Performance

Management
System & V-Pay
Performance Road Map
No formal employee
evaluation system
Confidential employee
evaluation system
Individual attribute
based PMS
Individual Key Result
Area based PMS
Linking organization &
individual goals using
Score Card
Transparency
Complexity
Linkage to organizations performance
Choice of a
system
BALANCED SCORE CARD (BSC)
1. BSC arose from research that 90% of companies
that can formulate Strategy can not implement
them.
2. Complements the Financial Measures of past
performance with the measures of the drivers of
future performance.
3. It clarifies the Vision/ Mission and Operationalises
it.
4. It Validates existing Business Strategy or
formulates new Business strategy covering
Financial , Customer, Internal Process,
Organizational Learning and Growth areas.
5. It helps to deploy strategy successfully.
6. It is an Enterprise Performance Management
System
7. Creates a PMS for all its staff aligned to
Enterprise Management System (BSC).
8. Focus on the support functions to address the
needs of the business.
9. Improves Communication of the strategy
across the organisation.
10.Managers are working hard to be sure things
are done right.They hardly have time to
decide if they are doing right things. It helps
in doing the right things
11. It helps organizations to be both strategically
and operationally excellent.
The Balanced Score Card is a multi-
dimensional frame work that gives top managers
a fast but comprehensive view of the business.
The BSC allows CEOs to look at the business
from four important perspectives:
1. Financial Perspective- To satisfy shareholders,
what financial objectives must we accomplish.?
2. Customer Perspective-To achieve Financial
objectives, what customer needs must we serve?
Balanced Score Card
3. Internal Process Perspective- To satisfy
shareholders and customers in which internal
processes must we excel?
4. Innovation and learning perspective- To
achieve our goals, how must our organisation
learn and innovate?
Approach followed for Goal Setting is top-down
Business plan approved by Board & communicated to HODs.
Department heads to then make plan for department and set
department specific targets.

Key Result Areas, Targets and Weightages decided during the one-
to-one discussion with the Reporting Officer.

Goal Setting Process
Pre-Assessment Assessment
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Goal Setting Process
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KRA Should be
SPECIFIC
MEASURABLE
ACHIEVABLE
RELEVANT
TIME BOUND
Functional KRAs should
be cascaded from the
Organisational Goals.
One or more KPI can be
used for each KRA.
Weightage to be assigned
based on the importance /
impact/ time spent for the
KRA.

Key Result Areas
Accountability statements expressing areas of
outcomes/ outputs the job holder is expected
to achieve
Help in aligning roles to organizations
business/ strategic plans
Focus on results rather than activities
Must be SMART:
(Specific Measurable Achievable Realistic
Time bound)

Measuring Performance
Key Performance Indicators
Quantifiable measurements of the
improvement in performing an activity that
is important to the success
of a business
Tangible, relevant, easy to understand,
repeatable,
and reliable
Drive management action and guide
decision-making
Generally no more than two measures per
objective

Pre-Assessment Assessment
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Targets
Very specific, expressed in terms of numbers or percentages within a specific timeframe
Aggressive, yet achievable
Reflect either expected achievement or relative position compared to industry
benchmark
Weights
Weightage given by appraiser on the basis of impact / importance / time spent on a
target
Sum of weights assigned to the KRAs must equal 100%
Rating Scale
Can be Numeric, Descriptive or Numeric Descriptive
Points on the scale map to different target achievement levels of appraise
Measuring Performance
Performance Measures
Target
Cost Reduction 10%
10% 12%

15%

5% 8%
1
Significantly
below target
2
Below target

3
Meets target

4
Exceeds target

5
Significantly
exceeds target
Pre-Assessment Assessment
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Principles of KRA
Setting
Linking Strategic Goals with Individual Roles.
Identifying and Measuring Performance Using
What, How Much and When.
Differentiating Priorities Over and Above the
Routine Work.
Involvement of Both the Superior and the
Subordinate.
Continuous Monitoring and Coaching through
Feedback and Discussion.
Assigning Weightage
Understanding the Relative Importance of
Each Key Result Area.
Understanding the Difficulty of Each KRA.
Understanding Superiors Perspective.
Discussing Weightage with the Superior.
Convert the Weightage of Each KRA for the
Different Levels of Performance.

Standards of KRAs
Numeric
Any Number, % etc
Deadline/Timeline
Projects, Clearance, Maintenance, Land Acquisition,
Accounts Closing, Budgets Allocation, Completion of
Engineering Design, Consulting Work
Negative
Complaints, Grievance, Accidents, IR problems, man days
lost, Rejection, etc.
Quality
Customer Satisfaction
Change Management
Team Work/People Development

Individual Score: 3.66
Utilization of the maintenance
budget (Signalling &
Telecommunications, Loco, Wagon)
for the department
Rs. (in
Crores)
20% 0.1 1.2 1.4 1.6 1.8 2 2.6 8.00 1.600
Vendor satisfaction index
Rating
out of 10
10% 0.1 5.6 6.3 7 7.7 8.4 6 1.57 0.157
Specific fuel consumption per rake Litres 25% 0.05 181.5 173.25 165 156.75 148.5 165 3.00 0.750
Average time taken for Drawn out to
placement time
Hours 20% 0.1 3 2.75 2.5 2.25 2 2.5 3.00 0.600
Wagon derailment Number 5% 0.1 4 3 2 1 0 2 3.00 0.150
Number of locomotive failures of
each locomotive
% 15% 0.5 4 3 2 1 0 3 2.00 0.300
Number of SOPs developed Number 5% 1 1 2 3 4 5 2 2.00 0.100
Rating on
Scale of 5
Weighted
Score
(Weightage X
Rating)
Weightage
Factor
(x)
1 2 3 (Target) 4 5
Actual
Achievement
Individual Scorecard
Calibration of the Rating Scale
Performance Measure Unit
Step 1: At the start of the performance cycle, identify individual performance measures basis
organizational and departmental scorecard
Step 2: Set weightages and targets for the measure. These are decided based on the targets set for
the department and the manager
Step 3: During year end performance appraisal, mention the actual target achievement. The
individual score would be the weighted score of all performance measures
Scorecard Illustration
Calibration
The target (T) is calibrated to a rating of
3 (giving scope for exceeding the target
and achieving up to a rating of 5)
The corresponding targets for other
ratings (such as 1, 2, 4 and 5), given
the target for 3 is computed by using a
differential factor of X as below:
Target for 1 = (1-2X)T
Target for 2 = (1-X)T
Target for 4 = (1+X)T
Target for 5 = (1+2X)T
Competency Model for
OPGCL
Task Cluster
People
Cluster
Thinking
Cluster
People
Management
Team Work &
Partnership
Management
Achievement
Orientation
Operational
Excellence
Analysis &
Decision
Making
Business
Orientation
Competency
Strand
Teamwork & Partnership
Management
Ensures and drives
collaboration within
and between teams
and effective
relationships with
stakeholders/partne
rs ensuring a win
win situation
Working with
others
Partnership
Management
Competency
Definition
Strand
Competency
Strand
Achievement Orientation
Displays and
drives initiative,
accountability and
a drive for results
in the
organization

Initiative
Accountability &
Drive for
Results
Competency
Definition
Strand
Competency
Strand
Operational Excellence
Delivers high
quality work
through
systematic
planning,
resource
utilization and
process efficiency
ensuring speed
and accuracy
Systematic
Planning
Process Focus
Competency
Definition
Strand
Competency
Strand
People Management
Drives
performance by
providing
direction and
necessary
support; provides
regular feedback
and coaching for
development
Measuring and
Monitoring
Performance
Inspiring and
Motivating
Others
Competency
Definition
Strand
Competency
Strand
Analysis & Decision Making
Displays comfort
with analysis of
information to
arrive at
necessary
conclusions and
judgment
Analytical Skills
Decision Making
Competency
Definition
Strand
Competency
Strand
Business Orientation
Displays the ability
to understand own
role and business
scenario and
ensures alignment
of own work to the
organization's
business objectives
Business
Awareness
Competency
Definition
Strand
The model has been designed keeping the
following broad grade mapping in mind
Grade E6-7A : Proficiency Level III
(Shaping)
Grade E 5 : Proficiency Level II(Guiding)
Grade E1-E4 : Proficiency Level I
(Executing &Applying)
All roles in a particular grade (e.g. Grade E 4),
would be mapped to Proficiency Level I,
irrespective of function
Weighted sum of the Scores obtained for each component
Organisation Level Performance
Function / Department Level Performance
Individual Level Performance

As we move to higher grades, the weightage for organisation level performance increases and
for individual performance decreases.
Computation of Cumulative Score for an
Employee
Grade
Organisation Level
Performance
Function Level
Performance
Individual Level
Performance
E-7 & above 85% 10% 5%
E-5 & E-6 65% 25% 10%
E-3 & E-4 60% 25% 15%
E-1 & E-2 60% 25% 15%
Supervisory 100%
Workmen 100%
Grade wise Weightage for Level of Performance - Year 1
The final cumulative score for each employee is then obtained by computing the
weighted sum of scores for Organisation level, Function level and Individual level
Performances as indicated below.
Weighted Function
Rating
Organisation
Performance
Weightage
Rating for
Organisation
Performance
Rating for
Function
Performance
X
X
=
=
Function
Performance
Weightage
+
Weighted
Organisation
Rating
Total Score for
the employee
Weighted
Individual Rating
Rating for
Individual
Performance
X
=
Individual
Performance
Weightage
+
Computation of Cumulative Score for an
Employee, Cont....
Variable Pay Computation
Grade Designation
Recommended Variable Pay (V) as
% of Total CTC = Fixed + Variable)
E8 Director 27%
E7A Sr GM 26%
E7 GM 23%
E6 DGM 20%
E5 SM 18%
E4 Manager 16%
E3 DM 14%
E2 Sr AM 12%
E1 AM 10%
E0 8%
SG 5%
S1 5%
S2 5%
W4 5%
W3 5%
W2 5%
W1 5%
The Variable Pay that the employee will be
entitled to on achieving the target will vary
depending on the category to which he / she
belongs as indicated below.
Every employee shall be paid a Variable Pay (V)
on achieving a cumulative performance score of
3 out of 5. This variable Pay (V) is defined as a
% of CTC (Fixed + Variable Pay) and shall be
paid out as per the following table.
Classification of
employees in each
grade based on score
Categor
y
%
Differential
in Variable
Pay
Top 20% A V + 15%
Next 50% B V
Next 20% C V 25%
Bottom 10% D V 50%


The Cumulative performance score is linked to % of Variable Pay as per the scale given below:
Rating
% of Variable
Pay
1 20%
1.5 40%
2 60%
2.5 80%
3 100%
3.5 105%
4 110%
4.5 115%
5 120%
For example,
If an individual A has a Variable pay of INR 2 Lakhs
and his / her cumulative performance score
(considering Organisation + Function + Individual
Level performances) is 3.5, he / she will get 105% of INR
2 Lakhs (= INR 2.1 Lakhs) as payout.
5. Threshold Level of Performance
An employee is eligible for any Variable Pay only if the Organisation Score AND the Individual Score is at
least 2 or more.

6. Eligibility & Period for Variable Pay
Eligibility: All regular employees (Executives & Non Executives) of OPGC
Variable pay period:1 April to 31 March)
Payout will be on prorated basis for actual days worked by the employee in the period under
consideration. Days of training and Casual Leave (up to the maximum limit of 10 days) will be counted as
actual days worked. In the case of death, retirement, leave of absence, leave exceeding beyond 10 days of
Casual Leave, the pay out will be on prorated basis. In the case of resignation or termination, no pay out
shall be made after the date of resignation/ termination.

7. Payout Frequency: 50% of target variable pay will be paid as equal monthly installments and remaining
is adjusted at the end of the year based on actual pay out decision.


. Level of Performance, Eligibility, Period of pay & Pay out
Frequency

Step 1 Step 2
Step 3
Identification of performance
objectives (KRAs) and
performance measures (KPIs)
for OPGC employees
Target setting and calibration of
targets for OPGC employees
Year end performance appraisal
To be identified by Top
Management for Organisation
Level
To be discussed with Heads of
Functions and agreed upon for
Functional Level
Heads of Functions shall
discuss the same with all
individuals in their teams and
finalise the individual KRAs
and KPIs
To be identified by Top
Management for Organisation
Level
To be discussed with Heads of
Functions and agreed upon for
Functional Level
Heads of Functions shall
discuss the same with all
individuals in their teams and
finalise the individual Targets
At the end of the year, based on
actual achievement
Organisation & Functional
Scores to be computed
Individual Scores to be
computed during the
Performance Discussion
between Appraiser and
Appraisee

Process for Implementation of PMS
The variable Pay for the Year 2009-10 has been computed based on the
pre-revised cost to company (CTC). It was decided to make this payment of
Variable Pay for 2008-09 over and above the generation incentive amount
already paid for the year 2008-09.
Variable Pay for
2008-09
It was decided to pay 50% of the Variable Pay amount, based on CTC for
2009-10, which was drawn as a corollary to the principles of Performance
Pay adopted for 2008-09. The payout has been made after adjusting 50% of
the provisional generation incentive of 2009-10. The balance 50% of the
Variable Pay amount shall be paid based on actual performance score as
per PMS 2010-11 along with the annual Variable Pay amount for year 2010-
11 during April-June 2011.
Variable Pay for
year 2009-10
The gradations for earlier years has been considered & Provisional
Variable Pay for 2010-11 is calculated based on the actual CTC for
2010-11, and accordingly 50% of the V-pay is being paid out on
monthly basis w.e.f April 2010 and rest 50% will be paid at the year
end basing on the Scorecard according to the V Pay policy.
50% of the Generation Incentive hitherto paid has been recovered
with a proviso to recover the balance 50% of Generation Incentive in
future. Future Generation Incentive to executives is being stopped
forthwith as per the extant policy.
Monthly Variable
Pay for year
2010-11
V Pay released for 2008-09, 2009-10 & 2010-11
2008-09

Future Action Plan for 2010-11
The V Pay for the years 2008-09 & 2009-10 has been fixed according to the grades
(A, B, C or D) which was finalized from the weighted average score obtained from
the marks in the dimensions of Committee Evaluation, Previous Performance &
Potential Assessment.
Now for the year, 2010-11, the process of functional scorecard development and
collection from the several team leaders has already initiated.

The timelines to be adhered to are:


Finalisation of Functional Scorecards: 25
th
September, 2010
Finalisation of Individual Scorecards: 1
st
October, 2010
Mid-year Review:15
th
-30
th
December, 2010
Final Appraisal at the Level of HODs: 15
th
-30
th
March, 2011
Normalisation: 1
st
-15
th
April, 2011
Thank You