial: For use in production process, details of which are as under: INDUSTRY Agriculture
APPLICATION Grain drying/ Weed killing/ Preservation of fruits/ Tobacco
curing/ Tea drying Automobile Heat treatment/ Paint baking Ceramics Biscuit and Gloss firing of porcelain & stoneware Chemicals and Drugs Heating and Drying Bulbs and Tubelights manufacturing/ Filament manufacturing/ Electrical Battery manufacturing Food Baking/ Boiling/ frying/ milk drying Glass Melting/ holding/ feeding/ working/ Fire polishing Annealing/ Billet heating/ Melting/ Descaling/ Stress relieving/ Metallurgical Mould/ Cupola/ Laddle heating Metal Working Steel cutting/ Hole piercing/ Welding of non ferrous metals Packaging Metal box soldering Drying/ Singeing/ Velvet processing calendaring / Print drying/ Textile Dyeing Transport Engine fuel Aerosols propellant/ Amarjyotis / Torches/ Bird scarers / Miscellaneous Bitumen Melting in water proofing industry and road making
GAIL LPG is valued in Industry because of its high energy heat, homogeneous content, cleanliness and easy availability. Industries prefer to use GAIL LPG to power process furnaces, dryers, ovens, kilns, paint shops, etc. Process Heating: Homogeneous composition leads to no residue on combustion and accurate temperature control. Air Fuel ratio need not be changed with every batch.
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Performance Appraisal Excellent application in manufacture of textiles, glass, picture-tubes, automobile, bearings, etc. Metal Processing: Clean burning. No residue of Sulphur, Lead & Carbon leads to minimum scaling losses. Melting operations are homogeneous due to constant temperature control. Excellent applications in forging, wire drawing, casting, melting industry Paintings nits: No unburned fuel and residues. Ability to have constant temperature control results in effective and uniform heating with minimum fuel.
Major car
manufacturers use GAIL LPG for paint shops. Also finds applications in food processing, ink printing, etc. Kilns & Furnaces: Accurate temperature control leads to enhanced productivity, reduces costs & pollution. No deposits of carbon lead to reduction in downtime and contamination. Excellent application in ceramics, heat treatment units. Drying Ovens: Finds excellent application in drying ovens due to less maintenance than oil systems because of one step heat transfer. Metal Industry: Usage of GAIL LPG leads to greater flame stability. No risk for overheating or blow back. Preferred over oxyacetylene fuel due to greater flame stability and efficiency LPG : Production GAIL produces LPG at its seven fractionating units. Detail of locations and their and their production capacity are given below
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•
Vijaipur(2 Nos) , Madhya Pradesh
•
Auraiya Pata, UP
•
Gandhar & Vaghodia, Gujarat
•
Usar, Maharasthra
•
Lakwa, Assam
Performance Appraisal GAIL is one of the largest indigenous producer of LPG. During 2006-2007 GAIL had produced about 10,25,900 MT (12 %) LPG against total all-India indigenous LPG production of 84,04,000 MT GAIL LPG is being supplied to PSU Oil Marketing Companies namely IOCL, BPCL, HPCL and IBP Ltd ex-Production Units at Import Parity Price. 3. Petrochemicals GAIL's the country's premier Natural Gas Marketer & Transporters , diversified into the manufacturing and marketing of downstream HDPE & LLDPE from natural gas cracking at its Pata (Uttar Pradesh state, India) unit from 19th April 1999. The beginning was with a name plate capacity of 2,60,000 MTPA of HDPE and LLDPE. In FY 2007-08, the petrochemical business portfolio contributed over 32% of the segment gross profit. GAIL is the only HDPE/LLDPE plant operating in Northern India and has a dominant market share in North India. The primary thrust markets for the polymers had been Western India, but, with the entry of GAIL in the HDPE & LLDPE market segments, today north India has also witnessed a rapid and significant growth in the polymer downstream processing segments. In a successful span of about a decades of establishing and marketing its grades under the brand names G-Lex & G-Lene, GAIL has along side augmented its name plate capacity of HDPE & LLDPE to 4,10,000 MTPA by adding another dedicated HDPE downstream polymerization unit of 1,00,000 MTPA. Polyethylene in India represents over 43% of thermo plastic Demand 4. Power Gujarat State Energy Generation Ltd was incorporated on December 13, 1998, with Gujarat State Petroleum Corporation Ltd (GSPCL) as the main promoter, to set up a Natural Gas-based power project at Hazira . The project was planned with a generation capacity of 156 MW by utilising natural gas from Hazira gas fields jointly owned by GSPCL and NIKO Resources, Canada, at an estimated cost of Rs. 576 crore with a 70:30 Debt to Equity ratio within 21 months from June 1, 2000.
32
Performance Appraisal Fuel Supply Agreement with GSPCL / NIKO and Fuel Transportation Agreement with Gujarat State Petronet Ltd were entered into to securitize fuel supply. An arrangement is in place to sell power to the Gujarat Electricity Board through a Power Purchase Agreement signed on February 28, 2000, for 20 years. Commercial production was declared with the commissioning of the Gas Turbines in open cycle mode in December 2001. Subsequent to successful completion of performance tests, Combined Cycle operation commenced from June 2002.The plant is running smoothly with high Availability and Plant Load Factor. 5. Gailtel The GAILTEL service arm of GAIL, is engaged in providing GAILTEL services to mission critical in-house SCADA and ERP services apart from commercially leasing services to GAILTEL Operators and ISP’s across India. GAILTEL has been operating commercially in the Indian GAILTEL sector since June 2001. It is also responsible for meeting the captive communication requirements of GAIL’s pipeline installations. GAILTEL, today serves most of the GAILTEL operators of the country, which include HUTCH, VSNL, Airtel , Idea Cellular, Reliance Infocom, Tata Tele services, to name a few. Its high speed optic-fibre network extends to well over 13,000 Km connecting around 200 cities across various states like: Rajasthan, Gujarat, Madhya Pradesh, Maharastra , Uttar Pradesh, Andhra Pradesh, Haryana, Chandigarh, Delhi, Karnataka, Tamil Nadu and Kerela. With SDH & DWDM as the core layer, the network is built largely along the highly secured GAIL’s cross country pipeline corridor and also configured in "self-healing" rings to ensure highly reliable and error free service to its esteemed customers. The network is managed centrally on round the clock basis from a state-of-art Network Management Centre at Noida 6. Exploration and Production Every cloud has a silver lining and every adversity hides an opportunity. GAIL's Exploration And Production (E&P) unit was born in just such a scenario.As the Indian Economy opened up around the year 2000, the business environment changed dramatically. For GAIL, liberalisation meant competition in our core business i.e.
33
Performance Appraisal midstream and downstream national gas distribution No longer could we rely on statutory support mandating secured sources of Natural Gas for GAIL. The reserves contained in existing contracted fields were fast depleting. The writing was on the wall that we had to find new sources. Apart from securing sources for Natural Gas, there were other compelling reasons for GAIL to get into E&P: •
Integration in supply-chain
•
Large gap in Gas demand and supply
•
National Gas security
•
Balancing of Business portfolio
•
Global opportunity
August 2001, therefore, saw the launch of GAIL's Exploration & Production (E&P) unit. Initially, NELP rounds were targeted, and we won 12 blocks under four NELP rounds. GAIL also clinched a chunk of the much sought after A-1 block in Myanmar, in its maiden international E&P venture. The year 2004 placed GAIL firmly on India's E&P map, with the dual strike of gas in Myanmar and oil in Cambay. We are also acquiring international acreages and actively pursuing various international E&P opportunities.We knows that the future will be demanding. And we are ready to embrace it, acquiring the suitable technological equipment and expertise, and enhancing our manpower strength. GAIL is currently participating in 27 exploration blocks, in Basins such as Mahanadi, Mumbai, Cambay, Assam-Arakan, Tripura Fold Belt, Krishna Godavari, Cauvery and Cauvery Palar. GAIL has partnership in these blocks with various companies such as ONGCL, GSPCL, Hardy Exploration & Production, Petrogas, JOGPL, Eni, Oilex and Daewoo as Operators. Out of these 27 E&P, 3 blocks are overseas (A-1 and A-3 blocks in Myanmar and Block-56 in Oman). GAIL is participating in three CBM blocks awarded to the consortium under CBM-III bidding round. Arrow Energy is the Operator of all the three CBM blocks. GAIL is a member of National Gas Hydrate Programme being
34
Performance Appraisal coordinated by DGH and is actively involved in activities related to Gas Hydrate exploration.A list of current Exploration blocks in which GAIL is participating is on the link 'E&P and CBM Blocks' showing Participating Interest (PI) of GAIL. 3 of these blocks were awarded during NELP-II, 2 during NELP-IV, 3 during NELP-V, 15 during NELP-VI and 1 during NELP-VII. GAIL has farmed-in three blocks. The total area for E&P Blocks is 172,275 KM2.
GAS TRANSMISSION 7000 KM (148)
E&P 27BLOCKS CBM 3 BLOCKS
MMSCMD) LPG TRANSMISSION 1922 KM (3.8 MMTPA)
GAS PROCESSING 7 PLANTS
LNG PLL, RGPPL 10MMTPA
(1.2)))MMTPA
)
PETROCHEM POLYETHYLEN E (410,000 TPA)
GAS & POWER GSEG, RGPPL (2250MW)
TELECOM OFC (13000 KM)
35
GAS RETAILING IGL, BGL, MGL, CUGL, GGL, TNGCL, MNGL, AGL
Performance Appraisal
OVERVIEW OF INDUSTRY
The Indian oil and gas sector is one of the six core industries in India and has very significant forward linkages with the entire economy. India has been growing at a decent rate annually and is committed to accelerate the growth momentum in the years to come. This would translate into India's energy needs growing many times in the years to come. Hence, there is an emphasized need for wider and more intensive exploration for new finds, more efficient and effective recovery, a more rational and optimally balanced global price regime - as against the rather wide upward fluctuations of recent times, and a spirit of equitable common benefit in global energy cooperation. The Indian oil and gas sector is of strategic importance and plays a predominantly pivotal role in influencing decisions in all other spheres of the economy. The annual growth has been commendable and will accelerate in future consequently encouraging all round growth and development. This has necessitated the need for a wider intensified search for new fields, evolving better methods of extraction, refining and distribution, the constitution of a national price mechanism - keeping in mind the alarming price fluctuation in the recent past and evolving a spirit of equitable global cooperation. Oil and Gas Sector: An Overview Exploration and Production (E&P)
36
Performance Appraisal The growing demand for crude oil and gas in the country and policy initiative of Government of India towards increased E&P activity, have given a great impetus to the Indian E&P industry raising hopes of increased exploration. Oil and Natural Gas Corporation Limited (ONGC) and Oil India Ltd. (OIL), the two National Oil Companies (NOCs) and private and joint-venture companies are engaged in the exploration and production (E&P) of oil and natural gas in the country. During the year 2008-09, crude oil production has been 33.51 million metric tonnes (MMT) with natural gas at 32.85 billion cubic metre (BCM).Natural gas production in 2009-10 is targeted to be about 52.116 BCM. Imports and Exports of crude oil and petroleum products During the financial year 2008-09, imports of crude oil has been 128.16 MMT valued at US$ 73.97 billion. Imports of crude oil during 2007-08 was 121.67 MMT valued at US$ 58.98 billion. This marked an increase of 5.33 per cent during 2008-09 in quantity terms and increased by 25.37 per cent in value terms. During the financial year 2008-09, exports of petroleum products in quantity terms is 36.93 MMT valued at US$ 25.41 billion marking an increase of 6.02 per cent in value terms compared to 2007-08. New Exploration Licensing Policy (NELP) New Exploration Licensing Policy (NELP) provides an international class fiscal and contract framework for Exploration and Production of Hydrocarbons. In the first seven rounds of NELP spanning 2000-2009, Production Sharing Contracts (PSCs) for 203 exploration blocks have been signed. Under NELP, 70 oil and gas discoveries have been made by private/joint venture (JV) companies in 20 blocks. With a view to accelerate further the pace of exploration, the eighth round of NELP was launched in April 2009.In the eighth round of NELP,70 exploration blocks comprising of 24 deepwater blocks,28 shallow water blocks and 18 onland blocks will be offered. Natural Gas
37
Performance Appraisal Natural Gas has emerged as one of the most preferred fuel due to its environmentally benign nature, greater efficiency and cost effectiveness. At present, the main producers of natural gas are Oil and Natural Gas Corporation Limited (ONGC), Oil India Limited (OIL) and the Joint Ventures of Panna Mukta & Tapti, and Ravva. Out of the total production of around 96 MMSCMD, after internal consumption, LPG extraction and unavoidable flaring, around 73 MMSCMD is available for sale to various consumers. In addition, around 7 MMTPA of re-gasified LNG (about 23 MMSCMD) is also being supplied to domestic consumers. Gas produced by ONGC and OIL from the existing nominated blocks is sold at administered prices fixed by the Government. As against a total allocation of 150 MMSCMD of gas, actual supply under APM is presently around 53 MMSCMD. Public Sector Undertakings •
Oil & Natural Gas Corporation Limited (ONGC)
Oil & Natural Gas Commission (then Commission) was established on 14th August, 1956 as a statutory body under Oil & Natural Gas Commission Act (The ONGC Act), for the development of petroleum resources and sale of petroleum products. ONGC was converted into a Public Limited Company under the Companies Act, 1956 and named as “Oil and Natural Gas Corporation Limited” with effect from February 1, 1994. •
Oil India Limited (OIL)
Oil India Limited (OIL), a Government of India Enterprise, under the administrative setup of Ministry of Petroleum and Natural Gas, is engaged in the business of exploration, production and transportation of crude oil and natural gas. The authorized capital of the company is Rs. 500.00 crores and the paid up capital of the company is Rs. 214.00 crore. OIL produces crude oil and natural gas from its oilfields in Assam and Arunachal Pradesh, non-associated gas from its fields in western Rajasthan and processes LPG from the natural gas in Assam. The Company presently has operational areas in Assam, Arunachal Pradesh, Mizoram, Orissa, Uttar Pradesh, Uttarakhand and Rajasthan in the country.
38
Performance Appraisal OIL is operating in 19 nominated ML and 19 nominated PELs. The Company has acquired participating interest in a total of 21 NELP blocks up to the end of NELP-VI bidding round with the right of Operatorship in respect of 12 blocks. The Company also holds Participating Interests (Pis) in another four Pre-NELP JV blocks in India and Production Sharing Interest (PSI) in one Joint Venture Contract with other partners in Arunachal Pradesh. OIL is presently active overseas in seven countries, viz. Libya, Gabon, Iran, Nigeria, Yemen, Sudan and Bangladesh, pursuing various upstream E&P activities. In addition, the Company is continuously scouting for suitable E&P opportunities in other countries like Syria, Indonesia, Oman, Kazakhastan, Russia, etc., either alone or with suitable partners. •
GAIL (India) Limited
GAIL (India) Limited, India’s principal Gas Transmission and Marketing Company, was created in 1984 with the objective of accelerating and optimizing the effective and economic use of natural gas and its fractions to the benefit of national economy. In line with core objective of its incorporation, GAIL has, over the years, developed natural gas infrastructure for sustained development of gas market in the country. GAIL, in the last two decades of its existence, has created a sizeable natural gas market in the country and presently markets around 25 BCM of Natural Gas. GAIL handles around 28 BCM of Natural Gas through its Transmission Network. Currently, GAIL’s market share in gas transmission and marketing is 79% and 70% respectively. Refining Capacity During the year 2008-09, domestic refinery production was 160.77 MMT. By the end of XI plan, refinery capacity is expected to reach 240.96 MMT per annum. The country is net exporter of petroleum products, and products like naphtha, petrol, diesel and Aviation Turbine Fuel (ATF) etc. were also exported during the year. At present, there are 20 refineries operating in the country, out of which 17 are in the public sector and 3 in the private sector. Out of 17 public sector refineries, 8 are owned by Indian Oil Corporation Limited (IOCL), 2 each by Chennai Petroleum Corporation Limited (a subsidiary of IOCL), Hindustan Petroleum Corporation Limited (HPCL),
39
Performance Appraisal Bharat Petroleum Corporation Limited (BPCL) and Oil and Natural Gas Corporation Limited, and 1 by Numaligarh Refinery Limited (a subsidiary of BPCL). The private sector refineries belong to Reliance Industries Limited and Essar Oil Limited. •
Chennai Petroleum Corporation Limited (CPCL)
Chennai Petroleum Corporation Limited (CPCL) formerly known as Madras Refineries Limited was formed as a joint venture in 1965 between the Government of India (GOI), AMOCO India Inc., U.S.A. and National Iranian Oil Company (NIOC) having a share holding in the ratio 74%: 13%: and 13% respectively. In 1985, AMOCO disinvested in favor of GOI and the shareholding percentage of GOI and NIOC stood revised at 84.62 and 15.38 respectively. Later, GOI disinvested 16.92% of the paid up capital in favor of Unit Trust of India, Mutual Funds, Insurance Companies and Banks on 19th May 1992, thereby reducing its holding to 67.7%. A public issue of CPCL shares was also made in 1994. As a part of the restructuring steps taken up by the Government of India, Indian Oil Corporation Limited (IOCL) acquired equity from GOI in 2000-01. Currently, IOCL holds 51.88% while Naftiran Inter-trade Company Limited (an affiliate of NIOC) continued its holding at %.CPCL has two refineries, with a combined refining capacity of 10.5 million metric tonnes per annum (MMTPA). The Manali Refinery in Chennai has a capacity of 9.5 MMTPA and is one of the most
complex
refineries
in
India
with
Fuel,
Lube,
Wax
and
Petrochemical feedstock’s production facilities. The second refinery at Cauvery Basin, Nagapattinam was set up initially with a capacity of 0.5 MMTPA in 1993 and later its capacity was enhanced to 1.0 MMTPA in 2002. •
Bongaigaon Refinery & Petrochemicals Limited (BRPL)
BRPL was incorporated on February 20,1974 , with the objective of installation of Refinery having crude processing capacity of 1 MMTPA and a Petrochemical Complex
40
Performance Appraisal consisting of Xylene Dimethyl Terephthalate (DMT) and Polyester Staple Fibre (PSF) units. The crude processing capacity of the Refinery was enhanced to 2.35 MMTPA in 1995-96 by commissions of its Refinery Expansion Units. The authorized equity capital and the paid-up capital of the Company is Rs.200 crore and Rs.199.82 crore respectively. The Government of India disinvested its equity share of 74.46% to Indian Oil Corporation Limited (IOCL) in March, 2001 and hence BRPL became the subsidiary Company of IOCL on 29th March, 2001. •
Numaligarh Refinery Limited (NRL)
Numaligarh Refinery, Popularly known as “Assam Accord Refinery” had been set up as a grass-root refinery at Numaligarh in the District of Golaghat (Assam) in fulfillment of the commitment made by Government of India in the historic “Assam Accord”, signed on 15th august, 1985 for providing the required thrust towards industrial and economic development of Assam. Both the Refinery and its adjacent Marketing Terminal were completed within the approved project cost of Rs.2724 crore. Commissioning process of Numaligarh Refinery was completed in June 2000 and commercial production commenced from 1st October, 2000. •
Mangaore Refinery & Petrochemicals Limited (MRPL)
Mangalore Refinery and Petrochemicals Limited (MRPL), first joint venture company for setting up a crude petroleum Refinery in India was formed in 1987 jointly by Hindustan Petroleum Corporation Limited along with Indian Rayon and Industries Limited and its associate companies (A.V. Birla Group). The refinery project was commissioned in March, 1996 with an actual capacity of 3.69 MMTPA. The expansion project of MRPL, having capacity of 9.69 MMTPA, was commissioned in April, 2001. The refinery is located at Mangalore on the western coast of India, primarily conceived to maximize middle distillates, such as kerosene and diesel. The refinery is designed to process light to heavy and sour to sweet crude. The performance of MRPL started deteriorating after dismantling of APM for refineries in April, 1998 and the Company came very close to becoming a sick company by 2002-03.
41
Performance Appraisal With the approval of the Government, ONGC acquired the entire stake of Aditya Birla Group in MRPL for Rs.59.43 crore and also infused additional equity capital of Rs.600 crore in March, 2003 as part of the approved debt restructuring plan. With this, ONGC acquired 51% stake in the equity of MRPL. Thus, MRPL became a Government company within the meaning and scope of Section 617 of the Companies Act, 1956 and also a subsidiary company of ONGC. In June / July 2003, ONGC acquired 35.80 crore equity shares held by banks and financial institutions issued against part conversion of their loans in terms of debt restructuring plan, increasing its stake in MRPL to 71.62%. MRPL is the first refinery in India to produce Euro-III High Speed Diesel (HSD) and Euro-III Motor Spirit (Petrol). Other Undertakings/organizations •
Directorate General of Hydrocarbons (DGH)
The Directorate General of Hydrocarbons (DGH) was established under the administrative control of Ministry of Petroleum & Natural Gas by Government of India Resolution in 1993. Objectives of DGH are to promote sound management of the oil and natural gas resources having a balanced regard for environment, safety, technological and economic aspects of the petroleum activity. DGH has been entrusted with certain responsibilities concerning the Production Sharing Contracts for discovered fields and exploration blocks, promotion of investment and monitoring of E&P activities including review of reservoir performance of major fields. In addition, DGH is also engaged in opening up of new/unexplored areas for future exploration and development of nonconventional hydrocarbon energy sources. •
Engineers India Limited (EIL)
Engineers India Limited (EIL) was established in 1965 to provide engineering and related technical services for petroleum refineries and other related projects. Over the years, it has diversified into and excelled in various fields. EIL has emerged as Asia’s leading design, engineering and turnkey contracting company in Petroleum Refining, Petrochemicals, Chemicals & Fertilizers, Pipelines, Offshore Oil & Gas, Onshore Oil &
42
Performance Appraisal Gas, Terminals & Storages, Mining & Metallurgy and Infrastructure Engineers India is an ISO 9001:2000 accredited Company. •
Balmer Lawrie & Co. Ltd. (BL)
Balmer Lawrie & Co. Ltd. (BL) was established in 1867 as a Partnership Firm and was incorporated as Private Limited Company in 1924. It was subsequently converted into a Public Limited Company in the year 1936 with its Registered Office at Kolkata. Biecco Lawrie Limited (BLL), a Government of India Enterprise, under the administrative control of the Ministry of Petroleum & Natural Gas (MOP&NG), was established in 1919 and became a Government Company in 1972. This is a medium sized Engineering Unit with diversified activities having two factories located at Kolkata. •
Oil Industry Development Board (OIDB)
The Oil Industry (Development) Act, 1974 was enacted following successive and steep increase in the international prices of crude oil and petroleum products since early 1973, when the need of progressive self-reliance in petroleum and petroleum based industrial raw materials assumed great importance. •
Oil Industry Safety Directorate (OISD)
The Oil Industry Safety Directorate (OISD) assists Safety Council under Ministry of Petroleum & Natural Gas (MOP&NG) headed by Secretary, P&NG as Chairman and includes Additional / Joint Secretaries, Advisors in MOP&NG, Chief Executives of all Public Sector Undertakings (PSUs) under the Ministry, Chief Controller of Explosives (CCE), Advisor (Fire) of the Govt. of India, DGMS and the Director General of Factory Advice Service & Labour Institute etc. as members. •
Centre for High Technology (CHT)
Centre for High Technology (CHT) was established in 1987 as a specialized agency of the oil industry to assess futuristic requirements, acquire, develop and adopt technologies in the field of refinery processes, petroleum products, additives, storage and handling of crude oil, products and gas. •
43
Petroleum India International (PII)
Performance Appraisal Petroleum India International (PII) is a consortium of Public Sector Companies in the petroleum, Petrochemicals and engineering sector. The member companies include Indian Oil Corporation Ltd., Bharat Petroleum Corporation Ltd., Bongaigaon Refinery & Petrochemicals Ltd., Chennai Petroleum Corporation Ltd., Engineers India Ltd., Hindustan Petroleum Corporation Ltd, Oil India Ltd and Indian Petrochemicals Corporation.
Petroleum Planning & Analysis Cell (PPAC) The Petroleum Planning & Analysis Cell (PPAC) was created w.e.f. 1st April 2002 after dismantling of the Administered Pricing Mechanism (APM) in the petroleum sector and abolition of the erstwhile Oil Coordination Committee (OCC). The Governing Body under the chairmanship of Secretary (PNG) and senior officials of MOPNG and Chief Executives of major oil and gas PSUs as members provides necessary supervision, guidelines in the functioning of PPAC. Investment Opportunities Petroleum products are the single largest merchandise export from India. Improved Oil Recovery (IOR) / Enhanced Oil Recovery (EOR) techniques Crude oil production from the deepwater block D6 in KG Basin •
Use of improved technology
•
Extended oil field acquisition activities
•
Capacity utilization of refineries
•
Foreign company collaboration
•
End-user market and Infrastructure development
•
Setting up oil & gas courses at universities and training institutes
•
Opportunities for world-class service providers
Initiatives National Auto Fuel Policy
44
Performance Appraisal The Auto Fuel Policy aims to comprehensively and holistically address the issues of vehicular emissions, vehicular technologies, and auto fuel quality in a cost-efficient manner while ensuring the security of fuel supply. The policy objectives are: (i) Ensure sustainable, safe, affordable and uninterrupted supplies of auto fuels of right quality to support social and economic development. One of the key factors for meeting this policy objective is to diversify the sources and reduce dependence on any single source of supply. (ii) Over the years, infrastructure for the import of crude and crude products, their processing and production, and storage and transportation has been created in the country. Considerable investment has been made in developing this infrastructure and the logistics for the distribution of petroleum products in the country. The Auto Fuel Policy is committed to an optimal utilization of such an infrastructure. (iii) Assess the future trends in emission and air quality requirements from the view point of public health, and establishment of a consistent framework within which different policy options to reduce emissions can be assessed. It is, therefore, required that environmental objectives for air quality be determined, emission reduction targets be established, input data on costs and benefits be collected and cost effective measures to reduce emissions be identified .Appropriate institutional arrangements to be put in place to where such activities can be handled effectively. (iv) Adopt such vehicular emission standards that they together with other measures, will be able to make a decisive impact on air quality, without placing an undue burden on the people. (v) Vehicular emission standards and auto fuel quality should offer choice to the citizens and equally a choice to automobile manufactures in matters of technology selection. Principles of widening the choice and promoting competition amongst automobile technologies, within the limits that are imposed by the availability of auto fuels and security of their supplies.
45
Performance Appraisal (vi) As elsewhere in the world, the Government should decide only the vehicular mission standards and the corresponding fuel specifications without specifying vehicle technology and the type of fuel. (vii) The requirement of investments to reach vehicular technology and fuel quality of Euro III equivalent levels throughout the country is estimated in the range of Rs. 50,000 Rs. 60,000 crore. Therefore, to achieve the air quality targets by gradually improving emission standards and a phased up gradation of fuel quality and vehicular technology, taking note of the financial, technical and institutional considerations as also the absorptive capacity is required. FDI Policy The present policy on FDI in the Petroleum & Natural Gas sector vide Press Note No 5 (2008) permits FDI up to 100% under the automatic route in all activities other than refining and including market study and formulation, investment/financing, setting up infrastructure for marketing in Petroleum and Natural Gas Sector subject to sectoral policy. In Refining, FDI up to 49% in case of Public Sector Undertakings, without involving any divestment or dilution of domestic equity in existing public sector undertakings through Foreign Investment Promotion Board (FIPB) and FDI up to 100% is permitted in case of Private Companies under Automatic route subject to sectoral policy. Key Players : Indian Oil , Reliance, Bharat Petroleum, HP, ONGC , BP, BG Group , Gaz de France, Chevron Foreign Direct Investment (FDI) Policy The present policy on FDI in the petroleum & natural gas sector vide press note no 5 (2008) permits FDI up to 100% under the automatic route in all activities other than refining, investment/financing, setting up infrastructure for marketing in petroleum and natural gas sector subject to sectoral policy including market study and formulation.
46
Performance Appraisal
LITERATURE REVIEW
47
Performance Appraisal
The concept of Performance Appraisal dates back to the First World War and was then called “Merit Rating Program”. Over a period of time, this concept has been through an ocean of change. The areas of evaluation have also changed. According to Carl Heyel, author/editor on management, philosopher and teacher, “performance appraisal is the process of evaluating the performance and qualifications of the employees in terms of job requirements, for administrative purposes such as placement, selection and promotion, to provide financial rewards and other actions which require differential treatment among the members of a group as distinguished from actions affecting all members equally”. Performance measurement (appraisal) is defined in many different ways. Neely et al. (1995) define PM as “the process of quantifying the efficiency and effectiveness of action”. They defined a PMS as “the set of metrics used to quantify both the efficiency and effectiveness of actions”. Rouse and Putterill (2003) define PM (Performance measurement) as “the comparison of results against expectations with the implied objective of learning to do better”. In their view, the main reason for setting up a PMS is the objective of becoming better. This is supported by Dumond (1994), who considers “performance measures to be established to support the achievement of goals with the intent to motivate, guide and improve an individual’s decision making”. That is the reason why many authors refer to a Performance Management System rather than a Performance Measurement System. In the eyes of Lebas (1995) and Amaratunga and Baldry (2002), measurement is not an end in itself, but a tool for more effective management. Results of performance measurement indicated what happened, not why it happened, or what to do about it. In order for an organisation to make effective use of its performance measurement outcomes, it must be able to make the transition from measurement to management. Within the literature however, the term ‘performance measurement’ is used most frequently, which is why we also adopt this terminology in this paper. We acknowledge the importance of using PM as a tool for management, and
48
Performance Appraisal define performance measurement as “the process of quantifying the efficiency and effectiveness of actions, in order to compare results against expectations, with the intent to motivate, guide and improve decision making”. We define a performance measurement system as “the set of metrics used to quantify the efficiency and effectiveness of actions, and the corresponding guidelines for linking these metrics to strategy and improvement”. In this paper, we will review performance measurement systems for purchasing, which mean we will focus on metrics that can be used to quantify the efficiency and effectiveness of purchasing actions, and the corresponding guidelines for linking these metrics to purchasing strategy and continuous improvement in purchasing. The evolution of performance measurement Financial measures have long been used as the sole criteria to evaluate performance of organisations. According to Lebas (1995), the traditional managerial accounting model of the firm is focused on product-costing and defines performance as income, that is, the difference between sales and costs. Bourne and Neely (2003) state: “Traditional accounting based performance measures have been characterised as being financially based, internally focused, backward looking and more concerned with local departmental performance than with the overall health or performance of the business”. Also within purchasing, the traditional approach to performance measurement is an efficiency-based PMS, focused on minimizing costs and maximizing functional operating efficiency (Dumond, 1994). In the early 1980s, however, several academics and practitioners realised that due to increased complexity of organisations and the markets in which they compete, it was no longer appropriate to use financial measures as the sole criteria for assessing success. Johnson and Kaplan (1987), for example, highlighted the failure of financial performance measures to reflect changes in the competitive circumstances and strategies of modern organisations. While profit remains the overriding goal, it is considered an insufficient performance measure, as measures should reflect what organisations have to manage in
49
Performance Appraisal order to profit. Kaplan and Norton (1992) show that traditional financial measures fail to provide information on what customers want and how competitors are performing. This is one of the reasons why a Performance Measurement Revolution started in the early 1990s. Many authors started to design and implement PMSs, which were able to overcome the shortages of the traditional PMSs. According to Neely (1999), there are seven main reasons for the ‘performance measurement revolution’: •
The changing nature of work, making traditional accounting systems with their emphasis on direct labour obsolete.
•
Increasing competition, driving a need for measures of quality of service, flexibility, customisation, innovation and rapid response.
•
Specific improvement initiatives that rely on performance measurement, such as Total Quality Management, Lean Production or World Class Manufacturing.
•
The establishment of national and international quality awards.
•
Changing organisation roles for performance measurement from accounting to human resource managers.
•
Changing external demands on performance accountability, such as the demands from regulators in newly deregulated industries.
•
The power of information technology, making the capture and analysis of data far easier, and opening up new opportunities for data review and subsequent action.
During this ‘performance measurement revolution’, many PMSs were developed such as the Balanced Scorecard (Kaplan, Norton, 1992), Performance Pyramid (Lynch, Cross, 1991), and the Performance Prism (Neely, Adams, 2000). The objective of such systems is to help organisations define a set of measures that reflect their objectives and assess their performance accordingly. These systems are usually multidimensional, explicitly balancing financial and non-financial measures. A wide range of criteria has also been developed, indicating the functions and elements of effective performance measures and measurement systems.
50
Performance Appraisal Functions and elements of effective performance measurement systems depending on the organisational context, the organisational culture and managerial intentions, performance measurement systems can fulfil different functions. There are, however, five main functions, which all PMSs should address: •
Assessing, managing and improving performance, on all relevant factors (financial and non-financial) that drive profitability (Butler et al., 1997).
•
Strategy formulation and clarification (Kaplan, Norton, 1996b; De Haas, Kleingeld, 1999).
•
Enhancing strategic dialogue (De Haas, Kleingeld, 1999; Bessire, Baker, 2004; Neely, 1999).
Besides these functions, a wide range of factors have been developed that distinguish effective performance measurement systems from less effective PMSs. First of all, the performance measures on which the system is based, should be relevant, balanced, and related to the company’s strategy. Performance measurement should be based on financial as well as non-financial PI’s, because quality or other non-financial goals are often part of a company’s strategy. According to Evans (2004), one of the limitations of traditional accounting measures is that they are often not able to translate strategy into measures that uniquely communicate an organisation’s vision. Measures need to be related directly to the organisation’s mission and objectives in order to reflect the company’s external competitive environment, customer requirements and internal objectives (Kennerley, Neely, 2002). Performance measures need to be balanced in terms of financial and non-financial measures, related to internal and external stakeholders, and consisting of leading and lagging indicators (Evans, 2004). In order to ensure that PMSs remain relevant, they should be reviewed periodically (Lynch, Cross, 1991). Yet few organisations appear to have systematic processes in place for managing the evolution of their measurement systems (Kennerley, Neely, 2002). Bititci et al. (2000) propose audit tools that enable organisations to identify whether their existing measurement systems are appropriate given their environment and objectives.
51
Performance Appraisal Many authors point out that a proper organisational and information system structure is a prerequisite for an effective PMS. According to Amaratunga and Baldry (2002), a proper organisation structure includes involved leadership, open communication, and a reward system that is linked to performance measures. A highly developed information system is also an important part of the organisation structure. Bourne et al. (2000) show that performance measurement systems requiring regular reporting are best automated. Bititci et al. (2000) point out that the main benefit of using an IT platform for managing the PMS within an organisation is that the maintenance of the information contained within the systems becomes much simpler. They also set up some requirements for an IT platform, which is suitable in such a situation. Finally, effective PMSs are linked to elements of human resource management, such as competence management; goal setting and sharing; feedback; and reward (Neely, 1999). Especially reward has been a hot topic recently and there is considerable debate as to whether performance measures should be linked to reward. According to Dumond (1994), providing feedback to individuals with regard to where they stand on the performance measures is essential. This can enhance performance by providing motivation or information about the correctness and adequacy of work behaviour, and can also provide workers with a sense of accomplishment, competence and control. Five performance measurement systems in practice During the Performance Measurement Revolution, many Performance Measurement Systems have been developed to overcome the drawbacks of traditional performance measurements systems, described earlier in this paper. According to Frigo and Krumwiede (1999), survey data suggest that between 40 and 60 percent of companies significantly changed their measurement systems between 1995 and 2000. In this paper, we review five influential PMSs, and assess their suitability as performance measurement system for purchasing: the Balanced Scorecard (Kaplan, Norton, 1992), the Tableau de Bord (a French approach developed in the 1930s), the Performance Prism (Neely, Adams, 2000), the Performance Pyramid (Lynch, Cross, 1991), and the Productivity Measurement and Enhancement System (Pritchard, 1990).
52
Performance Appraisal The Balanced Scorecard (BSC) The best known performance measurement system is undoubtedly the balanced scorecard (BSC), developed by Kaplan and Norton (1992; 1996a; 1996b). Kaplan and Norton (1996b) define the BSC as “a multidimensional framework for describing, implementing and managing strategy at all levels of an enterprise by linking, through a logical structure, objectives, initiatives, and measures to an organisation’s strategy”. The balanced scorecard provides an enterprise view of an organization’s overall performance: it complements the traditional financial performance measures with key performance indicators (KPIs) in three non-financial areas. The four building blocks of the BSC are: •
Financial Perspective. This perspective answers the question: “To succeed financially, how should we appear to our shareholders?” and is typically related to profitability. It is measured, for example, by the Return on Investment (ROI), Return on Capital Employed (ROCE), and Economic Value Added (EVA).
•
Customer Perspective. This perspective answers the question: “To achieve our vision, how should we appear to our customers?”. It includes several core or generic measures of successful outcomes from the company, like, customer satisfaction, and market share in targeted segments.
•
Internal Processes. In this perspective, the following question is answered: “To satisfy our shareholders and customers, what business processes must we excel at?”. This perspective focuses on the internal processes that will have the greatest impact on customer satisfaction and on achieving the organisation’s financial perspectives.
•
Learning and Growth. The question: “To achieve our vision, how will we sustain our ability to change and improve?” is answered in this perspective. The infrastructure the organization has to build and manage to create long-term growth and improvement through people, systems and organizational procedures, is identified in this perspective.
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Performance Appraisal The BSC is not a static list of measures, but rather a logical framework for implementing and aligning complex programs of change, and, indeed, for managing strategy-focused organizations (Abran, Buglione, 2003). The scorecard translates the vision and strategy of a business unit into objectives and measures in the four different areas. This is also depicted in Figure 1. Figure 1 - The four perspectives of the BSC
Source: Kaplan and Norton (1996a)
The execution of this strategy is then monitored through an internal performance measurement framework with a set of goals, drivers and indicators grouped into each of the four perspectives (Abran, Buglione, 2003). According to Norreklit (2000), a good balanced scorecard should have a mix of outcome measures (lag indicators) and performance drivers (lead indicators). An example of a lag indicator is increased turnover, while order execution time is a lead indicator. Each of the four strategic areas in the BSC should have both lead and lag indicators.
54
Performance Appraisal Many authors, including Kaplan and Norton (1996b), assume the following causal relationship: improvements in organizational learning and growth precede improvements in internal business processes, which precede improvements in the customer perspective, which in turn precede improvements in financial measures. The measures of organizational learning and growth are therefore the drivers of the measures of the internal business processes. This allows the measurements in non-financial areas to be used to predict future financial performance. Although there is some criticism on the BSC (e.g., Norreklit 2000) it has, according to Abran and Buglione (2003), the largest market penetration of all PMSs and tackles performance at several levels, from the organizational level to the small business unit, and to the individual level. Butler et al. (1997) state that it has been adopted by many companies and its format and content appear to meet several management needs . Silk (1998) estimated that 60% of Fortune 1000 companies in the USA have had experience with Balanced Scorecards. In Europe, however, the BSC seems to be less popular. Speckbacher et al. (2003), in a study conducted in Germany, Austria and Switzerland, find that only 26% of their sample of 174 firms used some form of a BSC, and then usually only a limited or incomplete version. Also in France, the BSC has not received a particularly warm welcome, where the Tableau de Bord has been used for at least 50 years. According to Bourguignon et al. (2004), the BSC was known to only 41% of the responding firms and only 3% aimed to implement one. The Tableau de Bord is in many ways similar to the BSC, and some authors have even suggested that, being a precursor of the Balanced Scorecard, it may have inspired its development (Chiapello, Lebas, 2001). The Tableau de Bord is discussed in the next subsection. From a purchasing perspective, a supplier, or organisational input, perspective is noticeably lacking in the BSC. In practice, this has lead many purchasing organisations to adding a fifth, supplier perspective to the BSC in order to make it useable for purchasing (e.g., Aich, Fiedler, 2002). As purchased inputs may account for 60-80% of business
55
Performance Appraisal turnover, it is in fact rather difficult to understand that the BSC is so widely used as a performance measurement system for the total business.
The Tableau de Bord (TdB) The Tableau de Bord (TdB) has gained widespread acceptance throughout the French business community. The TdB was introduced in France in the 1930s and was described as “being similar to a “dashboard” (i.e. the literal translation of “tableau de bord”) used by “pilots” (i.e. managers) to guide organisations to their destinations” (Bessire, Baker, 2004). It was first developed by process engineers who were looking for ways to improve their production process by better understanding cause-and-effect relationships (the relationships between actions and process performance). The same principle was then applied at the top management level, to give senior managers a set of indicators allowing them to monitor the progress of business, compare it to the goals that had been set, and take corrective actions. According to Epstein and Manzoni (1998), this initial objective - giving managers a brief and to the point overview of key parameters to support decision making - has two important implications: First, the TdB cannot be a single document applying equally well to the whole firm; because each sub-unit, and in fact each manager, has different responsibilities and objectives, there should be one TdB for each sub-unit. These “dashboards” should be integrated in a nested structure, as illustrated in Figure 2. In this context, the firm’s overall TdB would be translated into a series of documents supporting local decision making (cf. Chiapello, Lebas, 2001). Secondly, the various TdBs used within the firm should not be limited to financial indicators. Operational measures often give better information on the impact of local events and decisions, and thus on cause-and-effect relationships, than overall financial indicators. From its origin, the TdB was conceived of as a “balanced” combination of financial and non-financial indicators and many authors have emphasized the need to use non-financial indicators (e.g., Epstein, Manzoni, 1998). The development of a Tableau de Bord involves translating the unit’s mission and vision into a set of objectives, from
56
Performance Appraisal which the unit identifies its Key Success Factors, which then get translated into a series of quantitative Key Performance Indicators (KPIs). According to Epstein and Manzoni (1998), the TdB should primarily contain KPIs that are largely controllable by the sub-unit. At the same time, sub-units often need to collaborate on interdependent tasks and projects. Such areas of interdependence should be identified, and then reflected by choosing indicators that capture the interdependence and encourage sub-units to collaborate more effectively. Furthermore, Bourguignon et al. (2004) state that most authors insist on including a learning perspective in the TdB, according to which the measures represent a basis for learning about the cause-and-effect relationships of actions. The basic idea is that, if realised performance does not meet the standard, the cause for this should be found and the problem solved (single-loop learning), but the path should also be questioned (double-loop learning). Figure 2 - The nested structure of the Tableau de Bord
Source: De Guerny et al. (1990)
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Performance Appraisal The TdB is mainly used in France, the country where it has originated. Although there are clear similarities between the TdB and the BSC, there is a considerable French reluctance to the BSC. They state that the practice of the TdB has been far more developed in 60 years than the BSC, which only exists for 10 years. Also, reluctance is created by translation problems, caused by the French translation of BSC into Tableau de Bord Prospectif, which likely creates confusion (Bourguignon et al., 2004). The biggest drawback perhaps of the TdB is its undefined structure. Because of its lack of predefined performance areas, there is a risk of managers implementing the TdB with a set of performance indicators that is not balanced in terms of financial and non-financial, lead and lag, strategic and operational, and related to effectiveness and efficiency. The Performance Prism (PPR) The Performance Prism (PPR), developed by Neely and Adams (2000), is a PMS organised around five distinct but linked perspectives of performance: stakeholder satisfaction, strategies, processes, capabilities, and stakeholder contributions (see also Kennerley, Neely, 2002). These perspectives are visualised by a three dimensional model in the shape of a prism, which can be seen in Figure 3.
Source: Neely & Adams (2000)
58
Performance Appraisal The top and bottom facets are stakeholder satisfaction and stakeholder contribution respectively and the three side facets are strategies, processes and capabilities. These five distinct, but logically interlinked, perspectives on performance have been identified by Neely and Adams (2000) together with five key questions for measurement design. •
Stakeholder Satisfaction. The key question in this perspective is: who are the key stakeholders and what do they want and need? Those organisations aspiring to be successful in the long term within today’s business environment have an exceptionally clear picture of who their key stakeholders are and what they want. This perspective is deliberately broader than the balanced scorecard view of stakeholders, which encompasses only shareholders and customers (Neely et al., 2001).
•
Strategies. The key question here is: what strategies do we have to put in place to satisfy the wants and needs of these key stakeholders? These organisations have defined what strategies they will pursue to ensure that value is delivered to these stakeholders. The Performance Prism’s strategy measures monitor whether goals are being met and provide the data for informed executive decisions.
•
Processes. What critical processes do we require if we are to execute these strategies? Companies have to understand what processes the enterprise requires if the strategies defined before are to be delivered.
•
Capabilities. The main question in this perspective is: what capabilities do we need to operate and enhance these processes? Capabilities are the combination of people, practices, technology and infrastructure that together enable the execution of the organisation’s business processes (both now and in the future). Companies must consider which capabilities are needed to execute the processes defined before. These are the fundamental building blocks of a corporation’s ability to compete.
•
Stakeholder contribution. What contributions do we require from our stakeholders, if we are to maintain and develop these capabilities? This facet has been included as a separate component since it recognises the fact that not only
59
Performance Appraisal organisations have to deliver value to their stakeholders, but also that organisations enter into a relationship with their stakeholders, which should involve the stakeholders contributing to the organisation. The PPR distinguishes itself from other PMSs by not only taking into account shareholders like customers and employees, but also suppliers, regulators, local communities or pressure groups, who are nowadays essential stakeholder groups to consider. Especially suppliers are important because companies become more and more dependent on their suppliers since they outsource non-core business. Regarding experience of companies with the PPR, there is only little evidence the PPR works in practice. Neely et al. (2001) present three case studies. They conclude that the feedback of the companies involved was overwhelmingly positive. It seemed that the PPR’s principal appeal lies in the logical interrelationships between the five perspectives; its comprehensiveness and adaptability, allowing different entry points; and the fact that stakeholders are addressed in a wholly original and radical way (Neely et al., 2001). Performance Pyramid System (PPS)
The Performance Pyramid System (PPS) was one of the first “new” PMSs, developed by Lynch and Cross (1991) during the Performance Measurement Revolution. In short, it is
60
Performance Appraisal an interrelated system of different performance variables, which are controlled at different organisational levels. Strategic objectives flow down through the organisation with a reverse flow of information flowing upwards. Lynch and Cross use a pyramidshaped “map” for understanding and defining the relevant objectives and measures for each level of the business organisation. The four levels of the PPS embody the corporate vision, accountability of the business units, competitive dimensions for business operating systems, and specific operational criteria. According to Laitinen (2002), the purpose of the PPS is “to link an organisation’s strategy to its operations by translating objectives from the top down (based on customer priorities) and measures from the bottom up”. According to him, “the development of a firm’s performance pyramid starts with the definition of an overall corporate vision (the highest or first level of objectives), which is then translated into individual business unit objectives at the second level. At the second level of objectives key market and financial measures are identified as ways of monitoring performance in achieving the vision. In order to attain these market and financial objectives, key measures of customer satisfaction, flexibility and productivity are also derived. These key measures at the third level are further converted into specific operational measures, which form the base of the pyramid. These measures (quality, delivery, cycle time and waste) relate to individual departments”. Lynch and Cross (1991) claim that the performance pyramid is useful for describing how objectives are communicated down to the operational level and how measures are conveyed back up to higher levels. They also identify the use of the PPS in a feedback context, whereby it is used explicitly to monitor organizational performance. Finally, they argue that this model is equally useful for monitoring performance at the corporate, the SBU, the Business Operating Systems, and the departmental and work-centre levels of the organization. Although the original version of the PPS was not designed to cope with performance measurement at the individual level, later adaptations do specify its potential for measuring the performance of individuals and teams.
61
Performance Appraisal Stakeholders other than customers and shareholders do not feature prominently in the PPS. The user will have to make sure that measures at the different levels of the pyramid relate to other principal stakeholders, such as suppliers in the case of purchasing performance.
Productivity Measurement and Enhancement System (ProMES) The productivity measurement and enhancement system (ProMES) was originally developed by Pritchard (1990). ProMES is a participative development method for performance management systems, designed to be a practical method of measuring organisational productivity. In essence, ProMES is a formal, step-by-step process that identifies organisational objectives, develops a measurement system to assess how well the unit is meeting those objectives, and develops a feedback system which gives unit personnel and managers information on how well the unit is performing (Pritchard et al., 2002). As can be seen in Figure 4, the ProMES system is built up around the concept of motivational force. Figure 3 - ProMES
Source: Pritchard (1990) According to Pritchard et al. (2002), ProMES is based on the theory of work behaviour (see also Naylor et al., 1980). Motivation in this theory is seen as a resource allocation process where the resource is a person’s time and energy, which is allocated across possible actions or tasks. Motivational force is defined as the degree to which a person
62
Performance Appraisal believes that changes in the amount of personal resources in the form of time and energy (effort) devoted to different acts (tasks) over time will result in a change in anticipated need satisfaction (Pritchard et al., 2002). Pritchard et al. (2002) declare that the motivational force of a person is the result of his acts, products, evaluations, outcomes and need satisfaction (see Figure 4). An act is the “doing” of something, for example running or talking, which is characterized by amplitude and direction. Products are the results of acts and often the person’s output. When products are observed and evaluated, this results in evaluations where an evaluator places the measured product on a good to bad evaluative continuum. After evaluations are made, outcomes occur. These are intrinsic such as a feeling of accomplishment from writing a good paper, or extrinsic such as forms of recognition. Outcomes get their motivating power because of their ties to need satisfaction. Positive affect occurs when needs are satisfied and negative affect occurs when needs are not satisfied. Between each of these elements determining motivational force, relationships consist called contingencies (see Figure 4). These contingencies can be linear as well as non-linear. The ProMES system can be developed and implemented with the following seven step process (Pritchard et al., 2002): •
Form a design team, composed of those who will be measured, one or two supervisors, and one or two facilitators who familiar with ProMES.
•
Identify objectives for the unit.
•
For each objective, identify one of more quantitative measures, called indicators, that measure how well these objectives are being met. Indicators have to be largely under control of the people being measured.
•
Define contingencies. A contingency is a function that defines how much of an indicator is how good for the organisation.
63
•
Design the feedback system.
•
Give and respond to feedback.
•
Monitor the project over time and adjust if needed.
Performance Appraisal Although ProMES is not as popular as the BSC, up to 2002, about 120 ProMES projects have been executed in various types of organisations in nine different countries (Pritchard et al., 2002). One of the most interesting features of ProMES is the bottom-up approach. People are really involved in the design of the system which increases the acceptance of the system. Another interesting feature of the system is the use of contingencies. By using these contingencies, priorities for improvement can be set. Also, non-linearity can be captured between an indicator and the amount of contribution that level of indicator makes to the overall functioning of the organisation (Pritchard et al., 2002). However, these contingencies make the system more difficult to develop and more effort has to be put into explaining the system. Another disadvantage of ProMES is that the indicators do not necessarily need to be balanced if the objectives are not balanced. Because of its bottom-up approach, operational purchasing is really involved in the design of the system. The risk of this bottom-up approach however is that vertical consistency can not be taken for granted (Algera, De Haas, 2002), which could result in a Business Unit’s PMS being not in line with the company’s PMS. The five performance measurement systems assessed BSC Strategic
and
operational +
TdB
PPR
PPS
ProMES
+
+
++
+
measures All stakeholders considered
-
+/-
+
-
+/-
Lead and lag indicators
++
+/-
++
+
+/-
performance +/-
+/-
-
+/-
++
efficiency +
+/-
+
+/-
+/-
Individual-level measured Effectiveness measures
64
and
Performance Appraisal According to Flippo, a prominent personality in the field of Human resources, "performance appraisal is the systematic, periodic and an impartial rating of an employee’s excellence in the matters pertaining to his present job and his potential for a better job." Performance appraisal is a systematic way of reviewing and assessing the performance of an employee during a given period of time and planning for his future. It is a powerful tool to calibrate, refine and reward the performance of the employee. It helps to analyze his achievements and evaluate his contribution towards the achievements of the overall organizational goals by focusing the attention on performance, performance appraisal goes to the heart of personnel management and reflects the management's interest in the progress of the employees. Performance appraisal is the process of obtaining, analyzing and recording information about the relative worth of an employee. The focus of the performance appraisal is measuring and improving the actual performance of the employee and also the future potential of the employee. Its aim is to measure what an employee does. Organizations exist to achieve goals. Goals are only met when individual employees efforts matches with policy of the organization and thus bringing out success and effectiveness. The assessment of how successful employees have been at meeting their individual goals therefore becomes a critical part of HRM and here comes Performance Appraisal System. Performance appraisal is an important component of the information and control system. In today’s flexible organizations, performance evaluation provides an important way for managers to clarify performance goals and standards and to enhance future individual performance. Thus the purpose of performance appraisal is to improve the organization’s performance through the enhanced performance of individuals. The performance appraisal system: •
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Is an organizational necessity
Performance Appraisal •
Is based on well defined objective criteria
•
Is based on careful job analysis
•
Uses only job related criteria
•
Is supported by adequate studies
•
Is applied by trained qualified raters
•
Is applied objectively throughout the organization
•
Can be shown non discriminatory as defined by law.
Operational Definition of Concepts
Performance Appraisal Performance appraisal is the assessment of an individual's performance in an performance in a systematic way, the performance being measured against such factors as job knowledge, quality and quantity of output, initiative, leadership abilities, supervision, dependability, co-operation, judgment, versatility etc. assessment should not be confined to the past performance alone. Potentials of the employee for the future performance must also be assessed. Performance appraisal can be defined as "the systematic evaluation of the individual with respect to his or her performance on the job and his or her potential for development". A more comprehensive definition is, “Performance appraisal is a formal structured system of measuring and evaluating an employee's job and how the employee can perform effectively in future so that the employee, organization all be benefited."
Objectives of Performance Appraisal Performance appraisal system can serve the following purposes if designed properly Help each employee to understand more and more about his role and become clear about his functions. •
Helps each employee to understand his own strengths and weaknesses with respect to his role and functions of the company.
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Performance Appraisal •
Helps identifying the developmental needs of employees.
•
Helps increase mutuality between employee and his superiors.
•
Provides an opportunity to the employees for self reflection and individual goal setting
•
Helps in preparing employees for performing at high levels by continuously enforcing the required qualities.
•
Creates a healthy environment in the organization.
Measuring Performance In many organizations, the feedback on job performance is ambiguous or is given annually as a ritualistic exercise. Many subordinates therefore have trouble in gasping how their efforts are perceived by the organization. Almost every one who has worked at a job can remember times when they were unclear on how their performance was being judged. The annual performance appraisal system tends to serve only a little purpose: salary administration, training and succession planning. But this is not the sole objective of performance appraisal. These objectives will only dilute and weaken the clarity and validity of any appraisal system. Most organization ties the formal appraisal system directly to salary increase, which decrease their validity. It is therefore very important for organizations to: (a) Link Salary and Status Realistically to the Performance Appraisals Most personnel departments have a very narrow outlook to appraisals. The general view is to receive the appraisal forms at a date (which usually is the deadline), issue instructions regarding increments and promotions, receive the data regarding the same and they issue letters to the concerned employee informing of their salary increase. The appraisal process gets polluted as the appraiser and appraise have at the back of their minds promotion and salary increase, rather than performance plans and participative reviews. This dilutes the objectives of appraisal to great extent. In fact, if organizations create, a culture of continuous feedback on the performance they would be making the
67
Performance Appraisal appraisal system more relevant. Several organizations have already started delinking performance appraisal from salary increase. (b) Making Objectives of Performance Appraisals Clear to All Employees If performance appraisal should not directly be linked to salary increase the question then arises, what should the objectives of performance appraisals be that could be realistically achieved? Some suggestions: •
To do joint goal setting, and link the goals to the organizational objectives
•
To provide role clarity by defining Key Result areas for Accounting.
•
To establish a level of performance in the current job and seek ways of improving it.
•
To identify potential for development and to support the total process of planning
•
To increase communication between the appraiser and the appraise.
•
To identify factors that facilitate performance and other factors that hinder performance.
•
To help the employees identify and recognize their own strengths and weaknesses. To make them assess their own competencies and how the same can be multiplied and improved.
•
To generate data about the employee for various decisions like transfers, rewards, job-rotation, etc.
(c) Focus on Developmental Appraisals Managers should develop part ownership in the employee's future. Any good appraisal system should focus on developmental appraisal. Developmental appraisal mean that an organization needs to develop not just isolated performance appraisal tool/system, but the total frame work for the individuals development, improvement in job and level of competence and preparing employees for future jobs. Thus, appraisal of people, which is a part of the total HRD system, lies to be linked to long-term development activity and carrier planning.
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Performance Appraisal Organizations have to show vision for the future. Vision, strategies and objectives will give rise to individual objectives and performance standards. The immediate rewards and recognition do not lead to enduring performance and upgrading of competence and therefore are not real motivators. The appraisal as a tool not only gives the individual and the organization the idea of where the individual stands in terms of his skills, competencies and abilities, but also monitors the process of growth and development, together with the inputs that are required to develop a high level of competence by individuals.
(d) Let Employees Appraise Their Own Performance Subordinates need feedback more often on their performance. The best way to do it is to let them appraise their own performance. Self-appraisal would - 1) Motivate the employee to take more responsibility for his/her own performance. 2) Focus on the job behaviour only. 3) Reduce ambiguity in performance and focus on change in job behaviour. When subordinates undertake self-appraisal, they analyze their job duties and how key issues in a job they handle. Each individual may rate himself or herself. Self-appraisal may focus on cost control, communication, planning, training, delegation and decisionmaking. After self-appraisal, the subordinate discusses the ratings with his/her direct report or superior to get a feed back on performance. Both then come to an agreement in areas of convergence and draw a job improvement plan. (e) Create a Climate for Open Appraisals in Organizations In most organizations, the concept of open appraisal is misunderstood. Open appraisal does nut mean that the appraisal ratings are shown by the subordinate and his/her signature is then obtained. What it does mean that both the appraiser and the appraise share their views on performance with each other, identify the areas of improvement and work towards it. One of the objectives of open communication between the appraiser and appraise is to bring them together to solve organizational problems and performance
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Performance Appraisal related problems. The quality of ratings is likely to improve if there is shared understanding between the appraiser and appraise. (f) Muscle Builds the Organization In today's competitive world, raising performance goals is essential. This entails analyzing the company's current situation, projecting the future, establishing higher expectations, and selling the top management on the upgrading process and developing an action plan. Muscle builds the organization by 1) Enhancing your own performance 2) Accelerating the professional growth of the best performers 3) Not tolerating managerial performers. One cannot muscle build the organization, unless marginal performers are replaced. 4) Developing multiple skills and competencies by worshiping success and potential. (g) Build Commitment in the Workplace Change is an inevitable part of manager's job. As conditions change, individual responsibilities are also expected to change. In commitment-based approach, the workplace, jobs are designed to be broader than before, team accountability is as important as individual accountability for performance. The performance expectations are high and emphasize continuous important in the workplace. Managers have to stop being my topic to performance appraisals. No personnel professional in the 90's will be able to afford the luxury of myopia. We have to see our way to the various changes in environment that are taking place and those changes that will revolutionize our organization culture in the out coming years. We must help our organization's triumphant progress through the 90s, by recognizing and rewarding performance.
APPRAISAL ERRORS None of the methods for appraising performance is absolutely valid or reliable; each method has its own strengths and weakness. Let us try to understand the most commonly occurring errors within performance appraisal methods.
1. Error of Central Tendency:
70
Performance Appraisal This refers to the tendency of not using extreme scale scores on the judgment scale; most of the rates are clustered in the middle.
2. Error of Leniency: This is caused by the tendency of the lenient ratter to put most of the rates on the higher side of the scale, while a tough ratter places them on the lower side of the scale.
3. Halo Effect: In other words, it is tendency to allow the assessment on one trait to influence assessment on others. This usually arises when traits are unfamiliar, ill – defined and involved personal reactions.
4. Error in Unreliability: This error occurs when there is the existence of inconsistency in the evaluations of a group of employees by two / more appraisers.
5. Personal Bias: This error occurs when there exists a close relationship between appraiser and appraisee. This tends to influence the evaluation. The scores could be on the higher when there would be a bias on the side of the appraiser. Therefore, the scores given could tend to be higher then what appraise deserves. This would give appraise an undue advantage for appraisee during the times of promotions, pay rise etc. the same could happen vice versa too if an appraiser does not share a good relationship with appraisee, he could tend to give absolutely low scores for appraisee.
5. No Consultation There would tend to be an error in the scores if the appraiser just goes on giving scores without discussing with appraise. If the appraise would not be given his say in the matter, the score will not reflect the actual capability of appraise.
6. Spill over Effect This refers to allowing past performance appraisal ratings to unjustifiably influence current ratings.
7. Status Effect:
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Performance Appraisal It refers to over rating of employed in higher level job or jobs held in high esteem, and under rating employees in lower level job at job held in low esteem.
Performance appraisal in GAIL Performance Appraisal The Performance Appraisal System in the Organisation has been designed to evaluate employee performance with a view to enhance individual contribution, greater job responsibility and build an overall achievement oriented organisational culture OBJECTIVES: The objective of the Performance Appraisal System are : •
To set norms and targets of work performance as well as monitor the work progress of employees.
•
To facilitate placement of employees in accordance with their suitability for different types of assignments.
•
To provide and objective basis for determination of merit, efficiency and suitability for purposes of promotion.
•
To identify areas requiring exposure for Training / Development.
•
To plan the career growth of employees.
EVALUATION: The Performance Appraisal System seeks to evaluate:
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Performance Appraisal •
The work performance of an employee on the present job in relation to the expected level of performance, both qualitative and quantitative.
•
The extent of development achieved by the employee during the period under review.
•
Evaluation of behavioural attributes attitudes and abilities.
•
Evaluation of potential for assuming higher responsibilities.
Performance Appraisal System in GAIL •
The Performance Appraisal in GAIL is done during the financial year i.e. for the 12 months period from 1st April to 31st March.
•
The Appraisal is done of all regular employees of the Company
•
The Appraisal form is filled in respect of all employees who have served for a period of atleast 3 months in the organization during the relevant year.
73
Performance Appraisal
•
Time schedule followed for the completion of Annual Confidential Reports for Executives:
a) Blank Forms will be sent by the Personnel
15th March
Department to the concerned head of the Department / Branch. b) Forms to be given by Head of the Department Self
25th March
Reporting Officer
Reviewing Officer
Accepting
Annexure
S0-S3
Appraisal NA
Immediate Superior
Officer Immediate Superior of reporting officer
B
S4-S7
Appraisal
S4 & above :
Immediate Superior of reporting officer
C
Immediate Superior Executive
D
E1 & above S5 & above : E0-E3
Appraisal
E2 & above Immediate Superior
of Reporting officer superior
than
Reviewing officer E4-E9
Appraisal
Immediate Superior
Operation
and Functional
Administrative
Director/Chief
Head
Managing Director
to the concerned Executive for Self Appraisal. c) Completion of Self Appraisal by concerned officer
10th April
and submission to Reporting Office. d) Reporting Officer will complete his assessment and submit to the Reviewing / countersigning
74
20th April
E
Performance Appraisal officer. e) Reviewing/ Countersigning Officer will countersign
30th April
the Annual Confidential Reports /PAF with or without his remarks and send to Accepting Authority. f) Annual Confidential Report to be returned to
10th May
Personnel Department of Region / Corporate Office after perusal / remarks of Accepting Authority. a) Personnel Department of Regional Office will
20th May
send the Annual Confidential Reports of all Executives to Corporate Office.
•
Submission of Annual Confidential Reports / Performance Appraisal Form in respect of Executives:
Annual Confidential Reports / Performance Appraisals in respect of Executives in the level of E-3 and E-4 are submitted to the General Manager and the Director concerned wherever such authority is not the Reviewing /
Accepting Authority.
The Reports in respect of Executives in the level of E-5 is submitted to concern Director wherever he is not the Reviewing / Accepting Authority.
The Reports in respect of Executives in the level of E-6 and above will be put up to the Chief Managing Director.
• In the event of the overall assessment being not satisfactory or carrying some adverse remarks, a communication will need to be issued to the concerned after the report has been accepted by the concerned authority. The adverse remark will be conveyed to the concerned employee by the personnel Department and this activity shall be completed by 30th June.
75
Performance Appraisal
RESEARCH 76
Performance Appraisal
METHODOLOGY
In order to accomplish the objectives of the study, it is essential to articulate the Manner in which it is to be conducted, i.e., the research process is to be carried-out in a certain framework. The research methodology, which follows, is the backbone of the study. Data Collection Sources Research work was done from two sources: (1) Primary data (2) Secondary data Primary data was collected by questionnaire and interview in the organizations. The questionnaire comprised of closed and attitude questions. The opinion on existing Performance Appraisal practices and their affectivity were collected through
77
Performance Appraisal questionnaire which was circulated to all the employees at all levels and the results have been analyzed on the basis of agree and disagree. The methodology for collection of data also included interviews and discussion with the top management of the organization. Secondary data: It was collected by reviewing different literatures, from published books, management journals, articles published by the other researchers on 360 Degree Appraisal. Sampling: The total sample size for this project was 100 employees at Jindal Brothers. The information collected through above methods has been tabulated, analyzed and interpreted. Finally an overall assessment of the contribution of top management, supervisory staff has been made towards improving the effectiveness of the organization.
TYPES OF RESEARCH Research methodology is a way to systematic solve the Research Problem. It is a procedure, which is followed step by step to solve a particular research problem. There are basically four types of researches: 1 EXPLORATIVE RESEARCH 2 DESCRIPTIVE RESEARCH 3 DIAGNOSTIC RESEARCH 4 HYPOTHESIS TESTING RESEARCH Explorative Research: To gain familiarity with phenomenon or to achieve an insight into it.
78
Performance Appraisal Descriptive Research: To poetry accurately the characteristics of the particular individual situation or a group . Diagnostic Research: To determine the frequency with which something occurs or with which it is associated with something else. Hypothesis Testing Research: To test a hypothesis of casual relationship between variables . The present project is Descriptive cum Explorative in nature. It is done to poetry accurately the characteristics of a particular individual situation or a group. The major purpose of the descriptive research is the description of the state of the affairs as it exits at resent. The main characteristics of this method are that the researcher has no control over the variables; he can only report what has happened or what is happening.
SAMPLING TECHNIQUE The sampling technique adopted for the study is non-probability Random sampling technique according to the convenience of the researcher. A questionnaire was administered to employees of GAIL Infohub of different Departments like Finance Department ,HR Department ,G.P.C.T. Department , O & M Department, Business Information System Department and Gailtel Department.
SAMPLE SIZE Data is collected using a sample of 60 employees of GAIL Infohub.
SAMPLE DESCRIPTION
79
Performance Appraisal The sample mainly consists of data from the primary sources that are utilized for the purpose of this study. This is done by means of administrating questionnaire to employees in different Departments. Secondary data like company journals, newsletters, records etc. were also relied on for retrieving further information.
INSTRUMENTATION TECHNIQUE Questionnaire
ACTUAL COLLECTION OF DATA Both secondary and primary sources of data are utilized for the purpose of this study. Primary data is collected by means of administering a questionnaire to the employees of GAIL Infohub of different Departments like Finance Department, HR Department, G.P.C.T. Department, O & M Department, Business Information System Department and Gailtel Department. Secondary data is collected from various records, manuals and other sources of the HR Department.
80
Performance Appraisal
ANALYSIS AND INTERPRETATION
I have presented my results of survey in tabular form and their analysis. For the purpose of easy reading the section has been divided into two parts. •
Tabular form of Response
•
Analysis
Table 1: The current system of appraisal in GAIL (India) is time consuming.
Levels
81
Strongly
Agree
Neither
Disagree
Strongly
Performance Appraisal
S0-S3 S4-S7 E0-E3 E4-E9
10 9 8 7 6 5 4 3 2 1 0
Agree
Agree
0 0 1 0
Disagree 10 3 10 5
0 2 2 5
nor
Disagree 2 2 5 10
1 0 2 0
S0-S3 S4-S7 E0-E3 E4-E9 Strongly Agree
Agree
Neither Disagree Agree nor Disagree
Strongly Disagree
Analysis: 10% staff members agree that current system of appraisal in GAIL (India) is time consuming. 65% staff members have no comments that current system of appraisal in GAIL (India) is time consuming. 25% staff members disagree that current system of appraisal in GAIL (India) is time consuming. 20% members agree that current system of appraisal in GAIL (India) is time consuming. 37.5%
executive members have no comments that current system of appraisal in GAIL
(India) is time consuming. 42.5% executive members disagree that current system of appraisal in GAIL (India) is time consuming.
82
Performance Appraisal
Table2: The current process can be simplified by following same steps in Probation Approval and Annual Confidential Report.
Levels
S0-S3 S4-S7 E0-E3 E4-E9
Strongly
Agree
Neither
Agree
Agree
0 0 2 1
Disagree 5 7 15 3
16 14 12 10 8 6 4 2 0
4 2 9 8
Disagree nor
Strongly Disagree
2 0 1 1
0 0 0 0
S0-S3 S4-S7 E0-E3 E4-E9 Strongly Agree
Agree
Neither Disagree Strongly Agree nor Disagree Disagree
Analysis: 30% staff members agree that current process can be simplified by following same steps in Probation Approval and Annual Confidential Report. 60% staff members have no comments that current process can be simplified by following same steps in Probation Approval and Annual Confidential Report. 10% staff members disagree that current process can be simplified by following same steps in Probation Approval and Annual Confidential Report.
83
Performance Appraisal 50% executive members agree that current process can be simplified by following same steps in Probation Approval and Annual Confidential Report. 45%
executive members have no comments that current process can be simplified by
following same steps in Probation Approval and Annual Confidential Report. 5% executive members disagree that current process can be simplified by following same steps in Probation Approval and Annual Confidential Report.
Table3: Objective setting will complicate the process further and will not add value to performance Assessment system in GAIL.
Levels
Strongly
S0-S3 S4-S7 E0-E3 E4-E9
10 9 8 7 6 5 4 3 2 1 0
84
Agree
Neither
Agree
Agree
0 0 2 1
Disagree 5 6 3 3
2 3 4 10
Disagree nor
Strongly Disagree
2 0 10 4
2 0 2 1
S0-S3 S4-S7 E0-E3 E4-E9 Strongly Agree
Agree
Neither Disagree Agree nor Disagree
Strongly Disagree
Performance Appraisal Analysis: 25% staff members agrees that Objective setting will complicate the process further and will not add value to performance Assessment system in GAIL 55% staff members have no comments that Objective setting will complicate the process further and will not add value to performance Assessment system in GAIL 20% staff members disagree that Objective setting will complicate the process further and will not add value to performance Assessment system in GAIL 42.5% executive members agree that Objective setting will complicate the process further and will not add value to performance Assessment system in GAIL 15%
executive members have no comments that Objective setting will complicate the
process further and will not add value to performance Assessment system in GAIL 42.5% executive members disagree that Objective setting will complicate the process further and will not add value to performance Assessment system in GAIL Table 4: Self Assessment is a useful tool/step in the overall Performance.
Levels
S0-S3 S4-S7 E0-E3 E4-E9
85
Strongly
Agree
Neither
Agree
Agree
1 2 5 6
Disagree 6 0 2 6
5 4 15 6
Disagree nor
Strongly Disagree
1 0 0 0
1 0 0 0
Performance Appraisal
16 14 12 10 8 6 4 2 0
S0-S3 S4-S7 E0-E3 E4-E9 Strongly Agree
Agree
Neither Disagree Agree nor Disagree
Strongly Disagree
Analysis: 60% staff members agree that Self Assessment is a useful tool/step in the overall Performance. 30% staff members have no comments that Self Assessment is a useful tool/step in the overall Performance. 10% staff members disagree that Self Assessment is a useful tool/step in the overall Performance. 80% executive members agree that Self Assessment is a useful tool/step in the overall Performance. 20% executive members have no comments that Self Assessment is a useful tool/step in the overall Performance. 0% executive members disagree that Self Assessment is a useful tool/step in the overall Performance. Table 5: Annual Confidential report has no scope for bias.
Levels
Strongly Agree
86
Agree
Neither Agree
Disagree nor
Strongly Disagree
Performance Appraisal
S0-S3 S4-S7 E0-E3 E4-E9
0 0 2 0
0 3 0 3
Disagree 6 3 7 10
5 0 5 11
3 0 0 2
12 10 8
S0-S3 S4-S7 E0-E3 E4-E9
6 4 2 0
Strongly Agree
Agree
Neither Disagree Strongly Agree nor Disagree Disagree
Analysis: 15% staff members agrees that Annual Confidential report has no scope for bias 45% staff members have no comments that Annual Confidential report has no scope for bias 40% staff members disagree that Annual Confidential report has no scope for bias 12.5% executive members agree that Annual Confidential report has no scope for bias 42.5% executive members have no comments that Annual Confidential report has no scope for bias
87
Performance Appraisal 45% executive members disagree that Annual Confidential report has no scope for bias
Table 6: There is a transparent linkage between Performance Management System in GAIL & other HR processes like promotion & transfer.
Levels
Strongly
S0-S3 S4-S7 E0-E3 E4-E9
Agree
Neither
Agree
Agree
0 0 3 0
Disagree 4 4 7 10
5 5 10 2
Disagree nor
Strongly Disagree
1 0 2 3
1 0 1 2
10 8 6 4
S4-S7
2
E0-E3
0
88
S0-S3
E4-E9 Strongly Agree
Agree
Neither Disagree Agree nor Disagree
Strongly Disagree
Performance Appraisal Analysis: 50% staff members agree that there is a transparent linkage between Performance Management System in GAIL & other HR processes like promotion & transfer. 40% staff members have no comments that there is a transparent linkage between Performance Management System in GAIL & other HR processes like promotion & transfer. 10% staff members disagree that there is a transparent linkage between Performance Management System in GAIL & other HR processes like promotion & transfer. 37.5% executive members agree that there is a transparent linkage between Performance Management System in GAIL & other HR processes like promotion & transfer. 42.5% executive members have no comments that there is a transparent linkage between Performance Management System in GAIL & other HR processes like promotion & transfer. 20% executive members disagree that there is a transparent linkage between Performance Management System in GAIL & other HR processes like promotion & transfer
Table 7: Your training needs are identified on the basis of your annual confidential report.
Levels
S0-S3 S4-S7 E0-E3 E4-E9
89
Strongly
Agree
Neither
Agree
Agree
1 0 3 2
Disagree 4 4 3 2
1 4 9 16
Disagree nor
Strongly Disagree
4 0 0 3
2 0 2 0
Performance Appraisal
16 14 12 10 8 6 4 2 0
S0-S3 S4-S7 E0-E3 E4-E9 Strongly Agree
Agree
Neither Agree nor Disagree
Disagree
Strongly Disagree
Analysis: 30% staff members agree that training needs are identified on the basis of your annual confidential report. 40% staff members have no comments that training needs are identified on the basis of your annual confidential report. 30% staff members disagree that training needs are identified on the basis of your annual confidential report. 75% executive members agree that training needs are identified on the basis of your annual confidential report. 12.5% executive members have no comments that training needs are identified on the basis of your annual confidential report. 12.5% executive members disagree that training needs are identified on the basis of your annual confidential report
90
Performance Appraisal Table 8: Personal Development Plans (PDP) would be helpful in coaching for better performance.
Levels
Strongly
S0-S3 S4-S7 E0-E3 E4-E9
10 9 8 7 6 5 4 3 2 1 0
Agree
Neither
Agree
Agree
1 2 7 2
Disagree 10 0 3 3
2 4 17 8
Disagree nor
Strongly Disagree
1 0 0 0
0 0 0 0
S0-S3 S4-S7 E0-E3 E4-E9 Strongly Agree
Agree
Neither Disagree Strongly Agree nor Disagree Disagree
Analysis: 45% staff members agree that Personal Development Plans (PDP) would be helpful in coaching for better performance. 50% staff members have no comments that Personal Development Plans (PDP) would be helpful in coaching for better performance. 5% staff members disagree that Personal Development Plans (PDP) would be helpful in coaching for better performance.
91
Performance Appraisal 85% executive members agree that Personal Development Plans (PDP) would be helpful in coaching for better performance. 15% executive members have no comments that Personal Development Plans (PDP) would be helpful in coaching for better performance. 0% executive members disagree that Personal Development Plans (PDP) would be helpful in coaching for better performance.
Table 9: Appraisal should essentially have a step of meeting with the reporting officer, with the purpose of giving feedback on performance.
Levels
S0-S3 S4-S7 E0-E3 E4-E9
92
Strongly
Agree
Neither
Agree
Agree
2 2 6 8
Disagree 5 0 0 0
6 2 19 5
Disagree nor
Strongly Disagree
0 0 0 0
3 0 0 0
Performance Appraisal
20 18 16 14 12 10 8 6 4 2 0
S0-S3 S4-S7 E0-E3 E4-E9 Strongly Agree
Agree
Neither Disagree Strongly Agree nor Disagree Disagree
Analysis: 60% staff members agree that Appraisal should essentially have a step of meeting with the reporting officer, with the purpose of giving feedback on performance 25% staff members have no comments that Appraisal should essentially have a step of meeting with the reporting officer, with the purpose of giving feedback on performance 15% staff members disagree that Appraisal should essentially have a step of meeting with the reporting officer, with the purpose of giving feedback on performance 100% executive members agree that Appraisal should essentially have a step of meeting with the reporting officer, with the purpose of giving feedback on performance 0% executive members have no comments that Appraisal should essentially have a step of meeting with the reporting officer, with the purpose of giving feedback on performance. 0% executive members disagree that Appraisal should essentially have a step of meeting with the reporting officer, with the purpose of giving feedback on performance.
93
Performance Appraisal
Table 10: There should be a dedicated cell focused on improving as well as implementing the performance appraisal process centrally for all work centers.
Levels
Strongly
S0-S3 S4-S7 E0-E3 E4-E9
20 18 16 14 12 10 8 6 4 2 0
Agree
Neither
Agree
Agree
0 1 3 2
Disagree 8 0 4 2
4 5 20 9
Disagree nor
Strongly Disagree
1 0 0 0
1 0 0 0
S0-S3 S4-S7 E0-E3 E4-E9 Strongly Agree
Agree
Neither Disagree Strongly Agree nor Disagree Disagree
Analysis: 50% staff members agree that there should be a dedicated cell focused on improving as well as implementing the performance appraisal process centrally for all work centers 40% staff members have no comments that there should be a dedicated cell focused on improving as well as implementing the performance appraisal process centrally for all work centers
94
Performance Appraisal 10% staff members disagree that there should be a dedicated cell focused on improving as well as implementing the performance appraisal process centrally for all work centers 85% executive members agree that there should be a dedicated cell focused on improving as well as implementing the performance appraisal process centrally for all work centers 15% executive members have no comments that there should be a dedicated cell focused on improving as well as implementing the performance appraisal process centrally for all work centers 0% executive members disagree that there should be a dedicated cell focused on improving as well as implementing the performance appraisal process centrally for all work centers Table 11: Annual confidential report in GAIL is on the basis of pre defined competencies and not on actual work done.
Levels
S0-S3 S4-S7 E0-E3 E4-E9
95
Strongly
Agree
Neither
Agree
Agree
0 0 2 0
Disagree 6 3 6 9
5 4 4 12
Disagree nor
Strongly Disagree
1 1 3 3
0 0 1 0
Performance Appraisal
12 10 8 S0-S3
6
S4-S7
4
E0-E3
2 0
E4-E9 Strongly Agree
Agree
Neither Disagree Strongly Agree nor Disagree Disagree
Analysis: 45% staff members agree that Annual confidential report in GAIL is on the basis of pre defined competencies and not on actual work done. 45% staff members have no comments that Annual confidential report in GAIL is on the basis of pre defined competencies and not on actual work done. 10% staff members disagree that Annual confidential report in GAIL is on the basis of pre defined competencies and not on actual work done. 45% executive members agree that Annual confidential report in GAIL is on the basis of pre defined competencies and not on actual work done. 37.5% executive members have no comments that Annual confidential report in GAIL is on the basis of pre defined competencies and not on actual work done. 17.5% executive members disagree that Annual confidential report in GAIL is on the basis of pre defined competencies and not on actual work done.
96
Performance Appraisal Table 12: Annual confidential report in GAIL is on the basis of pre defined competencies and not on actual work done.
Levels
S0-S3 S4-S7 E0-E3 E4-E9
Strongly
Agree
Neither
Agree
Agree
0 0 3 0
Disagree 5 5 12 5
3 4 4 10
Disagree nor
Strongly Disagree
1 0 3 3
2 0 0 0
6 5 4 S0-S3
3
S4-S7
2
E0-E3
1 0
E4-E9 Strongly Agree
Agree
Neither Disagree Agree nor Disagree
Strongly Disagree
Analysis: 35% staff members agree that Annual confidential report in GAIL is on the basis of pre defined competencies and not on actual work done. 50% staff members have no comments that Annual confidential report in GAIL is on the basis of pre defined competencies and not on actual work done. 15% staff members disagree that Annual confidential report in GAIL is on the basis of pre defined competencies and not on actual work done.
97
Performance Appraisal 42.5% executive members agree that Annual confidential report in GAIL is on the basis of pre defined competencies and not on actual work done. 42.5% executive members have no comments that Annual confidential report in GAIL is on the basis of pre defined competencies and not on actual work done. 15% executive members disagree that Annual confidential report in GAIL is on the basis of pre defined competencies and not on actual work done.
Table 13: You seldom escalate your disagreement on Annual confidential report rating provided by your reporting officer to the level of reviewing /accepting officer.
Strongly
S0-S3 S4-S7 E0-E3 E4-E9
98
Agree
Neither
Agree
Agree
0 0 3 2
Disagree 10 3 12 3
2 1 10 5
Disagree nor
Strongly Disagree
1 2 2 3
1 0 0 0
Performance Appraisal
12 10 8 S0-S3
6
S4-S7
4
E0-E3
2 0
E4-E9 Strongly Agree
Agree
Neither Agree nor Disagree
Disagree
Strongly Disagree
Analysis: 15% staff members agree that You seldom escalate your disagreement on Annual confidential report rating provided by your reporting officer to the level of reviewing /accepting officer 65% staff members have no comments that You seldom escalate your disagreement on Annual confidential report rating provided by your reporting officer to the level of reviewing /accepting officer 20% staff members disagree that You seldom escalate your disagreement on Annual confidential report rating provided by your reporting officer to the level of reviewing /accepting officer. 50% executive members agree that You seldom escalate your disagreement on Annual confidential report rating provided by your reporting officer to the level of reviewing /accepting officer 37.5% executive members have no comments that You seldom escalate your disagreement on Annual confidential report rating provided by your reporting officer to the level of reviewing /accepting officer 12.5% executive members disagree that You seldom escalate your disagreement on Annual confidential report rating provided by your reporting officer to the level of reviewing /accepting officer
99
Performance Appraisal
Table 14: Once the process of Performance Appraisal is complete the form are simply filed away.
Levels
Strongly
S0-S3 S4-S7 E0-E3 E4-E9
16 14 12 10 8 6 4 2 0
Agree
Neither
Agree
Agree
0 0 2 0
Disagree 7 2 6 2
3 2 16 7
Disagree nor
Strongly Disagree
4 2 1 5
0 0 1 0
S0-S3 S4-S7 E0-E3 E4-E9 Strongly Agree
Agree
Neither Disagree Strongly Agree nor Disagree Disagree
Analysis: 25% staff members agree that once the process of Performance Appraisal is complete the forms are simply filed away.
100
Performance Appraisal 45% staff members have no comments that once the process of Performance Appraisal is complete the forms are simply filed away. 30% staff members disagree that once the process of Performance Appraisal is complete the form are simply filed away. 62.5% executive members agree that once the process of Performance Appraisal is complete the forms are simply filed away. 20% executive members have no comments that Once the process of Performance Appraisal is complete the form are simply filed away. 17.5% executive members disagree that once the process of Performance Appraisal is complete the form are simply filed away.
Table 15: The system of 360 degree appraisal should be implemented in GAIL, by which you can appraise your superior as well.
Levels
S0-S3 S4-S7 E0-E3 E4-E9
101
Strongly
Agree
Neither
Agree
Agree
2 0 3 4
Disagree 10 1 2 2
1 4 20 7
Disagree nor
Strongly Disagree
0 1 0 1
1 0 1 0
Performance Appraisal
20 18 16 14 12 10 8 6 4 2 0
S0-S3 S4-S7 E0-E3 E4-E9 Strongly Agree
Agree
Neither Disagree Strongly Agree nor Disagree Disagree
Analysis: 35% staff members agrees that the system of 360 degree appraisal should be implemented in GAIL, by which you can appraise your superior as well. 55% staff members have no comments that the system of 360 degree appraisal should be implemented in GAIL, by which you can appraise your superior as well. 10% staff members disagree that the system of 360 degree appraisal should be implemented in GAIL, by which you can appraise your superior as well. 85% executive members agree that the system of 360 degree appraisal should be implemented in GAIL, by which you can appraise your superior as well. 12.5% executive members have no comments that the system of 360 degree appraisal should be implemented in GAIL, by which you can appraise your superior as well. 2.5% executive members disagree that the system of 360 degree appraisal should be implemented in GAIL, by which you can appraise your superior as well.
102
Performance Appraisal Table 16: Performance appraisal process in GAIL is totally transparent.
Levels
Strongly
S0-S3 S4-S7 E0-E3 E4-E9
9 8 7 6 5 4 3 2 1 0
Agree
Neither
Disagree
Agree
Agree
0 0 1 0
Disagree 6 0 8 6
5 5 9 8
nor
Strongly Disagree
3 1 3 3
0 0 2 0
S0-S3 S4-S7 E0-E3 E4-E9 Strongly Agree
Agree
Neither Agree nor Disagree
Disagree
Strongly Disagree
Analysis: 50% staff members agrees that Performance appraisal process in GAIL is totally transparent 30% staff members have no comments that Performance appraisal process in GAIL is totally transparent 20% staff members disagree that Performance appraisal process in GAIL is totally transparent 45% executive members agree that Performance appraisal process in GAIL is totally transparent
103
Performance Appraisal 35% executive members have no comments that Performance appraisal process in GAIL is totally transparent 20% executive members disagree that Performance appraisal process in GAIL is totally transparent
Table 17: Annual Confidential Report does not enable the potential assessment of an employee.
Strongly
S0-S3 S4-S7 E0-E3 E4-E9
Agree
Neither
Disagree
Agree
Agree
0 1 3 2
Disagree 6 0 10 4
4 5 8 10
nor
Strongly Disagree
4 0 1 2
0 0 0 0
10 8 6
S0-S3
4
S4-S7
2
E0-E3 E4-E9
0 Strongly Agree
Agree
Neither Agree nor Disagree
Disagree
Strongly Disagree
Analysis: 50% staff members agrees that Annual Confidential Report does not enable the potential assessment of an employee.
104
Performance Appraisal 30% staff members have no comments that Annual Confidential Report does not enable the potential assessment of an employee. 20% staff members disagree that Annual Confidential Report does not enable the potential assessment of an employee. 57.5% executive members agree that Annual Confidential Report does not enable the potential assessment of an employee. 35% executive members have no comments that Annual Confidential Report does not enable the potential assessment of an employee. 7.5% executive members disagree that Annual Confidential Report does not enable the potential assessment of an employee.
Table 18: Appraisal rating should be linked to pay.
Levels
S0-S3 S4-S7 E0-E3 E4-E9
105
Strongly
Agree
Neither
Agree
Agree
0 2 3 2
Disagree 6 4 4 2
3 3 18 7
Disagree nor
Strongly Disagree
1 0 2 2
1 0 0 0
Performance Appraisal
18 16 14 12 10 8 6 4 2 0
S0-S3 S4-S7 E0-E3 E4-E9 Strongly Agree
Agree
Neither Disagree Strongly Agree nor Disagree Disagree
Analysis: 40% staff members agrees that Appraisal rating should be linked to pay. 50% staff members have no comments that Appraisal rating should be linked to pay. 10% staff members disagree that Appraisal rating should be linked to pay. 75% executive members agree that Appraisal rating should be linked to pay. 15% executive members have no comments that Appraisal rating should be linked to pay. 10% executive members disagree that Appraisal rating should be linked to pay.
Table 19: Probation Appraisal process after Promotion is merely customary and a time consuming exercise with no significant outcome. Levels
S0-S3 S4-S7 E0-E3 E4-E9
106
Strongly
Agree
Neither
Agree
Agree
0 1 2 1
Disagree 5 4 15 7
5 3 5 2
Disagree nor
Strongly Disagree
1 1 3 2
0 0 3 0
Performance Appraisal
16 14 12 10 8 6 4 2 0
S0-S3 S4-S7 E0-E3 E4-E9 Strongly Agree
Agree
Neither Disagree Strongly Agree nor Disagree Disagree
Analysis: 45% staff members agrees that Probation Appraisal process after Promotion is merely customary and a time consuming exercise with no significant outcome 45% staff members have no comments that Probation Appraisal process after Promotion is merely customary and a time consuming exercise with no significant outcome 10% staff members disagree that Probation Appraisal process after Promotion is merely customary and a time consuming exercise with no significant outcome 25% executive members agree that Probation Appraisal process after Promotion is merely customary and a time consuming exercise with no significant outcome 55% executive members have no comments that Probation Appraisal process after Promotion is merely customary and a time consuming exercise with no significant outcome 20% executive members disagree that Probation Appraisal process after Promotion is merely customary and a time consuming exercise with no significant outcome
107
Performance Appraisal
Table 20: By making changes to the Annual Confidential Report in GAIL we can impact employee retention positively.
Levels
Strongly
S0-S3 S4-S7 E0-E3 E4-E9
Agree
Neither
Agree
Agree
0 3 3 3
Disagree 11 1 14 3
2 2 10 7
Disagree nor
Strongly Disagree
1 0 0 0
0 0 0 0
14 12 10 8 6 4 2 0
S0-S3 S4-S7 E0-E3 E4-E9 Strongly Agree
Agree
Neither Disagree Strongly Agree nor Disagree Disagree
Analysis: 35% staff members agrees that By making changes to the Annual Confidential Report in GAIL we can impact employee retention positively 60% staff members have no comments that
By making changes to the Annual
Confidential Report in GAIL we can impact employee retention positively
108
Performance Appraisal 5% staff members disagree that By making changes to the Annual Confidential Report in GAIL we can impact employee retention positively 57.5% executive members agree that By making changes to the Annual Confidential Report in GAIL we can impact employee retention positively 42.5% executive members have no comments that By making changes to the Annual Confidential Report in GAIL we can impact employee retention positive
109
Performance Appraisal
MAJOR FINDINGS
110
Performance Appraisal
From the survey results its evident that both the appraisee’s and appraisers expectation from Performance appraisal system are almost same i.e. “Determination of Promotion or Transfer” and “Salary Administration and Benefits”. Hence a single performance appraisal system can satisfy needs of both the Appraiser and appraisee. Therefore the Performance appraisal program would be designed in such a way that the appraiser would be able to analyze the contribution of the employee to the organization periodically and all the employees who have been performing well would be rewarded suitably either by an increase in the salary or a promotion. Through this the appraiser can also motivate the employees who felt that they had no growth in the organization and serves the purpose of employee development. Thus performance appraisals can be used as a significant tool for career planning. Analyzing ones own strengths and weaknesses is the best way of identifying the potentials available, rather than the other person telling. Self-appraisal is a tool to analyze oneself. One of the most important findings was that almost all the employees are satisfied with their self-rating to be a part of performance appraisal program carried out by the GAIL. The results also indicate that the there is no communication of top management plans and business goal to the appraisee. The appraisers on the other hand feel that the goals and plans have been clearly communicated to the appraisees. Communication is very essential for any system to function efficiently. Therefore the appraisers should look into this matter and see to it that the goals and plans are communicated effectively. The findings suggest that for success of Appraisal system the credibility of appraiser is of utmost importance. As per the Appraiser, a poorly conducted appraisal system would lead to •
demotivation and ineffective team work which will result in inefficient
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functioning and low productivity in the organization. Therefore, if at all they feel there is dissatisfaction among the appraisee’s they should motivate them. Achievement, recognition, involvement, job satisfaction and
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Performance Appraisal development can motivate the employees to a large extent. •
Along with this satisfactory working conditions and appropriate awards also play an important role.
Also a majority of employees were satisfied with the current appraisal system although they requested for some changes. Most of the employees were also not clear about the criteria on which ratings were given to each employee while conducting the performance appraisal. Instead of secrecy there should be openess. Because of lack of communication, employees may not know how they are rated. The standards by which employees think they are being judged are sometimes different from those their superiors actually use. Proper communication of these ratings can help the employers achieve the level of acceptability and commitment which is required from the employ. From the survey we can also derive that the appraisee’s expect a post appraisal interview to be conducted wherein they are given a proper feedback on their performance and they can also put forward their complaints if any. The appraisal should also be followed up with a session of counseling which is often neglected in many organizations. Counseling involves helping an employee to identify his strengths and weaknesses to contribute to his growth and development. Purpose is to help an employee improve his performance level, maintain his morale, guide him to identify and develop his strong points, overcome his weak points, develop new capabilities to handle more responsibilities, identify his training needs.
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CONCLUSION
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Performance appraisal is the process of reviewing employee performance vis-à-vis the set expectations in a realistic manner, documenting the review, and delivering the review verbally in a face-to-face meeting, to raise performance standards year over year through honest and constructive feedback. In the process management expects to reinforce the employee’s strengths, identify improvement areas so that one can work on them and also set stretched goals for the coming year. Effective performance management requires a good deal of face-to-face supervisoremployee interaction. By knowing the subordinates, a supervisor can steer them onto a path of greater productivity and optimized output. It is one of the most significant and indispensable tool for an organization as it helps in getting to know the people, who work for them, provides information, which helps in taking important decisions for the development of an individual and the organization.
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BIBLIOGRAPHY
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Personal Manual of GAIL(India) Limited DEW Magazine C.R. Kothari http://www.scribd.com/doc/2918255/PPTPerformance-Appraisal http://www.wikipedia.com
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ANNEXURE
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Annexure -A Questionnaire on Performance Management System in GAIL (India) Limited Name: Designation:
Date of joining: Department :
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Strongly
Agree
Agree
3 Neither Agree
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nor disagree
disagree
Instruction: Please answer all the statements. •
You are requested to be honest and frank in your replies.
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You are not required to write your name.
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The answers given by you will be kept confidential.
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Please assess the extent to which each statement describes. Performance Management System in GAIL using the above five point rating scale; darken the most appropriate rating.
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Performance Appraisal 1
The current system of appraisal in GAIL (India) is
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time consuming. The current process can be simplified by following same steps in Probation Approval and Annual
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Confidential Report. 3
Objective setting will complicate the process further and will not add value to performance Assessment system in GAIL.
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Self Assessment is a useful tool/step in the overall
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Performance. Annual Confidential report has no scope for bias.
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There is a transparent linkage between Performance □
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Management System in GAIL & other HR processes like promotion & transfer. 7
Your training needs are identified on the basis of your annual confidential report.
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Personal Development Plans (PDP) would be helpful in coaching for better performance. (Definition: PDP is a process of individual selfdevelopment and the development of others.)
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Appraisal should essentially have a step of meeting with the reporting officer, with the purpose of giving feedback on performance.
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There should be a dedicated cell focused on improving as well as implementing the performance appraisal process centrally for all work centers.
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Performance Appraisal 11
Annual confidential report in GAIL is on the basis of pre defined competencies and not on actual work
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done. 12
There is a uniform understanding & connotation of ratings used in “Annual Confidential Report” all across different work centers as well as functions. In other words what ‘outstanding’ means for work centre ‘A’ is the same for work centre ‘B’.
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You seldom escalate your disagreement on Annual confidential report rating provided by your reporting officer to the level of reviewing /accepting officer.
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Once the process of Performance Appraisal is complete the form are simply filed away.
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The system of 360 degree appraisal should be implemented in GAIL, by which you can appraise your superior as well.
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Performance appraisal process in GAIL is totally transparent.
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Annual Confidential Report does not enable the potential assessment of an employee. (Potential appraisal refers to the identification of the hidden talents and skills of a person. The person might or might not be aware of them).
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Appraisal rating should be linked to pay.
Performance Appraisal 19
Probation Appraisal process after Promotion is merely customary and a time consuming exercise
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with no significant outcome. 20
By making changes to the Annual Confidential Report in GAIL we can impact employee retention positively.
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