SHAHEED ZULFIQAR ALI BHUTTO INSTITUTE OF SCIENCE

AND TECHNOLOGY

SEMESTER: SPRING 2008

PERFORMANCE APPRAISAL

LECTURER: MR. JAHANGIR ALI

PERFORMANCE MANAGEMENT SYSTEM AT SHELL

NAMES ID

ANJUM

ARTI

ASMA SETHI

MANAHIL RASHID KHATRI

0735135

SHAHBAZ

ACKNOWLEDGEMENT

We would like to thank God Almighty for providing means that enabled us to conduct the

research.

We would also like to thank Sir Jahangir for his valuable and constant support in helping

us accomplish our report.

Our warm gratitude extends towards our families who provided ample support and love

during the research.

EXECUTIVE SUMMARY

Research was conducted on the performance management system (PMS) implemented at

Shell. The process was gauged along with evaluation techniques and results of appraisal.

Other human resource functions were also assessed and suggestions for improvement

were granted in context of the already efficient PMS at Shell.

Shell employs a very effective PMS that is uniform all over the globe for all its

employees. In the report we have discussed the importance of PMS at Shell. Its process

has been highlighted with special emphasis on the Goals and Performance Appraisal

(GPA), Individual Development Plan (IDP) and Individual Performance Review (IPR).

In the last part of the report, we tagged compensation and benefits, career planning, team

work, employee relations, measurement criteria and competence based rewards with our

suggestions to further improve the PMS at Shell.

INTRODUCTION

Shell brand name enjoys a 100-year history, dating back to 1899 when Asiatic Petroleum,

began importing kerosene oil from Azerbaijan into the subcontinent. It is a global group

of energy and petrochemical companies. Currently it is operating in 140 countries and

territories and employs around 108,000 people worldwide.

Shell explores for and produces oil and gas to create essential products from them, such

as fuels and petrochemicals. Currently its exploration and production network has been

expanded across 38 countries worldwide with employees around 17,500, along with a

further 10,000 contractors and joint venture employees. Shell has also pioneered the gas

industry for more than 30 years. It’s now one of the largest equity producers of natural

gas with a fast-growing presence in the Power business.

Shell emphasizes a lot on its core values. These values are honesty, integrity and respect

which have formed the basis of its General Business Principles for 30 years and remain

as important as ever. The company is convinced that its short- and long-term business

success depends on finding environmentally and socially responsible ways to help meet

the world’s future energy needs.

It also has downstream classes of businesses (manufacturing, supply and distribution,

retail, business to business, chemicals and lubricants businesses), trading and shipping

business within the Shell Group and Global solutions which provides business and

operational consultancy, technical services, and research and development expertise to

the energy industry world-wide.

The strategy of Shell is more of an upstream and profitable downstream. The company

aims to engage efficiently, responsibly and profitably in oil, oil products, gas, chemicals

and other selected businesses and to participate in the search for and development of

other sources of energy to meet evolving customer needs and the world’s growing

demand for energy.

The HR professionals contribute to Shell’s bottom line performance and long-term

sustainability. They work diligently to support the business, but often forget the need to

build a shared understanding within the HR function of their roles and celebrate the

success they work so hard to achieve.

HUMAN RESOURCE MANAGEMENT AT

SHELLHR professionals of Shell continuously work hard to enhance the performance and long

term sustainability of Shell. HR collaborates with the business leaders around the world.

It solves employee issue and supports their interests. It implements robust processes and

procedures along with effective functional strategic plans to deliver better business

results. However, there is one hindrance of establishing a shared understanding of their

role within the HR function.

STRATEGY ADOPTED BY HR

There is one unique strategy named as plan, carried out by HR known as ‘More Upstream

and Profitable Downstream’. This plan clarifies the functional accountabilities and has

the capability to bring any fundamental transformation within the organization. This plan

is central part of functional leadership role at Shell and is directly related to the overall

strategy.

There are four key strategic priorities that are to be undertaken by Shell across the world:

HR PRIORITIES

1. Talent Now and a Sustainable Future Supply- HR have a critical role in meeting

the immediate resourcing needs of the businesses. It ensures that needs have to be

met in 5-10 years time.

2. Strengthening Leadership and Deepening Professionalism - HR supports and

encourages leadership development at all levels.

3. Improving Individual and Organizational Performance- HR provides clear

individual goals and objectives, appraise performance, and reward superior

performance.

4. Increase Efficiency and Effectiveness of HR Systems and Processes- HR strives

for first quartile efficiency in the delivery of basic processes. In order to achieve

such efficiency, they do proper benchmarking and focus on continuous

improvement.

ROLE OF HR

All the HR business professionals work collectively as a global HR community to

maximize alignment and increase efficiency. Ulrich Model is being used as a framework

for defining the roles and activities carried out by entire HR. The various roles and

activities defined are:

Business Player:

Attraction and recruitment processes

Leadership and talent identification and assessment

 Skill pool management and talent reviews

Organizational analysis and design

Aligning business strategy with individual objectives

Change Agent:

Strategy planning and culture assessment

Change management planning

Mergers and acquisition support

Behavioral feedback and coaching

Employee communications

Business improvement

Learning strategies

Line/Staff Support:

Employee advocate

Performance management processes

Staff opinion surveys

Consultation

Employee issues resolution and relations

Policies and systems

Remuneration and benefits

Administrative Expert:

Transactional activities

Shared services - outsourcing and off shoring

Payroll administration

Employee services

Job evaluation processes

Human Resource

Last Updated 2005

PERFORMANCE MANAGEMENT SYSTEM: A

GENERAL PERSPECTIVE

Performance Management System is the heart of any ‘people management’ process in

the organization. Performance Management involves the careful selection of employees

communication of work expectations, monitoring of performance, feedback and support

for ongoing development and recognition for excellent performance. It enhances

organizational success through increased employee clarity regarding organizational goals

and individual contributions towards goals. A unified approach to performance

management—one that ties together the organizational and individual aspects— is

discussed in the following pages.

COMPONENTS OF PERFORMANCE MANAGEMENT

Performance management is an amalgamation of five missing linkages. These are

combined together through the organizational and individual aspects. These core

components include:

Align the objectives, resources and budgets of the different parts of the

organization and the goals, opportunities and quotas of individuals.

Measure organizational and individual performance.

Reward individuals for performance.

Report organizational and individual performance.

Analyze organizational and individual strategy execution.

Alignment

An organization consists of business units, departments and divisions, each with its own

set of objectives. Alignment must exist between the objectives of the various

organizational entities and the strategic objectives of the organization itself. This

grouping must be frequently adjusted — at least quarterly — in response to new

objectives, changes in the business environment or problems with achieving current

objectives.

Aligning employees involves cascading strategic objectives down to all levels of the

workforce. This enables members of the workforce to understand how their performance

will be measured and evaluated, and also how their efforts tie into the overall strategy.

This linkage between organizational objectives and individual goals and activities is at

the core of effective performance management.

Measurement

Although all organizations measure performance, most focus on financial metrics and

meeting government regulations. An organization that only measures historical financial

performance, however, is focusing on the past rather than driving future performance.

To drive performance, one must link organizational objectives and individual employee

goals — and their associated metrics of performance — with the measurement of actual

organizational and individual performance. Measurement is of critical value in linking

pay to performance and in laying out a feedback mechanism that allows one to adjust

their strategy and tactics over time.

Measuring individual performance through a tight link to goal achievement defines

expectations for the employees, thus providing an equitable and predictable basis for

accountability. It also provides a way for management to assess employee capabilities.

Such measurement provides a consistent and objective basis for determination of

employee rewards.

Frequent, objective measurement facilitates in assessing whether the organization is on

the right path or needs to adjust objectives—and the goals of individual employees—to

drive desired behaviors.

Reward

Linking performance measurement to rewards is the power steering that enables the

organization to drive the behaviors of the entire workforce and keep them on the

straightest path to achieving the organization’s strategic objectives.

All employees in the organization should be on a variable pay plan that is linked to their

individual performance. Although rewarding people based only on individual

performance may make for an overtly competitive culture, teamwork and collaborative

effort can be factored in to preclude unhealthy competition.

Report

Reporting is about providing timely information to executives, managers and individuals

about the performance of the organization and its people. However, for most

organizations reporting is more a matter of compliance with government regulations.

Effective reporting allows you to see the degree of objective and goal achievement and

provides a feedback mechanism that allows you to adjust your strategy, tactics, objectives

and goals over time.

Analyze

Analysis answers the why and how of performance management. The purpose of analysis

is to initiate change—changes in strategy, in tactics, in personnel, in budgets and many

other aspects of managing the enterprise.

Analysis of organizational performance provides actionable, timely, meaningful

information that enables the organization to take corrective action proactively and to

learn and adapt rapidly. Analysis of individual performance enables managers to help

employees understand how specific behaviors affect the company’s performance, identify

trouble points in processes that are restricting individual performance and make the best

use of resources by optimally aligning people and activities.

DRIVING PERFORMANCE

In essence, effective performance management is when every part of the organization and

every person is drumming to the same beat and marching in step.

For many organizations, becoming performance-driven might cause a cultural upheaval

that, at least in its early stages, results in turmoil, a perception of chaos and a lot of

discomfort. It can trigger turnover of long-time employees who do not like to be held

accountable for goal achievement and who feel entitled to a certain level of pay

regardless of their performance. And it might cost money as they make the initial

investments.

But with the leadership and commitment of senior management, becoming performance-

driven will lead to dramatic improvements in performance in financial terms, with respect

to employee productivity and morale and in the flexibility to quickly adapt to change.

The effort will be well worth it.

PURPOSE OF PERFORMANCE MANAGEMENT

Performance management has many advantages. It greatly facilitates the organization to:

Ensure that the work plans of the employees are effectively directed towards the

strategic direction of the organization. It significantly motivates employees to

accomplish their best.

Improve performance by establishing clear communication between the manager

and the employee about what he/she is expected to accomplish. It also provides

ongoing, constructive feedback on performance and reveals poor areas that need

improvement.

Identify skills and abilities of each employee so that work assignments build and

reflect on employee’s strength.

Train & develop the staff in the right way so they successfully accomplish their

work and career goals. All this is done by identifying training needs and

development opportunities.

Formulate administrative decisions that support decision making regarding

promotions, terminations, compensation and rewards.

Performance measurement is designed to highlight achievements and reveal strategic and

operational issues that hinder progress toward the attainment of the organization’s

mission. It is not designed or intended for use in assessing performance at the individual

level. It is an on-going progress, and is not a once a year process like performance

appraisal was initially where employees met once a year to look back at the work done

during the previous year and to evaluate what was accomplished. Performance

management on the other hand, is the process employers use to make sure that employees

are working towards organizational goals.

ROADBLOCKS TO PERFORMANCE MANAGEMENT

Rating scales are applied inconsistently

Evaluators are not trained leading to rater errors

Supervisors do not value the procedure and use it for reprimanding or arguing

Standards and criteria are not objective, relevant and realistic or are unrelated to

the work performed.

Failure to use evaluation results for decision.

It is highly personal and time consuming

Supervisors are reluctant to measure performance of the very employees they

depend on to get work accomplished from.

TYPES OF PERFORMANCE APPRAISALS

Self Appraisal: when the employee is asked to evaluate his/her own work

Peer Appraisal: staff of equal rank within the organization are asked to evaluate

the employee

Team Appraisal: similar to peer appraisals; employees who work as a part of the

team are asked to evaluate the team work.

Assessment centre: the employee is assessed by professional assessors using

several types of evaluation such as work simulations and actual activities

360-degree Appraisal: the employee’s work is reviewed by gathering input from

representatives of all the groups the employee interacts with as supervisors, peers,

subordinates and clients.

Management by Objectives: the employee’s achievements of work objectives

that are set in collaboration with his/her supervisor are assessed.

Combination Methods: some organizations combine different methods into their

performance management process. Some organizations include an evaluation of

competencies such as the KSAs that distinguish superior performance.

Performance Appraisal Ratings and Forms

Organizations usually establish appraisal ratings to indicate the level of performance

achieved by employees. The current trend is to simplify rating scales and move away

from numeric scales to words of descriptive performance. The value of a rating system is

that it provides a clear indicator to the employee of the level of his or her performance

achievement. However, over focus on the performance rating minimizes the value of the

ongoing performance development of the employee.

An appraisal form constitutes to consistency in performance feedback and management

in the organization and ensures performance management activities are properly

documented. Form should be kept as simple and clear as possible the more complex the

form, the more opportunity for misunderstanding and miscommunication.

Performance Appraisal Roles

Supervisors

o Usually do the actual appraising.

o Must be familiar with basic appraisal techniques.

o Must understand and avoid problems that can cripple appraisals.

o Must know how to conduct appraisals fairly.

HR department

o Serves a policy-making and advisory role.

o Provides advice and assistance regarding the appraisal tool to use.

o Prepares forms and procedures and insists that all departments use them.

o Responsible for training supervisors to improve their appraisal skills.

o Responsible for monitoring the system to ensure that appraisal formats and

criteria comply with Equal Employee Opportunity (EEO) laws and are up

to date.

MANAGEMENT BY OBJECTIVES

Management by objectives (MBO) is a systematic and organized approach that allows

management to focus on achievable goals and to attain the best possible results from

available resources. It aims to increase organizational performance by aligning goals and

subordinate objectives throughout the organization. Ideally, employees get strong input to

identify their objectives, time lines for completion, etc. MBO includes ongoing tracking

and feedback in the process to reach objectives.

Managerial Focus

MBO managers focus on the result, not the activity. They delegate tasks by "negotiating a

contract of goals" with their subordinates without dictating a detailed roadmap for

implementation. Management by Objectives (MBO) is about setting objectives and then

breaking these down into more specific goals or key results.

Main Principle

The principle behind Management by Objectives (MBO) is to make sure that everybody

within the organization has a clear understanding of the aims, or objectives, of that

organization, as well as awareness of their own roles and responsibilities in achieving

those aims. The complete MBO system is to get managers and empowered employees

acting to implement and achieve their plans, which automatically achieve those of the

organization.

Where to Use MBO

The MBO style is appropriate for knowledge-based enterprises when your staff is

competent. It is appropriate in situations where you wish to build employees'

management and self-leadership skills and tap their creativity, tacit knowledge and

initiative. Management by Objectives (MBO) is also used by chief executives of

multinational corporations (MNCs) for their country managers abroad.

MBO Strategy

1. All individuals within an organization are assigned a special set of objectives that

they try to reach during a normal operating period. These objectives are mutually

set and agreed upon by individuals and their managers.

2. Performance reviews are conducted periodically to determine how close

individuals are to attaining their objectives.

3. Rewards are given to individuals on the basis of how close they come to reaching

their goals.

6 MBO Stages

1. Define corporate objectives at board level

2. Analyze management tasks and devise formal job specifications, which allocate

responsibilities and decisions to individual managers

3. Set performance standards

4. Agree and set specific objectives

5. Align individual targets with corporate objectives

6. Establish a management information system to monitor achievements against

objectives

Advantages

MBO programs continually emphasize what should be done in an organization to

achieve organizational goals.

MBO process secures employee commitment to attaining organizational goals.

Disadvantages

The development of objectives can be time consuming, leaving both managers

and employees less time in which to do their actual work.

The elaborate written goals, careful communication of goals, and detailed

performance evaluation required in an MBO program increase the volume of

paperwork in an organization.

BOTTOM LINE

For many organizations, becoming performance-driven might cause a cultural upheaval

that, at least in its early stages, results in turmoil, a perception of chaos and a lot of

discomfort. It can trigger turnover of long-time employees who do not like to be held

accountable for goal achievement and who feel entitled to a certain level of pay

regardless of their performance. And it might cost money as you make the initial

investments.

But with the leadership and commitment of senior management, becoming performance-

driven will lead to dramatic improvements in performance in financial terms, with respect

to employee productivity and morale and in the flexibility to quickly adapt to change.

The effort will be well worth it.

PERFORMANCE MANAGEMENT SYSTEM

AT SHELL

Being the third largest corporation in the world (Wikipedia, 2008), Shell employs a

highly proficient performance evaluation system. Performance management is an annual

activity. It facilitates the organization to plan in advance and to achieve its strategic goals.

It gives a bird’s eye view of the performance of the whole organization and aids in

tracking and steering it towards the right direction.

The upper level management is very committed towards performance management and

plays a crucial part in ensuring that appraisals are unbiased and are conducted on time.

One major reason for the commitment of upper level management towards performance

management system is that the employee’s performance is reported on a global level. A

standard appraisal system is used throughout Shell which was designed in Hague. It

aligns the organization’s vision/mission and objectives and takes into account the

company’s strategic business plans.

In Pakistan, Shell has the six departments, including: Finance, Global Functions

&Learning Advisor, Retail, Lubes & Commercial Fuels, Lubricants, Operations and S&D

& Aviation. For each department there is a separate Human Resource Accounts Manager/

HR Relationship Manager. His major duties include: building effective working

relationships with leadership teams to create significant business value, identifying where

changes are necessary and how these can be implemented effectively and representing the

interests of line managers.

The HR Relationship Manager is also responsible for facilitating processes; coaching,

advising and guiding senior leaders; managing communication delivery; ensuring HR

strategies operate correctly; balancing individual team requirements with those of the

business as a whole and enabling change to happen. Among the duties mentioned above,

his one main job includes conducting performance appraisal for his/her department

because performance management at Shell is not conducted under a separate department

or division.

PERFORMANCE EVALUATION PROCESS

Employees record their targets in a document called Goals and Performance Appraisal

(GPA). The goals are made for the current year and are aligned to the business objectives

because individual performance goals are linked to it. Achievement is focused on current

successes, results and development actions within the current performance year, and also

involves goal setting for the following year.

The GPA is linked to Individual Development Plan (IDP) which is a plan for

development of a Shell employee in his current role as well as the next. This is also an

ongoing document which is continually updated and recorded in ‘Shell People’. IDP

facilitates in recruitment and granting promotion and is incredibly useful for personnel

responsible for resourcing and talent management. Because it helps match employees

with positions that best fit their skills and identifies potential opportunities for

development.

Employee performance evaluation is called the Individual Performance Review (IPR).

IPR is conducted by three individuals in the presence of the employee. These three

include the employee’s line manager; HR Relationship Manager and the General

Manager, both are of the employee’s department. The employee’s goals, which were set

at the beginning of the year with his line manager, are compared with the employee’s

achievements for the passing year. At the end of the IPR, the employee is given an

Individual Performance Factor (IPF) score. The score comprises of numbers ranging from

0.7 (lowest) to 1.5 (highest). These numbers are based on forced ranking distribution.

Bonuses and increments are granted on the basis of the IPF score.

Goals are set on the basis of SMART technique. Business goals and individual

development goals are set during the months of January and February. A midyear review

is conducted to gauge the progress made. Feedback is given, on performance against

goals, during the end of year review. Performance is rewarded during the months of

February and March.

Preparation of meeting

Employee completes his competence self assessment, drafts his goals and reviews them.

The supervisor also reviews the employee’s competence assessment, goals and his

performance to date. He also evaluates the employee’s achievements and behavior.

During the meeting

Both agree on the goals set and the development needs. Progress against goals and

development plan is assessed. Performance and its outcomes are discussed i.e. how the

IPF leads to pay outcomes.

Outcomes of meeting

Employee records his targets in GPA, and his plans in IDP. The supervisor reviews the

GPA and IDP, ensuring they are up to date; he completes the performance summary in

the GPA. He then ranks the employee in the IPF and prepares for the next cycle.

CONTENTS OF IDP

Strengths: includes key areas of strength that contribute to performance of the employee.

Areas for development: behaviors, skills, knowledge and / characteristics that the

employee needs to acquire or address for future success

Actions to address development needs: identify recommended learning opportunities to

address development needs e.g. formal courses, special projects.

Next job/ position option: the likely position or generic job that may be appropriate for

the employee’s next assignment.

Long term career options: likely types of generic jobs or roles for longer time frame (3-

5 years) taking Current Estimated Potential (CEP) into account

Own views and wishes: an employee’s view on his current assignment and preferences

for short and long term development.

Mobility: accurate reflection of an employee’s willingness to change location

Availability date: earliest date the employee is available for re assignment.

Strengths, areas for development, actions to address development needs, next job/

position option, and long term career options are filled by the employee. Own views &

wishes and mobility are discussed with the supervisor whereas the availability date is

discussed and agreed upon in consultation with the supervisor.

PROPOSED PERFROMANCE MANAGEMENT

SYSTEM

COMPENSATION & BENEFITS

The remuneration and benefits department at Shell plays a major impact on the success of

the business as it helps to attract and retain the best people for the right jobs. Regular, in-

depth benchmarking processes are carried out. Job evaluation is conducted to establish a

hierarchy of job groups. Pay is managed among these levels and is linked to performance

which results in rewards and promotion.

In some locations, subsidized services such as sports facilities, medical & dental care and

car parking are offered. In some countries, employees are offered a chance to participate

in a Share save program. It is administered by Halifax. And allows Shell employees to

save money and invest in Royal Dutch Shell plc.

Individual contributions are recognized and rewarded through performance-related pay

and bonuses. They are granted in the form of merit increment, annual bonus and the

MD’s Award (a prize which equivalent to one month’s salary). The higher the IPF score

the higher the increment and bonus. If the achiever is an extraordinary high performer, he

is nominated for a VP Award. The VP Award is a global prize, in which the employee

with his family is invited to The Hague (Royal Dutch Shell’s headquarters), in all

expense paid trip, where he is awarded a prize of 5000 Euros in a special ceremony.

Executive remuneration supports the policies and practices for the top executives and

directors at Shell. Global benefits are responsible for the global governance and support

of retirement benefits arrangements throughout Shell. Annual leave entitlements and

maternity/paternity leave allowances are given. Career breaks and sabbaticals are also

accommodated wherever possible.

Flexible working practices are granted where necessary and operationally possible.

Employees can ‘telecommute’ and work from home. Some locations also offer flexi-time

working – enabling the employee to start his work day earlier or later to fit his needs.

Some of the actions taken to date include: advocating video or teleconferences to reduce

travel, organizing midweek meetings to avoid weekend travel, promoting an email Code

of Conduct to improve efficiency and standardizing the recognition of unavoidable

overtime work.

Special packages and support is granted to expatriates to make their relocation pleasant.

These people are immensely respected because they have a combination of analytical and

creative problem solving techniques. It’s comprehensive and contains policies from

temporary accommodation requirements to schooling.

Compensation adopted as a strategy can be improved if benefits are granted in

accordance to the contribution each employee makes; it will generate a very valuable

perception of rewards among employees. Rewards offered should be uniform i.e. an

employee in one company of Shell performing, should get the same award granted to

another employee working for Shell in another country. The benefits mentioned above

should be extended to all employees around the globe and they should be facilitated with

the opportunity of investing in Share save.

CAREER PLANNING

New employees are placed in G scheme. They take two assignments in three year period

in two different functions. Appraisal is conducted every six months. Coaching program is

given to help the graduates so they learn the procedures of Shell. When they successfully

exit the G Scheme at SG5 or SG6, they are allowed in the normal salary progression

policy.

Career development is greatly emphasized at Shell. Line managers and employees work

together. They highlight the development framework of competency based jobs and note

the qualities necessary for the specific role of each job. The employee thus identifies his

needs and avails the career opportunities. As Shell operates in over 140 countries

employees are exposed to projects in every corner of the globe. A special career

development program was introduced for women as part of an overall strategy to

accelerate their development and progression.

The Individual Development Plan is a good way of fostering employees to plan for their

careers. It also emphasizes the importance and value of career planning.

TEAMWORK

Team work is employed to conduct appraisals. This eliminates biasness altogether or at

least ensures that it’s at a minimal level. An employee’s immediate line manager, the HR

relationship manager and the General Manager of the concerned department do the

appraisal. The final IPF score is awarded to employee based on voting by these three

people.

HR Business Development Partners are integral members of management teams. Their

job is to co-ordinate the delivery of the HR Functional Plans. They also ensure that robust

processes and procedures are in place and that effective delivery takes place of functional

strategic plans. They provide advice and guidance to line managers, on the appropriate

HR tools, facilitate processes, addressing performance issues and ensure proper feedback

is provided. They help other teams move from where they are to where they want to be

by providing support in a variety of areas - from recruitment and performance

management to leadership and development.

Team efforts in Shell can further be improved if HR has a strong base in the organization.

Since every department has an HR relationship manager, there is no separate department

for HR. this weakens the power of the HR manager when he tries to implement change. If

a separate department is formed, it will extend a good backing for the HR officer in

implementing new strategies and practices especially those that are relatively new for the

company. It will also control different areas of HR including reward management, talent

management, employee development etc.

EMPLOYEE RELATIONS

Contribution from every member is appreciated no matter their background or level. A

specific department manages Diversity and Inclusiveness (D&I) within the organization.

Its purpose is to manage D&I as a critical business activity, value the cultural and

personal differences of employees at Shell and provide a means for employees to share

personal support, learning, self-development and communication.

Employee and Industrial Relations professionals focus on the morale and motivation of

employees and how they feel about working for Shell. They also build strong

relationships with employee representatives. Communication and consultations are done

with the staff of Shell on a global level. There are various cultural similarities and

disparities between the countries where Shell operates. ER issues are solved using

different approaches but the company strengthened its global employee relations

capability so that issues are solved form a global perspective. Innovation is greatly

encouraged and so are individual priorities, ambitions and aspirations.

Shell’s hundred year successful operation its presence in 140 countries is greatly

commendable. Managing such diverse cultures must have only been possible through

quality processes, calculated progression and team work. Having a centralized

governance system that effectively governs many companies which work under it is

exceptionally praiseworthy.

MEASUREMENT CRITERIA

Goals are set using the SMART technique. Employees set goals in collaboration with

their immediate line managers. Performance is measured through Forced Ranking

Distribution.

Every two years, shell conducts a survey of its employees called the Shell People Survey.

The survey gauges the real views of all employees as to the level of inclusiveness they

experience in the organization. This way trends and needs of specific groups are

identified.

Employees are encouraged to participate in discussion forums and interactive webcasts.

This gives everyone a chance to make suggestions on improving their work environment,

to give input for policies or to address areas of concern.

Using the SMART technique to set goals is a well-organized and useful way to undergo

the said activity. Forced ranking system is an effective way of identifying laggards and

distinguishing high achievers. The benefit of the above mentioned appraisal system is

that it segments employees according to their performance. It also stops the leniency

attitude some raters have towards employees and forces them to reveal the low

performers. The benefit to the latter is that they can easily avail training facilities and

improve their performance.

If low performance continues for two years consecutively i.e. the employee gets a rating

below 1.00 (average), disciplinary action should be taken. This is because Shell provides

continuous feedback to low performers, and a lot of amount is spent on training them.

There is no reason for performance not to improve.

Self appraisal technique should be introduced for employees working in the middle level.

This will facilitate them in evaluating themselves at the end of the year as they are

responsible for their IDP. They will also get ample opportunities to defend their scores.

360o Feedback should be introduced for the upper hierarchy as they are more involved in

the strategic decisions. This way they will be assessed from the top, by peers and their

subordinates. The assessment will be made keeping in mind, how effective and beneficial

their strategies were for the company (efficiency based). It will highlight their interest in

employee development plan (development based) and also show how effectively they

implement their plans (implementation).

BUILDING COMPETENCE

Learning and development is taken very seriously at Shell. The aim is to equip an

employee with competencies and confidence that will build his professional expertise.

Special focus is given on developing leadership skills and commercial acumen. A

holistic approach is used to connect interest and challenge the development of individual

talent. From on-the-job learning and training for recognized professional qualifications to

personal development programs and ‘buddy’ schemes, Shell offers tools to develop an

employee’s skills and knowledge.

Shell recognizes that the value from formal classroom learning can be maximized when

it's blended with assignments in the workplace and face-to-face coaching while reaping

the benefits of internal and external networks. They believe this reflects best practice in

the learning world - the real innovation comes from how learners apply it for Shell’s

businesses and functions.

Employees at all levels of the business have access to personal development and training

opportunities, which help to enhance their skills and ensure they are better equipped to

compete for employment opportunities in the future. Women are encouraged to

participate in all training and development opportunities.

Motivating employees who fall under second category is also important. This issue arises

due to forced ranking distribution. The difference between the performance of A and B

graders is minimal, but the former gets more recognition, praise and rewards in

comparison to the latter. Shell should especially target B graders and introduce some

reward scheme that is purely granted on the basis of competence to encourage them.

Creating a competency based succession planning system will be very helpful for Shell.

This will constantly supply and ensure availability of managerial-ship because it will

identify people who can fit the job well.

CONCLUSION Shell employs a very competent Performance Management System. Management of Shell

keeps a vigilant eye on all the processes related to performance of the organization. It

carries out a well defined performance evaluation process to achieve its target goals. In

addition to that, Shell offers an attractive compensation and benefits package that retains

employees for a longer period of time.

It provides numerous monetary as well as non-monetary benefits like flexible working

hours which enhance the productivity of employees. Career development is considered

one of the instrumental motivational factors at Sell. It implements special career

programs to motivate its employees. Its management conducts all appraisals of

supervisors through teamwork which shows that teamwork plays significant role in

eliminating biasness.

It highly recognizes the work contributed by employees because it believes that if

contribution that each employee makes to raise the reputation of its organization is not

acknowledged and appreciated then it will result in employee dissatisfaction and would

eventually result in employee turnover. Shell encourages employee involvement in

setting goals of the organization. Shell believes that learning and development has a

critical role in grooming employees it ensures that employees from all levels have access

to development and training opportunities.

REFERENCE

Wikipedia. (2008). Royal Dutch Shell. Retrieved on April, 19, 2008 from the World Wide Web:

http://en.wikipedia.org/wiki/Royal_Dutch_Shell