Human resorce management

MGT-513

Assignment
On
Performance Appraisal of Maruti Suzuki.

Submitted by: -
Submitted to:-
Sukhvinder Singh Mr. Munish Kumar

Roll no: - RV8901A07 lecturer of L.S.H

SESSION (2009-11)

Maruti Suzuki
Maruti Suzuki India Limited (MSIL,
formerly known as Maruti Udyog
Limited) is a subsidiary of Suzuki Motor
Corporation, Japan. MSIL has been the
leader of the Indian car market for over two and a half decades. The company has
two manufacturing facilities located at Gurgaon and Manesar, south of New Delhi,
India. Both the facilities have a combined capability to produce over a 1.2 million
(1,200,000) passenger car units annually.

The company plans to expand its manufacturing capacity to 1.75 million by 2013.
For this the company will be investing around Rs. 60 Billion (Rs 6,000 Crores)
over the period till 2013.

The company offers a wide range of cars across different segments. It offers 14
brands and over 150 variants - Maruti 800, people movers, Omni and Eeco,
international brands Alto, Alto-K10, A-star, WagonR, Swift, Ritz and Estilo, off-
roader Gypsy, SUV Grand Vitara, sedans SX4 and Swift DZire In an environment
friendly initiative, in August 2010 Maruti Suzuki introduced factory fitted CNG
option on 5 models across vehicle segments. These include Eeco, Alto, Estilo,
Wagon R and Sx4.

In fiscal 2009-10 Maruti Suzuki became the only Indian company to manufacture
and sell One Million cars in a year.
Maruti Suzuki has employee strength over 7,600 (as at end March 2010),
In 2009-10, the company sold a record 10,18,365 vehicles including 1,47,575 units
of exports. With this, at the end of March 2010, Maruti Suzuki had a market share
of 53.3 per cent of the Indian passenger car market.

Maruti Suzuki's revenue has grown consistently over the years.

(Rs. in Million)
Year Net Sales Year Net Sales
2004-05 1,09,108 2005-06 1,20,034
2006-07 1,45,922 2007-08 1,78,603
2008-09 2,03,583 2009-10 3,01,198

The company is listed on Bombay Stock Exchange and National Stock

Exchange.

The Government of Japan has honoured Maruti Suzuki with the METI Award for
promotion of Japanese brand in India. Maruti Suzuki is one of the six companies,
as also one among two outside Japan, to have received this prestigious award.
Vision:-

We believe our core values drive us in every endeavour.

Maruti's Million
We began our operations way back in 1983, with the Maruti 800 - the vehicle which
brought about a revolution in the Indian car market.
Today, one in every two cars in India is a product of Maruti Suzuki. Our scale and
manufacturing complexity have today moved to a different league from when it began.
We have reached a capacity of one million cars annual production this year.

This feat is entirely based on the company's constant endeavour to meet aspirations of
a large and diverse demography, by providing the best through innovative products
and services.
Today, each car from the Maruti Suzuki factories at Gurgaon, and Manesar, Haryana,
North India are the tangible evidence of Quality, manufacturing standards and
efficiency.

PMS:-

Production Management System (PMS) is the next step towards moving ahead to sustain
the momentum. It is a strategy to achieve Manufacturing Excellence evolved through
participative approach. The system is people driven and ensures involvement of all levels
(Managers, Executives, and Supervisors).

The concept ensures participation and error free communication. The result is clarity of
content, better understanding and openness towards feedback. These values make PMS a
sustainable system. Having achieved the target of selling a million cars in the financial
year 2009 - 2010, PMS has lead the production team towards greater enhanced
productivity with perfection.
PMS is derived from the basic Japanese principles of 5S, 3G and 3K

In order to bring an improvement in overall processes and systems in Production

Division through involvement of all levels, PMS was launched in Maruti Suzuki.
Through various phases of PMS the company embarked on its journey of bring in
a) Clarity of Role, Non-duplication of work, Ownership, Commitment and
Standardization in all our process and systems across the production division.

Suzuki Motor Corporation

The Company started its business in the year 1909 as Suzuki Loom Works and then
was incorporated as Suzuki Motor Corporation in the year 1920.
With headquarters at Hamamatsu, Japan, Suzuki has steadily grown and expanded
its business across geographies. During the post WW II period, the company's
'Power Free' motorized bike earned a good reputation.
Post the success of its first motorized bike 'Power Free', the company launched a
125cc motorcycle 'Colleda', and later launched its first lightweight car 'Suzulight'
that marked the start of Japan's automotive revolution. Each of these products were
epoch-making in their own right as they were developed and manufactured by
optimizing the most advanced technologies of that period.

Suzuki today offers its customers a wide range of motorcycles, automobiles,

outboard motors and related products such as generators and motorized
wheelchairs.

Suzuki's trademark is recognized throughout the world as a brand that offers high
quality, reliable and genuine products. Suzuki stands behind this global symbol
with a determination to maintain this confidence in the future as well, never
stopping in creating such advanced 'value-packed' products.

Financial highlights for the fiscal year 2009:

Net sales ¥ 2.5 trillion (up 1.3% y-o-y)

Operating Income ¥ 80.0 billion (up 0.8% y-o-y)

Net Income ¥ 30.0 billion (up 3.8% y-o-y)

MEANING OF SELECTION

It is the process of searching the potential candidate. It is negative in nature in the

Indian context. But it is positive in the US context.
Steps in Selection Process of Maruti udyog ltd

Selection process consists of a series of steps, at each stage, facts may come light
which may lead to the rejection of the applicant. It is a series of successive hurdles or
barriers which an applicant must cross. These hurdles or screens are designed
to eliminate an unqualified candidate at any point in the selection process There
is no standards selection procedure to be used in all organizations or for
all jobs. The complexity of selection procedures increases with the level and
esponsibility of the position to be filled.

Performance appraisal
Performance appraisal, also known as employee appraisal, is a method by which
the job performance of an employee is evaluated (generally in terms of quality,
quantity, cost and time). Performance appraisal is a part of career development.

Performance appraisals are regular reviews of employee performance within

organizations

Generally, the aims of a performance appraisal are to:

1) Give feedback on performance to employees.

2) Identify employee training needs.

3) Document criteria used to allocate organizational rewards.

4) Form a basis for personnel decisions: salary increases, promotions, disciplinary

actions, etc.

5) Provide the opportunity for organizational diagnosis and development.

6) Facilitate communication between employee and administrator.

7) Validate selection techniques and human resource policies to meet federal Equal
Employment Opportunity requirements.

A common approach to assessing performance is to use a numerical or scalar rating

system whereby managers are asked to score an individual against a number of
objectives/attributes. In some companies, employees receive assessments from
their manager, peers, subordinates and customers while also performing a self
assessment. This is known as 360° appraisal.

The most popular methods that are being used as performance appraisal process
are:

1) Management by objectives

2) 360 degree appraisal

3) Behavioral Observation Scale

4) Behaviorally Anchored Rating Scale

Trait based systems, which rely on factors such as integrity and conscientiousness,
are also commonly used by businesses. The scientific literature on the subject
provides evidence that assessing employees on factors such as these should be
avoided. The reasons for this are two-fold:

1) Because trait based systems are by definition based on personality traits, they
make it difficult for a manager to provide feedback that can cause positive change
in employee performance

2) Trait based systems, because they are vague, are more easily influenced by
office politics, causing them to be less reliable as a source of information on an
employee's true performance.

Effective performance appraisal

A tricky issue facing most organizations is the carrying out of effective and fair
performance appraisal. Far too often companies find that many employees are left
grumbling about “unfairness” and bias.

While first accepting that there is probably no system which is close to perfect, let
us look at some key criteria that an appraisal system must satisfy.

At a macro-level, the aim of the performance appraisal from the company’s point
of view cannot be to just determine increments or promotions. Yes, that is how it
affects the individuals, but it cannot be the organization’s aim. The organization’s
aim has to be to put in place a system that actually improves performance.

Let us now look at the specific criteria for the system.

The first step must be to understand clearly what is expected from each employee /
position in the organization. And this must be done well before appraisal time,
even before the appraisal year starts, in fact.

For instance, if the job of the Corporate Communications manager is to ensure that
all mass communication about the brands and about the company is effective and
in cohesion, then these should be laid out as her primary performance appraisal
criteria. Once the criteria are clearly laid out, they should be communicated to her
in unambiguous fashion so that she knows what to work towards and how she is
going to be evaluated.

It is useful if these goals can be quantified. For example, one goal for a brand
manager could be that his brand must have at least X per cent awareness in the
market

Making the goals quantitative in nature makes evaluation easier and less
subjective; and therefore less susceptible to suspicions of “unfairness”.

However, it is not a good idea to get caught up in making all goals quantitative. It
is a fact of life that not all things can be measured or quantified; for instance,
courtesy. If a front desk’s performance is to be evaluated on the level of courtesy
shown to visitors, then this cannot be quantified very easily but certain pointers can
be got from the number of complaints about discourtesy and general observations
about the person’s deportment, among others.

Such non-quantifiable measures will involve a certain amount of subjectivity.

Subjectivity need not automatically mean bias. There are steps that ensure that
subjectivity does not degenerate to bias in the performance appraisal context

One such step is periodicity. It is useful if some form of appraisal can be done
every three months. This would tell the person whether he / she is going in the
right direction, and what extra efforts / course correction are required to improve
the performance.

Another crucial requirement is transparency. Too often, people are told something
like “your performance has been good, but I wouldn’t say excellent” and that they
need to try harder. Such feedback is little better than useless as it offers no
direction whatsoever to the individual. The individual needs to know what scores
he / she is being given and why.

One of the main reasons why transparency is a casualty in most appraisals is that
most managers are not comfortable giving negative feedback.

Maybe it is a cultural issue, but pointing out problems or giving negative feedback
in a one-on-one face-to-face setting and in a calm matter-of-fact manner is not
something most managers are comfortable doing. For that matter, most individuals
are not comfortable receiving this either.

This can only be tackled through extensive counseling and this too needs to start
well before appraisal time.

Employees also need to be counseled that the amount of increment given is

dependent on the appraisal score, but is equally dependent on the company’s
financial performance and outlook. This again has to be handled with a certain
degree of tact.

In many companies, such decisions are veiled in secrecy and there is talk of
“normalization” which no one really understands. Transparency is again crucial to
dispel lingering doubts of bias.

Effective performance appraisal clearly needs a lot more than the few points
outlined here, but attention given to these points will go a long way indeed.

Maruti adopts `360 degree' appraisal system

Employee to be evaluated not just by superiors, but also by peers, subordinates

It would seem that there is no corporate human resources policy that has not had
its share of controversies for being biased. With an increasing number of
qualitative factors that affect employees at the workplace, the performance
appraisal process to make it as fair as possible has been the dream of every HR
manager.

And now qualitative factors are not just at play in the services sector, but also in
manufacturing. With cubicles giving way to open offices, the top-down approach
to employee performance appraisal is also on its way out.

One company that has set itself on course to further demonstrating and opening up
its employee evaluation process is car market leader Maruti Udyog.

The company has introduced a unique 360-degree feedback system, starting with
its senior leadership. The new system has been co-developed with Ernst & Young
and has been put in place recently.

Under the 360-degree feedback system, the employee is rated not just by his
superiors, but also by his peers and subordinates.

"We are starting the 360-degree feedback process with employees in the top
management such as chief general managers and general managers, whose
performance will now be assessed based on feedback from their peers and junior
management employees within the same department. Till last year, their
performance was being appraised only by the Directors and the Managing
Director," says Maruti's Chief General Manager (HR), Mr S.Y. Siddiqui.
Ernst & Young, in consultation with Maruti, has listed a set of leadership
competencies that are expected in a general manager. Based on that, it has prepared
a questionnaire to which peers and subordinates can respond online.

Although acknowledged as an effective tool for leadership development in the

West, Indian companies have been shy of introducing such a feedback system for
fear of disturbing traditional hierarchical structures.

HR consultants feel that the critical issues in implementing such a system include
assuring respondents that their feedback will remain confidential and convincing
the person receiving the feedback that this is a development tool and not an
appraisal tool. Maruti has handled this by getting E&Y and other consultants to
make detailed presentations to the senior management personnel before the process
got under way. The company has a committee of general managers, called Human
Resource Inter Divisional Committee (HRIDC), which is consulted on all major
HR issues.

The initiative has been unveiled with an e-mail by Maruti's Managing Director, Mr
Jagdish Khattar, asking people to support the online questionnaire process. The
360-degree feedback system will also include a self-appraisal by the general
manager. At the end of the process, he can compare his self-appraisal with the
assessment of his subordinates and peers.

One of the benefits that Maruti is hoping to get out of the 360-degree feedback
process is the sense of empowerment and importance felt by subordinates, when
they are asked to offer their feedback about their superiors. Maruti currently has
over 4,000 employees on its rolls.

Establishment of Maruti Udyog Limited

• Incorporated on February 24, 1981.

• MOU signed on April 4, 1982.

• License and JV agreement signed on Oct 2, 1982.

• Plants located at Gurgaon, Haryana.

• Head office located at New Delhi.

• Ownership - GOI 49.74%, SMC 50%,

VISION

“The leader in the Indian Automobile Industry, creating customer delight and
shareholders’ wealth; A pride of India.”

HR VISION

Lead and Facilitate continuous change towards organisational excellence ; create a

learning and vibrant organisation with high sense of pride amongst its members

APPRAISAL & REWARD

APPRAISAL

· New Appraisal System based on KRAs &Targets

· Review of Targets at regular Intervals

· People Development an important KRA

REWARD

· Promotions based on Performance

· Productivity & Profit-linked Incentive Schemes

· Training including Long-term SMC Japan Trg.

· Highest paid workforce in the Industry, if not the Country

CAREER DESIGN

• Performance & Potential based Appraisals

• Fast Track Option for High-performers

• Promotions after Managers Vacancy based

• Interviews for promotions above Managers

• Selection of Supervisors:

– Performance / Attendance / Discipline record

– Written Test & Interview

• Job Rotation - including Inter-functional

RETENTION & EMPLOYEE WELFARE

· Employee Welfare

- Residential Colonies for Employees – Chakkarpur & Bhondsi

- Hospitalisation Reimbursement – on actuals without Ceiling

- Vehicle Loans

- Household Equipment Loans

- House Building Advance

- Annual Advance

· MUL PF Trust – for better Mgt., Service & speedy redress

· Proposed MUL Pension Scheme

· Learning Opportunity - Benchmark in Auto Technology

· Professional Value addition through Training

· Opportunity for foreign training at SMC, Japan

· Job Rotation & Job enrichment

EMPLOYEE ENGAGEMENT -

ESOPs

• Maruti Udyog Ltd. Employees Mutual

Benefit Fund Scheme

• Managed by a 10-member Trust

• Fixed Equity of 0.26%

• Lock-in period of 3 years \

• Transferable Internally

Maruti SUGGESTION SCHEME &

QUALITY CIRCLES

• For better quality and productivity

• Through involvement of all employees and teamwork

• During the year 1999-2000 :-

i) Suggestions Implemented - 52,054

ii) Cost Saving (in crores) - Rs. 131.69 Crores

iii) Number of QC Groups - 510

iv) QC Meetings held - 7189

• Target for SS & QC for 2000-01:

Suggestions Implemented - Prod. & VI - 1implmented/employee/month

Other areas - 8.4 implemented/employee/month

Cost Saving Rs. 165 crores (25%)increase for the Company

QC Meeting - 13 meetings/QC Gp./ Year

Targ • Company-wide QC Groups (8-15 members per group)

• Monthly QC Meetings on the First Wednesday each Month

• Company-wide QC Competitions - Best Team sent to SMC

• MD’s lunch with Best QC Team & Best Suggestion Winner

• SUGGESTION MERIT EVALUATION : 5 LEVELS (A to E)

Criteria - Cost Saving (per annum/one time)

- Ingenuity of Suggestion (depth of study)

- Applicability (in work area/entire plant)

• SUGGESTIONS : Monetary Reward

MARUTI Criteria - Idea

- Efforts

- Result : Cost reduction / Q Improvement / Productivity

Improvement

FUTURE CHALLENGES

- HR INITIATIVES

• REALIGNING ORGANISATION CULTURE BASED ON

NEW VISION & VALUES

• OBJECTIVE PERFORMANCE MANAGEMENT & DEVELOPMENT

SYSTEM

• TRANSPARENT JOB ROTATION & JOB ENRICHMENT

• PERFORMANCE LINKED REWARD AND RECOGNITION SYSTEM

• CAREER PLANNING & PROMOTION POLICY

• REVISED RECRUITMENT POLICY

• COMPETENCY MAPPING

• STRONG FUCUS ON TRAINING INITIATIVES

- BUILD A LEARNNG ORGANISATION

 - CONTINUOUS VALUE ADDITION TO PROFESSIONAL SKILL

- CUSTOMISED TRAINING

- TRAINING TO THE PERSONNEL OF BUSINESS PARTNERS

• INTERNAL COMMUNICATION

• UNION ALIGNMENT

• EMPLOYEE INVOLVMENT & PARTICIPATION

et - 34 marks / suggestion

MUL to change gear on performance appraisal -- 100% link between pay,

productivity

RENEWING its efforts at cutting costs and improving productivity, Maruti Udyog
Ltd (MUL) has drawn up a new human resources policy, which for the first time,
entirely links performance to pay packets for all its executives and managers.

MUL has traditionally had a performance-based component of about 30 per cent in

its compensation package for its executives. But now it has gone the whole hog
and decided that in addition to the hike in individual perquisites, increments to
even the basic salary will now depend on the employees' performance during the
year.

The new performance appraisal and compensation system is likely to affect over
1,000 employees -- executives and senior and middle level managers. Company
officials said the changeover to a completely performance-based compensation
system has been under discussion amongst MUL's senior management and
directors for quite sometime now.

So, the new appraisal process has not come as a surprise for most of the employees
and has been accepted by them, the official said. ``Over the past week, the
principle underlying the new system has been communicated at length throughout
the company and feedback has been obtained,'' the official said.
In the run-up to the new remuneration system, the company has also developed a
new performance measurement and development method along with the noted
consultant, Mr M.B. Athreya. The performance measurement process will
complement the new remuneration s ystem.

MUL sources said rather than appraise employees through confidential reports, the
new performance measurement system involves an interactive process of goal
setting, review and counselling by managers throughout the year. It incorporates
qualitative aspe cts, along with quantitative targets.

The employees are being put through workshops to train them on the various
aspects of the system developed with Mr Athreya. The new system will take effect
from this year.

The new system is expected to help enhance managerial performance and skills,
while making the organisation more capable of assessing its costs and returns. The
move is also indicative of the company's renewed stress on increasing per
employee productivi ty.

MUL, which has been beleaguered by low margins and a falling bottomline, has
also been forced to take a hard look at its costs this year. For the first time, MUL
has slipped into the red and recorded a loss during the year 2000-01.

Maruti MUL has also drawn up a voluntary retirement scheme (VRS) for its
employees. The VRS programme received in-principle approval from the board
last month. While the VRS proposal is yet to be formally notified and offered to
the company's employees, it is e xpected to apply equally to all the staff members,
including the shop floor workers, company sources said.

Maruti adopts `360 degree' appraisal system ( February '5,2007, HBL)

Maruti has introduced a unique 360-degree feedback system, starting with its
senior leadership. The new system has been co-developed with Ernst & Young and
has been put in place recently.
Under the 360-degree feedback system, the employee is rated not just by his
superiors, but also by his peers and subordinates.

"We are starting the 360-degree feedback process with employees in the top
management such as chief general managers and general managers, whose
performance will now be assessed based on feedback from their peers and junior
management employees within the same department. Till last year, their
performance was being appraised only by the Directors and the Managing
Director," says Maruti's Chief General Manager (HR), Mr S.Y. Siddiqui.

Ernst & Young, in consultation with Maruti, has listed a set of leadership
competencies that are expected in a general manager. Based on that, it has prepared
a questionnaire to which peers and subordinates can respond online.

Although acknowledged as an effective tool for leadership development in the

West, Indian companies have been shy of introducing such a feedback system for
fear of disturbing traditional hierarchical structures.

HR consultants feel that the critical issues in implementing such a system include
assuring respondents that their feedback will remain confidential and convincing
the person receiving the feedback that this is a development tool and not an
appraisal tool. Maruti has handled this by getting E&Y and other consultants to
make detailed presentations to the senior management personnel before the process
got under way. The company has a committee of general managers, called Human
Resource Inter Divisional Committee (HRIDC), which is consulted on all major
HR issues.

The initiative has been unveiled with an e-mail by Maruti's Managing Director, Mr
Jagdish Khattar, asking people to support the online questionnaire process. The
360-degree feedback system will also include a self-appraisal by the general
manager. At the end of the process, he can compare his self-appraisal with the
assessment of his subordinates and peers.

One of the benefits that Maruti is hoping to get out of the 360-degree feedback
process is the sense of empowerment and importance felt by subordinates, when
they are asked to offer their feedback about their superiors. Maruti currently has
over 4,000 employees on its rolls.
 Training and Development of dealer Sales Executives

Development and Updation of Training Modules

The Sales Training Department develops new modules along with

training agencies based on market requirements, specific needs
identified and feedback received
Conducting Training

Annual Training Calendar is fixed based on:

Number of Sales Executives in the sales network

 Training path requirement of Sales Executives
Review of training programs done in the previous year
 Market Share/ Market situation/Focus areas and new product launches

• Training conducted regionally based on fixed monthly calendar.

• Training Path /Norms for all Dealer Sales persons are as follows:

 All Dealer Sales Executives need to attend Induction Training before

or within a month of joining the dealership (depending on when the
program is scheduled in the region)
 After Induction then the Sales executives needs to attend a segment B
program.
 They also should attend ‘ Car Advisor for life Program’ which trains
him to be a one point contact with the customers handling all his car
related needs like finance, insurance, extended warranty, MGA etc and
how to develop and maintain relationship with customers
 After gaining experience, he can attend other courses like segment C
etc.

Monitoring and feedback:

Monitoring and Evaluation of Sales force is done on a continuous basis. Pre-

tests and post-tests are conducted during training. Feedback is taken from
 participants on trainers and from trainers on participants. Monitoring is also

done through tests and audits at the dealerships.

Communication:

Sales Training Department sends monthly Newsletter “Creating Winners” to all

DSE’s. It is a monthly communication containing articles on various aspects of
product knowledge, selling skills, market etc .It is a forum for effective
communication of new ideas and strategies. It also provides two-way
communication.
An Annual Selling Skill Contest is organized to test the selling skills of the sales
executives. It is conducted at regional levels and culminates in an all India level
contest.
 CONCLUSION

As per my observation I felt that Maruti Udyog Ltd (MUL) has drawn up a new
human resources policy, which for the first time, entirely links performance to pay
packets for all its executives and managers. The new performance appraisal and
compensation system is likely to affect over 1,000 employees -- executives and
senior and middle level managers. Company officials said the changeover to a
completely performance-based compensation system has been under discussion
amongst MUL's senior management and directors for quite sometime now.

The employees are being put through workshops to train them on the various
aspects of the system developed with Mr Athreya. The new system will take effect
from this year. The new system is expected to help enhance managerial
performance and skills, while making the organisation more capable of assessing
its costs and returns. The move is also indicative of the company's renewed stress
on increasing per employee productivity.