Mumbai, Oct 21: It was threatening to become a mammoth manpower issue. On the one hand, a countrywide PAJORR-Performance Appraisal, Job Rotation and Rewards -- survey conducted in Larsen & Toubro (L&T) in 1997, had brought to light the employees' unhappiness towards the performance appraisal system.The issue: discrepancies in the annual performance-based rewards were arising due to the performance appraisal ratings. On the other hand, with L&T plunging into a restructuring action-plan, there was an urgent need to check the bloating workforce.
``There was an immediate need to have a structured and effective system of identifying high, medium and low performers to address the issues,'' says Monica Wadhwa, a student of Tata Institute of Social Sciences (TISS), Mumbai, in her summer project presentation for the HR Module at Prerana '99, an All-India Management Summer Project Contest held in Mumbai recently and organised by National Institute of Industrial Engineering (Nitie) in association with The Financial Express.
Wadhwa-whose project was adjudged second best in the contest -- started with a clear objective to design a system for identifying high, medium and low performers at the supervisory and the managerial level by studying the systems developed by organisations in different sectors.
While L&T followed the system of management by objective (MBO), the key result areas of an individual were not specific and measurable. ``It was suggested that the individual goals be aligned with the acronym SMART (specific, measurable, attainable, realistic, and time-linked). Also, that the organisation develop job competencies for the main job families in L&T,'' says Wadhwa. As part of the research work, Wadhwa conducted cultural analysis with the help of informal chats with employees.
In addition to the key result areas not being very specific and measurable, Wadhwa noticed some grey areas in the existing Performance Appraisal System in L&T, such as:
Core competencies to rate employees was not clearly defined. Specific role related attributes were not specified. Rating by the immediate superior alone, led to a bias. The four-point scale grading system did not identify low-performers.To overcome these, Wadhwa decided to benchmark the system with leading, non-competing companies like HLL, Pepsi, Johnson & Johnson, Cadbury India, Knoll Pharmaceuticals, Novartis, Philips and Godrej GE. Data was collected from organisations in different sectors which enabled identification of high, medium and low performers at the supervisory and management level.
This was done through a sampling exercise based on theoretical and structured questionnaires prepared by her.
Also, competency profiling was done through random sampling of L&T's main business of manufacturing. This was carried out at the three levels-covenants (assistant managers, managers and senior managers), executives and supervisory-through semi-structured interviewwith covenants and focused groups along with semi-structured interviews at the executive and supervisory level.
Wadhwa later administered three performance questionnaires consisting of 55, 50, 40 forced choice questions for covenants, executives and supervisors respectively, to the same people at the three levels. On the pre-condition of anonymity, employees were then asked to rate the most effective performer in their respective departments on a five-point scale.
Improving feedback
Among other major recommendations to the company, Wadhwa pointed out that certain functions like HR and finance cannot be easily quantifiable. To make these specific and measurable:
Objectives should be prioritised as per their importance for the department by distributing 100 points among the objectives. Core competencies should be specifically defined on a 100-point scale each. Competency profiling should be done for the main job families. In order to avoid biases in the superior's ratings, six internal customers could be chosen by the employee in consensus with the immediate superior. Rating on a five-point scale given for each objective and competency could be multiplied by the points given to that objective and competency. The total number of points given to employees should be awarded out of a scale of 500 points so as to clearly demarcate low performers from outstanding/good/medium performers.``Job competency profiling can be used to identify the training needs. Identified job competencies can be used to select suitable candidates for different jobs in future,'' asserts Wadhwa. Moreover, this system could also be used to identify the potential of employees-which in turn, would help build a high-performance culture at L&T.
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.