Performance Appraisal In Tisco

BEST HR PRACTICES IN

Pradnia Bhalerao C-03 Anandita Singh C-34 Jayashree Prabhu C-43 Sanchi Gaikwad P- 07

Abstract This case examines : Unique HR practices. The change and performance management practices. Some of the retention strategies adopted by the company.

WE ASPIRE TO BE THE GLOBAL STEEL INDUSTRY BENCHMARK FOR VALUE CREATION AND CORPORATE CITIZENSHIP.

TISCO – UNDER THE CHANGE • In the early 1990s, TISCO appointed McKinsey and Booz-Allen & Hamilton to study its operations and suggest ways to cut costs. • To focus on various components affecting the cost of steel. • Included cost of raw materials, cost of conversion, fuel rate in the blast furnace and mining of coal. • Advised to use the most modern technologies to cut costs further.

• In the second half of 1998, in association with McKinsey, TISCO implemented TOP program at its G blast furnace . • TOP - Maximum positive impact to the bottomline, with minimum investment, required in minimum time. • Aimed achieving large improvements in throughput, quality and cost in the short term. • In the long run, TOP was expected to enable the TISCO to achieve high rates of performance improvement.

• Helped TISCO to shift its focus from just producing volumes to costs and quality. • Enabled TISCO to improve customer satisfaction and loyalty. • TISCO also took steps to reduce its manpower costs. • Between 1996 and 2000, TISCO reduced its workforce from 78,000 to 40,000 employees.

• Cutting its workforce by 38,000 employees was not an easy job. • Company was able to do it with a lot of communication with employees. • TISCO had adopted Performance Ethic Programme (PEP). • It planned to promote hardworking young people to higher positions depending on their performance, rather than following the convention of seniority. • This exercise was expected to cut the management staff from 4000 to 3000.

pep Two core elements • Proposed a new organizational structure: expected to foster growth businesses, introduce more decision-making flexibility, clear accountability, and encourage teamwork among the managers and the workforce. • Proposed to introduce a Performance Management System (PMS).

Objectives of pep • It would identify and reward strong performers, and also offer development opportunities for each employee. • PMS would also ensure that every employee's job profile was clearly defined. • By introducing PMS, TISCO wanted to make performance appraisals transparent and fair and reward the good performers. • The company also planned to introduce a new compensation package based on performance from November 2001.

BENEFITS OF PEP • Youngsters are getting higher salary than some of the seniors, and after the restructuring, the average age of the managers has fallen by 10 years. • Through PEP, TISCO also reduced the hierarchical levels from 13 to 5. • In a bid to reduce costs further, TISCO used IT as a strategic tool.

• After SAP solutions were introduced in TISCO, the business processes became more efficient. • It also improved customer service and productivity, and reduced costs. • The introduction of SAP also decreased manpower cost from more than US $ 200 per ton in 1998 to about US $ 140 per ton in 2000.

Component 1: Conventional Appraisal

Coincides with FY

Preceded by Annual Business Plan

Three components

Three components

The THREE components

• • • •

Self-appraisal The work done Difficulties Major achievments Developmental needs

Objective assessment • Assesment of KRA’s fulfilment • Done against concrete goals Subjective assessment • In what manner the work is done? • Decision making • Managerial capabilities/traits

• Transparent & open • Rewards, annual increment for promotion, postings, job rotation are linked with appraisals • Feedback but tool for administrative decision making

Component ii: MANAGERIAL STYLE FEEDBACK

How it started ? • Subordinate must get chance to assess their bosses. • Started with critical group – divisional managers and higher.

Procedure

• HR dept. selects who will give the feedback. • Random sampling. • Managerial Style feedback Questionnaire. • Identity of people giving feedback is kept confidential. • All data is collected, analyzed.

Managerial style feedback ?? • Subordinates – did not have expertise or wisdom • Confidentiality • Perception

Advantages • Johari Window - Blind • the boss get a reflection of what his employees think about him • Management Style

Component iii: INTERNAL CUSTOMERS ASSESSMENT

Internal Customer Assessment • TISCO extended their feedback system. • Evaluate to what extent one meets the expectations of internal customers • Provide peers with third set of data

Sample of appraisers Procedure: • List of 15- 20 from a wide set of functions • The HR dept. • Work on appraisers & merge the list • Again pick random sample each year of 10- 12 names

Contd… • • • • • •

Separate questionnaire is developed 10 questions Space for writing open ended responses Anonymous feedback Summarizing of report Report goes back to an individual in detailed form

Contd.. Observations : • Assessment by subordinate is tougher than the assessment by peers & colleagues • Some bosses are assessed very stringently by subordinates but far more positively by their peers & colleagues • This process goes up to CEO level & he too goes through entire process

Observation & Learning TISCO chose to do three components separately Sequence Time gaps Anonymity is practiced Counseling people

Contd.. • Problems in dropout rate • Feedback is taken seriously

CONCLUSION

bibliography • Performance Management & Appraisal System – HR Tools for Global Competitiveness – By T.V. Rao. • www.icmrindia.com • www.tisco.com

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