A

Project Report

on

PERFORMANCE MANAGEMENT IN

AKZONOBEL PVT. LTD.

Submitted by:

RATIKA RASTOGI

Roll No: 13101

MBA- IV Sem.

2016-2017

BANASTHALI VIDYAPITH
 CONTENTS

ACKNOWLEDGEMENT ..3
INTRODUCTION............................................
DECISION ...............................................
ILLUSTRATION/
EXAMPLES.
CONCLUSIONS.......................
REFERENCE.......................................
 ACKNOWLEDGEMENT
Several individuals were extremely instrumental in allowing us to create this case

analysis. I am indebted to Charu Gupta for encouraging us to start this project. Numerous

HR managers and corporate from Gurgaon have given their best of knowledge regarding

the subject matter of the case analysis. We, the group members are thankful to them. We

also received constructive feedbacks from our batch mates and old students of this

institution in preparing this case study a relevant one.

 INTRODUCTION

PERFORMANCE MANAGEMENT

DEFINITION, FOUNDATION AND SCOPE

What is Performance Management?

Systematically managing all the people in an organization, for innovation, goal focus,

productivity and satisfaction--it is a goal- congruent win - win plan

Armstrong and Baron define performance management as a strategic and

integrated approach to delivering sustained success to organizations by improving

performance of people who work in them and by developing the capabilities of

teams and individual contributors

Performance management is that part of an organizations people-related function,

which is performed by those directly managing the people- the HR managers.

FOUNDATION OF PERFORMANCE MANAGEMENT:

Why organizations introduce performance management?

The IRS 1998 survey elicited the following reasons from few organizations for

introducing performance management:

ORGANISATIONREASONS

Akzonoble India ltd Cultural change

Gurgaon Quality-providing the Customer with what the

Customer want

Customer Service
 SCOPE

The scope of performance management has expanded to policy and strategy at the

corporate level. There are five major groups of interacting factors that determine

performance at the corporate level. These are:-

Corporate strategy and objectives

Technology
Organizational structure and system
Human Resource development and
Organizational climate and culture
 THE PERFORMANCE - MANAGEMENT CYCLE

Plan

Review Act

Performance Managed Organizations are likely to have the following characteristics:

Measurable performance targets.

Manage-learning linked with organizational goals on the one hand and

with career development on the other.

Pre-eminence of intrinsic needs of managers without neglecting their

extrinsic needs.

Ownership of performance management by line management rather than

the personnel function.

Key to Performance Management:

Building organizational capability and successful implementation of

High - commitment management practices is a key managerial responsibility

 High-performance management practices require consistent leadership attention,

while time and attention are the scarcest of resources in most organizations

When people (individuals and teams) know and understand what is expected of

them, and have taken part in forming these expectations, they will use their best

endeavors to meet them.

The capacity to meet expectations depends on the levels of capability that can be

achieved by individuals and teams, and the processes, systems and resources made

available to them by the organization.

 DISCUSSION

A full cycle of performance management consists of Planning, Monitoring, Developing,

Appraising, and Rewarding.

The management or superiors have the authority to redesign and reassign an employees

work based on their assessment of individual and team performance.

What is Performance?

Performance is degree of accomplishment of the tasks or how well an individual is

fulfilling the job requirements. Performance evaluation or Appraisal is the personnel

activity by means of which the organization determines the extent to which the employee

is performing the job effectively.

Managing this whole process of evaluation is called Performance Management, which is

performed by those directly managing the people- the HR managers.

Steps to be followed while Introducing a Good Potential Appraisal System:

Role Descriptions:

Organizational roles and functions must be3 defined clearly. To this end, job description

must be prepared for each job.

Quality needed to perform for each job:

Based on job descriptions, the roles to be played people must be prepared.

 Performance Appraisal: Definition

Performance appraisal is a method of evaluating the behavior of employees in the work

spot, normally including both the quantitative and qualitative aspects of job performance.

Its a systematic and objective way of evaluating both work related behavior and potential

employees.

Features:

When Performance appraisal is implemented correctly, it can affect corporate

performance and the bottom line.

It mainly involves three steps:

a Setting work standards

b Assessing employees actual performance relative to these standards
c Offering feedback to the employee so that he can eliminate deficiencies and

improve performance in course of time.

Benefits of performance appraisal:

Employer perspective [Administrative uses]

Despite imperfect measurement techniques, individual differences in performance

can make a difference to company performance.

Documentation of performance appraisal and feedback may be required for legal

defense.

Appraisal offers a rational basis for constructing a bonus or merit system.

Appraisal dimensions and standards can help to implement strategic goals and

clarify performance expectations.

 Employee perspective [developmental purposes]

Individual feedback helps people to rectify their mistakes and get ahead, focusing

more on their unique strengths.

Assessment and reorganization of performance levels can motivate employees to

improve their performance.

What is to be appraised?

The content to be appraised is determined on the basis of job analysis. Usually it

comprises of:

Behaviors, including observable physical actions, movements.

Objectives which measure job related results.

Traits which are measured in terms of personal characteristics.

Who will appraise?

Supervisors

Peers

Subordinates

Users of services

Consultants

Self-appraisal

THE PERFORMANCE APPRAISAL PROCESS:

 A) Establish performance Standards
B) Communicate the standards
C) Measure actual performance
D) Compare actual performance with standards and discuss the appraisal
E) Taking corrective action, if necessary.
Methods of Performance Appraisals
 Individual Evaluation Methods:

1 Confidential report:-

It is a descriptive report prepared, generally at the end of every year, by the

employees immediate superior. It mainly highlights the strengths and weakness of

the subordinates. E.g.:- Government organizations

The report usually has the impression of the superior about the subordinate.

Since the report is generally not made public, no feedback is available to the

appraise, rectification of mistakes, if any, is not possible.

2 Essay Evaluation:

In Essay technique of evaluation, the evaluator is asked to describe the strong and

weak aspects of the employees behavior. In some organization this technique is

only one used; in others, the essay method is combined with any other form, such

as graphic rating. In this case, the essay summaries the scale, elaborates on some

of the ratings, or discusses added dimensions not o the scale. In most of the cases

there are guidelines on the topics to be covered, purpose of the essay, and so on.

The essay method can be used by evaluators who are superiors, peers, or

subordinates of the employee to be evaluated.

3 Critical Incidence techniques:

In this method, managers prepare lists of statements of very effective and very

ineffective behavior of the employee. These critical incidents or events represent

the outstanding and poor behavior of employees on the job. The manager

maintains logs of each employee, whereby he periodically records critical

 incidents of the workers behavior. At the end of the rating period, these recorded

critical incidents are used in the evaluation of the workers performance. This

method is most likely to be used by superiors than peers or subordinate

evaluations.

4 Checklists and weighted checklists:

Another simple type of individual evaluation method is the checklist. In its

simplest form, the checklist is a set of objectives or descriptive statements about

the employee and his behavior. If the rater believes that the employee possesses a

trait listed, the Rater checks the items; if not, the rater leaves it blank. A rating

score from the checklist equals the number of checks.

5 Graphic rating scale:

The mostly widely used performance evaluation technique is a graphic rating

scale. In the technique, the evaluator is presented with a graph and asked to rate

employees on each of the characteristics listed. The number of characteristics rated

varies from few to several dozen. A factor analysis of the results indicates that

only two traits were being rated: quality of performance and ability to do the

present job.

The ratings can be in a series of boxes, or be on a continuous scale (0-9) or so. In

the latter case, the evaluator places a check above descriptive words ranging from

none to maximum. Typically, these ratings are then assigned points.

6 Behaviorally anchored rating scales:

 Another technique which essentially is based on the critical incident approach is

the behaviorally anchored rating scale (BARS). This is a new, relatively

infrequently used technique.

Supervisors give descriptions of actually good and bad performance, and

personnel specialists group these into categories (5-10 is typical).As with weighted

checklists, the items are evaluated by superiors (often other than those who

submitted the items).A procedure similar to that for weighted checklists is used to

verify the evaluations(outstanding for example) with the smalleststandard

deviation, hopefully around 1.5 on a 7-point scale. These items are then used to

construct the BARS.

7 Forced choice method:

The forced choice method of evaluation was developed because other methods

used at the time led to a preponderance of higher ratings, which made promotion

decisions difficult. In forced choice, the evaluator must choose from a set of

descriptive statements about the employee. The two-, three-, or four- statement

items are grouped in a way that the evaluator cannot easily judge which statements

apply to the most effective employee. The primary purpose of the forced choice

method is to correct the tendency of a rater to give consistently high or low ratings

to all the employees.

8 Management by objectives (MBO):

Another individual method in use now a day is MBO. In this system, the

supervisor and the employee to be evaluated jointly set objectives in advance for the

employee to try to achieve during a specified period. The method encourages, if not
requires, them to phrase these objectives primarily in quantitative terms. The evaluation

consists of a joint review of the degree of achievement of the objectives. This approach

combines the superior and self-evaluation systems.

Multiple Person Evaluation Techniques:

In individual evaluation methods is used to evaluation of employees one at a time. Three

techniques that have been used to evaluate an employee in comparison with other

employees are ranking, paired comparison and forced distribution.

Ranking method:

In ranking method, the ranking of an employee in a work place is done against

that of another employee. The relative position of each employee is expressed in

terms of his numerical rank. Here the evaluator is asked to rate the employees

from highest to lowest on some overall criterion. It is very easy to rank the best

and the worst employees, it is very difficult to rank the average employees. In this

approach the evaluators pick the top and the bottom employees first, then select

the next highest and next lowest, and move towards the middle.

Paired Comparison:

This approach makes the ranking method easier and more reliable. First the names

of the persons to be evaluated are placed on separate sheets (or cards) in

predetermined order, so that each person is compared to all others to be evaluated.

The evaluator then checks the person he feels is the better of the two on a criterion
 for each comparison. Typically the criterion is overall ability to do the present job.

The number of times a person is preferred is tallied, and this develops an index of

the number of preferences compared to the number being evaluated.

Paired Comparison:

This approach makes the ranking method easier and more reliable. First the names

of the persons to be evaluated are placed on separate sheets (or cards) in

predetermined order, so that each person is compared to all others to be evaluated.

The evaluator then checks the person he feels is the better of the two on a criterion

for each comparison. Typically the criterion is overall ability to do the present job.

The number of times a person is preferred is tallied, and this develops an index of

the number of preferences compared to the number being evaluated.

Other methods:-

Other methods include: Group Appraisal method, Human Resource Accounting,

Assessment Centre, and Field Review.

Group Appraisal method:-

In this method, an employee is appraised by a group of appraisers. This group

consists of the immediate superior of the employee, other supervisors who have

close contact with employees work, manager or head of the dept. and consultants.

This group uses one or multiple techniques of evaluation.

This method eliminates personal biases to a large extent, as performers are

evaluated on multiple methods. But it is very time consuming process.

Human Resource Accounting:-

 This is a sophisticated way to measure effectiveness. It is a process of accounting

for people as an organizational resource.

The HRA process shows the investment the organization makes in its people and

how value of these people changes over time. The value of employees is increased

by investments made by the company to improve the quality of its human

resources such as training, development, and skills acquired by employee over a

period of time through experience, etc. In this method, employee performance is

evaluated in terms of cost and contributions of employees. Employee performance

can be taken as positive whencontributionis more than the cost and performance

can be viewed as negative if cost is more than contribution.

360-DEGREE FEEDBACK system

360-degree feedback is the latest and, for some people, the most exciting development in

the field of performance management. It hardly existed at all at the time of the 1991

survey but 11% of the organizations covered by the 1997 survey had some form of 360-

degree feedback, and the impression we gained was that many other organizations are

contemplating using it.

A 360- degree feedback, system collects performance information from multiple parties,

including ones subordinates peers, supervisor and customers. Corporations like GE

Reliance, Crompton Greaves, Wipro, Infosys, and NTPCetc. are all using this tool to

discover home truths about their managers.

USES OF 360-DEGREE FEEDBACK

The uses of 360 degree are numerous:

a) This medium of feedback is there to solely support learning and development as a

whole

b) To support a number of HR resources such as appraisal, resourcing and succession-

planning, pay decisions

c) A long term perspective is adopted because the ultimate goal is personal growth.

d) Strengths and weaknesss which are pointed out are regarded as developmental

opportunities.
OTHER ASPECTS OF PERFORMANCE MANAGEMENT:

JOB EVALUATION

JOB ANALYSIS

Job Evaluation is different from performance appraisal. Performance appraisal refers to

how well someone is doing an assigned job. Job Evaluation on the other hand, determines

how much a job is worth to the organization and therefore what range of pay should be

assigned to the job.

JOB EVALUATION:

The process of determining how much a job should be paid, balancing two goals

Internal Equity: Paying different jobs differently, based on what the job

entails

External Competitiveness: Paying satisfactory performers what the market

is paying

BENEFITS:

It tries to link pay with the requirements of the job

It offers systematic procedure for determining the relative worth of jobs

An unbiased job evaluation tends to eliminate salary inequities by placing jobs

having similar requirements in the same salary range.

Job evaluation when conducted properly and with care helps in the evaluation of

the performance of the existing employees as well as new jobs.

 AKZONOBLE INDIA LTD

COMPANY PROFILE(ABOUT THE COMPANY)

Akzo Nobel India Limited is an India-based company, which is engaged in

manufacturing of paints, varnishes, enamels and lacquers. The Company operates through

two segments: Coatings and Others. Coatings segment consists of decorative, and

industrial paints. Others segment consists of chemicals and polymers. It manufactures and

markets a range of coatings covering decorative paints; performance coatings, including

marine coatings, protective coatings, metal coatings, powder coatings, specialty coatings

and vehicle refinishes, and specialty chemicals. The Company provides solutions to the

industries and sectors, including automotive, consumer electronics, power, aviation,

shipping and leisure craft, construction, oil and gas, water and waste water, and food and

beverages. Its portfolio includes brands, such as Dulux, Duco, Sikkens, Bindzil, Butanox,

Perkadox, Sanal, Expancel, Levasil, Trigonox, Kromasil, Bermocoll, International and

Interpol.

VISION:

To be a world class company, known for very high customer base.

To be internationally renowned organization, much sought after by both customer

and suppliers.

To be a company known for nurturing and developing human resources for

organizational excellence.
 MISSION:

To maximize value to shareholders and provide value enhancement to customers,

employees and company served.

Introduction of the Project:

Competency represents the knowledge, skills, capacities and behavior which an

employee exhibit in doing his/her job and which are key factors in achieving

results pertinent to the organizations strategy. The project titled

PerformanceManagement in Akzonoble India LMTis the process of identification

of the performance (Acquired and required) required to perform successfully a

given job or role or a set of tasks at a given point of time. It identifies an

individuals strengths; weaknesses in order to help them better understand their

roles and responsibilities and then by making an action plan to minimize the gaps

found out in their performance. This is a new concept which when implemented

provide benefits to the organizations as well as the individuals or employees

working with it. Performance based HR system in an organization is necessary to

train, defines, retain talent and ensure optimum utilization of performance from

employees. It also helps to determine the roles, positions, compensation,

appraisals etc. for the existing as well as the new employees on the basis of actual

performance levels through the process of measuring actual competencies

exhibited by individuals while performing their jobs.

BENEFITS OF THE PROJECT:

Today individual employees as well as the organization have an ongoing need to use and

map their competencies.

Benefits of this project to individual employees are:

Once the individual knows his/her competencies and compare those to that are

asked for the job, they themselves can take initiative to develop or train them

to fit for the job they are assigned.

It will also help them to demonstrate their self-confidence that comes from

knowing ones competitive advantage.

It will also help them to improve their performance by improving their soft

(Behavioral skills like observation, self-development, communication, etc.)

skills and hard skills (Technical skills like writing computer programs,

managing the balance sheet, etc.).

The project will provide motivation to the individual employees to work hard

and become better and better by learning the missing skills required.

DEFINITIONS:

COMPETENCY MANAGEMENT: Today the organizations must ensure that personnel

performing various duties have appropriate education, training & experience to perform

those duties. Ensuring them to have proper skills & competencies to consistently perform

the task required of them is sometimes a daunting challenge. World class organizations

use competencies to articulate & leverage exceptional organizational performance.

Competency-based management system adds value and enables the realization of

business strategy and provides a distinctive, enduring advantage for the organization.

PREFORMANCE MANAGEMENT SYSTEM: Performance management system (PMS)

is the heart of any people management " process in organization. Organizations exist to

perform. If people do not perform organizations don't survive. It reflects how well an

employee is fulfilling the job requirements. Performance management refers to the entire
process of appraising performances, giving feedback to the employees and offering

rewards or reprimand to them.

SUCCESSION PLANNING: Succession planning an important process which involves

identification of individuals or employees as the possible successors to the key or very

senior positions in an organization when such position become vacant. In short,

Succession planning focuses on the identification of vacancies and locating probable

successor .Succession planning is usually for 2 to 5 years or 2 to 7 years period for an

individual, but it is a continuous process for an organization.

TRAINING & DEVELOPMENT: Training is an integral part of HRD. It focuses on

identifying & helping to develop the key competencies which enable the employees to

perform the current as well as the future jobs & functions. Training can take place either

On-The-Job Training such as job rotation or Off-The-Job Training such as outside & in-

class room training programmes.

REWARD MANAGEMENT: People join organizations expecting rewards. Competency

management helps in deciding whether to reward a person or not depending upon his/her

skills/knowledge and the way they are using it in their assigned jobs or roles.

When rewards are linked to competencies, what emerges is The Skill Based Pay. In the

skill-based pay, employees are paid on the basis of number of jobs they are capable of

doing, or on the depth of their knowledge. The purpose is to motivate employees to

acquire additional skills so that they become more useful to the organization.

PERFORMANCE MANAGEMENT: Performance management refers to the entire

process of appraising performances, giving feedback to the employees and offering

rewards or reprimand to them.

COMPETENCY BASED PERFORMANCE MANAGEMENT SYSTEM: A competency

based PMS helps to identify core positions within the organization, identify soft skills &

competencies for the position and then provide training & development in the necessary

competencies so as to achieve superior performance in any job and also can better meet

the competitive challenges of todays market.

COMPETENCY BASED PERFORMANCE MANAGEMENT SYSTEM: A competency

based PMS helps to identify core positions within the organization, identify soft skills &

competencies for the position and then provide training & development in the necessary

competencies so as to achieve superior performance in any job and also can better meet

the competitive challenges of todays market.

REQUIRED COMPETENCY: Required competency may be defined as The

competencies an employee must have in order to perform his/her job effectively.

SURVEYS: This method facilitates quick and cheap collection of sufficient data for

statistical analysis. Large number of jobs can be studied efficiently & at different times to

identify trends in competency requirement. But data are limited to items and concepts

included in the survey & therefore miss competencies not included by those who

conducted the surveys.

DIRECT OBSERVATION:In this employees are directly observed performing job tasks

and their behavior are coded for competencies. But again it will take a lot of time to have

a chance of seeing something important.

360 DEGREES FEEDBACK:360 Degree Feedback is a system or process in which

employees receive confidential, anonymous feedback from the people who work around

them. This typically includes the employee's manager, peers, and direct reports. But the
reason we did not use 360 feedbacks is that it is not a way to measure employee

performance objectives, not a way to determine whether an employee is meeting basic

job requirements.360 feedback is not focused on basic technical or job-specific skills.

ROLE PLAY EXERCISE: This is a technique in which some problem- real or imaginary-

involving human interaction is presented and then spontaneously acted out. Role play

develops interpersonal skills among participants. Immediate feedback helps them correct

mistakes. But it is not easy to duplicate the pressures and realities of actual decision

making on the job; and individuals, often react differently in real-life situations than they

do in acting out a simulated exercise. And hence the result will not be accurate.

GROUP DISCUSSION: In this candidates are asked to discuss among themselves

hypothetical problems and arrive at a recommended solution. It reflects various

competencies like team player, analytical thinking, communication, etc. It is time

consuming and needs experts for analysis.

CONCLUSION

What makes some businesses more successful than others? What is todays key

competitive advantage? The answer is people. Organization with motivated and talented

employees offering outstanding service to customers are likely to pull ahead of the

competition, even if the products offered are similar to those offered by the competitors.

Customers want to get the right answer at the right time and they want to receive their

products or services promptly and accurately. Only people can make these things happen.

Only people can produce a sustainable competitive advantage. And, performance

management systems are the key tools to transform peoples talent and motivation into a

strategic business advantage.

Performance management is continuous process of identifying ,measuring and

developing the performance of individuals and team and aligning performance with the

strategic goals of the organization. Performance management is critical to small and large

organization, for profit and not for profit, domestic and global, and to all industries.

Unfortunately, however, if they have a performance management, few organizations use

their existing performance management system in productive ways. Performance

management is usually vilified as an HR Department requirement.

In this case analysis we tried to discuss the advantage of implementing a successful

performance appraisal system as well as the negative outcomes associated with deficient

system. It also includes a description of employee developmental plans& the advantages

of using 360-degree appraisal system.

References:

Book of Human resource management by V S P Rao.

Performance management by Michael Armstrong & Angela Baron.
Performance management & Appraisal Systems by T.V.Rao.