A Study of Effectiveness of Performance Management System (PMS) at

Maruti Suzuki India Limited

Dr. Aditi R Khandelwal
Assistant Professor
The IIS University, Jaipur

Introduction
Performance management consists of all organizational processes which determine how well
employees, teams and ultimately, the organization perform. The process of performance
management includes :-

1. HR planning,

2. Employee recruitment and selection,

3. Training &Development,

4. Career planning and development,

5. Compensation.

Performance management is integrated process of performance planning, performance appraisal,

performance feedback, performance counseling or consolidates goal setting, performance
appraisal, development in to a single common system. The aim of such a system is to ensure that
employee’s performance is supporting the company’s strategic aim.

Performance management is the systematic process of, planning work and setting expectations,
continually monitoring performance, developing the capacity to perform, supporting on the
“How” perspective of performance, periodically reviewing performance and rewarding desirable
performance.

Company Profile – Maruti Suzuki India Limited

Maruti Suzuki is the car company that leads the Indian auto industry. Maruti started its operation
in 1982 and today Maruti Suzuki alone makes 1.5 million family cars every year. All this
happened due to teamwork of over 12500 dedicated and passionate professionals.

Maruti Suzuki offers a dynamic, challenging and professional environment where an employee
can grow and learn, build on a rewarding career. Career development is an ongoing, lifelong
process to help individual learn and achieve more in their career. Success in career is a
combination of various factors like performance, potential, competence, results and positive

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attitude. Performance is measured through a well-defined and robust Performance Management
System (PMS) which assesses employee performance on functional KRA’s (Key Result Areas)
and behavioral traits and competencies.

Performance Management System in Maruti Suzuki

To ensure a performance driven culture in an organization like MSIL, where most of the
employee’s achieve performance targets it becomes imperative to have a mechanism for
assessment of how effectively these targets have been achieved. To ensure an objective &
transparent system of employee’s performance assessment and to facilitate employee
development and career growth towards building a performance oriented culture. It is an online
process, based on clear & measurable Key Result Areas (KRAs) and involves active
participation from appraiser & appraise, ensuring feedback & suggested improvements.

Performance Management System at MSIL is directly linked to-

• Career Growth
• Employee Development
• Compensation & Rewards
• Employee benefits

Stages in Performance Assessment

FORMULATION MID TERM FINAL

OF KEY RESULT PERFORMANCE PERFORMANCE
AREAS (KRA’S) REVIEW REVIEW

Mid Term Performance Review Process

Mid-term Performance Review is a Developmental tool which helps establish the following :

• extent to which results have been achieved

• measure gaps in performance
• arrive at reasons for the deviation
• ways to bridge the gaps in performance

preparing well in advance forms the basis of a fair Performance Review process.

Steps of Relative Performance Assessment during Mid Term Performance Review:

• Assessment of Functional KRAs

• Assessment of Behavioral Traits

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Mid Term Performance Review forms an important base for Final Assessment at the year end,
therefore utmost focus & precision is solicited.

Final Performance Review Process

As mentioned earlier, Relative Performance Assessment has two components.

• Assessment of KRA’s (Functional Targets)
• Assessment of Behavioral Traits
Based on weightage of the two components overall rating is provided.
Rating Scale Description

Exceptional (EC) 5 Significantly and consistently exceeds performance requirements and

expectations

Star Performer (SP) 4 Exceeds performance requirements and expectation

High Performer 3 Meets performance requirement and expectation

(HP)

Performer (PF) 2 Meets performance requirements and expectations with support and
direction

Average (AV) 1 Performance needs improvement to meet the targets

Needs Improvement 0 This is an optional grade used only based on Management Decision for
(NI) performance which is below minimum requirements

Review of Literature

Khan Muhammad FaseehUllah (Mar.-Apr.2013), in his paper “Role of Performance

Appraisal System on Employees Motivation” opines that the appraisal process should adopt such
methods in which both the appraiser and the appraise take keen interest. For the successful
implementation of performance system regular training, focused approach and accountability of
person using is required. Both financial and non-financial incentives should be linked to annual
appraisal system.

MiahM.Khasro(June.2012), Performance Management System in UK Retail Industry.

Sainsbury’s has developed a powerful performance appraisal system measuring financial
performance based on target achievement. Their approach of conducting PMS may result
negatively in long term in terms of development of their employees.

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Shrivastava Pallavee, RaiUshaKiran, Performance Appraisal Practice in Indian Banks.
Performance system should be correlated with the organization’s philosophies and mission,
cover assessment of performance as well as potential for development, look after the needs of
both the individual and the organization, help create a clean environment, rewards linked to
achievements, generate information for personnel development and career planning, suggesting
appropriate person task matching etc.

Nair Bindu , PareekAshish, Performance Management Systems adopted by select Indian

Private Sector. Organizations have now come to realize the importance of a performance
measurement & management system that enables them to more effectively drive and manage
their business operations. They are now aligning the individual and team performances to the
organization strategies so that compensation & incentives are aligned to strategic performance.

Yadav Rajesh K., DabhadeNishant, Performance Management Systems in Maharatna

Companies (a case study of B.H.E.L.,Bhopal). One performance appraisal program should not be
designed to serve a numerous of purposes because it may be unclear and difficult & results into
failure. The solution is to separate assessment program should be designed for development of
employees.

Objective & Scope of the Study: The study looks at performance management system at MSIL

• Checking the effectiveness of Performance Management System in MSIL.

• To find out the level of employees satisfaction at MSIL.

Research Methodology & Action Plan

Type of Study: The study uses both qualitative and quantitative techniques. The analysis is
descriptive in nature.

Source & tools for collection of Data: For this study questionnaire method of data collection is
used. A structured questionnaire containing 16 questions was formulated and was administered
to the employees. The data so collected was tabulated, analyzed &calculated to find out the final
conclusion.

Sample: This is convenience sampling. The sample units were employees working at MSIL
regional office situated at (1) Jaipur (2) Mumbai (3) Pune (4) Ahmedabad (5) Chandigarh.

Sample Size: The questionnaire was filled by 200 respondents for the purpose of this study.

Method of Analysis: The questionnaire consists of four important aspects of PMS. (1) KRA
Setting, understanding & congruence (2) Mid-Term process quality (3) Behavioral Trait
assessment (4) Final Assessment .The analysis was descriptive. The data collected was tabulated.
The frequencies of response were measured using percentage as a tool. Logical analysis was
done. Evaluation was made by using inferences and final conclusion was drawn.

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Limitation of Study
• The data collected under this study is restricted to respondents of five regional offices(1)
Jaipur (2) Mumbai (3) Pune (4) Ahmedabad (5) Chandigarh. So, the sample chosen may not
be a good representative for the whole population.

• Many respondents were reluctant to furnish responses on the ground of confidentiality.

Data Analysis and Interpretation

Point no.1 KRA Setting, Understanding & Congruence.

From the above table we can analyze that On scale of 1 to 3, about 55% of sample
67% have complete understanding of PMS. size have given rating of 2 and only 22%
people have given rating of 3.

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 • 7
6
Only 61% population feels that KRA is set 75% employees said that they are made to
according to their Role description. understand their KRA

Only 55% people believe KRA is set by Only 66% of employees are able to align
discussion whereas 45% says it is top down their KRA with goals of company,
by appraiser. division and dept.

Point no.2 Mid-term process quality.

• O
n
l

87% says that YES mid-term performance Only 56% of employees feel that a quality
review takes place. discussion takes place with Appraiser.
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 Only 57% people believe that they receive Only 56%
meaningful feedback while 8% feels that take cour
the feedback they receive is not at all believes s
meaningful.

Point no.3 : Behavioral Traits.

Only 44% believe that Behavioral Traits are Only 32% believes that sufficient discussion
defined to help complete understanding of takes place on Behavioral traits whereas
expectations whereas 13% said No. 23% said no discussion takes place.

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Only 60% people says that dialogue on 47% believes that performance is discussed
behavioral trait will help them in shaping as elaborately whereas 37% says somewhat it is
good MSIL leader while 33% says may be. discussed.

47% believes that performance is discussed 72% says that sufficient time is allotted to
elaborately whereas 37% says somewhat it is Final Assessment while other 28% says no.
discussed.

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 Findings

Comparison Sheet - Aspect wise

Aspect Options Overall
KRA Setting,
Understanding & Highly Satisfied 58%
Congruence
(Effectiveness, Alignment with
Somewhat Satisfied 28%
Role Description,dept,divisional&
business goal ,Setting KRA by
Not Satisfied 14%
Discussion or Top Down)
Mid-Term Process Quality Highly Satisfied 64%
(Quality Discussion, Meaningful Somewhat Satisfied 28%
Feedback, Help in Course
Correction) Not Satisfied 8%
Behaviorial Traits Highly Satisfied 45%
(Undersanding of Expectations, Somewhat Satisfied 41%
Sufficeint Discussion, Help in
shaping MSIL Business Leader) Not Satisfied
14%
Highly Satisfied 52%
Final Assessment
Somewhat Satisfied 23%
(Elaborate Discussion, Next year
goal finalization, Sufficient Time Not Satisfied
Allotment) 25%

Suggestions
• More Sessions for Departmental Managers (DPM) should be held to make them understand
importance of PMS.
• Concerned DPMs should counsel their people.
• PMS process should be available on company internal website so that people have direct access
to it.
• HR should take more initiative to make PMS more effective and transparent.
• Employees should be made aware of PMS by more one to one sessions.
• PMS Process should be explained to new joinees during their Induction Process.

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References

• Khan Muhammad FaseehUllah (Mar.-Apr.2013), Role of Performance Appraisal

System on Employees Motivation, IOSR Journal of Business and Management, Volume
8, Issue 4, 66-83.

• MiahM.Khasro (June.2012), Performance Management System in UK Retail Industry,

Far East Journal of Psychology and Business, Volume 7, No.3, 13-25.

• ShrivastavaPallavee , RaiUshaKiran, Performance Appraisal Practice in Indian Banks,

Integral Review - A Journal of Management , Volume 5, No 2,46-52.
• Nair Bindu , PareekAshish, Performance Management Systems adopted by select
Indian Private Sector– International Journal of Research in Commerce & Management
,Volume 2(2011), Issue No 6,43-46.
• Yadav Rajesh K., DabhadeNishant, Performance Management Systems in Maharatna
Companies (a case study of B.H.E.L.,Bhopal.)– International letter of Social and
Humanistic Sciences,(2013), Issue No 4,49-69.
• Negi Karan Singh, Study of Workplace Performance Management Through
Performance Appraisal Systems in Major Government Owned Commercial
Organizations of India– Global Journal of Finance and Management, Volume6,Number
2(2014), pp.143-146.
• Gautam Abhinanda,A study on performance appraisal system practiced in sugar mills,
and its impact on employees motivation-A case study of Simbhawli sugar limited, Asian
Journal of Management Research, Volume 4, Issue 3(2014),350-360.
• Suresh P ;Mohideen Akbar M.Dr., A study on performance appraisal of automobile
industries at Chennai, Tamilnadu. International Journal of Marketing, Financial Services
& Management Research, Volume 2, No.5, May 2013, 110-122

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