PROJECT REPORT

ON PERFORMANCE APPRAISAL SYSTEM PRACTISED IN ONGC

By:

Sakshi Sehgal
(M.B.A. III Sem.)

Guided By:

Mr. Manoj Berthwal

Chief Manager(P&A) ONGC Tel Bhawan Dehradun

A report submitted for the partial fulfillment for the course of Master of Business Administration IIMT ENGINEERING COLLEGE, IIMT Group of Colleges, Ganga Nagar, MEERUT

PREFACE

Efficient management of the human resource and physical resource is very important for the accomplishment of the objectives of any organization every manager has to perform certain function coordinate the efforts of people working under him. One of the important functions of the organization is Performance Appraisal. The quality of this system determines the success of any Organization to a great extent.

My research objective was to analyze the importance and effectiveness of PERFORMANCE APPRAISAL SUSTEM IN ONGC. This system has been always a major and most difficult task to study.

I have studied in the project work assign to me & it has given me the opportunity to have a close look at organizational functioning and management of the organization.

ACKNOWLEDGEMENT

Hard work always pays off in future and laziness pays off

now. Through hard work you can get success and in your success there are many people behind you directly or indirectly.
I am deeply in debited to the following people; without their support my summer training entitled at OIL & NATURAL GAS CORPORATION would have remained incomplete. I own my sincerely thanks to Mr. MANOJ BARTHWAL, Chief Manager (P&A)/Head Exploration Establishment, for his valuable guidance and his dynamic leadership. I am hearted thankful to all employees of ONGC, Dehradun who helped me at each and every step in my survey work and provided me information as and when required for preparing my report.I am also greatly thankful to Mr. P.S.ANAND (Ex. G.G.M., MUMBAI BRANCH) without whom my work would not become an entity. I would like to thank Ms. Padma Mishra, lecturer IIMT, Meerut and Mr. PANKAJ BEJALWAN, lecturer OIMT, Rishikesh, who have given their great support in conceptualizing this project. Without their help this project would not have been a success. I would also like to thank to my teachers of IIMT for their kind support. At last but not the least I deeply own thanks to my Parents, my Family, and my Friends of their loved inspiration and hearted support. I am thankful to all those who were connected with my report for providing me a wonderful experience and learning opportunity.

Sakshi Sehgal

CONTENTS
a. b. c. d. Executive Summary..8 Research Design, Methodology and Plan.9 The Concept Data Collection Sampling plan Research tool
7

 Company Profile..............................................................................14 a. History of ONGC17 b. Corporate Governance21 c. Vision & Mission46 d. HRD at ONGC....48 i. HR Vision....48 ii. HR Mission..48 iii. HR Objectives..49 iv. HR Strategies...49 v. Role of HR...50 vi. Measuring HR performances...50 vii. Core Values..54 viii. Organizational Chart56 e. ONGC Press Releases.57 f. Performance Appraisal System at ONGC...60 My Topic...67 a. IntroductionPerformance Appraisal.68 b. Why Performance Appraisal....68 c. Objectives of Performance Appraisal..70 d. Appraisal Methods...72 Findings and Analysis...81 a. Questionnaire Responses.82 b. Overall satisfaction score-Employees..101 Conclusion and Suggestions.............................................................102 a. Conclusion...103 b. Suggestion106 Annexure...........................................................................................108 Bibliography......113

Executive Summary

This project report basically deals with the measurement of the effectiveness of Performance Appraisal System (PAS), being practiced in ONGC. During this project a

study of ONGCs PAS was done and the study of satisfaction level among the employees regarding the same was carried out with the help of Questionnaire. The Questionnaire focused on the different parameters that were important for the understanding of the PAS.

The first part deals with the profile of ONGC as a whole, covering its vision, mission, HRD, and a study of PAS at ONGC. The second part gives the introduction of PAS. It covers the need, objectives and the method of PAS. The next part deals with the research design, methodology and plan that was needed to complete this project report. Finally on the basis of responses of the questionnaire and personal interaction with the employees, some findings, analysis, and conclusion have been drawn and certain suggestion have been made.

RESEARCH METHODOLOGY
The Concept: The term research methodology indicates an exhaustive and searching investigation into some accepted principle and conclusion so as to bring into light and novel facts. The first step towards any research is to identify problem and look at it objectively. Once the problem to recognized, the step for the research should be finalized as follows: 9

 Types of sample to be used for collecting the required information. Method to be used for collecting the required information Interpretation of data to get the required result through a deep analysis Provide the necessary suggestion and recommendations. Data Collection: Data collection has been done through questionnaire. At the same time discussion and interview were held with different executive groups from E1 to E6 level. Sampling Plan: Sampling Element Sampling Unit Sampling Frame Sample Size -ONGC Headquarters, Dehradun -Employees of ONGC Headquarter, Dehradun -Employees list -50

The questionnaires were distributed among the non-officers as well as officers. Research Tool: The instrument used was questionnaire, which focused on the Performance Appraisal System in ONGC. A five point rating scale was included in the questionnaire ranging from strongly agree to strongly disagree. Lots of efforts were put into convincing the employees that questionnaire is for academic purpose and their responses will be strictly kept confidential.

10

11

PURPOSE OF MAKING THE REPORT ON PERFORMANCE APPRAISAL SYSTEM IN ONGC

The main objective of the report on Performance Appraisal system was to know degree of devotions these types of programs holds in measuring employees performance and to facilitate career planning, promotions, and compensation and to help the policy makers and administrators on modifying the Performance Appraisal System. Finding Importance of PAS also assists in increasing the knowledge of employee and executives about their performances and help them to improver his or her work.

Deep study of the Performance Appraisal System was importance not only for an enterprise but also for their respective head level executives who are really engaged with development and further improvement of Human resource. That is the main reason for me to give an evaluated Report on the Performance Appraisal System.

12

PURPOSE OF MAKING THE REPORT

Being student of M.B.A. it is very essential for me to have a practical knowledge in an organization. Only to study Business Administration is not the solution of the problem that arises in practical field. There is not certain formula for any practical problem, but the aim of the study is to develop the ability at decision-making. A right decision at the right time and right place itself helps an organization to run smoothly. Only in eight month training it was not easy to understand it so deeply but still an overview could be design and hence an over all idea can be developed for the same which further improve my future existence in business and management world..

13

LIMITATION OF STUDY
The study was restricted to a period of eight months. It was not possible to go through the topic in such depth in such short pan of time. It was difficult to collect the secondary data from the organization and prepare a primary data for further requisition. The respondents were not in a position to provide accurate data as I needed. The method used may suffer from persons own attitude, behavior, and their business, which vary from person to person and can often make the information one sided.

14

COMPANY PROFILE
Securing Sustained Growth
Born as the modest corporate entity within serene Himalayan Settings on 14 th 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 Indias highest profit making corporate, which has achieved the landmark of registering a net profit of Rs. 6197.87 crore in the year 200102. Since its inception ONGC has produced more than 600 million metric tones of crude oil and supplied more than 200 billion cubic meter of gas, thus fuelling Indias economy.

To achieve this sustained growth, ONGC decided to double oil and gas reserves. In 45 years of operation, ONGC accreted six billion tones oil and oil equivalent reserves, and ONGC has drawn a plan to double these reserves in the next 20 years, Secondary the global recovery factor of ONGC is of the order of 28 percent; the target is to raise this to the level of 40 percent, over the same 20 years.

Out of the six billion tones of oil and gas reserves accretion, four billion tones are expected to come from Offshore and Deep Waters. To improve recovery factor from the existing fields, ONGC is investing Rs. 2,000 crore in 15 Redevelopment Schemes.

15

Corporate Rejuvenation Campaign

ONGC is in the process of reorganization, which is designed to focus on results, rather than activities. The concept of Virtual Corporate is introduced; wherein the Key Executives is the CEO of the sub-corporate is assigned to him. The Directors act as the Chairman of the Boards of for the sub-corporate in their charge. This process is designed to inculcate entrepreneurship and encourages the Virtual Corporate to function like a MNC.

Best-In-Class Standard
Information Technology and Communication Systems are being integrated and upgraded. A number of new projects Project PROMISE (Professional Review of Major Infocom Systems & Equipments), Project ICE (Information Consolidation for Efficiency), Project IMPETUS (Implementing Maintenance & Procurement Efforts Through Upgraded Systems) are launched. All these projects are aimed at integrating infotech resources, integrate company-wide ERP Management System and facilitate better maintenance and repair of equipment and facilities.

ONGC Videsh Limited

ONGC Videsh, the wholly owned subsidiary of ONGC concluded detail for 20 percent firm in and another 20 percent carried interest, in Sakhalin-1 project. Estimated at US $ 1.7 billion, this is the largest single foreign investment ever made by any Indian Corporate. ONGC Videsh also holds a 45 percent interest in Vietnam Offshore Gas project and the project will start production by the end of 2002.

16

ONGIO International Limited

ONGIO International Limited, a 50:50 joint venture between ONGC and IOC, has been incorporated, to provide training, consultancy and services from drilling to dispensing, in India and Abroad.

ONGC Corporate Ranking

In its annual survey (2000-01) of Asias 1000 largest companies, the Asia week magazine ranks ONGC as the 4th most profitable Oil and Gas Company in Asia. After PetroChina, Petroleum National of Malaysia and China National Offshore Oil. ONGC has been ranked 5th in the overall ranking, out of 100 Indian Company that find a place in the super hundred list of Indias best performing companies, compiled by Business India. Another leading magazine, Business Baron, has ranked ONGC as Indias 4 th most valuable company out of 500 companies best on market capitalization, as on June 2001.

17

History of ONGC
1947-1960 During the pre-independence period, the Assam Oil Company in the northeastern and Attock Oil company in northwestern 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

18

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.

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 19

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 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 20

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.

21

Corporate Governance
Introduction
ONGC is committed to provide the best standards of Corporate Governance to all the stake-holders. The Corporate Governance process in ONGC is focused on the key business objectives: 1. Creating Value, 2. Strengthening Oil Security, 3. Maximizing Return to Investors, 4. Ensuring best feasible HSE practices, and 5. Blending prudence of a State Enterprise with agility of a Trans-national.

The management must have the operational freedom to pursue the Business Goals within a definitive framework of accountability. The practice of Corporate Governance, therefore, is based on these principles:

1. Independent verification of financial reporting and reserves accounting, 2. Protection of shareholders rights and proactive investor relations, and 3.Transparent and timely disclosure of all material aspects of the Companys operations and performance.

In recognition of excellence in Corporate Governance, the Institute of Company Secretaries of India conferred the ICSI National Award for Excellence in Corporate Governance, in the public sector, for the year 2003 to ONGC.

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Board Of Directors
The Company is managed by the Board of Directors, which formulates strategies, policies and reviews its performance periodically. The Chairman & Managing Director and six Whole-time Directors manage the business of the Company under the overall supervision and guidance of the Board. The Functional Directors, Statutory Auditors, were also invited to attend the Audit & Ethics Committee Meetings, as and when required.

The Board has 16 members, comprising of 7 Functional Directors (two vacant), including the Chairman & Managing Director, 1 Director from ONGC Videsh Ltd. (vacant), and 8 nonexecutive Directors comprising of: 3 part-time official Directors (one vacant) and 5 parttime non-official Directors (one vacant), all nominated by Government of India. The Board of Directors thus, has an adequate combination of executive and non-executive Directors

Board Procedure
(A) Institutionalised decision making process: With a view to institutionalize all corporate affairs and setting up systems and procedures for advance planning for matters requiring discussion/decisions by the Board , the Company has defined guidelines for the meetings of the Board of Directors and Committees thereof. These Guidelines seek to systematize the decision making process at the meetings of Board/Committees, in an informed and efficient manner.

23

(B) Scheduling and selection of Agenda items for Board /Committee Meetings: (i) The meetings are being convened by giving appropriate notice after obtaining the approval of the Chairman of the Board/Committee. Detailed agenda, management reports and other explanatory statements are circulated in advance amongst the members for facilitating meaningful, informed and focused decisions at the meetings. To address specific urgent need, meetings are also being called at short notice. The Board is also authorized to pass Resolution by Circulation for all such matters which are of utmost urgent nature.

(ii) Where it is not practicable to attach any document or the agenda is of confidential nature, the same is placed on the table at the meeting with the approval of the C&MD. In special and exceptional circumstances, additional or supplemental item(s) on the agenda are permitted. Sensitive subject matters are discussed at the meeting without written material being circulated.

(iii) The agenda papers are prepared by the concerned officials and submitted to concerned functional Directors for obtaining approval of the Chairman and Managing Director. Duly approved agenda papers are circulated amongst the Board members by the Company Secretary.

(iv) The meetings are usually held at the Companys Registered Office in New Delhi.

(v) Presentations are made at the Board/ Committees covering Finance, Operations & Business Segments, Human Resources, Marketing and Joint Venture Operations etc. of 24

the Company before taking on record quarterly/annual financial results at the prescheduled Board/Committee Meetings.

(vi) The members of the Board have complete access to all information of the Company. The Board is also free to recommend inclusion of any matter in agenda for discussion. Senior management officials are called to provide additional inputs to the items being discussed by the Board, as and when necessary.

(C) Recording minutes of proceedings at the Board Meeting Minutes of the proceedings of each Board/Committee meeting are recorded. Draft minutes are circulated amongst all members of the Board/ Committee for their comments. The minutes of the proceedings of meetings are entered in the Minutes Book.

(D) Follow-up mechanism The guidelines for the Board and Committee Meetings facilitate an effective post meeting follow-up, review and reporting process for the action taken on decisions of the Board and Committee. Every functional Director submits follow-up Action Taken Report (ATR) on the areas of his responsibilities, once in a quarter, on the decisions/instructions of the Board.

(E) Compliance Every functional Director while preparing the agenda notes is responsible for and is required to ensure adherence to all the applicable provisions of law, rules, guidelines etc. The Company Secretary has to ensure compliance to all the applicable provisions of 25

the Companies Act, 1956, SEBI Guidelines, Listing Agreement, and other statutory requirements pertaining to capital market. A Quarterly Compliance Report confirming adherence to the applicable laws, rules, guidelines and on Corporate Governance is submitted to the Board of Directors for their review.

Board Meetings
During the year under review, the Board met seventeen times on April 22, May 9, June 10 & 23, July 26, August 16, September 11 & 24, October 28, November 21, December 16, & 29, 2003, January 30, February 7 & 27, March, 10 & 26, 2004. The minimum and maximum interval between any two Board meetings was 7 and 33 days, respectively. Composition and Attendance :

26

Non-executive directors

*Reflects Chairman/Member of only Statutory Committees, namely Audit & Ethics, Shareholders/Investors Grievance and Remuneration Committees. ** Excluding Foreign Company.

27

Notes : (i) ONGC being a PSU, all Directors are appointed/ nominated by the President of India; (ii) Directors are not related to each other; (iii) Directors do not have any pecuniary relationship with the Company. (iv) The Directorship/Committee Memberships are based on the latest disclosure received from Directors.

Strategy Meets
The Company has a practice of periodic retreats where all members of the Board, and high officials of the Ministry of Petroleum & Natural Gas discuss issues of Corporate Strategy and Policy. The 4th Strategy Meet was held during February 27-29, 2004.

Conclave
To benefit from the cumulative knowledge and experience of the elders of the ONGC family, an assembly of the past and present members of Oil & Natural Gas Commission and Board is organized every year. The 3rd Conclave was held on August 9-10, 2003.

Vichar Vishleshan
The Key Executives in charge of Assets, Basins, Services and Institutes meet periodically with the Executive Committee of the C&MD and the whole time Directors to review performance and to formulate plans. 2nd, 3rd & 4th Key Executives Meets were held at the ONGC Academy, from November 2-4, 2003, April 25-27, 2004 and May 30-31, 2004 respectively.

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Brief Resume of Directors Proposed to be re-appointed

S/Mr. Y.B. Sinha, Dr. A.K.Balyan, M.M. Chitale, Rajesh .V. Shah and U. Sundararajan, Directors, retire by rotation and seek re-appointment. Their brief resumes are as under:

Mr. Y.B. Sinha, joined the Board of ONGC as Director (Exploration) on May 5, 2000. Sh.Sinha holds a Masters degree in Geology from Lucknow University. He has experience of 37 years in ONGC. He has been involved in installation of reservoir simulation facilities and in development of the Companys exploration and exploitation strategy. He played a major role in evolving the exploration strategy for the Company and was instrumental in the transformation of the operational entities through planning of acreage specific and areas requisite exploration programme, when the NELP regime was introduced by the Government of India. He also has evaluated oil and gas fields in Russia, Sudan, and Kazakhistan. Mr. Sinha joined our Company as a field geologist and has been with us since 1966. Mr. Sinha is on the Boards of ONGC Videsh Ltd, Petronet LNG Ltd. and Petro Technical Open Software Corporation, Houston. He is member of Human Resource, Project Appraisal, Health, Safety & Environment and Policy & Planning and Mumbai High Re-development Project Committees. Also member of EPC, Shipping, Solid Cargo and Human Resource Committees of Petronet LNG Ltd. and member of Audit Committee of ONGC Videsh Ltd.

Dr. A.K. Balyan, joined the Board of ONGC as Director (Human Resources) on August, 23, 2003. He holds a Doctorate degree in Chemistry from Technische Hochshule fur Chemie, Merseburg, Germany; an alumnus of IIT, Delhi. He has thirty years of experience and had held several field and staff assignments in various disciplines 29

including Analytical Geo-Chemistry Lab, Mud Engineering, Planning, Monitoring of Exploration activities, Project Management and Basin Manager and Head of Exploration. He has been with ONGC since 1976 and prior to that was with Mr.ram Institute for Industrial Research.

Dr. Balyan is on the Boards of Mangalore Refinery and Petrochemicals Ltd., and ONGC Videsh Ltd., both subsidiaries. He is member of Human Resources, Remuneration, Project Appraisal, Health, Safety & Environment, Policy & Planning and Mumbai High Re-development Project Committees.

Mr. M.M.Chitale, a fellow member of the Institute of Chartered Accountants of India. Mr. Chitale joined ONGC board on September 11, 2003. Sh. Chitale is a practicing Chartered Accountant since 1973 and has wide and varied experience of thirty years in Finance, Accounting, Banking, Insurance and General Management. He held the position of President of the Institute of Chartered Accountants of India during 1997-98 and had been a member of the Committee for Collective Investment Scheme, Working Group on Restructuring of Weak Public Sector Banks and Company Law Advisory Committee of the Central Government. Mr. Chitale is on the Boards of IDBI Bank Ltd., E-Serve International Ltd., Deposit Insurance and Credit Guarantee Corporation, SBI Mutual Fund Trustee Company Pvt. Ltd., ASREC (India) Ltd., and Larsen & Turbo Ltd. He is Chairman of Audit & Ethics Committee and Member of Project Appraisal, Human Resource Management and Health, Safety & Environment Committees. He also holds the position of Chairman of Audit Committee of IDBI Bank, E-Serve International Ltd. & Deposit Insurance & Credit Guarantee Corporation and Member of Remuneration 30

Committee

of

IDBI

Bank

Ltd.

Mr. Rajesh V. Shah, Master in Business Administration from University of California, Berkeley and has attended programme for Management Development from Harvard Business school in 1983. Sh. Shah joined ONGC Board on September 11, 2003. Currently, he is Managing Director of Mukund Limited. Sh. Shah has served on various business councils and is a past president and has been a member of National Council of the apex Indian business body, the Confederation of Indian Industry (CII) since1986. Mr. Shah is Chairman of Human Resource Management & Shareholders/Investors Grievance Committees and Member of Audit & Ethics, Project Appraisal, Policy & Planning and Mumbai High- Re-development Project and Health, Safety & Environment Committees. He is also Member of Shareholders/Investors Grievance Committees of Hindustan Petroleum Corpn. Ltd. (HPCL) and Mukund Engineers Ltd.

Mr. U Sundararajan, former Chairman and Managing Director of Bharat Petroleum Corporation Limited, joined the Board of ONGC on September 11, 2003. He is a Fellow member of the Institute of Cost and Works Accountants of India and has experience of thirty years in petroleum industry. He is Chairman of Project Appraisal, Policy & Planning and Health, Safety & Environment Committees of the Company and is Member of Audit & Ethics, Mumbai High- Re-development Project, Human Resource Management and Remuneration Committees. He is also on the Boards of Thirumalai Chemicals Ltd. and Cochin Shipyard Ltd.

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Committees Of The Board

Board committees The Company has the following Committees of the Board: Audit & ethics committee Pursuant to the provisions of the Listing Agreement and Section 292 A of the Companies Act,1956, an Audi t & Ethics Committee of the Board with defined terms of reference, is functioning under the stewardship of Mr. M.M.Chitale, an Independent Non-executive Director. Mr. Chitale is a fellow member of the Institute of Chartered Accountants of India, and has vast experience in financial and accounting matters. Mr. U. Sundararajan and Mr. Rajesh V Shah, both Independent Non-executive Directors, having multifarious experience, are the other members of the Committee. The Company continued to derive immense benefits from the deliberation.

The Scope of the Committee includes: a. Overseeing the Companys financial reporting process and the disclosure of financial information to ensure that the financial statement is correct sufficient and credible; b. Recommending audit fees payable to Statutory Auditors appointed by C&AG and approving payments for any other services;

c. Reviewing with management the periodical financial statements before submission to the Board, focusing primarily on (i) changes in accounting policies and practices, (ii) major accounting adjustment based on management judgment, (iii) qualifications in draft audit report, (iv) significant adjustments arising out of the audit, (v) the going concern assumption, (vi) compliance with accounting standards, (vii) compliance with stock 32

exchanges and legal requirements concerning financial statements, (viii) any related party transactions i.e. transactions of the company of material nature, with promoters or the management, their subsidiaries or relatives etc that may have potential conflict with the interest of the company at large;

d. Reviewing with the management, Reports of Internal, Statutory and the Government auditors, the adequacy of internal control systems and recommending improvements to the management;

e. Reviewing the adequacy of internal audit functions, including the structure of the internal audit department, staffing, reporting structure, coverage and frequency of internal audit; f. Discussion with internal auditors any significant findings and follow-up thereon; g. Reviewing the findings of any internal investigations by the internal auditors into the matters where there is suspected irregularity or a failure of internal control systems of a material nature and reporting the matter to the Board;

h. Discussion with the Statutory Auditors before the audit commences, the nature and scope of audit, as well as have post-audit discussion to ascertain any area of concern; i. Reviewing the Companys financial and risk management policies; j. Review Ethical adherence and Corporate Governance and

principles.

Composition,

Meetings

and

Attendance

During the year, the Committee met nine times, as against minimum requirement of three times on June 4 & 23, July 26, September 10, October 28, December 29, 2003, January 30, February 7 and March 26, 2004. Director (Finance) and ED-Chief, Internal Audit are 33

the permanent invitees. The Operational Heads (Executive Directors), Statutory Auditors were also invited to attend the Audit & Ethics Committee meetings. The Company Secretary acts as Secretary to the Committee. The Chairman of the Audit & Ethics Committee was also present at the last AGM of the Company.

Remuneration committee
ONGC being a Government Company, appointment and terms and conditions of remuneration of Executive (whole-time functional) Directors are determined by the Government through the Ministry of Petroleum & Natural Gas. Non-executive Part-time official Directors (ex-officio) do not draw any remuneration. The Part-time non-official Directors receive sitting fees of Rs. 10,000/- (from 28.10.2003) and Rs.5000/- (up to 27.10.2003) for each Board/Committee meeting attended by them.

34

During the year, in view of increase in the cost of living and the changed economic scenario, reimbursement of expenses towards entertainment of official guests at the residence of Chairman & Managing Director and whole-time Directors were revised from Rs. 2500/- per month to Rs. 3750/- per month for Chairman & Managing Director and from Rs. 2000/- per month to Rs. 3000/- per month for other whole-time functional Directors. Special Personal Pay and Special Pay were resorted from the respective date of appointment to the Board Level, in case of officials inducted to the Board from below Board level positions. The Committee is headed by Mr. Sunjoy Joshi (from 28th May,2004),Joint Secretary, MOP&NG, a part-time official Director. Prior to Mr. Joshi, Mr. J.M. Mauskar, Joint Secretary, MOP&NG, was heading the Committee up to April 22,2004. S/Mr. U.Sundararajan (from 24.9. 2003), Jawahar Vadivelu (up to 11.9.2003), independent Directors, Mr. R.S.Sharma, Director (Finance), Dr. A.K. Balyan, Director(Human Resources) (from 23.8.2003) and Mr. Jauhari Lal, Director (Human Resources) (upto 30.4.2003) are/were the others members.

DIRECTORS REMUNERATION :
Remuneration of Directors for the year ended 31st March, 2004 was as follows:

35

Notes: 1. The remuneration does not include cost of medical treatment availed from the Companys own medical facilities, provision for gratuity and leave encashment. 2. Notice period of 3 months or salary in lieu thereof is required for severance of service. (b) Non-Executive Directors (Part-time non-official) Non-Executive part-time Non-official Directors are paid sitting fee at the rate of Rs.10000/- [@ Rs.5000/- up to 27.9.03] for attending each meeting of the Board and/or Committees thereof. Details of sitting fees paid during the year under review are given below:

Stock Options
The Company has not issued any Stock Options to its Directors/Employees. Equity shares Held By Directors (As on 1st June,2004) Except as stated hereunder, none of the Directors, hold any Equity Shares in the Company:

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Shareholdiner`s

or

Investors

grievance

committee

The Shareholders/Investors Grievance Committee of the Board is empowered to oversee the redressal of Shareholders/ Investors complaints/grievances pertaining to share transfers, non receipt of annual reports, dividend payments, issue of duplicate certificates, transmission(with or without legal representation) of shares and other miscellaneous complaints. The Committee also oversees the performance of the Registrar and Share Transfer Agent and recommends measures for overall improvement in the quality of investor services. It also supervises adherence to ONGC Code of Conduct for Prevention of Insider Trading in Securities.

The Committee is headed by Mr. Rajesh V. Shah, an independent non-official Director effective from 24.9.2003. Mr. Jawahar Vadivelu, an independent non-official Director was heading the Committee up to 11.9.2003. Dy. Company Secretary acts as Secretary to the Committee.

37

Composition,

Meetings

and

Attendance

During the year under review, four meetings of the Committee were held on June 23, September 10, December 15, 2003 and March 26, 2004. These meetings were attended by the members of the Committee, as under:

Divestment

by

Government

of

India

Govt. of India offered for sale of up to 142,593,300 equity shares through Book Building Process. The issue was opened on 5th March and closed on 13th March, 2004. Due to uploading of wrong file, erroneous credits were given in certain investors accounts maintained with their respective depository participants or certain genuine applicants were denied credit by M/S MCS Ltd., Registrar to the offer. Although, corrective steps were initiated immediately, but it delayed the process of crediting respective allottees account to some extent. Credit to allottees Demat account is being/was given after concurrent audit and reconciliation. To avoid investors hardships, Help lines were set up across the country to attend and settle complaints arised out of the offer for sale. Advertisements were published in leading newspapers having wide circulation, giving contact addresses including e-mail, phone & fax numbers etc and other general clarifications, for the 38

convenience of the investors. Since the above sale was made by Govt. of India from its holding, through Ministry of Petroleum & Natural Gas in co-ordination with Department of Disinvestment (MODI), therefore, for settling issues arising out of the Offer for Sale, close co-ordination is being maintained with all the intermediaries.

Investor

Relations

Cell

Due to tremendous interest shown by public at large and huge investment made by FIIs, OCBs, NRIs and other Institutional investors in the shares of the Company, offered for sale by Govt. of India, highest market capitalization, higher weightage in BSE Sensex, S&P CNX Nifty and the MSCI Index and continued increasing interest of investor community in ONGC shares, a Core Team has been constituted comprising of senior, seasoned and experienced officials chosen from various segments of the Company , headed by Director (Finance) to maintain close liaison and to share the information with investment bankers, research analysts the media, institutional investors etc. Periodic Investors Meets were also held to share the information on performance, latest development and future course of action.

Grievance

Settlement

Members complaints/ queries/ correspondence were expeditiously attended to and the replies sent generally within a period of 15 days of receipt, except in the cases that were constrained by incomplete documentation and /or by legal impediments. Similarly, no share transfer beyond 30 days was pending as on 31.3.2004, where the documents lodged were in order in all respects. All requests for de-materialization of shares are likewise processed and confirmation communicated to investors and Depository Participants 39

within

10

working

days.

During the year, the Company received 104 complaints from the stock exchanges and SEBI. All these complaints were resolved immediately. The total number of complaints/queries /correspondence received and replied/attended to the satisfaction of the shareholders was 6143. Outstanding complaints as on 31st March, 2004 were nil. Excepting complaints relating to allocation of shares in the offer for sale 2004, 435 complaints/ queries / correspondence was received from 1st April to 25th August, 2004. 33 complaints/ queries are under process of settlement and will stand resolved / attended by 10th September, 2004.

40

41

Human

Resource

Management

committee

The terms of reference include consideration of HR policies & issues and proposals for promotions to below - Board levels. Mr. Rajesh V. Shah, an independent non-executive Director is the Chairman of the Committee effective 24.9.2003. Smt. R. D. Barkataki was Chairperson up to 11.9.2003. Director (HR) is the convener of the Committee. Composition, Meetings and Attendance The Committee met four times during the year under report on April 29, September 10, November 21, 2003 and March 26, 2004. These meetings were attended by the members of the Committee, as under :

42

Project

Appraisal

committee

The Project Appraisal Committee examines and makes recommendations to the Board on projects/capital investment exceeding Rs.150 Crore. Proposals exceeding Rs.150 Crore are appraised in-house, while the proposals exceeding Rs.250 Crore are first appraised by outside technical and financial consultants. Effective from 24.9. 2003, Mr. U. Sundararajan, an independent non-executive Director is the Chairman. Prior to him the Committee was headed by Mr. J.Jayaraman upto 11.9.2003. Director (T&FS) acts as a convener of the Committee on superannuation of Mr. R.C.Gourh, Director (Onshore).

Composition, Meetings and Attendance

During the year, seven meetings of Project Appraisal Committee were held on April 22, June 09, October 16, November 24, December 15,2003 17th and 25th March ,2004. These meetings were attended by the members of the Committee, as under :

43

Share

Transfer

committee

In order to expedite the process of share transfers and other related activities, the Share Transfer Committee has been empowered to approve the requests received for share transfer/ transmission/ transposition, issue of duplicate share certificates, sub-division, consolidation, re-materialization, change of status etc. These requests are processed through the Registrar & Share Transfer Agent, M/s MCS Limited, generally once in a fortnight. The details of transfers are reported to the Board of Directors at the ensuing meeting. The Committee is headed by the Director (Finance) and the Dy. Company Secretary acts as a convener to the Committee.

Composition,

Meetings

and

Attendance

During the year, twenty seven meetings of the Share Transfer Committee were held on April 5 & 23, May 9, 20 & 26, June 10&23, July 11 & 26, August 6,18 & 27, September 8 & 26, October 21, November 13 & 27, December 16 & 29, 2003, January 14 & 30, February 7,9,21 & 26, March 15 & 26, 2004. These meetings were attended by the members of the Committee, as under :

44

Health,

Safety

&

Environment

committee

The Health, Safety & Environment Committee set forth policies on all aspects of Occupational Health, Safety & Environment Protection. Mr. U.Sundararajan, an independent non-executive Director (effective from 24.9.2003) is the Chairman of the Committee. Mr. Jawahar Vadivelu was Chairman up to 11.9.2003. Director (Onshore) acts as the convener. S/Mr. Subir Raha, Jauhari Lal (upto 30.4.2003), R.C. Gourh (upto 31.12.2003), Y.B. Sinha V.K. Sharma (up to 31.5.2004), Nathu Lal, R.S. Sharma and Dr.A.K.Balyan( from 23.8.2003), S/Mr. Sunjoy Joshi (from 28.5.2004), J.M. Mauskar (up to 22.4.2004), Smt. R.D. Barkataki (up to 11.9.2003), Dr. K.R.S. Murthy (upto 11.9.2003), S/Mr. M.M. Chitale (from 24.9.2003) and Rajesh V Shah (from 24.9.2003) are the members.

Policy

&

Planning

committee

The Policy & Planning Committee has a mandate to look into the matters pertaining to new areas of business, proposals for collaborations, Joint Ventures, amalgamation, mergers and acquisitions; commercial matters including marketing; periodic performance review of ONGC Videsh Ltd. and MRPL, both subsidiaries. The Committee is headed by Mr. U. Sundararajan, an independent non-executive Director from 24.9.2003 and by Mr. J.Jayaraman up to 11.9.2003. Mr. Y.B. Sinha, Director (Exploration) is the convener. S/Mr. Subir Raha (up to 28.5.2004), Jauhari Lal (upto 30.04.2003), R.C.Gourh (upto31.12.2003),V.K.Sharma (up to 31.5.2004), Nathu Lal, R.S.Sharma, Dr. A.K. Balyan (from 23.8.2003), S/Mr. Atul Chandra, B.K. Das (from 24.9.2003), Dr.Surajit Mitra (upto16.7.2003), S/Mr. J.M.Mauskar (upto 22.4.2004), Jawahar Vaidvelu (upto 11.9.2003), Rajesh V Shah (from 24.9.2003), Sunjoy Joshi (from 28.5.2004) are the members.

45

Other Functional committee Apart from the above, the Board may from time to time, constitute Functional Committees with specific terms of reference as it may deem fit. Meetings of such Committees will be held as and when the need for discussing the matter concerning the purpose arises. Time schedule for holding the meetings of such functional committee(s) are finalized in consultation with the Committee Members.

Procedures at Meetings Companys guidelines relating to Board Meetings are applicable to Committee Meetings as far as may be practicable. Each Committee has the authority to engage outside experts, advisers and counsels to the extent it considers appropriate to assist the Committee in its work. Minutes of the proceedings of each of the committee meeting are placed before the Board for its perusal, noting, ratification and approval, as the case may be. Minutes of the sub-committee meetings are circulated to the members of the Committee and the same are noted, ratified and approved by the Board of Directors.

Compliance Officer The Company Secretary has been nominated as the Compliance Officer.

46

Vision and Mission

CORPORATE VISION To be a word class Oil and Gas Company integrated in energy Business with dominant Indian leadership and global presence World class
To be a world class oil and gas company, ONGC is dedicated to excellence by leveraging competitive advantage in R & D and technology with involved people and imbibe high standards of business ethics and organizational values. ONGC also foster a culture of thrust, openness and mutual concern to make working a stimulating and challenging experience for our people and also strive for customer delight through quality products and services.

Integrated in Energy Business

The company strives to be integrated in energy business. This implies that the company focuses on domestic and international oil and gas exploration and production business opportunities and also creates growth opportunity and maximizes shareholder value.

47

Dominant Indian Leadership

ONGC has retained dominant position in Indian Petroleum sector and enhances Indias energy available.

HR VISION To attain organizational excellence by developing and inspiring the true potential of companys Human Capital and providing opportunities for growth, well being and

enrichment TRAINING VISION To develop excellence in Entrepreneur and Expertise

HUMAN RESOURCE DEVELOPMENT AT ONGC

48

Today, ONGC is the flagship company of India; and making this possible is a dedicated team of nearly 40,000 professionals who toil round the clock. Over 18,000 experienced and technically competent executives mostly scientists and engineers from distinguished Universities / Institutions of India and abroad form the core of their manpower. They include geologists, geophysicists, geochemists, drilling engineers, reservoir engineers, petroleum engineers, production engineers, engineering & technical service providers, financial and human resource experts, IT professionals and so on. HR has certain key roles to play in an organization. ONGC clearly defines the roles of HR in its organizational context.

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

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 at ONGC
To develop and sustain core values.

49

 To develop business leaders for tomorrow. To provide job contentment through empowerment, accountability and responsibility. 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 To build and upgrade competencies through virtual learning, opportunities for growth and providing challenges in the job.

HR Strategies of ONGC
To meet challenging demands of the business environment, focus of the HR Strategy is on change of the employees' mindset Building quality culture and resources Re-engineering and redeployment for maximizing of HR potential To build and upgrade competencies through virtual learning, Opportunities for growth and providing challenges in the job Re-strengthening mutual faith, trust and respect Inculcating a spirit of learning & enjoying challenges Developing Human Resource through virtual learning, providing opportunities for growth, inculcating involvement and exposure to benchmarking in performance

Roles of HR
50

Alignment of HR vision with corporate vision Shift from support group to strategic partner in business operations HR as a change agent Enhance productivity and performance by developing employee competency and potential

Developing professional attitude and approach Developing Global Managers for tomorrow to ensure the role of global players

Measuring HR performance
HR parameters have been incorporated in the MOU by ONGC since 1994-95, to systematically and scientifically evaluate effectiveness of HR systems, which enables and facilitates time bound initiatives.

HR parameters for MOU for 2000-2001

-Transformation of ONGC-HR as facilitator and change agent for pilot implementation at WRBC -ERP for HR-Project SHRAMIK -Training and Development -Action plan and implementation for achieving HR mission and Objectives -Roll out of Succession Planning Model for identified key position -HR Audit -IR for enhancing efficiency and productivity -Introducing the concepts of monitoring and knowledge management 51

-Conducting a climate survey to identify areas of OD interventions

A Motivated Team
HR policies at ONGC revolve around the basic tenet of creating a highly motivated, vibrant & self-driven team. The Company cares for each & every employee and has inbuilt systems to recognize & reward them periodically. Motivation plays an important role in HR Development. In order to keep its employees motivated the company has incorporated schemes such as Reward and Recognition Scheme, Grievance Handling Scheme and Suggestion Scheme.

Training & Development

An integral part of ONGCs employee-centered policies is its thrust on their knowledge up gradation and development. The Institute of Management Development, which has an ISO 9001 certification, along with 7 other training institutes, play a key role in keeping our workforce at pace with global standards.

The Institute of Management Development is the premier nodal agency responsible for developing the human resource of ONGC. It also focuses on marketing its HRD expertise in the field of Exploration & Production of Hydrocarbons. ONGCs Sports Promotion Board, the Apex body, has a Comprehensive Sports Policy through which top honors in sports at national and international levels have been achieved.

52

The annals of leading companies of the world bear testimony to the belief that training can truly transform the complexion and business activity of an organization. The Croton Ville experience of General Electric (GE) holds many lessons how Leadership Focuses took company to strength. In this backdrop, training has to be viewed Transformation Engine and not as a routine exercise.

ONGC Academy:

Oil And Natural Gas Corporation Ltd. (ONGC) is a highly capital and technology intensive organization. It is on cross roads of transformation from a fully protected, monopolistic economy to a market driven liberalized and competitive setup. With the advent of New Exploration Licensing Policy, the Petroleum Sector has been opened for the private and multinational petroleum companies. ONGC has to be competing with other private operators and maintain its leading position. This requires adoption of very progressive and comprehensive HRD policies to sustain and survive me the new economic scenario. The dynamic manpower with updated knowledge and skills and positive mind frame can only make ONGC a dynamic and vibrant organization. Only the

53

competent and motivated people help achieve the competitive edge and enable the organization to achieve its business goals. Human Resource Development is a continuous process and to ensure continuous development of its vast human capital. The HRD efforts are based on our strong beliefs;

Human Resource has a boundless potential An individual who ceases to learn ceases to grow The organizational excellence is achievable through the excellence of human Resource

Keeping this in view, the HRD policy and strategies have been designed and implemented throughout the Organization to harness the boundless potential of human capital and make it a vibrant and learning organization.

Project-Shramik
To move towards world-class systems, processes and practices, a project for integrated System of Human Resource Automated Management Information for KAIZEN

(SHRAMIK) based on software platform SAP R/3 has been launched which is an attempt to address key issues in HRM through comprehensive process re-engineering and remodeling of HR functions.

Participative-Culture
Policies and policy makers at ONGC have always had the interests of the large and multidisciplined workforce at heart and have been aware of the nuances and significance of

54

cordial Industrial Relations. By enabling workers to participate in management, they are provided with an Informative, Consultative, Associative and Administrative forum for interactive participation and for fostering an innovative culture.

Core Values
A task force was constituted to identify 5 core values in ONGC along with their attributes and desired behavior associated with them. These core values have been constituted in the following table: S.No 1 Core Values Sense of Belonging Attributes and Desired Behavior on job Commitment, loyalty, sense of ownership of the job and company properties, improvement in personal work areas as a self starter, ensuring quality in individual work and value 2 Integrity addition. Personal/Professional integrity by strictly abiding by rules & regulations, 3 Team Spirit processing/deciding cases in an

unbiased/dispassionate way, sense of ethics in behavior. Working in groups, trust and openness, cooperation, communication, sharing knowledge and information,

collective learning, target consciousness, cost and quality 4 Discipline consciousness. Punctuality, work ethics, dress code, self discipline as a model to others, enforcing discipline in a fair and firm Social Responsibility manner. Caring of society and environment, projecting a lofty image of ONGC to society.

55

These core values are those that establish ONGC at a place where it is right now. These are not just values but are a world for an ONGCian, as a Sense of Belonging, Integrity, Team Spirit, Discipline and Social Responsibility set out a framework for effective and efficient working of ONGCs operations.

ORGANIZATIONAL CHART
Fig A.

56

ONGC Press Releases

ONGC Hazira Plant bags OISD Safety Award November 16, 2006

57

The Hazira Gas-Processing Plant of Oil and Natural Gas Corporation Ltd. (ONGC) has bagged the prestigious Oil Industry Safety Award for 2005-06. The award was announced by Oil Industry Safety Directorate under the Ministry of Petroleum & Natural Gas.

ONGC and Hindujas formalize pact to pursue LNG,Oil and Gas opportunities November 08, 2006 Oil and Natural Gas Corporation Ltd. (ONGC) and Hinduja Group, today at New Delhi, signed a Memorandum of Understanding to form Joint Ventures to pursue global opportunities in Liquefied Natural Gas (LNG) and linked E&P business. The collaboration will leverage the E&P expertise of ONGC and the business-relationship advantage of the Hinduja Group in the hydrocarbon-rich Middle East, with business prospectivity benefits to both entities.

ONGC and Hindujas get close to pursue LNG-related opportunities November 07, 2006 ONGC has entered into a pact with Ashok Leyland Project Services (ALPS) of the 15 billion USD Hinduja Group, to form Joint Ventures to pursue global opportunities in Liquefied Natural Gas (LNG) and linked E&P business.

Highlights of 2nd Quarter Results of Mangalore Refinery and Petrochemicals Ltd. (MRPL) October 31, 2006 Abnormal Inventory losses depress Financial Results despite Highest-ever 58

ONGC Release on Q2 results October 19, 2006 ONGC maintains growth in H1 (FY-07) results, registers 22 % increase in Revenue, 11 % increase in Net Profit, despite 78 % increase in Subsidy Discount

MRPL pays dividend to HPCL October 5, 2006 Mr. L. K. Gupta, Director (Finance), Mangalore Refinery and Petrochemicals Ltd. (MRPL), a subsidiary of Oil and Natural Gas Corporation Ltd. (ONGC) today, handed over to Shri C. Ramulu, Director (Finance), Hindustan Petroleum Corporation Ltd. (HPCL), the Dividend Cheque of Rs.20,80,07,463/- towards dividend for the year 200506, on 297153518 Equity Shares of HPCL in MRPL, representing HPCL's 16.95% Equity in MRPL.

Monetization of Marginal fields a strategic move by ONGC September 27, 2006 ONGC Signs Service Contract for Development of Offshore Marginal Fields with Consortium of Prize Petroleum, HPCL and Trenergy.

OVL Signs MoU with INTEVEP, Venezuela September 26, 2006

59

ONGC Videsh Limited (OVL) signed a Memorandum of Understanding (MoU) with INTEVEP, S.A., a subsidiary of National Oil Company of Venezuela, PDVSA for Skill Development in various aspects of exploration and production on September 11, 2006.

ONGC - jointly with Sinopec - acquires producing Colombian Oil Assets September 21, 2006 A 50:50 joint venture - comprising a subsidiary of ONGC Videsh Ltd. (ONGC-VL) and a subsidiary of Sinopec International Petroleum Exploration and Production Corporation (SIPC) - has acquired Omimex de Colombia Ltd. (Omimex), from Texas-based Omimex Resources, Inc.

ONGC shareholders approve Bonus Shares, Highest-ever Dividend for FY-06 September 19, 2006 At the 13th AGM of the company held today (19th September 2006) at New Delhi, the significant Agenda items approved by the shareholders relate to final approval of the earlier Board recommendations for (a) Issuance of Bonus Shares in the ratio of one share each against two shares held; and (b) final dividend of 200% (in addition to the interim dividend already paid at 250%) for the fiscal year 2005-06.

PERFORMANCE APPRAISAL SYSTEM IN ONGC

60

In ONGC, the concerning rules are called Employee Performance Appraisal Rules 1995.

The performance Appraisal system in ONGC 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 potential for assuming higher responsibility

TITLE:
These rules will be called Oil and Natural Gas Corporation Ltd.-Executive Performance Appraisal Rules, 1995.

APPLICATION:
These rules shall apply to all executives in E1 to E6 grades, belonging to different cadres of ONGC including its subsidiaries and associated offices, if any. All executives on deputation to ONGC will also be governed by these rules.

DEFINATION OF EXECUTIVE:
An executive is a person employed under the authority of ONGC in any of the executive grades E1 and above but shall not include Directors or any of the other person appointed by the President of India, for any of the offices in ONGC or its subsidiaries and associated offices. 61

APPRAISAL YEAR:
The appraisal period is 12months of financial year i.e. 1 st April of a year to 31st March of the succeeding year.

APPRAISEE:
An Appraisee is an executive who has worked under the direct control and supervision of other executive for a minimum period of 4 months within time span of 1st April-31st March (12 months) in an Appraisal year.

APPRAISERS:
There are two levels of Appraisers:The First Appraiser, also called Reporting Authority, means an executive under whose direct control and supervision the appraisee operates. In case of seconded appraisee, immediate functional senior executive (who may be equal in status to the 1 st appraiser) could be the joint appraiser with the Reporting Authority, and he would only record, whether or not, he agrees with the observation of the first Appraiser.

ACCEPTING AUTHORITY:
A very senior officer who is designated under the Rules to re-look at the performance of the Appraisee, and review the observations of the first and second Appraisers is an Accepting Authority. He would finally determine and evaluate the performance of the Appraisee. In case of disparity between his assessment and that of first and second appraisers, he has to record the basis of his revised assessment. He is expected to record

62

specifically his comments in case of overall performance grading A+ or D, and low score for personality traits, by either of the earlier two Appraisers.

APPELLATE AUTHORITY:
Project General Managers, Regional Directors, Group General Managers and Company Directors and Chairman-cum-Managing Director, would be Appellate Authorities to take the decisions on representations of different levels of appraisee executives. They would also take the final decision on the evaluation of the performance of the appraisee in special cases.

ROLES AND RESPONSIBILITIES OF THE REPORTING AUTHORITY:

The overall performance classification in grades is to be determined by examining both a) Performance and b) Personality of the appraisee. The parameters of this task are listed in part II of the PAR format in blocks A, B, C, D, E, and F. In evaluating performance (block A) due consideration is to be given to the benchmarks indicate therein and one numerical block only is to be ticked. In respect of the personality traits in blocks B, C, D, E, and f, only one numerical block is to be ticked after considering the benchmarks indicated therein.

SPECIAL COMMENTS BY REVIEWING OFFICE:

After the detailed analysis of performance/personality traits by the Reporting office, the Reviewing Officer is required to offer special comments (no numerical values) in respect of few special items like integrity, professional potential for growth and the like. Specific areas/functions for potential growth should be mentioned.

63

OVERALL ASSESSMENT BY ACCEPTING AUTHORITY:

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

THE GRADING SYSTEM:

The grading system in ONGC is based on Graphic Rating System method of performance appraisal. It is perhaps the most commonly used method. Under this method a printed form is used to evaluate the performance of the employee. A variety of traits may be used in these types of rating devices, the most common being the quantity and quality of work.

In ONGC,s performance appraisal form the block numerical values have been assigned to assist the first appraiser in making an overall assessment. The overall total score for determining a grade is merely a guide and the final grade may be at variance with the total score. The second appraiser i.e. the Reviewing Authority and the Accepting Authority, have to take an overall view, both of the performance and the personality of the appraisee, while determining the FINAL GRADING. The Accepting Authority arrives at the Final Grading by judiciously weighing the assessment of Reviewing Authority, which may belong to functional discipline of the appraisee along with the detailed assessment of the Reporting Authority.

64

The overall rating in grades in respect of appraisals would be as under: A+ A B C D Exceptional (rare occasions) Top Performer Very Good Adequate Inadequate

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.

The Grades
The performance categories are defined as follows: EXCEPTIONAL (A+) This is a person whose job performance and personality attributes are clearly remarkable. This person meets or exceeds Companys highest standards and achieves extra ordinary results in extra ordinary circumstances. TOP PERFORMER (A) This is some one whose job performance is not worthy and he makes valuable contribution to the organization. He does not have any negative personality attributes.

GOOD (B) This is an individual whose performance consistently meets companys expectations. He is above average.

65

ADEQUATE (C) This is the person whose overall performance meets the basic requirements of the job, and the basic targets. INADEQUATE (D) This is the person who needs to improve his or her performance and has not achieved results in spite of guidance and counseling by appraisers.

Moderation
This means re-evaluation of the PAR of an appraisee and the grade awarded by the accepting authority to correct any aberrations. The head of the personnel department at the region i.e. G.M. (P&A) will review the PARs of the executives upto E6 level, and advise the regional director in consultation with the functional head (which has to be recorded in the PAR) will have authority to moderate PARs as under:

All PARs which are graded A+ and D Cases referred by General Manager (P&A) of monitoring. the regions, on the basis of

The moderation is based on Forced Distribution Method of Performance Appraisal. Under this system the rater is asked to appraise the employee according to a predetermined distribution scale. The raters bias is sought to be eliminated here because workers are not placed at a higher or lower end of the scale.

66

The designated authority for moderation has special responsibility to ensure that by and large, the final grading of PARs of executive (E4 to E6) of various disciplines conform to the broad pattern indicated below:

1. Exceptional(A+) 2. Top Performer(A) 3. Very Good(C) 4. Adequate 5. Inadequate

5% 20% 50% 20% 5%

10%

70%-85%

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INTRODUCTION: - PERFORMANCE APPRAISAL

68

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 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. (Organization needs 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 a very uncertain and contentious matter.

Why Performance Appraisal?

Performance appraisal is a vehicle to: -(1) Validate and refine organizational actions (e.g. selection, training); and (2) Provide feedback to employees with an eye on improving future performances.

Validating and refining organizational actions

69

Employee selection, training and about just any cultural or management practicesuch as the introduction of a new pruning method or an incentive pay programmay be evaluated in part of obtaining worker performance data. The evaluation may provide ideas for refining established practices or instituting young ones. Data from performance appraisals can also help management (1) plan for long term staffing and worker development, (2) raises the pay or give other rewards, (3) set up an employee counseling session, or (4) institute discipline and discharge procedure.

Employee need for feedback

Although employees vary in their desires for improvement, generally people want to know how well they are performing. People need positive feedback and validation on a regular basis. Once an employee has been selected, few management actions can have as positive an effect on worker performance as encouraging affirmation. These are, in effect, good-will deposits, without which withdrawals cannot be made. This does not mean you should gloss over areas needing improvement. When presented in a constructive fashion, worker will often be grateful for information on how to improve shortcomings. Such constructive feedback, however,can happen only within the context of listening to and caring about the person. In general, supervisors who tend to look for employees positive behavior and do so in a sincere, non-manipulative way will have less difficulty giving suggestion.

Feedback may be qualitative or quantitative. Qualitative comments are descriptive, such as telling the employee you appreciate the timeliness and quality of his work. In contrast,

70

quantitative feedback is based on numerical figure, such as percentage of successful project that have taken some researches feedback is particularly useful when employees have an achievement objective.

Objective of Performance Appraisal:

Effective Performance Appraisal System content two basic systems operating in congestion: an evaluation system and a feedback system. The main aim of the evaluation system is to identify the performance gap (if any). This gap is the shortfall that occurs when performance does not meat the standard set by organization as acceptable. The main aim of the feedback system is to inform the employee about the quality of his or her performance. However, the information flow is not exclusively one way. The appraisers also receive feedback from the employee about job problems, etc. One of the best way to appreciate the purpose of performance appraisal is to look at it from the different viewpoints of the main stakeholders: the employee and the organization.

Employee Viewpoint
From the employee viewpoint, the purpose of performance appraisal is four fold. (1) Tell me what you want me to do. (2) (3) performance. (4) Reward me for doing well. Tell me how well I have done it. Help me improve my

71

Organizational Viewpoint
From the organizational viewpoint, one of the most important reason for having a system of performance appraisal is to establish and uphold the principle of accountability.

For decades it has been known to researchers that one of the chief causes of organizational failure is non-alignment of responsibility and accountability. Nonalignment occurs where employees are given responsibilities and duties, but are not held accountable for the way in which those responsibilities and duties are performed. What typically happens is that several individual or work units appear to have overlapping roles.

To overlap allowsindeed actively encourages each individual or business unit to pass the buck to the others. Ultimately, in the severely non-aligned system, no one is accountable for anything. In this event, the principle of accountability breaks down completely. Organizational failure is the only possible outcome.

In cases where the non-alignment is not so severe, the organization may continue to function, albeit inefficiently. Like a poorly made or badly tuned engine, the non-aligned organization may run, but it will be sluggish, costly and unreliable. One of the principle aims of performance appraisal is to make people accountable. The objective is to align responsibility and accountability at every organizational level.

APPRAISAL METHODS:

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Performance Appraisal Technique: (1)Individual evaluation Methods -Confidential Report

-Essay evaluation -Critical Incidents -checklists -Graphic Rating Scale -BARS -Forced choice method -MBO

(2) Multiple-person Evaluation Methods

-Ranking -Paired Comparison -Forced Distribution

(3)Other Methods
-Performance Test -Field Review techniques

Here are some key steps management can take towards achieving effective performance appraisalone of that can be used to validate the selection process as well as to make decisions about pay or promotions:

1. 2. 3. 4. 5. 6.

Select what performance data to collect Determine who conducts the appraisal Decide on a rating philosophy Overcome rating deficiencies Create a rating instrument Deliver useful information to employees

1. Select what performance data to collect

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One way to classify on-the-job worker behavior is by considering the three ps productivity (What was done), personal traits (how it was done, conduct), and proficiency (skills). Productivity can be measure in terms of specific performance accomplishments. For example, reducing the cost of some project without compromising the quality. Personal Traits such as motivation, willingness to take criticism, cooperation, initiative, dependability, and appearance (dress and grooming) may be considered. Personal trait ratings are useful, even though they sometimes say more about how supervisors get along with an employee than how well the employee performs on the job.

When personal traits are considered as part of a performance appraisal, specific characteristics should be related to the job. Often, a personal trait issue can be translated into an achievement. Instead of talking about employee dependability (personal trait), for instance, one may want to address how well an employee reports on assignment completions (productivity). Proficiencyskills, knowledge, and abilityplays an important role in employee performance. When appraisals address employee proficiency factors, they help assure employee interest I overcoming deficiencies that may be blocking future performance or growth. Over-emphasis on personal traits may increase compliance at the expense of both creativity and performance. Stressing achievement over personal traits may lead to a philosophy where the end justifies the meansno matter how dysfunctional or unethical the behavior.

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2. Determine who conducts the appraisal

Input into the appraisal of worker performance may come from many sources including the employee, co-workers, supervisors, subordinates, or even persons outside the organization. Ratings from multiple sources usually yield more reliable performance appraisal.

Employee. Usually, but not always, the employee has a good understanding of his daily performance and how it can be improved. Employees can be the most important persons in the evaluation process. Nevertheless, employees have a vested interest in making positive comments about their own performance, and no matter how motivated they are, can usually benefit from outside evaluation.

Co-workers. At times co-workers have a better grasp for a colleagues performance than the supervisor, but co-worker evaluations have a tendency to be lenient. Sometimes he is particularly hard on a disliked worker.

Supervisor. Performance appraisal data obtained from the immediate supervisor is the most common rating source. Supervisors are often in the best position to give workers an honest evaluation. The danger in supervisory evaluation is the substantial amount of power and influence wielded, often by the hand of a single rater.

Subordinate. Formal evaluation by subordinates is unusual, although from time to time subordinates may be asked for input into the evaluation of their supervisor. When subordinates have an input into their supervisors evaluation, supervisors have been 75

known to improve their interpersonal relations and to reduce management by limitation. Issues of anonymity and adequate sampling of subordinates may be important in traditional appraisals.

Outside the organization. Evaluations by outside clientele may be useful in instances when there s much personal contact with outsiders or when the person being evaluated knows more about aspects of the job than the subordinate or supervisors.

3. Decide on a rating philosophy

Performance Appraisal data can also be classified according to whether employees are compared against others or are rated against a standard.

Comparison against others. Normally, when comparing employees against each other, a few employees end up at the top and the few at the bottom in what is known as a normal distribution curve. The majority end up somewhere in the middle. Where the employee is ranked depends on how a person performs in comparison to others.

The principle advantage of the comparison method is preventing raters from placing all employees in one category. Two advantagesespecially when very few workers are involvedinclude assuming (1) employees fall in the normal distribution (there may be four excellent performers in a group of five, or none in a group of three), (2) there are similar differences in performances between two adjacent employees, for instance, between those ranked 1 and 2 and those ranked 4 and 5.

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Rating against a standard permits a supervisor to classify employee performance independently from that of other employees. Both supervisor and employee have a reference point for accurately looking at an employees long term performance growth. Ratings against a standard do not preclude comparisons. While employees may typically compare themselves to others, there is little to be gained by having he organization promote such comparisons. They are likely to create envy, vanity, and dysfunctional competition. In a healthy organization, one employees success need not mean anothers failure. If all can succeed, it will be much better for the organization.

4. Overcome rating deficiencies

Supervisory valuations often suffer from numerous rating deficiencies: One particularly good or poor trait may contaminate other performance areas considered in the evaluation.

Once a worker is classified as a poor performer, it may take a long time for a supervisor to notice that the worker has improved.

Supervisors tend to remember events more recent to the evaluation. Workers, realizing this may strive to improve performance as time for appraisals near. Supervisors may tend to rate workers as average, especially when rating forms require a written justification for a high or low rating. Others may tend towards being either overly strict or lenient. Lenient raters may later appear to contradict themselves (e.g. when a worker is disciplined or does not get a raise).

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Raters may also be influenced by an employees personal attributes such as national origin, level of education, union membership, philosophy, age, race, gender, or even attractiveness.

Physical Attractiveness Studies shows that attractive people are often judged to be more intelligent and have other positive qualities. In a study, for instance, men gave attractive women higher

scores on the quality of their writing. Photographers of the supposed authors were attached to the essays. First impression attractiveness can have even more serious impact on an employees selection. This is particularly true where candidate impressions are formed solely on an interview and not moderate with data obtained from practical and written tests.

5. Creating a rating instrument

You can choose from several data collection and evaluation techniques, or rating scales. Whatever instrument is used, it should provide meaningful information to both employees and management.

There are a number of ways of classifying performance appraisal instruments. Data can be presented in terms of critical incidents, narratives, or predetermined anchors. A combination of approaches is often necessary to end up with a useful performance appraisal. Appraisal instruments require substantial rater training if results are to be meaningful.

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Critical Incidents. This technique involves noting instances where workers reacted particularly well or poorly. To be effective and accurate, critical incidents needs to be jotted down as they take place and are still fresh in the supervisors mind.

If care is not taken, though, the critical incident is susceptible to emphasizing negative worker behavior. When used alone, employees may have difficulty translating critical incident reports into improved day-to-day performances. Further, long period of time may not yield any particular good or poor behavior.

The critical incident approach can be used to come up with data and ideas to develop more complex rating scales.

Narratives. As compared to the critical incident, narratives provide a broader outlook on worker performances. Narratives work best when raters have the skills and take the time to provide a thorough, analytical report while maintaining a positive tone.

Predetermined anchors. Appraisals where raters simply check the most appropriate answer can potentially make for more standardized evaluation than either the narrative or critical incidents and are less time consuming for the supervisor. Their ease in use may be deceiving, and raters may give the appraisal less thought than it deserves. Anchor-based appraisals include rating factors with a numerical scale (e.g., 0 to 3), or an adjectivedescriptive scale (e.g., superior, good, below average). The most useful method is a combination approach that includes either a numerical or descriptive anchor, as well as critical incidents and a narrative performance description. 79

6. Deliver useful information to employees

This brings us back to sharing information with the employee (see Negotiated Performance Appraisal). Evaluations work best when workers know the evaluation criteria in advance. Such areas of evaluation can form the basis for an intelligent conservation about performance between supervisor and employee. In one operation a manager was able to not only discuss a foremans performance within his present job, but also the types of skills that were needed if the foreman was interested in a potential promotion to assistant manager.

Despite the importance of formal appraisals, an effective manager does not wait for formal performance appraisal interviews to communicate with employees. Sharing information about performance should be done frequently and a positive manner. There should not be too many surprises for the employee when both discus the evaluation. The negotiated performance appraisal, to a great extent, accomplishes the task of removing possible surprises at a much deeper level, as it encourages candid conversation between the individual being appraised and t he supervisor.

Regardless of the approach taken, it helps to improve the worker in making plans and taking responsibility for improvement. Allowing the worker to take a major role in the performance appraisal interview, it does not guarantee that the interview will be fun, but it can do much to reduce its unpleasantness.

SUMMARY

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Key objectives of performance appraisals include: (1) validating selection and other management or cultural practices; (2) helping employees understand and take responsibility for their performance; and (3) making decisions about pay or promotions.

Important steps to obtaining useful traditional appraisals include determining the type of data to be collected as well as who will conduct the appraisal, establishing a rating philosophy, overcoming typical rating deficiencies, creating a rating instrument, and engaging the employee in making decisions on future performance changes.

An effective negotiated performance appraisal helps the employee take additional ownership for both continuing effective performance and improving weak areas. Employee goals set through performance appraisal should be difficult but achievable, as goals that are overly ambitious are doomed for failure. Some employees tend to boycott their own progress by setting impossible goals to achieve. Finally, employees want to know what you think of their work. Letting workers know that you have noticed their efforts goes a long way towards having a more motivated workforce.

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FINDING AND ANALYSIS

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1.Current

Performance

Appraisal

System

is

better

than

the

previous

one .

Ques 1

10% 20%

23%

Strongly agree Agree Neutral Disagree

0% 47%

Strongly disagree

From the graph, it is evident that majority of the employees (almost 60%) are satisfied with the new performance appraisal system.

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Performance Appraisal System in our organization is transparent, fair and

well communicated.

Quse 2
10%

13%

3% 27%

Srongly Agree Agree Neutral Disagree

47%

Strogly Disagree

By transparent, fair and well communicated, it means that the performance appraisal system is thorough with the employees and they get to know the feedback from time to time in a fair and transparent manner. The responses show that there is a very low percentage, which actually agrees with this.

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3. Performance Appraisal System monitors work progress quantitatively as well as qualitatively.

7% 3% 23%

Ques 3

27%
Strongly Agree Agree Neutral Disagree Strongly disagree

40%
According to this it suggests that the subjective as well as the objective, both the factors are taken into consideration. The performance of any employee cannot be measured merely in terms of numbers so a qualitative judgment is also required for this. Here almost 30% show disagreement that PAS is not qualitative.

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4. PAS facilities placement of employees in accordance with there suitability for different type of assignment.

7% 20%

13%

Ques 4

Strongly Agree Agree Neutral Disagree Strongly disagree

20%

40%

It suggests that whether the appropriate skill sets are taken into account while assigning the responsibilities or not. Does the PAS system anyway ensures this factor to be taken note of or not, is shown by the responses. It is noted that quite a fair amount of people (73%) feel that PAS helps in the decision regarding the placement of employees within the organization.

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5. PAS helps identify areas requiring exposure for Training and Development in future.

23% 0%

3%

17%

Ques 5

Strongly Agree Agree Neutral Disagree Strongly disagree

57%
Almost a balanced response was noticed in this case and there were almost the same number of employees who agrees as who disagreed, with a fairly large percentage of employees in the neutral category (57%).

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6.

Performance

Appraisal

feedback

is

properly

communicated.

17% 7%

7%

Ques 6

27%

Strongly Agree Agree Neutral Disagree Strongly disagree

42%
A fair amount of agreement in the above response shows that the PAS is well communicated to the employees and they are informed about the results as and when required.

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7. Poor performance is handled sensitively and personally.

7% 23%

17%

Ques 7

Strongly Agree Agree Neutral

33% 20%

Disagree Strongly disagree

Good number of agreement is present to show that the cases of poor performance in any case are usually taken care very personally and secretively, so as to maintain the sanctity of the work environment and to protect the dignity of the work force.

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8. Appeals against performance Appraisal feedback are handled fairly.

7% 0% 23% 23%

Ques 8

Strongly Agree Agree Neutral Disagree Strongly disagree

47%
The study shows that the management keep their employees uninformed regarding the measures taken against performance Appraisal feedback. 23% states that the appeal is not handled fairly.

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9. A sense of trust and relationship exists between appraisers and appraisee.

10% 3% 7%

Ques 9

Strongly Agree Agree

37%

43%

Neutral Disagree Strongly disagree

Trust as always a big thing to be taken into consideration. And any organization where the sense of trust and belongingness is more is sure to prosper in the long run. We see from the responses that a very few people actually disagree with the sense of trust being offered. Almost it is 13%.

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10. Appraisers dont play favorites.

3%

10%

7%

Ques 10

Strongly Agree

27% 53%

Agree Neutral Disagree Strongly disagree

The response show a very low percentage of such favorites, which is a good sign in total, always encouraging for the organization.

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11. Rather than evaluation by the controlling officer, it would be better to have 360 degree feedback, e.g., every employee is assessed by his superiors, colleagues and juniors.

10% 3% 0%

Ques 11

40% 47%

Strongly Agree Agree Neutral Disagree Strongly disagree

There is a very strong demand toward the need for an appraisal system that uses the 360degree approach. More, than 87% people feel that 360-degree should be present there to judge the performance.

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12. Supervisor set achievable targets of work performance.

10%

3%

Ques 12

20%
Strongly Agree Agree Neutral Disagree Strongly disagree

30% 37%

This is again one of the relative questions that can be considered to play its part in many of the other questions. If supervisors give achievable targets then the employees are able to achieve them effectively. If the targets are tough then difficulty arises that leads to poor performances. Here it shows that almost 57% feels that the targets are achievable.

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13. Targets are set and mutually agreed upon by the appraiser and the appraisee

7%

7%

Ques 13

17%
Strongly Agree

20% 49%

Agree Neutral Disagree Strongly disagree

This question is a sequel to the above question, which suggests that the proper collaborative efforts are taken to set the goals and thus helping in the overall synergy. Only 14% disagree with this fact.

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14. A periodic review of the set targets is carried out, meticulously

10% 17%

10%

Ques 14

Strongly Agree Agree Neutral Disagree Strongly disagree

13%

50%

Review is another form of performance appraisal; time consuming yet helpful on many occasions. Responses show a favor towards the review.

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15. It is better to have quarterly periodic review rather than annual.

23%

13%

Ques 15

17% 13% 34%

Strongly Agree Agree Neutral Disagree Strongly disagree

A 36% disagreement is shown in increasing the frequency of review from annual to quarterly.

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16. Supervisors make sure that employees have adequate resources for accomplishing set targets.

0%

10% 17%

Ques 16

Strongly Agree Agree Neutral

43%

30%

Disagree Strongly disagree

A large number (10%) strongly disagrees with the suggestion.

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17. Supervisors help employees understand and take responsibility for their performance.

17%

0%

Ques 17

37% 23% 23%

Strongly Agree Agree Neutral Disagree Strongly disagree

A very large percentage shows that the strong agreement towards taking responsibility of own self during lacking or poor performance shows that the organization is more of a self-dependent type, i.e., the employees feel that they are the only one who are responsible for a deficiency in their optimal performance as desired.

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18. Everyone works together to solve problems.

17%

0%

Ques 18

36% 27% 20%

Strongly Agree Agree Neutral Disagree Strongly disagree

Strong indicator towards such a behavior indicates that a sense of collaboration and cooperation exits in the organization, which in turn is very helpful in the operational efficiencies. Only 17% show negative tendency towards it.

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19. Certain parameters in PAR forms need to be revised.

17%

3% 0%

Ques 19

30%

Strongly Agree Agree Neutral Disagree Strongly disagree

50%
Almost everybody felt that the parameters in the PAR form need to be revised by the authorities. Most of the employees i.e., 97% feel that they are not well versed or they dont feel comfortable with the current PAR format.

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The average score of each of the questions that were being asked by the employees in the questionnaire are diagrammatically represented as follows. The highest and the lowest are being indicated by the use of appropriate colors.

Average score 5 4 3 2 1 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 1 2 3 4 5 6 7 8 9 10 11 12 13 14

15 16 17 18 19

Average Score 3.7 3.5 3 3.3 2.9 3 3.3 2.9 3.4 3.4 4.2 3.6 3.3 3.4 3.8 3.8 3.8 3.8 1.9

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CONCLUSION

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The analysis of the responses in the questionnaire suggests that the overall satisfaction score of the employees regarding the performance appraisal methods in ONGC is 3.30 out of 5.00.

One particular question showed a tremendous level of satisfaction or agreement, which was regarding the 360-degree appraisal. There is a very strong demand towards the need for an appraisal system that uses the 360-degree approach. More than 97% people feel that 360-degrree should be present there to judge the performance.

The question, which showed the least degree of agreement, was the one that was regarding the parameters in the PAR form. Whether those parameter need revision or not was quite visible from the responses regarding this question. Almost everybody felt that the parameters in the PAR form need to be revised by the authorities. Most of the employees i.e., 97% feel that they are not well versed or they dont fell comfortable with the current PAR form.

By transparent, fair and well communicated, it means that the performance appraisal system is thorough with the employees and they get to know the feedback from time to time in a fair and transparent manner. The responses say that there is a very low percentage of people that actually agrees with this.

Trust is always a big thing to be taken into consideration. And any organization where the sense of trust and belongingness is more is sure to prosper in the long run.

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We see from the response that a very few people actually disagree with the sense of trust being offered.

Strong indicator towards cooperation is visible such a behavior indicates that a sense of collaboration and cooperation exists in the organization, which in turn is very helpful in the operational efficiencies.

PAS is well communicated to the employees and they are informed about the results as and when required.

It was noticed that proper collaborative efforts are taken by superiors as well as subordinates to set the goal and thus helping in the overall synergy.

A very large percentage shows the strong agreement towards taking responsibility of own self during lacking or poor performance. It shows that the organization is more of a self-dependent type, i.e., the employees feel that they are the only one who is responsible for a deficiency in their optimal performance as desired.

The awareness level among the employees regarding PAR from parameters is not at all effective; still some innovative suggestions come from their side this includes:- Targets need to be filled before the beginning of evaluation period.

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- PAR system should have an objective standard to follow and should not be run by subjective feelings of a superior. There should be the mechanism to quantify the job being performed by an employee.

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SUGGESTIONS
It was observed that the awareness level regarding PAR parameters was very low among the staff and lower grade executives. It is therefore suggested that all the existing as well as newly recruited employees should be made aware of all the parameters on the basis of which their performance is going to be judged in future.

It was found that communication is issued to the concerned employee only in case of adverse remarks or the overall assessment being not satisfactory. However it is very essential to communicate positive feedback also, which the management can use as a motivating tool.

In the PAR form, there should be an opportunity for the employee to express their views and do a type of self-assessment on all parameters to make it more effective and acceptable.

The PAR formats of higher-level executives are having provision of self-assessment. If possible, management should work upon extending the same facility to all levels.

It was noticed that many employees feel that the PAS is not fair and hence a need for 360 degree appraisal system is felt in which the employees performance can be judged by superiors, peers and subordinates so that appraisers biases (if any) can be avoided.

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It was observed that employees feel that certain parameters in PAR forms need to be revised. It is therefore suggested that whenever any such changes are made it is decided through settlement with the collectives who are representatives of employees and accordingly the collective concerns of the employees should be taken care of.

It seems that the scope of Performance Appraisal is limited top promotional issues. It is suggested that it should encompass other aspects like assessment of training needs, competency mapping etc.

The PAR form should be modified such that there are two sections one where employee himself is able to identify the areas where he feels he is lacking and needs training and the other section where appraiser identifies the employees training needs.

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ANNEXURE

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QUESTIONNAIRE
Name of Employee (Optional):_______________________________________________ Gender: Male ___ Female ___

Department: _____________________________________________________________ Grade: __________________________________________________________________ Work Experience (in years)_________________________________________________

Given below are certain statements with two different viewpoints. Please tick closer to the option which best matches your opinion.
1.Current Performance Appraisal System is better than the previous one. Much better Previous was better

2. Performance Appraisal System in our organization is transparent, fair and well communicated. Strongly Agree Strongly Disagree

3. Performance Appraisal System monitors work progress quantitatively as well as qualitatively. Strongly Agree Strongly Disagree

4. PAS facilities placement of employees in accordance with there suitability for different type of assignment. Strongly Agree Strongly Disagree

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5. PAS helps identify areas requiring exposure for Training and Development in future. Strongly Agree Strongly Disagree

6. Performance Appraisal feedback is properly communicated. Strongly Agree Strongly Disagree

7. Poor performance is handled sensitively and personally. Strongly Agree Strongly Disagree

8. Appeals against performance Appraisal feedback are handled fairly. Strongly Agree Strongly Disagree

9. A sense of trust and relationship exists between appraisers and appraisee. Strongly Agree Strongly Disagree

10. Appraisers dont play favorites. Strongly Agree Strongly Disagree

11. Rather than evaluation by the controlling officer, it would be better to have 360 degree feedback, e.g., every employee is assessed by his superiors, colleagues and juniors. Strongly Agree Strongly Disagree

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12. Supervisor set achievable targets of work performance. Strongly Agree Strongly Disagree

13. Targets are set and mutually agreed upon by the appraiser and the appraisee. Strongly Agree Strongly Disagree

14. A periodic review of the set targets is carried out, meticulously Strongly Agree Strongly Disagree

15. It is better to have quarterly periodic review rather than annual. Strongly Agree Strongly Disagree

16. Supervisors make sure that employees have adequate resources for accomplishing set targets. Strongly Agree Strongly Disagree

17. Supervisors help employees to understand and take responsibility for their performance. Strongly Agree Strongly Disagree

18. Everyone works together to solve problems. Strongly Agree Strongly Disagree

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19. Certain parameters in PAR forms need to be revised. Strongly Agree Strongly Disagree

20. Suggestion (if any) (a)__________________________________________________________________ (b)__________________________________________________________________

This questionnaire will be used for academic purpose and the responses provided by you will be kept confidential. Your co-operation in filling up this questionnaire is essential for the successful completion of my project work. Thank you.

SAKSHI SEHGAL

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BIBLIOGRAPHY

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Human Resource Management by V S P Rao Human Relations and Organizational Behavior by R S Dwiwedi Project Report on the Impact of Training & Development in ONGC WEBSITES: www.ongcindia.com www.google.com www.workinfo.com www.hr.com www.hr-guide.com www.hrtools.com

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