Professional Documents
Culture Documents
AND TECHNOLOGY
PERFORMANCE APPRAISAL
NAMES ID
ANJUM
ARTI
ASMA SETHI
MANAHIL RASHID KHATRI
0735135
SHAHBAZ
ACKNOWLEDGEMENT
We would like to thank God Almighty for providing means that enabled us to conduct the
research.
We would also like to thank Sir Jahangir for his valuable and constant support in helping
us accomplish our report.
Our warm gratitude extends towards our families who provided ample support and love
during the research.
EXECUTIVE SUMMARY
Shell employs a very effective PMS that is uniform all over the globe for all its
employees. In the report we have discussed the importance of PMS at Shell. Its process
has been highlighted with special emphasis on the Goals and Performance Appraisal
(GPA), Individual Development Plan (IDP) and Individual Performance Review (IPR).
In the last part of the report, we tagged compensation and benefits, career planning, team
work, employee relations, measurement criteria and competence based rewards with our
suggestions to further improve the PMS at Shell.
INTRODUCTION
Shell brand name enjoys a 100-year history, dating back to 1899 when Asiatic Petroleum,
began importing kerosene oil from Azerbaijan into the subcontinent. It is a global group
of energy and petrochemical companies. Currently it is operating in 140 countries and
territories and employs around 108,000 people worldwide.
Shell explores for and produces oil and gas to create essential products from them, such
as fuels and petrochemicals. Currently its exploration and production network has been
expanded across 38 countries worldwide with employees around 17,500, along with a
further 10,000 contractors and joint venture employees. Shell has also pioneered the gas
industry for more than 30 years. It’s now one of the largest equity producers of natural
gas with a fast-growing presence in the Power business.
Shell emphasizes a lot on its core values. These values are honesty, integrity and respect
which have formed the basis of its General Business Principles for 30 years and remain
as important as ever. The company is convinced that its short- and long-term business
success depends on finding environmentally and socially responsible ways to help meet
the world’s future energy needs.
The strategy of Shell is more of an upstream and profitable downstream. The company
aims to engage efficiently, responsibly and profitably in oil, oil products, gas, chemicals
and other selected businesses and to participate in the search for and development of
other sources of energy to meet evolving customer needs and the world’s growing
demand for energy.
STRATEGY ADOPTED BY HR
There is one unique strategy named as plan, carried out by HR known as ‘More Upstream
and Profitable Downstream’. This plan clarifies the functional accountabilities and has
the capability to bring any fundamental transformation within the organization. This plan
is central part of functional leadership role at Shell and is directly related to the overall
strategy.
There are four key strategic priorities that are to be undertaken by Shell across the world:
HR PRIORITIES
1. Talent Now and a Sustainable Future Supply- HR have a critical role in meeting
the immediate resourcing needs of the businesses. It ensures that needs have to be
met in 5-10 years time.
2. Strengthening Leadership and Deepening Professionalism - HR supports and
encourages leadership development at all levels.
3. Improving Individual and Organizational Performance- HR provides clear
individual goals and objectives, appraise performance, and reward superior
performance.
4. Increase Efficiency and Effectiveness of HR Systems and Processes- HR strives
for first quartile efficiency in the delivery of basic processes. In order to achieve
such efficiency, they do proper benchmarking and focus on continuous
improvement.
ROLE OF HR
All the HR business professionals work collectively as a global HR community to
maximize alignment and increase efficiency. Ulrich Model is being used as a framework
for defining the roles and activities carried out by entire HR. The various roles and
activities defined are:
• Business Player:
Attraction and recruitment processes
Leadership and talent identification and assessment
Skill pool management and talent reviews
Organizational analysis and design
Aligning business strategy with individual objectives
• Change Agent:
Strategy planning and culture assessment
Change management planning
Mergers and acquisition support
Behavioral feedback and coaching
Employee communications
Business improvement
Learning strategies
• Line/Staff Support:
Employee advocate
Performance management processes
Staff opinion surveys
Consultation
Employee issues resolution and relations
Policies and systems
Remuneration and benefits
• Administrative Expert:
Transactional activities
Shared services - outsourcing and off shoring
Payroll administration
Employee services
Job evaluation processes
Human Resource
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PERFORMANCE MANAGEMENT SYSTEM: A
GENERAL PERSPECTIVE
Alignment
An organization consists of business units, departments and divisions, each with its own
set of objectives. Alignment must exist between the objectives of the various
organizational entities and the strategic objectives of the organization itself. This
grouping must be frequently adjusted — at least quarterly — in response to new
objectives, changes in the business environment or problems with achieving current
objectives.
Aligning employees involves cascading strategic objectives down to all levels of the
workforce. This enables members of the workforce to understand how their performance
will be measured and evaluated, and also how their efforts tie into the overall strategy.
This linkage between organizational objectives and individual goals and activities is at
the core of effective performance management.
Measurement
Although all organizations measure performance, most focus on financial metrics and
meeting government regulations. An organization that only measures historical financial
performance, however, is focusing on the past rather than driving future performance.
To drive performance, one must link organizational objectives and individual employee
goals — and their associated metrics of performance — with the measurement of actual
organizational and individual performance. Measurement is of critical value in linking
pay to performance and in laying out a feedback mechanism that allows one to adjust
their strategy and tactics over time.
Reward
Linking performance measurement to rewards is the power steering that enables the
organization to drive the behaviors of the entire workforce and keep them on the
straightest path to achieving the organization’s strategic objectives.
All employees in the organization should be on a variable pay plan that is linked to their
individual performance. Although rewarding people based only on individual
performance may make for an overtly competitive culture, teamwork and collaborative
effort can be factored in to preclude unhealthy competition.
Report
Reporting is about providing timely information to executives, managers and individuals
about the performance of the organization and its people. However, for most
organizations reporting is more a matter of compliance with government regulations.
Effective reporting allows you to see the degree of objective and goal achievement and
provides a feedback mechanism that allows you to adjust your strategy, tactics, objectives
and goals over time.
Analyze
Analysis answers the why and how of performance management. The purpose of analysis
is to initiate change—changes in strategy, in tactics, in personnel, in budgets and many
other aspects of managing the enterprise.
DRIVING PERFORMANCE
In essence, effective performance management is when every part of the organization and
every person is drumming to the same beat and marching in step.
But with the leadership and commitment of senior management, becoming performance-
driven will lead to dramatic improvements in performance in financial terms, with respect
to employee productivity and morale and in the flexibility to quickly adapt to change.
The effort will be well worth it.
PURPOSE OF PERFORMANCE MANAGEMENT
Performance management has many advantages. It greatly facilitates the organization to:
• Ensure that the work plans of the employees are effectively directed towards the
strategic direction of the organization. It significantly motivates employees to
accomplish their best.
• Improve performance by establishing clear communication between the manager
and the employee about what he/she is expected to accomplish. It also provides
ongoing, constructive feedback on performance and reveals poor areas that need
improvement.
• Identify skills and abilities of each employee so that work assignments build and
reflect on employee’s strength.
• Train & develop the staff in the right way so they successfully accomplish their
work and career goals. All this is done by identifying training needs and
development opportunities.
• Formulate administrative decisions that support decision making regarding
promotions, terminations, compensation and rewards.
• Self Appraisal: when the employee is asked to evaluate his/her own work
• Peer Appraisal: staff of equal rank within the organization are asked to evaluate
the employee
• Team Appraisal: similar to peer appraisals; employees who work as a part of the
team are asked to evaluate the team work.
• Assessment centre: the employee is assessed by professional assessors using
several types of evaluation such as work simulations and actual activities
• 360-degree Appraisal: the employee’s work is reviewed by gathering input from
representatives of all the groups the employee interacts with as supervisors, peers,
subordinates and clients.
• Management by Objectives: the employee’s achievements of work objectives
that are set in collaboration with his/her supervisor are assessed.
• Combination Methods: some organizations combine different methods into their
performance management process. Some organizations include an evaluation of
competencies such as the KSAs that distinguish superior performance.
Performance Appraisal Ratings and Forms
• HR department
o Serves a policy-making and advisory role.
o Provides advice and assistance regarding the appraisal tool to use.
o Prepares forms and procedures and insists that all departments use them.
o Responsible for training supervisors to improve their appraisal skills.
o Responsible for monitoring the system to ensure that appraisal formats and
criteria comply with Equal Employee Opportunity (EEO) laws and are up
to date.
MANAGEMENT BY OBJECTIVES
Management by objectives (MBO) is a systematic and organized approach that allows
management to focus on achievable goals and to attain the best possible results from
available resources. It aims to increase organizational performance by aligning goals and
subordinate objectives throughout the organization. Ideally, employees get strong input to
identify their objectives, time lines for completion, etc. MBO includes ongoing tracking
and feedback in the process to reach objectives.
Managerial Focus
MBO managers focus on the result, not the activity. They delegate tasks by "negotiating a
contract of goals" with their subordinates without dictating a detailed roadmap for
implementation. Management by Objectives (MBO) is about setting objectives and then
breaking these down into more specific goals or key results.
Main Principle
The principle behind Management by Objectives (MBO) is to make sure that everybody
within the organization has a clear understanding of the aims, or objectives, of that
organization, as well as awareness of their own roles and responsibilities in achieving
those aims. The complete MBO system is to get managers and empowered employees
acting to implement and achieve their plans, which automatically achieve those of the
organization.
MBO Strategy
1. All individuals within an organization are assigned a special set of
objectives that they try to reach during a normal operating period. These
objectives are mutually set and agreed upon by individuals and their managers.
2. Performance reviews are conducted periodically to determine how close
individuals are to attaining their objectives.
3. Rewards are given to individuals on the basis of how close they come to
reaching their goals.
6 MBO Stages
1. Define corporate objectives at board level
2. Analyze management tasks and devise formal job specifications, which
allocate responsibilities and decisions to individual managers
3. Set performance standards
4. Agree and set specific objectives
5. Align individual targets with corporate objectives
6. Establish a management information system to monitor achievements
against objectives
Advantages
• MBO programs continually emphasize what should be done in an organization to
achieve organizational goals.
• MBO process secures employee commitment to attaining organizational goals.
Disadvantages
• The development of objectives can be time consuming, leaving both managers
and employees less time in which to do their actual work.
• The elaborate written goals, careful communication of goals, and detailed
performance evaluation required in an MBO program increase the volume of
paperwork in an organization.
BOTTOM LINE
For many organizations, becoming performance-driven might cause a cultural upheaval
that, at least in its early stages, results in turmoil, a perception of chaos and a lot of
discomfort. It can trigger turnover of long-time employees who do not like to be held
accountable for goal achievement and who feel entitled to a certain level of pay
regardless of their performance. And it might cost money as you make the initial
investments.
But with the leadership and commitment of senior management, becoming performance-
driven will lead to dramatic improvements in performance in financial terms, with respect
to employee productivity and morale and in the flexibility to quickly adapt to change.
The effort will be well worth it.
PERFORMANCE MANAGEMENT SYSTEM
AT SHELL
Being the third largest corporation in the world (Wikipedia, 2008), Shell employs a
highly proficient performance evaluation system. Performance management is an annual
activity. It facilitates the organization to plan in advance and to achieve its strategic goals.
It gives a bird’s eye view of the performance of the whole organization and aids in
tracking and steering it towards the right direction.
The upper level management is very committed towards performance management and
plays a crucial part in ensuring that appraisals are unbiased and are conducted on time.
One major reason for the commitment of upper level management towards performance
management system is that the employee’s performance is reported on a global level. A
standard appraisal system is used throughout Shell which was designed in Hague. It
aligns the organization’s vision/mission and objectives and takes into account the
company’s strategic business plans.
In Pakistan, Shell has the six departments, including: Finance, Global Functions
&Learning Advisor, Retail, Lubes & Commercial Fuels, Lubricants, Operations and S&D
& Aviation. For each department there is a separate Human Resource Accounts Manager/
HR Relationship Manager. His major duties include: building effective working
relationships with leadership teams to create significant business value, identifying where
changes are necessary and how these can be implemented effectively and representing the
interests of line managers.
The GPA is linked to Individual Development Plan (IDP) which is a plan for
development of a Shell employee in his current role as well as the next. This is also an
ongoing document which is continually updated and recorded in ‘Shell People’. IDP
facilitates in recruitment and granting promotion and is incredibly useful for personnel
responsible for resourcing and talent management. Because it helps match employees
with positions that best fit their skills and identifies potential opportunities for
development.
Goals are set on the basis of SMART technique. Business goals and individual
development goals are set during the months of January and February. A midyear review
is conducted to gauge the progress made. Feedback is given, on performance against
goals, during the end of year review. Performance is rewarded during the months of
February and March.
Preparation of meeting
Employee completes his competence self assessment, drafts his goals and reviews them.
The supervisor also reviews the employee’s competence assessment, goals and his
performance to date. He also evaluates the employee’s achievements and behavior.
Outcomes of meeting
Employee records his targets in GPA, and his plans in IDP. The supervisor reviews the
GPA and IDP, ensuring they are up to date; he completes the performance summary in
the GPA. He then ranks the employee in the IPF and prepares for the next cycle.
CONTENTS OF IDP
Strengths: includes key areas of strength that contribute to performance of the employee.
Areas for development: behaviors, skills, knowledge and / characteristics that the
employee needs to acquire or address for future success
Next job/ position option: the likely position or generic job that may be appropriate for
the employee’s next assignment.
Long term career options: likely types of generic jobs or roles for longer time frame (3-
5 years) taking Current Estimated Potential (CEP) into account
Own views and wishes: an employee’s view on his current assignment and preferences
for short and long term development.
Strengths, areas for development, actions to address development needs, next job/
position option, and long term career options are filled by the employee. Own views &
wishes and mobility are discussed with the supervisor whereas the availability date is
discussed and agreed upon in consultation with the supervisor.
In some locations, subsidized services such as sports facilities, medical & dental care and
car parking are offered. In some countries, employees are offered a chance to participate
in a Share save program. It is administered by Halifax. And allows Shell employees to
save money and invest in Royal Dutch Shell plc.
Executive remuneration supports the policies and practices for the top executives and
directors at Shell. Global benefits are responsible for the global governance and support
of retirement benefits arrangements throughout Shell. Annual leave entitlements and
maternity/paternity leave allowances are given. Career breaks and sabbaticals are also
accommodated wherever possible.
Flexible working practices are granted where necessary and operationally possible.
Employees can ‘telecommute’ and work from home. Some locations also offer flexi-time
working – enabling the employee to start his work day earlier or later to fit his needs.
Some of the actions taken to date include: advocating video or teleconferences to reduce
travel, organizing midweek meetings to avoid weekend travel, promoting an email Code
of Conduct to improve efficiency and standardizing the recognition of unavoidable
overtime work.
Special packages and support is granted to expatriates to make their relocation pleasant.
These people are immensely respected because they have a combination of analytical and
creative problem solving techniques. It’s comprehensive and contains policies from
temporary accommodation requirements to schooling.
CAREER PLANNING
New employees are placed in G scheme. They take two assignments in three year period
in two different functions. Appraisal is conducted every six months. Coaching
program is given to help the graduates so they learn the procedures of Shell.
When they successfully exit the G Scheme at SG5 or SG6, they are allowed in
the normal salary progression policy.
Career development is greatly emphasized at Shell. Line managers and employees work
together. They highlight the development framework of competency based jobs and note
the qualities necessary for the specific role of each job. The employee thus identifies his
needs and avails the career opportunities. As Shell operates in over 140 countries
employees are exposed to projects in every corner of the globe. A special career
development program was introduced for women as part of an overall strategy to
accelerate their development and progression.
The Individual Development Plan is a good way of fostering employees to plan for their
careers. It also emphasizes the importance and value of career planning.
TEAMWORK
Team work is employed to conduct appraisals. This eliminates biasness altogether or at
least ensures that it’s at a minimal level. An employee’s immediate line manager, the HR
relationship manager and the General Manager of the concerned department do the
appraisal. The final IPF score is awarded to employee based on voting by these three
people.
Team efforts in Shell can further be improved if HR has a strong base in the organization.
Since every department has an HR relationship manager, there is no separate department
for HR. this weakens the power of the HR manager when he tries to implement change. If
a separate department is formed, it will extend a good backing for the HR officer in
implementing new strategies and practices especially those that are relatively new for the
company. It will also control different areas of HR including reward management, talent
management, employee development etc.
EMPLOYEE RELATIONS
Contribution from every member is appreciated no matter their background or level. A
specific department manages Diversity and Inclusiveness (D&I) within the organization.
Its purpose is to manage D&I as a critical business activity, value the cultural and
personal differences of employees at Shell and provide a means for employees to share
personal support, learning, self-development and communication.
Employee and Industrial Relations professionals focus on the morale and motivation of
employees and how they feel about working for Shell. They also build strong
relationships with employee representatives. Communication and consultations are done
with the staff of Shell on a global level. There are various cultural similarities and
disparities between the countries where Shell operates. ER issues are solved using
different approaches but the company strengthened its global employee relations
capability so that issues are solved form a global perspective. Innovation is greatly
encouraged and so are individual priorities, ambitions and aspirations.
Shell’s hundred year successful operation its presence in 140 countries is greatly
commendable. Managing such diverse cultures must have only been possible through
quality processes, calculated progression and team work. Having a centralized
governance system that effectively governs many companies which work under it is
exceptionally praiseworthy.
MEASUREMENT CRITERIA
Goals are set using the SMART technique. Employees set goals in collaboration with
their immediate line managers. Performance is measured through Forced Ranking
Distribution.
Every two years, shell conducts a survey of its employees called the Shell People Survey.
The survey gauges the real views of all employees as to the level of inclusiveness they
experience in the organization. This way trends and needs of specific groups are
identified.
Employees are encouraged to participate in discussion forums and interactive webcasts.
This gives everyone a chance to make suggestions on improving their work environment,
to give input for policies or to address areas of concern.
Using the SMART technique to set goals is a well-organized and useful way to undergo
the said activity. Forced ranking system is an effective way of identifying laggards and
distinguishing high achievers. The benefit of the above mentioned appraisal system is
that it segments employees according to their performance. It also stops the leniency
attitude some raters have towards employees and forces them to reveal the low
performers. The benefit to the latter is that they can easily avail training facilities and
improve their performance.
If low performance continues for two years consecutively i.e. the employee gets a rating
below 1.00 (average), disciplinary action should be taken. This is because Shell provides
continuous feedback to low performers, and a lot of amount is spent on training them.
There is no reason for performance not to improve.
Self appraisal technique should be introduced for employees working in the middle level.
This will facilitate them in evaluating themselves at the end of the year as they are
responsible for their IDP. They will also get ample opportunities to defend their scores.
360o Feedback should be introduced for the upper hierarchy as they are more involved in
the strategic decisions. This way they will be assessed from the top, by peers and their
subordinates. The assessment will be made keeping in mind, how effective and beneficial
their strategies were for the company (efficiency based). It will highlight their interest in
employee development plan (development based) and also show how effectively they
implement their plans (implementation).
BUILDING COMPETENCE
Learning and development is taken very seriously at Shell. The aim is to equip an
employee with competencies and confidence that will build his professional expertise.
Special focus is given on developing leadership skills and commercial acumen. A
holistic approach is used to connect interest and challenge the development of individual
talent. From on-the-job learning and training for recognized professional qualifications to
personal development programs and ‘buddy’ schemes, Shell offers tools to develop an
employee’s skills and knowledge.
Shell recognizes that the value from formal classroom learning can be maximized when
it's blended with assignments in the workplace and face-to-face coaching while reaping
the benefits of internal and external networks. They believe this reflects best practice in
the learning world - the real innovation comes from how learners apply it for Shell’s
businesses and functions.
Employees at all levels of the business have access to personal development and training
opportunities, which help to enhance their skills and ensure they are better equipped to
compete for employment opportunities in the future. Women are encouraged to
participate in all training and development opportunities.
Motivating employees who fall under second category is also important. This issue arises
due to forced ranking distribution. The difference between the performance of A and B
graders is minimal, but the former gets more recognition, praise and rewards in
comparison to the latter. Shell should especially target B graders and introduce some
reward scheme that is purely granted on the basis of competence to encourage them.
Creating a competency based succession planning system will be very helpful for Shell.
This will constantly supply and ensure availability of managerial-ship because it will
identify people who can fit the job well.
CONCLUSION
Shell employs a very competent Performance Management System. Management of Shell
keeps a vigilant eye on all the processes related to performance of the organization. It
carries out a well defined performance evaluation process to achieve its target goals. In
addition to that, Shell offers an attractive compensation and benefits package that retains
employees for a longer period of time.
REFERENCE
Wikipedia. (2008). Royal Dutch Shell. Retrieved on April, 19, 2008 from the World Wide Web:
http://en.wikipedia.org/wiki/Royal_Dutch_Shell