mcs-5th module(itc)

8/2/2019 MCS-5th module(ITC)

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A

PROJECTREPORT

ON

MANAGEMENT CONTROL SYSTEM AT ITC

Subject: - Management Control System (MCS)

Prepared By: - Guided By:-

(1)Alay H. Desai (1038) Mrs. Chetna Makwana(2)Mitesh Rajput (1044) NCM,Bharuch(3)Nimesh Chavda (1049)

Narmada College of Management, Bharuch

Gujarat Technological University, Ahmedabad

MBA

April-2012


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ContentsCHAPTER 1 .................................................................................................................................................... 4

ITC LIMITED ................................................................................................................................................... 4

INTRODUCTION ......................................................................................................................................... 5

Organizational Structure ........................................................................................................................... 6

Chairman ............................................................................................................................................... 6

Executive Director ................................................................................................................................. 6

Non-Executive Director ......................................................................................................................... 7

Divisional / SBU Chief Executive Officer (CEO) ..................................................................................... 7

Control System .......................................................................................................................................... 7

ROLES OF VARIOUS ENTITIES ................................................................................................................ 7

Advantage ............................................................................................................................................. 8

Compensation Management and Remuneration System......................................................................... 8

Remuneration committee ..................................................................................................................... 8

Composition .......................................................................................................................................... 8

Remuneration of Directors ................................................................................................................... 8

Employee Stock Option Schemes.......................................................................................................... 9

Service Contracts, Severance Fee and Notice Period ........................................................................... 9

MANAGEMENT COMMUNICATION SYSTEM........................................................................................... 10

Policies on human Rights .................................................................................................................... 10

Policy to Ensure Respect for Human Rights Policy across the Supply Chain ...................................... 11

Policy to Prevent Discrimination at Workplace .................................................................................. 12

Policy on Freedom of Association ....................................................................................................... 13

Policy on Information and Consultation on Changes.......................................................................... 13

CHAPTER 2 .................................................................................................................................................. 15

ITC HOTELS .................................................................................................................................................. 15

STRATEGIC BUSINESS UNIT ITC FIVE BRANDS OF HOTELS................................................................ 16

ITC HOTELS- Luxury Collection, Organizational Structure ...................................................................... 16

The organizational structure at ITC Hotels ............................................................................................. 17

COMMUNICATION .................................................................................................................................. 18

PERFORMANCE MANAGEMENT AT ITC HOTELS ..................................................................................... 18

MANAGEMENT CONTROL IMPLICATIONS .............................................................................................. 20


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MANAGEMENT STYLE AND SIX SIGMA CONTROL SYSTEMS ................................................................... 20

1) WOW Ratios .................................................................................................................................... 21

2) Model Areas .................................................................................................................................... 21

3) Process Line Charts ......................................................................................................................... 21

Culture and the Management Style ........................................................................................................ 21

AWARDS .................................................................................................................................................. 22


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CHAPTER 1

ITC LIMITED


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INTRODUCTION

ITC is one of India's foremost private sector company. It is rated among the World's Best Big

Companies, Asia's 'Fab 50' and the World's Most Reputable Companies by Forbes magazine,

among India's Most Respected Companies by Business World and among India's Most Valuable

Companies by Business Today. ITC also ranks among India's top 10 `Most Valuable (Company)

Brands', in a study conducted by Brand Finance and published by the Economic Times.

The ancient Imperial Tobacco Company of India Limited is ITC Limited today, which was

incorporated in August 24, 1910. The growth after long way in its journey, ITC posted its face as

sector leader in its traditional businesses and spread over more than 60 locations across India.

ITC has commitment with the business segments of

Cigarettes Hotels Paperboards & Specialty Papers Packaging, Agri-Business Packaged Foods & Confectionery Information Technology Branded Apparel Personal Care Stationery Safety Matches and Other FMCG products.

The Company's ownership progressively Indianised and the name of the Company was changedto I.T.C. Limited in 1974. As a strategic backward integration for ITC's Cigarettes business, the

Packaging & Printing Business was set up in 1925. It is today India's most sophisticated

packaging house. Spanning the network the company has 11 Subsidiaries, 3 JV Companies and 2

Associate Companies. The Company continuously endeavors to enhance its wealth generating

capabilities in a globalizing environment.


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Organizational Structure

Board of Directors

Audit Committee Compensation Committee Nominations

Committee

Investor Services

Committee

Corporate Management Committee

Divisional/Strategic Business Unit (SBU)

Management Committees, each headed by a

Divisional/SBU Chief Executive

Corporate Functions, each headed by a HOD

Businesses include:

FMCG, Hotels, Paperboards, Specialty Papers& Packaging and Agri-Business

Corporate Functions include:

Planning and Treasury, Accounting, Legal,Secretarial, EHS, Human Resources,

Communications, Internal Audit and

Information Technology

Chairman The Chairman of ITC is the Chief Executive of the Company. He is the Chairman of

the Board and the CMC. His primary role is to provide leadership to the Board and the CMC for

realizing Company goals in accordance with the charter approved by the Board. He is

responsible, inter alia, for the working of the Board and the CMC, for ensuring that all relevantissues are on the agenda and for ensuring that all Directors and CMC members are enabled and

encouraged to play a full part in the activities of the Board and the CMC, respectively. He keeps

the Board informed on all matters of importance. He is also responsible for the balance of

membership of the Board, subject to Board and Shareholder approvals. He presides over General

Meetings of Shareholders.

Executive DirectorThe Executive Directors, as members of the CMC, contribute to the strategic

management of the Companys businesses within Board approved direction / framework.

Executive Directors assume overall responsibility for the strategic management including

governance processes and top management effectiveness for businesses / functions reporting tothem. In the context of the multi-business character of the Company, an Executive Director is in

the nature of a Managing Director for those businesses and functions reporting to him. As an

Executive Director accountable to the Board for a wholly owned subsidiary or its wholly owned

subsidiary, he acts as the custodian of ITCs interests and is responsible for its governance in

accordance with the charter approved by the Board.


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Non-Executive Director Non-Executive Directors, including Independent Directors, play a

critical role in imparting balance to the Board processes by bringing an independent judgment onissues of strategy, performance, resources, standards of Company conduct etc.

Divisional / SBU Chief Executive Officer (CEO)The Divisional / SBU CEO for a business has

the overall executive responsibility for its day-to-day operations and provides leadership to theDMC / SBU MC in its task of executive management of the business.

Control System

ROLES OF VARIOUS ENTITIES

Board of Directors (Board) The primary role of the Board is that of trusteeship to protect and

enhance shareholder value through strategic supervision of ITC, its wholly owned subsidiaries

and their wholly owned subsidiaries. As trustees, the Board ensures that the Company has clear

goals relating to shareholder value and its growth. The Board sets strategic goals and seeks

accountability for their fulfillment. The Board also provides direction and exercises appropriate

control to ensure that the Company is managed in a manner that fulfils stakeholders aspirations

and societal expectations. The Board, as part and parcel of its functioning, also periodically

reviews its role.

Corporate Management Committee (CMC) The primary role of the CMC is strategic

management of the Companys businesses within Board approved direction / framework. The

CMC operates under the strategic supervision and control of the Board.

Executivemanagement

Strategicmanagement

Strategicsupervision

BOARD OFDIRECTORS

CorporateManagementCommittee

Divisional /Strategic BusinessUnit (SBU) Chief


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Divisional Management Committee (DMC) / SBU

Management Committee (SBU MC): The primary role of the DMC / SBU MC is executive

management of the Divisional / SBU business to realize tactical and strategic objectives in

accordance with Board approved plan.

Advantage

The three-tier governance structure ensures that:

(a) Strategic supervision (on behalf of the shareholders), being free from involvement in the task

of strategic management of the Company, can be conducted by the Board with objectivity,

thereby sharpening accountability of management;

(b) Strategic management of the Company, uncluttered by the day-to-day tasks of executive

management, remains focused and energised; and

(c) Executive management of a Division or Business, free from collective strategic

responsibilities for ITC as a whole, focuses on enhancing the quality, efficiency and

effectiveness of the business.

Compensation Management and Remuneration System

Remuneration committee

The Remuneration Committee of the Board, under the nomenclature 'Compensation Committee',inter alia, recommends to the Board the compensation terms of Executive Directors and the

senior most level of management immediately below the Executive Directors. This Committeealso has the responsibility for administering the Employee Stock Option Schemes of theCompany.

Composition

The Compensation Committee presently comprises five Non-Executive Directors, four of whom

are Independent Directors. The Chairman of the Committee is an Independent Director.

The names of the members of the Compensation Committee, including its Chairman, are

provided under the section 'Board of Directors & Committees' in the Report and Accounts.

Remuneration of Directors

Remuneration of Chairman and other Executive Directors is determined by the CompensationCommittee comprising only Non-Executive Directors. The recommendations of the

Compensation Committee are considered and approved by the Board subject to the approval ofthe Shareholders. The Chairman and Executive Directors are entitled to Performance Bonus for

each financial year up to a maximum of 200% and 150% of their consolidated salary,


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respectively, and as may be determined by the Board on the recommendation of the

Compensation Committee, based on qualitative and quantitative assessment of Companyperformance.

Non-Executive Directors are entitled to remuneration by way of commission for each financial

year, up to a maximum of 6, 00,000/- individually, as approved by the Shareholders. Non-Executive Directors' commission is determined by the Board based, inter alia, on Company

performance and regulatory provisions and is payable on a uniform basis to reinforce theprinciple of collective responsibility. Non-Executive Directors are also entitled to sitting fees for

attending meetings of the Board and Committees thereof, the quantum of which is determined by

the Board, within the limit approved by the Shareholders. The sitting fees, as determined by theBoard, are presently 20,000/- for attending each meeting of the Board, Audit Committee,

Compensation Committee, Nominations Committee and Sustainability Committee and 5,000/-

for each meeting of the Investor Services Committee. Non-Executive Directors are also entitled

to coverage under Personal Accident Insurance.

Employee Stock Option Schemes

The Company granted 42,30,600 Options during the financial year to the eligible employees ofthe Company and some of its subsidiary companies. Pursuant to the Shareholders' approval on

23rd July, 2010 to the Bonus share issue, in the ratio of 1 Bonus share for every existing 1Ordinary share, adjustment was made to the outstanding Options with respect to the number of

Options and the exercise price, in accordance with the Employee Stock Option Schemes of the

Company read with the Securities and Exchange Board of India (Employee Stock OptionScheme and Employee Stock Purchase Scheme) Guidelines, 1999, consequent to which

1,92,80,432 Bonus Options were allocated during the year.

Service Contracts, Severance Fee and Notice Period

The appointment of the Executive Directors is governed by resolutions passed by the Board andthe Shareholders of the Company, which cover the terms and conditions of such appointment

read with the service rules of the Company. A separate Service Contract is not entered into by

the Company with those elevated to the Board from the management cadre, since they alreadyhave a Service Contract with the Company.

There is no separate provision for payment of severance fee under the resolutions governing theappointment of Executive Directors who have all been drawn from amongst the management

cadre. The statutory provisions will however apply. In terms of the Articles of Association of the

Company, a notice of one month is required to be given by a Director seeking to vacate officeand the resignation takes effect upon the expiration of such notice or its earlier acceptance by theBoard.

ITC also empowers the employees with the following options like:

Gives them an option to switch division if the person can perform better in some otherdivision.


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Company also encourage cross business movements for the capable employee. A constant focus is given on the career development of the employees- the organization

provides opportunities for learning and growth, it is the individual's responsibility toensure he/she enhances his/hers competencies to shoulder higher responsibilities.

There is no age barrier when it comes to growth. They have a proper performance system in place - The cornerstone of the performancemanagement system is the Appraisal System. The individual agrees to performance

objectives at the beginning of the year with his/her superiors. These objectives naturally

flow from the objectives of the unit/business. At the end of the year the individual's

performance is assessed against the objectives set. The appraisal attaches as much

importance to ''how'' results were achieved as to the results themselves. The rating isdetermined by the manager's boss and endorsed by his boss. Therefore, two individuals

are involved in assessing a manager's performance

The appraisal process also gives the individual an opportunity to share in a formalmanner his/her own career aspirations and what the individual needs from the

organization to enhance Their compensation package is very comprehensive - Apart from the monetary

component which comprises Consolidated Salary and Supplementary Allowance,managers are provided with quality accommodation, medical assistance for self and

family, leave travel assistance, etc. At middle and senior levels, managers are provided

with company maintained cars and the facility of a club membership for businesspurposes.

All managers are members of ITC's Retirement Funds, the Pension Scheme being one of

the most attractive in the country.Other benefits include the facility of holiday homes, assistance for further education/self

development etc.

MANAGEMENT COMMUNICATION SYSTEM

ITC management communication system that it follows across the groups to avoid asymmetry of

information within the group. This it has a very robust and a clear cut defined communication

strategy that it follows:

Policies on human Rights

ITC believes that all its employees must live with social and economic dignity and freedom,

regardless of nationality, gender, race, economic status or religion. In the management of itsbusinesses and operations therefore, ITC ensures that it upholds the spirit of human rights as

enshrined in existing international standards such as the Universal Declaration and theFundamental Human Rights Conventions of the ILO.


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PolicyITC upholds international human rights standards, does not condone human rights abuses, andcreates and nurtures a working environment where human rights are respected without prejudice.

Implementation

The Corporate Human Resources function of ITC is responsible for the Human Rights Policydesign, implementation and updation.

The policy is implemented at all locations of ITC through a set of separate policies and

procedures covering each of the main constituents of human rights applicable at the workplaces.

Monitoring & AuditThe assessment procedures for different constituents of this policy are defined against each

specific policy.

Consideration of Human Rights Impacts Across the Supply Chain

As a large and multi-product enterprise whose products are benchmarked nationally andinternationally, ITC's main supply chains can be grouped as follows:

1. For all its operations, technology, machinery and equipment are sourced fromreputed and globally benchmarked suppliers/vendors who are expected to follow

internationally accepted norms and standards on human rights.

2. ITC's major businesses are vertically integrated across several Divisions. Asubstantial part of the supply chain is therefore internal through strategic backward

linkages. Common values relating to human rights performance are shared acrossthis supply chain.

3. Being a major agri-based company, the agriculture sector is a major supplier ofinputs for its operations. The bulk of agricultural commodities are procured from

state controlled trading platforms and the open market.

4. A very small proportion of ITC's business consists of supply chains comprising localvendors and suppliers. The policy framework for such entities is enunciated

separately in 'Policy to Ensure Respect for Human Rights across the Supply Chain'.

Policy to Ensure Respect for Human Rights Policy across the Supply Chain

ITC provides products and services of superior quality and value by sourcing its technologies,

equipment and inputs from reputed international and Indian manufacturers and suppliers.Common values, relating to human rights performance, are shared across the entire supply chainbecause ITC is committed to the importance of a socially responsible and accountable supply

chain.

PolicyITC nurtures an internal working environment which respects human rights without prejudice.


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Likewise, it expects its business partners to establish a human rights compliant business

environment at the workplace.

ImplementationThe responsibility for implementation of this policy rests with the Divisional Chief Executive of

the concerned business and the Unit Manager. The policy is communicated internally throughpolicy manuals and intranet portals, and externally by the HR personnel of concerned units to

vendors/suppliers.

Monitoring & AuditITC has established a policy intent for mapping/monitoring progress and performance of existing

and potential vendors/suppliers on human rights performance.

Policy to Prevent Discrimination at Workplace

ITC acknowledges that every individual brings a different and unique set of perspectives and

capabilities to the team. A discrimination-free workplace for employees provides theenvironment in which diverse talents can bloom and be nurtured. This is achieved by ensuring

that a non-discrimination policy and practice is embedded across the Company in line withcorporate principles and benchmarked business practices.

PolicyITC's approach to its human resources is premised on the fundamental belief in fostering

meritocracy in the organization which, pari passu, promotes diversity and offers equality of

opportunity to all employees. ITC does not engage in or support direct or indirect discriminationin recruitment, compensation, access to training, promotion, termination or retirement based on

caste, religion, disability, gender, age, race, color, ancestry, marital status or affiliation with a

political, religious, or union organization or minority group.

ImplementationThe policy is communicated to all employees through induction programmes, policy manualsand intranet portals. The custodian of this policy is the head of each operational unit and

Divisional Chief Executives of the respective business. ITC's complaints resolution procedure is

premised on the freedom of employees to approach higher officials beyond his/her immediatesuperior. For the unionized employees, compliance of the policy is ensured through a robust

grievance handling procedure and the presence of a union that brings violations to the notice of

the unit HR head.

Monitoring & AuditingThe accountability for the application of the non-discrimination employment policy rests withthe Unit Head who reviews anti-discriminatory complaints annually or on a case-by-case basis.

The Corporate Human Resources function conducts non-discrimination reviews annually on a

sample basis with unit heads and through on-site assessments.


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Policy on Freedom of Association

ITC's culture is characterized by cooperative relationships and high employee involvement thatrelies on building partnerships and interdependence. Adhering to these principles has helped

build, sustain and strengthen harmonious employee relations in the organisation.

PolicyITC respects the employees' right to organize themselves into interest groups as initiatives of the

workers, independent from supervision by the management. In keeping with the spirit of this

Policy, employees are not discriminated against for exercising this right.

ImplementationThe policy is communicated to all employees through induction programmes, policy manualsand intranet portals. The custodian of this policy is the HR head of each operational unit who

reports directly to Unit Head on such issues. The actualization of this policy is evident from the

joint agreements and minutes that are signed between the union and the management.

Monitoring & AuditEach ITC Unit has appropriate systems and checks to ensure compliance with the Policy andstatutory provisions, including means for filing of grievances, collective bargaining agreements

and minutes from worker meetings. Compliance with the Policy is regularly monitored by

Divisional and Corporate HR.

Policy on Information and Consultation on Changes

ITC's core values support an employee engagement process that aligns its employees with ashared vision and purpose of the Company in the belief that every individual brings a different

perspective and capability to the team. ITC thus harnesses the creative potential of all itsemployees by promoting a culture of partnerships to unleash relevant synergies between different

groups of employees.

PolicyAll major changes in operations involving work processes, manning norms and otherproductivity linked issues are carried out after discussions with the employees and the

recognized unions at each location.

ImplementationBusiness plans are shared with employees at all units through a series of formal communication

meetings, and through the intranet portals. Unionised employees at the concerned units are

informed of all major changes well in advance through their representatives.

The responsibility for the implementation of the policy rests with the Unit's HR Department inthe case of unionized employees and with the concerned Divisional Management Committees for

other employees.


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The employees are given enough time to consider the implications of change and an opportunity

to discuss their apprehensions, if any, with the management.

The Policy is actualized through consultative meetings with representatives of employees,

culminating in joint minutes/agreements.

Monitoring & AuditingCompliance with the Policy is regularly monitored by the Unit Head.


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CHAPTER 2

ITC HOTELS


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STRATEGIC BUSINESS UNIT ITC FIVE BRANDS OF HOTELS

ITC Hotels - Luxury Collection are super deluxe and premium hotels, located at strategicbusiness and leisure locations.

ITC-Welcome group Sheraton Hotels offer warm, comforting services to the global travelerand a chance to connect.

Welcome Hotels offer five-star hospitality for the discerning business and leisure traveler.Fortune Hotels offer full service properties all over India, including smaller towns and cities,

ideal for the budget traveler.

Welcome Heritage brings together a chain of palaces, forts, havelis and resorts that offer aunique experience.

ITC HOTELS- Luxury Collection, Organizational Structure

ITC Hotels follows a functional organizational structure. This type of structure involves amanager who brings specialized knowledge to bear on decisions related to a specific function, as

contrasted with the general-purpose manager who lacks that specialized knowledge. A skilled

marketing manager and a skilled production manager are likely to make better decisions in their

fields than would a manager responsible for both functions. Moreover, the skilled specialist

should be able to supervise workers in the same function better than the generalist would, just as

skilled higher-level managers should be able to provide better supervision of lower-level

managers in the same or similar function. Thus, an important advantage of a functional structure

is efficiency.

There are even a few disadvantages attached to a functional structure. First, in a functionalorganization there is no unambiguous way of determining the effectiveness of the separate

functional managers because each function contributes jointly to the organizations final output.

Therefore, there is no way of measuring what fraction of determining how much of the profit

was earned respectively by the several production departments, the product engineering

department and the sales office.

Second, if the organization consists of managers in one function who report to higher-level

managers in the same function who in turn, report to still high-level managers in that function,

then a dispute between managers of different functions can be resolved only at the top, even

though it may have originated at a much lower organizational level.

Thirdly, functional structures are inadequate for a firm with diversified products and markets.

Finally, functional structures prevent cross-functional coordination in areas such as new product

development. However, this problem can be eliminated by supplementing the vertical functional

structure with lateral cross-functional processes such as cross-functional job rotation and team-

based rewards.


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The organizational structure at ITC Hotels

The organizational structure at ITC Hotels consists of eight functional departments, namely:

1.Food and Beverages Production2.Food and Beverages Service3.Front Office4.Housekeeping5.Engineering6.Sales7.Finance8.Human ResourceEvery department has its respective head of the department (HOD) as shown in the chart below:

Under every department, there are two to three executives who report to the supervisor above

them and to the respective HODs and all the HODs report to the general manager, who is at the

top of the hierarchy. Each department has a clearly defined responsibility and thereby

accountability and authority attached to it.

GENERALMANAGER

F&B MANAGER

ASSISTANT F&BMANAGER

F&B EXECUTIVE

EXECUTIVE CHEF

SENIOR SOUSCHEF

JUNIOR SOUSCHEF

ASSISTANTMASTER CHEF

FRONT OFFICEMANAGER

ASSISTAN FRONTOFFICE MANAGER

FRONT OFFICEEXECUTIVE

EXECUTIVEHOUSEKEEPER

ASSISTANTHOUSEKEEPER

HOUSEKEEPINGEXECUTIVE

CHIEF ENGINEER

ASSISTANT CHIEFENGINEER

SALES MANAGER

ASSISTANT SALESMANAGER

SALES EXECUTIVE

UNIT FINANACIALCONTROLLER

ASSISTANTFINANCIAL

CONTROLLER

HUMANRESOURCEMANAGER

ASSISTANT HRMANAGER

HHR EXECUTIVE

MANAGERLEARNINGSERVICES


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COMMUNICATION

ITC Hotels follow a participative, two-way communication system where the flow of

information is from top to bottom and from the bottom to top.

Since, it is a service industry where the organization delivers experience, there needs to be

proper coordination and communication among all the departments which is maintained throughdaily morning meetings among all the HODs and the general manager to discuss the guest

feedback and daily issues.

PERFORMANCE MANAGEMENT AT ITC HOTELS

Every organization has goals. An important role of management control systems is to motivate

organizational members to attain those goals.

Each organization has a strategy and the strategys success depends on its soundness. A

performance management system is simply a mechanism that improves the likelihood that the

organization will implement its strategies successfully.

What needs to be done here, is designing a performance measurement system, that measures and

rewards people to carry on tasks and targets that help the company achieve its strategy.

Each professional working in the organization is a cost to company and return on this investment

should be calculated wisely. This is taken care of by appraising every e mployees performance

from time to time and making his contribution to the overall organization as objective as

possible.

A doctors skill can be measured by the success ratio of operations, but in a service unit, where

each guest is looking for a different experience, its difficult to suggest the skills of peopleinvolved very objectively.

The performances of employees who are in constant touch with the guests are more scrutinized

in behavioral aspects while those involved in providing food and beverage have a lot to do with

their skills and knowledge in their area.

The management realizes the importance of appraising and evaluating each employees

contribution objectively, and hence follows an yearly appraisal system.

The various attributes on which they are rated are:

1) JOB KNOWLEDGE2) SKILLS3) CO-OPERATION4) RESPONSIBILITY5) ATTITUDE TOWARDS WORK6) INITIATIVE


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7) EFFICIENCY8) ATTENDANCE9) PUNCTUALITY10)DISCIPLINE

Each of these attributes carries certain weight age depending upon their importance to theoverall performance target of an individual.

The employee is scored on a likert scale of 1 to 5, each level representing a certain level ofbehavior or skill. The score is further multiplied to the weights and scores for each attribute

is finally added.

Score for each attribute : weight of attribute * score on likert scale Depending upon the overall score, there are various actions that are taken and ratings are

provided to the concerned employee.

Such an appraisal system followed by ITC HOTELS is known as FACTOR RATINGMETHOD

For e.g.:

SCORE OBSERVATION RATING RECOMMENDATIONS

0-25 Re Rating Poor Worker File needs to be built

25-60 Needs further input Average Worker One increment

60-80 Needs to be groomed Good Two increments

80-100 Should be retained Excellent Three

increments/Promotion

The likert scale so developed is a modification of BARS, i.e. Behavioral Anchored Rating

Scale.

Behaviorally anchored rating scales (BARS) are rating scales whose scale points are defined by

statements of effective and ineffective behaviors. They are said to be behaviorally anchored in

that the scales represent a continuum of descriptive statements of behaviors ranging from least to

most effective. An evaluator must indicate which behavior on each scale best describes an

employee's performance.


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Each attribute in the appraisal tells about different levels of behaviors. For e.g.: CO-

OPERATION.

ATTRIBUTE 0 1 2 3 4

CO

OPERATION

Co-operates

grudgingly,inclined to

betroublesome

Gives limited

Co operation

Co operates

to anadequate

degree

Co operates

willingly, fitseasily to his

group

Co operates

willingly andhelps others fit

into the groupeasily.

MANAGEMENT CONTROL IMPLICATIONS

Following a strict and regular appraisal system helps the organization have a clear account of

average, good and excellent performers and further helps in taking important decisions that

involve considerable budget, time and other resources:

1) Training of individuals, deciding who needs to be trained and in which area.2) Deciding on who needs what level of increments.3) Understanding who needs to be retained in the organization and who needs to be layed

off.

4) Controlling employees behavior and check its sync with the organization culture andvalues.

MANAGEMENT STYLE AND SIX SIGMA CONTROL SYSTEMS

With over 100 hotels at more than 90 destinations across the country, ITC Hotels offerstraditional Indian Hospitality combined with globally benchmarked services and sustainable

business practices. A good indicator of this dedication to excellence is the fact that ITC Hotels

have been regularly voted as amongst the best employers in Asia in the hospitality sector (latest

being in 2009).

ITC Hotels is well known for its participative style of management. Everyday the HODs and

General Managers meet to discuss feedback on the previous days performance. Employees are

constantly encouraged to recommend any process improvements and are regularly asked for

recommendations.

In addition to this the company is following the requirements of Six Sigma inorder to ensure

quality control. A separate department has been set up in each of its hotels called the 6 Sigma

Assurance Department.This department is responsible for quality control and maintaining

operational efficiency.The department comprises of 2 to 3 people and focuses on streamlining

hotel processes.The following are a few examples of the work this department is responsible

for:-


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1) WOW Ratios

At the daily meetings each department submits its WOW ratios. These ratios indicate the

performance of each department on a likert scale as per the previous day. The performance of

each department is compared on a monthly basis the best performing department is rewarded for

theyre performance in the form of incentives and perks.

2) Model Areas

Each month departments have to take up Model Areas. Each department has to choose a specific

area within the organization ,not necessarily relating to their functional area , for the purpose of

improvement.

For example: Assuming the HR department decided to undertake improvement of the laundry

room of the hotel. They would be required to submit their recommendations and costing to the

senior management on how they can improve this space. Each of the hotels department then

compete with each other on the basis of the above mentioned plans for improvement and the best

recommendation is rewarded.

3) Process Line Charts

The 6 Sigma Assurance department also looks at Process line charts.Which clearly defines the

process flow of any department or function. The department look into the old process charts and

tries to make process improvements .Based on industry benchmarks and research it then goes

ahead and creates a new improved process chart.

For example: The process of availing of a duplicate key in case an employee misplaced his/hers

involved contacting an HR representative and gaining access to the duplicate. The problem with

this process was that the HR representatives left the office at 6 every evening and in case of an

emergency duplicate keys were not available. The new process required two individuals who

would be incharge of duplicate keys in 2 shifts i.e one in the morning and one at night.

Permission for access would be granted by an HR representative over the phone and this

improved the efficiency of the process and saved time.

Thus the Six Sigma Assurance Department plays a major role in controlling employee

performance by motivating them through rewards and incentives. Moreover constant

involvement of employee in process improvements encourages a sense of loyalty and ensures

that the hotel is adopting best practices.

Culture and the Management Style

The culture, as well as the management style, has been kept in line with ITCs core values,

promoting diversity and offering equality of opportunity to all employees fostering meritocracy

in the organisation. It acknowledges that every individual brings a different and unique set of

perspectives and capabilities to the team. A discrimination-free workplace for employees


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provides the environment in which diverse talents can bloom and be nurtured. This is achieved

by ensuring that a non-discrimination policy and practice is embedded across the Company in

line with corporate principles and benchmarked business practices. There have been various

examples to prove why the subsidiary is recognized and praised worldwide-

India s bes t companies to work for 2009 -2010

Rank: 14

Gender Ratio (F:M): 1:11.8

Employee Turnover: 9%

Workplace Quotient:

The hotel community works as one big family, serving dollops of commitment to a common

goal.

Best Practices:

Its a never-ending engagement. There is postretirement counseling on health and finance

matters for the retiree and spouse. They are also provided medical reimbursement as long as theylive. With more than 200 associates/managers from the DAP (Differently-Abled People)

category, the company conducts elaborate programmes to educate all employees on disabilities

and how to work with disabled people.

AWARDS

ITC Hote ls award ed as Hewit t Bes t Empl oyers in As ia fo r the Year

Indias management culture has been moving away from a traditional top-down culture whereage equals seniority toward a merit-driven system that promotes young achievers and strives to

bring out the best in employees. In the same regards, Hewitt produced a separate list of the fivebest hotel employers, the winners of this category being Four Seasons, Resort Langkawi,

Malaysia, Indias ITC Hotels, JW Marriott Hotel Bangkok, The Conrad Bangkok and The Ritz -

Carlton Millenia, Singapore.

According to Hewitts research, Hotels as an industry understood very strongly the link between

the employee, the interaction with the customers, and business results.

Government of India honored ITC Hotels with Best Employer National Award for

Empow erment of Persons wi th Disabi li ti es

The Government of India, Ministry of Social Justice and Empowerment had conferred ITC

Hotels with the 2011 Best Employer National Award for Empowerment of Persons withDisabilities. The award was presented by Minister of Social Justice and Empowerment, Shri

Mukul Wasnik, in recognition of ITCs philosophy of an equal opportunities employer in

keeping with its policy to ensure respect for Humans Rights and Prevention of Discrimination atWorkplace.


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Dipak Haksar, COO, ITC Hotels, said, The recognition further validated the fact that our

company starts with the work culture and weve really focused on making ITC Welcomgroup an

organization where employees grow beyond professionals.''

ITC Welcome group - empowering di ff er en tl y-abled peopl e

-Everyone should be treated with sympathy and empathy.

-Opportunity to work and become self-sufficient

-People involved in Housekeeping, Teleworking, Bakery and as Musicians.

How do th ey do it ?

Over the years, ITC Hotels has been redefining standards, showcasing the best from India to the

world. There lies a spirit of excellence that pervades at all ITC Hotels in key business and leisure

locations.

ITC Hotels is the only hospitality chain, perhaps in the world to have a unique programme like

the "Welcomlegionnaire". This competitive hotel management programme, recruits students on

their completion of class 12 for a 4-year course. The first two years are devoted to the basics in

hoteliering, personality development, culture building, etc., along with a bachelors in Tourism

Administration. The remaining 2 years are spent as Hotel Executive Trainees in sync with in

house Management Training Programmes, thus providing the students valuable hands on

practical experiences with solid theoretical knowledge. The two institutes are-

The Welcomgroup Management Institute, Gurgaon The Welcomlegionnaire Programme
http://www.itchotels.in/wmi/index.htmlhttp://www.itchotels.in/wmi/index.html

mcs-5th module(itc)

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