A PROJECT REPORT ON PERFORMANCE MANAGEMENT SYSTEM AT INDIAN OIL CORPORATION LTD.

INDIAN OIL CORPORATION LTD. SCOPE COMPLEX, LODHI ROAD, DELHI

UNDER THE GUIDANCE OF:

MR. ANIL YADAV, Dy. MANAGER(HRD) INDIAN OIL CORPORATION LTD., SCOPE COMPLEX , LODHI ROAD, NEW DELHI

SUBMITTED BY: SHRUTI BANGIA

BBA SEMESTER-IV, TRINITY INSTITUTE OF PROFESSIONAL STUDIES, DWARKA, AFFILIATED TO G.G.S.I.P. UNIVERSITY KASHMERE GATE, DELHI

ACKNOWLEDGMENT

ACKNOWLEDGEMENT

I express my profound sense of gratitude and indebtedness towards all those who have rendered me direct or indirect support and assistance during my Summer training.

I would like to express my deep gratitude to the Indian Oil Corporation Ltd Headquarters for granting me permission to undergo my Summer Internship. My Heartfelt thanks to Mr. Anil Yadav for providing me with a pleasant training environment during the course of my summer training . His valuable thoughts were of great importance and I express my gratitude towards him for providing me with such valuable information about the Indian Oil Corporation Ltd.

I would also like to thank Mr. Sunil Arora (Deputy Manager, C&M, NTPC, Noida) to provide me with the valuable information about the NTPC which helped me in making my project.

Finally, I express a hearty acknowledgement towards all the employees in the organization for providing a co-operative environment during the course of my summer internship and help me adjust in the organization for these days.

ORGANIZATIONS PROFILE

ORGANIZATIONS PROFILE OF IOCL

Indian Oil Corporation Ltd. is the largest commercial enterprise in India. Incorporated in 1959 as Indian Oil Company Ltd. became a corporation in 1964 when Indian Refineries Ltd.(Estd. 1958) was merged with the company. Indian Oil Corporation Ltd. is currently India's largest company by sales with a turnover of Rs. 247,479 crore (US $59.22 billion), and profit of Rs. 6963 crore (US $ 1.67 billion) for fiscal 2007. Indian Oil is also the highest ranked Indian company in the prestigious Fortune 'Global 500' listing, having moved up 19 places to the 116th position in 2008. It is also the 18th largest petroleum company in the world. Indian Oil's vision is driven by a group of dynamic leaders who have made it a name to reckon with. In this section, you can peruse through the profile and spread of Indian Oil across the country & abroad. You can also know about Indian Oil's current financial performance, special initiatives and causes along with the prestigious recognitions & awards that have come its way for exceptional performances. IOCL has a large, divisionalized, multi-location structure, dispersed throughout the country, with its corporate office at New Delhi. It has three major divisionMarketing with its head office at Mumbai. Refineries with the head office

at New Delhi, and Pipelines with head office at Noida. The R&D centre is located at Faridabad about 20 k.m. from Delhi.

There are presently seven refineries namely Guwahati , Barauni , Gujrat , Haldia, Mathura , Panipat and Assam Oil Division(AOD). The pipelines set-up functions as two major regions-Eastern Region and Western Region.

Similarly , marketing division operates through its four regions , North , South , East , and West. Indian Oil has two subsidiary companies, Chennai Petroleum Corporation Ltd. And Bongaigaon Refinery and Petrochemicals Ltd., with a combined refining capacity of 9.35 MMTPA, thereby raising its total refining capacity to 47.50 MMTPA, the highest in the country today. Indian Oil has the countrys largest network to crude and product pipelines, with a combined length of 6,523 km and a capacity of 43.45 MMTPA. With sales of 47.17 million metric tones in 2001-02, Indian Oil holds over 53% of the petroleum products market share in India. Its extensive network of over 22,000 sales points is backed for supplies by 182 bulk storage points and 78 Indane bottling plants. 92 Aviation Fuel Stations cater to the Aviation Industry, defence as well as civil.

The following are the salient features of IOCL:y It is the 21st largest petroleum company in the world. y Indian Oil is the highest ranked Indian company in the Fortune 'Global 500' list of companies. y For the year 2005-06, the Indian Oil group sold 54.6 million Tonnes of Petrolium products, including 2.09 million tones through exports. y The Indian Oil Group of Companies owns and operates 10 of Indias 18 refineries. y IOCL owns and operates the widest and the largest network of Petrol & Diesel stations in the country (more than 15,000). y It has a network of 4,856 Indane Distribution of Indane Gas to its domestic customers. y IOCL has a wholly owned subsidiary, Indian Oil Technologies Ltd. y It is also a leading distributor of natural gas in India.

HISTORY OF IOCL

HISTORY OF IOCL

YEAR

MILESTONES

1958 1959

Indian Refineries Ltd. formed in August with Mr. Feroze Gandhi as the Chairman. Indian Oil Company Ltd. established on 30th June 1959 with Mr. S. Nijalingappa as the Chairman. Agreement for supply of Kerosene and Diesel signed with the then USSR. MV Uzhgorod carrying the first parcel of 11,390 tonnes of Diesel for IndianOil docked at Pir Pau Jetty in Mumbai on 17th August 1960.

1960

1962

Guwahati Refinery inaugurated by Pt. Jawaharlal Nehru, Honble Prime Minister of India. Construction of Barauni Refinery commenced.

1963

Foundation laid for Gujarat Refinery Indian Oil Blending Ltd. (a 50:50 Joint Venture with Mobil) formed.

1964

Indian Refineries Ltd. merged with Indian Oil Company with effect from 1st September, 1964, and Indian Oil Company renamed as Indian Oil Corporation Ltd. Barauni Refinery commissioned. The first petroleum product pipeline from Guwahati to Siliguri commissioned.

1965

Gujarat Refinery inaugurated by HE Dr. S.Radhakrishnan, President of India. Barauni-Kanpur product pipeline and KoyaliAhmedabad product pipeline commissioned. IndianOilPeople maintained the vital supply of Petroleum products to Defence Services during Indo-Pak war.

1967

Haldia Barauni product pipeline commissioned. Bitumen and marine bunkering businesses commenced.

1968

Techno-economic studies for Haldia-Calcutta, Bombay-Pune and Bombay-Manmad Pipelines submitted to Government. Marketing of Madras Refineries Ltd. products commences. Acquired 60% majority shares of IBP Co. Ltd. The same was offloaded in favour of the President of India in 1972. Dealership/reservation extended to war widows, disabled Defence personnel, freedom fighters, etc. for the first time after the IndoPak war. R&D Centre established at Faridabad. SERVO, the first indigenous lubricant, launched.

1969 1970

1971

1972

1973

Foundation-stone of Mathura Refinery laid by Mrs. Indira Gandhi, Honble Prime Minister of India. Indian Oil Blending Ltd. became the wholly-owned subsidiary. Marketing Division attained a new watershed with market participation of 64.2%.

1974

1975

Haldia Refinery commissioned. Multipurpose Distribution Centres introduced at 132 Retail Outlets pioneering rural convenience.

1977 1978

Nutan wick stove launched by R&D Centre. Phase-wise commissioning of Salaya-Mathura crude oil pipeline begins. Digboi Refinery and Assam Oil Company's (AOC) marketing operations vested in IndianOil and it became Assam Oil Division(AOD)of Indian Oil on 13th oct. 1981. Mathura Refinery and Mathura- Jalandhar Pipeline commissioned. Massive augmentation of LPG storage and distribution facilities undertaken. Proposal for the 6 MMTPA Refinery at Karnal submitted. Taluka Kerosene Depots (TKDs) commissioned for improved availability of kerosene in rural and hilly areas in addition to Multipurpose Distribution Centres. Foreshore Terminal at Kandla Port commissioned. Integrated Corporate Planning a 10-year Perspective Plan and 5year Long Range Plan initiated.

1981

1982 1983

1984

1985

New office complex for Registered Office of the Corporation and Head Office of Marketing Division in Mumbai completed. A new Foreshore Terminal at Madras commissioned. Test marketing of 5 kg LPG cylinders begins in 1986-87 in Garo Hills and Kumaon. Salaya-Mathura crude oil pipeline suitably modified for handling Bombay High Crude during winter. Kandla-Bhatinda product pipeline project approved. First LPG Bottling Plant of Assam Oil Division (AOD) commissioned at Silchar.

1986 1987

1989

1990

1991

Digboi Refinery modernisation project initiated. Bunkering facility at Paradip commissioned.

1993 1994

New era Micro-processor based 'Distributed Digital Control Systems' replacing the pneumatic instrumentations began in refineries. India's first Hydrocracker commissioned at Gujarat Refinery. 'Vision-2000', the Retail Visual Identity programme launched to upgrade retail outlets.

1995

1,443 km. long Kandla-Bhatinda product pipeline commissioned. First lndane Home Shoppe launched.

1996

State-of-the-art LPG Import Terminal at Kandla (capacity of 6,00,000 tonnes per annum) commissioned. First batch of one-year International MBA (iMBA) programme passes out of IndianOil Institute of Petroleum Management (IIPM).

1997

Business Development received renewed thrust with new functional group. IndianOil enters into LNG business through Petronet LNG -a JV company.

1998

Panipat Refinery commissioned. Haldia-Barauni crude oil pipeline completed. Administrative Pricing Mechanism (APM) withdrawn for refining sector with effect from 1st April. Phase-wise dismantling of APM began. IndianOil Board reconstituted under the Navaratna concept, with the induction of five part-time non-official independent Directors.

1999

'Indian Hydrocarbon Vision -2025' was announced at PETROTECH99, organised by IndianOil on behalf of the oil Industry. Manthan - IT re-engineering project launched.

2000

IndianOil crossed Rs l ,00,000 crore in turnover first corporate in India to do so. The 'IndianOil Foundation', a non-profit trust, the first of its kind in Corporate India, unveiled to protect, preserve and promote the country's heritage.

2001

Digboi Refinery completed 100 years of continuous operation. Chennai Petroleum Corporation Ltd. (CPCL) and Bongaigaon Refinery & Petrochemicals Ltd. (BRPL) became subsidiary companies.

2002

APM dismantled for marketing sector. Pricing of petroleum products decontrolled. IBP Co. Ltd. acquired with management control.

2003

Lanka IOC Pvt. Ltd. (LIOC) launched in Sri Lanka. Retail operations begins in Sri Lanka. Indian Oil becomes the first Indian Petroleum Company to begin downstream marketing operations in overseas market.

2004

IndianOil begins gas marketing of regassified LNG. IndianOil Mauritius Ltd. state-of-the-art oil storage terminal at Mer Rouge port in Mauritius commissioned .

2005

Entry into E&P with the IndianOil-Oil India consortium signing Exploration and Production Sharing Agreement with the National Oil Corporation of Libya for a block in the Sirte basin of Libya. IndianOil's Mathura Refinery becomes the first Indian refinery to produce Euro-III compliant diesel with the commissioning of diesel hydrotreater. Also commissions India's first petrol quantity upgradation unit to produce Euro-III compliant petrol.

2006

IndianOil Blending Ltd. (IOBL), the wholly-owned subsidiary of IndianOil, merged with the parent company on 12th May, 2006.

Panipat Refinery capacity enhanced from 9 to 12 MMTPA. 2007 Marketing subsidiary IBP Co. Ltd. merged with parent company. Concept of SERVOXpress Centres as one-stop shops for autocare services launched. 2008 SERVO lubricants launched in Oman. IndianOil Chairman elected as President of World LP Gas Association. 2009 The 'historic amalgamation' of Bongaigaon Refinery & Petrochemicals Ltd. (BRPL) with the parent company - Indian Oil became effective from March 25, 2009. BRPL was inducted as an IndianOil Group Company on 29th March, 2001.

OBJECTIVES OF IOCL

y To serve the national interests in oil and related sectors in accordance and to consistent with Government Policy. y To ensure maintenance of continuous and smooth supplies of petroleum products by way of crude oil refining, transportation and marketing activities and to provide appropriate assistance to consumers to conserve and use petroleum products efficiently. y To enhance the country's self-sufficiency in crude oil refining and build expertise in laying of crude oil and petroleum product pipelines. y To further enhance marketing infrastructure and reseller network for providing assured service to customers throughout the country. y To create a strong research &development base in refinery processes, product formulations, pipeline transportation and alternative fuels with a view to minimizing/eliminating imports and to have next generation products.

y To optimise utilisation of refining capacity and maximize distillate yield and gross refining margin. y To maximise utilisation of the existing facilities for improving efficiency and increasing productivity.

y To minimise fuel consumption and hydrocarbon loss in refineries and stock loss in marketing operations to effect energy conservation. y To earn a reasonable rate of return on investment.

y To avail of all viable opportunities, both national and global, arising out of the Government of Indias policy of liberalisation and reforms. y To achieve higher growth through mergers, acquisitions, integration and diversification by harnessing new business opportunities in oil exploration & production, petrochemicals, natural gas and downstream opportunities overseas.

y To inculcate strong core values among the employees and continuously update skill sets for full exploitation of the new business opportunities.

y To develop operational synergies with subsidiaries and joint ventures and continuously engage across the hydrocarbon value chain for the benefit of society at large.

FINANCIAL OBJECTIVES OF IOCL

y To ensure adequate return on the capital employed and maintain a reasonable annual dividend on equity capital. y To ensure maximum economy in expenditure.

y To manage and operate all facilities in an efficient manner so as to generate adequate internal resources to meet revenue cost and requirements for project investment, without budgetary support. y To develop long-term corporate plans to provide for adequate growth of the Corporations business.

y To reduce the cost of production of petroleum products by means of systematic cost control measures and thereby sustain market leadership through cost competitiveness. y To complete all planned projects within the scheduled time and approved cost.

VISION, MISSION, VALUES AND OBLIGATIONS OF IOCL

VISION OF IOCL

A major diversified, trans-national, integrated energy company, with national leadership and a strong environment conscience, playing a national role in oil security & public distribution.

MISSION OF IOCL

 To achieve international standards of Excellence in all aspects of excellence in Petroleum refining marketing and transportation with concern for customer satisfaction.  To maximise creation of wealth, value and satisfaction for the stakeholders.  To attain leadership in developing, adopting and assimilating state-ofthe-art technology for competitive advantage.  To provide technology and services through sustained Research and Development.  To foster a culture of participation and innovation for employee growth and contribution.  To cultivate high standards of business ethics and Total Quality Management for a strong corporate identity and brand equity.  To help enrich the quality of life of the community and preserve ecological balance and heritage through a strong environment conscience.

VALUES OF IOCL

(I)

Care - Stands for y Concern y Empathy y Understanding y Cooperation y Empowerment Innovation - Stands for y y y y Creativity Ability to learn Flexibility Change

(II)

(II)

Passion - Stands for y Commitment y Dedication y Pride y Inspiration y Ownership y Zeal & Zest

(IV)

Trust - Stands for y y y y y y Reliability Dependability Integrity Truthfulness Transparency Delivered promises

OBLIGATIONS OF IOCL  Towards customers and dealers:- To provide prompt, courteous and efficient service and quality products at competitive prices.

 Towards suppliers:- To ensure prompt dealings with integrity, impartiality and courtesy and help promote ancillary industries.

 Towards employees:- To develop their capabilities and facilitate their advancement through appropriate training and career planning. To have fair dealings with recognised representatives of employees in pursuance of healthy industrial relations practices and sound personnel policies.

 Towards community:- To develop techno-economically viable and environment -friendly products. To maintain the highest standards in respect of safety, environment protection and occupational health at all production units.

 Towards Defence Services:- To maintain adequate supplies to defence and other para military services during normal as well as emergency situations.

HUMAN RESOURCE DEPARTMENT OF IOCL

HR DEPARTMENT OF IOCL

The human resources in Indian Oil Corporation was 31,675 strong as on 31.03.2002, of which 9,728 are in the Officers cadre and 21,947 are in the Staff cadre. There are 5,672 employees from SC category and 2,097 from ST category. The SC and ST employees constitute 24.53% of the total employees strength. There are 2,387 women employees, out of whom 692 are in the Officers carde and 1,695 in Staff cadre. The women employees constitute 7.54% of total employees strength. The HR department at IOCL Refineries Division subdivided into the following areas:-

(i)

Personnel Department :The main function of personnel department is to ensure that the all information related to employees is maintained and updated, to provide various benefits to employees under the rules, to frame policies etc. The main sections of the personnel department are as following:(a) HRD:- This section looks after the manpower recruitment of the refinery division. It is concern with recruitment, promotion, transfers of employees across the division.

(b) Policy Section:- Policy section is concerned with framing and modification of policies. It also books into HR and legal matter. (c) Establishment :- Establishment section maintains the personal data of employee /individuals and facilitates providing various employee benefits such as medical benefits, leave , pay, post retirement benefits etc. Objectives of Personnel Department of IOCL :-

The primary objectives of Personnel Department are as under:

(i)

Design and develop an organizational structure with well defined relationships commensurate with the business plans and corporate strategies; Promote and develop co-operative attitude amongst employees by fostering harmonious relations at all levels and inculcate sense of belonging; Evolve progressive and pragmatic personnel policies, procedures and practices and ensure its uniform interpretation and judicious implementation; Develop the capability and proficiency of employees and their advancement through appropriate training and

(ii)

(iii)

(iv)

continuous knowledge updation to face corporate challenges and new technologies; (v) Promote and inculcate the culture of employees participation in management; Ensure compliance of social and statutory obligations and Govt. directives; and

(vi)

(vii) Inculcate productivity consciousness amongst employees. (viii) Administration of Electronic Performance Management System and Productivity Incentive Schemes. (ix) Change agent to new interventions.

FUNCTIONS OF PERSONNEL DEPARTMENT OF IOCL:-

(i)

STAFFING: Manpower planning.  Determine the organizational structure and optimize manpower to effectively meet Companys objective.  Job description.  Recruitment.  Personnel records.  Promotion.  Transfer.

(ii)        

PERSONNEL MAINTENANCE:Motivation. Performance Appraisal. Recreation. Communication. Employee amenities - canteen , clubs etc. Safety. Medical Services. Security.

(iii)

DEVELOPING THE HUMAN RESOURCE:-

 Induction and apprentice training.  Training & development of employees.

(iv)    

INDUSTRIAL RELATIONS:Productivity Bargaining. Grievance Handling. Discipline Administration. Providing joint consultative machinery-Joint Management Councils.

(v)

COMPENSATION : Wage & Salary surveys & controls.  Negotiations.  Incentives / bonus.

(vi)

PERSONNEL POLICY & PLANNING:-

 Defining Organizational goals, Policy guidelines and strategies.  Formulating & implementing Personnel policies.

RESPONSIBILITIES OF PERSONNEL DEPARTMENT OF IOCL:-

It will be the responsibility of Personnel Department at Refineries HQ to formulate, under the overall direction of Director (Refineries), the Refineries Division's personnel policies and programmes and to communicate the same to the Units. Personnel Department at Hqrs. and P&A Departments at each unit shall provide assistance and counsel to other departments on personnel matters.

Personnel management essentially being a staff functions, Personnel Department's role will be that of a staff department with emphasis on its advisory character in all matters connected with personnel activities except in respect of the promotion of welfare measures which will be the executive responsibility of this Department. Personnel Department shall also be responsible for ensuring compliance with the provision of various labour laws and other statutes.

(ii)

Administration Department :The function of administration department is to provide services related to administration and welfare of employees. Some of the main areas looked after for administration department are: Allotment of quarters/ accommodation to employees.  Arranging vehicles for official requirements.  Implementation of hindi language in various official activities.  Supervising canteen services.  Providing loans/ advances to employees for house.  Community development programs.  Orgnising functions.  Maintaining stores and dispatch activities.

Objectives of Administration Department of IOCL:-

(i)

The primary objective of the Department is to assist the Management in implementation and execution of various administrative decisions taken by the Board of Directors of the Corporation. For this purpose, it acts as a Secretariat of the Director (Refineries) / Director In-charge (AOD).

Apart from it, the Department also functions as Service Department to the internal and external customers and provides necessary assistance on general administrative, welfare and security matters to all the Refinery Units including AOD, Kolkata and Mumbai offices as well as other Departments at Headquarters.

(ii)

Coordination is another important task of the Department. For this purpose, the Department maintains various records and statistics and handles correspondence with the Ministry, Government agencies, Parliamentary bodies, other organizations and VIP references.

(iii)

The Department also renders assistance to Refinery Units and various departments at the Headquarters in maintaining liaison with various Ministries of the Government of India, Lok Sabha Secretariat etc.

(iv)

The Department aims at achieving the highest level of efficiency and productivity with utmost speed and accuracy.

FUNCTIONS OF ADMINISTRATION DEPARTMENT OF IOCL:-

Policy Matters : (i) (ii) (iii) (iv) (v) Delegation of Powers. Implementation of Board's decisions. Rajbhasha implementation. Administration of House Building Advance, Conveyance Advance, Festival Advance, reimbursement of conveyance expenses, etc. Office and residential accommodation (company owned / company lease/ self-lease).

(vi) Furniture and computers on hire for officers at residence. (vii) Furniture / computers for office at residence of Sr. Executives. (viii) Disposal of unserviceable materials including vehicles. (ix) Maintenance of office records. (x) Transport facilities. (xi) Security of Company Assets & Personnel. (xii) Provision of Club memberships/ credit cards. (xiii) Schools in Refinery Townships. (xiv) Community Development

Coordination: (i) (ii) (iii) Reply to Parliament Questions. Reply to VIP references. Furnishing information required by Deptt. Of Public Enterprises, Estimates Committee, Parliamentary Committee on Public Undertakings and other such Committees. (iv) Coordination with Ministries.

Legal Matters: i) ii) iii) iv) iv) v) Providing assistance in processing of contracts and agreements. Land/Houses acquisition matters. Office Services Contracts. Bonds and Mortgage deeds. Lease agreements. Liaison with Solicitors for obtaining legal advice.

General Administration: (i) (ii) (iii) (iv) (v) (vi) House keeping of office space. Dak receipt, distribution and dispatch. Domestic Rail and Air bookings. Control of Staff/Hired Cars including maintenance. Transportation Hiring of Cars & Buses. Photocopiers / Digital Document Centres / Fax Machines / Cellular phones. (vii) Office furniture and equipments. (viii) Stationery and Stores. (ix) International travel arrangement including Foreign exchange.

(x) (xi) (xii) (xiii)

Allotment of office space / residential accommodation. Maintenance and Administration of Guest Houses. Lodging arrangements for officers on tour. Communication Services maintenance.

Civil Defence, Security & Safety: (i) (ii) (iii) (iv) (v) (vi) Territorial Army. Security measures in Refinery Units & HO including CO. Induction of CISF Civil Defence Measures Issue of identity cards. Fire fighting.

Welfare Activities:

(i)

(ii) (iii) (iv) (v)

Maintenance and Administration of Holiday Homes for officers at Shimla & Manali and for workmen at Manali, Darjeeling, Goa and Mussoorie. Maintenance and Administration of Medical Transit Camps, Transit accommodation, etc. Canteens. Sports Coordination jobs relating to official functions/gatherings.

Maintenance of Assets

(i) (ii)

Maintenance of land / property records. Servicing and maintenance of office equipment viz. lifts, air conditioners, staff vehicles, photocopiers, Digital document centers, Mobile phones etc. purchased by the Corporation. Operation and maintenance of electrical installations, water supply, water storage tanks, neon signs etc. Maintenance of office buildings, company owned / leased residential accommodation, Townships and Guest Houses.

(iii)

(iv)

(v)

Communication Services like Fax, MTNL Telephones, Mobile phones, etc.

PERFORMANCE MANAGEMENT SYSTEM

PERFORMANCE MANAGEMENT SYSTEM

Performance Management System(PMS) is one of the important components in systemic process of human resource management. The information obtained through performance management system provides foundations for recruiting and selecting new hires, training and development of existing staff, and motivating and maintaining a quality work force by adequately and properly rewarding their performance. Without a reliable performance appraisal system, a human resource management system falls apart, resulting in the total waste of the valuable human assets a company has. There are two primary purposes of performance management system : evaluative developmental. The evaluative purpose is intended to inform people of their performance standing. The collected performance data are frequently used to reward high performance and to punish poor performance. The developmental purpose is intended to identify problems in employees performing the assigned task. The collected performance data are used to provide necessary skill training or professional development. In order for performance appraisal information to be useful, the PMS system must be able to consistently produce reliable and valid results. Measurement items in the performance appraisal system must be designed in such a way that the results of

rating are consistent regardless of the raters and the timing of the assessment. The purpose of performance appraisal must be clearly communicated both to raters and ratees, because their reactions to the appraisal process are significantly different depending on the intended purpose. Failure to inform about the purpose or misleading information about the purpose may result in inaccurate and biased appraisal reports. In order for performance information to be useful, the PMS system must be able to consistently produce reliable and valid results. Measurement items in the performance managemnt system must be designed in such a way that the results of rating are consistent regardless of the raters and the timing of the assessment. Another critical criterion in developing a PA system is the validity of the measurements. It is important to make sure that the appraisal items are really measuring the intended performance or target behavior. If they are not, the PM system encourages the wrong kind of work behaviors and produces unintended , frequently negative, organizational outcomes. For instance, if the number of traffic violation tickets issued is an item in performance appraisal of police officers, it encourages them to sit on a corner of a street and pull over as many violators as possible during heavy traffic hours. The true purpose of a police force, which is public safety, may become secondary to issuing a large number of tickets for many officers.

 What to Evaluate? The first important step in developing a PM system is to determine which aspects of performance to evaluate. The most frequently used appraisal criteria are traits, behaviors, and task outcomes.

(a) Traits :- Many employees are assessed according to their traits, such as personality, aptitudes, attitudes, skills, and abilities. Traits are relatively easy to assess once a rater gets to know ratees. But traits are not always directly related to job per formance. Trait-based assessment lacks validity and thus frequently raises legal questions.

(b) Behaviors :- For many jobs, performance is so broadly defined or so conceptual in nature such as ensuring public safety in the police de partmentthat it is hard to come up with reliable performance measures. In such cases, desirable behaviors can be identified and assessed in the belief that such behaviors lead to successful performance. Such behavior-focused assessment encourages employees to adopt desirable behavioral patterns in the workplace.

(c) Task outcomes :- When information about task outcomes is readily available, it is the most appropriate factor to use in evaluating performance.

When an organization has a clear and measurable goal as in the case of a sales force, this approach is recommended. However, it has its own pitfalls. There is a problem if employee behaviors are not directly related to the task out-come. Too narrow a focus on measuring out-come only sometimes results in unintended negative consequences. When sales staff narrowly focus on target sales figures to increase their performance measure, for example, they are encouraged to help a few large-volume customers and to ignore many smaller buyers. This may result in poor customer service on the floor.

 Who Evaluates? The most common raters of performance are employees' immediate supervisors, who are usually in the best position to know and observe the employees' job performance. They are also responsible for employees work. Their evaluation is a powerful tool in motivating employees to achieve successful and timely completion of tasks. However, as a result of working together over a long time with the same employees, the immediate supervisor may build up a fixed impression about each employee and use it every time he or she has to evaluate performance. Some companies find that subordinates are in an excellent position to observe and

evaluate their managers' performance, especially when it comes to measuring effective management of their department. While there is merit in asking subordinates to evaluate how they are managed, such evaluation may turn into a popularity contest. Accurate and objective assessment may not be obtained if employees are fearful of possible retaliation from their supervisors. Anonymity of the evaluators is key to the successful use of subordinates for objective evaluation. Other raters who are frequently used in some companies include peers, customers, and the employees themselves. Peer evaluation is particularly useful when teamwork and collegiality are important to successful task performance. Peer pressure is sometimes a powerful motivator in encouraging teamwork among members. Customer satisfaction is vital to a company's success and can be used in performance management. Many companies systematically collect performance information from customers, typically through anonymous surveys and interviews. Self-assessment is also a useful means, especially when the performance appraisal is intended to identify the training and development needs of potential employees. Organization exist to attain certain goals and objectives through a effort. Some form of control and co-ordination is needed to facilitate the achievement of such goal. Some form of control and co-ordination is needed to facilitate the achievement of such goal. Some form of control and co-ordination is needed to facilitate the achievement of such goal. Control devices in the form of performance appraisals were invented by the corporate world to accomplish their professed objectives.

Performance management system is systematic and objective way of judging the relative worth or ability of an employee in performing his task. It is a process of evaluating an employees performance on a job in terms of its requirement. In industry, appraisal is a systematic evaluation of performance by supervisors or other familier with their performance because employers are interested in knowing about employee performance. Employee also wishes to know their position in their organization. Performance mgt helps to identify those who are performing their assigned tasks well and those who are not and the reason for such performance. A caution has to be exercised as the assessment of an individuals performance is a delicate task since it is intricately enmeshed in the personality make up of one who is assessing the performance and having profound effect on the individual who is being assessed. It is here that the weakness of human judgement comes to the force. In the field of human behavior and performance, the measurement or appraisal cant take the form of weighing on a scale certain material object or accurately temperature with the instrument. Thus judgement as the basis of the appraisal can be subject to numerous drawbacks connected with the perceptions ones own bias, the social prejudice, unconscious urges and the fact that it is impossible to arrive at categorically absolute judgement in this sphere. Performance Appraisal is useful in many ways as it many ways as it helps in salary and wage determination, helping the employees know their achievements

and failures, training and development needs, promotions and transfer decisions etc. Therefore, a good performance appraisal system should aim at facilitating the communication between two officers and developing empathy, mutuality and appreciation for one anothers problem.

Performance management system concerns with mainly three purposes:-

 Administrative decisions i. e. Promotions, transfers and allocation of financial rewards.  Employee development i.e. identification of training and developmental needs and performance feedback.  Personnel research i. e. identification of training and developmental needs and performance feedback. Therefore a good performance appraisal system should aim at facilitating the communication between two officers and developing empathy, mutuality and appreciation for one anothers problem.

PURPOSE OF PERFORMANCE APPRAISAL:-

 To help determine promotions and transfer decisions.  To identify area for further training.

 To help in deciding the compensation plan.

 To uncover the potential of the person.  To decide about confirmation or termination during probationary period.

ADVANTAGE OF SYSTEMATIC APPROACH TO PERFORMANCE APPRAISAL:-

(1) If it is possible to establish an atmosphere of mutual trust and confidence an effective performance appraisal system will help to build up employee morale.

(2) It will stimulate employee participation in decision making affecting his own work. Management By Objectives is an established criterion as the standard of performance is established by the superior in consultation with employee concerned. Employee interest to improve his performance will help the

management in achieving the organizational goals. (3) It will also help the management in rationalizing a job-oriented level of individual performance. Once the performance level is satisfactorily established, the standard of performance could also move upward leading to productivity. (4) Employee performance can be utilized for placement, job-rotation, transfers, lay-offs, dismissal and discharges demotions. (5) Such appraisals can also serve as a guide in properly administering wage-and salary administrations.

In addition to having an impact on productivity, an effectively designed performance appraisal form servers as a contract between the organization and the employee. This contract acts as a control and evaluating system, better enabling performance appraisal to serve the following performance:

 Management development: Focuses on the future by identifying and preparing individuals for increased responsibility or by establishing remedial training programs.

 Performance measurement:Emphasis the past, trying to determine the relative value of employee performance; is useful for promotion, transfer, compensation and layoff decision.  Feedback:Outlines what performance is expected from employee.  HR planning:Audits management talent to evaluate the present supply of HR for replacement planning.  Communication:Provide a format for the dialogue between superior and subordinate and improves understanding of personal goals and concerns; can also increase the trust between the rater and rate.

PERFORMANCE APPRAISAL- CONCEPT AND PHILOSOPHY :-

Performance appraisals are also known as employee appraisal. It is a technique by which the performance of an employee is measured in terms of cost, quality, time and quantity. Performance appraisal is considered as part of career improvement and development. Performance appraisal are is on going continuous review of companys employee performance.

The purpose of these appraisals are as follows:

 Give feedback on employees performance.  Recognize training needs of employee.  Shape criteria for salary increments, promotion etc.  Offer the chance for organizational analysis and improvement.  Bridge the communication gap between employee and administrator.

 Document criteria used to allocate organizational rewards.

 Form a basis for personnel decisions: salary increases, promotions,

disciplinary actions, etc.  Provide the opportunity for organizational diagnosis and development.  Validate selection techniques and human resource policies to meet federal equal Employment Opportunity requirements.

A frequently used technique to evaluate performance is to make use of numerical or scalar rating method where managers numerically score an individual against a number of objectives/ attributes.The other method is 360 degree performance appraisal in this the employees are also allowed the opportunity to assess the person and give feedback about manager. Mostly used appraisals are: 360-Degree Performance Appraisal.  General Performance Appraisal.  Technical /Administrative Performance Appraisal.  Manager Performance Appraisal.  Employee Self Assessment.

 Project Evaluation Review.

 Sales Performance Appraisal.

PROCESSES OF PERFORMANCE APPRAISAL

The process of Performance Appraisal is as shown in the following tabular form:-

PERFORMANCE MANAGEMENT SYSTEM AT IOCL

BRIEF ON PERFORMANCE APPRAISAL IN IOCL

With a view to appraising each employee, helping the management in placement, transfer and promotion, and deciding about his training needs.The following systems are in practice in IOCL.

(i) (ii)

e-PMS (Electronic Performance Management System) for officers. CRs (Confidential Reports) for non officers.

Assessment period

The assessment period for recording the performance of officers is financial year (1 April to 31 March). For staff it is calendar year.

Employees having rendered more than three months service in a particular year has been separated before end assessment years are eligible and rated through ePMS System.

PROCESS OF PERFORMANCE APPRAISAL SYSTEM FOR OFFICERS:-

Three persons participate actively in Performance Appraisal System. Who are:

(i) (ii)

Appraisee: The employee, who is to be evaluated. Appraiser: Supervisor, who evaluate the performance of Appraiser.

(iii)

Reviewer: Sr. executives, who check the evaluation process.

Apraisee fills a form in the starting of financial year which includes targets to be achieved by that particular employee. Then Appraiser and Appraisee discuss them, reach an agreement and put the agreed goals in writing.

Then they plan how to achieve these goals. On the basis of priority they decide activities to be done to achieve the goals.

At the end of financial year, Appraisee evaluates himself and gives marks out of 5. Then Appraiser evaluates the Appraisee and gives him marks out of 5.

These 3 marks signify: 321Outstanding Average. Needs improvement

Appraiser evaluates Appraisee on the basis of following areas:

(i)

KRA (Key Result Area) is basic area to evaluate employees performance. KPI (Key Performance Indicator): On the basis of KRA, Appraiser gives measurable grades to Appraisee is known as KPI. It may be in terms of marks or percentage. On the basis of difficult KRA, Appraiser decide the stretch for each KPI.

(ii)

Competency Skills such as Intelligence, Communicative Ability, Decisiveness, Human Skills, Teaching Skill, Executive Skills, Leadership Skills, Negotiation Skills, and Creativity Skills.

(iii)

Potential: It shows Employees ability to do the work and to take up higher responsibilities in future.

(iv)

Values: It shows how much values of individual match to the objectives of organization.

COMPARATIVE ANALYSIS BETWEEN NTPC AND IOCL FOR PERFORMANCE APPRAISAL SYSTEM

COMPARATIVE ANALYSIS OF PERFORMANCE APPRAISAL IN 2 PSUs(HIGHER LEVEL)

NTPC (i) In the appraisal form the key result areas are set by discussion of both. Self-assessment & appraisal assessment are done side by side helps in easy comparison. The constraints faced by the appraise are not mentioned in the self appraisal form. (i) IOCL In the appraisal form activities & corresponding targets under each KPA are set. Self assessment & Appraisal assessment are done side by side for easy comparision. Self -analysis of appraise on his performance considering the unfavourable & informable factors in self & the work invironment are done. Targets are set after mutual agreement by both the appraise & the appraiser. A form of counseling session that takes into accounts the strengths, weakness & areas of improvement & the appraise do this feedback. Career profile & plan that takes account of mobility and constraints and career analysis. Contributions by the appraise, its benefits to the organization are considered. Overall assessment is done by appraiser, reviewing officer & the countersigning officer on the basis of his potential for growth.

(ii)

(ii)

(iii)

(iii)

(iv)

(v)

Targets are set after mutual agreement by both the appraise & the appraiser. The moderation committee does final assessment on basis of overall evaluation & potential assessment. Career profile & plan are not considered.

(iv)

(v)

(vi)

(vi)

(vii)

Benefits to the organization by the contribution of appraise are not taken account of. (viii) Overall assessment is done on average of & responses by reporting reviewing, next higher authority & Countersigning authority. (ix) Dont consider the training need & the job rotation.

(vii)

(viii)

(ix)

Training needs are not identified.

COMPARATIVE ANALYSIS OF PERFORMANE APPRAISAL IN 2 PSUs(LOWER LEVEL) NTPC

(1) Form consists of 4 parts. y For Appraisee. y For Appraiser/Rep. officer. y For reviewing officer and other higher authority. y By Chairman of the moderation(counselling) committee. (2) Appraise is assessed by Reporting Officer only on the basis of 4 factors viz. job knowledge,cost consciousness, initiative and communication skill. Important factors like leadership, quality and quantity of work, adaptability, etc., have not considered at all.Moreover the assessment is comprehensive as factors are not rated on a suitable scale. (3) Targets achieved and other achievements are considered but the difficulties faced or facilitating resources are ignored all together. (4) Over all performance and potential of appraise are reassessed by reviewing, reporting, next higher officer and countersigning officer. (5) No career profile and profile and plan sheet.

IOCL
(1) Form consists of 6 parts. y Annual Perf. Appraisal. y Perf. Highlights and add.information. y Overall appraisal. y Career profile & Plan. y Councelling. y General. (2) The appraise is assessed on the basis of attributes rated on a 3 point scale. No weightage is given to factors.

(3) Targets achieved & extra contribution by the appraisee are also considered for appraisal.

(4) Over all performance & potential of appraise are reassessed by appraiser, reviewing officer & the countersigning officer. (5) Career Profile & Plansheet allows appraise to give his own choices for future assignments i.e. it in a way gives an opportunity to the appraise to decide his KPAs.

(6) No comments are given by the rating officers for their extreme ratings so doubts that appraise has cant be solved.

(6) Any constraints faced by the appraise in case of transfer, etc.,are also considered so no employee is forced to do a job which he/she might be unable to do because of any reason.

(7) The training needs of the appraisee are not identified so appraisal form cant be used by the training dept to plan actions.

(7) Councelling is also done so that biasing (if any) is reduced to minimum & both sides get a suitable hearing.

SWOT ANALYSIS OF IOCL

SWOT ANALYSIS OF IOCL:The corporation is a big organization and the Main endeavour for it is to be ahead of the competitors. SWOT Analysis of the corporation gives the following results:Strengths:      Wide field network. Dealership network to assist in our direct efforts. Up-country storage nearer to the market. Lower cost of production from old refineries. Strength on international trade. Seven existing refineries.

Weaknesses: Lack of dedicated organizational set up for support system like Finance etc.  Manpower reduction because of downloading at head office, Regional Offices and field offices. Opportunities : Liberalized market scenario.  Lack of so many refineries producing Free Trade Products by other marketing companies.  Capability to import and market shortfall products. Threats:    Emerging players like Reliance Petroleum Ltd.,Essar oil and MNCs,etc. Dismanting of Administered Price Mechanism. Penetration of International giants into marketing. Old traditional production techniques.

CONCLUSION

CONCLUSION

From all the above information with the help of which I have been able to make my summer training project I draw a conclusion that the performance management system at IOCL has gradually developed over years at IOCL from hand written records to the compturised management systems which is commonly known as the e- PMS at the IOCL. This project also shows that the e-PMS policy at IOCL is of a great importance for the IOCL itself and the employees of the IOCL. It is found that during the e- PMS policy the employees are assessed on regular basis which helps to keep a regular check on the employees and by the performance appraisal methods the employees are assessed only at the end of year which helps them to complete their goals at last minute time also. I also want to tell that the employees had a difficulty when this method was introduced in the organization to adapt this method but later on it made work easy for them as more and more handy records are not maintained .i would also like to come to the point that the performance management system at IOCL is better than other PSUs. The performance management system at IOCL is transparent and clears all the problem of HR department. Its more sinple to understand the working environment of IOCL than NTPC because the self assessment procedure of IOCL specifies all the requirements for the to manage the performance of employees working at IOCL. It is also seen by the comparison made between IOCL and NTPC that both the Organizations have similar work environment but IOCL is providing with the Employees more career oriented work environment which help employees to grow

and perform more tasks as compared to the NTPC. The NTPC rate their employees on the basis of 4 factors while the IOCL rate their employees on a 3 point scale which is more easy to understand and rate the performance of each employee on a similar basis. As the working environment of NTPC says that no career plans are made by the employees even they are not allowed to make, IOCL contradicts this activity of NTPC by allowing their employees to make career oriented plans and plans which are helpful in future so that they provide with employees more vscope to grow. One more point of difference between IOCL and NTPC is that IOCL provides their employees with some workshops, training and counsellings which help them to grow whereas NTPC does not conduct any. By the swot analysis we got to know that despite of being so powerful in market by possessing strengths like wide field network , low cost of production and many more still there are some threats to the PSU like emergence of more and more big companies like Reliance ltd and lesser share in market but overall IOCL is still the biggest and most powerful PSU in oil production.