Performance Appraisal in Tata Motors
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Tata Motors is India’s One of the most successful automobile company. It currently Employees 59,759 (2012) personnel , who are constantly evaluated and appraised . This Gives us the opportunity to study the performance appraisal method by the company and it’s efficiency towards employees as well as Organization. INTRODUCTION
Managing human resources in today’s dynamic environment is becoming more and more complex as well as important. Recognition of people as a valuable resource in the organization has led to increases trends in employee maintenance, job security, etc. My paper deals with “Performance Appraisal as carried out at Tata motors ”. In this paper, I have studied and evaluated the performance appraisal process as it is carried out in the company. The first section deals with a detailed company profile. It includes the company’s history: its activities and operations, organizational structure, etc. this section attempts to give detailed information about the company and the nature of it’s functioning. The second section deals with performance appraisal. In this section, a brief conceptual explanation to performance appraisal is given. It contains the definition, process and significance of performance appraisal. In the third section of my paper, I have conducted a research study to evaluate the process of performance appraisal at Tata motors.; this section also contains my findings and conclusions. HISTORY
Tata Motors Limited formerly is an Indian multinational automotive manufacturing company headquartered in Mumbai, India and a subsidiary of the Tata Group. Its products include passenger cars, trucks, vans and coaches. It is the world’s eighteenth-largest motor vehicle manufacturing company, fourth-largest truck manufacturer and second-largest bus manufacturer by volume. Tata Motors has auto manufacturing and assembly plants in:
JamshedpurPantnagarLucknowSanandDharwadPuneIndia, as well as in Argentina, South Africa, Thailand and the United Kingdom. Tata Motors has produced and sold over 6.5 million vehicles in India since 1954. Originally a manufacturer of locomotives, the company manufactured its first commercial vehicle in 1954 in a collaboration with Daimler-Benz AG, which ended in 1969. In 2010, Tata Motors surpassed Reliance to win the coveted title of ‘India’s most valuable brand’ in an annual survey conducted by Brand Finance and The Economic Times. Tata Motors was ranked as India’s 3rd Most Reputed Car manufacturer in the Reputation Benchmark Study – Auto (Cars) Sector, launched in April 2012. Tata Motors has been ranked 314th in the Fortune Global 500 rankings of the world’s biggest corporations for the year 2012. Tata Motors is a cross-listed company; Its stock trades on the Bombay Stock Exchange and the New York Stock Exchange as TTM. OPERATIONS
Tata Motors has vehicle assembly operations in India, the United Kingdom, South Korea, Thailand, Spain and South Africa. It plans to establish plants in Turkey, Indonesia and Eastern Europe.Tata Motors’ principal subsidiaries include Jaguar Land Rover, Tata Daewoo and Tata Hispano. Tata Motors is among the top three in passenger vehicles in India with products in the compact, midsize car and utility vehicle segments. The company’s manufacturing base in India is spread across:
Lucknow (Uttar Pradesh)
The company is establishing a new plant at Sanand (Gujarat). Tata’s dealership, sales, service and spare parts network comprises over 3500 touch points. Tata also has franchisee/joint venture assembly operations in Kenya, Bangladesh, Ukraine, Russia and Senegal .Tata has dealerships in 26 countries across 4 continents. Though Tata is present in many countries it has only managed to create a large consumer base in the Indian Subcontinent, namely India, Bangladesh, Bhutan, Sri Lanka and Nepal. Tata has a growing consumer base in Italy, Spain and South Africa. Tata Motors has more than 250 dealerships in more than 195 cities across 27 states and 4 Union Territories of India. It has the 3rd largest Sales and Service Network after Maruti Suzuki and Hyundai. Tata Daewoo . In 2004, Tata Motors acquired Daewoo Commercial Vehicle Company of South Korea. : To expand the product portfolio Tata Motors recently introduced the 25MT GVW Tata Novus from Daewoo’s (South Korea) (TDCV) platform.
Tata plans to leverage on the strong presence of TDCV in the heavy-tonnage range and introduce products in India at an appropriate time. This was mainly to cater to the international market and also to cater to the domestic market where a major improvement in the Road infrastructure was done through the National Highway Development Project. Tata Daewoo is the second-largest heavy commercial vehicle manufacturer in South Korea. Tata Motors has jointly worked with Tata Daewoo to develop trucks such as Novus and World Truck and buses including GloBus and StarBus. In 2012, Tata will start developing a new line to manufacture competitive and fuel efficient commercial vehicles to face the competition posed by the entry of international brands like Mercedes-Benz, Volvo and Navistar into the Indian market. PRODUCTS
Tata Starbus Low Floor 1610
Tata Marcopolo buses in the Delhi BRT
WHAT IS “PERFORMANCE APPRAISAL”
Performance Appraisal is defined as the process of assessing the performance and progress of an employee or a group of employees on a given job and his / their potential for future development. It consists of all formal procedures used in working organizations and potential of employees. According to Flippo, “Performance Appraisal is the systematic, periodic and an important rating of an employee’s excellence in matters pertaining to his present job and his potential for a better job.” CHARACTERISTICS
Performance Appraisal is a process.
It is the systematic examination of the strengths and weakness of an employee in terms of his job. It is scientific and objective study. Formal procedures are used in the study. It is an ongoing and continuous process wherein the evaluations are arranged periodically according to a definite plan. The main purpose of Performance Appraisal is to secure information necessary for making objective and correct decision an employee. PROCESS
The process of performance appraisal:
Establishing performance standards
Communicating the Standards
Comparing the actual with the standards
Discussing the appraisal
Taking Corrective Action
Errors in Rating
Lack of reliability
Lack of knowledge
METHODS OF PERFORMANCE APPRAISAL
The foregoing list of major program pitfalls represents a formidable challenge, even considering the available battery of appraisal techniques. But attempting to avoid these pitfalls by doing away with appraisals themselves is like trying to solve the problems of life by committing suicide. The more logical task is to identify those appraisal practices that are (a) most likely to achieve a particular objective and (b) least vulnerable to the obstacles already discussed. Before relating the specific techniques to the goals of performance appraisal stated at the outset of the article, We shall briefly review each, taking them more or less in an order of increasing complexity.The best-known techniques will be treated most briefly. ESSAY APPRAISAL
In its simplest form, this technique asks the rater to write a paragraph or more covering an individual’s strengths, weaknesses, potential, and so on. In most selection situations, particularly those involving professional, sales, or managerial positions, essay appraisals from former employers, teachers, or associates carry significant weight. GRAPHIC RATING SCALE
This technique may not yield the depth of an essay appraisal, but it is more consistent and reliable. Typically, a graphic scale assesses a person on the quality and quantity of his work (is he outstanding, above average, average, or unsatisfactory?) and on a variety of other factors that vary with the job but usually include personal traits like reliability and cooperation. It may also include specific performance items like oral and written communication. FIELD REVIEW
The field review is one of several techniques for doing this. A member of the personnel or central administrative staff meets with small groups of raters from each supervisory unit and goes over each employee’s rating with them to (a) identify areas of inter-rater disagreement, (b) help the group arrive at a consensus, and (c) determine that each rater conceives the standards similarly. FORCED-CHOICE RATING
Like the field review, this technique was developed to reduce bias and establish objective standards of comparison between individuals, but it does not involve the intervention of a third party. MANAGEMENT BY OBJECTIVES
To avoid, or to deal with, the feeling that they are being judged by unfairly high standards, employees in some organizations are being asked to set – or help set – their own performance goals. Within the past five or six years, MBO has become something of a fad and is so familiar to most managers that I will not dwell on it here. RANKING METHODS
For comparative purposes, particularly when it is necessary to compare people who work for different supervisors, individual statements, ratings, or appraisal forms are not particularly useful. Instead, it is necessary to recognize that comparisons involve an overall subjective judgment to which a host of additional facts and impressions must somehow be added. There is no single form or way to do this. The best approach appears to be a ranking technique involving pooled judgment. The two most effective methods are alternation ranking and paired comparison ranking. 1. “Alternation ranking”:
Ranking of employees from best to worst on a trait or traits is another method for evaluating employees. Since it is usually easier to distinguish between the worst and the best employees than to rank them, an alternation ranking method is most popular. Here subordinates to be rated are listed and the names of those not well enough to rank are crossed. Then on a form as shown below, the employee who is highest on the characteristic being measured and the one who is the lowest are indicated. Then chose the next highest and the next lowest, alternating between highest and lowest until all the employees to be rated have been ranked. 2. “Paired-comparison ranking”:
This technique is probably just as accurate as alternation ranking and might be more so. But with large numbers of employees it becomes extremely time consuming and cumbersome. Both ranking techniques, particularly when combined with multiple rankings (i.e., when two or more people are asked to make independent rankings of the same work group and their lists are averaged), are among the best available for generating valid order-of-merit rankings for salary administration purposes. ASSESSMENT CENTERS
So far, we have been talking about assessing past performance. What about the assessment of future performance or potential? In any placement decision and even more so in promotion decisions, some prediction of future performance is necessary. How can this kind of prediction be made most validly and most fairly? 360 DEGREE FEEDBACK
Many firms have expanded the idea of upward feedback into what the call 360-degree feedback. The feedback is generally used for training and development, rather than for pay increases. Most 360 Degree Feedback system contains several common features. Appropriate parties – peers, supervisors, subordinates and customers, for instance – complete survey, questionnaires on an individual. 360 degree feedback is also known as the multi-rater feedback, whereby ratings are not given just by the next manager up in the organizational hierarchy, but also by peers and subordinates. Appropriates customer ratings are also included, along with the element of self appraisal. Once gathered in, the assessment from the various quarters are compared with one another and the results communicated to the manager concerned. Another technique that is useful for coaching purposes is, of course, MBO. Like the critical incident method, it focuses on actual behavior and actual results, which can be discussed objectively and constructively, with little or no need for a supervisor to “play God.” Advantages
Instead of assuming traits, the MBO method concentrates on actual outcomes. If the employee meets or exceeds the set objectives, then he or she has demonstrated an acceptable level of job performance. Employees are judged according to real outcomes, and not on their potential for success, or on someone’s subjective opinion of their abilities. The guiding principle of the MBO approach is that direct results can be observed easily. The MBO method recognizes the fact that it is difficult to neatly dissect all the complex and varied elements that go to make up employee performance. MBO advocates claim that the performance of employees cannot be broken up into so many constituent parts, but to put all the parts together and the performance may be directly observed and measured.
Disadvantages This approach can lead to unrealistic expectations about what can and cannot be reasonably accomplished. Supervisors and subordinates must have very good “reality checking” skills to use MBO appraisal methods. They will need these skills during the initial stage of objective setting, and for the purposes of self-auditing and self-monitoring. Variable objectives may cause employee confusion. It is also possible that fluid objectives may be distorted to disguise or justify failures in performance. BENEFITS OF PERFORMANCE APPRAISALS
Measures an employee’s performance.
Helps in clarifying, defining, redefining priorities and objectives. Motivates the employee through achievement and feedback.
Facilitates assessment and agreement of training needs.
Helps in identification of personal strengths and weaknesses. Plays an important role in Personal career and succession planning. Clarifies team roles and facilitates team building.
Plays major role in organizational training needs assessment and analysis. Improves understanding and relationship between the employee and the reporting manager and also helps in resolving confusions and misunderstandings. Plays an important tool for communicating the organization’s philosophies, values, aims, strategies, priorities, etc among its employees. Helps in counseling and feedback.
KEY CONCEPTS IN PERFORMANCE MANAGEMENT SYSTEM
In order to understand the Performance Management System at Tata Motors , some concepts need to be explained which play a very important role in using the PMS successfully. They are: KRA’S (KEY RESULT AREAS): The performance of an employee is largely dependent on the KRA score achieved by the employee during that particular year. Thus, it is necessary to answer a few basic questions i.e. What are the guidelines for setting the KRA’s for an employee? How does an employee write down his KRA’s for a particular financial year? KRA’s: The Four Perspectives.
How is the KRA score calculated for an employee on the basis of the targets sets and targets achieved? BEHAVIORAL TRAITS: Some of the qualitative aspects of an employees’ performance combined with the general behavioral traits displayed by the employee during a year constitutes his behavior traits. An employee is assigned the rating on the basis of the intensity of the behavior displayed by him. They play a very important role in the deciding the final performance rating for an employee as is even capable of shifting the rating one level upwards/downwards. BHARTI 2010 LEADERSHIP COMPETENCY FRAMEWORK: This competency framework is a simple and structured way to describe the elements of behaviors required to perform a role effectively. This framework also tries to assess the performance of an employee objectively.
THE PERFORMANCE RATING PROCESS: The rating process tries to explain the four different types of rating that an employee can achieve i.e. EC, SC, C and PC. It also explains the criteria, which is considered for awarding any of these ratings to the employee. PROMOTION AND RATING DISRTRIBUTION GUIDELINES: The promotion and normal distribution guidelines provide the framework within which the performance appraisal process has to work. It is very important that the HR department pays due attention to these guidelines while preparing the bell curves for various functions and the consolidated bell curve for all the functions. These guidelines also help in deciding upon the promotion cases in a year. PERFORMANCE RATING PROCESS
EXCEPTIONAL CONTRIBUTOR (EC)
Performs consistently and substantially above expectations in all areas Achieves a final score greater than or equal to 115%
Consistently delivers on stretch targets
Spots and anticipates problems, implements solutions
Sees and exploits opportunities
Delivers ahead of time
Sees the wider picture-impacts across business
Focuses on what’s good for the business
Seen as role model by others
Recognized as exceptional by other functions as well
Motivates others to solve problems
Provides open and honest feedback
Able to establish and lead cross-functional teams SIGNIFICANT CONTRIBUTOR (SC) Performs above expectations in all areas
Achieves final score between 100-114%
Versatile in his/ her area of operation
Develops creative solutions and require little / minimal supervision Sets examples for others
Take ownership of own development
Demonstrates business initiative
Is self motivated
Supportive team player
Leads own team very effectively
Demonstrate functional initiative
PERFORMANCE APPRAISAL IN TATA MOTORS
Tata Motors Ideologies
“To be the world class corporate constantly furthering the interest of all stakeholder”. HR VISION
Lead and Facilitate continuous change towards organizational excellence ; create a learning and vibrant organization with high sense of pride amongst its members APPRAISAL & REWARD APPRAISAL
New Appraisal System based on KRAs & Targets·
Review of Targets at regular Intervals·
People Development an important KRA
Promotions based on Performance·
Productivity & Profit-linked Incentive Schemes·
Training including Long-term Term
Performance & Potential based Appraisals
Fast Track Option for High-performers
Promotions after Managers Vacancy based
Interviews for promotions above Managers
Selection of Supervisors:– Performance / Attendance / Discipline record– Written Test & Interview Job Rotation – including Inter-functional
RETENTION & EMPLOYEE WELFARE
Residential Colonies for Employees
Hospitalization Reimbursement – on actual without Ceiling
Household Equipment Loans
House Building Advance
PF Trust – for better Mgt., Service & speedy redress· Proposed MUL Pension Scheme
SUGGESTION SCHEME & QUALITY CIRCLES
For better quality and productivity
Through involvement of all employees and teamwork
Result : Cost reduction / Q Improvement / Productivity Improvement HR INITIATIVES
REALIGNING ORGANISATION CULTURE BASED ONNEW VISION & VALUES OBJECTIVE PERFORMANCE MANAGEMENT & DEVELOPMENT SYSTEM
PERFORMANCE LINKED REWARD AND RECOGNITION SYSTEM
CAREER PLANNING & PROMOTION POLICY
REVISED RECRUITMENT POLICY
STRONG FUCUS ON TRAINING INITIATIVES- BUILD A LEARNNG ORGANISATION CONTINUOUS VALUE ADDITION TO PROFESSIONAL SKILL- CUSTOMISED TRAINING- TRAINING TO THE PERSONNEL OF BUSINESS PARTNERS INTERNAL COMMUNICATION
EMPLOYEE INVOLVMENT & PARTICIPATION
TATA MOTORS APPRAISAL SYSTEM
Tata Motors have a midterm review for all those who have been performers, thereby creating an expectation amongst the employees of an increase in salary twice a year if they perform well. They used to have annual appraisals earlier, but then they felt that the incentives are not enough to motivation the sales department, which generates major revenues or the organization. they do give monetary increments and designation hikes, according to the performance. If the employee deserves both, they give him/her both the advantages otherwise at least one of them. Designation hikes are given annually. These are proportional to effort of the individual, team and the department. Designation changes are given keeping in mind the immense responsibility one has to shoulder in a high rank.
Monetary increments are primarily incentives that are given either in cash or kind for example they give them travel package within India or outside. Also, they have an accumulating incentive scheme in which employees can accumulate incentives and get them annually with interest. To meet the new demands of the business and to motivate the employees for higher performance, they have started linking a part of the salary increase to individual performance measures as variable pay. At present, between 6 to 8 percent of the compensation is variable pay, which they are planning to increase over a period of time. Executives are categorized in levels based on their performances in a relative ranking and based on outcome performance-linked pay is awarded. GOAL – SETTING MODEL
A goal setting program in an organization requires careful planning. As shown in the figure, the first three factors in goal setting process are establishing the goal, achieving goal commitment, and overcoming resistance to goal acceptance. Goals can be established in a variety of ways. Best way is to set by joint participation between the employee and the supervisor. This method often leads to employee commitment, a crucial ingredient in effective goal setting.
Specific – precise and detailed
Measurable – with criteria for determining progress and success Achievable – attainable and action-oriented
Realistic – relevant and aligned
Time-related – grounded within a time-frame
For this purpose, an online template is circulated in the organization. Superiors fill out that form keeping in view the performance of their subordinate over the year. This feedback becomes the basis of the promotion of the employees. Superior is responsible for categorizing the employess in four category, namely – This categorization is done both on the basis of performance and the goals they were given. This whole system is commonly known as 90 degree appraisal system, also called 2 tiers.
After having analyzed the data, it was observed that there was appraisal in the organization. It is an effective tool, since it is on continuous basis. Performance appraisals in Tata Motors is satisfactory for its effective management and evaluation of staff. Appraisals here are helping individuals to develop, improve organizational performance, and feed into business planning. Performance appraisals enable management in monitoring of standards, agreeing expectations and objectives, and delegation of responsibilities and tasks. Staff performance appraisals also establish individual training needs and enable organizational training needs analysis and planning. 90degrees appraisal system or review is being followed in Tata Motors i.e feedback that comes from members of an employee’s immediate work circle most often, 360-degree feedback will include direct feedback from an employee’s subordinates, peers, and supervisor(s), as well as a self-evaluation. It can also include, in some cases, feedback from external sources, such as customers and suppliers or other interested stakeholders. The appraisal process is continuous here and encourages employee productivity with positive feedbacks. Findings :
The very concept of performance appraisal is marketed throughout the organization, people have accepted it and understood its importance to the organization. To market such a concept, it should not start at bottom, instead it should be started by the initiative of the top management. This would help in percolating down the concept to the advantage of all, which includes the top management as well as those below them. This means that the top management has to take a welcoming and positive approach towards the change that is intended to be brought. Further, at the time of confirmation also, the appraisal form should not lead to duplication of any information. Instead, detailed appraisal of the employee’s work must be done – which must incorporates both the work related as well as the other personal attributes that are important for work performance. It should be noted that the appraisal form for each job position should be different as each job has different knowledge and skill requirements.
There should not be a common appraisal form for every job position in the organization. The job and role expected from the employees should be decided well in advance and that too with the consensus with them. A neutral panel of people should do the appraisal and to avoid subjectivity to a marked extent, objective methods should be employed having quantifiable data. The time period for conducting the appraisal should be revised, so that the exercise becomes a continuous phenomenon. Transparency into the system should be ensured through the discussion about the employee’s performance with the employee concerned and trying to find out the grey areas so that training can be implemented to improve on that. The feedback doesn’t Come from multiple source. It should to increase the efficiency. Lack of Truth about Organization culture is conveyed through 90 degree of appraisal system. it should be overcome. Superiors response tend to be bias, which make employees unsatisfied.
Thus, a better system can be installed. Linking, Findings to the rewards can prove to be unfair. Transparency should be bought in appraisal system. Assesses denies the truth of negative feedback, as it’s done by one person. More parties should be involved. System can be used to humiliate people, if Employer and employee relations are not good. Ignores performance in terms of reaching goals, which can be disastrous for the organization. Ideally in the present day scenario, appraisal should be done, taking the views of all the concerned parties who have some bearing on the employee. But, since a change in the system is required, it cannot be a drastic one. It ought to be gradual and a change in the mindset of both the employees and the head is required.
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