A

Project Report

On

“Performance Appraisal In ONGC”

In the partial fulfillment of Master of Business

Administration ( MBA )
(Session 2009-2011)

Guided by:- Approved by:-

Mr. Amit Tripathi Mr. Sunil Mathew
Sr. HR Executive DGM (IE)
HR Department HR Department
ONGC D.DUN ONGC D.DUN

Submitted by:-
Rashmi Rana

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 CERTIFICATE

This is to certify that the project report on “Performance

Appraisal In ONGC” submitted by Ms. Rashmi Rana a regular
student of Guru Ram Das Institute of Management &
Technology Dehradun, session 2009-2011 has been carried
under my supervision and guidance. She has shown keen
interest and has put in her best efforts to make this project a
success. Thus this certificate of Excellence is hereby granted to
her for her outstanding performance.

The report has been brought out by her under my supervision.

Approved By:- Guided By:-

Mr. Amit
Tripathi
Mr. Sunil Mathew Sr. HR Executive
DGM (IE) HR Department ONGC, D.DUN
ONGC ,D. DUN

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 ACKNOWLEDGEMENT

I feel a great pleasure to acknowledge my indebtness to my

guide Mr. Amit Tripathi (Sr. HR Executive ONGC D.DUN
Uttarakhand). It is a pleasure to express my thanks and
gratitude to all the persons in ONGC Dehradun where I got the
chance, support and encouragement that enabled me to conduct
my study within the stipulated period of time.

I sincerely express my gratitude for their indigenous and able

guidance, constant encouragement and for the discussion they
had with the tenure of my work.

Thanks are also due to all members of HR Department, ONGC

Dehradun for their constant guidance.

I once again take the opportunity to convey my heartiest thanks

to all those who were connected with project directly and have
provide me with a wonderful experience and learning
opportunity.

Rashmi Rana
GRD IMT
Dehradun

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 Oil and Natural Gas Corporation Limited

OVERVIEW OF ONGC LTD.

Born as a modest corporate entity within serene Himalayan settings on
14th August 1956 as Commission, Oil and Natural Gas Corporation
Limited (ONGC), has grown into a full fledged horizontally integrated
upstream petroleum company. Today, ONGC is a flagship public sector
enterprise and India’s highest profit making corporate, which has
achieved the landmark since inception, ONGC has produced more than
600 million metric tones of crude oil and supplied more than 200 billion
cubic meters of gas, thus fuelling India’s economy.

ONGC – AN INTERNATIONAL E&P COMPANY

ONGC Group of companies compares of Oil and Natural Gas

Corporation Limited (ONGC – The Parent Company); ONGC Videsh
Limited (OVL – a wholly owned subsidiary of ONGC); ONGC Nile
Ganga BV (ONGBV – a wholly owned subsidiary of OVL) and
Mangalore Refinery and Petrochemical Limited (MRPL – a subsidiary
of ONGC).

ONGC Videsh Limited (OVL) is overseas arm of ONGC, engaged in

Exploration and Production Activities. It trans-nationally operates E&P
Business in 10 countries, making ONGC the biggest Indian
Multinational Corporation. In recent years, it has laid footholds in
hydrocarbon acreage in various countries including Ivory Cost and
Australia. ONGC Nile Ganga BV is a wholly owned subsidiary of OVL
and has equity in producing fields in Sudan.

ONGC envisages organizing Import/International

Sale of Crude Oil and Export of Petroleum Products through Tendering
Procedure for all the group Companies. However it would be restricted
to the Companies/ Firms/ Vendor registered with ONGC on its approved
Vendor Lists.

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 Oil and Natural Gas Corporation

Type State-owned Public enterprise

Industry Oil and Gas
Founded 14 August 1956
Headquarters Dehradun, Uttarakhand, India
R. S. Sharma
Key people
(Chairman & MD)
Petroleum
Products Natural gas
Petrochemicals
Revenue ▼ US$ 21.447 billion (2010)
Net income ▲ US$ 4.089 billion (2010)
Total assets ▲ US$ 37.264 billion (2010)
Total equity ▲ US$ 22.590 billion (2010)[1]
Employees 33,924 (2010)
Website www.ongcindia.com

HISTORY
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 Foundation
In August 1960, the Oil and Natural Gas
Commission was formed. Raised from mere Directorate status
to Commission, it had enhanced powers. In 1959, these powers
were further enhanced by converting the commission into a
statutory body by an Act of [Indian Parliament]

1947 - 1960
During the pre-independence period, the Assam Oil
Company in the north-eastern and Attock Oil company in north-western
part of the undivided India were the only oil companies producing oil in
the country, with minimal exploration input. The major part of Indian
sedimentary basins was deemed to be unfit for development of oil and
gas resources.

After independence, the national Government realized the

importance oil and gas for rapid industrial development and its strategic
role in defense. Consequently, while framing the Industrial Policy
Statement of 1948, the development of petroleum industry in the
country was considered to be of utmost necessity.

Until 1955, private oil companies mainly carried out exploration of

hydrocarbon resources of India. In Assam, the Assam Oil Company was
producing oil at Digboi (discovered in 1889) and the Oil India Ltd. (a
50% joint venture between Government of India and Burmah Oil
Company) was engaged in developing two newly discovered large fields
Naharkatiya and Moran in Assam. In West Bengal, the Indo-Stanvac
Petroleum project (a joint venture between Government of India and
Standard Vacuum Oil Company of USA) was engaged in exploration
work. The vast sedimentary tract in other parts of India and adjoining
offshore remained largely unexplored.

In 1955, Government of India decided to develop the oil

and natural gas resources in the various regions of the country as part of
the Public Sector development. With this objective, an Oil and Natural
Gas Directorate was set up towards the end of 1955, as a subordinate
office under the then Ministry of Natural Resources and Scientific
Research. The department was constituted with a nucleus of
geoscientists from the Geological survey of India.

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A delegation under the leadership of Mr. K D Malviya, the then
Minister of Natural Resources, visited several European countries to
study the status of oil industry in those countries and to facilitate the
training of Indian professionals for exploring potential oil and gas
reserves. Foreign experts from USA, West Germany, Romania and
erstwhile U.S.S.R visited India and helped the government with their
expertise. Finally, the visiting Soviet experts drew up a detailed plan for
geological and geophysical surveys and drilling operations to be carried
out in the 2nd Five Year Plan (1956-57 to 1960-61).

In April 1956, the Government of India adopted the Industrial Policy

Resolution, which placed mineral oil industry among the schedule 'A'
industries, the future development of which was to be the sole and
exclusive responsibility of the state.

Soon, after the formation of the Oil and Natural Gas Directorate, it
became apparent that it would not be possible for the Directorate with
its limited financial and administrative powers as subordinate office of
the Government, to function efficiently. So in August, 1956, the
Directorate was raised to the status of a commission with enhanced
powers, although it continued to be under the government. In October
1959, the Commission was converted into a statutory body by an act of
the Indian Parliament, which enhanced powers of the commission
further. The main functions of the Oil and Natural Gas Commission
subject to the provisions of the Act, were "to plan, promote, organize
and implement programmes for development of Petroleum Resources
and the production and sale of petroleum and petroleum products
produced by it, and to perform such other functions as the Central
Government may, from time to time, assign to it ". The act further
outlined the activities and steps to be taken by ONGC in fulfilling its
mandate

• 1961 - 1990

Since its inception, ONGC has been instrumental in

transforming the country's limited upstream sector into a large viable
playing field, with its activities spread throughout India and
significantly in overseas territories. In the inland areas, ONGC not only
found new resources in Assam but also established new oil province in
Cambay basin (Gujarat), while adding new petroliferous areas in the
Assam-Arakan Fold Belt and East coast basins (both inland and
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offshore).
ONGC went offshore in early 70's and discovered a giant oil field in the
form of Bombay High, now known as Mumbai High. This discovery,
along with subsequent discoveries of huge oil and gas fields in Western
offshore changed the oil scenario of the country. Subsequently, over 5
billion tonnes of hydrocarbons, which were present in the country, were
discovered. The most important contribution of ONGC, however, is its
self-reliance and development of core competence in E&P activities at a
globally competitive level.

After 1990

The liberalized economic policy, adopted by the Government of India in

July 1991, sought to deregulate and de-license the core sectors
(including petroleum sector) with partial disinvestments of government
equity in Public Sector Undertakings and other measures. As a
consequence thereof, ONGC was re-organized as a limited Company
under the Company's Act, 1956 in February 1994.

After the conversion of business of the erstwhile Oil & Natural

Gas Commission to that of Oil & Natural Gas Corporation Limited in
1993, the Government disinvested 2 per cent of its shares through
competitive bidding. Subsequently, ONGC expanded its equity by
another 2 per cent by offering shares to its employees.

During March 1999, ONGC, Indian Oil Corporation (IOC) - a

downstream giant and Gas Authority of India Limited (GAIL) - the only
gas marketing company, agreed to have cross holding in each other's
stock. This paved the way for long-term strategic alliances both for the
domestic and overseas business opportunities in the energy value chain,
amongst themselves. Consequent to this the Government sold off 10 per
cent of its share holding in ONGC to IOC and 2.5 per cent to GAIL.
With this, the Government holding in ONGC came down to 84.11 per
cent.

In the year 2002-03, after taking over MRPL from the A V Birla
Group, ONGC diversified into the downstream sector. ONGC will soon
be entering into the retailing business. ONGC has also entered the
global field through its subsidiary, ONGC Videsh Ltd. (OVL). ONGC
has made major investments in Vietnam, Sakhalin and Sudan and
earned its first hydrocarbon revenue from its investment in Vietnam.

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ONGC OBJECTIVES

 Optimize production of Hydrocarbons.

 Self reliance in technology.

 Promoting indigenous efforts in oil and gas equipment, materials

and services.

 Assist in conservation of hydrocarbons, more efficient use of

energy and development of alternative sources of energy.

 Develop scientifically oriented and technically component HR

through motivation and training.

 Environment protection.

 Generate adequate resources for investment.

SWOT ANALYSIS

 STRENGHTS

1. ONGC LTD is the leader in oil production industry.

2. ONGC has a very efficient and professional management team.
3. ONGC being an international company has sufficient resources
and capital to invest..

 WEAKNESS

1. ONGC is facing difficulties to produce oil from aging reservoirs.

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  OPPURTUNITY

1. Energy utilization of buried coal resources (700-1700M),

estimated 63BT-Equivalent to 15000 BCM.

 THREATS

1. Security of personnel and property especially crude oil continues

to be a cause of concern in certain area.
2. In some exploration campaigns company involves high
technology, high investment and high risks.

Oil and Natural Gas Corporation Limited is one of the

leading enterprises in the country with significant contribution in the
industrial and economic growth of the country. Born as a modest
corporate, ONGC has grown today, into a full fledged horizontally
integrated upstream petroleum company within house service
capabilities and infrastructure in the entire range of Oil and Gas
Exploration, Production and related activities.

Vision

“ To be global leader in integrated energy business through sustainable

growth, knowledge, excellence and exemplary governance practices”.

Mission

• Dedicated to excellence by leveraging competitive advantages in

R & D & Technology with involved people.
• Strive for customer delight through quality products & services.
• Imbibe high standards of business ethics and organizational
values.
• Abiding commitment to safety, health and environment to enrich
quality of community life.
• Foster a culture of Trust, openness and mutual concern to make a
stimulating and challenging experience for our people.

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 CORPORATE CITIZENSHIP
• Education.
• Health care and Family welfare.
• Community Development.
• Promotion of sports and culture.
• Development of infrastructural facilities.
• Development of the socially and economically weaker sections
of the society benefit and welfare.

Dominant Indian Leadership

Retain dominant position in Indian petroleum sector and enhance
India’s energy availability.

COMPETITIVE STRENGTH

• All crudes are sweet and most

(76%) are light, with sulphur percentage
ranging from 0.02-0.10, API gravity
range 26°-46° and hence attract a
premium in the market.

• Strong intellectual property base,

information, knowledge, skills and experience.

• Maximum number of Exploration Licenses, including

competitive NELP rounds. ONGC has bagged 120 of the 238 Blocks
awarded in the 8 rounds of bidding, under the New Exploration
Licensing Policy (NELP) of the Indian Government. ONGC has

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 begged 17 out of 31 blocks awarded in NELP round VIII (14 as
operator).

• ONGC owns and operates more than 22000 kilometers of

pipelines in India, including nearly 4500 kilometers of sub-sea
pipelines. No other company in India, operates even 50 per cent of this
route length.

ONGC achieves highest Reserve Accretion in last

two decades
1. Discoveries and Reserve Accretion:The Ultimate Reserve accretion
of ONGC including its Joint Ventures in domestic fields in 2009-10 has been
87.37 MTOE (Million tonne oil and oil equivalent gas) against the MoU
Target of 76.28 MTOE(114.5% achievement). Ultimate Reserve accretion in
ONGC operated fields has been 82.98 MTOE; the highest ultimate reserve
accretion in the last 20 years. Significant finds of the last fiscal are
Kasomarigaon in Assam, South Mahadevpatnam & Pennugonda in KG
onland, GK-28-1 in Kutch offshore and PER-1 in Mumbai offshore.
Kasomarigaon and Pennugonda discoveries have already been put on
production.

2. ONGC maintains Production levels: The combined Oil & Gas

production of ONGC, including OVL and ONGC’s share in PSC-JVs
registered 61.04 million tones of oil and oil equivalent gas (MTOE) during
the year 2009-10; marginally less compared to production during FY’09 i.e.,
61.23 MTOE. This year, ONGC achieved all the production targets except
that for crude oil. Crude oil production registered 24.858 MMT against the
target of 25.764 MMT (97%); whereas gas production has been 104% against
the target.

Details FY’10
Target Actual %
Crude oil (MMT) 25.764 24.858 96.48
Natural Gas 22.248 23.109 103.88
Gas sales(BCM) 16.985 18.240 107.39
Vap production 3309 3457 104.47
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Natural Gas production from ONGC operated domestic fields and OVL
fields registered increase of 2.77% and 7.25% respectively. However, gas
production from PSC JV fields registered a decline of 15.73% mainly on
account of 27% decrease in production from Tapti field and 5% decrease in
production from Panna & Mukta fields.

ORGANISATION STRUCTURE & WORK AREAS

Structure and W

C o m p a n y S e creta ry
C o o rd in a tio n
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GROWTH PLANS

IN FOREIGN COUNTRIES
ONGC expended its global operation through its subsidiary OVL, by making
sizeable capital investment in Vietnam, Sakhalin (Russia), Myanmar and
Sudan. They acquired 25% in Nile project in Sudan, 20% stake in Sakhalin
Oil field and other major project in Myanmar

IN INDIA
Technology up gradation : -Technological obsolesce is the main factor that is
faced by ONGC and to cope up with this problem it decided to employ
advanced technology-enabled like Increased Oil Recovery (IOR) and
Enhanced Oil Recovery(EOR). And another technology was Supervisory
Control and Data Acquisition (SCADA). It also adopted modern technology
called Virtual Reality Interpretation (VRI) to enhance the oil recovery.

Strategic Vision: 2001-2020

To focus on core business, ONGC has set

strategic objectives of:

• Doubling reserves (i.e. accreting 6

billion tonnes of O+OEG).

• Improving average recovery from 28

per cent to 40 per cent.

• Tie-up 20 MMTPA of equity Hydrocarbon from abroad.

The focus of management will be to monetize the assets as well as to assetise

the money.

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 Performance Highlights FY’10
 Total 21 Discoveries made in FY’10 which include 11 New
Prospects (1 Deep water, 3 Shallow water, 7 Onshore) and 10
New pools (6 onshore, 4 offshore).

 ONGC’s ultimate reserve accretion of 82.98 MTOE from

domestic acreages is highest in 20 years.

 Crude production declines 2%, from 27.13 MMT to 26.46 MMT.

Natural Gas production increases 1%, from 25.43 BCM to 25.60
BCM

 Net Profit of Q4FY’10 increases 71%, from Rs 2,207 Crore to Rs.

3, 776 Crore.

 Annual net profit of ONGC increases 4%, from Rs. 16,126 Crore
to Rs.16, 768 Crore in FY’10.

 Subsidy payout of Rs.4, 999 Crore as compared to Rs. 852 Crore

in Q4FY’09. On annualized basis, subsidy payout of Rs.11, 554
Crore as compared to Rs. 28, 225 Crore in FY’09.

 Dividend: Recommended payout of Rs. 33 per share (including

interim dividend Rs. 18 per share) aggregating to Rs. 7,058 Crore
(FY ’09- Rs,32 per share aggregating to Rs 6844 crore)

ONGC Videsh Ltd. (OVL) in FY’10

1. Production of 8.87 MTOE of O+OEG, as compared to 8.78
MTOE in FY’09

2. Profit after tax Rs. 2,115 Crore, down 25% over Rs. 2,853 Crore
in FY’09 (lower average crude oil prices in the international
market)

3. OVL led Consortium selected to acquire stake for development of

Heavy Oil field in Venezuela

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 Mangalore Refinery & Petrochemicals Ltd. (MRPL) in
FY’10

1. Refinery Crude Throughput 12.50 MMT, down from 12.59 MMT

in FY’09

2. Capacity utilization 129%; the highest among Indian Refineries.

3. Turnover Rs. 36,081 Crore, down 15% from Rs. 42,719 Crore in
FY’09 (due to fall in international prices of refined petroleum
products)

4. Profit-after-tax Rs. 1,112 Crore, down 7% Rs. 1,193 Crore in

FY’09

HUMAN RESOURCE IN ONGC

Keeping with the strong focus on continuous development, ONGC seeks
to build and nurture world class human capital for leadership in its every
business. It is essential to keep pace with the latest technology and
ensure continuous development of people. Empowerment initiatives
have become part of ONGC’s corporate rejuvenation campaign. The
company believes in continuous learning and does not hesitate to
approach external experts. ONGC has created many departments for the
HR practices. ONGC works under major groups drilling, exploration
and engineering/technical. These groups performed exceptionally well
with focus aligned with business growth. The experts in each field are
empowered to become the decision makers and are given managerial
post at basins/ assets. Human Resource at ONGC helps employee to set
target and perform well.

HR VISION
"To attain organizational excellence by developing and
inspiring the true potential of company’s human capital and
providing opportunities for growth, well being and
enrichment".

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HR MISSION

"To create a value and knowledge based organization by inculcating a

culture of learning, innovation & team working and aligning business
priorities with aspiration of employees leading to development of an
empowered, responsive and competent human capital".

HR OBJECTIVES
- To develop and sustain core values
- To develop business leaders for tomorrow
- To provide job contentment through empowerment, accountability
and
responsibility
- To build and upgrade competencies through virtual learning,
opportunities for growth and providing challenges in the job
- To foster a climate of creativity, innovation and enthusiasm
- To enhance the quality of life of employees and their family
- To inculcate high understanding of 'Service' to a greater cause.

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18
What is performance Appraisal ?

“Performance appraisal is a systematic and objective way of judging the

relative worth or ability of an employee in performing the task.
Performance appraisal helps to identify those who are performing their
assigned tasks and those who are not and the reasons for such
performance.”

HISTORY OF PERFORMANCE APPRAISAL

The history of performance appraisal is quite brief. Its roots in the early
20th century can be traced to Taylor’s pioneering Time and Motion
studies. 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.
Yet in a broader sense, the practice of appraisal is a very ancient art. In
the scale of things historical, it might well lay claim to being the world’s
second oldest profession!
The human inclination to judge can create serious motivational, ethical
and legal problems in the workplace. Without a structured appraisal
system, there is little chance of ensuring that the judgments made will
be lawful, fair, defensible and accurate.
The observations and understanding of the performance appraisal
process helped reduce a monumental task into something much more
manageable. Also, performing performance appraisals on highly
technical people is much more difficult than doing them for employees
that are performing routine or production oriented tasks. For production
employees, developmental aspects and expectations for job growth are
typically not as great. This is not always the rule. There are always a
few employees who come along who want and need developmental
planning.

MODERN PERFORMANCE APPRAISAL

Performance appraisal may be defined as a structured formal interaction

between a subordinate and supervisor, that usually takes the form of a
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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.
In many organizations – but not all – appraisal results are used, either
directly or indirectly, 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.
By the same token, appraisal results are used to identify the poorer
performers who may require some form of counseling, 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.)
Whether this is an appropriate use of performance appraisal – the
assignment and justification of rewards and penalties – is very uncertain
and contentious matter.

PURPOSE OF PERFORMANCE APPRAISAL

A major responsibility of a supervisor is that of coaching and counseling

those under his/her supervision so that employees are able to achieve
higher levels of job performance while experiencing a greater sense of
individual job satisfaction and accomplishment. The collective and
effective performance of employees assists the University in
accomplishing strategic goals and fulfilling its mission. Individual
performance appraisals serve as important tools to facilitate professional
job growth while providing relevant information to management
regarding compensation and other personnel related decisions.
Performance appraisal is an on-going process – the Essence of which is
to enhance open, honest and timely communication between employees
and supervisors. While supervisory feedback about individual
performance is best communicated at the time of the specific
observation, a formal written appraisal is required annually to reinforce,
summarize and document the informal discussions that have occurred

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over the evaluation period. A mid- year performance assessment is
recommended and is intended to enhance communication and review
progress to date on goals and action plans. Goal setting is an important
element of the performance appraisal system. Both employee and
supervisor should actively participate in this process so that meaningful
and relevant goals are developed for the subsequent appraisal period.
Goals should be explicit, measurable, attainable, and realistic and time
specific.
Performance appraisal is used for:
1. Identifying employees for salary increases, promotion, transfers
and lay off or termination of services.
2. Determining training needs for further improvement in
performance.
3. Motivating employees by indicating their performance levels.
4. Establishing a basis for research and reference for personnel
decisions in future.

PERFORMANCE STANDARDS AND GOALS

Performance standards & goals are the basis from which employee
performance is measured. Effective goals & objective must be specific,
measurable, and reasonable.
Specific Objective and precise language is essentials when developing
performance goals & objective.
Measurable Goal & objective should be written so that
accomplishment, non accomplishment con is objectively measured.
Reasonable Goals and objective should be reasonable given time
frames, circumstances and departmental unit expectations.

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Goals of the Performance Appraisal System

For supervisors, the process of performance management is one of the

most important leadership responsibilities. The performance appraisal
system has three primary goals:
1. To provide a formal means of constructive, open and honest
communication between the employee and his\her supervisor.
2. To enhance employee development through performance
feedback and through the identification of future professional
development activities.
3. To measure and document job performance as a basis for making
promotion, compensation and other personnel management
decisions.

Who Should Conduct the Appraisal?

The individual (supervisor) who has the authority to make hiring

recommendations and to assign work to the employee should be the
person responsible for completing the appraisal. Supervisors who do not
directly observe or otherwise measure the outcomes of a given
employee’s job performance should seek input from individuals who do
directly observe the employee (e.g., a crew leader, group leader, area
coordinator, other workers). This may be the case, especially in larger
departments\units. It is the responsibility of department\unit heads and
supervisors to prepare written performance appraisals and to conduct
timely appraisal meetings. If a given supervisor should delay or neglect
to conduct an appraisal, the affected employee is encouraged to initiate
such or may contact the Department of Human Resources for assistance.

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 Advantages of performance appraisal
• They provide a record of performance over a period of time.

• They provide an opportunity for a manager to meet and discuss

performance with an employee.
• Provide the employee with feedback about their performance and
how they completed their goals.
• Provide an opportunity for an employee to discuss issues and to
clarify expectations with their manager.
• Offer an opportunity to think about the upcoming year and
develop employee goals.
• Can be motivational with the support of a good reward and
compensation system.

Disadvantages of performance appraisal

• If not done appropriately, can be a negative experience.

• Are very time consuming, especially for a manager with many

employees.
• Are based on human assessment and are subject to rater errors
and biases.
• If not done right can be a complete waste of time.
• Can be stressful for all involved

Purposes of Traditional Performance Appraisals

Performance appraisal for evaluation using the traditional approach has

served the following purposes:
 Promotion, separation, and transfer decisions.
 Feedback to the employee regarding how the organization viewed
the employee’s performance.
 Evaluations of relative contributions made by individuals and
entire departments in achieving higher level organization goals.
 Reward decisions, including merit increases, promotions, and
other rewards.
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  Ascertaining and diagnosing training and development decisions.
 Criteria for evaluating the success of training and development
decisions.
 Information upon which work scheduling plans, budgeting, and
human resources planning can be used.

PURPOSE OF DEVELOPMENT PERFORMANCE APPRAISAL

The developmental approach to performance appraisal has been related

to employees as individuals. This approach has been concerned with the
use of performance appraisal as a contributor to employee motivation,
development and human resources planning.
The following additional purposes are:

 Provided employees the opportunity to formally indicate the

direction and level of employee’s ambition.
 Show organizational interest in employee development.
 Provide satisfaction and encouragement to the employee who has
been trying to perform well.

Expectations of a Manager in doing a Performance Appraisal

The following is typically expected from company managers when

doing performance appraisal:
 Translate organizational goals into individual job objective.
 Communicate management’s expectations regarding employee
performance.
 Provide feedback to the employee about job performance in light
of management’s objectives.

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  Coach the employee on how to achieve job
objectives/requirements.
 Diagnose the employee’s strengths and weaknesses.
 Determine what kind of development activities might help the
employee better utilize his or her skills improve performance on
the current job.

Benefits of Appraisal—
 Motivation and Satisfaction
Performance appraisal can have a profound effect on levels of employee
motivation and satisfaction - for better as well as for worse.

Performance appraisal provides employees with recognition for their

work efforts. The power of social recognition as an incentive has been
long noted. In fact, there is evidence that human beings will even prefer
negative recognition in preference to no recognition at all.

If nothing else, the existence of an appraisal program indicates to an

employee that the organization is genuinely interested in their individual
performance and development. The strength and prevalence of this
natural human desire for individual recognition should not be
overlooked. Absenteeism and turnover rates in some organizations
might be greatly reduced if more attention were paid to it. Regular
performance appraisal, at least, is a good startsitive influence on the
individual's sense of worth, commitment and belonging.

Training and Development

Performance appraisal offers an excellent opportunity - perhaps the best
that will ever occur - for a supervisor and subordinate to recognize and
agree upon individual training and development needs.

During the discussion of an employee's work performance, the presence

or absence of work skills can become very obvious - even to those who
habitually reject the idea of training for them!

25
Performance appraisal can make the need for training more pressing and
relevant by linking it clearly to performance outcomes and future career
aspirations.

From the point of view of the organization as a whole, consolidated

appraisal data can form a picture of the overall demand for training.
This data may be analyzed by variables such as sex, department, etc. In
this respect, performance appraisal can provide a regular and efficient
training needs audit for the entire organization.

 Recruitment and Induction

Appraisal data can be used to monitor the success of the organization's
recruitment and induction practices. For example, how well are the
employees performing who were hired in the past two years? Appraisal
data can also be used to monitor the effectiveness of changes in
recruitment strategies. By following the yearly data related to new hires
(and given sufficient numbers on which to base the analysis) it is
possible to assess whether the general quality of the workforce is
improving, staying steady, or declining.

 Employee Evaluation

Though often understated or even denied, evaluation is a legitimate and

major objective of performance appraisal. But the need to evaluate (i.e.,
to judge) is also an ongoing source of tension, since evaluative and
developmental priorities appear to frequently clash. Yet at its most basic
level, performance appraisal is the process of examining and evaluating
the performance of an individual. Though organizations have a clear
right - some would say a duty - to conduct such evaluations of
performance, many still recoil from the idea. To them, the explicit
process of judgments can be dehumanizing and demoralizing and a
source of anxiety and distress to employees. It is been said by some that
appraisal cannot serve the needs of evaluation and development at the
same time; it must be one or the other. But there may be an acceptable
middle ground, where the need to evaluate employees objectively, and
the need to encourage and develop them, can be balanced.

26
Effects on bias on Performance Appraisal

1) Frustration
When the Appraisal system is biased then the employee will
suffer from the frustration. Certain employees may be unfairly
advantaged, while others are disadvantaged, by bias effects in
the judgements of supervisors

2) Awareness Training
Supervisors need to be informed of the types of subtle bias that
can interfere with their performance as appraisers. They need to
understand that the in-group/ out-group bias, for instance,
reduces the morale and motivation of their subordinates.

3) Developing Poor Performers

Incentives, financial or non-financial, may offered to encourage
supervisors to make special efforts to help poor performers
improve. Supervisory appraisals, for example, might stress the
importance of working with poor performers to upgrade their
performance. The possibilities are extensive.

4) Counseling, Transfer, Termination

There is always the possibility that an employee who receives
poor appraisal results is in fact a chronic poor performer. No
employer is obliged to tolerate poor performance forever.
Consistently poor appraisal results will indicate a need for
counseling, transfer or termination. The exact remedy will
depend on the circumstances.

27
 PERFORMANCE APPRAISAL
SYSTEM AT ONGC
Performance appraisal report is an index of an employee’s work
performance over a given period of time. It is crucial for his or her
career growth as it indicates the strengths, weaknesses, training needs,
nature of job being performed and problems faced in work situation.

The objectives of the performance appraisal system at ONGC

are:
 To set norms and targets of work performance, as well as, to
monitor the work progress of employees.

 To facilitate placement of employees in accordance with their

suitability for different types of assignments.

 To provide an objective basis for determination of merit,

efficiency and suitability for the purpose of promotion.

 To identify areas requiring exposure for training and

development.

The performance appraisal system seeks to evaluate:

 The work performance of an employee on the present job in

relation to the expected levels of performance, both qualitative
and quantitative.
 The extent of development achieved by the employee during the
period under review.
 Evaluation of behavioral attributes, attitudes and abilities.
 Evaluation of potentials for assuming higher responsibility.

Importance of Performance Appraisal

PARs are required for manpower resource development activities like:-

• Quantification of work plan and performance

28
• Potential assessment for career growth and promotions
• Placements and Lateral shifting etc.
• Strategic assignments /board level selection in respect of senior officers
• Deputation
• Mapping developmental needs
• Talent management initiatives
• Grooming and succession planning
• Recognition & Awards
• Motivating productivity and identification of true performers.

The appraisal covers:

• Performance during the period from 1st April to 31st march

of every year.
• All regular employees of the company.
a) Non Executives.
b) Executives

The appraisal form PAR is filled in respect of all such employees who
have served for a period of at least four months in the organization
during the relevant year.

Procedure

PAR in respect of an employee is required to be assessed by levels

indicated below:

 By the reporting officer under whom employee is working.

 By the reviewing officer.
 The reporting officer for writing PAR of an employee of class
III/IV and E-0 level category will be the executive under whose
control the employee is working. The reviewing officer will be of
one grade above the grade of reviewing officer. The PAR’s in respect
of class III/IV employees duly reviewed is maintained at
Region/Institute/Headquarters group wise in the concerned
establishment section/PAR sections.
 The PAR in respect of E-0 to E-6 level executives is being
maintained in PAR departments at headquarters of R&P division.
 As regards E-7 and above all such reports which are received
from Regions/Institutes/Headquarters are maintained at CMD’s
office. The reviewing officer will be the officer to whom the
29
 executive reports for his day to day work. Review of the PAR will be
done by the executives to whom the reporting officer is responsible
for his functions. Accepting authority will be the executive higher
than the reviewing officer at different levels depending upon the
nature of the grades as per delegation of powers in PAR rules.

 The performance appraisal reports of executives of E-6 level i.e.

Deputy general manager and above will be submitted to concern
functional Director for final review and acceptance.

 The performance appraisal reports of executives of E-5 level i.e.

chief manager and equivalent will be reviewed by the
RD/ED/Nominee of the Director concerned.
 The performance appraisal of the executive upto E-4 level i.e.
manager and equivalent would be reviewed by the functional
head/GM/GGM not less than E-7.

Performance Appraisal Format for Executives

I. Personal Data (Annexure- 4)

This includes personal details of the individual being appraised.

II. Self Appraisal

In this section the appraisee is required to mention the tasks achieved in
the appraisal period including enabling and constraining factors. These
achievements are then rated by the individual itself and the appraiser.

III.A. Performance Appraisal (Annexure- 5)

Performance appraisal is done on the basis of Key Result Areas and a
certain weightage is assigned to each.

Following are the Key Result Areas:

Performance in respect to volume 40

Quality of output 30
Timeliness of jobs completed 30
The total of the score gained by the individual is noted and termed as P.

30
B. Potential Appraisal

Potential of the candidate is appraised on the scale of 1 to 5

keeping the existing role as
well as future positions in perspective.
Scale 1 to 5 is given for (1-poor, 2-fair, 3-good, 4-very good, 5-
excellent)
Potential is appraised on the basis of following traits:
· Result oriented approach
· Willingness to accept challenges
· Diligence and reliability
· Initiative
· Professional competence
· Communication skills
· Commitment and dedication
· Personal conduct and discipline
· Leadership
· Inter personal relationship
Total of score gained by an individual in this section is again noted and
termed as Q.

C. Work done for HINDI:

In this section assessment of the work done in official language
is done.

D. Overall Grade

Total score(S) is calculated as

S=a*P+b*2*Q

Where a & b are weightage for performance and potentials. This

weightage is as per the Level.

Level a b
E1 0.9 0.1
E2 0.8 0.2
E3 0.7 0.3
E4 0.6 0.4
E5 0.5 0.5
E6 0.4 0.6

The grading system

31
 A+ 95 and above
A 85 and above but less than 95
A- 75 and above but less than 85
B+ 65 and above but less than 75
B 55 and above but less than 65
C 45 and above but less than 55
D less than 45

IV.A. Assessment by Reviewing Officer

B. Training Needs:

The appraisee himself mentions the training requirements which are

then remarked by the appraiser.

C. Co- Review:

V. Moderation:
This means re- evaluation of PAR of an appraisee and the grade
awarded by the accepting authority to correct any aberrations.

VI. Assessment by accepting officer:

The accepting authority will minutely examine the observations made
by the first appraiser and the reviewing authority, and also the self
appraisal of the appraisee, and after taking due considerations of all the
aspects, determine overall grade and also comment on the total
performance.

The final grade given by the accepting authority after detailed and due
consideration to the rating by the 1st and 2nd appraisers, will be the
decisive grade of the appraisee executive. In case this final rating is
different from those of the 1st and 2nd appraiser, adequate justification
must be mentioned by the accepting authority. There must be adequate
explanation by the 1st and 2nd Appraisers and the accepting authority for
any grade assigned to the appraisee. In the absence of adequate
explanation the report will be considered incomplete and returned back
to the appraisers for confirming to the directives contained in the
instructions. At last the PAR is disclosed.

32
PAR Process (Paper PAR)

Introduction to e-PAR System in ONGC

"Electronic performance monitoring" refers to the use of technology to

monitor the employee’s performance. Many organizations have
incorporated technologies in the Performance appraisal and
management processes. The electronic and computerized systems are
being used to monitor and evaluate the performance of the employees.

E-PAR was introduced in ONGC in June 2008 for executives from E1-
E6.

33
 Need for e-PAR

1) Address the need for a transparent, multidimensional evaluation system in alignment

with industry practices.

2) Introduce Performance Contracting and objective evaluation.

3) Supplement efforts to enable speed up HR processes like Promotions,

Special Assignments, Deputation out Rewards and Incentives etc. through system.

4) Streamlining of PAR Process.

E-PAR Benefits

E-PAR shall have following distinct advantages:-

 Uniform application of the system

 Single point Data capturing and Authentication
 System driven Control and monitoring mechanism
 Reduced cycle time and Adherence to Time Schedules
 Enhanced Data Security
 Authenticity and audit trail of transaction
 Availability of online information
 Performance based Rewards and Incentives for future

34
E-PAR Process flow:

Disclosure of PAR ratings to the appraisee is done

on completion of the PAR cycle.

35
36
Research Instrument: Questionnaire
Scope of the Study: The scope of the study is limited to Dehradun.

Sample Size: 70 (E1 to E6)

Population of the Study: All E1-E6 employees in ONGC Dehradun.

Sampling Method: Personal survey method through preparation of

questionnaire

METHOD OF DATA COLLECTION

PRIMARY DATA
The primary data to be selected was based upon the response of the
respondents to the questionnaire designed. The questionnaire consists of
open ended questions.

SECONDARY DATA
The secondary data was collected by referring through manuals, journals
and intra net, web sites, and the final data was analyzed systematically
to achieve the desired result.

37
38
Q1.Are you satisfied with the existing PAR System?

60

50

40
yes
30 no
52
can't say
20

10 12
6
0

Interpretation:-

Yes 75%
No 08%
Can’t Say 17%

 75% employees are satisfied with the present PAR system.

39
Q2. Do you think PAR system increases employee motivation?

40
35
30
40
25 yes
20 no
27 can't say
15
10
5
3
0

Interpretation:-

Yes 58%
No 38%
Can’t Say 04%

 58% employees think that existing PAR system increases

motivation.

40
Q3. Are you well aware of your KRA/KPIs.

50
45
40
35
30 yes
46
25 no
20 can't say
21
15
10
5
3
0

Yes 65%
No 30%
Can’t say 5%

 65% employees are well aware of their KRA/KPIs.

Q4. Do predefined KRA/KPI render any help in filling up E-PAR.

40
35
30
25 yes
20 38 no
15 can't say
21
10
5 11
0

Yes 55%
No 30%
Can’t say 15%

 55% employees agree that predefined KRA/KPIs help in filling

up E-PAR.
41
Q5. Should promotion be purely based on performance appraisal?

45
40
35
30
yes
25
no
20
can't say
15
41
10 19
5 10
0

Yes 28%
No 58%
Can’t say 14%

 58% employees do not agree that promotion should purely be

based on performance appraisal.

Q6. Are training & development needs of executives identified by the

PAR System?
30

25

20
yes
15 no
can't say
10 29
20
5
21
0

Yes 28%
No 42%
Can’t say 30%

 42% employees disagree that training & development needs of

executives are identified by the PAR system.
42
Q7. Performance appraisal system in ONGC is well communicated.

50

40

30 yes
50 no
20 can't say

10
10 10
0

Yes 72%
No 14%
Can’t say 14%

 72% employees agree that PAR system in ONGC is well

communicated.

43
Q8. Do you think PAR process improves communication between
appraiser and appraise?

45
40
35
30
yes
25
no
20 45
can't say
15
10
5 10 15
0

Yes 65%
No 14%
Can’t say 21%

 65% employees think that PAR process improves communication

between appraiser and appraisee.

Q9. Should PAR rating be used to fix annual increments?

45
40
35
30
yes
25
no
20
can't say
15 40
10 20
5 10

Yes 28%
No 57%
Can’t say 15%
44
  As per the result 57% employees disagree that PAR rating be
used to fix annual increment.

Q10. PAR system in ONGC is equitable.

35
30
25
yes
20
35 no
15 25 can't say
10
5 10

Yes 50%
No 35%
Can’t say 15%

 50% employees agree that PAR system in ONGC is equitable.

45
Q11. Existing PAR system effectively monitors work progress
(quantitatively & qualitatively).

50

40

30 yes
no
20 44 can't say

10 14
12

Yes 63%
No 18%
Can’t say 20%

 63% employees agree that existing PAR system effectively

monitors work progress.

Q12. The existing PAR system is helpful in reducing grievance among

the employees?

46
 30

25

20
yes
15 22 30 no
18
can't say
10

Yes 32%
No 42%
Can’t say 26%

 42% employees disagree that PAR system is helpful in reducing

grievances.

Q13. Are you aware of weightage given to PAR in deriving the value of
PRP?
30

25

20
yes
15 30 no
can't say
10 25

5 15

Yes 36%
No 43%
Can’t say 21%

 43% employees are not aware of weightage given to PAR in

deriving the value of PRP.
47
Q14. E-PAR is a better system compared to paper PAR.

60

50

40
YES
30 52 no
can't say
20

10
12
6
0

Yes 75%
No 8%
Can’t say 17%

 75% employees agree that e-PAR is better than paper PAR.

Q15. DO you think there is a need of “external consultants” in PAR

system?
30

25

20
2 YES
30
15 NO
Can't say
10 15

Yes 35%
No 43%
Can’t say 22%

48
  43% employees think that there is no need of “external
consultants” in PAR system.

Q16. DO you think existing PAR system facilitates career growth of

employee.

35

30

25
20 35 yes
no
15 can't say
20
10 0
15
5

Yes 50%
No 28%
Can’t say 22%

 50% employees think that existing PAR system facilitates career

growth of employee.

Q17. Do you think PAR system encourages team spirit?

45
40
35
30
yes
25
45 no
20
can't say
15
10
15
5 10
0

49
 Yes 65%
No 14%
Can’t say 21%

 65% employees think that PAR system encourages team spirit.

Q18. Do you think E-PAR is more objective than paper par?

60

50

40
yes
30 55 no
can't say
20

10
10
5
0

Yes 78%
No 14%
Can’t say 08%

 78% employees think that E-PAR is more objective than paper

PAR.

50
Q19. The current method used in PAR system is sufficient to evaluate
the performance and potential of employees.

45
40
35
30
yes
25 41
No
20
can't say
15
19
10
10
5
0

Yes 58%
No 28%
Can’t say 14%

 58% employees think that current method used in PAR system is

sufficient to evaluate the performance and potential of employees.

51
Q20. Rate the effectiveness of PAR system in ONGC.

30

25

20 e xcellent
V.Good
15
Good
24
10 30 Average

5
6 10
0

Excellent 8%
V.Good 14%
Good 42%
Average 36%

 64% respondents find the effectiveness of PAR System has been

rated as “Good” or above.

52
53
 Major Findings

 The existing PAR system in ONGC is perceived to be effective

(64% respondents rating it as “Good or above”). It is also seen as
sufficient to evaluate the performance and potential of employees.
Majority of employees are satisfied with the existing performance
appraisal system (75%).

 Majority of respondents think that PAR system increases

employee motivation (58%). Existing PAR system in ONGC is
perceived to be equitable. 58% respondents do not feel that existing
PAR system does not reduce grievance among the employees.

 Majority of respondents find predefined KRA/KPI helpful while

filling up e-PAR. However, almost one third of respondents were
not well aware of their KRA/KPIs in the system.

 Majority of respondents feel that Promotion and Annual

Increment should not be based on PAR system (58%). It is also
seen that 43% respondents are not aware of weightage given to
PAR in deriving the value of PRP.

 42% respondents felt that training & development needs of

executives are not identified by the PAR system.

 Existing PAR system in ONGC is perceived to be well

communicated (72%). It is also seen as sufficient to monitors
work progress (quantitatively & qualitatively).

 Majority of employees think that PAR process improves

communication between appraiser and appraisee and it also
encourages team spirit (65%). It also seen as sufficient to
facilitates career growth of employee.

 E-PAR is perceived to be more objective than paper PAR.

 Majority of respondents do not find any need of “external

consultants” in existing PAR system.

54
55
RECOMMENDATIONS

The performance appraisal system of ONGC is of good quality.

Majority of employees find the existing PAR system as effective and are
satisfied.
With the introduction of new e-PAR system, the PMS is refined further.
On the basis of the responses a few steps may be considered to further
strengthen the performance appraisal system.

 The detailed feedback, covering all the parameters of PAR, should be

provided to the employees. So that they may be in a position to know
where they stand exactly and can identify their performance gaps and
prepare accordingly for the future.

Training plays a vital role in the development of an individual and

helps improve the performance. Note may be taken of the training
requirements shown by the appraisee/ appraiser.

 More predefined KRA/KPIs should be defined and to be provided in

the system to cover more jobs/ assignments.

 Relation between PAR Ratings and PRP (Performance Related Pay)

should be made communicated to the employees before beginning of
the appraisal cycle.

 E-PAR may be introduced as soon as possible for the class 3, 4 and

E-0 level, because E-PAR is perceived to be more objective than
paper PAR.

56
57
 ANNEXURE 1

QUESTIONNAIRE

Personal Profile:-

Discipline :-

Level :-

Age :-

1. Are you satisfied with the existing performance appraisal system?

a) Yes ( ) b) No ( ) c) Can’t say ( )

2. Do you think PAR system increases employee motivation?

a) Yes ( ) b) No ( ) c) Can’t say ( )

3. Are you well aware of your KRA/KPI.

a) Yes ( ) b) No ( ) c) Can’t say ( )

4. Do predefined KRA/KPI render any help in filling up e-PAR?

a) Yes ( ) b) No ( ) c) Can’t say ( )

5. Should promotion be purely based on performance appraisal?

a) Yes ( ) b) No ( ) c) Can’t say ( )

6. Are training & development needs of executives identified by the

PAR system?
a) Yes ( ) b) No ( ) c) Can’t say ( )

7. Performance appraisal system in ONGC is well communicated.

a) Yes ( ) b) No ( ) c) Can’t say ( )

8. Do you think performance appraisal process improves

communication between appraiser and appraise?
a) Yes ( ) b) No ( ) c) Can’t say ( )

9. Should PAR rating be used to fix annual increment?

a) Yes ( ) b) No ( ) c) Can’t say ( )

58
10. PAR system in ONGC is equitable.
a) Yes ( ) b) No ( ) c) Can’t say ( )

11. Existing Performance Appraisal system effectively monitors work

progress ( quantitatively & qualitatively).
a) Yes ( ) b) No ( ) c) Can’t say ( )

12. The existing PAR system is helpful in reducing grievance among

the employees?
a) Yes ( ) b) No ( ) c) Can’t say ( )

13. Are you aware of weightage given to PAR in deriving the value of
PRP?
a) Yes ( ) b) No ( ) c) Can’t say ( )

14. E-PAR is a better system compared to paper PAR.

a) Yes ( ) b) No ( ) c) Can’t say ( )

15. Do you think there is a need of “external consultants” in PAR

system?
a) Yes ( ) b) No ( ) c) Can’t say ( )

16. Do you think existing PAR System facilitates career growth of

employee.
a) Yes ( ) b) No ( ) c) Can’t say ( )

17. Do you think PAR System encourages team spirit?

a) Yes ( ) b) No ( ) c) Can’t say ( )

18. Do you think E-par is more objective than paper par?

a) Yes ( ) b) No ( ) c) Can’t say ( )

19. The current method used in PAR system is sufficient to evaluate

the performance and potential of employees?
a) Yes ( ) b) No ( ) c) Can’t say ( )

20. Rate the effectiveness of performance appraisal system in ONGC.

1) Excellent
2) Very Good
3) Good
4) Average
5) Poor

59
ANNEXURE 2

60
ANNEXURE 3

61
ANNEXURE 4

62
ANNEXURE 5

63
 BIBLIOGRAPHY

HUMAN RESOURCE MANAGEMENT (C.B.Gupta)

HUMAN RESOURCE MANAGEMENT (L.M.Prasad)

PERSONEL MANAGEMENT (K.Aswathappa)

www.ongcindia.co m

www.ongcreport.com

64
65