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FAIR Manual 2020
FAIR Manual 2020
APPRAISALS WITH
(FAIR 2020)
MANUAL
A. Why FAIR? 3
B. Summary of the FAIR System 3–4
C. Objective of the System 5
D. Appraisal Period 5
E. Coverage 5
F. Performance Thrust Areas 5
G. Steps of the FAIR Process 5 - 11
Step 1: Performance Planning Workshop 5
Step 2: Employee Performance Planning (Goal Setting) 6
Step 3: Development Goals 7
Step 4: Anytime Performance Conversations (APC) 8
Step 5: Mid-Year Review 8
Step 6: Assessment Process 9
Step 7: MVG Normalization Process – MVG Rating 9
Step 8: Feedback to the employees 10
H. FAIR, in certain situations 11 - 13
•
Performance Review in case of Matrix-Reporting
•
Performance Review in case of new employees and
transferees
• Special Considerations
I. Performance Management Cycle
14
Process Control Reports
J. Linkage to Rewards & Promotions 14
K. Annexures 15 - 25
Annexure A: Schedule for FAIR (2019-20) & Development Goals
15
(2020-21)
Annexure B: Guidelines for Cascading Goals through PPW 16
Annexure C: Sample Goals 17 - 19
Annexure D: Aspects of Feedback 20
Annexure E: Format of Report to IC Head & CHR 21
Annexure F: Rating distribution 22
Annexure G: Attributes of effective Internal Controls Behaviour 23
Annexure H: Legend 24
Annexure I: Explanatory Note on Internal Financial Controls 25
Careers in L&T depend on a troika of factors i.e. Performance, Potential and Position.
Performance is tracked by FAIR, which is designed to be an employee-centered process
that helps in Assessment and Development. The potential tracking is done through
Development Centres (DCs) for high performers and Position Clarification (PCs) for
role expansion and for stimulating the person’s potential and the business’s growth
opportunities. Hence, FAIR is an important input in the tripod.
The FAIR system is designed to establish a clear linkage between performance ratings
and rewards and serve as a tool for identifying developmental needs of an employee
in his/her current role. It facilitates a meaningful dialogue between the superior and
subordinate. This system covers employees from Junior Supervisory to Tier 4.
The FAIR System is now deployed electronically through the PMGM module of SAP
Success Factors. The system facilitates the Goal setting process through Performance
Planning Workshops (PPW). Each IC / SBG / Business Unit is required to conduct
Performance Planning Workshops, following the finalization of its annual budget,
through which Business Goals for the year are cascaded. The key result areas derived
through cascading at the workshop forms the basis for individual Appraisee’s goals.
The Immediate Superior (IS) and Appraisee together decide on the individual goals of
the Appraisee. Development Goals are also set simultaneously.
At the end of six months of the appraisal period, the IS holds a performance
feedback and development discussion meeting with the Appraisee.
The Annual appraisal at the end of the appraisal period, lays emphasis on Performance
Evaluation in which the IS evaluates the Appraisee’s performance. The IS assigns a
1-8 rating to the Appraisee relative to others in the same Tier / Band keeping in mind
Key Behavioural Indicators (KBIs) and role related attributes i.e., speed, volume and
quality of work and internal customer orientation besides achievements against set
goals and deliverables. Achievement of goals and deliverables are at the heart of the
rating and must be based on metrics, cascading out of the IC goals/ budgets. The IS
is expected to view the performance of an individual, relative not only to those
reporting to him / her but relative to the highest level of performance in the same
FAIR 2020 /28-03-2020 3
The ratings finalized by MVG are communicated by HR to the DH who will inform the
IS/NS. IS then gives feedback to the Appraisee and conveys the final rating category.
Once the IS/NS receives the feedback back from the MVG about the final rating decided
for the employee based on relativities, the conversation between the dyad (IS/NS«-»
Employee) stand at the centre of the FAIR process. The results of this conversation
can be either:
1. The IS/NS and the employee have a constructive conversation to build a new
rigour into the subsequent goals set for the employee, such that the
achievement of these, will qualify for a higher rating. The outcome of such
conversations is usually positive. (Effective Conversation)
Or
2. The employee feels despondent about the rating being below his / her
expectation. The outcome of such conversations is usually negative.
(Dysfunctional Conversation)
Hence, the IS/NS needs to ensure that the conversation is positive and constructive.
The Appraisee’s relative performance within the band as assigned by the MVG and the
IC/SBG performance as derived from the applicable parameters of the IC/SBG
Performance Metrics will form the basis for:
Development Goals in such cases will incorporate the new competencies required to
deliver the higher rating.
To provide a system that helps to bring in high performance work culture through
following actions –
D. Appraisal Period
The appraisal period is from April to March. This aligns with the Company’s budget
period. The performance plans (goals) are set for this period and performance is
appraised.
E. Coverage
The system is designed to cover all the employees on Regular rolls in the following
bands & Tier:
KBIs are generic competencies specific to Tier/band of the employee and required to
be demonstrated on the job. The KBIs are provided by the system and are bespoke to
the Tier/ Band of the Appraisee and need not be specifically set for every individual.
The KBIs have been identified based on how closely they connect with the
competencies relevant for the particular Band/Tier. However, the standard lexicon of
KBIs recommended by Success Factors has been retained for consistency in using the
ERP system. It may be noted that the competencies for each ascending Tier are a
build-up on competencies already honed in the previous Tier(s). The weightages of
KRAs and KBIs in the overall appraisal system will be 80% and 20%, respectively.
The process provides for cascading of KRAs across the Business Unit through Goal Plan
sheet to bring in the required congruence between Business Goals and Individual
Goals.
The process provides for guidance, for appropriate goal selection through a Goal
Library that contains goals crafted from a body of knowledge researched from best
practices and Goal Cascading trees. Businesses can pick Goals relevant to their thrust
areas and further expand this Goal Library by adding business specific SMART goals to
it. The Goal Library is illustrative and not exhaustive. It may have more such goals that
emanate from the parameters.
To set the said KRAs / goals, there is a menu of 8 parameters, identified as critical for
success. An IS and Appraisee may choose a minimum of 4 and not more than 6 goals
for a year from the menu of parameters. The Digital initiatives parameter is mandatory.
The Functional & Financial parameter is also mandatory.
Goal setting is not a mechanical listing of activities. It involves specific and broad level
deliverables to be achieved during the performance year and shall have weightages
with pre-defined timelines attached to it. The goals will be directly linked to the
business units’ goals and the individual performance should have a direct linkage to
the business performance.
Based on the impact of the Goal on the role, a weightage should be assigned to it,
which should be jointly decided by both Appraisee and IS. However, in no case should
the weightage be less than 5% for a given goal. For every set Goal, the measures of
success need to be defined
1. Functional & Key Outcomes / Accountabilities of the role are set as >= 50 %
Financial Functional Goals; Revenues, margins, budgets etc. are
set as financial goals;
3. Espousing Identify the work processes which reflect the values of <= 20 %
Corporate the organization; Highlight the employee and customer
Values & experiences which are in sync or aligned to the values;
Vision Including demonstrating attributes of effective Internal
controls behavior detailed in Annexure G
Please refer to Sample Goals – Annexure C. The Goal setting should be followed by
setting of Development Goals.
The Goals submitted as above in the Goal Plan sheet are to be approved by the IS in
the Performance Form. This is a dynamic Form and provides an opportunity to the
employee and Superior to review Goals in Performance Form and effect any change in
these goals, if required, during the year. It also provides for intimation to employee
and IS on changes made therein. This is largely applicable in cases of role change,
new tasks assigned or transfers.
It is linked to the feedback session between the IS/NS and the appraisee particularly
when the MVG normalizes the relative rating of an individual and where the individual
and IS/NS set goals for the next year that has additional rigour.
Development Goals encourages the IS and Appraisee to plan for the Appraisee’s
competency development through various training and non-training interventions.
On completion of both, the Goal setting and the Development Goals form, will move
to the IS for approval. Once the IS approves the goals, the employee needs to provide
feedback through the system on the discussion that has taken place and his / her level
of satisfaction with the same.
Apart from the MTR process, there is the Anytime Performance Conversation (APC)
feature made available in the FAIR system. This is a platform available to the employee
and IS for the entire appraisal year i.e. 1st April to 31st March. This is to encourage
periodic/event-based conversations between Employee and IS on progress of task
completion, course corrections needed, additional support required and development
feedback. This helps in breaking down actions for achieving a Goal, recording
Achievements along these activities and critical incidents for Feedback to be provided
for the successful completion of activities. IS can seek feedback from other Managers
or team members who have actively participated in the goals taken up by the
employee.
By the end of six months of the appraisal period, i.e., in the month of October the
employee should review his / her performance to take stock of progress with respect
to the goals set. The employee will need to fill the Self-Review column in the
performance form. The same will flow to the IS for approval. The details captured in
The IS captures the comments on the attainment of each Goal in the system, which
can be viewed by the DH, NS as well as the employee.
In case the review indicates that there is a shortfall in achievement with respect to
targets in the six-month period, the IS should be able to guide the individual on how
to make up for the shortfall in the balance six months.
The NS and DH must provide the Overall rating and comments for the Appraisee. In
addition, it is mandatory for IS, NS and DH/FH to provide specific Promotion
recommendations for the Appraisee (for Promotion in July or January or Not
recommended for Promotion).
The Department Head (DH) then arrives at a normalized rating (on a scale of 1-8) or
relative performance as per the prescribed distribution after considering the relative
performance and contribution of the Appraisee, vis-à-vis his / her peers in the same
band, across the department. The comparison should include aspects of KBIs and
speed of execution, stretched goals (in terms of volume and quality of work), internal
customer orientation in relation to his/her peer group. DH gives comments on his/her
views on the basis of the normalization or relative performance and overall
performance feedback based on the inputs received from IS and NS and enters the
comments and ratings on the system. In case there is a difference of two points or
more on the 1-8 Rating scale between the ratings given by the DH and that given by
the IS/NS, then the DH discusses with the IS/NS and explains the rationale for the
difference.
The DH should ensure that all employees are relatively rated as per the distribution
curve specified in this manual.
IC HR Head should declare the composition of the Macro View Group (MVG) of various
IC / SBG / BUs. MVGs are constituted such that they have a line of sight of the
• For Supervisory and Executive Bands and Tier 1, MVG should be chaired by an
employee in Grade M3-C or above (preferably DH of larger business),
• For Tier 2 and Tier 3 Bands, MVG should be chaired by an employee in Tier 4
or above (BU / SBG Head)
• For Tier 4, MVG should be chaired by IC Head
In cases when the number of employees considered for normalization in MVG is less
than 30, it is recommended that related Departments / functions be clubbed together
under one MVG.
IC HR collates the ratings and forwards the same to the respective MVGs.
The MVG reviews the rating given by the DH and normalizes it to arrive at MVG rating
as per the recommended distribution percentages of the IC or the Business. KBIs and
Role related attributes such as speed of execution, volume and quality of work are
given due consideration when the MVG decides the ratings. In case there is a large
difference (two points or more in rating scale of 1-8) between the ratings given by the
MVG and that of the DH, MVG discusses with the DH and if need be with NS / IS.
Head of IC and IC HR will ensure that the MVG adheres to the rating distribution
guideline curve as applicable to the IC in letter and spirit and this is not pushed
upwards for moderation. MVG has the role of convincing the DH/NS/IS to take
accountability for “owning” the rating and the performance conversation that ensues.
Communication of Rating
MVG should keep the IS apprised (through HR) about the rating category (vital
contributor etc.) of the employee reporting to him before communication of rewards
to the employee.
The emphasis, over the years, is to improve organization productivity. There has been
and continues to be a consistent need to differentiate performers through the process
of FAIR. There should be a performance filter to identify the critical mass to retain and
develop and continuously filter out the below minimum expectation performers from
the organization. This churn will be supplemented with the intake of better performers
to substitute the below minimum expectation performers. Thus, the performance
feedback process is very critical to justify the churn and the below minimum
expectation performer is not taken by surprise at the end of the year.
This feedback session should lead to discussions on how to improve the performance
for the next year and ways and means to achieve the same. Based on this feedback,
the next year’s goals set for the Appraisee may be reviewed to set goals with higher
rigour and to make suitable changes in the Development Goals.
For the purpose of feedback, all Appraisees in a band who are rated on a 1-8 scale will
be categorised into 5 appraisal buckets
Please refer to Schedule for the Performance Planning Appraisal Cycle - Annexure A.
It is mandatory that both superiors (administrative and functional) are involved in the
entire PA exercise.
Similarly, in case an Appraisee is a member of a Task Force / Project for the entire
performance cycle, while being based in a Department, the main responsibility of
performance review will be of the superior who sets the goals. It is recommended that
both functional and Taskforce / Project Head are involved in the PA exercise.
In case of Area / Regional / Branch offices, it is recommended that IS from the business
gives ratings after having a discussion with Area / Regional / Branch Manager. IS
should solicit comments on ‘Espousing Corporate Values and Vision’ from the Regional
/ Area Manager / Branch Manager and mention this in his/her comments, on the
system.
Newly inducted employees will be covered in the performance review cycle if they
have joined the Company on or before 2nd Jan in the relevant review year. Though the
entire process should be followed for the first performance cycle, the performance
measurement and rating shall not be reckoned for the distribution curve for the IC /
Business. The PLR committed during the recruitment process will be protected in the
first year unless the person is rated as 4 or below
Transferees will go through the PA exercise the reference point being the goals to
be achieved by them in the giving department for which purpose the taking department
FAIR 2020 /28-03-2020 11
The DH with whom he/she is working at the time of appraisal will decide the final
rating after taking into account the inputs from the employee’s IS / DH in the previous
department(s). The PMS system provides the appraising IS the facility to seek feedback
from the previous IS – the PMS Form can be moved electronically to the Previous IS
for filling up of comments sought.
If the IS / NS is new to the department, he/she should consult the earlier role holder
before appraising the performance of the team members.
a) All employees joining laterally and eligible for being appraised, in the first
assessment year after joining, shall be excluded from being fitted into the rating
distribution curve as applicable to the IC.
In both the above cases (i.e. Trainees and Lateral Hires), from the second appraisal
year, will be assessed as regular employees and will be covered by the rating
distribution as applicable to the IC.
a) Lady employees proceeding on maternity leave shall carry the rating for the
appraisal year when they proceed on Maternity leave and resume for duty
after the leave. This rating shall not be less than their average ratings of
the last two appraisal years before proceeding on maternity leave. If the
maternity leave period straddles two appraisal review years, the year for
reckoning the previous two years’ average rating as a minimum, will be the
assessment year when the employee avails the maximum portion of the
maternity leave.
Illustration: An employee goes on maternity leave from 15th Feb 2019 and
returns on 16th August 2019. In this instance her period of leave straddles two
assessment years 2018-19 by 1.5 months and 2019-20 by 4.5 months. In such
an instance her rating in 2019-20 should not be less than previous two years
(i.e. 2017-18 and 2018-19) average rating.
The person will be fitted into the distribution curve of the taking/receiving
IC .
5. Any other exclusion of any category of employees will require the specific
approval of the MD & CEO and CHR, since this is a departure from the policy.
Stages:
PPW
Goal Setting
Development Goals Setting
Performance
Planning Mid Term
Exercise & Goal Review
Setting
Stages:
Performance Appraisal Recording Achievements –
Appraisee
IS / NS / DH Reviews
Normalization process – MVG
Performance Feedback
IC HR Head may present the above to the IC Head for review. A copy of the same be
sent to CHR.
The Appraisee’s relative performance within the band as assigned by the MVG (MVG
Rating) and the IC/SBG performance and as derived from the applicable parameters
of the IC/SBG Performance Metrics will form the basis for performance conversations
and computation of corpus and distribution of annual rewards. The rating shall also
form the basis for Compensation increases / fitment along with other elements of
compensation.
However, along with Performance Ratings all inter band/tier promotions should be
accompanied by a significant increase in job responsibility. Such promotions should be
carefully evaluated as per IPE version 3.2 and should meet the Position Class criteria
required for the higher grade. The process of decisions on inter-band/tier promotions
should include interviews by a panel constituted by the IC Head.
Start Medium
Activity End Date
Date
Performance Planning (PP) 2020-21
Employee fills and submits Development Goals in In PMGM and consultation through phone/zoom/MS-
16-Apr 14-May Team
consultation with IS
• Highlights progress during the last year and the strategic focus areas for the
current year.
• Participants
o IC / SBG Head
o Department Heads
o Section Heads and
o Others as required
• Methodologies such as Balance Score Card, X matrix, Hoshin Kanri, MBO., etc.
to be used for cascading during workshop
Sample Goals
Any employee who has a subordinate reporting to him/her will be assessed on the
focus on ensuring competency development of his/her subordinate (as per the
Development Goals set for subordinate). In other words, an IS will be assessed on the
extent to which he/she has aided his/her subordinate in implementing the
Development Goals
At the end of the Development Goals cycle, the filled in forms are sent to the Next
Superior. This is to assist the NS in appraising the IS against the Subordinate
Development Goals.
Note: Strategic parameters need to be suitably broken down into annual activities and
the annual goals will be worked out on this basis.
Execution Goals
• Reduce delivery time
• Increase project execution efficiencies
• Reduce Working Capital as a percentage of Revenues
Manufacturing Goals
• Reduce cost of Rework from 5% to 1%
• Reduce time overruns of major items from 10% to 2%
Safety
• Identification of ‘Successor-in-Making’
From Employee
Sr. Ongoing
Aspects of feedback
No. Review
1 Job content Y
2 Role clarity Y
3 Resources Y
4 Recognition Y
5 Departmental Support / Team work Y
6 Learning & Growth Opportunities Y
7 Other Facilitating / Hindering Factors Y
Legend
IS : Immediate Superior
NS : Next Superior
DH : Department Head
Companies Act, 2013 has mandated the listed enterprises to implement and adopt
Internal Financial Controls (IFC) including Internal Control over Financial
Reporting (ICFR) in all its sphere of operations.
‘Internal Financial Controls’ (IFC) has been defined as “policies and procedures
adopted by the company for ensuring orderly and efficient conduct of its
business, including adherence to company’s policies, safeguarding of assets,
prevention and detection of frauds and errors, accuracy and completeness of
accounting records, and timely preparation of reliable financial information.”
Internal Financial Controls (IFC) covers, (i) Internal Controls over Financial
Reporting (ICFR), (ii) Internal Controls over Operations and (iii) Internal controls
for Fraud prevention.
Listed enterprises have to maintain accurate and complete financial records while
adhering to all the statutory accounting and reporting standards for presenting the
financial performance at the end of each quarter reliably. The controls which are
required to be instituted in all the above processes constitute Internal Control over
Financial Reporting (ICFR)
In this respect, all process owners need to design suitable control framework and
institutionalize adequate monitoring mechanism to ensure Internal Financial
Controls.