FRAMEWORK FOR LINKING

APPRAISALS WITH

INCENTIVES AND REWARDS

(Revised)

(FAIR 2009)

MANUAL

Larsen & Toubro Limited

P A 2009 /02-04-09 1
 CONTENTS

Summary of the FAIR System ......................................................................................... 3

A. Objectives of the System.............................................................................................. 4
B. Appraisal Period........................................................................................................... 4
C. Coverage ....................................................................................................................... 4
D. Performance Theme..................................................................................................... 4
E. Performance Planning / Appraisal Cycle................................................................... 4
Step 1: Performance Planning (Objective Setting) ...............................................................................4
Performance Oriented Development Plan (PODP)...........................................................................5
Step 2: Mid Year Review .....................................................................................................................6
Step 3: Announcement of MVGs .........................................................................................................6
Step 4: Assessment process ..................................................................................................................7
Step 5: Feedback to the employees.......................................................................................................8
F. Non-Standard Variations............................................................................................. 8
Performance Review In Case Of Multi-Reporting ...............................................................................8
Performance Review In Case Of New Employees and Transferees.....................................................9
G. Report to Divisional / OC Board ............................................................................... 9
Annexures ........................................................................................................................ 10
Standard Schedule for FAIR & PODP ...............................................................................................11
Guidelines for Cascading Objectives through Performance Planning Workshop ..............................12
Sample Objectives ..............................................................................................................................13
Aspects of Feedback...........................................................................................................................16
E1 – E5: Competency-based Training Programmes...........................................................................17
Suggested Format for Report to Division / OC Board........................................................................24
Requirements of On-line FAIR Performance Management System...................................................25
Distribution Percentage ......................................................................................................................27
Legend................................................................................................................................................28

P A 2009 /02-04-09 2
Summary of the FAIR System

The FAIR system is designed to establish a clear linkage between ratings and
rewards and also serve as a tool for identifying developmental needs of an employee
in his /her current role. It facilitates a meaningful dialogue between the superior and
the subordinate. This system covers all the employees from Supervisory to Tier 4.

The system facilitates the objective setting process through Performance Planning
Workshops (PPW). Each OD / OC / SBU is required to conduct a Performance
Planning Workshop, following the finalization of its annual budget, during which
Business Objectives for the year are to be cascaded. Please refer Annexure B for
PPW guidelines. Thereafter the immediate Superior (IS) and appraisee together
decide on the individual objectives of the appraisee. The key result areas derived
through cascading at the workshop form the basis for individual appraisee’s
objectives. It is recommended that a minimum of three objectives be set and total
number of objectives set do not exceed five. Developmental objectives under the
PODP process are also set simultaneously.

At the end of six months of the appraisal period, the IS holds a performance
feedback and development discussion meeting with the appraisee. This six-monthly
review will help in determining the progress against set objectives and if need be,
initiate remedial action to help achieve the objective by the year-end. Above all it will
facilitate the process of providing developmental feedback to the appraisee. Please
refer Annexure D for aspects of feedback.

At the end of the appraisal period, the IS evaluates the appraisee’s performance. The
IS assigns a 1-8 rating to the appraisee relative to others in the same Tier / Band
keeping in mind role related attributes i.e., speed, volume and quality of work and
internal customer orientation besides achievements against set objectives. The IS is
expected to view the performance of an individual relative not only to those
reporting to her / him but relative to the high level of performance across the OD /
OC. The IS then gives the form to Next Superior (NS) for his/her comments. NS
gives his/her comments and routes the form to Department Head (DH) who forwards
the same with his comments to the Macro View Group. Finally, the Macro View Group
(MVG) reviews the rating given by the DH and moderates it to arrive at relativity
across the SBU / OC / OD as the case may be, to fall in line with the distribution
percentages mentioned in Annexure H.

The ratings finalized by MVG are communicated by HR to the DH who will inform the
IS / NS. IS then gives feedback to the appraisee and conveys the final rating
category. The mutual feedback forms the basis of increasing the level of objectives
set for the appraisee, if required, and making suitable changes to the appraisee’s
developmental plan under PODP.

The appraisee’s relative performance within the band as assigned by the MVG and
the OD/SBU Performance as derived from the applicable parameters of the OD
Performance Metrics will form the basis for computation of corpus and distribution of
annual rewards. The relative weightage to be assigned to the two factors (SBU
Performance & the Individual Performance) will be as decided by the CMC.

P A 2009 /02-04-09 3
A. Objectives of the System

To provide a system that helps in-

• Tracking promises made at the beginning of the year

• Managing expectations of both superiors and subordinates
• Establishing a clear linkage between rewards and ratings
• Providing appropriate feedback on performance
• Identifying developmental needs of appraise

B. Appraisal Period

The appraisal period is from April to March. The performance plans (objectives) are
set for this period and performance is appraised.

C. Coverage

The system is designed to cover all the employees in –

• Supervisory, Executive & equivalent cadres

• Covenanted cadre Tier 1 to Tier 4

D. Performance Theme

Performance theme of the organization / OD / OC / SBU, as cascaded through PPW

using appropriate methodology (X- Matrix, MBO, Hoshin Kanri, Balanced Score Card
etc.) will form the framework for determining the objectives of individual employees.
Position Clarification exercise, defining role responsibilities, should also serve as an
input for Objective Setting.

It should be made clear that as there is a relative rating of contributions made by

her/his peer group, achieving the set objectives may not necessarily result in a high
rating given by IS / NS / DH / MVG.

E. Performance Planning / Appraisal Cycle

Step 1: Performance Planning (Objective Setting)

The performance management cycle shall commence with a Performance Planning

Workshop. Each OD / OC / SBU will conduct a Performance Planning
Workshop, following the finalization of its annual budget. During this workshop,
Business Objectives for the year are to be cascaded to the lowest possible level

P A 2009 /02-04-09 4
using appropriate methodology (X-Matrix, MBO, Hoshin Kanri, Balanced Score
Card etc.)

Thereafter the IS and the appraisee together decide on the objectives of the
appraisee while ensuring that these are in line with the objectives derived at the
PPW. The Objectives set should be specific and measurable and written down in
Form 1.

Performance Oriented Development Plan (PODP)

PODP form also should be filled during the objective setting exercise. PODP is the
development tool for identifying development needs of the employee in his/her
current role and forms an integral part of the appraisal system. It is to be jointly
drawn up by the IS and the appraisee.

PODP encourages the IS and appraisee to plan for the appraisee’s development
through various training & non-training interventions (refer Annexure E-1 to E-4 for
the list of Competency Based Training Programmes).

The identification of Training & Development needs commences with an analysis of

the areas of strengths and improvements of an individual which has facilitated or
hindered his/her performance in the current role. The words “Performance Oriented"
used in PODP refer to development of competencies keeping the current role of the
appraisee in mind, which will facilitate the appraisee to enhance his performance
level. These competencies can be Leadership / Behavioural, Technical / Functional or
IT related competencies (For those employees whose role is in IT, such needs may
be noted under Technical / Financial competencies)

In the event the appraisee and the appraiser are of the opinion that the competency
gaps can be met through non-training interventions, the same can be specified in the
PODP form. However, a concrete action plan for the same needs to be drawn up by
the appraisee and IS seeking inputs from the NS.

The focus of PODP will be on developing depth/expertise in a few competencies.

Hence it is suggested that the appraisee selects not more than 2 competencies for
development for the current year.

Total number of objectives set should be five. In exceptional cases the objectives
could be less but should not be less than three and in no case should exceed five.
Based on the importance of the objective, a Weightage should be assigned to it.
Weightage for each objective should be jointly decided by both - appraisee and IS.

After setting objectives and assigning weightages to each objective, the Performance
Plan should be routed through the NS to the OD-HR Department.

It is recommended that the annual objectives once set should not be revised or
changed. However, in certain exceptional cases e.g. when there is a change in the
job profile, objectives should be suitably reviewed and revised in consultation with
the IS and the NS / DH. In case of revision in budget, the revised objectives should
be in line with modified budget. In such a situation, a fresh copy of the objectives set
should be sent to the OD HR Department. HR Department will maintain the copies of

P A 2009 /02-04-09 5
both the forms - the form in which objectives were initially set and the other form
with the changed objectives.

Periodic review of progress made against the set objectives is recommended.

Step 2: Mid Year Review

At the end of six months of the appraisal period i.e. in the month of October the
employee should review her / his performance to take stock of where she / he stand
vis-à-vis objectives set.

The IS takes this opportunity to conduct a performance feedback and development

discussion meeting with the appraisee. During this meeting task, resources and the
way forward are discussed. The focus during this discussion should be on
development of the employee. During the discussion the IS also actively seeks
feedback from the employee.

The self-review form is to be sent to the IS. IS discusses the six months performance
with the NS and capture the comments on Form 2 and returns both forms (Form 1
and Form 2) to the appraisee. IS sends the copy of Form 2 to OD HR Department.

In case the review indicates that there is a shortfall in achievement with respect to
target in the six month period, the IS should be able to guide on how to make up for
the shortfall in the balance six months.

Step 3: Announcement of MVGs

In April OD / OC HR Heads shall declare the composition of the various MVGs. While
doing so, personnel who are to be considered as DH, for the purpose of Performance
Appraisal, shall also be declared.

Care should be taken to ensure MVGs are constituted such that employees rated by a
particular MVG fall within the line of sight of the members of that MVG. Members of
the MVG shall be within 2 to 3 reporting levels of the employees being appraised This
would ensure that MVG members are more keenly aware of the performance of the
employees they are rating.

• For Supervisory and Executive Bands and Tier 1, MVG should be chaired by
an employee in Covenanted Grade M3-C or above (preferably SBU Head /
DH),
• For Tier 2 and Tier 3 Bands, MVG should be chaired by an employee in Tier 4
or above
• For Tier 4, MVG should be chaired by OD/OC Head

Normally, a MVG should have at least 30 employees in a band for moderation

purposes. However, in case the total number of employees in a band is less than 30,
it is recommended that smaller Departments be clubbed together under one MVG.

P A 2009 /02-04-09 6
Step 4: Assessment process

• At the end of the year, the appraisee records what has been his achievement
for the year against the objectives set and forwards to his IS.

• IS appraises the performance and rates on a 1-8 scale based on her / his
evaluation of the performance of the appraisee on his achievement vis-à-vis
set objectives, the volume of work undertaken, quality of output generated,
the speed with which the assignments are handled and Internal Customer
Orientation, relative to his/her peers in the Department. In the event the IS
does not have sufficient number of reports he may consider consulting the NS
before rating the appraisee. Since the NS would have visibility to the
performance of larger number of appraisees this would enable the IS to rate
her / his reports closer to the required distribution percentages.

• IS routes the Form 1 with the score and his/her comments to the NS.
Comments of IS may cover the context and the situation in which the results
have been achieved. IS comments may also include other significant
achievements of appraisee.

• NS adds his comments and routes the form upward to the Department Head.
NS’s comments should not only include his overall evaluation of the
performance and contribution of the appraisee but also remarks on the
comments of IS.

• The DH arrives at a normalized rating (on a scale of 1-8) after considering the
relative performance and contribution of the appraisee, vis-à-vis her / his
peers in the same band, across the department. The comparison should
include aspects of speed, volume, quality of work, internal customer
orientation in relation to his/her peer group. Department Head gives
comments on the basis of the normalized rating and on the inputs received
from IS and NS and sends it to OD HR Department. In case there is a
difference of 2 points or more on the 1-8 scale between the ratings given by
the Department Head and that given by the IS, then the Department Head
discusses with the IS and explains the rationale for the difference.

• The DH should ensure that all employees are relatively slotted as per the
recommended percentage limits specified in this manual.

• OD / OC HR Head collates and forwards the forms to the respective “Macro

View Group” (MVG). In case of the employees whose objectives have been
revised during the year, the OD-HR Head sends the objectives set earlier,
along with the final form to the MVG.

• The MVG reviews the rating given by the Department Head and moderates it
to arrive at relativity across the OD / OC /SBU as the case may be, to fall in
line with the recommended distribution percentages. Role related attributes
such as speed, volume and quality of work are given due consideration when
the MVG pens down the ratings and the comments on the form. The
comments are necessary in case there is a large difference between their
ratings and that of the Department Head.

P A 2009 /02-04-09 7
 • The form is then handed over to the OD HR Head. OD HR Head routes it back
to the IS through the reporting route. MVG discusses with the Department
Head and if need be with NS / IS where there is a large difference (of two
levels or more in rating scale of 1-8) between their rating and Department
Head’s rating. Department Head suitably conveys this to the IS.

Step 5: Feedback to the employees

After IS receives the Form 1, he / she should discuss the rating and category given
by the MVG with the NS /DH. The IS then gives feedback to the employee and
communicates to him his performance category.

For the purpose of feedback, all appraisees in a band who are rated on a 1-
8 scale will be clubbed into 4 categories

Rating 8 - Outstanding Performer

Rating 7 & 6 - Top Performer,
Rating 5, 4 & 3 - Vital Contributor,
Rating 2 & 1 - Below Average.

IS while giving feedback on these lines, may also explain the process that was
followed while evaluating. This feedback session should lead to discussions on how
to improve the ratings for the next year and ways and means to achieve the same.
Based on this feedback, the objectives set for the appraisee may be reviewed to set
a higher level of objectives and / or make suitable changes to the developmental
plan under PODP.

Schedule for the Performance Appraisal Cycle is mentioned in Annexure A

F. Non-Standard Variations

Performance Review In Case Of Multi-Reporting

In case an appraisee reports functionally to one person, and administratively to

another, the main responsibility of the performance review will be that of the
superior who is involved in objective setting.

It is recommended that both superiors (administrative and functional) are involved in

the entire PA exercise.

Similarly, in case an appraisee is a member of a Task Force / Project, while being

based in a Department, the main responsibility of performance review will be of the
superior who sets the objectives. It is recommended that both functional and
Taskforce / Project Head are involved in the PA exercise.

In case of area / regional / branch offices, it is recommended that IS gives ratings

after having a discussion with Regional / Area Manager/ Branch Manager. IS should
solicit comments on ‘Espousing Corporate Values and Vision’ from the Regional /
Area Manager / Branch Manager and mention this in his comments, in the form.

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Performance Review In Case Of New Employees and Transferees

New employees will be covered if they have completed 90 or more days of service
before 31st March. However such employees for whom PLR has been committed at
the time of recruitment will be kept out of the FAIR system for a period of one year.
The PLR committed shall be honoured in the first year.

Transferees will go through the PA exercise in the departments where they have
worked for more than 90 days. The DH with whom he/she is working at the time of
appraisal will decide the final ratings after taking into account the inputs from the
employee’s IS / NS in the previous department(s).

Where an employee has worked for more than 90 days in a department before being
transferred , he/she should write down his/her achievements in the form and obtain
IS ratings and comments. In the new Department he should set his objectives in
another PA form along with his new IS. At the end of the year both the forms i.e. for
the previous department as well as the new department should be forwarded to the
department head for evaluation.

It is recommended that the department head discusses the appaisee’s performance

in the earlier department with the Department Head / IS before giving his ratings.

G. Report to Divisional / OC Board

Periodic reports (suggested in May, August and November) on the status of FAIR vis-
a-vis the schedule drawn up shall be presented to the Divisional / OC Board for their
review by OD / OC HR. Among other details percentage completion and the quality
of process may be reported. Please refer Annexure F.

P A 2009 /02-04-09 9
 Annexures

P A 2009 /02-04-09 10
 Annexure A

Standard Schedule for FAIR & PODP

Activity Start Date End Date

Performance Planning (PP) 09-10
Budget Finalised March
OC Head Communique on Strategic Themes 10-Apr 20-Apr
SBU Performance Planning Workshops & declare Initiatives and KRAs 15-Apr 25-Apr
Employee sets objectives (PP) in consultation with IS 20-Apr 5-May
Development Plan (PODP) 09-10
Employee fills and submits PODP in consultation with IS 20-Apr 5-May
Performance Appraisal (PA) 08-09
Employee fills and submits PA 16-Mar 14-Apr
Review by Superiors (Immediate, Next, Dept Head) 06-Apr 5th May
Moderation by MVG 07-May 30-May
Performance Feedback 1-Jun 20-Jun
Reward letters by HR 20-Jun 27-Jul
Midterm Review
Mid year Review with Development Discussion 31st Oct

P A 2009 /02-04-09 11
 Annexure B

Guidelines for Cascading Objectives through Performance Planning Workshop

• OD/OC / SBU Head releases a communiqué to all

• Highlights progress during the last year and the strategic focus areas for the
current year.

• OC / SBU conducts Performance Planning Workshop

• Workshops facilitated by OD / OC HR.

• Conducted after OC / SBU budget is finalized

• Participants
o OC / SBU Head,
o Department Heads,
o Section Heads and
o Others as required

• Dept Heads of Support functions also to be involved in workshop in order to

address interdependencies.

• Methodologies such as Balance Score Card, X matrix, Hoshin Kanri, MBO etc.
to be used for cascading during workshop

• Outcomes to be consolidated in Performance Plan Booklet.

• Performance Plan Booklet to be made available to Department Heads.

• Immediate Superiors to help subordinates formulate objectives aligned with

targets in Performance Plan Booklet.

• Following parameters, as applicable, to be considered while individual

objectives are formulated:

o Strategic Parameter (quantitative)

o Financial / Functional Parameter (quantitative)
o Development of Successor / Subordinate (quantitative / qualitative)
o Espousing Corporate Values and Vision (qualitative)
The sum total of the Functional and / or Financial objectives
should have a weightage of 50% or more for all employees.
The weightage for “Espousing Corporate Values and Vision”
should not exceed 20%, for any employee.

P A 2009 /02-04-09 12
 Annexure C

Sample Objectives

Mandatory Objectives- Subordinate Development

Any person who has a subordinate reporting to him/her will be assessed on the focus
on ensuring competency development of his subordinate (as per the Performance
Oriented Development Plan). In other words, an IS will be assessed on the extent to
which he/she has aided his/her subordinate in implementing their PODP

At the end of the PODP cycle, the filled in forms are sent to the Next Superior. This is
to assist the NS in appraising the IS against the Subordinate Development objective.

Sample Objectives- Strategic Parameter

An example of strategic objective could be to increase exports market by 20% in

next two years. Action plans to reach this objective could be setting up offices
abroad, investing in technology, coming out with new innovative products

Note: Strategic parameter needs to be suitably broken down into annual activities
and the annual objectives set up on this basis.

Sample Objectives- Functional Parameter

Manufacturing Objectives
• Reduce cost of Rework from 5% to 1%
• Reduce time overruns of major items from 10% to 2%

Materials and Purchase Objectives

• Reduce inventory from 60 days of consumption to 30 days consumption by
end of the year

Sales and Marketing Objectives

• Control outstanding as per the monthly budgeted targets
• Earn a contribution of 100 lakhs during the year

Human Resource objectives

• Filling the critical positions through external recruitment of MLPs, where
internal talent is not available.

Sample Objectives- Development of Successor

• No: of Critical Positions Identified

• Identification of critical positions across the OD / OC / SBU taking into

account:

o The Value added by that position in the organization

o The Growth and Future Prospects of the Business concerned,
including International competence

P A 2009 /02-04-09 13
 o Position criticality. Implication of keeping vacant

• Operating span & impact of decisions

• Identification of ‘Successor In Making’

• Development Plan & Mentorship for successor

Sample Objectives- Espousing Corporate Values and Vision

• Participation in MLP / TLP assessment center as an Assessor to identify a pool

of high potential employees
• Propagation of company’s values and vision in GET/MT campuses
• Participation in initiatives like Coaching as a transformation coach
• Building brand image of the company by participation in initiatives like
Campus Ambassador.

P A 2009 /02-04-09 14
 Sample Objectives/Evaluation Criteria for Service Departments:

SN. Assignment/task Frequency/time/ Evaluation criteria

number
1. Country risk studies ( Pertinent to Need-based or Timeliness.
Economics/Legal Department) say, 6 countries. Feedback from concerned
officials.
2. Routine jobs Frequency is pre- Timeliness
Data Base Management determined for Feedback from other user
Policy evaluation each of these departments (if possible)
Forex View studies
(All Service departments)
3. Information purveyor to other Need-based Feedback from concerned
departments (All Service departments departments
) Timeliness.
4. Ad-hoc assignments for management Need/situation Timeliness
Presentations based Feedback directly from
Speeches concerned member of
Representations to industry management
associations/ ministries
Write-ups
(All Service departments )
5. Exhibitions/ advertisements To be decided Timeliness
(Pertinent to CCD Department) with reporting Reporting authority or user
authority department to comment on
usefulness.
Surveys/ Media reports
6. Training (Pertinent to Human Based on HR Number of training programs in
Resource Department) department a particular period/ Budgets
needs and can be allocated for training programs/
discussed with ROI / feedback from trainees.
department.
7. Recruitment (Pertinent to Human Need based Number and time in which
Resource Department) vacancies are filled.
Performance of recruits reflects
the quality of recruitment.
8. Cost savings (pertinent for say CCD Not applicable Not applicable
or Admin) Travel costs could be a
sub-criteria here.

P A 2009 /02-04-09 15
 Annexure D

Aspects of Feedback

To Employee

Aspects Midterm Annual

Ongoing
Review Review
Performance review incl. achievement of
1 targets / change of objectives Y Y
Needs for training, job rotation &
2 development Y Y
3 Stretch element in objectives Y Y
4 Critical incidents Y Y Y
5 Facilitating / Hindering factors Y Y Y
Strengths & weaknesses incl.
6 competencies Y Y
Leadership competencies & Team
7 behaviours Y Y
8 Career path/growth Y Y
Being open for feedback from the
9 employee Y Y
10 Immediate Superior Rating No No N
11 MVG Rating Category No Y

From Employee

Midterm
Aspects of feedback
Review
1 Job content Y
2 Role clarity Y
3 Resources Y
4 Recognition Y
5 Departmental Support / Team work Y
6 Learning & Growth Opportunities Y
7 Other Facilitating / Hindering Factors Y

P A 2009 /02-04-09 16
 E1 – E5: Competency-based Training Programmes

Annexure E-1

SUPERVISORY BAND
COMPETENCY DEFINITION Programs being offered
i Customer Service Proactively understands customer
(internal/external) requirements and seeks to
Orientation exceed customer expectations. Is highly quality Customer Focus
conscious. Builds beneficial customer
relationships.
ii Planning & Works in an organised and systematic manner. Resource Optimisation
Anticipates constraints. Prioritises and effectively Problem Solving & Decision Making
Execution utilizes resources and achieves end results.
iii Communication Listens, understands and interprets accurately. Communication Certificate Program
Conveys information (technical / functional) and Effective Business Communication
ideas in a clear, structured and credible manner. Skills for Effective Communication
vi Self Is confident, decisive and action-oriented.
Assumes ownership and responsibility for the job.
Empowerment Self Empowerment
Is committed, resilient and energetic and has a
clear sense of what needs to be done.
v Functional Has a good grasp of his job and related
processes. Can evaluate job related information To be conducted by respective ODs
Knowledge for its practical application
vi Interpersonal Involves others, interacts effectively and is a
committed team member. Understands others
Skills Interpersonal Skills & Personal
and is able to deal with them effectively. Shares
Effectiveness
information and ideas and seeks to resolve
conflicts.
vii Improvement Seeks, suggests and implements new ideas for
continuous improvements. Can think of innovative Fundamentals of Creativity
Orientation (out of box), multiple options.
viii Positive Attitude Is positive in his outlook towards work and the
environment in general. Enthusiastic in accepting
Lifestyle Programs
new initiatives / challenges and demonstrates a
feeling of optimism and energy.
ix Analytical Ability Is able to identify and diagnose key issues, seek
relevant information, draw accurate conclusions / Problem Solving and Decision
inferences in order to find the appropriate Making
solution.
x Adaptability Is open and adapts to different situations quickly. This competency will be better
Accepts change willingly. developed , by methods other than
class room training.

Note: CHRP T&D also offers program on Economic Environment of Business which
aims at enabling elementary multifunctional thinking / business acumen.

P A 2009 /02-04-09 17
 Annexure E-2

EXECUTIVE BAND
COMPETENCY DEFINITION Programs being offered

i Customer Focus Maintains frequent customer contact,

understands customer requirements and Customer Focus
defends their interests within L&T. Seeks to
exceed customer expectations.
ii Communication Conveys information and ideas in a clear,
structured, interesting and credible manner, Communication Certificate
both orally and in writing. Accurately Program
interprets and simplifies business information. Effective Business Communication
Extracts meaning and makes Skills for Effective Communication
recommendations.
iii Planning & Works in an organised and systematic
manner. Identifies and prioritises resources. Problem Solving and Decision
Organising Anticipates constraints, schedules work and Making
mobilises and monitors resources to achieve Resource Optimization
targets.
iv Self- Is confident, decisive and action-oriented.
Assumes ownership and responsibility for the
Empowerment Self-empowerment
job. Is committed, resilient and energetic and
has a clear sense of what needs to be done.
v Problem Solving Overcomes problems and obstacles through
systematic analysis and balanced decision-
Problem Solving and Decision
making. Seeks all relevant information, draws
Making
accurate conclusions and inferences and finds
the optimal solution.
vi Interpersonal Involves others, interacts effectively and is a
committed team member. Understands other
Skills Interpersonal Skills & Personal
people and is able to utilise them effectively.
Effectiveness
Shares information and ideas and seeks to
resolve conflicts.
vii Functional Has a good grasp of his subject and related To be conducted by respective ODs
processes. Keeps abreast of changes and
Knowledge developments and can evaluate information
for its practical application.
viii Flexibility Is open, adaptable and willing to change. Lifestyle Program
Learns from experiences.
ix Creativity Can think of innovative, multiple options. Fundamentals of Creativity
Suggests new ideas for improvements.

Note: CHRP T&D also offers program on Economic Environment of

Business which aims at enabling elementary multifunctional thinking / business
acumen.

P A 2009 /02-04-09 18
 Annexure E-3

TIER 1

i Business Produces clear and effective documentation Effective Business Communication

and communication. Is able to make accurate Corporate Etiquette
Communication interpretations of complex material.
ii Interpersonal Involves others, interacts effectively and is a Interpersonal skills & Personal
committed team member. Understands other Effective
Skills people and is able to utilise them effectively. Behavioral skills for negotiation
Shares information and ideas and seeks to Basic Counseling skills
resolve conflicts. Corporate Etiquette
iii Customer Focus Builds effective relationships with the internal Customer Focus
or external client and acts to ensure that all Behavioral Skills for Negotiation
stages of the transaction are smooth and Corporate Etiquette
efficient. Makes the additional effort to
exceed expectations and delight the
customer.
iv Creativity Can think of innovative, multiple options,
Managing Creativity
suggest new ideas for improvements.
v Improvement Keeps own skill set up to date and is
proactive in ensuring the implementation of
Orientation Managing Creativity,
new and better ways of achieving desired
Self-empowerment
objectives. Ensures that learning is shared
Lifestyle Program
and that quality is maintained and improved
upon.
vi Functional Has a good grasp of a wide range of
operational issues and demonstrates good
Knowledge technical project skills. Keeps updated on new
developments, theories and methods and To be conducted by respective ODs
continuously expands his knowledge base.
Capable of conducting research in a specialist
area.
vii Drive Is committed to the job and works hard for
the long term good of the organisation.
Self-empowerment
Takes on responsibility and accepts
challenges.
viii Planning & Works in an organised and systematic
manner. Identifies and prioritises resources. Resource Optimization
Organising Anticipates constraints, schedules work and Strategy & Implementation of
mobilises and monitors resources to achieve Strategy
targets.
ix Analysis Overcomes problems and obstacles through
systematic analysis and balanced decision- Problem Solving & Decision
making. Seeks all relevant information, draws making
accurate conclusions and inferences and finds Kautilya
the optimal solution
x Decision Making Proactively seeks and accurately evaluates the
available data. Anticipates outcomes and
implications. Chooses the optimal solutions
Problem Solving & Decision
from all those available and implements the
making
necessary actions in a timely manner.
Involves others and ensures buy-in to
decision-making process.

Note: CHRP T&D also offers programs on Economic Environment of Business &
Finance for Non-finance which aims at enabling elementary multifunctional thinking /
business acumen.

P A 2009 /02-04-09 19
 Annexure E-4

TIER 2
COMPETENCY DEFINITION Programs being offered

i Business Produces clear and effective documentation

Communication and communication. Is able to make Corporate Etiquette
accurate interpretations of complex material
ii Customer Focus Builds effective relationships with the internal Customer Focus
or external client and acts to ensure that all Behavioral skills for negotiation
stages of the transaction are smooth and Corporate Etiquette
efficient. Makes the additional effort to Interpersonal skills
exceed expectations and delight the Managing & Leading Across
customer. borders
iii Team Leadership Is an effective team player and team leader.
Interpersonal Skills
Guides and supports the efforts of team
Basic Counseling Skills
members towards the achievement of the
Managing & Leading Across
business objectives. Is proactive in avoiding
Borders
or resolving conflicts
iv Competitive Looks at information from a commercial
Kautilya
angle. Is sensitive to the business
Analysis Strategy & Implementation of
environment and applies models and theories
Strategy
in order to understand it. Evaluates
Economic Environment of Business
possibilities in terms of products/ processes/
Finance for non-finance
services/ systems and finds the right USP for
Shareholder Value Creation
the client.
v Resource Acts in a line management capacity to
translate business objectives into functional Resource Optimization
Management activities. Sets goals and processes and Management Planning & Control
organizes resources to ensure that the Systems
desired results are met.
vi Decision-Making Proactively seeks and accurately evaluates
the available data. Anticipates outcomes and
implications. Chooses the optimal solutions
Problem Solving & Decision
from all those available and implements the
Making
necessary actions in a timely manner.
Involves others and ensures buy-in to
decision-making process.
vii Improvement Keeps own skill set up to date and is
proactive in ensuring the implementation of
Orientation new and better ways of achieving desired
Lifestyle program
objectives. Ensures that learning is shared
and that quality is maintained and improved
upon.
viii Functional Has a good grasp of a wide range of
operational issues and demonstrates good
Knowledge technical project skills. Keeps updated on new
developments, theories and methods and To be conducted by respective ODs
continuously expands his knowledge base.
Capable of conducting research in a specialist
area.
ix Motivating Creates an urge in an employee to achieve
specific objectives. Shows genuine concern
Employees and respect and are sensitive to employees' Basic Counseling Skills
needs. Is committed to supporting and
protecting employees.

P A 2009 /02-04-09 20
x Networking Collects, interprets and shares information
effectively. Interacts, liases and builds Corporate Etiquette
relationships with a diverse range of parties Interpersonal skills
both internal and external to the organisation.
xi Influencing Makes an impact and puts his/her ideas and
views across clearly. Establishes credibility,
Behavioral Skills for Negotiation
gains acceptance and converts resistance to
acceptance.
xii Entrepreneurship Identifies business opportunities. Considers
Share Holder Value Creation
various options in terms of developing
Corporate Entrepreneurship
business, supported by data, analysis of
Economic Environment of Business
resources required, detailed plans, time-lines
Finance Management
and critical performance parameters. Pursues
Strategy & implementation of
the opportunity with passion and
Strategy
determination.
xii Empowering Creates an environment where people have
the confidence to assume responsibility and
Employees ownership of the job. Supports ongoing
Basic Counseling Skills
feedback and development and helps
employees to realise their full potential
through appropriate interventions.
xiii Drive Is committed to the job and works hard for
the long term good of the organization. To be developed by methods other
Takes on responsibility and accepts than classroom training
challenges

P A 2009 /02-04-09 21
 Annexure E-5

TIER 3

COMPETENCY DEFINITION Programs being offered

i Risk Management Proactively assesses and benchmarks the

wider business environment and reacts
rapidly and decisively as a consequence of
accurate interpretation. Acts after evaluating Risk Management
the feasibility and likely impact of all available
courses of action. Plans effectively to make
the best possible use of the existing resources
ii Customer Understands fully and responds rapidly to the
customer's needs. Champions the customer
Orientation Customer Focus
within L&T and seeks to streamline the entire
Managing & Leading Across
transaction. Develops and maintains close
Borders
relationships with key individuals within the
client organisation.
iii Team Building Is an effective team player and team leader.
Sees team working as a value addition and Leadership Grid
promotes a culture of empathy and mutual Basic Counseling skills
respect and win/win solutions.
iv Strategic Examines and accurately evaluates the
competitive strengths and weaknesses of
Visioning & L&T. Chooses the correct course of action to
derive long-term business advantage after Strategy & Leadership
Thinking
assessing all relevant environmental factors. Shareholder Value Creation
Internalises the Company/Group/SBU's goals
and objectives and translates these into
specific action plans.
v Business Produces effective high-level documentation
and communication. Is able to make Excellence in Business
Communication accurate interpretations of complex material Communication

vii Leadership Motivates, inspires, influences and pushes

Leadership Grid
people to attain organisational and project
Basic Counseling Skills
goals. Leads by example and delegates
Lifestyle Program
effectively
viii People Shows genuine concern for staff and takes
responsibility for their welfare and
Management development. Seeks to improve and optimise
man-management processes and the working Basic Counseling Skills
environment. Achieves optimal handling of
both people and task elements. Taps the
potential in people.
ix Multi-functional Has a complete overview of the operation and Economic Environment of Business
business area. Understands the specific Finance for Non-finance
Thinking operational components and diverse Finance Management
functional responsibilities and ensures their Management Planning & Control
smooth integration Systems

P A 2009 /02-04-09 22
vi Influencing Is able to impact upon, gain the acceptance
of, and effect behaviour changes in
individuals, groups and large audiences either
-
through directly presentational skills or
liaising, negotiating, setting examples,
networking and indirect influence.
x Entrepreneurship Identifies business opportunities. Presents an
effective case for starting a new business or
turning around an existing business,
supported by data, analysis of resources Corporate Entrepreneurship
required, detailed plans, time-lines and critical
performance parameters. Pursues the
opportunity with passion and determination.
xi Organisation Initiates and supports a continuous process of
increasing the skill base and systems and
Development process improvement. Makes optimal
utilisation of various people management Management Planning & Control
Orientation
techniques for effective recruitment, reward Systems
and development. Sets goals and objectives,
monitors progress and responds rapidly when
required.
xii Drive Fully internalises the L&T philosophy of doing
business and acts as a role model and To be developed by methods other
example. Does whatever he/she believes to than classroom training
be right in spite of pressures to the contrary.

P A 2009 /02-04-09 23
 Annexure F

Suggested Format for Report to Division / OC Board

Number Number %-age

Activity
Scheduled Completed Completion

Performance Planning Workshops

Employees who have completed
Objective Setting

Employees Trained on Revised FAIR

Employees who have completed Mid-

Year Review with Development
Discussion
Completion of Appraisal by Employee
and Immediate Superior
Employees foe whom Rating has been
Finalized by MVG
Employees for whom Feedback Session
has been completed

P A 2009 /02-04-09 24
 Annexure G

Requirements of On-line FAIR Performance Management System

Essential Features

1. Cascading Strategic Objectives: The system should follow Top Down

approach for objective Setting. PMS cycle should begin with SBU Objectives
followed by Department Objectives. System should allow individuals to put
down their objectives only if their Immediate Superior’s (IS) objectives are
approved. The individual should be able to view SBU, Department and IS
objectives. However, IS should be able to hide specific objectives from
subordinates in case they are confidential in nature.

2. Performance History: The system should not only record performance

history (objectives & ratings) but also record the objectives before every
revision along with the date.

3. Normalised Curve: Band wise normalized curve based on the rating (1-8)
given by IS, DH & MVG will help in reviewing DH & MVG ratings as per the
corporate guidelines.

4. Automated Reminders: For HR to send reminders (Standard reminders

with the facility for customization) with a click of button, to the employees.

5. Integrated PODP: Integrating PODP with Objective setting should help in

getting employees to necessarily work on their development plan.

6. Training & Non Training Intervention: The PODP form should capture
the Strengths and Areas of Improvements. The employee should choose to
develop one or two competency either through a Training program and/ or
through Non Training intervention such as Job Rotation, research, reading,
Mentoring/Coaching etc. The Non Training Intervention should be displayed
to the IS at the time of approving objectives & PODP. IS should then assign
timelines & responsibility for enhancing the said competency.

7. Reports: Following reports should be generated by the system:

a. Status of Objective setting/Mid Term Review/ Appraisals

b. PODP needs report for Department Head and OD HR.
c. Reports on IS/DH/MVG Rating
d. Band wise / SBU / Department / Unit wise Normalised curve.
e. Status on Employee-Subordinate Discussions (Objective Setting,
Appraisal, Feedback)
f. Quality of Feedback Process (Not Satisfied, Partially Satisfied or Fully
Satisfied)

P A 2009 /02-04-09 25
 g. Report for OC Board Meeting

8. Specific Measurable Achievable Relevant Time framed (SMART)

Objectives: The system should allow IS to put in the following details for
every objective:
a. Target
b. Units
c. Review Date
d. Performance Standards (By putting in explanation for High, Average &
Low standard per objective)

9. Capturing data on discussion between Employee and IS: The system

should capture data with regards to whether feedback was given or received
as also the quality of the same. In addition the system may also capture
whether the discussions on the following have taken place outside the online
system:
a. Objective Setting
b. Appraisal

Optional Features

10. Linkage of each objective to strategic initiative as finalized in the

Performance Planning Workshop.

11. If the rating assigned by the Department Head is different from the rating
assigned by IS and if the difference is of 2 points or more, then the
system should allow the Department Head to record the explanation and the
same should be triggered to the IS.

12. Critical Incidents Diary: To enable IS to capture the achievements and

areas of improvements for his/her subordinates online, in order to give
objective feedback.

13. Link to Training Calendar (Corporate and OD): To enable employees to

view the content of the programs before choosing them in the PODP form.

14. Security feature: Access control/Flag

P A 2009 /02-04-09 26
 Annexure H

Distribution Percentage

Supervisory & Executive Bands & Tier 1

Fair 1 2 3 4 5 6 7 8
Rating

Reco. 5% 10% 10% 20% 25% 15% 10% 5%

%

Tier 2

Fair 1 2 3 4 5 6 7 8
Rating

Reco. Not 5% 10% 20% 25% 20% 15% 5%

% Mandated

Tier 3

Fair 1 2 3 4 5 6 7 8
Rating

Reco. Not Mandated 5% 20% 25% 25% 20% 5%

%

Tier 4

Fair 1 2 3 4 5 6 7 8
Rating

Reco. Not Mandated 10% 25% 30% 25% 10%

%

P A 2009 /02-04-09 27
 Annexure I

Legend

FAIR : Framework For Linking Appraisals with

Incentives and Rewards

IS : Immediate Superior

NS : Next Superior

DH : Department Head

MVG : Macro View Group

PPW : Performance Planning Workshop

PODP : Performance Oriented Development Plan

P A 2009 /02-04-09 28