Performance Management System at NTPC

1. INTRODUCTION:

1.1 The System of Performance Appraisal for Board level positions and of executives two levels below the Board level positions for Navaratna and Mini Ratna Companies has been revised by Public Sector Enterprises Selection Board for having uniformity in the Appraisal System.

1.2 NTPC has accordingly reviewed the existing Appraisal System of senior executive levels. The revised Performance Management System having components of Performance Planning, Monitoring, Review, and Development through involvement of the Appraisee is being introduced. 2 2.1 OBJECTIVES: To accomplish organizational goals through a system of performance assessment

linked to company's objectives. 2.2 excellence. 2.3 To encourage a two-way communication process between the Appraisee and the To facilitate fulfillment of individual aspirations and promotion of professional

Reporting Officer for bringing objectivity in Performance Appraisal System. 2.4 hierarchy. 2.5 To involve the Appraisee through various stages of Performance Management, To evaluate the potential of the executive to assume higher responsibilities along the

thereby reducing the Performance gaps. 2.6 To map competencies and potential of executives for enabling the organisation to

source the talent generally from within the company for meeting organizational growth. 2.7 To involve the executive to share the responsibility and become accountable for

efficient management of the business for result oriented performance through mutual involvement. 2.8 To provide a transparent system to help each executive to evaluate his own performance and

develop himself with the help of Reporting Officer To provide for removal of differences, if any, in performance appraisal through intervention of the Reviewing Officer.

3.0

APPLICABILITY:

3.1 The revised Performance Management System is applicable to all senior executives at the level of E7A and above including Board level. 3.2 The Performance Management System will also cover senior executives of E7A and above who may join NTPC on deputation or retaining lien while in service of NTPC. 3.3 However, for Board level Appointees the The Performance Appraisal Report as prescribed by PESB is applicable.

FOCUS OF PERFORMANCE MANAGEMENT:

4.1 The focus of the Performance Management System for senior executives is to appraise them on different components of managerial responsibilities, consisting of Performance, Generic Managerial Competencies, Values and Potential, totaling to 100 marks. 4.2 The Performance Component as identified and measures evolved would have 50% weightage in total appraisal. 4.3 Generic Managerial competencies exhibited by an Appraisee while discharging duties have been given 20% weightage in appraisal. 4.4 The Companys concern for actualization of organizational Core Values is reflected in the Performance Management and is assigned a weightage of 15% in appraisal. 4.5The Performance Management System provides for appraisal of the executives Potential to assume higher responsibility and has a weightage of 15% in appraisal. 4.6The Performance Management System brings to focus important managerial attributes and strikes a balance between Performance and other aspects of managerial talents/skills. Executives will have a set of Key Performance Areas to be identified through discussion and achieve them during the performance period. 4.7The system is to develop the competencies by involving the executive in setting targets and identifying Key Performance Areas. 4.8The System aims to bring the concept of ownership and accountability on both Appraisee and Appraiser to create mutual trust and confidence. 4.9To utilize the Performance Management System for facilitating individual career development and bring organisation-wide HR intervention at senior levels to bridge competency gaps.

6.0

VARIOUS PERFORMANCE MEASURES

PART 1 PERFORMANCE PART II COMPETENCIES PART III - VALUES PART IV POTENTIAL APPRAISAL PART V PERFORMANCE & POTENTIAL APPRAISAL

7.0

PART I-PERFORMANCE:

7.1

Part IA: First Half Year Performance:

7.1.1 The System provides for the Reporting Officer (Appraiser) and the executive (Appraisee) to identify through discussion and agree upon a set of Key Performance Areas (KPAs) in brief at the beginning of the first half-year.

7.1.2 While identifying KPAs, actual Measures for each KPA is to be defined and written. The Measure could have Quantitative Targets, Time Schedule for achieving KPAs fully/partially, Qualitative Improvements etc., based on the nature of the KPA item.

7.1.3 The KPA Targets may be having different weightages and limited to 8 Key Performance Areas only. The idea is to enable the executive to focus on given deliverables and not miss important critical areas.

7.1.4 The KPAs should be more focussed, concrete and measureable. They should be more than the Norm i.e. normal standard of performance expected. The KPAs reflect Stretch Standard which is in excess of Norm. The KPAs should be SMART i.e. Specific, Measurable, Agreed (mutually arrived at by the Appraiser and the Appraisee), Realistic and Time-Bound.

7.1.5 One of the KPAs should be Staff Development, as building a performing team is an essential target for senior executives. The measures for this could be mandays of training & development activities for the Unit/ Department/function vis-a-vis the Companys training targets, HR initiatives like Professional Circles, Quality Circles, Suggestion Scheme etc.

7.1.6 The Appraiser and Appraisee jointly evolve KPAs, define measures and allocate marks for each KPA at the beginning of first half-year by 15th April.

7.1.7 The Performance under Part IA is jointly reviewed and performance evaluated at the beginning of 2nd half year and not later than 15th October.

7.1.8 At the time of joint review, actual achievement is briefly recorded against each KPA and marks obtained w.r.t. each KPA is indicated in relevant column.

7.1.9 The aggregate of marks obtained for different KPAs is worked out and indicated as aggregate of IA. Both the Appraisee and the Reporting Officer sign the Part IA.

7.2

PART IB: SECOND HALF PERFORMANCE:

7.2.1 The System helps to review the Key Performance Area Targets for the Second Half-Year based on the evaluation of 1st half-year KPAs depending on actual achievements.

7.2.2 The reworked KPA targets are briefly recorded, Measures for each KPA defined and Marks allocated. KPAs which extend beyond the 1st half year may be re-recorded in the targets of the 2nd half-year.

7.4

PART 1D: COMMENTS ON PERFORMANCE:

7.4.1 Part I related to Performance gets completed on filling up of Part ID by the Reporting Officer at the end of Appraisal year.

7.4.2 In Part ID the Reporting Officer offers comments w.r.t. KPAs, Measures, Achievements and sums up in brief the Performance profile of the appraisee in writing. It would provide a pictorial description on the performance of the appraisee for the year.

7.4.3 While summarising the performance, the Reporting Officer would bring out summary of Key Performance Areas achieved in the year; point out positive personality factors that were observed during the performance, unfavourable situations that were encountered by the appriasee during the period, favourable conditions that prevailed in the situation and finally mention the negative personality factors which were observed and which came in the way of achieving KPAs, if any.

7.4.4. The Reporting Officer should base the evaluation of the performance based on the data collected during the performance period. It is therefore desirable to maintain a diary for monitoring the performance and providing feedback from time to time during the relevant performance period.

7.5 DETERMINATION OF INPUT FOR PART IA AND PART IB: 7.5.1 Key Performance Areas (KPAs) are such critical areas of performance, which though constitute few in number, would have major impact on Business/Targets of the Units/Functions.

7.5.2 The input for identification of Key Performance Areas, Measures and allocation of marks to different KPAs will have to be derived and worked out from the Annual Performance Targets of the Project, Station, Division, Department and Function as the case may be.

7.5.3 Similarly, the KPA inputs and measures are also derived from the MOU Targets set for the financial year which flows down from Corporate level to different Units and Functions across the Organisation.

7.5.4 Another source for KPAs are the functional role & responsibility being discharged as Unit Head, Functional Head, Head of Department, etc. In addition, KPAs could be arrived from the Business Plans for the Unit/Function, Corporate Plan, Recommendations of Study Groups, Task Forces, R&M Plans, Long Term and Short Term Plans etc. These are only indicative.

7.5.5 The various activities/sub-activities associated with KPAs should be separately discussed including Measures/Standards for each of them. Therefore a separate diary for details and for monitoring periodically is preferred.

7.5.6 KPA-Measures should be preferably fixed on a reasonable range of performance target instead of a fixed target, so that other factors affecting performance could be accounted for and a reasonable assessment is made.

7.5.7 The range of performance measurement could be Good which amounts to meeting the Norm, Very Good would be a range of performance which would be superior to the Norm but cannot be classified as Outstanding. The range of measure for Outstanding is a stretch target which could be achieved by best efforts, optimal utilisation of resources. Similarly, allotment of marks should be on a range linked to the extent of achievement of targets whether it is in range of Good, Very Good or Outstanding. For performance below Good also, marks are allotted commensurate with performance level.

7.5.8 Therefore, at the beginning of the year, it is essential to discuss the KPAs, Measures and Marks awarded to different KPAs by the Reporting Officer with the appraisee for 1st half-year performance.

7.5.9 Similarly, at the beginning of 2nd half-year, the KPAs and Measures are assessed and Marks allotted for the 1st half-year, and a new set of KPAs, Measures and Marks are arrived at for 2nd halfyear Performance period.

COMPETENCIES AND EVALUATION : 8.1.1 To reward Appraisees not solely on the performance but also on the competencies, as performance may be influenced by several other factors on which executive has no direct control.

8.1.2 Competency based evaluation would help the organisation to take systematic steps for bridging the competency gaps.

8.2

COMPETENCIES AND RATINGS:

8.2.1 Competencies: The competencies and the ascribed meaning/ability to be assessed are as under: A. Technical Knowledge:

Knowledge and understanding of all aspects of the work of the organisation, as well as, the present assignment which the executive is presently doing. B. Business Attitude:

The ability to identify opportunities, use data for making effective business decisions on time, identify the strengths and weaknesses of the existing system and take action as required. Considers all departmental/divisions performance in line with the targets and goals of the company. C. Strategic Thinking:

The ability to understand situations and to generate alternate strategies, plans and tactics. Capacity to conceptualize long term role based on operational analysis and assessment of policies and procedures having impact on business strategies of the company. D. Resources Management:

The ability to allocate and optimally utilize the resources in a cost effective way. E. Communication Skills:

Ability to communicate ideas and information effectively through both written and oral presentations, to convert ideas into action plans after ensuring their acceptability to present companys policies and objectives to groups within and outside.

F.

Systematic Thinking:

Ability to see linkages between situations that are not obviously related, using common sense, past experience and rules to identify key underlying issues in their proper perspective for taking necessary action. G. Interpersonal Competence:

To promote open and constructive relationships with all; the ability to understand the nature and dynamics of interaction with others; respecting individuals as they are and exhibiting tolerance for differences and disagreements based on rational and objective grounds. H. Empowering Skills:

The ability to delegate authority to the subordinates while retaining responsibility thus, contributing to the development of the subordinates. Willingness to consult and involve subordinates in decision making thereby espousing confidence in subordinates.

8.2.2 RATINGS OF COMPETENCIES: The competencies are evaluated annually on a five-point rating scale-1,2,3,4 & 5 - the rating 1 being the lowest end of the scale and 5 being the highest on the scale.

8.2.3 Based on the competencies observed, the Reporting Officer would classify each competency on a scale of 1 to 5.

8.2.4 The Reporting Officer would discuss each competency (A to H) with the Appraisee and plot the rating.

8.2.5 The competencies all together have a weightage of 20% in the total Performance Appraisal.

8.2.6 The aggregate of the rating of each competency is to be arrived at the bottom of the ratings column. Thereafter the aggregate rating is to be converted to marks out of 20 using the Conversion formula (based on the maximum attainable marks of 40 i.e. 8 competencies x 5 maximum rating = 40).

8.2.7 The marks so obtained out of 20 is indicated in the Box at the bottom of Part II.

8.2.8 The Part II is duly signed by the Appraisee and the Reporting Officer.

8.2.9 The review of competencies and completion of Part II for the previous appraisal year is done at the end of Appraisal year, not later than 15th April.

9.0

PART III:VALUES:

9.1

Value Actualisation:

9.1.1 Adoption of the Companys Core Values in the business dealings is one of the essential duties of employees at all levels.

9.1.2 Especially Senior Executives who occupy leadership positions in the Company, have a major role in the actualisation of Core Values by being Role Models in observing and practising them and thereby leading by example.

9.1.3 Hence due emphasis is laid on the Core Values demonstrated by the executive in his day-today business dealings and 15% weightage has been ascribed in the Performance Appraisal to the process of Value actualisation exhibited by the executive.

9.2

COMPANY VALUES & RATINGS:

9.2.1 The Corporate Values COMIT and the indicative observable behavior in respect of each value is as under:

A.

Customer Focus:

The Executive has conviction that the customer (Internal & External) is the center of all activity; he is courteous, sincere, patient and sensitive to the customers and honours commitments on time.

B.

Organisational Pride:

The Executive holds the company in high esteem and rejoices in belonging to it; he demonstrates loyalty and commitment to the organisation and has a sense of ownership and belongingness with it.

C.

Mutual Respect and Trust:

The Executive has high regard for and faith in the fellow organisational members; he believes in collaboration and openness and has good team spirit.

D.

Initiative and Speed:

The Executive believes in taking the first step, thinking new and ahead and being swift without compromising on quality; he is creative and innovative and has the willingness to experiment and take risks.

E.

Total Quality:

The Executive believes in pursuing excellence in all spheres of activity; he makes continuous efforts in improving standards of performance, systems and processes.

9.2.2. Each value has to be evaluated through discussion on a rating scale of 1 to 5 the rating 1 being the lowest and 5 being the highest.

9.2.3 The Reporting Officer would evaluate the Appraisee on each of the Value and mark the rating for each value. The ratings are then aggregated at the bottom of the rating column out of maximum of 25.

9.2.4 The ratings so obtained would be converted to 15 marks by the conversion formula given.

9.2.5 The marks obtained out of 15 marks is written in the Box.

9.2.6 The Part III is signed jointly by the Reporting Officer and the Appraisee.

9.2.7 The evaluation of Values and completion of Part III for the previous appraisal year is done at the end of Performance Appraisal Year, not later than 15th April.

10.0

PART IV-POTENTIAL APPRAISAL:

10.1.1 Evaluation of Potential:

10.1.2 Potential is a component related to Competencies of Part II. It seeks to achieve one of the major objectives of the Performance Appraisal System, namely evaluating the suitability of the executive to assume higher responsibilities along the hierarchy.

10.1.3 In due course of time, the appraisal of Potential Component may be done through Assessment Centres or with the help of such other means, to make the appraisal more broad-based. 10.1.4 The personality profile of each individual based on the Assessment Centre or with the help of other process can become available to the Reporting Officer to enable him to evaluate potential of the appraise with more objectivity.

10.1.5 That would also provide a more detailed prescription of development initiatives. This would be possible once the Assessment Centres or any such other systems are institutionalised and all senior executives are covered.

10.1.6 Pending institutionalisation of such systems, the Reporting Officer would objectively evaluate the potential of the assessee based on factual information observed during assessment year.

10.2

RATINGS ON POTENTIAL:

10.2.1 The following generic competencies are covered for potential evaluation of Executives : A. Team Building:

The executive demonstrates ability to cooperate and interact with others in a team environment, is able to work collaboratively instead of competitively, is able to reorganize his own department while managing diverse and divergent views without losing sight of the objectives.

B.

Conceptual Ability:

The executive demonstrates the ability to understand and forecast results, sensitive to environment, able to respond to situations quickly and predict changes.

C.

Strategic Vision:

The executive demonstrates the ability to build future scenarios and to handle change with a focus on long term issues.

D.

Leadership Abilities:

The executive demonstrates ability for guiding and facilitating decision making for achieving goals, generates enthusiasm, pride and commitment amongst all levels of the organisation, setting an example for others to emulate.

10.2.2 The evaluation of Generic Competencies for potential Appraisal is done through discussion on a rating scale of 1 to 5. Rating 1 being lowest and rating 5 being the highest.

10.2.3 The evaluation of potential is done on each competency and rating given against each in the rating column by the Reporting Officer.

10.2.4 The aggregate of all the competencies A to D would be arrived at by totaling all the ratings. This would be out of 20 marks.

10.2.5 The Potential Appraisal has a weightage of 15% in the total Performance Appraisal.

10.2.6 The rating on potential out of 15 marks is obtained by using the Conversion formula at the bottom of Part IV.

10.2.7 The marks so obtained out of 15 marks is written in the Box.

10.2.8 The Part IV is jointly signed by the Reporting Officer and the Appraisee at the bottom of the page.

10.2.9 The appraisal of this Part for the previous appraisal year is done at the end of Performance Appraisal year, not later than 15th April.

11.0 11.1

PART V: PERFORMANCE AND POTENTIAL PROFILE: Final Marks Scored:

11.1.1 The Part V would sum up all marks scored for the Performance Appraisal year.

11.1.2 The marks scored for Part I, Part II, Part III and Part IV is transferred to this section and entered against respective item.

11.1.3 The aggregate of the marks scored is arrived at by adding all marks scored for different components.

11.1.4 This would form the Final score of Performance & Potential Appraisal rating of the executive out of 100 marks.

11.2

COUNTERSIGNING THE APPRAISAL:

11.2.1 The Appraisal of the Reporting Officer is duly countersigned by the Reviewing Officers above in the hierarchy.

11.2.2 The Reviewing Officers in the hierarchy would go through the performance of the appraisee in totality as finally brought out by the Reporting Officer inter-alia indicating details of marks scored under Performance, Competencies, Values and Potential before countersigning & offering comments if any. 11.2.3 In case the first Reviewing Officer in hierarchy feels the necessity of reviewing the appraisal written by the Reporting Officer he would have a detailed discussion with the Reporting Officer on each of the items and arrive at a fair decision accounting for the views of Reporting Officer.

Thereafter he should offer comments in the relevant column including different ratings for each of the items duly substantiated by the facts.

11.2.4 Similarly if the Second Reviewing Officer has any comments with respect to the performance and other parameters of evaluation he would duly discuss with the first Reviewing Officer and arrive at a fair decision, accounting for the views of the first Reviewing Officer. Thereafter offer comments and ratings on the Performance of the appraisee in the relevant column.

11.2.5 Similarly, countersigning authority who is the final authority will offer considered comments in the final appraisal by him taking into account the appraisal of the Reporting Officer and the Reviewing Officers. The decision of the countersigning authority is final.

11.2.6 The Reviewing Officer / countersigning officer while undertaking review would be guided by such factors like situations/circumstances that may have bearing on the overall performance evaluation of the appraisee. He would endeavour to have uniform approach with respect to assessments brought out by different Reporting Officers under his control.