PERFORMANCE MANAGEMENT AT WELSPUN CORP. LTD.

BY Pooja Mhatre Submitted in partial fulfilment of the requirements for the degree of Master in Business Administration at the D.Y.Patil Department of Business Management

Abstract The paper seeks to show that Effective Performance Management has become the core of Human Resources and is revitalizing, reenergizing and rejuvenating HR. The challenges faced by the present day organization are broadly discussed under the effectiveness of its performance management systems, which ultimately acts as a catalyst for employee engagements and their effective performance. This paper explores through its findings a new performance management system for improving overall organizational performance in general, through inventing new dimension for effective individual performances in specific. A framework is developed for the implementation of effective performance management in any organization. This paper is explicitly directed towards various parameters for energising human resources and serves interesting food for thought for the future managers dealing with performance management. Introduction Performance management is the systematic process by which organization involves its employees, as individuals and members of a group, in improving organizational effectiveness in the accomplishment of agency mission and goals. The performance management process is used to

communicate organizational goals and objectives, reinforce individual accountability for meeting those goals, and track and evaluate individual and organizational performance results.

Steps in Performance Management System

Performance Planning - provides information on establishing performance expectations and goals for employees to channel their efforts toward achieving organizational objectives. Monitoring Employee Performance provides information on the requirements to conduct at least one formal written progress review for all employees. Employee Development provides information on the importance of evaluating and addressing employee development to increase the effectiveness of an organization. Evaluating Employee Performance provides information on evaluating employee performance against the elements and standards in an employee's performance plan and assigning a summary rating of record. Recognition provides information on a large variety of informal and formal recognition programs, which can be used to recognize and reward employee excellence.

Steps in Performance Management System at Welspun Corp Ltd. A)Goal Setting Goal setting process starts with the finalization of the Annual Business Plan (ABP) of the business for the current financial year. Basis ABP, a Business Scorecard is created which is essentially the balanced scorecard of the CEO. The business scorecard contains strategy of the organization for the financial year. Once the business scorecard is signed off by the board of directors the goals then are to be cascaded across the various functions across the organization. The various functions in an organization work in coordination to achieve the organizational goal. None of the organizational objectives can be achieved by a solitary function in isolation. People resource, technical know-how, operational efficiency and market intelligence are all required to execute the strategy successfully. To ensure such cross-functional synergies are inbuilt into the functional scorecards an alignment process is executed at the very beginning. In the alignment meeting the performance scorecard of a functional head is finalised in presence of his/her peers. This interface raises their expectations from the function concerned and vice-versa.

For example, performance scorecard setting of the functional head of HR & Admin function will receive inputs from Sales & Marketing and Finance functions which are in close interface to HR. Once the functional scorecards are signed off the cascade of goals follow downwards with the cross functional synergies built in. The cascade process must occur in successive stages, each of which is dependent on the preceding one, to produce a culminating effect which is of achieving organizations goals. To put it simply, the business strategy and goals are set by the top management. The success of which is dependent on the performance of each and every individual in the organization. Thus once the Business Strategy for the year is in place, it sets the responsibilities of the Top Management. This is in turn percolated to the next in line, who further cascade it to their Direct Reports, in order to achieve the overall targets. This process continues to the bottom line in each function thus aligning the day to day work processes towards the Organizations Vision and Strategy. The organizational vision and strategy thus cascades through the organization with precision and transparency clearly stating the responsibilities of individuals at each level in the following manner. The Goal Setting process for all Welspun Group companies will start from the formation of Annual Business Plan (ABP) whereas in case of corporate

functions it will start directly with the formation of the BSCs of the corporate function heads. Steps in Goal Setting Process: Step 1:-Annual Business Plan to be frozen before start of new FY. Step 2:-Business Score card (or CEOs BSC) to be signed off by Chairman /Board of Directors. Step 3:-Business Scorecard (or CEOs BSC) to be shared with all function heads in a meeting to ensure common understanding of business goals and objectives. Step 4:-Functional Scorecard created by the Function Heads ,and shared in a common meeting of all function heads and CEO to ensure alignment of functional goals. Step 5:-Final version of Functional scorecard signed off by CEO in 1:1 meeting Step 6:-Each Function Head to repeat step 3,4 and 5 with his/her direct reports and follow same process for all employees in his/her till GM level.

B)Mid Year Review (Oct) Self assessment and manager assessment Feedback meeting with manager on progress to mid year Review development plan progress

C)Year End Review(Apr-May) Business Results available Face to Face Review meeting by the appraiser Self assessment of objectives and behaviours Appraisal meeting Career Discussions Performance Review Development needs

Format of Business Scorecard:-

INDICATIVE

WEIGHTAGES

The performance parameters KRAs, CRs and SPs will have weightages assigned to them in order to come up with a composite performance score. These weightages will be allocated on the basis of the role. Each KRA, CR and SP will also have a weightages assigned to it depending on its importance. Indicative overall weightages are given below Designation KRA Core Responsibility President and above 90 10 General Manager to Sr. 80 20 Vice President DGM 70 30 Dy. Manager-Sr. Manager 60 40 Special Projects 0* 0* 0* 0

Performance Calibration Summary Format

Normally, when comparing employees against each other, a few employees end up at the top and a few at the bottom in what is known as a normal distribution curve (also known as "grading by the curve," see Figure . The majority end up somewhere in the middle. Where the employee is ranked depends on how a person performs in comparison to others. The principal advantage of the comparison method is preventing raters from placing all employees in one category (for example, all superior). Two disadvantagesespecially when very few workers are involvedinclude assuming (1) employees fall in a normal distribution (there may be four excellent performers in a group of five, or none in a group of three), and (2) there are similar differences in performance between two adjacent employees, for instance, between those ranked 1 and 2 and those ranked 4 and 5.

Worker Performance 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 the organization promote such comparisons. Managers who choose to use a standardized approach must next decide whether to judge all workers on an absolute standard or whether to consider an employees time on the job. Those who prefer an absolute standard tend to give lower scores to employees, as they fear new workers who receive high marks will not feel the need for further improvement. In contrast, raters who feel a worker has done superior work considering his time in the position, may rate him as such. An evaluation six months or a year later yielding a superior mark would require a corresponding improvement on the part of the worker. I prefer the latter approach, because it seems more positive.

Research Methodology RESEARCH DESIGN: Research Design refers to "framework or plan for a study that guides the collection and analysis of data". (1) Explorative Research Design: Explorative studies are undertaken with a view to know more about the problem. These studies help in a proper definition of the problem, and development of specific hypothesis is to be tested later by more conclusive research designs. Its basic purpose is to identify factors underlying a problem and to determine which one of them need to be further researched by using rigorous conclusive research designs.

2)SAMPLING PLAN: Sample Size = 31 Employees Sample Area Welspun Corp. Ltd. Duration = Two (2) Months. 3)DATA COLLECTION: Data Sources: (i) Secondary Data through Internet (ii) Primary Data through Questionnaire Contact Method Personal Interaction

Data Analysis Organization Startegy Part 1-Organizational Strategy

Strongl Agr disagr Strongl Contro y agree ee ee y l disagree Total 15 17 10 4 1 1 31 31

1)I am aware of the organisations 5 mission statement. 2)I understand how my role 9 contributes to overall organisational goals and objectives.

1)Responses in terms of awareness of the organisations mission statement are as follows:

Strongly Agree Agree Disagree Strongly Disagree

2)Responses as to whether employees understand how their role contributes to overall organisational goals and objectives yielded the following results:

Strongly Agree Agree Disagree Strongly Disagree

Performance monitoring and feedback

Part 2-Performance monitoring and Strongly Agre feedback agree e Disagree Strongl y disagre e 5 0 7 9 Control Total

1)My performance is effectively 7 monitored 2)I am provided with verbal and 5 written feedback about positive performance. 3)During the performance review 3 meeting, my manager and I set mutually agreeable action plans for future improvements.

19 10

31 31

15

31

4)Personal biases creeps-in while appraising an employee

1)Respondents answered as follows when asked if they feel that their performance is effectively monitored:

Strongly Agree Agree Disagree Strongly Disagree

2) Responses in terms of whether employees believe that they are provided with verbal and written feedback about positive performance yielded the following results:

Strongly Agree Agree Disagree Strongly Disagree

3) Respondents, when asked whether during performance reviews mutually agreeable action plans are set for future improvements, answered as follows:

Strongly Agree Agree Disagree Strongly Disagree

4) Respondents, when asked whether personal bias creeps-in while appraising an employee , answered as follows

Strongly Agree Agree Disagree Strongly Agree

Training and Development Part 4 Training and development Strongly Agree Disagree Strongly Control Disagree Diagree Total

1)Training and 0 developmental needs are identified and documented during the performance review process 2)I am provided with 4 required training such that I am in a position to complete tasks effectively

13

13

31

15

31

1)Respondents opinions as to whether they believe that training and development needs are identified and documented during the performance review process yielded the following responses:

Strongly Agree Agree disagree Strongly Disagree

2)Respondents answered as follows when asked whether they are provided with training such that they are in a position to complete tasks effectively:

Strongly Agree Agree Disagree Strongly Diagree

Reward
Reward Strongly Agree Disagree agree 1)The current performance appraisal 5 4 11 system links performance to pay 2)Performance management may be 7 12 7 used as a decision making tool for the distribution of performance related pay and promotion. Strongly Control Disagree Total 11 31 5 31

1)Respondents, when asked whether they believe that the current appraisal system links performance to pay, answered as follows:

Strongly agree agree Disagree Strongly Disagree

2)Respondents provided the following answers when asked if they believe that performance management may be used as a tool for the distribution of performance-related pay and promotion:

Strongly Agree Agree Disagree Strongly Disagree

The main findings of this study may be summarised as follows: Organisational strategy There is a lack of understanding by employees of the organisations overall strategy; Many employees are not aware of the mission statement.There is a constructive culture present in the organisation. Goals and performance measures Divisionally, goals and objectives have been established and these have been communicated to employees. From the findings relating to organisational strategy, it has been established that many respondents do not know or understand what the overall organisational strategy is. Performance management systems are effective when tying divisional goals and objectives to organisational goals and objective. The setting of individual goals and objectives which are reasonable, by mutual agreement between managers and subordinates is not satisfactory according to the respondents

surveyed. All employees have an understanding of the levels of performance that are expected from them. Performance monitoring and feedback: There is a lack of feedback and communication from managers to subordinates regarding their performance. This is evident from the closed-end questions in the survey as well as the openend probed format question at the end of the survey.Measurement of performance against prior mutually agreed set objectives is lacking. Employees are not involved in decisions which affect the way in which they work. Most respondents surveyed indicated that they are not encouraged to prepare for performance review meetings. Training and development: Training and developmental needs are not sufficiently addressed. There is little formal planning for personal development and growth. Few employees are encouraged to prepare for greater responsibility in the future. Reward: There is not a strong link between performance and pay. Most respondents feel that the measurement of performance and individual contribution to business objectives is not fair and consistent. A large percentage of employees believe that performance management may be used as a decision making tool for the distribution of performance related pay and promotion.

Limitations of Study A few limitations and constraints came in way of conducting the present study, under which the researcher had to work are as follows: Although all attempts were made to make this an objective study, biases on the part of respondents might have resulted in some subjectivity.

Though, no effort was spared to make the study most accurate and useful, the sample Size selected for the same may not be the true representative of the Company, resulting in biased results. This being the maiden experience of the researcher of conducting study such as this, the possibility of better results, using deeper statistical techniques in analyzing and interpreting data may not be ruled

Recommendations The objective of the study was to determine whether the implementation of a performance management system at Welspun Corp. Ltd. would yield desired results in terms of achievement of its strategic goals and objectives. Various literature sources were investigated and considered in an effort to identify key elements of performance management

systems, and their effect on organisations, particularly with regard to the effect of such systems on the implementation of strategy.From the literature, it was established that performance management systems provide a platform for strategy implementation. A performance management system is an excellent mechanism by which improved performance may be achieved. It does this through shared understanding and collective responsibility at all levels of the organisation for the overall achievement of goals and objectives. From the respondents surveyed it has been established that although there are some elements of performance management systems already in operation at Welspun Corp. Ltd., there are many areas in which the implementation of a performance management system would result in improvement. The areas which may be addressed by means of a performance management system are documented below: Communication would be greatly improved by a performance management system which is of sound design, is carefully planned and correctly implemented; An improvement in communication would result in more regularfeedback to subordinates in terms of their performance; Regular feedback on performance requires that performance objectives be set, and that performance is then measured against the set objectives; Individual and divisional performance measures would be directly related to each other and to those of the organisation, and in support of overall group performance, particularly in terms of goals and objectives.

Conclusion The aim of this study was to determine whether the implementation of a performance management system at Welspun Corp Ltd. would yield desired results in terms of achievement of its strategic goals and objectives. The performance management cycle consists of clarifying expectations; planning to facilitate performance; monitoring performance; providing feedback; coaching; counselling and support; and the recognition of good performance. According to the literature, the chances of improved performance are greatly improved with this cycle in place. Although the organisation has strategic objectives, it has experienced difficulty in achieving these objectives. Based on the literature, it has been established that performance management is a strategy implementation tool. It would appear that the biggest problem experienced at Welspun Corp. Ltd. is that of communication. Effective performance management stipulates communication as one of its underpinnings. It relies on interpersonal relationships, as well as frank and open discussion between subordinates and managers regarding performance issues. If nothing else, the implementation of a performance management system would improve communication at Welspun Corp. Ltd., which would in turn go a long way in improving both individual and group performance. There is sufficient factual evidence to support the notion that the implementation of a performance

management system at would yield desired results in terms of achievement of its strategic goals and objectives.