PERFORMANCE MANAGEMENT SYSTEM & PERFORMANCE RELATED PAY

Definition

PREFACE
In terms of DPE guidelines dated 26.11.2008, to make Performance Management System more objective and result-oriented, the Performance Appraisal system of all categories of employees has been reviewed in the Company. Performance review has been divided into two parts (i) Performance Assessment (ii) Potential Assessment

Varying weightages of Performance Assessment and Potential Assessment has been assigned at different levels of Executives

For employees at the level of E3 to E7, Performance assessment is based on achievement of KPAs ( Key Performance Area) while for employees at the level of E0-E2 assessment is based on defined performance parameters.

Potential Assessment is based on assessment of Competencies and Values, for which expected behavioral parameters have been defined, to bring in uniformity.

Training Need Assessment form has also been re-designed to identify the training needs of the concerned executive. Indicative Training Directory has been developed to assist the Reporting Officers in identifying the training programs for Subordinates.

Definition PMS FOR E-0 to E-7 LEVEL

The Performance Appraisal Form has been redesigned taking into account various factors and a system of rating on a defined no. scale on various performance and potential parameters has been introduced. The weightages amongst the two sections is as follows: Weightages for different grades E-0 to E-7 Performance Assessment (on the basis of KPAs for E-3 to E-7) 60

S. No.

PMS Parameters

1.

Competencies 2. Potential Assessment

20

Values
TOTAL

20
100

Definition KEY PERFORMANCE AREAS FOR E-3 to E-7 LEVEL

At the beginning of the year, the Appraiser and Appraise jointly discuss and evolve KPAs KPAs), define Measures and allocate Marks (weightage) for each KPA. (limited to 5-7

KPAs are identified based on the Principle of SMART - Specific, Measurable, Achievable, Realistic, Timebound. It is to be ensured that Results are within the control of the Executive. Results are measurable / quantifiable. Data is available for measurement. The performance targets are arrived at after sufficient discussion between the individual and the Reporting Officer.

KPAs, are derived from the Corporate Plan, MOU Targets of the Company, Long Term & Short Term Plans, Business Plans, Annual Performance Targets for the Unit/Function, Functional Role & Responsibilities etc.

Definition PMS FOR E-3 to E-7 LEVEL

Potential Assessment Competencies (20 marks)
The Employee is judged on the following desired equally weighted Competencies (Behavioral and Professional) Parameters on a scale of 0 to 50: Analytical Ability & Decision Making Managerial Ability Professional Competence Commercial Sense Communication Skills Team Building Initiative & Attitude

Potential Assessment -

Values

(20 marks)

The Employee is judged on the following desired equally weighted Values Parameters on a scale of 0 to 50: Ethical Behavior Discipline Mutual Respect & Trust Organizational Pride Transparency & Fairness

Definition PMS FOR E-0 to E-2 LEVEL

Performance Assessment (60 marks)

The Employee is judged on the following performance parameters on a scale of 0 to 50: i. ii. iii. iv. v. vi. vii. viii. ix. x. Job Knowledge Achievement of set targets Problem Solving Capacity to do inter-related jobs Quality of Performance Safety & Cost Consciousness Planning & Efficiency in doing jobs Ability to develop subordinates Initiative & Attitude Knowledge of Rules & Regulations

The parameters listed at i to iv above carry twice the weightage than rest of the parameters.

Definition PMS FOR E-0 to E-2 LEVEL

Potential Assessment Competencies (20 marks)
The Employee is judged on the following desired equally weighted Competencies (Behavioral and Professional) Parameters on a scale of 0 to 50: Team Player Leadership Versatility Learning Attitude Communication

Potential Assessment -

Values

(20 marks)

The Employee is judged on the following desired equally weighted Values Parameters on a scale of 0 to 50: Ethical Behavior Discipline Mutual Respect & Trust Organizational Pride Transparency & Fairness

Definition

PERFORMANCE MANAGEMENT SYSTEM FOR NON - EXECUTIVES

Definition PMS FOR W-5 to W-12 LEVEL

The Performance Appraisal Form has been redesigned taking into account various factors. A numbering system of rating the employee on various performance and potential parameters (Competencies and Values) has been introduced. The weightages amongst the two sections is as follows:

Weightages for different grades S. No. 1. 2. PMS Parameters Performance Assessment Potential Assessment (Competencies & Values) TOTAL W-5 to W-12 70 30 100

As in vogue, at the end of the year, the reporting Officer assigns ratings on a scale of 0-50 against various performance and potential parameters depending upon the performance and potential of the individual, rather than earlier system of ratings from Below Satisfactory to Outstanding. Final outcome is a result of weighted average of performance & potential score. The scores may be reviewed by the Reviewing Authority and then by the Accepting Authority specifying rationale for the change. The overall rating of the Accepting Authority is considered as final one.

Definition PMS FOR W-5 to W-12 LEVEL

Performance Assessment - 70 Marks

The Employee is judged on the following performance parameters on a scale of 0 to 50:

i. ii. iii. iv. v. vi. vii. viii. ix. x. Job Knowledge Level of Achievement of Performance Capacity to do inter-related jobs Quality of Performance Safety Consciousness Cost Consciousness Planning & Efficiency in doing jobs Initiative & Attitude Knowledge of Rules & Regulations House Keeping

The parameters listed at i to iv above carry twice the weightage than rest of the parameters.

Definition PMS FOR W-5 to W-12 LEVEL

Potential Assessment (Competencies & Values) - 30 marks

The Employee is judged on the following desired equally weighted Competencies & Values Parameters on a scale of 0 to 50: Team Player

Learning Attitude
Communication Behavior

Discipline (Punctuality & Regularity)

Organizational Pride

Definition PMS FOR W-0 to W-4 LEVEL

The concerned employee is assessed by the reporting Officer against various performance parameters by assigning a ratings on a scale of 0-50 depending upon the performance of the individual, at the end of the year. The Employee is judged on the following performance parameters: i. ii. iii. iv. v. vi. vii. viii. ix. x. Performance of Duties Attendance/ Punctuality Cooperation Discipline House Keeping Safety & Cost Consciousness Ability to Communicate Dependability Initiative & Attitude Ability to understand and grasp instructions

The parameters listed at i to iv above carry twice the weightage. Final outcome is a result of weighted average ratings on above performance parameters out of a total of 100 marks. The scores may be reviewed by the Reviewing Authority and then by the Accepting Authority specifying rationale for the change. The overall rating of the Accepting Authority is considered as final one.

Definition

PERFORMANCE RELATED PAY

Definition PERFORMANCE RELATED PAY

Based on the guidelines of DPE, Performance Related Pay in NFL has been directly linked with

the profits of the Company, and performance of the employee

Further, 'Bell Curve Approach' to grade employees has been adopted according to which not more than 10-15% of employees are to be graded in the Outstanding/ Excellent category and around 10% are to be graded as Below Par'.` Under the Performance Management System, the Overall score earned by each employee is evaluated as under for the purpose of working out his eligibility criteria for promotion to the next higher grade as well as for payment of PRP:

Total Score 85 or more 70 to 84 55 to 69 40 to 54 Below 40

Equivalent Rating Outstanding Very Good Good Satisfactory Below Satisfactory

Definition PERFORMANCE RELATED PAY

In NFL, scheme of PRP covers both workmen as well as Executives. Salient Features are:

Total PRP corpus limited to 7% of PBT of NFL including workmen. The amount admissible to Executives shall be limited to 3% of current year PBT when there is no incremental profit and maximum 5% in case there is an incremental profit as per DPE guidelines. As per DPE guidelines, the admissible allowances & perks are subject to maximum ceiling of 50% of BP. In NFL the maximum ceiling is 47.5%. Out of this, for executives, 7% of BP has been linked to achievement of physical targets of production / productivity, i.e. energy efficiency, production, sales, marketing costs etc. For workmen, this linkage is limited to 2% of BP.

Definition PERFORMANCE RELATED PAY

Factors for PRP Calculations: (i) Percentage ceiling of PRP :-

Pay Grade E0 to E3 E4 & E5 E6 & E7 E8 & E9 Director CMD

PRP as %age of Annual BP 40% 50% 60% 70% 150% 200%

The PRP as %age of Annual BP has been fixed as 38% in respect of all levels of workmen

Definition PERFORMANCE RELATED PAY

Factors for PRP Calculations: -

(ii)

MOU Rating of the Company:-

(This factor shall carry 80% weightage)

MoU Rating
Excellent Very Good Good Fair

Eligibility % for PRP

100% 80% 60% 40%

Poor
(iii) Individual Performance:Performance Rating Outstanding/ Very Good Good Satisfactory Below Satisfactory

0%
(This factor shall carry 20% weightage) Eligibility for Individuals PRP 100% 95% 60% 50%

Definition PERFORMANCE RELATED PAY

(iv) Attendance Factor:For individual attendance factor, no. of days of unauthorized absence and EOL availed by the employee during the year shall be considered as period of absence.

(365 - No. of days Absent) Attendance Factor (AF)= 365