NTPC LIMITED

PERFORMANCE MANAGEMENT SYSTEM

Objectives of NTPCs PMS P A C E Performance And Competence for Excellence

To accomplish overall organisational vision and mission by linking individual performance to company objectives To facilitate fulfilment of individual aspirations To build a culture of performance To encourage two-way communication between appraiser and appraisee To evaluate the potential of the appraisee to assume higher responsibilities in the organisational hierarchy To translate future skill requirements of the organisation into individual development plans To identify high performers and recognise them through rewards and incentives

Linking Strategy With Performance Management

Strategy Plans & Memorandum of Understanding

Development of Strategic Goals At the Top Leadership Level

Cascading Down of Goals at the Executive Director and General Manager/BUHs Level

Cascading Down of Goals at the Head of Department Level and other levels below

PACE is a five step process

Identify KPAs, constituents, weightages, measures and targets Identify functional and managerial competencies for the appraisee
Step 1 Step 2

Performance Planning

Mid-year Review

Joint review of performance Document changes in KPAs if any Document midyear review discussions

PMS Process

Communicatio n of score Developmental feedback

Feedback
Step 5

Annual Assessment
Step 3

Normalisation Process
Step 4

Assessment of KPAs, Competencies, Values and Potential by appraiser Training and Development Plans Review by reviewing officer

PACE Cycle (Important Dates)

Stages of PACE Performance Planning Mid Year Review Annual Assessment Normalization Communication of scores E1 to E5 1st to 25th January 1st to 15th July 15th Dec to 7th Jan 15th to 31st January 7th February E6 & above 1st to 25th April 1st to 15th October 1st to 25th April 1st to 25th May 31st May

Step #1: Performance Planning

KPA Setting Process
Corporate Plan MOUs

Process Steps
Set KPAs KPA setting for all appraisees in consultation with the reporting officer (appraiser) KPAs to be set by referring to the KPA Directory and taking inputs from the MoU targets, functional plans, individual responsibilities and cascading of KPAs from the top The KPAs, once finalised, to be signed off by the appraiser and the appraisee Identify Competencies Functional competencies for the appraisee to be identified and written in the PMS form by referring to the Competency Directory Managerial competencies to be identified from the prescribed set on the PMS form

Company Goals Unit Goals

Initiatives

Functional / Departmental Goals

Special Tasks

Individual Goals

Why is it critical?
Parameters for performance measurement are predefined Objectives are prioritized Individual performance is enhanced by clear definition of deliverables Role of individuals is clarified within overall organizational context

Principles of Formulating Key Performance Areas

Define Job Families Define Roles Develop KPAs

The critical few areas which define the employees contribution towards achievement of organizational objectives They are to be derived from MoU, functional plan, plant level plan, supervisors priorities etc. Select KPAs where there is greater element of control. KPAs of managers in a chain are linked to a large extent. Thus, many managers have the interest to support a managers KPAs.

A KPA based Performance Management System plays a critical role in achieving business strategy
Define Job Families Define Roles Develop KPAs

Achieve Business Strategy and Goals Communicate the strategy, goals and management priorities to the organisation Provide a vehicle to align the objectives, actions and behaviour of employees with the overall objectives of the organisation Provide control to management Track progress towards goals Assign responsibility and accountability Provide early warning to top management Enable the organisational and individual improvement process Gather data to measure performance Identify areas that need improvement Provide objective feedback and facilitate learning
A KPA based Performance Management System provides the rudder which management requires to steer the ship

The Nature of KPAs

Define Job Families Define Roles Develop KPAs

EDs

GM AGM

SelfResponsibility

Common Area Of Responsibility

Vertical & horizontal interdependence Area of self-responsibility

The Nature of KPAs: Three Types of Areas at the Workplace

Define Job Families Define Roles Develop KPAs

NO CONTROL

FULL CONTROL
PARTIAL CONTROL

Type of KPAs
Define Job Families Define Roles Develop KPAs

Numeric
PLF, Availability, Profit, Cost, Inventory

Time/ Deadline
Projects, Clearance, Maintenance, Land Acquisition, Accounts, Budgets, Engineering

Negative
Complaints, Grievance, Accidents, IR problems, man days lost, Rejection, etc.

The Nature of KPAs

IMPORTANCE LOW U R G E N C Y ACTIVTY TRAP HIGH KPAs (20% Activities Lead to 80% Results)

LOW

HIGH

FIRE FIGHTING

EMERGENCY

NORMS FOR KPAs

TO BE DRAWN FROM THE BUSINESS PLANS AS FAR AS POSSIBLE. THE NO. OF KPA INDICES SHOULD NOT BE MORE THAN EIGHT & THE NO.
OF CONSTITUENTS OF KPAs SHOULD NOT EXCEED 24 IN ALL INCLUDING THE COMMON INDICES.

THE UNIT OF MEASUREMENT FOR ANY KPA CAN ONLY BE ONE OF THE
THREE ,VIZ., % , TIME , Nos.

EACH KPA SHOULD CARRY AT LEAST 3 MARKS NO KPA CONSTITUENT SHOULD HAVE MARKS IN DECIMALS SUCH AS 3.5
OR 4.5.

EVERY

EXECUTIVE TO HAVE ATLEAST TWO COMMON INDICES. THE

MINIMUM MARKS FOR COMMON INDICES AT VARIOUS LEVELS SHOULD BE AS FOLLOWS.

Performance Planning
Performance Planning is done through a process of discussion between executive and the reporting officer to arrive at the performance targets for the Key Performance Areas (KPAs)

KPA Setting Process

Corporate Plan

MOUs Company Goals Unit Goals

Initiatives

Functional / Departmental Goals Special Tasks Individual Goals

Performance Planning

Identify the KPAs, their constituents (Activities), measures for each constituent, marks and three different performance (target) levels. While filling the form, the guidelines need to be kept in mind. KPA directory available for reference

Performance Planning
Example of KPAs: Coal Mining CBA Act 1957 (L3): Site
SNo KPA indices with marks Constituents of the KPA index Measure Weightage of constituents Target performance levels Stretch (100%) Intermediate (80%) Base (60%)

Application & Collection of relevant data (Khatian, Maps, Notifications etc) (Section 4) Index Preparation of land plan and land schedule (Section 4) Submission of land plan & land schedule to CC (Section 4) Preparation of Land Plan (Village wise, Plot details) (Section 7) Freezing of Block Boundary (Section 7) Verification of plot details (Section 7) Submission of land plan to CC (Section 7) Collecting data of nature and the extent of the land to be acquired (Section 9) Submission of data to CC (Section 7) Liaisoning for Section 10

Time Time Time Time Time Time Time Time Time Time

Assigning Weightage Understanding the Relative Importance of Each Key Performance Area. Understanding the Difficulty of Each Key Performance Area. Understanding Superiors Perspective. Discussing Weightage with the Superior. Convert the Weightage of Each KPA for the Different Levels of Performance.

PMS would comprise assessment on four parameters with different wieghtages for various levels
SNo. 1. KPA PMS Parameter E1-E3 80 10 E4 75 10 E5 65 10 E6-E8 50 10 E9 50 5

2 (a) Functional Competency Assessment 2 (b) Executive/Managerial Competency Assessment 3 4 Core Values Assessment Potential Assessment Total

05

05

10

15

15

05 Nil 100

05 05 100

05 10 100

15 10 100

20 10 100

For executives in lower grades, there is higher weightage on KPAs and functional competencies as the there is higher focus on achieving the immediate functional tasks The weightage on managerial competencies and values increases for an executive as the grade increases because the role requires achieving business goals by managing work of other employees

Competencies are defined under two heads: Functional and Managerial

Competencies A combination of the skills, knowledge and behaviors that are critical to A combination of the skills, knowledge and behaviors that are critical to the success of the organization and the achievement of individual the success of the organization and the achievement of individual performance goals performance goals

Types of Competencies

Functional

Managerial

Benefits of defining Competencies for each role

Competencies that are required for Behavioral in nature success in a particular function or Generally relevant to all job family employees Typically involve demonstrating technical/expert knowledge The opportunity to link HR systems with business objectives A common language to define the skills, knowledge and behaviors required for successful performance in positions across the organization An integrated approach to people issues Recruitment, PMS, Training etc. Improved quality of information on people within the organization

Job families have been defined on the basis of the roles performed by different departments within a function
Level Typical Grade
(1)

Define Job Families

Define Roles

Define functional competencies

L1

E6 E7

Electrical Maintenance
(Head)

Illustrative

L2

E5 E6
Main Plant

Transformers and switch yard maintenance

Electrical testing

Coal Handling Plant

L3

E1 E5
High Low tension tension Switch Switch Gears Gears Transformers and switch yard maintenance Generator Motors Electrical testing ESP

Low tension Switch Gears

High tension Switch Gears

Motor s

Note: (1) Actual grade varies from plant to plant depending up on size of the plant and experience of individual

Role

Roles and functional competencies Electrical Maintenance (Head)

Illustrative

Ensure high availability of all electrical equipment and systems in the power plant Minimise cost of electrical maintenance of the plant Supervision of maintenance measures in electrical maintenance division and ensuring quality of maintenance Ensure availability of spares and other infrastructure for maintenance Minimise response time to the customer (i.e. Operations) for handling routine day-to-day problems Optimise equipment lifecycle cost Ensure compliance with safety requirements Optimise Mean Time Between Failure (MTBF) and Mean Time To Repair (MTTR) Plan resource requirements for electrical maintenance manpower, materials and contracts Network with other electrical maintenance teams in the plant and at other locations to capture learning Coordination with R&M for equipment upgradation

Functional competence requirement

Technical knowledge of all electrical machines and equipment (e.g. generator, motors, transformers, switch gears, relays etc.) Understanding of working and history of equipment Knowledge of standard operating procedures with respect to maintenance of main plant, transformers, switch yard and coal handling plant Technical trouble shooting Knowledge of safety requirements Awareness of suppliers of material and services for electrical maintenance Knowledge of power generation process Knowledge of modern maintenance management practices and of NTPCs Maintenance Management Systems Spares inventory management Knowledge of statutory guidelines related to electrical equipment

Cross functional competence requirement

Knowledge of Engineering, Erection and Operations functions Knowledge of Mechanical, C&I and Civil Maintenance Knowledge of Finance, HR, IT and C&M

Managerial Competencies
S No 1 2 3 4 5 6 7 8 9 10 11 12 Competency Analytical Ability Learning Team Player Communication Skills Managerial Effectiveness Team Building Decision Making Business Attitude Leadership Vision and Strategic Thinking Resource Management and Administrative Ability Interpersonal Skills D D D E1-E5 M M M M M M M M M M M M E6-E7 E7A-E8 E9

13 System Orientation M Mandatory Competencies, Other shaded boxes Optional Competencies of which 3 need to be selected for assessment

Performance Planning
Managerial/Executive Competencies
Reporting officer and executive to choose three competencies in addition to mandatory competencies based upon direct and significant relevance to the executives area of responsibilities Mandatory competencies and the basket available depends on the level of executive

Performance Planning
Core Values

Assessment to be done at the end of the year

Potential Competencies E1-E5

Leadership System Orientation

E6-E7
Leadership System orientation

E7A-E8
Leadership

E9
Corporate citizenship

Networking and Networking and relationship relationship management management Coaching and counseling Coaching and counseling

Resource Management and admin ability Team Building

Resource management and admin ability Business Attitude

Vision and Strategic Thinking

Change management

Competencies assessment levels

Needs development ( 1-4); Meets expectations (5-6); Moderately above expectations (7-8); Significantly exceeds expectations (910).

Step #2: Mid-year Review

Why is it critical? Performance management is not an event but an ongoing process Helps in objective annual evaluation Provides early warnings of nonperformance; avoids year end surprises Opportunity to revisit KPAs, change weightages or measures Reinforces good performance in time Provides an opportunity for appraisee to express his thoughts on progress made and roadblocks encountered Process Steps Appraiser and appraisee to discuss changes in KPAs, if necessary All KPAs to be re-filled in the form if any changes are made in either the KPAs, weightages or targets Justification for change to be documented Self appraisal to be completed Appraiser to document mid year discussion

Guidelines for changing KPAs in the mid year Change in roles and responsibilities of appraisee (transfer, additional role etc.) Changes in organisational goals Unanticipated projects Abandonment of project as per corporate directive Situations beyond control of the appraisee such as accident or emergency situations

Step #3: Annual Assessment

Why is it critical? Formal process to ensure performance is assessed annually Opportunity for reviewing officer to offset rating biases Provides inputs for other HR systems: Rewards and Incentives Career Development Training and Development Process Steps for Appraiser and Appraisee Evaluate performance against KPAs by comparing actual performance to targets set Evaluate Functional/technical competencies (chosen at the beginning of the year) Managerial competencies (3 mandatory and 3 optional) Values & Potential Complete section on Special Achievements Transfer scores from all sections to the section on Total Marks for consolidation Complete Individual Training and Development Plan Process Steps for Revng Officer Review the marks given for each section by the appraiser check for overrating or underrating Hold discussion with appraiser in case changes in scores are required Rationale for changes in scores must be documented on PMS form Reviewing officer and appraiser sign-off on the PMS form

Annual Assessment

The reporting officer is to invite the concerned executive to participate in the annual assessment.

Annual Assessment
During annual assessment marks to be provided for the following: KPAs Functional/Technical competencies evaluated on 10 point scale) Managerial/Executive competencies evaluated on 10 point scale) Values (to be evaluated on 10 point scale) Potential competencies (to be evaluated on 10 point scale) Special achievements to be filled Individual training & development plan also needs to be filled (to (to be be

Annual Assessment

Step #4: Normalization Process

Objectives of Normalization Process Ensure parity and integrity by minimizing rater variation across various departments Enhance objectivity and transparency in the appraisal system

Final Output PMS scores from Appraiser Reviewer to check integrity Performance Management Committee
Top 30% Middle 65% Bottom 05%

Process Steps of Normalization Plot distribution of scores for the cluster to check for skewing within and across departments Checks to be made whether employees have been overrated or underrated on various PMS parameters such as: KPA assessment Competencies, Values and Potential assessment Make suitable adjustments to scores, where necessary, Scores (revised and unchanged) and reasons for moderation to be documented in PMS form All appraisees in the cluster must be categorized into Top 20%, Middle 70% and Bottom 10%

Depending upon the grade and location, employees would be normalized either at the Plant, RHQ or CC
Grade E1-E4 (to be normalised together) E5 Posted at Plants, Projects RHQ CC Plants, Projects RHQ CC E6 Plants, Projects, RHQ CC E7, E7A, E8 and E9 Plants, Projects, RHQ, CC To be normalized at Plant/ Project RHQ CC Plant/ project RHQ CC RHQ CC CC

Normalization
Principles of Normalization Cluster of different departments have been created (at various levels) for effective normalization of performance Minimum size of 15 executives in a cluster for performance normalization
The performance scores finalized by the Performance Management Committee and the categorization at the end of the normalization process are final

Departments with affinities congregated to form clusters

have

been

Example of Cluster

Depending upon the level, location and the number of executives in the given level function, clusters would be either at the plant, RHQ or CC level The PACE reports of executives who have been transferred during the course of an assessment year shall be normalized at the place of posting where he/she is working as on the last day of the relevant assessment cycle

Linkage of PMS to other HR systems

Outputs of PMS Linkage with other HR Systems Rewards System - Differential individual rewards for each category Career Development System PMS scores and relative rankings are one of the key inputs for the CDS

Top 30% Middle 65% Bottom 05%

PMS Training and Development System Inputs for Competency Assessment and Development Plans designing of training programmes Career Development System Competency profiles of employees would provide inputs for job rotation and placement decisions

Step #5: Communication of Score and Developmental Feedback

Performance Management Committee Output Process Steps Performance Management Committee output to be sent to HR Final individual scores Relative ranking Rationale for any changes made HR to consolidate final scores, relative ranking and feedback from Performance Management Committee for all employees HR to send final score sheet with relative ranking and feedback from Performance Management Committee (if any) to respective appraisers Appraisers to communicate final score, relative performance as well as developmental feedback to appraisee

Human Resources Final Score Relative Ranking (Top 20%; Middle 70%; Bottom 10%) Developmental Feedback

Appraiser

Employee

Appraisers to be provided training on performance feedback and counseling skills

Snapshot of the Contents of the PMS Policy Manual Applicability: PMS Policy would be applicable to: Objectives All Executives of NTPC (E1-E9) Executives on deputation joining PMS Process NTPC or those retaining lien while in
Performance Planning -MYR Annual Assessment -Normalisation Feedback, Coaching and Counselling
service of NTPC For those joining in the middle of assessment period with minimum service of 3 months during the period

PMS Linkage with Other HR Systems PMS Form

Performance Planning Mid-Year Review Assessment

Normalisation Process, Clusters and Constitution of Performance Management Committees

PMS calendar for E1 to E5

Process
Performance Planning

Activity
Issue of PMS Forms Performance Planning Submission to HR

Target Dates
Ist Dec. 15th Dec. 1st Jan. - 25th Jan 30th Jan. 20th June- 30th June 1st 15th July 21st July Ist Dec. 15th Dec. 15th Dec. 7th Jan.

Responsibility
HR Department Executive Reporting officer Reporting officer HR Department Executive Reporting officer Reporting officer HR Department Executive Reporting officer Reviewing Officer Reviewing officer Performance Management Committee Reporting officer (admin support from HR)

Mid Year Review Issue of PMS Form for Mid-year Review Mid Year Performance Review Submission to HR Annual Assessment Issue of PMS Form for Annual Assessment Annual Assessment

Submission to HR Normalisation Feedback Normalisation

12th Jan. 15th Jan- 31st Jan.

Performance Communication and 15th Feb. Feedback

System of Appeal
Incase of grievance on the individual performance scores finalized by the performance management committee (PMC), the grievance can be directly put up to an appellate authority (ies) which is one level above the PMC with a copy to concerned HR. Only such cases where change of marks is equal to or more than 5% of that awarded by the Reporting Officer shall be eligible for appeal

Review by Head of Deptt.

Location
Project/ Plants Project/ Plants RHQ RHQ CC CC All locations All locations

Level
E1 E4 E5 E1 to E4 E5 E1 to E4 E5 E6 E7/E7A

2nd Review level

Head of the department (PMC Member). Head of Plant/ Project to review Same as in the case of Plant/ Project Regional ED to review Head of the department. Head of the department of minimum E8 level. Head of the department of minimum E8 level. ED of Region / Functional ED to review.