This document provides information about a summer training project report submitted by Pooja for her Master of International Business degree. The report discusses Pooja's summer training at MMTC India Ltd, a large Indian trading company. The report includes an introduction to MMTC, its objectives and activities. It also describes Pooja's research methodology for studying MMTC's performance appraisal system and presents findings from her study.
This document provides information about a summer training project report submitted by Pooja for her Master of International Business degree. The report discusses Pooja's summer training at MMTC India Ltd, a large Indian trading company. The report includes an introduction to MMTC, its objectives and activities. It also describes Pooja's research methodology for studying MMTC's performance appraisal system and presents findings from her study.
This document provides information about a summer training project report submitted by Pooja for her Master of International Business degree. The report discusses Pooja's summer training at MMTC India Ltd, a large Indian trading company. The report includes an introduction to MMTC, its objectives and activities. It also describes Pooja's research methodology for studying MMTC's performance appraisal system and presents findings from her study.
UNDERTAKEN AT PERFORMANCE APPRAISAL SYSTEM AT MMTC INDIA LTD. LODHI ROAD NEW DELHI-110003
SUBMITTED IN PARTIAL FULFILLMENT OF REQUIREMENT FOR THE AWARD OF THE DEGREE OF MASTER OF INTERNATIONAL BUSINESS [MIB]
BY POOJA ROLL NO.- 10-MIB-35 ENROLMENT NO : 08-4667
UNDER THE SUPERVISION OF MS. MADHULIKAM DEPUTY MANAGER
CENTRE FOR MANAGEMENT STUDIES Jamia Millia islamia, New Delhi-110025
~ 2 ~
ACKNOWLEDGEMENT
I would like to take an opportunity to thank all the people who helped me in collecting necessary information and making of the report. I am grateful to all of them for their time, energy and wisdom. Getting a project ready requires the work and effort of many people. I would like all those who have contributed in completing this project. First of all, I would like to send my sincere thanks to MS. MADHULIKAM (DEPUTY MANAGER) for her helpful hand in the completion of my project.
NAME: DATE:
~ 3 ~
Declaration
I, POOJA a bonafide student of MIB (Full Time) Programme at the Centre for Management Studies, Jamia Millia Islamia, New Delhi, hereby declare that I have undergone the Summer Training at MMTC INDIA LTD., Lodhi Road New Delhi- 110003 under the supervision of Ms. Madhulikam on and from 20 th June 2011 to 01 st
August 2011.
I also declare that the present project report is based on the above summer training and is my original work. The content of this project report has not been submitted to any other university or institute either in part or in full for the award of any degree, diploma or fellowship.
Further, I assign the right to the university, subject to the permission from the organization concerned, use the information and contents of this project to develop cases, caselets, case leads, and papers for publication and/or for use in teaching.
Signature of Student Name of Student Roll No Place: New Delhi
~ 4 ~
Date---------------
TABLE OF CONTENTS 1. Introduction to the Industry ......................................................................... 2. Introduction to the Company ....................................................................... a. Genesis Vision, Mission, and Objectives. b. Form of Organisation, Main Activities, Market Share, USPs. c. Analysis of Financial statement for the past three years. d. Organizational Structure. e. Recent Maagement Initiatives in the Area of HR.
3. Research Methodology ................................................................................ a. Title ......................................................................................................... i. Title Justification .......................................................................... b. Objective ................................................................................................. i. Objective One ............................................................................... ii. Objective Two ............................................................................... c. Scope of the Study .................................................................................. d. Significance of the study ......................................................................... e. Research Design ..................................................................................... f. Sampling Methodology ........................................................................... g. Limitation ................................................................................................ 4. Facts and Findings ........................................................................................ 5. Data Analysis and Interpretation .................................................................. 6. Conclusion and Recommendation ................................................................ 7. Bibliography ................................................................................................. a. Books ......................................................................................................
~ 5 ~
b. Journals c. Magazines ............................................................................................... d. Internet ................................................................................................... i. Sites ii. Search Engines ........................................................................... 8. Annexure ...................................................................................................... a. Questionnaire ........................................................................................... b. Supporting Documents .............................................................................
~ 6 ~
COMPANY PROFILE
As the largest trading company of India and a major trading company of Asia, MMTC aims at improving its position further by achieving sustainable and viable growth rate through excellence in all its activities, generating optimum profits through total satisfaction of shareholders, customers, suppliers, employees and society. CORPORATE OBJECTIVES
1. To be a leading International Trading House in India operating in the competitive global trading environment, with focus on "bulk" as core competency and to improve returns on capital employed. 2. To retain the position of single largest trader in the country for product lines like minerals, metals and precious metals. 3. To promote development of trade-related infrastructure. 4. To provide support services to the medium and small scale sectors. 5. To render high quality of service to all categories of customers with professionalism and efficiency. 6. To streamline system within the company for settlement of commercial disputes. 7. To upgrade employee skills for achieving higher productivity.
~ 7 ~
State Trading Corporation After Independence the government decided to authorize the mining of scarce mineral resources to the public sector rather than private sector, although India's National Mineral Policy clearly states that it does not "preclude the State from securing the co- operation of private enterprise in the larger interest of the State or with a view to accelerating the pace of development"
Under the Constitution of India, mineral rights and authority of mining laws remain vested with the state governments. On the other hand, Central government regulates the development of minerals under the Mines and Minerals (Regulation) Act of 1957.
The MMTC has its origins in the 1950s, when the Indian government, with the interest of boosting agricultural and industrial development, determined to earn valuable foreign currency through the export of canalized mineral ores, which the country had huge deposits of. As a consequence of the government's decision to earn foreign currency, the State Trading Corporation of India Ltd. was founded in 1956, as a wholly owned government subsidiary, to handle the export and import of selected commodities. 1963-2000
The Company had commenced its operation on 1 October 1963. With the rapid growth of the State Trading Corporation (STC) in its direct trading activities and in view of the importance given to the exports of mineral ores in the country's Five Year Plans, a decision was taken by the Government of India to split the STC and establish another corporation to deal exclusively with the trade in minerals and metals.
Japan and South Korea continued to be the major markets till the year of 1994. Then it made a foray into European market with the exports of one lakh tonnes of iron ore to Slovakia and Romania. Also in the same year, the company had commenced import of gold and silver against special import license for supply to the customers in the domestic area. Imports worth 20 metric tonnes of gold and silver worth 270 tonnes was made and the company opened new gold vaults at Hyderabad and Vizag to offer its services to the customers in these areas. However, manganese ore exports remained
~ 8 ~
depressed due to recession in the steel industry.
The wholly owned subsidiary MMTC Transnational Pte Ltd, Singapore was incorporated under the control of company in the year 1994 itself. During the year 1995, MMTC opened a duty-free jewellery show room at Chhatrapati Shivaji International Airport and a Memorandum of understanding was signed with the government of Orissa for development of existing Gopalpur minor port into a all- weather, deep water and direct berthing port. In the same year, Board for Industrial & Financial Reconstruction (BIFR) had approved the scheme of merger-cum- amalgamation of Mica Trading Corporation of India Limited (MITCO) with MMTC. From the year 1996 onwards, the company started to import the Chemical items and 2000-Onwards
MMTC had signed a MoU with the Department of Commerce under Ministry of Commerce and Industry during the year 2001 for its various applications. The Company had opened a new outlet at Thiruvananthapuram as a duty free business in the year of 2002 and also in the same year unveiled a new line of silverware, Sanchi- Silver in Style. During the year 2003, MMTC had acquired Rs.800 crore deals from Japanese and South Korean companies for the supply of iron ore. In the identical year of 2003, the joint venture with the Orissa government namely Neelchal Ispat Nigam Ltd was emerged as the second largest exporter of pig iron from the country.
The Company was ranked in Trading Sector by Business Standard in their publication BS 1000 'India's Corporate Giants' released in December 2006 and also noted as Top Company in the trading sector for the D&B by coveted American Express Corporate Award 2006. MMTC bagged a gold trophy for top Exporter for the Year 2006-07 in Merchant Exporter category by Engineering Export Promotion Council of India (EEPC) and also CAPEXIL highest export award for highest export of minerals for the year 2006-07, (16th time in a row). The 15 MW wind farms of the company were commissioned in March of the year 2007 at Karnataka. In The year 2007, MMTC had received government approval for acquiring an equity stake in the consortium, which has undertaken the project for construction of a permanent iron ore-loading berth at Ennore to decongest Chennai port.
~ 9 ~
Today MMTC has the distinction of being:
Largest exporter of minerals from India India's Largest Bullion Trader One of India's biggest importer of Non Ferrous Metals India's largest importer of Steel-Coal One of India's leading importer of fertilizers One of India's largest trader of Agro Products
~ 10 ~
MAIN ACTIVITIES, MARKET SHARE, USPs METALS MMTC (A Govt. of India Enterprise) - India's Single Largest Trader of metals. It's metals division imports and exports Non-Ferrous metals, Industrial raw materials, Steel items, Pig Iron, Non Ferrous metals scrap and Iron and Steel scrap etc. MMTC's share of import in India's import of refined base non-ferrous metals in terms of value is about 20%. ITEMS OF TRADE
MMTC imports following metals as per LME deliverable specifications and also Non LME grade material according to the requirements of our customers: Base Non-Ferrous Metals: Copper (min. 99.90% purity) in the form of Wire bars, Cathodes, CC rods Aluminium (min. 99.70%) Zinc Ingots High grade (min. 99.95%) Zinc Ingots Spl. HG (min. 99.995%) Lead Ingots (min. 99.97%) Tin (min. 99.85% purity) Nickel (min. 99.80% purity ) (Squares 4''x4'' ,uncut,Briquettes, Ferro Nickel etc.) Minor Metals : Antimony (min. 99.65% purity) Silicon (Grade 4-4-1 and 5-5-3) Magnesium (min. 99.9% purity) Mercury (min. 99.9% purity) Industrial Raw Materials, Noble metals and ferro alloys Pig Iron, Slag, Steel scrap, HR Coils, CRGO and Steel items
~ 11 ~
MINRALS MMTC Limited, Indias first Super Star Trading House, continues to be the country's leader in mineral exports for four decades now. During the last decade, MMTC could withstand the stiff competition in the world market by its continuous and persistent efforts in diversifying its markets, enlarging its product range, expanding extensively its infrastructure facilities and expertise in mineral operations, and by attaching utmost care and importance to its trade commitments as also the quality of service and products. MMTC has been consistently striving to enhance its competitiveness in the area of value addition. It has set up a crushing and screening plant at Banehatti in Bellary Hospet Sector not only to source higher value realization in the international market but also to compete with the international suppliers like Australia and Brazil in the markets like Japan and South Korea. has provided further fillip to value addition to minerals. The 1.1 million ton Steel Plant consumes about 2 million tons of various types of minerals annually being supplied by MMTC. The company has also taken an initiative to link import of capital equipments required for modernizing mining activities in the country to promote export of minerals. The import of the earthmoving equipments was linked to export of Iron Ore under EPCG scheme.
ITEMS OF TRADE IRON ORE MANGANESE ORE CHROME ORE OTHERS (Mud Chemicals, Barytes, Bentonite, Bauxite, Talc, Gypsum, Feldspar, Quartz/Silica
MMTC Limited, (A Govt. of India Enterprise) is Indias Premier bullion trader, handling more than 185 MTs of Gold & 690 MTs of Silver during 2009-10. The Precious Metals Division has consistently contributed considerable proportion of the total turnover of the Company.
MMTCs Precious Metals Division is in to a range of activities covering imports, exports and domestic retail trade. It helps in promoting exports from India by holding exclusive foreign exhibitions of gold and studded jewellery at chosen overseas locations.
MMTC is an authorized agency of the Government of India for import of gold, silver, platinum, palladium, rough diamonds, emeralds, rubies and other semi-precious stones and supplies these items to jewellers in India for domestic sales and exports. It is one of the custodians of the Diamond Plaza Customs Clearance Center in Mumbai. MMTC is also the custodian for import & export of precious cargo at SEEPZ, SEZ Mumbai.
The company also operates an in-house assaying and hallmarking unit at New Delhi, Jaipur, Ahmedabad and Kolkatta for testing purity of gold and gold articles duly accredited with Bureau of Indian Standards.
MMTC has a unit in New Delhi for manufacturing its own brand of gold and silver medallions since the year 1996. Customized requirements for corporate/institutional orders are serviced from here throughout the year. MMTC has retail jewellery & its own branded Sterling Silverware (Sanchi) showrooms in all the major metro cities of India. MMTC also supplies branded hallmarked gold and studded jewellery.
~ 13 ~
COAL AND HYDROCARBON
Coal and Hydrocarbon is identified as one of the core areas of business for MMTC and Steam coal is identified as a thrust product for import. The coal and hydrocarbons business has achieved a turnover of Rs 18390 million in 2004-05. The above turn over is comprised of mainly LAM COKE, Coking Coal and steam coal. During 2004-05 MMTC transacted a business of around 1.10 million tons of Coking Coal, 0.50 million tons of LAM COKE and 1.39 million tons of steam coal. A quantum jump both in value and quantity of coking coal and non-coking steam coal total 6 million tons valued at Rs.2500 Million - is expected during 2005-06. MMTC withstood the stiff competition due to its continuous and persistent efforts in diversifying its markets, offering value added products and services to its existing customers, enlarging its product range and customer base, expanding extensively its infrastructure facilities, using its expertise in trading by attaching utmost care and importance to its trade commitments as also the quality service and product. Certain specific strengths of MMTC, which make it a strong player in this sector are : Strong business relationship with the leading coal mines and reputed suppliers of various coal and hydrocarbon products. A list of suppliers whose credentials are established are also updated from time to time. They are retained by MMTC for sourcing. Elaborate infrastructure facilities for bulk handling with arrangements for rail and road transport, warehousing, port and shipping operations, which gives MMTC complete control over trade logistics. One of the biggest International traders in bulk in the country. Importing non-coking steam coal continuously for the power plants under long-term contracts.
~ 14 ~
FERTILIZERS
MMTC Limited (A Govt. of India Enterprise) is one of the largest importers of Fertilizers in India. It imports both finished fertilizers, fertilizer intermediaries and fertilizer raw materials. The volume of trade in fertilizers today stands over one million tonnes. MMTC has established itself as a trusted and reliable supplier of fertilizers with major consumers in India. This is result of a very high level of reliability and the resultant reputation that MMTC has so assiduosly built over the last four decades.
MMTC's UNIQUE POSITION
MMTC has remained one of the largest institutional buyers of fertilizers across the globe. MMTC has built this unique position through its continued presence for about four decades in the fertilizer arena internationally. MMTC has been successful in building confidence both amongst its suppliers as well as its buyers in India and abroad through its unstinted transparency in dealings and commitments to contractual terms of international trade. MMTC, through these four decades of buying, selling and net- working, has created a strong leverage for itself, benefiting both the suppliers as well as the buyers. It thereby adds value in the supply chain with its reliable sourcing ability. Thus, MMTC remains the single unique window for buying and selling of all fertilizer products globally. We re-assure all our valued business associates the most transparent, efficient and effective trading experience in fertilizers.
~ 15 ~
AGRO PRODUCT MMTC Limited (A Govt. of India Enterprise) is a global player in the Agro trade, with its comprehensive infrastructural expertise to handle agro products. MMTC Limited provides full logistic support from procurement, quality control to guaranteed timely deliveries of agro products from different parts of India through a wide network of regional and port offices in India and its contacts abroad.
MMTC's UNIQUE POSITION IN THE FIELD OF AGRO TRADE
Reliable established supplier/buyer having over 3 decades of experience in the trade.
Exporting/Importing in bulk.
Sourcing from established suppliers.
Securing competitive prices through bulk buying.
Strong links with government & state marketing agencies.
Recognized as the best quality supplier of Agro products.
Large warehousing facilities having proximity to rail-heads and ports.
MMTC which is a State-run trading firm on the 29th of June reported a 54.21 per cent rise in its net profit at Rs 216.24 crore for the year ended March 2010.
The company in a release said that it had clocked a net profit of Rs 140.22 crore in the last fiscal. The company had also recorded an increase in the turnover to Rs 46,263.91 crore during the year against Rs 37,017.44 crore in the previous year 2008-09.
The MMTC board has recommended the final dividend of 90 per cent on every share of Rs 10 face value and a 1:1 bonus share issue besides share split of 1:10.
MMTC is eyeing to achieve a turnover of Rs. 1 lakh crore during the next 3 years which would mean increasing from its current level of Rs. 45,000 crore. The turnover that it is trying to achieve is mainly on the back of its strategy of diversification and synergy in allied trading activities through consolidation.
MMTC Ltds Chairman and MD Mr. Sanjiv Batra, has earlier said that as the company deals with a large array of products, and in any given situation if some products of the company were not doing well, some others would do. Due to the economic slowdown in the year 2009, people had more faith in gold and the country's gold import had surge by more than 20 % as compared to the previous financial year 2008-09 due to which, MMTC's share of gold imports also increased over 25 % from 16-17 %, which had helped the company to increase its top line.
Mr. Batra had said that MMTC has been following a policy of forward and backward integration and is into infrastructure too.
He further said that until and unless one has some USP or core competence, survival becomes very miserable. Moreover, MMTC has formed a Joint Venture with Sical Logistics Ltd. and L&T Infrastructure for setting up a permanent berth for handling iron ore exports at Ennore port which would be operational by July this year.
~ 17 ~
ANLYSIS OF FINANCIAL STATEMENT
Balance Sheet of MMTC Ltd ------------------- in Rs. Cr. -------------------
Mar '10 Mar '09 Mar '08 Mar '07 Mar '06
12 mths 12 mths 12 mths 12 mths 12 mths
Sources Of Funds
Total Share Capital 50.00 50.00 50.00 50.00 50.00
Equity Share Capital 50.00 50.00 50.00 50.00 50.00
Book Value (Rs) 257.43 224.68 205.99 176.43 166.65
~ 19 ~
RECENT MANAGEMENT INITIATIVES IN THE AREA OF HR
In MMTC we focus on fashioning our HR policies towards providing more non- monetary incentives stemming from job satisfaction, diverse learning opportunities and wider exposure to ever-changing global business environment. MMTC Ltd., which is a global trading organization and one of Asia's leading trading companies, has been the first corporate in the public sector to realize the vital role which online trading has come to occupy in today's global business.
HR mantra in MMTC is to provide more and more job enrichment opportunities to all so as to ensure that employees remain motivated to realize their full potential for organizational goals and self-development. Opportunities are also provided to all to enrich their knowledge base and technical skills through in-house training programmes and through trainings/seminars organized by reputed outside agencies. Human resource development in MMTC, therefore, is a continuous exercise compatible with the change in business patterns and technological innovations in an era of diversification and search for new business opportunities. Notwithstanding the culture of a public sector organization, we in MMTC realize that our most important asset is the employee. We design our HR policies to meet the above objective. Following are some of the HR policies followed in MMTC. i. In an IT driven culture, computer literacy is imparted to all employees ii. Non-graduate employees are encouraged through various incentive schemes to become graduates. Likewise, post-graduate qualifications are encouraged through incentives for promotion to higher levels. iii. Graduate employees are encouraged to obtain professional qualifications through corporate sponsorships. iv. Through job rotation employees are constantly motivated to acquire knowledge and operational skills in different areas of company's operations. This exercise
~ 20 ~
obviously prepares employees for managing higher positions more competently. v. As an incentive to better performers, merit based promotions are considered. vi. Regular training programmes for upgrading employee skills, knowledge and attitudes, in areas like IT, ERP, e-commerce, international trading practices, general management techniques etc. are organized in an effort to keep employee morale and commitment high. vii. Specialization is encouraged in higher management positions through specialized management development programmes arranged within India and outside India. LME training, hedging in metals, global bullion pricing, third country trading, offshore trading are some of such specialized trainings. viii. General management training programmes for all categories of managers are periodically organized through reputed institutions like IIM, ASCI, IIFT, MDI etc. ix. Periodical training programmes are also organized for the development of SC/ST/OBC employees and women employees. In short, corporate philosophy at MMTC towards HR is to ensure continuous development of human resource for fast changing global business through individual freedom and flexibility.
~ 21 ~
EXECUTIVE SUMMARY
Performance appraisal is the process of obtaining, analyzing and recording information about the relative worth of an employee. The focus of the performance appraisal is measuring and improving the actual performance of the employee and also the future potential of the employee. Its aim is to measure what an employee does. According to Flippo, a prominent personality in the field of Human resources, performance appraisal is the systematic, periodic and an impartial rating of an employees excellence in the matters pertaining to his present job and his potential for a better job." Performance appraisal is a systematic way of reviewing and assessing the performance of an employee during a given period of time and planning for his future. It is a powerful tool to calibrate, refine and reward the performance of the employee. It helps to analyze his achievements and evaluate his contribution towards the achievements of the overall organizational goals. By focusing the attention on performance, performance appraisal goes to the heart of personnel management and reflects the managements interest in the progress of the employees. Managements basic job is the effective utilization of human resources for achievements of organizational objectives. The personnel management is concerned with organizing human resources in such a way to get maximum output to the enterprise and to develop the talent of people at work to the fullest satisfaction. Motivation implies that one person, in organization context a manager, includes another, say an employee, to engage in action by ensuring that a channel to satisfy those needs and aspirations becomes available to the person. In addition to this, the strong needs in a direction that is satisfying to the latent needs in employees and harness them in a manner that would be functional for the organization. Employee motivation is one of the major issues faced by every organization. It is the major task of every manager to motivate his subordinates or to create the will to work among the subordinates. It should also be remembered that a worker may be immensely capable of doing some work; nothing can be achieved if he is not willing to work. A manager has to make appropriate use of motivation to enthuse the employees to follow them. Hence this studies also focusing on the employee motivation among the employees of Reliance Infrastructure.
~ 22 ~
INTRODUCTION TO THE TOPIC Introduction While good people are hard to find, great people are much harder to replace. Michael Guld Organization is the strength of any business. The more organized and efficient the different components in the business are, the better it functions and produces. Breaking down tasks associated with each component in the system has led to the concept of job design. Job design came about with rapid technological advancements at the turn of the 20th century when mass production and assembly line operations emerged. As jobs continue to become more sophisticated and specialized, the need for an educated and motivated workforce has become indispensable. The nature of work and its organization has interested managers, economists and social scientists for as long as people have been employed by others to engage in productive activity. Managers have largely been interested in maximizing output from available resources. Economists and social scientists have raised questions about the organization of work in relation to issues of the individual and society in general. Workers today are motivated by many different intentions. Some of these causes are considered as a needed entity or as a desired. Many organizations all over the globe throughout the past hundred years have focused on theories that motivate the workers to be the best they can be. Many of the theories of motivation have proven to be true. In this day of age most workers are well educated to a very high standard and for that they demand a reasonable salary and good working conditions. Motivation has conventionally been assumed to be an individual phenomenon. Each individual is unique in which each individual have different needs, potential, values, strengthening history, attitudes and goals. The most important aspect that most workers are concerned about is their wants and desires. "It is important to identify employees' wants and desires which includes: 1) Praise and recognition-often employees feel that they get noticed only for the things they do wrong, not for the things they do right; 2) Job security; 3) Opportunity to advance and gain new experiences;
~ 23 ~
4) Communication-to know where they stand in the eyes of their employers and what is done right or wrong; 5) To feel involved in the company-to take part in making decisions. Job design and work organization is the specification of the contents, method and relationships of jobs to satisfy technological and organizational requirements as well as the personal needs of jobholders. The main purpose of job design (or re-design) is to increase both employee motivation and productivity (Rush, 1971). Increased productivity can manifest itself in various forms. For example, the focus can be that of improving quality and quantity of goods and services, reduce operation costs, and/or reduce turnover and training costs. Managers have the opportunity to influence the motivation of employees through design of their jobs. Well-designed jobs help accomplish two important goals: getting the necessary work done in a timely and competent manner, and motivating and challenging employees. Both the business and the employee benefit from successful job design. Poorly designed jobs leave to chance whether the expected tasks will get done in a timely and competent manner. Poorly designed jobs, moreover, are likely to be discouraging, boring and frustrating to employees. Even if employees would otherwise be enthused, competent and productive, poorly designed jobs almost certainly lead to employee disappointment.
~ 24 ~
PROCESS OF PERFORMANCE APPRAISAL
ESTABLISHING PERFORMANCE STANDARDS: The first step in the process of performance appraisal is the setting up of the standards which will be used to as the base to compare the actual performance of the employees. This step requires setting the criteria to judge the performance of the employees as successful or unsuccessful and the degrees of their contribution to the organizational goals and objectives. The standards set should be clear, easily understandable and in measurable terms. In case the performance of the employee cannot be measured, great care should be taken to describe the standards.
COMMUNICATING THE STANDARDS :Once set, it is the responsibility of the management to communicate the standards to all the employees of the
~ 25 ~
organization. The employees should be informed and the standards should be clearly explained to the. This will help them to understand their roles and to know what exactly is expected from them. The standards should also be communicated to the appraisers or the evaluators and if required, the standards can also be modified at this stage itself according to the relevant feedback from the employees or the evaluators.
MEASURING THE ACTUAL PERFORMANCE: The most difficult part of the Performance appraisal process is measuring the actual performance of the employees that is the work done by the employees during the specified period of time. It is a continuous process which involves monitoring the performance throughout the year. This stage requires the careful selection of the appropriate techniques of measurement, taking care that personal bias does not affect the outcome of the process and providing assistance rather than interfering in an employees work.
COMPARING THE ACTUAL WITH THE DESIRED PERFORMANCE: The actual performance is compared with the desired or the standard performance. The comparison tells the deviations in the performance of the employees from the standards set. The result can show the actual performance being more than the desired performance or, the actual performance being less than the desired performance depicting a negative deviation in the organizational performance. It includes recalling, evaluating and analysis of data related to the employees performance.
DISCUSSING RESULTS: The result of the appraisal is communicated and discussed with the employees on one-to-one basis. The focus of this discussion is on communication and listening. The results, the problems and the possible solutions are discussed with the aim of problem solving and reaching consensus. The feedback should be given with a positive attitude as this can have an effect on the employees future performance. The purpose of the meeting should be to solve the problems faced and motivate the employees to perform better.
~ 26 ~
DECISION MAKING: The last step of the process is to take decisions which can be taken either to improve the performance of the employees, take the required corrective actions, or the related HR decisions like rewards, promotions, demotions, transfers etc.
~ 27 ~
Pre-requisites for Effective & Successful Performance Appraisal
The essentials of an effective performance system are as follows: Documentation means continuous noting and documenting the performance. It also helps the evaluators to give a proof and the basis of their ratings. Standards / Goals the standards set should be clear, easy to understand, achievable, motivating, time bound and measurable. Practical and simple format - The appraisal format should be simple, clear, fair and objective. Long and complicated formats are time consuming, difficult to understand, and do not elicit much useful information. Evaluation technique An appropriate evaluation technique should be selected; the appraisal system should be performance based and uniform. The criteria for evaluation should be based on observable and measurable characteristics of the behavior of the employee. Communication Communication is an indispensable part of the Performance appraisal process. The desired behavior or the expected results should be communicated to the employees as well as the evaluators. Communication also plays an important role in the review or feedback meeting. Open communication system motivates the employees to actively participate in the appraisal process. Feedback The purpose of the feedback should be developmental rather than judgmental. To maintain its utility, timely feedback should be provided to the employees and the manner of giving feedback should be such that it should have a motivating effect on the employees future performance. Personal Bias Interpersonal relationships can influence the evaluation and the decisions in the performance appraisal process. Therefore, the evaluators should be trained to carry out the processes of appraisals without personal bias and effectively.
~ 28 ~
Challenges Of Performance Appraisal In order to make a performance appraisal system effective and successful, an organization comes across various challenges and problems. The main challenges involved in the performance appraisal process are: Determining the evaluation criteria: Identification of the appraisal criteria is one of the biggest problems faced by the top management. The performance data to be considered for evaluation should be carefully selected. For the purpose of evaluation, the criteria selected should be in quantifiable or measurable terms Create a rating instrument: The purpose of the Performance appraisal process is to judge the performance of the employees rather than the employee. The focus of the system should be on the development of the employees of the organization. Lack of competence: Top management should choose the raters or the evaluators carefully. They should have the required expertise and the knowledge to decide the criteria accurately. They should have the experience and the necessary training to carry out the appraisal process objectively. Errors in rating and evaluation: Many errors based on the personal bias like stereotyping, halo effect (i.e. one trait influencing the evaluators rating for all other traits) etc. may creep in the appraisal process. Therefore the rater should exercise objectivity and fairness in evaluating and rating the performance of the employees Resistance: The appraisal process may face resistance from the employees and the trade unions for the fear of negative ratings. Therefore, the employees should be communicated and clearly explained the purpose as well the process of appraisal. The standards should be clearly communicated and every employee should be made aware that what exactly is expected from him/her.
~ 29 ~
Purpose of Performance Appraisal
Performance Appraisal is being practiced in 90% of the organizations worldwide. Self- appraisal and potential appraisal also form a part of the performance appraisal processes. Typically, Performance Appraisal is aimed at:
To review the performance of the employees over a given period of time. To judge the gap between the actual and the desired performance. To help the management in exercising organizational control. To diagnose the training and development needs of the future. Provide information to assist in the HR decisions like promotions, transfers etc. Provide clarity of the expectations and responsibilities of the functions to be performed by the employees. To judge the effectiveness of the other human resource functions of the organization such as recruitment, selection, training and development. To reduce the grievances of the employees. Helps to strengthen the relationship and communication between superior subordinates and management employees. The most significant reasons of using Performance appraisal are: Making payroll and compensation decisions 80%
~ 30 ~
Training and development needs 71% Identifying the gaps in desired and actual performance and its cause 76% Deciding future goals and course of action 42% Promotions, demotions and transfers 49% Other purposes 6% (including job analysis and providing superior support, assistance and counseling).
The Balanced Scorecard To evaluate the organizational and employee performance in Performance appraisal management processes, the conventional approach measures the performance only on a few parameters like the action processes, results achieved or the financial measures etc. The Balanced scorecard an approach given by Kaplan and Norton- provides a framework of various measures to ensure the complete and balanced view of the performance of the employees. Balanced scorecard focuses on the measures that drive performance. The balanced scorecard provides a list of measures that balance the organizations internal and process measures with results, achievements and financial measures. The two basic features of the balanced scorecard are: A balanced set of measures based on. the four perspectives of balanced scorecard Linking the measures to Employee Performance The four Perspectives recommended by Kaplan and Norton for the managers to collect information are: The financial measures The financial measures include the results like profits, increase in the market share, return on investments and other economic measures as a result of the actions taken. The customers measures - These measures help to get on customer satisfaction, the customers perspective about the organisation, customer loyalty, acquiring new customers. The data can be collected from the frequency and number of customer complaints, the time taken to deliver the products and services, improvement in quality etc. The internal business measures These are the measures related to the organizations internal processes which help to achieve the customer satisfaction. It includes the infrastructure, the long term and short term goals and
~ 31 ~
objectives, organisational processes and procedures, systems and the human resources. The innovation and learning perspective. The innovation and learning measures cover the organisations ability to learn, innovate and improve. They can be judged by employee skills matrix, key competencies, value added and the revenue per employee.
BENEFITS OF BALANCED SCORECARD The benefits of the balanced scorecard approach in measuring performance are: Gives the complete picture of the employee as well as the organisational performance. It guides users in determining the critical success factors and performance indicators. Strategic review or analysis of the organisational capabilities and performance. Focusing the whole organisation on the few key things needed to create breakthrough performance. Integrating and directing the performance and efforts from the lowest levels in the organisation to achieve excellent overall performance.
~ 32 ~
Techniques Of Performance Appraisal
~ 33 ~
Traditionally, performance appraisal has been used as just a method for determining and justifying the salaries of the employees. Than it began to be used a tool for determining rewards (a rise in the pay) and punishments (a cut in the pay) for the past performance of the employees. This approach was a past oriented approach which focused only on the past performance of the employees i.e. during a past specified period of time. This approach did not consider the developmental aspects of the employee performance i.e. his training and development needs or career developmental possibilities. The primary concern of the traditional approach is to judge the performance of the organization as a whole by the past performances of its employees Therefore, this approach is also called as the overall approach. In 1950s the performance appraisal was recognized as a complete system in itself and the Modern Approach to performance appraisal was developed. The modern approach to performance development has made the performance appraisal process more formal and structured. Now, the performance appraisal is taken as a tool to identify better performing employees from others, employees training needs, career development paths, rewards and bonuses and their promotions to the next levels. Appraisals have become a continuous and periodic activity in the organizations. The results of performance appraisals are used to take various other HR decisions like promotions, demotions, transfers, training and development, reward outcomes. The modern approach to performance appraisals includes a feedback process that helps to strengthen the relationships between superiors and subordinates and improve communication throughout the organization. The modern approach to Performance appraisal is a future oriented approach and is developmental in nature. This recognizes employees as individuals and focuses on their development. 1. ESSAY APPRAISAL METHOD This traditional form of appraisal, also known as Free Form method involves a description of the performance of an employee by his superior. The description is an evaluation of the performance of any individual based on the facts and often includes examples and evidences to support the information. A major drawback of the method is the inseparability of the bias of the evaluator.
~ 34 ~
2. STRAIGHT RANKING METHOD This is one of the oldest and simplest techniques of performance appraisal. In this method, the appraiser ranks the employees from the best to the poorest on the basis of their overall performance. It is quite useful for a comparative evaluation. 3. PAIRED COMPARISON A better technique of comparison than the straight ranking method, this method compares each employee with all others in the group, one at a time. After all the comparisons on the basis of the overall comparisons, the employees are given the final rankings. 4. CRITICAL INCIDENTS METHODS In this method of Performance appraisal, the evaluator rates the employee on the basis of critical events and how the employee behaved during those incidents. It includes both negative and positive points. The drawback of this method is that the supervisor has to note down the critical incidents and the employee behaviour as and when they occur. 5. FIELD REVIEW In this method, a senior member of the HR department or a training officer discusses and interviews the supervisors to evaluate and rate their respective subordinates. A major drawback of this method is that it is a very time consuming method. But this method helps to reduce the superiors personal bias. 6. CHECKLIST METHOD The rater is given a checklist of the descriptions of the behaviour of the employees on job. The checklist contains a list of statements on the basis of which the rater describes the on the job performance of the employees.
7. GRAPHIC RATING SCALE In this method, an employees quality and quantity of work is assessed in a graphic scale indicating different degrees of a particular trait. The factors taken into consideration include both the personal characteristics and characteristics related to the on-the-job performance of the employees. For example a trait like Job Knowledge may be judged on the range of average, above average, outstanding or unsatisfactory.
~ 35 ~
8. FORCED DISTRIBUTION To eliminate the element of bias from the raters ratings, the evaluator is asked to distribute the employees in some fixed categories of ratings like on a normal distribution curve. The rater chooses the appropriate fit for the categories on his own discretion. MODERN METHODS
1. 360 DEGREE PERFORMANCE APPRAISALS 360 degree feedback, also known as 'multi-rater feedback', is the most comprehensive appraisal where the feedback about the employees performance comes from all the sources that come in contact with the employee on his job. 360 degree respondents for an employee can be his/her peers, managers (i.e. superior), subordinates, team members, customers, suppliers/ vendors - anyone who comes into contact with the employee and can provide valuable insights and information or feedback regarding the on-the-job performance of the employee. 360 degree appraisal has four integral components: 1. Self appraisal 2. Superiors appraisal 3. Subordinates appraisal 4. Peer appraisal. Self appraisal gives a chance to the employee to look at his/her strengths and weaknesses, his achievements, and judge his own performance. Superiors appraisal forms the traditional part of the 360 degree appraisal where the employees responsibilities and actual performance is rated by the superior.
Subordinates appraisal gives a chance to judge the employee on the parameters like communication and motivating abilities, superiors ability to delegate the work, leadership qualities etc. Also known as internal customers, the correct feedback given by peers can help to find employees abilities to work in a team, co-operation and sensitivity towards others.
Self assessment is an indispensable part of 360 degree appraisals and therefore 360 degree Performance appraisal have high employee involvement and also have the strongest impact on behavior and performance. It provides a "360- degree review" of the employees performance and is considered to be one of the most credible performance appraisal methods.
~ 36 ~
360 degree appraisal is also a powerful developmental tool because when conducted at regular intervals (say yearly) it helps to keep a track of the changes others perceptions about the employees. A 360 degree appraisal is generally found more suitable for the managers as it helps to assess their leadership and managing styles. This technique is being effectively used across the globe for performance appraisals. Some of the organizations following it are Wipro, Infosys, and Reliance Industries etc.
2. MANAGEMENT BY OBJECTIVES
The concept of Management by Objectives (MBO) was first given by Peter Drucker in 1954. It can be defined as a process whereby the employees and the superiors come together to identify common goals, the employees set their goals to be achieved, the standards to be taken as the criteria for measurement of their performance and contribution and deciding the course of action to be followed. The essence of MBO is participative goal setting, choosing course of actions and decision making. An important part of the MBO is the measurement and the comparison of the employees actual performance with the standards set. Ideally, when employees themselves have been involved with the goal setting and the choosing the course of action to be followed by them, they are more likely to fulfill their responsibilities.
UNIQUE FEATURES AND ADVANTAGES OF MBO
The principle behind Management by Objectives (MBO) is to create empowered employees who have clarity of the roles and responsibilities expected from them, understand their objectives to be achieved and thus help in the achievement of organizational as well as personal goals. Some of the important features and advantages of MBO are: Clarity of goals With MBO, came the concept of SMART goals i.e. goals that are: Specific Measurable Achievable Realistic, and Time bound. The goals thus set are clear, motivating and there is a linkage between organizational goals and performance targets of the employees. The focus is on future rather than on past. Goals and standards are set for the performance for the future with periodic reviews and feedback. Motivation Involving employees in the whole process of goal setting and increasing employee empowerment increases employee job satisfaction and commitment.
~ 37 ~
Better communication and Coordination Frequent reviews and interactions between superiors and subordinates helps to maintain harmonious relationships within the enterprise and also solve many problems faced during the period . 3. Assessment Centres
Assessment centre refers to a method to objectively observe and assess the people in action by experts or HR professionals with the help of various assessment tools and instruments. Assessment centers simulate the employees on-the-job environment and facilitate the assessment of their on-the-job performance. An assessment centre typically involves the use of methods like social/informal events, tests and exercises, assignments being given to a group of employees to assess their competencies and on-the-job behaviour and potential to take higher responsibilities in the future. Generally, employees are given an assignment similar to the job they would be expected to perform if promoted. The trained evaluators observe and evaluate employees as they perform the assigned jobs and are evaluated on job related characteristics. An assessment centre for Performance appraisal of an employee typically includes: Social/Informal Events An assessment centre has a group of participants and also a few assessors which gives a chance to the employees to socialize with a variety of people and also to share information and know more about the organisation. Information Sessions information sessions are also a part of the assessment centres. They provide information to the employees about the organisation, their roles and responsibilities, the activities and the procedures etc. Assignments- assignments in assessment centers include various tests and exercises which are specially designed to assess the competencies and the potential of the employees. These include various interviews, psychometric tests, management games etc. all these assignments are focused at the target job. The following are the common features of all assessment centers: The final results is based on the pass/fail criteria All the activities are carried out to fill the targeted job. Each session lasts from 1 to 5 days. The results are based on the assessment of the assessors with less emphasis on self-assessment Immediate review or feedbacks are not provided to the employees. An organizations human resources can be a vital competitive advantage and assessment centre helps in getting the right people in right places. The major competencies that are judged in assessment centres are interpersonal skills, intellectual capability, planning and organizing capabilities, motivation, career
~ 38 ~
orientation etc. assessment centres are also an effective way to determine the training and development needs of the targeted employees.
BEHAVIORALLY ANCHORED RATING SCALES Behaviorally Anchored Rating Scales (BARS) is a relatively new technique which combines the graphic rating scale and critical incidents method. It consists of predetermined critical areas of job performance or sets of behavioral statements describing important job performance qualities as good or bad (for eg. the qualities like inter-personal relationships, adaptability and reliability, job knowledge etc). These statements are developed from critical incidents. In this method, an employees actual job behaviour is judged against the desired behaviour by recording and comparing the behaviour with BARS. Developing and practicing BARS requires expert knowledge.
HUMAN RESOURCE ACCOUNTING METHOD Human resources are valuable assets for every organization. Human resource accounting method tries to find the relative worth of these assets in the terms of money. In this method the Performance appraisal of the employees is judged in terms of cost and contribution of the employees. The cost of employees include all the expenses incurred on them like their compensation, recruitment and selection costs, induction and training costs etc whereas their contribution includes the total value added (in monetary terms). The difference between the cost and the contribution will be the performance of the employees. Ideally, the contribution of the employees should be greater than the cost incurred on them. 360 degree feedback, also known as 'multi-rater feedback', is the most comprehensive appraisal where the feedback about the employees performance comes from all the sources that come in contact with the employee on his job. 360 degree respondents for an employee can be his/her peers, managers (i.e. superior), subordinates, team members, customers, suppliers/ vendors - anyone who comes into contact with the employee and can provide valuable insights and information or feedback regarding the on-the-job performance of the employee.
~ 39 ~
TQM and Performance Appraisal According to Sashkin and Kiser, Total Quality Management (TQM) may be defined as creating an organisational culture committed to the continuous improvement of skills, teamwork, processes, product and service quality and customer satisfaction. TQM refers to the continuous improvement in the quality of work of all employees with the focus on satisfaction of the customers. Elements of TQM are: Meeting customers requirements, Continuous improvement Empowerment of employees. Both TQM and Performance appraisal/ evaluation are focused on increasing the productivity of the organisation through continuous improvement. They both facilitate the systematic management of all the processes, actions and practices at all levels in the organisation. Some of the benefits of both the performance appraisal and TQM are: Improvement in the performance of the employees Brings quality consciousness Better utilization of resources Commitment to higher quality. But there also exists a few other schools of thought which refute the compatibility of the TQM and performance appraisal. According to them, both TQM and Performance appraisals differ in their fundamental nature, characteristics and requirements making it impossible to combine them. Some fundamental differences between the two are as follows: TQM is team based whereas performance appraisals are designed for individuals i.e. it undermines teamwork. TQM focuses on customer satisfaction whereas performance appraisal focuses on the improving the performance of the employees. Performance appraisal generally results in some rewards like increased pay etc. whereas TQM may or may not yield visible results. Performance appraisal can sometimes, encourage an employee to focus on his personal goals (like his promotion) rather than the organisational goals.
~ 40 ~
PERFORMANCE APPRAISAL PROCESS CHANGE MANAGEMENT
The performance appraisal process provides an opportunity for introducing organizational change. It facilitates the process of change in the organizational culture. The interactive sessions between the management and the employees, the mutual goal setting and the efforts towards the career development of the employees help the organization to become a learning organization. Conducting performance appraisals on a regular basis helps it to become an ongoing part of everyday practice and helps employees to take the responsibility of their work and boosts their professional development. Various studies in the field of human resources have already proved that performance appraisal process can affect the individual performance (in a negative or positive way), thus having an impact on the collective performance. Performance appraisal: An opportunity for an organisational culture shift Performance appraisal process focuses on the goal setting approach throughout the organisation. Performance appraisal helps the clarity and understanding of the roles and responsibilities of the employees. The performance appraisal processes have the potential positive effects on recruitment It increases organisational effectiveness i.e. what to do and how to do through a formal and structured approach. Some evidence of the beneficial effects of team rewards Therefore, performance appraisal is also an important link in the process of change in organization culture. Managers have the responsibility of designing jobs. If they ignore this responsibility, employees will design their own jobs. Not surprisingly, the jobs designed by employees are more likely to be attuned to employee experiences and preferences than to the goals of the business. Neither the business nor the employees are long-term winners from managers defaulting job design to employees. In designing the work group activity one of the basic principles is that of 'minimum critical specification' of the tasks and the 'minimum critical specification of tasks to jobs. Specification of objectives remains essential but the means for obtaining them in many
~ 41 ~
instances can be decided by the task performer. In designing the work system it will often be the case that some overriding factor limits the application of all these principles. Nevertheless they can form the basis for questioning the assumptions being made in the design process and lead to discussion about the possible consequences of ignoring them. Criteria applied when making decisions about jobs and work organization were criticized by Louis Davis, in the 1950's, for more or less ignoring the social and psychological needs of job holders. Whilst there is now a much greater awareness of these aspects, those responsible for designing systems often are forced to operate within narrow parameters. Decisions made earlier by designers of manufacturing equipment often impose constraints on the choices available at the later stage. However, whilst recognizing these constraints it would appear that those responsible for job design are still dominated in their decisions by those factors criticized by Davis. The challenge facing managers now and in the future is that of employing the new technology with all its opportunities in ways which not only meet the organization's needs but also the expectations and aspirations of employees. In order to achieve this more effectively there is the need to further develop these approaches to job and work organization design which facilitates these broader criteria being incorporated into the design process as well as the tools with which to achieve the task. Job design serves to improve performance and motivation. Job-design analysis starts by looking at a job with a broad perspective and swiftly moves toward identifying the specific activities required to do the job. This is done for the purpose of identifying and correcting any deficiencies that affect performance and motivation. In this study we intend to explore which features of job design are motivating for employees working in banking sector in Pakistan so that they can perform at their best.
~ 42 ~
1.2 Operational Definitions 1.2.1 Job A job is a regular activity performed in exchange for payment, especially as one's occupation. A person usually begins a job by becoming an employee, volunteering, or starting a business. The duration of a job may range from an hour (in the case of odd jobs) to a lifetime (in the case of some judges). If a person is trained for a certain type of job, they may have a profession. The series of jobs a person holds in their life is their career. 1.2.2 Job Design It refers to the process of determining exactly what an employee does on the job: the tasks, duties, responsibilities, decision-making and the level of authority 1.2.3 Motivation Motivation is goal directed behavior. Factors, which energize, direct and sustain employee behavior. 1.2.4 Job Performance Job performance is a commonly used, yet poorly defined concept in industrial and organizational psychology, the branch of psychology that deals with the workplace. It most commonly refers to whether a person performs their job well. Despite the confusion over how it should be exactly defined, performance is an extremely important criterion that relates to organizational outcomes and success. Disinvestment
The government is encouraging the listing of public sector enterprises (PSEs), as this unlocks the true value of a company, improves its corporate governance standards and also helps it in raising resources for funding future expansion plans Prime Minister Manmohan Singh said on September 2009.
In accordance with this, the commerce ministry on 1 October 2009 has consented to 10% disinvestment in MMTC, which can fetch the government Rs 17,000 crore at present valuation. The government holds 99.33% of five crore shares in MMTC, which has major interests in global trading of minerals and metals, including gold and silver. The official said the timing of the MMTC follow-on-offer would be decided by the
~ 43 ~
department of disinvestment, depending on the market conditions. Despite repeated attempts, the MMTC top management could not be reached. With boom time returning to the stock market, corporates are making a beeline before the Securities and Exchange Board of India for initial public offers or follow-on offers. The National Hydroelectric Power Corporation and Oil India Ltd have recently been listed in the marketplace. REC, NTPC, Satluj Jal Vidyut Nigam Ltd and NMDC are few other companies expected to go for Follow-on Public Offers (FPO) in the coming months.
Aiming at diversification and with a view to add value to its existing trading operations, the company has undertaken various strategic initiatives during the year 2007-08 following public private partnership route, effectively integrating vertically, both backwards and forwards, to encompass the entire gamut of the product process starting from the stage of manufacture and ending with distribution to the ultimate consumer. The Company had inked an agreement with Swiss metal company PAMP to set up a gold refinery in Sohna during March of the year 2008
~ 44 ~
EMPLOYEE ENGAGEMENT is a process in which the employees are encouraged to remain with the organization for the maximum period of time or until the completion of the project. Employee engagement is beneficial for the organization as well as the employee. Employees today are different. They are not the ones who dont have good opportunities in hand. As soon as they feel dissatisfied with the current employer or the job, they switch over to the next job. It is the responsibility of the employer to retain their best employees. If they dont, they would be left with no good employees. A good employer should know how to attract and retain its employees. Engagement involves five major things:
Compensation Compensation constitutes the largest part of the employee engagement process. The employees always have high expectations regarding their compensation packages. Compensation packages vary from industry to industry. So an attractive compensation package plays a critical role in retaining the employees. Compensation includes salary and wages, bonuses, benefits, prerequisites, stock options, bonuses, vacations, etc. While setting up the packages, the following components should be kept in mind: Salary and monthly wage: It is the biggest component of the compensation package. It is also the most common factor of comparison among employees. It includes Basic wage House rent allowance Dearness allowance City compensatory allowance
~ 45 ~
Salary and wages represent the level of skill and experience an individual has. Time to time increase in the salaries and wages of employees should be done. And this increase should be based on the employees performance and his contribution to the organization. o Bonus: Bonuses are usually given to the employees at the end of the year or on a festival. o Economic benefits: It includes paid holidays, leave travel concession, etc. o Long-term incentives: Long term incentives include stock options or stock grants. These incentives help retain employees in the organization's startup stage. o Health insurance: Health insurance is a great benefit to the employees. It saves employees money as well as gives them a peace of mind that they have somebody to take care of them in bad times. It also shows the employee that the organization cares about the employee and its family. o After retirement: It includes payments that an Employee gets after he retires like EPF (Employee Provident Fund) etc. o Miscellaneous compensation: It may include employee assistance programs (like psychological counseling, legal assistance etc), discounts on company products, use of a company cars, etc.
LINKING COMPENSATION TO PERFORMANCE One of the latest strategies being followed in all sectors through out the world for engagement and Employee engagement is linking compensation to performance. Commonly known as Performance pay or Performance based pay, it links the compensation of the employees to their performance and their contribution to the organizational goals. Therefore, periodic performance reviews play a vital role and provide the basis of performance related pay. Commissions, incentives and bonuses, piece rate pay help the employer to pay the employee according to their productivity and hard work. The process of performance based pay involves: Deciding and clearly defining the performance goals and the performance measures Setting the target bonus for different levels of performances
~ 46 ~
Measuring the performance of the employee Giving rewards and bonus according to performance Organizations are also designing variable compensation plans for various roles and positions in the organization. Types of Performance Pay
Merit pay The first step to performance pay, merit pay means setting some basic salary according to the position and the rank of the employee and the variable part of the salary is based on the periodic performance reviews. Profit Sharing Sharing the profits of the enterprise with the employees as bonus. Incentives and Performance Bonus Rewards for special accomplishments or fulfillment of the targets set such as sales commission.
Gain sharing - Sharing of gains as a result of the increased performance of the employees with them. Although performance related pay has always been a topic of discussions and controversies with many arguments against it, but it has also been proved that performance based pay motivates employees to perform better and earn, and encourages learning, innovation, creativity, problem solving and empowerment which can be facilitated through proper performance measurement and reviews. o Growth and Career
Growth and development are the integral part of every individuals career. If an employee can not foresee his path of career development in his current organization, there are chances that hell leave the organization as soon as he gets an opportunity. The important factors in employee growth that an employee looks for himself are: Work profile: The work profile on which the employee is working should be in sync with his capabilities. The profile should not be too low or too high. Personal growth and dreams: Employees responsibilities in the organization should help him achieve his personal goals also. Organizations can not keep aside the individual goals of employees and foster organizations goals. Employees priority is to work for themselves and later on comes the organization. If hes not satisfied with his growth, hell not be able to contribute in organization growth. Training and
~ 47 ~
development: Employees should be trained and given chance to improve and enhance their skills. Many employers fear that if the employees are well rained, theyll leave the organization for better jobs. Organization should not limit the resources on which organizations success depends. These trainings can be given to improve many skills like:
Communications skills Technical skills In-house processes and procedures improvement related skills C or customer satisfaction related skills Special project related skills
Need for such trainings can be recognized from individual performance reviews, individual meetings, employee satisfaction surveys and by being in constant touch with the employees. Lack of support from management can sometimes serve as a reason for employee engagement . Supervisor should support his subordinates in a way so that each one of them is a success. Management should try to focus on its employees and support them not only in their difficult times at work but also through the times of personal crisis. Management can support employees by providing them recognition and appreciation. Employers can also provide valuable feedback to employees and make them feel valused to the organization. The feedback from supervisor helps the employee to feel more responsible, confident and empowered. Top management can also support its employees in their personal crisis by providing personal loans during emergencies, childcare services, employee assistance programs, counseling services, et al. Employers can also support their employees by creating an environment of trust and inculcating the organizational values into employees. Thus employers can support their employees in a number of ways as follows: By providing feedback By giving recognition and rewards By counseling them By providing emotional support
~ 48 ~
Relationship Sometimes the relationship with the management and the peers becomes the reason for an employee to leave the organization. The management is sometimes not able to provide an employee a supportive work culture and environment in terms of personal or professional relationships. There are times when an employee starts feeling bitterness towards the management or peers. This bitterness could be due to many reasons. This decreases employees interest and he becomes de-motivated. It leads to less satisfaction and eventually attrition. A supportive work culture helps grow employee professionally and boosts employee satisfaction. To enhance good professional relationships at work, the management should keep the following points in mind. Respect for the individual: Respect for the individual is the must in the organization. Relationship with the immediate manager: A manger plays the role of a mentor and a coach. He designs and plans work for each employee. It is his duty to involve the employee in the processes of the organization. So an organization should hire managers who can make and maintain good relations with their subordinates. Relationship with colleagues: Promote team work, not only among teams but in different departments as well. This will induce competition as well as improve the relationships among colleagues. Recruit whole heartedly: An employee should be recruited if there is a proper place and duties for him to perform. Otherwise hell feel useless and will be dissatisfied. Employees should know what the organization expects from them and what their expectation from the organization is. Deliver what is promised. Promote an employee based culture: The employee should know that the organization is there to support him at the time of need. Show them that the organization cares and hell show the same for the organization. An employee based culture may include decision making authority, availability of resources, open door policy, etc. Individual development: Taking proper care of employees includes acknowledgement to the employees dreams and personal goals. Create opportunities for their career growth by providing mentorship programs, certifications, educational courses, etc. Induce loyalty: Organizations should be loyal as well as they should promote loyalty in the employees too. Try to make the current employees stay instead of recruiting new ones.
Organization Environment
~ 49 ~
It is not about managing engagement . It is about managing people. If an organization manages people well, employee engagement will take care of itself. Organizations should focus on managing the work environment to make better use of the available human assets.
People want to work for an organization which provides Appreciation for the work done Ample opportunities to grow A friendly and cooperative environment A feeling that the organization is second home to the employee Organization environment includes Culture Values Company reputation Quality of people in the organization Employee development and career growth Risk taking Leading technologies
Trust Types of environment the employee needs in an organization Learning environment: It includes continuous learning and improvement of the individual, certifications and provision for higher studies, etc. Support environment: Organization can provide support in the form of work-life balance. Work life balance includes: Flexible hours Telecommuting Dependent care Alternate work schedules Vacations Wellness Work environment: It includes efficient managers, supportive co-workers, challenging work, involvement in decision-making, clarity of work and responsibilities, and
~ 50 ~
recognition. Lack or absence of such environment pushes employees to look for new opportunities. The environment should be such that the employee feels connected to the organization in every respect. 1. Gallup Research 2. Categories of Employee Engagement. 3. Aspects of Employee Engagement 4. Factors leading to employee Engagement GALL UP RESEARCH The Gallup study is based on positive Psychology and emotions. Having a best friend at work or receiving recognition every week makes one feel cared for and proud respectively. If one wants to keep recreating those positive emotions, then one should keep coming back to work. Borden-and Build theory is about evolutionary significance of positive emotions which are better observed over the long haul. Their effects accumulate and compound overtime and the adaptive benefits are evident from later, when people face new challenges. The Gallup research has contributed an additional P to the 4Ps of marketing i.e. product, price, and promotion place and now people to the mix. The Gallup defines a great workplace as one where employees were satisfied with their jobs which help produce positive business outcomes. CATEGORIES OF EMPLOYEE ENGAGEMENT According to the Gallup there are different types of people- Engaged:
ngths at work every day.
Not Engaged:
not being tapped. t have productive relationship with their managers or with their co-workers. Actively Disengaged:
re not just unhappy at work; theyre busy acting out their unhappiness.
~ 51 ~
undetermined what their engaged co-worker accomplish. and services, the problems and tensions that are fostered by actively disengaged workers can cause great damage to an organizations functioning ASPECTS OF EMPLOYEE ENGAGEMENT
d their ability to create conditions that promote engagement.
conducive to this partnership and win-win equation. FACTORS LEADING TO EMPLOYEE ENGAGEMENT
-making Image-Perception about quality of the companys product and willingness to endorse.
-satisfaction whether job matches career goals which makes work enjoyable. en Communication
Effect of Employee Engagement Employee Engagement has a variety of effects. These effects may be seen in the context of an individuals physical and mental health, productivity, absenteeism, and turnover. Physical and Mental Health: The degree of Employee Engagement affects an individuals physical and mental health. Since Employee Engagement is a type of mental feeling, its favourableness or
~ 52 ~
unfavourablesness affects the individual psychologically which ultimately affects his physical health. For example, Lawler has pointed out that drug abuse, alcoholism and mental and physical health result from psychologically harmful jobs. Further, since a job is an important part of life, Employee Engagement. Influences general life satisfaction. The result is that there is spillover effect which occurs in both directions between job and life satisfaction. Productivity: There are two views about the relationship between Employee Engagement and productivity: 1. A happy worker is a productive worker, 2. A happy worker is not necessarily a productive worker. The first view establishes a direct cause-effect relationship between Employee Engagement and productivity; when Employee Engagement increases, productivity increases; when satisfaction decreases, productivity decreases. The basic logic behind this is that a happy worker will put more efforts for job performance. However, this may not be true in all cases. For example, a worker having low expectations from his jobs may feel satisfied but he may not put his efforts more vigorously because of his low expectations from the job. Therefore, this view does not explain fully the complex relationship between Employee Engagement and productivity. The another view: That is a satisfied worker is not necessarily a productive worker explains the relationship between Employee Engagement and productivity. Various research studies also support this view. This relationship may be explained in terms of the operation of two factors: effect of job performance on satisfaction and organizational expectations from individuals for job performance.
1. Job performance leads to job satisfaction and not the other way round. The basic factor for this phenomenon is the rewards (a source of satisfaction) attached with performance.
There are two types of rewards-intrinsic and extrinsic. The intrinsic reward stems from the job itself which may be in the form of growth potential, challenging job, etc. The satisfaction on such a type of reward may help to increase productivity. The extrinsic reward is subject to control by management such as salary, bonus, etc. Any increase in
~ 53 ~
these factors does not hep to increase productivity though these factors increase Employee Engagement. 2. A happy worker does not necessarily contribute to higher productivity because he has to operate under certain technological constraints and, therefore, he cannot go beyond certain output. Further, this constraint affects the managements expectations from the individual in the form of lower output. Thus, the work situation is pegged to minimally acceptable level of performance. However, it does not mean that the Employee Engagement has no impact o productivity. A satisfied worker may not necessarily lead to increased productivity but a dis-satisfied worker leads to lower productivity. Absenteeism: Absenteeism refers to the frequency of absence of job holder from the workplace either unexcused absence due to some avoidable reasons or long absence due to some unavoidable reasons. It is the former type of absence which is a matter of concern. This absence is due to lack of satisfaction from the job which produces a lack of will to work and alienate a worker form work as for as possible. Thus, job satisfaction is related to absenteeism. Employee turnover: Turnover of employees is the rate at which employees leave the organization within a given period of time. When an individual feels dissatisfaction in the organization, he tries to overcome this through the various ways of defense mechanism. If he is not able to do so, he opts to leave the organization. Thus, in general case, employee turnover is related to Employee Engagement. However, Employee Engagement is not the only cause of employee turnover, the other cause being better opportunity elsewhere. For example, in the present context, the rate of turnover of computer software professionals is very high in India. However, these professionals leave their organizations not simply because they are not satisfied but because of the opportunities offered from other sources particularly from foreign companies located abroad. The credit card industry in India has registered an encouraging growth in recent times, but the usage pattern of credit cards remains a point of concern, those in the industry say. Seven years back, India had a base of around five lakh credit cards. There has been a seven-fold increase, with the number of cardholders touching over 38 lakh. These figures point towards the fact that the credit card industry in India is growing at a brisk annual rate of 30 per cent and is expected to grow at a similar rate in the coming
~ 54 ~
years. This fortifies the view that conservative purchasing ideas are giving way to the big in-thing. But it is the usability that raises doubts. According to a survey by the Credit Card & Management Consultancy (CCMC), 71 per cent of first time credit card applicants in the country have expressed the need for advice on appropriate card selection despite the plethora of cards available in the market. Through this survey it has come to realise a long felt need of potential and existing cardholders for advice on suitable selection of a credit cards. The whole idea behind the introduction of the credit cards was to increase the purchasing capacity of the cardholder. With this in mind, the foreign banks launched a credit car d blitzkrieg on the Indian customer. The innovations have already begun to show their effect. The Standard Chartered Bank has seen its credit card base shoot up after the launch of its Global Rupee Card in March last year. It has seen the fresh issuance of global card increase by more than one lakh, and the bank now has a base of more than half a billion. But the real challenge for the banks is to make the holder spend more on the card. Going by estimates, India has a long way to be anywhere near the matured markets. The markets like the United States and England have an average annual card spend of 1,300 and 3,600 dollars respectively. The credit card players will have to think about simplifying the foreign exchange transactions. When one uses the card, it is entirely his responsibility to make sure that exchange controls have been complied with. The banks that issue the cards, have made it abundantly clear that one has to look out for himself. It is upto him to find out the facts of regulatory life. The real point of worry is the spending on the credit cards. According to estimates, the average card spending in India is even less than that in Indonesia. Those in the credit card business say that per capita credit card spending in India is about five hundred dollars (Rs 21,500), whereas in Indonesia, it is about 678 dollars (Rs 29,154). At present there are over a dozen players in the credit card market in India, and the fact is the foreign banks are clearly the leaders. The leaders will surely be identified by the innovations for the card users. But the alarm has been raised for the banks by the figures that show that while the average usage in Malaysia is 27 times annually, in India it is only 11 times. Some of the key factors impacting the cards business in India are limited credit, wide geographical spread, limited telecommunication infrastructure and emerging regulatory controls. The
~ 55 ~
other players feel that the card acceptance base in India has to be widened. Suggestions include credit card usage at petrol pumps and railway bookings. They also point out that though the cards business has been in the country for long, but even today the insurance premium cannot be paid by card. Though LIC is talking about the introduction of this facility to customers, but its turning into reality may take time. There is talk of widening the card business with new features, but the present scenario does not paint a positive picture, with many loopholes remaining to be plugged. Of the twenty million tax payers in India, more than ten per cent of them are cardholders. Those in the industry point out that this figure is not bad, considering the fact that, the cards business is still in its initial stages. However, the players feel that the business has not reached an optimum level to say that they are making money. Even the largest player in the Indian market does not still have the economies to make the card business really profitable in India, despite the fact that it has more than one million credit card holders. Less than two per cent of private consumption spending in India is done on cards. While issuing the cards may seem to be easy, the challenge for the banks lies in being able to manage their portfolios by keeping the delinquency levels at the lowest. Huge investments in systems and infrastructure are, therefore, a necessity. The increase is being attributed to new ideas such as round-the-clock functioning of card issuing banks and pulling out all stops even at a loss, to grab a sizeable share of the expanding pie. Not to be left behind in this race, even the big brother, the State Bank of India in association with GE Capital entered the card business. The spurt in the card business has gathered momentum during the past couple of years. For instance, the HongKong & Shanghai Banking Corporation (HSBC), was in the credit cards business since seven years, but from 50,000 card holders in 1997, it has about three lakh card holders now. Indias fastest growing credit card company - SBI Cards 2.5 lakh credit cards25 cities16 months. The joint venture between Indias largest bank State Bank of India and one of the worlds leading financial services companies GE Capital, SBI Cards & Payment Services (SBI Cards) has issued 2.5 lakh credit cards across 25 cities (the largest distribution network in the payment card industry) within 16 months. Thereby achieving the target in the fastest period seen in Indias payment card industry.
~ 56 ~
SBI Cards & Payments Services attributed this success to SBIs enormous brand equity, and unparalleled retail branch network coupled with GE Capitals payment card process and technology expertise. He also highlighted Speed, Simplicity and Service as the key drivers of growth for the SBI Card. Speed Unique and exclusive 14-day average turnaround time, coupled with availability of the SBI Card in 25 cities in just 16 months. Simplicity Simple application process with minimum documentation. Service 24 hours a day/7 days a week local call access to the SBI Card Helpline across 25 cities. As a result of the focus on the Speed, Simplicity and Service growth platform, SBI Cards today offers the largest distribution and widest cash advance network for Indias middle class customers. SBI Cardholders can access cash for emergency purposes from over 158 SBI branches across 68 locations in India.
INTERMEDIARIES:
In their attempt to increase their market share, credit card companies are opting for Direct Sales Agents. These DSAs are paid a flat rate against the approved applications. They are also provided with bonuses either in cash or in kind at regular interval or if they cross a certain minimum limit. The DSA team comprises aggressive salesmen who visit different organisations and professionals. They collect filled forms and produce them to the bank for approval. After cards are issued they also deliver the same to the individuals. Promotion The changing trends in the payment systems are global and even in India revolve around the change in customer needs and the evolution of financial markets. Traditionally Indians like to pay in cash or at the most avail the services of a bank. As a result credit card companies had to educate the consumers and spread awareness of the uses of its products. The companies have tried to address this issue through promotional campaigns: 1. Placing of take away firms of credit card at more than a thousand merchant establishments. 2. Appointing of DSAs 3. Using business magazines and news papers for advertisement.
~ 57 ~
4. Mailing of forms along with contests to professionals and middle management executives etc. 5. Tapping the get member route 6. Reducing their minimum eligibility criteria and changing income documentation structure. 7. Introduction of photocards. 8. Tying up with durable consumer goods manufacturer ( e.g. Onida, Philips ) to sell their products. 9. Providing ATM facility to their card holders 10. Travel assistance via telebanking.
Talbros Employee Engagement Attrition is the biggest problem faced by TALBROSs these days. Attrition rate in TALBROSs is more than the attrition rate in any other sector. It is very important to control this attrition rate. Many engagement schemes are applied in TALBROSs for engagement . A single tool like training alone is not sufficient for employee engagement . The best results for employee engagement can be achieved by applying different tools strategically. Let us now learn about various strategies which can boost successful employee engagement in TALBROSs. First know the cost. This is the most basic and initial part of the engagement process. A good engagement plan needs all the facts. The turnover cost includes cost of selection process, hiring, induction, training, lost productivity, etc. Hire from known sources like employee referrals through trustworthy employees. Hire the right people. Engagement starts with recruitment itself. Identify the characteristics of the people you want to hire who fit in organizations culture. To retain employees, the people who are productive and are likely to stay for a longer time should be hired. Focus on employee orientation. It is the first impression that the employee takes home with him. A proper welcome form the management will encourage the employee to stay with the organization. Individual development. Develop
~ 58 ~
career plans for employees. Initiate mentorship and higher education programs to keep the learning and development moving. Training for managers. An important factor that keeps the employee in the organization is the manager. Employees need a manager who manages them well. A manager should be a good listener and motivator. Proper training should be given to the managers. Find the reason why employees are leaving. Conduct exit interviews with the employees after 3-4 months of leaving the job. This is because most of the employees would not like to reveal the true reason of quitting the job as long as they are in the organization and are associated with the job. The exit interviews can be conducted online. Then the employees can talk straight-from-the- shoulder. Employee recognition. Star of the month, top performer, picture on bulletin boards, appreciation cards and certificates, etc, increase employee moral and confidence. This is a great way to retain employees of a call center. The human resources are the most important assets of an organization. The success or failure of an organization is largely dependent on the caliber of the people working therein. Without positive and creative contributions from people, organizations cannot progress and prosper. In order to achieve the goals or the activities of an organization, therefore, they need to recruit people with requisite skills, qualifications and experience. While doing so, they have to keep the present as well as the future requirements of the organization in mind. Recruitment is distinct from Employment and Selection. Once the required number and kind of human resources are determined, the management has to find the places where the required human resources are/will be available and also find the means of attracting them towards the organization before selecting suitable candidates for jobs. All this process is generally known as recruitment. Some people use the term Recruitment for employment. These two are not one and the same. Recruitment is only one of the steps in the entire employment process. Some others use the term recruitment for selection. These are not the same either. Technically speaking, the function of recruitment precedes the selection function and it includes only finding, developing the sources of prospective employees and attracting them to apply for jobs in an organization, whereas the selection is the process of finding out the most suitable candidate to the job out of the candidates attracted (i.e., recruited).Formal definition of recruitment would give clear cut idea about the function of recruitment.
~ 59 ~
Recruitment is defined as, a process to discover the sources of manpower to meet the requirements of the staffing schedule and to employ effective measures for attracting that manpower in adequate numbers to facilitate effective selection of an efficient workforce. Edwin B. Flippo defined recruitment as the process of searching for prospective employees and stimulating them to apply for jobs in the organization.
.
~ 60 ~
Importance Of Employee Engagement Now that so much is being done by organizations to retain its employees, why is engagement so important? Is it just to reduce the turnover costs? Well, the answer is a definite no. Its not only the cost incurred by a company that emphasizes the need of retaining employees but also the need to retain talented employees from getting poached. The process of employee engagement will benefit an organization in the following ways: 1. The Cost of Turnover: The cost of employee turnover adds hundreds of thousands of money to a company's expenses. While it is difficult to fully calculate the cost of turnover (including hiring costs, training costs and productivity loss), industry experts often quote 25% of the average employee salary as a conservative estimate. Loss of Company Knowledge: When an employee leaves, he takes with him valuable knowledge about the company, customers, current projects and past history (sometimes to competitors). Often much time and money has been spent on the employee in expectation of a future return. When the employee leaves, the investment is not realized. Interruption of Customer Service: Customers and clients do business with a company in part because of the people. Relationships are developed that encourage continued sponsorship of the business. When an employee leaves, the relationships that employee built for the company are severed, which could lead to potential customer loss. Turnover leads to more turnovers: When an employee terminates, the effect is felt throughout the organization. Co-workers are often required to pick up the slack. The unspoken negativity often intensifies for the remaining staff. Goodwill of the company: The goodwill of a company is maintained when the attrition rates are low. Higher engagement rates motivate potential employees to join the organization. Regaining efficiency: If an employee resigns, then good amount of time is lost in hiring a new employee and then training him/her and this goes to the loss of the company directly which many a times goes unnoticed. And even after this you cannot assure us of the same efficiency from the new employee
~ 61 ~
What makes employee leave
Communication mediums
There are 3 categories of employees: A: Who will leave their current employer in 3 years of their employment B: Who have a probability of leaving their current employer in next 3 years C: Who will stay with their current employer in the next 3 years Category A: These are the employees who lack communication with their employers. Category C: These are the employees who have proper, well structured communication with their employers. Communication is also the way to win the employees trust in the organization. Employees trust the employers who are friendly and open to them. This trust leads to
~ 62 ~
employee loyalty and finally engagement . Employers also feel that the immediate supervisors are the most authenticated and trusted source of information for them. So the organizations should hire managers who are active communicators.
Employees do not leave an organization without any significant reason. There are certain circumstances that lead to their leaving the organization. The most common reasons can be: Job is not what the employee expected to be: Sometimes the job responsibilities dont come out to be same as expected by the candidates. Unexpected job responsibilities lead to job dissatisfaction. Job and person mismatch: A candidate may be fit to do a certain type of job which matches his personality. If he is given a job which mismatches his personality, then he wont be able to perform it well and will try to find out reasons to leave the job. No growth opportunities: No or less learning and growth opportunities in the current job will make candidates job and career stagnant. Lack of appreciation: If the work is not appreciated by the supervisor, the employee feels de-motivated and loses interest in job.Lack of trust and support in coworkers, seniors and management: Trust is the most important factor that is required for an individual to stay in the job. Non-supportive coworkers, seniors and management can make office environment unfriendly and difficult to work in. Stress from overwork and work life imbalance: Job stress can lead to work life imbalance which ultimately many times lead to employee leaving the organization. Compensation: Better compensation packages being offered by other companies may attract employees towards themselves. New job offer: An attractive job offer which an employee thinks is good for him with respect to job responsibility, compensation, growth and learning etc. can lead an employee to leave the organization.
~ 63 ~
Employee Engagement Strategies
The basic practices which should be kept in mind in the employee engagement strategies are:
1. Hire the right people in the first place. 2. Empower the employees: Give the employees the authority to get things done.
~ 64 ~
3. Make employees realize that they are the most valuable asset of the organization. 4. Have faith in them, trust them and respect them. 5. Provide them information and knowledge. 6. Keep providing them feedback on their performance. 7. Recognize and appreciate their achievements. 8. Keep their morale high. 9. Create an environment where the employees want to work and have fun. These practices can be categorized in 3 levels: Low, medium and high level.
.
~ 65 ~
Engagement Myths The process of engagement is not as easy at it seems. There are so many tactics and strategies used in engagement of employees by the organizations. The basic purpose of these strategies should be to increase employee satisfaction, boost employee morale hence achieve engagement . But some times these strategies are not used properly or even worse, wrong strategies are used. Because of which these strategies fail to achieve the desired results.There are many myths related to the employee engagement process. These myths exist because the strategies being used are either wrong or are being used from a long time. These myths prevent the employer from successfully implementing the engagement strategies. Let us learn about some of these myths. Employees leave an organization for more pay: Money may be the motivating factor for some but for many people it is not the most important factor. Money matters more to the low-income-employees for whom its a survival issue. Money can make an employee stay in an organization but not for long. The factors more important than money are job satisfaction, job responsibilities, and individuals skill development. The employers should understand this and work out some other ways to make employees feel satisfied. When employees leave, management tries to retain them by offering more money. But instead they should try to figure out the main reason behind it. Issues that are mainly the cause of dissatisfaction are organizations policies and procedures, working conditions, relationship with the supervisor and salary, etc. For such employees, achievement, growth, respect, recognition, is the main concern. Incentives can increase productivity: Incentives can surely increase productivity but not for long term. Cash incentives, volume work targets and speed awards are old management beliefs. They can generate work speedily and in volumes but cant boost employee commitment. Rather speed can hamper the quality of work produced. What really glues employees to their work and organization is quality work, meaningful responsibilities, recognition, respect, growth opportunities and friendly supervisors. Employees run away from responsibilities: It is a myth that employees run from responsibilities. In-fact employees feel more responsible if they are given extra responsibilities apart from their regular job. Employees look for variety, greater control on the processes and authority to take decisions in their present job. They want opportunities to learn and grow. Management can assign extra responsibilities to their
~ 66 ~
employees and appreciate them on the completion of these tasks. This will induce a sense of pride in the employee and will improve the relationship between the management and the employee. Loyalty is a thing of the past: Employees can be loyal but what they need is an employer for whom they can be loyal. There is no reason for the employee to hop jobs if hes satisfied with the employer. Taking measures to increase employee satisfaction will be expensive for the organizations: The things actually required to improve employee satisfaction like respect, career growth and development, appreciation, etc. cant be bought. They are free of cost. An employer or management that reacts well to the employees ideas and suggestions is enough for the employees to be retained. Managing employee performance is an integral part of the work that all managers and rating officials perform throughout the year. It is as important as managing financial resources and program outcomes because employee performance, or the lack thereof, has a profound effect on both the financial and program components of any organization. The Department of the Interiors performance management policy is designed to document the expectations of individual and organizational performance, provide a meaningful process by which employees can be rewarded for noteworthy contributions to the organization, and provide a mechanism to improve individual/organizational performance as necessary. To accomplish these objectives, managers need to identify organizational goals to be accomplished, communicate individual and organizational goals to employees that support the overall strategic mission and Government Performance and Results Act (GPRA) goals of the Department, monitor and evaluate employee performance, and use performance as a basis for appropriate personnel actions, including rewarding noteworthy performance and taking action to improve less than successful performance. The Office of Personnel Management defines performance management as the systematic process of: planning work and setting expectations continually monitoring performance developing the capacity to perform periodically rating performance in a summary fashion; and rewarding good performance Performance appraisal is the process of obtaining, analyzing and recording information about the relative worth of an employee. The focus of the performance appraisal is measuring and improving the actual performance of the employee and also the future
~ 67 ~
potential of the employee. Its aim is to measure what an employee does. According to Flippo, a prominent personality in the field of Human resources, performance appraisal is the systematic, periodic and an impartial rating of an employees excellence in the matters pertaining to his present job and his potential for a better job." Performance appraisal is a systematic way of reviewing and assessing the performance of an employee during a given period of time and planning for his future. It is a powerful tool to calibrate, refine and reward the performance of the employee. It helps to analyze his achievements and evaluate his contribution towards the achievements of the overall organizational goals. By focusing the attention on performance, performance appraisal goes to the heart of personnel management and reflects the managements interest in the progress of the employees.
~ 68 ~
PERFORMANCE APPRAISALS AS CAREER DEVELOPMENT
Performance appraisal is a part of career development. The latest mantra being followed by organizations across the world being get paid according to what you contribute the focus of the organizations is turning to performance management and specifically to individual performance. Performance appraisal helps to rate the performance of the employees and evaluate their contribution towards the organizational goals. Performance appraisal leads to the recognition of the work done by the employees, many a times by the means of rewards and appreciation etc. It plays the role of the link between the organization and the employees personal career goals. Potential appraisal, a part of Performance appraisal, helps to identify the hidden talents and potential of the individuals. Identifying these potential talents can help in preparing the individuals for higher responsibilities and positions in the future. The performance appraisal process in itself is developmental in nature. Performance appraisal is also closely linked to other HR processes like helps to identify the training and development needs, promotions, demotions, Appraisals in the compensation etc. A feedback communicated in a positive manner goes a long way to motivate the employees and helps to identify individual career developmental plans.
~ 69 ~
RESEARCH METHODOLOGY
Secondary Data: I will collect the secondary data from the Internet, Book and from the library.
PRIMARY DATA: I will collect the primary data from the employees of the company and also include HR people to understand the function.
Tool Used:
Bar Graph, Pie Diagram , ms-excel ,mean, sd, qd, md, frequency distibution
SAMPLING METHOD:
Random Sampling chosen by the gathering of data Limitation (if any) This study involves a number of problem and short comings during the conduct of the study which are given below: 1. They are unwilling to provide sufficient primary data to us to prepare the report.
~ 70 ~
ANALYSIS AND FINDINGS
1) Talented people need to be constantly challenged and stretched.
In the above pie chart it is clearly shown that on the given sample size they are generally Agree with the question but it is very difficult to make any assumption that in all organizations think like above, it may be different. So, on the basis of sample size we can see that there is very tiny difference between Agree and strongly agree. So we are concluding that statement with Agree.
1st Qtr 58% 2nd Qtr 23% 3rd Qtr 10% 4th Qtr 9%
0%
~ 71 ~
2) Two ingredients essential to enhance a talent are stimulation and freedom to explore and initiate a passion
Here we can easily see that maximum number of people are Strongly agree with two essential ingredients to enhance a talent are 55% and again it is depend upon organization to organization but according to our sample there are very less amount of people are Neutral, Strongly Disagree and Disagree, majority is in the favor of those essential ingredients. So, we are concluding it with organization has to support to these ingredients to enhance the talent.
3) Deep interest is the most important tool to encourage a talent and prevent them from discouragement.
Above pie chart is clearly show that Deep interest with employee is not a important tool to encourage their talent but accept this there are so many another tools to encourage their talent. According to interest of responded towards this question was not a likely good; they think that Deep interest may be kill the hard work of employee. So, we can conclude this without think beyond.
4) Diversity in talents and personalities means a blend of cross cultured talents and the best of the productivity.
According to our survey and some comments by the responded, they said that meaning of talent and personality of employee is being intermingled of cross culture talents and the productivity. They are believed that both are the same but synonyms of each other. Our sample are strongly agree with that statement and very few are neutral about that, neutrality is shows that they are unaware about the intermingle. So, we can conclude with this in an organization Diversity in talent and personalitys means a blend of cross culture talents and the best of the productivity.
5) Employing best practices leads optimum productivity.
Of course employee best work and hard work is lead to the organization optimum productivity but on the other hand we know that without proper guidance no one can perform well. So it is say that optimum productivity is not only generated by employee but behind this there are some another hand to support it like managers and Board of Directors. But again according to our survey it is clear that around 55% people are strongly agree with the employee hard work or give the support to the employee and anothers 30% are give support to the employee but not 100%.and amount of neutral are 0% that means everybody in any organization are know that who gives a best.
6) The term Human Resource Management will be supplanted by Employee engagement, signifying that Employee engagement is more of retaining employees than acquiring them.
Our survey shows that strongly disagree percentage are very huge and also on the other hand Disagree percentage is not tolerable. Around 70% are disagree with that Employee engagement is more retaining employee than acquiring them.
7 Knowledge Management is being used to pass on the expertise to juniors.
According to our knowledge we knew that Knowledge Management is the process to pass the expertise to new employee but still we had to believe over that because teachers taught us and Books tells to us but after that research we came to know reality, and this time we are not getting insist by any theory but here we have done practical and know that from where teachers and books tells to us that Knowledge Management is process to pass knowledge to the junior. And above pie chart is nothing but proof of that by sample a vast majority of people are strongly to say that Knowledge Management is being used to pass on the expertise to juniors.
8) How often leadership development program takes place in an organization?
Here we saw during the research all organization has different thinking towards the Leadership Development program. Before this research we did not know and even we had not any idea about duration of that program but know really specially after completing the this research we came to know about as more as about the Leadership Development program and also at what time they have need of or at what time managers came to think about this program should to be given to the employee of that organization. Here we can see in pie chart 45% organization says that Leadership Development program is should be given every 6 months or two times in the year but interval should be same. 30% organization says that every 4 months in the year is necessary to give leadership development program to juniors.
Every week 5% Every Month 10% Every 3 Months 10% Quarter of year 30% Every 6 Months 45%
~ 78 ~
9) Talent in the organization is mostly nurtured
Actually our sample has little bit confliction or can say that their answers are blended at some point. Here a vast majority of sample said that No talent is never been nurtured it is depend upon person to person we can only say that we are just a pathfinder not more than this, but talent is stay in mind of the person we cannot nurture it. On the other hand 35% of the sample are agreeing with that and also say that we are also a pathfinder as well as foster.
Yes 35% No 65%
~ 79 ~
10) How often training programs are being conducted in the organization?
Her we can see that very few people are state that training should be give in a half year but majority i.e. 45% people says that it should be give when new employees are join the organization. And another majority i.e. 30% people are stated that in a year one at least one time training should to be give to the all active employees. And another majority stated that whenever new technology is adopted by the organization training is become necessity there.
When new technology is adopted 20% With new commers 45% 6 months 5% A year 30%
~ 80 ~
RECOMMENDATION
Employee engagement is all about putting the right people in the right jobs. The organization will be successful, if the jobs are being handled by the right kind of peoples. Employee engagement is much more than succession management. The succession planning is obviously important, our belief is that Employee engagement must encompass a far broader portion of the employee population. One major reason for thinking more expansively is the reality that value creation does not come from senior leadership alone. The ability of an organization to compete depends upon the performance of all its key Talent.
Start with the End in mind- the current and future needs. Effective Employee engagement requires that the business goals and strategies drive the quality and quantity of the Talent needed.
Applying a system approach to Personnel approach. Aligned talent systems can be used to validate and reinforce each other. For Example, performance appraisal data can be used to validate the impact of training Program or selection system.
Finally, integrated systems lead to a reduction in the time devoted to communication, Training, and administration, as all employees and leaders are using a single, common Vocabulary for key roles or positions.
Importance
~ 81 ~
First, let us look at some of the reasons for the importance of Employee engagement. Globalization: Now for any jobseeker the whole world is the potential place to find employment. One can know the opportunities available in any part of the world easily and the number of talent seekers has also increased. Increased Competition: Increased competition in the market place has necessitated the need for consistently good performance on the side of organizations. These have made the companies to put in all efforts to hire and retain the best talent in the respective field of operation. Increasing Knowledge: The knowledge era has necessitated the retaining of those talents which have the ability to assimilate new technologies and knowledge, which are growing at a pace never seen before.
The Challenge The challenge of Employee engagement has two facets to it. First is how to find new people and second is how to retain the present workforce. Each of the challenges has to be tackled in the most efficient way possible so that the organization can achieve its objectives. The First Challenge - Where to find new talent? All the organizations are finding loads of business opportunities and consequently, their revenues are growing at a rapid pace. The increasing business opportunities has necessitated that these organizations go in for massive recruitment. But, the question is where to find the best talent which is able to fit the job description and also adjust to the organizations values and norms. If we scan the environment, we find there is a shortage of skilled workforce that can be employed. Some of the possible reasons that have led to the shortage are: -
~ 82 ~
Demographic Constraints: This is a common problem faced by many of the developed countries, where a large chunk of its population is nearing the age of retirement or is over 50 years. USA, Germany and Japan are facing the same problem. All these countries will see a decline in their workforce and talent. In the coming years, they will see a great shortage in their skilled professionals. Existing Educational System: The graduates and the postgraduates that are being churned out of the universities are found to be ill-equipped to handle the challenges of the workplace. They are mostly equipped with only the theoretical aspects of the issues and lack the application part. The educational system is faulty and does not take industry needs into consideration, resulting in a mismatch between industry requirements and educational preparation. Cost Factor: Recruiting new employees is becoming tougher and tougher in the developing countries, where the HR department has to sort out thousands of applications for a handful of jobs. Finding right person for the right job becomes a very difficult process. It also involves very high cost to conduct the recruitment and selection process for such a large population of applicants. Attracting the Best Talent: This is another challenge. As was the case in the past, the best available talent is not just motivated by the name and fame of the organization. Not any more. They have a new set of motivators like - challenging work, conducive work environment and freedom from bureaucratic structure. The Second Challenge - How to retain the existing employees? Gone are the days when a person would join an organization in his mid-20s and would work till his retirement in the late-50s. Today the young professionals hop jobs, especially during the first 4-5 years of their work life. Though the Indian service industry is basking in the light of outsourced jobs from the developed countries, they also cannot ignore the fact that the BPO industry is also facing one of the highest attrition rates, infact never heard before in India, of around 35%. It is a fact that its the people that add value to organizations. It is also a fact that humans are a restless species who, unlike the immovable Banyan Tree, cannot stay
~ 83 ~
rooted in one place. People need to move on for one reason or another, and the organization stands to lose. Let us look at some of the reasons behind the massive attrition rates: - Gap between organizational values and goals and the personal values and goals is one of the major reasons of the attrition rates. If they go parallel, there is no way both would be satisfied and inevitably, the organization would lose out on a talented employee. n the knowledge era demand creative and a democratic work environment. Failure on the part of the management to provide such an environment will result in a talented employee leaving the organization. gh work pressure on the employees of any organization. This has led to psychological problems like stress, and in extreme situations, total burnouts. It also leads to other health related problems. younger professionals. There is no shortage for organizations who are looking for talented employees and who are ready to shell out a hefty salary for a talented person. Other lures like better job opportunities, higher posts and overseas assignments are also major factors in the attrition rates. proper care to fit the right person to the right job also breeds dissatisfaction among the employees. from management on issues of succession planning and promotion, appointments for senior positions also is a major factor which makes the organization lose out on the talented employees. their career. During the initial years, they have good salary and foreign assignments. Next on the list is working on cutting edge technology. More seasoned professionals look for learning
~ 84 ~
opportunities. So employees tend to move to those organizations which provide them with means to fulfill their aspirations. Retaining the present employees is of the foremost importance to the organizations because; the company would have already incurred heavy costs in the form of training and development. Now if the organization has to look for a replacement for the employee who has left, it involves a lot of costs like - hiring costs, training costs and the induction costs. some time for the new employee to adjust to the new work environment. During this time the productivity of the employee will be low. The HR department will have to fit the new employee into a proper role in the organization. Apart from causing the company a monetary loss and breaks in their day-to-day operations, attrition contributes to knowledge transfer, which is a great loss and adversely affects business.
~ 85 ~
FINDING AND INFERENCES It is now proved beyond doubt that, in the era of technology and knowledge, talent is in the driving seat. One who possesses it dictates. Not he who pays for it. It is the demand of the time that business leaders elevate management of talent to a burning corporate priority. It is not a walk in the park for the talent market. Quality people are no longer available in plenty, easily replaceable and relatively inexpensive. These are some of the measures that should be taken into account to hire and retain talent in the organization, to be efficient and competitive in this highly competitive world: - Hire the Right People: Proper care must be taken while hiring the people itself. It would be beneficial for an organization to recruit young people and nurture them, than to substitute by hiring from other organizations. Questions to be asked at this stage are: Whether the person has the requisite skills needed for the job? Whether the person's values and goals match with those of organization's? In short, care must be taken to fit the right person to the right job. Keep the Promises: Good talent cannot be motivated by fake platitudes, half-truths and broken promises. Unfulfilled expectations can breed dissatisfaction among the employees and make them either leave the organization or work below their productive level. Promises made during the hiring stage must be kept to build loyalty among the employees, so that they are satisfied and work to their fullest capability. Good Working Environment: It has to be accepted by the organizations that highly talented persons make their own rules. They have to be provided with a democratic and a stimulating work environment. The organizational rules must be flexible enough to provide them with freedom to carry out their part of task to their liking, as long as the task is achieved. Opportunities should also be provided to the employees to achieve their personal goals. Recognition of Merit: It is highly motivating for any person if his talent is recognized and is suitably rewarded. One way is providing them with salary commensurate with
~ 86 ~
their performance. Promotions and incentives based on performance are another way of doing it. Another way is by providing them with challenging projects. This will achieve two objectives - it makes employee feel that he is considered important (a highly motivating factor) and gets the work done in a efficient manner and brings out the best in the employee. Providing Learning Opportunities: Employees must be provided with continuous learning opportunities on and off work field through management development programmes and distance learning programmes. This will also benefit the organization in the form of highly talented workforce. Shielding from High Work Pressure: If an organization has to make the most of the available talent, they should be provided with adequate time to relax, so that they can di-stress themselves. It is very important to provide them with holidays and all- expenses-paid trips, so that they can come back refreshed to work and with increased energy. They must also be encouraged to pursue their interests which are also a good way of reducing work environment stress. Recreation clubs, entertain programmes, fun activities with in the work area will also reduce the work life stress of the employees and develop camaraderie among the workers and result in a good working environment. Highly demanding business environment makes it imperative for the organizations to build competence in the form of superior intellectual capital. It is agreed by almost all CEOs of big companies that it is the human resource - a talented one - that can provide them competitiveness in the long run. duty of the HR department to nurture a brigade of talented workforce, which can win them the war in the business field. The talent has to be spotted, carefully nurtured and most importantly preserved. Right person for the right job - is the new mantra.
~ 87 ~
CONCLUSION
Employee engagement implies recognizing a person's inherent skills, traits, personality and offering him a matching job. Every person has a unique talent that suits a particular job profile and any other position will cause discomfort. It is the job of the Management, particularly the HR Department, to place candidates with prudence and caution. A wrong fit will result in further hiring, re-training and other wasteful activities. Employee engagement is beneficial to both the organization and the employees. The organization benefits from: Increased productivity and capability; a better linkage between individuals' efforts and business goals; commitment of valued employees; reduced turnover; increased bench strength and a better fit between people's jobs and skills. Employees benefit from: Higher motivation and commitment; career development; increased knowledge about and contribution to company goals; sustained motivation and job satisfaction. In these days of highly competitive world, where change is the only constant factor, it is important for an organization to develop the most important resource of all - the Human Resource. In this globalized world, it is only the Human Resource that can provide an organization the competitive edge because under the new trade agreements, technology can be easily transferred from one country to another and there is no dearth for sources of cheap finance. But it is the talented workforce that is very hard to find. The biggest problem is how to retain the present workforce and stop them from quitting?