INDUSTRIAL TRAINING

REPORT SUBMISSION ON

PERFORMANCE MANAGEMENT SYSTEM

IN ENGINEERS INDIA LIMITED

Submitted to: Mr S.C Tyagi GM (HR) Engineers India Limited

Submitted By: Sonam Gupta MBA

GITARATTAN INTERNATIONAL BUSINESS SCHOOL

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CONTENTS

1. INTRODUCTION..............................................................................................................5 Company Profile ..............................................................................................................6 Overview of Company ...................................................................................................12

2. Theoretical Framework of Study ...................................................................................14 What is Performance Appraisal?................................................................................... 14 What do we evaluate?....................................................................................................15 Who conducts Performance Appraisal? 15 The Performance Appraisal Process .16

3. Performance Appraisal in EIL..19 Purpose of PMS.....19 Characteristics....20 Employee Categories.20 PMS Framework....21 Rating scale for evaluation.....23 The PMS Process...26 Competencies Factors....29 Roles in PMS Process....31 PMS Outcomes..32

Acknowledgement
Vital to every operation is co-operation I really agree to this wonderful quotation put by Mr. Frank Tyger. This project was successful due to the co-operation extended by people who have truly contributed towards it. Words arent enough to express my gratitude to all those who helped me throughout my Training period. With deep regards and humble respect I would like to thanks Mr. S.C Tyagi GM(HR), Mr. HC Nagar GM-Recruitment MDD (HR), Engineers India Limited who provided me a distinctive opportunity to work at Engineers India Limited. I would like to express my humble thanks and regards to Ms. Anubha T Aggarwal Manager (HR), Engineers India Limited, whose kind supervision and Interest went all way in successful completion of this work. I would like to thanks all the members of Engineers India Limited who directly or indirectly helped me during my project work.

Executive Summary
Engineers India Limited (EIL) is a public-sector undertaking of the Government of India under the Ministry of Petroleum and Natural Gas. It was initially set up in 1965 to provide engineering and related technical services for petroleum refineries and other industrial projects. In addition to Petroleum Refineries, with which EIL started initially, over the years it has diversified and excelled in various other fields. EIL today has emerged as Asias leading design, engineering and turnkey contracting company providing a complete range of project services needed to conceptualize, plan, design, engineer and construct projects to meet the specific requirements of its clients. In many organizations - but not all - appraisal results are used, either directly or indirectly, to help determine reward outcomes. That is, the appraisal results are used to identify the better performing employees who should get the majority of available merit pay increases, bonuses and promotions.

By the same token, appraisal results are used to identify the poorer performers who may require some form of counseling, training or in extreme cases, demotion, dismissal or decreases in pay. (Organizations need to be aware of laws in their country that might restrict their capacity to dismiss employees or decrease pay.)

The purpose of this study has been to determine whether the performance appraisal helps the employees to know where they are lacking in their performance and also to know how performance appraisal helps the management to take administrative decisions of promotions, transfers, training and development and wage and salary administration.

INTRODUCTION

Company Profile

Engineers India Limited (EIL) was set up in 1965 to provide engineering and related technical services for petroleum refineries and other industrial projects. EIL is working under the administrative control of Ministry of Petroleum and Natural Gas (MoP&NG), Government of India. In addition to Petroleum Refineries, with which EIL started initially, over the years it has diversified and excelled in various other fields. EIL today has emerged as Asias leading design, engineering and turnkey contracting company providing a complete range of project services needed to conceptualize, plan, design, engineer and construct projects to meet the specific requirements of its clients in the following fields: Petroleum Refining Petrochemicals Pipelines Offshore Oil & Gas Onshore Oil & Gas Terminals & Storages Mining & Metallurgy Infrastructure

EIL is capable to provide services from concept to commissioning in all the sectors listed above and its association with clients extend beyond the commissioning of their plants through monitoring the operation of each plant and accumulating feedback on its performance. EIL can provide its services in the following modes:

a) Project Implementation Services (EPCM) such as Conceptual Studies, Feasibility Studies, Detailed Project Reports, FEED Package, Basic Design Engineering Package (BDEP) Project Management, Planning & Scheduling, Cost Engineering, Process Design, Detailed Engineering, Procurement Services, Construction Management & Supervision, Commissioning and plant startup assistance etc. b) Project Management Consultancy (PMC) Services c) Specialist Services such as Heat & Mass Transfer Equipment Design, Engineering & Technology Development and Design, Environmental Engineering, Information Technology Services, Specialist Materials and Maintenance Services, Energy Conservation Services, Plant Operations & Safety including HAZOP Studies, Safety Integrity Levels (SIL) studies and Risk Analysis, Yield and Energy and Optimisation Studies. d) Engineering, Procurement & Construction (EPC) / Lumpsum Turnkey (LSTK) Contracts e) Open Book converted LSTK Projects EIL has been involved in setting up of almost all the large projects that have come up in India in the Oil & Gas Sector in the last four decades and has also successfully executed several assignments in the middleeast and southeast Asia. EIL has to its credit more than 400 major projects successfully completed and operating smoothly at the rated capacity, creating an array of satisfied clients.

In the course of setting up various projects, EIL has worked with a large number of process licensors and engineering/construction/contracting companies worldwide and is well versed with the latest engineering codes and practices followed internationally.

EIL is a strong technology based and technology oriented company and has developed extensive data bank, computerized design tools, flexible yet integrated project control systems, besides having an extra edge in the following traits:

Technical skills for process design, optimization and integration, HAZOP Analysis.

Knowledge & appreciation of third party processes. Extensive experience in detailed engineering. Worldwide procurement capabilities (purchase, inspection, expediting, transportation).

Expertise in Contract Management Expertise in Project Management Consultancy Services Expertise in construction management & commissioning assistance.

TRACK RECORD EIL has an impressive track record of implementing a large number of projects in India and abroad. EILs experience is summarised as follows:

DIVERSIFICATION With a vision To be a World Class Globally Competitive EPC and Total Solutions Consultancy Organization, the Company is targeting higher business projections and closely looking at diversification avenues based on its strengths in design, engineering and project management capabilities. New endeavours for diversification have identified that thrust needs to be given to overseas operations in EILs core areas including targeting medium to large size EPC projects. Entering into new sectors e.g. Nuclear and Water and closely following sunrise sectors like Solar Power, Coal to Liquid projects constitute the diversification initiative.

Joint Venture Companies have been floated for tapping business opportunities. In this regard, TEIL Projects Ltd (TEIL), the joint venture company with Tata Projects is exploring business opportunities in EPC sector. TechnimontEIL Emirates, a JV with M/s Technimont is also in place to explore international business opportunities in the hydrocarbon sector.

EIL is looking at getting into the solar power project consultancy business. EIL plans to provide end-to-end solutions for the development of solar power projects. Meanwhile, EIL is also planning to enter the gas-based power project consultancy business. Once EIL gets a foothold in gas-fired power consultancy business, it can also diversify into coal-based power consultancy. The Company is also planning to tap the nuclear power consultancy business. We are trying to leverage our expertise to provide consultancy for balance of plant packages for nuclear power projects.

Earlier, EIL was in fertiliser project consultancy. It had provided consultancy services for various fertiliser plants, including National Fertilisers Ltds (NFL) Bhatinda and Panipat units. But subsequently, the Company had to quit this business in favour of other public sector consulting firms. Now that business environment has changed, EIL is planning to get back into the fertiliser consultancy business.

The company is also very bullish on the water management consultancy business. EIL is already working with Delhi Jal Board and looking to expand in this area. The Company is also planning to move into the infrastructure consultancy business. It has been assigned the task of conducting quality inspection for most flyovers coming up in Delhi.

HUMAN RESOURCES Human resources along with technology are the two prime resources of consulting organizations like EIL. Over the years, EIL has earned the reputation of being a veritable treasure of technical knowledge, skills and professional competence. At present, EIL has a staff strength of more than 3300, of which about 2730 are engineers, technologists and specialists in various disciplines like chemical engineering, mechanical engineering, civil engineering, structural engineering, computer sciences, information technology, geotechnical engineering, welding sciences, material technology, ocean engineering etc. With this manpower, EIL has about 4.5 million manhours available annually in its design offices along with about 6,000 man months of construction management services per annum and is in a position to handle a number of large projects at a given point of time.

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Engineers India is an ISO 9001 Accredited Company. EIL has state-of-the-art computer and communications network for an enterprise wide connectivity. It takes care of voice, data and document communications requirements for operations within the country as well as abroad. Such enterprise connectivity provides a fabric for Electronic Data Interchange (EDI) facilitating the effective execution of company's projects. Effective internet and intranet communication infrastructure has been established among Head office, Regional/ Branch Offices & Overseas Offices.

Vision To be a World Class Globally Competitive EPC and Total Solutions Consultancy Organization.

Mission Achieve Customer Delight through innovative, cost effective and value added consulting & EPC services. Maximize creation of wealth, value and satisfaction for stakeholders with high standards of business ethics and aligned with national polices.

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Overview of the Industry

One of Indias leading Consultancy and EPC Companies in Hydrocarbons and Petrochemical

Focused diversification into other emerging sectors.

1973: Diversified business into mining & non ferrous metallurgy 2001: Diversified into infrastructure sectors 2004: Strategic crude oil storage as part of Govt. of Indias energy

security initiative 2010-11: Diversification initiatives into Fertilizer, City Gas & Power

sectors 2011-12: New area of Oil & Gas Exploration(NELPIX)

Technology driven organization with an in-house and collaborative(R&D). Overseas presence in Middle East, North Africa and South East Asia. Zero debt firm with reserves of over INR 22 Billion with consistent record of healthy earnings and dividend payout.

Providing services from concept to commissioning covering Project Implementation Services, Turkey Contracts & Specialist Services.

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 Strong financial track record with robust growth in turnover and profit. Competent and dedicated team of professionals adept at project implementation through deployment of state-of-the-art technologies.

Large multi-disciplinary engineering work force with over 4.5 million manhours available in Project Management & Engineering offices along with 9600 manmonths of construction management services annually.

Optimized services to attain highest standards of Customer Delight.

An ISO 9001:2008 accredited company.

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THEORETICAL FRAMEWORK OF THE STUDY

What is Performance Appraisal?

A performance appraisal (PA) or performance evaluation is a systematic and periodic process that assesses an individual employees job performance and productivity in relation to certain pre-established criteria and organizational objectives. Other aspects of individual employees are considered as well, such as organizational citizenship behavior, accomplishments, potential for future improvement, strengths and weaknesses, etc. To collect PA data, there are three main methods: objective production, personnel, and judgmental evaluation. Judgmental evaluations are the most commonly used with a large variety of evaluation methods. A PA is typically conducted annually. The interview could function as providing feedback to employees, counseling and developing employees, and conveying and discussing compensation, job status, or disciplinary decisions. PA is often included in performance management systems. Performance management systems are employed to manage and align" all of an organization's resources in order to achieve highest possible performance. How performance is managed in an organization determines to a large extent the success or failure of the organization. Therefore, improving PA for everyone should be among the highest priorities of contemporary organizations. Performance Appraisal includes: Identification: Means determining what areas of work the manager should be examining when measuring performance essentially focusing on performance that affects organizational success.

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 Measurement: Entails making managerial judgements of how good or bad employee performance was. Management: Appraisal should be more than a post-mortem examination of past events, criticising or praising workers for their performance in the preceding year. Instead, it must take a future oriented view of what workers can do to realize their potential.

What do we evaluate?
Individual task outcomes: Here the focus is on the results of work behavior. The approach deals with bottom line issues such as how much work is done by an employee or how much profit the employee brought into the organization. Behaviours: Here the focus is on behaviours exhibited by employee while executing the job. Traits: Here the focus is on the personal characteristics of employees such as their ability to arrive at decisions, loyalty to the company, communication skills or level of initiative shown etc.

Who Conducts Performance Appraisal?

Human resource management (HRM) conducts performance management. Performance management systems consist of the activities and/or processes embraced by an organization in anticipation of improving employee performance, and therefore, organizational performance. Consequently, performance

management is conducted at the organizational level and the individual level. At the organizational level, performance management oversees organizational
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performance and compares present performance with organizational performance goals. The achievement of these organizational performance goals depends on the performance of the individual organizational members. Therefore, measuring individual employee performance can prove to be a valuable performance management process for the purposes of HRM and for the organization.

The performance Appraisal Process

1. Identify performance criteria:

The number of appraisal criteria for each position is from 3 10 criteria. The standards set should be clear, easily understandable and in measurable terms The appraisal criteria can be changed but must be the authority for approval and must be implemented for the relevant level before applying. HR department and managers/ supervisor will set up weight of each criteria and must be approved directors.

2. Communicating performance criteria: HR department should inform this procedure to all level of management and employees. The employees should be informed and the standards should be clearly explained in order to help them understanding their roles and to know what exactly is expected from them. Performance criteria should also be communicated to the appraisers or the evaluators and if required.

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3. Measuring performance HR department should prepare all materials, notes agreed tasks and records of performance, achievements, incidents, reports etc anything pertaining to performance and achievement. Inform the appraisee: o To ensure the appraisee is informed of a suitable time and place and clarify purpose and type of appraisal. o Give the appraisee the chance to assemble data and relevant performance and achievement records and materials. Review and measure HR dept and managers / supervisors review the activities, tasks, objectives and achievements one by one, keeping to distinct separate items one by one. Agree an action plan o An overall plan should be agreed with the appraisee, which should take account of the job responsibilities and review strengths and weaknesses. o The plan can be staged if necessary with short, medium and long term aspects, but importantly it must be agreed and realistic.

4. Comparing with desired criteria The actual performance is compared with the desired or performance criteria. 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.

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5. Discussing results The result of the appraisal should be communicated and discussed with the employees. 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. The results, the problems and the possible solutions are discussed with the aim of problem solving and reaching consensus.

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PERFORMANCE APPRAISAL IN EIL

Manual Appraisal Process in place Year end Activity 2005 Performance Linked reward based on Corporate Performance & Individual Performance 2007 Introduction of new online Role based PMS 2010 - Introduction of Role based Competencies in PMS

Purpose of PMS
To set up as a robust & transparent performance measurement system to reward individual performance and establish visible linkage with other HR systems.

Characteristics
Unique Role based Formal goal setting process at the beginning of the year (KRAs) Periodic review and feedback End year assessment Creation Individual development plan Web based online process (in-house software) Sharing of appraisal Separate rating scales for Performance & Potential
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Employee Categories

Category

Description

Divisions/ Departments

Project Executioner

Role having maximum of project related Engineering, Technical, responsibilities. Maximum amount of Projects & others time is spent in project execution but executes some function based responsibilities as well

Functional Executioner

Has no project based responsibility but HR, Finance, CQA, all work is related to the function Vigilance & others Technical Depts. officers in support functions (Secretary, Support staff etc.)

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The PMS Framework

(a) Level 12-15 Performance Management System

Performance

Potential

Competencies
Function Based BRs Project Based BRs (if applicable) Functional Competencies Behavioural Competencies

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(b) Level 16-18

Performance Management System

Performance

Potential

KRAs

BRs

Competencies

Behavioural Function Based KRAs Project Based KRAs (if applicable) Function Based BRs Project Based BRs (if applicable)

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Relative Weights for KRAs and BRs

Performance Category Function Based KRAs 15 Project Project Based KRAs Based BR 65 10 Function Based BRs 10

Project Executioner

Functional Executioner

60

40

Overall Rating (Performance & Potential) Category Weightage

Performance Potential

60 40

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Rating Scale for Evaluation of Performance (BRs)

5: Consistently Exceeds Expectations - Consistently exceeded the expectations beyond a point which deserves special mention. This is the highest rating and is given when the results put in by an individual is truly outstanding. 4: Meets/Occasionally Exceeds Expectations Meets/Exceeded most of the set expectations by a reasonable margin This rating is to be used when a majority of the set expectations were met or exceeded and outcomes and efforts were above average. 3: Partly meets expectations Partly met all the set expectations as per target This rating is the average rating, when an employee partly delivers what s/he is bound to deliver. Needs to be given only when the expectations were partly met. 2: Somewhat below expectations - Met most of the set expectations When an employee misses some of the expectations, this rating is applicable. 1: Significantly Below Expectation - Failed to meet most of the expectations. When a majority of the expectations are not met, this rating is applicable

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Rating scale for evaluation of Potential

5: Expert - Encourages & influences others to display the skill 4: Advanced - Almost always demonstrates behavior/ skill 3: Intermediate - Often demonstrates the behavior/skill. 2: Elementary - Sometimes demonstrates the behavior/ skill 1: Beginner - Has not yet demonstrated the behavior/skill.

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The PMS Process

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Performance Planning
Coming to agreement on the individuals key job responsibilities Develop a common understanding of the goals and objectives that need to be achieved Discuss on the most important competencies that the individual must display in doing the job Creating an appropriate individual development plan

Performance Measures
Quantifiable standards used to evaluate and communicate performance against expected results. Focus on outputs, outcomes that can be clearly defined and for which evidence can be made available; Outputs (measurable quantifiably) - meeting or exceeding a quantified target - financial measures income, shareholder value - units produced or processed - time measures Outcome (result of an effort cannot necessarily be measured in quantified terms) - reaching a agreed standard of performance - delivering a agreed level of service
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- changes in behaviour - acquisition and effective use of additional knowledge & skills

Key Result Areas (KRAs)

KRAs are the objectives/ goals (specific & time-bound). What a role holder is expected to achieve in this aspect of the role. Each KRA can have one or more Performance Measure KRAs have quantifiable/ measurable Performance Measures

Baseline Responsibilities (BRs)

The essential duties (tasks & activities) that an individual must perform his / her role in the organization. The same are critical for performance in the role, however they may necessarily be directly cascaded from the Unit/ Business Sector MOU. This would include significant responsibilities against which target setting would be difficult. not in

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Potential (Competencies) Factors

Knowledge, skills and abilities described in behavioral terms that are coachable, observable and critical to successful individual or corporation performance. They form the foundation of what capabilities are required for the successful execution of roles and responsibilities, thereby driving functional, unit and organizations performance. Critical Competencies for each role and their weightages have been defined through a Competency Mapping exercise.

Competencies Framework & Levels

Technical

Managerial

People Skills

Leadership
Visioning & Strategic Thinking Brand Building Mentoring & Coaching

Global
Global Business Perspective and Sensitivity

Job Knowledge/ Planning, Leading Others Technical Organising & Expertise / Foresightedness Negotiating Domain/Knowl Communication Business edge Acumen Fostering Team Awareness Work Customer Focus Specific Managing Drive For knowledge Change Results Leveraging Building Analytical Technology Collaborative Thinking & Relationships Decisiveness Conceptual Thinking Innovation

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Proficiency Levels 1 Beginner 2 Elementary 3 Intermediate 4 Advanced 5 Expert

Personal Development Plan

Personal development plan is a learning action plan for which the Appraisees are responsible & with the support of their supervisors and the organization. It may include formal training but, more importantly, it will incorporate a wider set of development activities such as self-managed learning, project work, job enlargement and job enrichment.

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The Roles in the PMS process

Appraisee Appraiser Reviewer Acceptor HR

An individual who is assessed as part of the performance cycle

An individual who assesses the performance of one or more appraisees that (functionally) report to him/her

An individual who is responsible for reviewing the entire performance process and typically is appraisers appraiser Will ensure objectivity, transparency & consistency. Any escalated grievances would be settled by
him/her

An individual who typically is appraiser for a group of Reviewers and is the final signing off authority

HR to function only as a facilitator in the entire process

The key driver of the process

Helps manage performance & provides continuous feedback and coaching

Will ensure objectivity, transparency & consistency and resolve grievances across various Reviewer
groups

Will facilitate the process

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PMS Outcomes
Promotion Performance Related Pay Training & Development Identification of High Performers

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