chennai petroleum pms
TRANSCRIPT
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22 Jan 2011
PERFORMANCE MANAGEMENT
SYSTEMAND
Chennai Petroleum Corporation Limited( A group company ofIndianOil)
PERFORMANCE RELATED PAYat
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CPCL in Brief
Performance Management System
Performance Related Pay
CONTENTS
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CPCL (erstwhile MRL) wasestablished as a JV - PSUwith
GOI - 74 % NIOC, Iran - 13 %
AMOCO, USA - 13 %
AMOCO disinvested in1985. GOI disinvested toIOC in March, 2001
Now CPCL is a groupcompany of IndianOilwith shareholding of
51.89%. NIOC -15.40%,FI & others 32.71%
Inception
6th January, 1967
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Manali Refinery - Expansion1984 Capacity expanded to 5.6 MMTPA
1985 Propylene plant added1993 Capacity debottlenecked to 6.5 MMTPA
2004 Capacity was further expanded to 9.5 MMTPA
2010 Capacity enhanced to 10.5 MMTPA
Shri Rajiv Gandhi, Prime MinisterDedicating Expansion Project to the
Nation
Shri Rajiv Gandhi, Prime MinisterDedicating Expansion Project to the Nation
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Second Refinery at Cauvery
Basin1993 Refinery commissioned with 0.5 MMTPA capacity
2002 Capacity debottlenecked to 1.0 MMTPA
2003 A jetty constructed to receive crude oil
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Hexane
Extracts
Wax
Crumb Rubber Modified
Bitumen
Petrochemical Feedstocks
LPG
MS (Petrol)
SK (Kerosene)
ATF
Naphtha
HSD
LDO
FO
LSHS Bitumen
Lube Oil Base Stocks
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Performance ManagementSystem
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Purpose
Set up as a robust, transparent performancemeasuring system to reward according to
individual/ team performance, suitablydifferentiating higher performance, based on welldefined performance measures.
CPCL implemented e-PMS for officers in 2008-09
Three performance appraisal years completed. Departmental promotion, individual based
incentive and PRP disbursed based on ePMSoutput ratings and scores
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HR action point identified based on DPE O.M. dated26.11.2008, 09.02.2009 and 02.04.2009
Achieving Performance Differentiation (Bell CurveApproach) with Transparency
Introduced system intervention in e-PMS to improve Performance Bell Curve approach
Transparency and
Provide opportunity to make representation against the
entries and final grading
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ePMS seeks to determine individualperformance and potential through a system thatis:
Objective Transparent
Aligned to the Business needs
Robust
Easy to Use and Manage
Each of the above is better achieved in an
e-enabled system
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Goal Setting driven down to all grades
Improvement in Target Setting process
through stretch tool and 5 levels oftarget
Appraisal on Role Based Key Result
Areas and Competencies and levelbased Values and Potential
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Role based KRAs and KPIs
Special KRAs/Additional KRAs
Weightage to KPIs
Stretch Tool for target setting
Self Appraisal and Final rating
Performance diary
Monitoring of status
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AlignmentAlignment :: MOU targets cascadingMOU targets cascading
ObjectivityObjectivity :: Measurable targetsMeasurable targets
ConsistencyConsistency :: Standard Unique RolesStandard Unique RolesDifferentiationDifferentiation :: Stretch tool,ContinuousStretch tool,Continuous
rating scale, ratingrating scale, rating
distributiondistribution
TransparencyTransparency :: On line display of On line display of
Performance score &Performance score &
integrityintegrity
DevelopmentDevelopment :: Feedback & Reward schemeFeedback & Reward scheme14
ePMSePMS Features &Features &
MeasurementMeasurement
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Performance
Planning
Mid Year review
& feedback
Feedback
and Review
April - June
October
April
Ongoing monthlyreview and feedback
Final PerformanceAppraisal
April-May
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D/E grades
KRA
55%
Competency
20%
Value
10%
Potential
15%
H grades
KRA
45%
Competency
20%
Value
15%
Potential
20%
The relative weightages are as follows:
F/G grade
KRA
45%
Competency
20%
Value
15%
Potential
20%
A/B/C grades
KRA
60%
Competency
15%
Value
10%
Potential
15%
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Performance Planning
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Appraisee
completes
Performance
Plan on KRAsection by
setting
targets,
assigning
weightages
for each KPI
chosen in hisplan
Appraiser
assigns
stretch on
each chosentarget,
makes
modificatio
n if needed
& Appraiser
signs-off on
the Plan
Plan is
sent to
Reviewer
for inputsand Final
Sign-off
Final
Performance
Plan for
Appraisee is
ready
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Stretch is the degree of difficulty built intothe target at the time of performanceplanning
Ensures uniformity in degree of loading oftargets
Ensures balance across similar roles
Average stretch in a reporting groupcontrolled
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Dimensions of Stretch
Target relative to previous years
achievement Dependence of uncontrollables
Complexity
Skill requirements
Need for Innovation
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Performance Appraisal
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Competencies
Moving from critical attributes to competencies.Competencies are like an iceberg.
Competencies are the underlying characteristics ofindividual/s i.e. Knowledge, Skills, Attitudes,Values, Self-Concepts, Traits and Motives that havea causal relationship with effective and/ or superiorperformance in a job situation.
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Deep Rooted Lasting Predictive Measurable Trainable
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Performance AppraisalPerformance Appraisal--Soft SkillsSoft Skills
Values
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Adaptability to change
Collaboration
Cost Consciousness/
Resource utilisation
DependabilityQuality of Work /
Output
Managing Change
Boundary
Management
Entrepreneurial
LeadershipEnhancement of
Quality and Output
Senior ManagementJunior Management
Ability to shoulder higher responsibilities
Potential
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5-point continuous scale
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Significantly
below
expectations
Moderately
below
expectations
Just Meets
Expectations
Moderately
above
expectations
Significantly
above
expectations
1..1.999
Unsatisfactory
2...2.999
Fair
3.3.849
Satisfactory
3.85....4.349
Very Good
4.35...5.0
Outstanding
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Appraisee
completes
Self
Appraisal
on KPIs &
submits
Appraiser
determines
Rating on
each KPI,
Competency
, value and
potentialelement
System
calculates the
PMS Score as
per weightages
of elements and
overall weight of
sections based onKPI
competencies,
values and
potential
Reviewer
validates each
rating and
makes
changes, if any
Final KPI score
is used for PRP.
Overall grade is
finalised by
Countersigning
officer. This is
used for DPC
The overall
grade and
assessment of
integrity
communicated
through online
display
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PMS Calculation Sheet
DGM LevelKRA Weight Rating Stretch Individual KPI Score
45% (weight * rating * stretch)
KPI 1 20% 3.5 0.85 0.595
KPI 2 30% 4.7 0.75 1.058
KPI 3 40% 4.2 0.95 1.596
KPI 4 10% 2.0 0.60 0.120
KPI Score 3.369
Competency Weight Rating Individual Competency Score
20% (weight * rating)
Competency 1 33% 3 0.990Competency 2 33% 4 1.320
Competency 3 33% 3 0.990
Competency Score 3.300
Values Weight Rating Individual Values Score
15% (weight * rating)
Values 1 33% 4 1.320
Values 2 33% 3 0.990
Values 3 33% 4 1.320
Values Score 3.630
Potential Weight Rating Individual Potential Score
20% (weight * rating)
Potential 1 33% 4 1.320
Potential 2 33% 5 1.650
Potential 3 33% 4 1.320
Potential Score 4.290
Overall score 3.578
Overall Score= (KPI rating * KPI weight + Competency rating * Competency weight + values rating * Valuesweight + Potential rating * Potential weight )
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Well defined Roles /targets/clear expectationfor all officers
Performance cycle aligned with fiscal year Appraisal process streamlined/Better
monitoring/Online robust MIS Opportunity to differentiate performance (bell
curve approach) on a continuous linear scalefrom 1 to 5 and reward accordingly
Online display of Overall grade andassessment of integrity
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Smooth and timely
implementation of DPEguidelines on Variable pay/PRP
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As a part of Pay revision to Officers payment ofVariable Pay / Performance Related Pay (PRP) is
permitted
PRP is payable grade-wise, 40% of Basic Pay at
the minimum level and 200% at MDs level PRP to be linked to MOU Performance, Nil to
100%
PRP will come out of profits
60% from current years profit (max 3% of PBT) and
40% from 10% of incremental profit
This 3% / 5% of PBT is the Available Amount
PRP to be
max. 5%
of PBT
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PRP to be linked to Robust & transparent PMS.
Performance Ratings of Individual Officers to be
fitted into a Bell Curve so that not more than
10 to 15% of Executives are
Outstanding/Excellent. Similarly, 10% of
Executives should be graded as Below Par
To constitute a Remuneration Committee todecide the PRP pay pool and policy for its
distribution across the executives.
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The CPCL Board of Directors in its meeting held on27.07.2009 constituted a Remuneration Committee, headedby an Independent Director
The details of the Remuneration Committee of Board ofDirectors are given below :
1. Shri L.Sabaretnam - Chairman
2. Shri Venkatraman Srinivasan - Member
3. Shri B.N.Bankapur - Member
4. Shri N.C.Sridharan - Member
5. Shri S.Venkatramana - Member
Remuneration Committee
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PRP is calculated as under:
PRP Payout = P x Q x R x S x T
P = Annual Basic PayQ = Prescribed eligibility level for Companys MOU
Rating
R = Grade Incentive
S = Performance RatingT = Ratio of required amount to available amount
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MOU Rating PRP Eligibility
Excellent 100%
Very Good 80%
Good 60%
Fair 40%
Poor NIL
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Prescribed eligibility level for Companys MOU
Rating (Q) shall be as under:
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Grade Incentive Percentage (R) shall be as under:
Grade Grade Incentive
MD 200%
Directors 150%
H 70%
E, F & G 60%
C & D 50%A & B 40%
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Grade-wise Entitlement
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Performance Rating (S) Percentageapplicable to Officers shall be as follows:
S will be based on Individual Performance(S1) as well as Team Performance (S2) in thefollowing ratio:
Grade A-G = 50:50
GradeH = 25:75
Performance Rating
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Individual Performance Rating(S1) Percentage applicable toOfficers shall be as follows:
Category Percentile % ofPopulation
PRP Payout
I >85 15 100%
II >55 & upto 85 30 90%
III >25 & upto 55 30 80%
IV >10 & upto 25 15 70%
V 10 10 60%
VI 2.000-2.999 40%
VII
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S2 Team Performance Ratings
As effective performance of Teams is crucial for theachievement of organizational goals and to promoteteam spirit amongst the employees Team PerformanceRatings were introduced for arriving at performanceratings of the Individual Officer.
S2 - Based on achievement of stretched MoU Targetsfor the year 2009-10.
The Parameters under the stretched MoU Targets are
Operating Cost, Strategic Initiatives, PlantAvailability Factor, Accident free man hours, TPM,Inventory management, Safety incidents, etc
In 2009-10, 92.5% of targets were achieved.
Performance Rating
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Ratio of Available Amount to Required Amount (T) for
payment of PRP
Ratio of Available Amount to Reqd. Amount
Year PBT (Rs/ cr)
3% PBT(currentyear
profit)(Rs./cr)
2% PBT(incrementalprofit)
(Rs./cr)
CurrentyearPRP
(Rs/cr.)
Incremental PRP(Rs/cr.)
2007-08 1721.63 51.64 NA 15.61(T=1)
----
2008-09 Net loss NA NA Nil Nil
2009-10 683.7 20.51 13.67 cr 10.9
(T=1)
Beingfinalized
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FinancialYear
CAT I CAT II CAT III CAT IV CAT V
2007-08 14 24 34 20 8
2008-09 - - - - -
2009-10 15 30 29 15 11
Figures in %
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