PERFORMANCE MANAGEMENT SYSTEM AT NTPC

INTRODUCTION The establishment of a framework necessary for planning, supervising, and revising, what an organisation does towards attaining the objective of improvement can be termed as performance management system. It is such a process which helps in efficaciously managing both the individuals and the teams to attain the goal of achieving very high levels of organisational performance. Performance management system establishes shared understanding about what is to be achieved and an approach to leading and developing people which will ensure that it is achieved. Performance management in other words can also be termed as a continuous business cycle. This approach should cater to all the requirements of the organisation and take a holistic view by shunning the approach of isolation. The aim of the organisation should be to evolve a culture with high standards and excellence in quality of service. In present context and keeping in mind the cut throat competition at the global level in the market, an organisation must equip itself with employees who are able to work in the changing scenario of market where a highly professional approach is the prerequisite to deliver the best performance. OBJECTIVES OF PMS OF NTPC: The Company has introduced performance management system to achieve the following objectives: i. To accomplish organizational goals through a system of performance assessment linked to company's objectives. ii. To encourage a two-way communication process between the Appraisee and the Reporting Officer for bringing objectivity in Performance Appraisal System. iii. To evaluate the potential of the executive to assume higher responsibilities along the hierarchy. iv. To involve the Appraisee through various stages of Performance Management, thereby reducing the Performance gaps. v. To map competencies and potential of executives for enabling the organization to source the talent generally from within the company for meeting organizational growth. vi. To involve the executive to share the responsibility and become accountable for efficient management of the business for result oriented performance through mutual involvement. vii. 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. PERFORMANCE MANAGEMENT SYSTEM AT NTPC 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, totalling to 100 marks. The Performance Component as identified and measures evolved would have 50% weightage in total appraisal. Generic Managerial competencies exhibited by an Appraisee while discharging duties have been given 20% weightage in appraisal. The Companys concern for actualization of organizational Core Values is reflected in the Performance Management and is assigned a weightage of 15% in appraisal. The Performance Management System provides for appraisal of the executives Potential to assume higher responsibility and has a weightage of 15% in appraisal. The 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. The system is to develop the competencies by involving the executive in setting targets and identifying Key Performance Areas. The System aims to bring the concept of ownership and accountability on both Appraisee and Appraiser to create mutual trust and confidence. To utilize the Performance Management System for facilitating individual career development and bring organisation wide HR intervention at senior levels to bridge competency gaps. Performance management system at NTPC comprises appraisal of 5 components: PART 1 PERFORMANCE PART II COMPETENCIES PART III - VALUES PART IV POTENTIAL APPRAISAL PART V PERFORMANCE & POTENTIAL APPRAISAL 1. PERFORMANCE: At NTPC, the performance is evaluated at two intervals i.e. first half year performance appraisal, and second half performance appraisal. FIRST HALF PERFORMANCE:: 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. While identifying KPAs, actual Measures for each KPA is defined in written. The KPA Targets are given different weightage 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. The KPAs are determined using SMART approach i.e. Specific, Measurable, Agreed (mutually arrived at by the Appraiser and the Appraisee), Realistic and Time-Bound. The Appraiser and Appraisee jointly evolve KPAs, define measures and allocate marks for each KPA at the beginning of first half-year in April. The Performance under Part IA is jointly reviewed and performance evaluated at the beginning of 2nd half year. 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. 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. SECOND HALF PERFORMANCE: 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. 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. COMMENTS ON PERFORMANCE: Reporting Officer completes the performance report at the end of Appraisal year. In Part IC the Reporting Officer offers comments w.r.t. KPAs, Measures, Achievements and sums up in brief the Performance profile of the appraisee in writing. COMPETENCIES AND EVALUATION: To reward Appraisee 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. Competency based evaluation would help the organisation to take systematic steps for bridging the competency gaps.

2. COMPETENCES: There are 8 competencies assessed and rated at NTPC. These competencies are technical Knowledge, Business Attitude, Strategic,Thinking, Resources Management, Communication Skills, Systematic Thinking, Interpersonal Competence, and Empowering Skills. RATINGS OF COMPETENCIES: The competencies are evaluated annually on a fivepoint 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. Based on the competencies observed, the Reporting Officer classifies each competency on a scale of 1 to 5. The Reporting Officer discusses each competency (A to H) with the Appraisee and plot the rating. The competencies all together have a weightage of 20% in the total Performance Appraisal. 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). The Part II is duly signed by the Appraisee and the Reporting Officer. 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. 3. VALUES: Adoption of the Companys Core Values in the business dealings is one of the essential duties of employees at all levels. 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. 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. COMPANY VALUES: The Corporate Values COMIT and the indicative observable behavior in respect of each value is Customer Focus, Organisational Pride, Mutual Respect and Trust, Initiative and Speed, Total Quality RATINGS: 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. 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. The ratings so obtained would be converted to 15 marks by the conversion formula given. The marks obtained out of 15 marks is written in the Box. The Part III is signed jointly by the Reporting Officer and the Appraisee. The evaluation 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. 4. POTENTIAL APPRAISAL: Potential is a component related to Competencies. 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. In due course of time, the appraisal of Potential Component may be done through Assessment Centre or with the help of such other means, to make the appraisal more broad-based. 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. The Reporting Officer would objectively evaluate the potential of the assessee based on factual information observed during assessment year.

POTENTIAL EVALUATION CRITERIAS: There are 4 generic competencies i.e. Team Building, Conceptual Ability, Strategic Vision, and Leadership Abilities are covered for potential evaluation of Executives. RATING OF POTENTIAL EVALUATION: The evaluation of Generic Competencies for potential Appraisal is done through discussion on a rating scale of 1 to 5. Rating 1 is the lowest and rating 5 being the highest. The evaluation of potential is done on each competency and rating given against each in the rating column by the Reporting Officer. The aggregate of all the competencies A to D would be arrived at by totalling all the ratings. This would be out of 20 marks. The Potential Appraisal has a weightage of 15% in the total Performance Appraisal. The rating on potential out of 15 marks is obtained by using the Conversion formula at the bottom of Part IV. The marks so obtained out of 15 marks are written in the Box. The Part IV is jointly signed by the Reporting Officer and the Appraisee at the bottom of the page. The appraisal of this Part for the previous appraisal year is done at the end of Performance Appraisal year, not later than 15th April. 5. PERFORMANCE AND POTENTIAL PROFILE: The Part V would sum up all marks scored for the Performance Appraisal year. The marks scored for Part I, Part II, Part III and Part IV is transferred to this section and entered against respective item. The aggregate of the marks scored is arrived at by adding all marks scored for different components. This would form the Final score of Performance & Potential Appraisal rating of the executive out of 100 marks. CONCLUSION & SUGGESTION: The Performance Management System is a tool to be utilised for identifying the developmental needs of the appraisee. It is observed that performance management system of NTPC clearly establishes an understanding about what is to be achieved and developing the people to ensure that how it is to be achieved. With absolute clear vision and strong HR strategy, its performance management system evaluates its human resources on different components of managerial responsibilities, consisting of Performance, Generic Managerial Competencies, Values and Potential, The Reporting evaluates Performance, Competencies, Values and Potential. Hence, it is clear on the basis of study and evaluation of PMS system that the companys appraisal system is strong enough to identify and specifically address the developmental needs in order to overcome the competency gaps in its human resources.