OIL AND NATURAL GAS CORPORATION LTD

Workshop on Performance Management System

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In Today’s Discussion

Where we are

• PMS in ONGC the “As Is”

Transitioning to a new paradigm

Exploring current state and further enhancements

Summary

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Framework usedA typical PMS framework

Periodic Review

Linkage with other HR systems

Appraisal

Goal Setting

• Process of setting goalsProcess of setting goals

• Communication of targetsCommunication of targets

• KRAs and KPIs settingKRAs and KPIs setting

• Mid year review and Mid year review and course correctioncourse correction

• AssessmentAssessment

• FeedbackFeedback

• AttributesAttributes

• Appraisal mechanismAppraisal mechanism

• ModerationModeration

• DiscussionsDiscussions

Linkage toLinkage to

- Training & Development- Training & Development

- Promotion - Promotion

- Incentive pay- Incentive pay

Governance Mechanisms

Governance Mechanisms

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1. Key Result Areas (KRAs)

2. Key Performance Indicator (KPIs)

3. Tasks/Targets/Objectives

4. Performance Analysis and Ratings

5. Potential Assessment and Ratings

6. Identify Areas for Improvement & Counseling

Key Components…that emerge from PMS framework

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The present PMS is open, Robust and Transparent. It also provides the redressal of individual’s grievance if any on disclosure of their grading

Process Enhancements already introduced– Shift from manual to online PMS for officers E0-E6 in 2008-09– Introduction of performance distribution guidelines– Enabling of standard list of KPIs as a drop down for employees to

choose from

Challenges we faced– Initial discomfort of employees in using new online model– Hesitation in differentiating employees as per the distribution guidelines– Adherence to process timelines

In part due to remote location work with continuous field shifts

• Salient features of existing PMS

Where we areStrengths and Opportunities

• Appeal and review process

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Transition to a new paradigm

In conformity to DPE guidelines further enhancements have been made and some more features are planned for the future:

Enhancements introduced– Shift from ‘Distribution’ guidelines to ‘Forced Distribution’

approach adopting Bell Curve concept.– Incentive Pay linked to Performance rating of the individual.

Enhancements Planned \ underway– Extension of online PMS to all other employee grades.– Modification in goal setting format to increase correlation with role.– Development of standard KRAs and KPIs mapped to each role.– Further refinement in moderation process system driven module.

Current state vis-a-vis further enhancements

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Goal SettingCurrent Format

20Timeliness Total - Y

40Quantitative Total - X

Timeliness5

Quantitative5 KPI-5

Timeliness4

Quantitative4 KPI-4

Timeliness3

Quantitative3 KPI-3

Timeliness2

Quantitative2KPI-2

Timeliness1

Quantitative1 KPI-1

Reviewing Officer

AppraiserAssessment by Weightage

(out of X/Y below)

KRA-1 Quantitative & Timeliness (To be described within 96 characters)(Quantitative - e. g. output in terms in production / work over jobs / meterage / equipment availability / oil gain / LKMs / interpretation volume / %age completion of project / achievement of project milestones / targets / achievement of MOU parameters/ marks in case of trainees/UPS/SUPS schemes etc. ANDTimeliness- (e.g. response time / turn around time / adherence to schedules / time optimization etc.)Note: No. of KPIs may depend on assignments & level of executive (maximum 5 and minimum 2). Weightages against each KPI may also vary as per importance of KPI in each case. The total allocation against quantitative and timeliness may be aproportioned against the chosen KPIs.

20Timeliness Total - Y

40Quantitative Total - X

Timeliness5

Quantitative5 KPI-5

Timeliness4

Quantitative4 KPI-4

Timeliness3

Quantitative3 KPI-3

Timeliness2

Quantitative2KPI-2

Timeliness1

Quantitative1 KPI-1

Reviewing Officer

AppraiserAssessment by Weightage

(out of X/Y below)

KRA-1 Quantitative & Timeliness (To be described within 96 characters)(Quantitative - e. g. output in terms in production / work over jobs / meterage / equipment availability / oil gain / LKMs / interpretation volume / %age completion of project / achievement of project milestones / targets / achievement of MOU parameters/ marks in case of trainees/UPS/SUPS schemes etc. ANDTimeliness- (e.g. response time / turn around time / adherence to schedules / time optimization etc.)Note: No. of KPIs may depend on assignments & level of executive (maximum 5 and minimum 2). Weightages against each KPI may also vary as per importance of KPI in each case. The total allocation against quantitative and timeliness may be aproportioned against the chosen KPIs.

10KRA - 3 : HSE(for field duty) / Office Management :(e.g. safe work practices/ environment protection/ adherance to sfety guidelines / availability of safety equipment/ compliance of statutory requirements etc. & achievements/innovation in these areas)Office Management (for Office Duty)(e.g. adherence to correct systems and procedures/ maintenance of records/ IT systems usage /optimizing processes /proactive peer support /workplace upkeep etc.)

10KRA - 2 : System Improvements :(e.g. efficient work procedures / adoption of technology / optimizing processes / cost optimization/ dissemination of new knowledge etc.)

Reviewing Officer

Appraiser

Assessment by

WeightageDescriptionKRA

10KRA - 3 : HSE(for field duty) / Office Management :(e.g. safe work practices/ environment protection/ adherance to sfety guidelines / availability of safety equipment/ compliance of statutory requirements etc. & achievements/innovation in these areas)Office Management (for Office Duty)(e.g. adherence to correct systems and procedures/ maintenance of records/ IT systems usage /optimizing processes /proactive peer support /workplace upkeep etc.)

10KRA - 2 : System Improvements :(e.g. efficient work procedures / adoption of technology / optimizing processes / cost optimization/ dissemination of new knowledge etc.)

Reviewing Officer

Appraiser

Assessment by

WeightageDescriptionKRA

• Currently KPIs and targets defined only under KRA 1

• KRA 2,3,4 generic KRAs which were envisioned from perspective of impacting all employees

• As a step ahead all KRAs to be mapped to roles,

• Increases clarity and specificity of expectations

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Goal SettingFuture Enhancement

KRA 1

Planning and Scheduling

KRA 2

Operations

KRA 3

Maintenance

KRA 4

HSE

KPI’s

% of timely availability of materials and manpower

Commercial speed as per target

Cycle speed as per target

KPI’s

100 % compliance to GTO

Well Completion time as per target

Cost of drilling as per target

KPI’s

Reduce equipment downtime by X %

Reduce Rig NPT by X%

KPI’s

Nil accidents

100% successful liquidation of well activity in case of kick

Nil safety observations by safety enforcement agencies

• 4 to 5 KRAs based on main responsibilities

• 2 to 3 KPIs in each KRA

Illustrative Drilling, Tool PusherDrilling, Tool Pusher

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DisciplineFunctional Work Area/Role

KPI for the disciplines

DRILLING

RIG INCHARGE / DIC/TOOL PUSHER

Minimize the waiting time up to max of _______% of cycle time.

DRILLING

RIG INCHARGE / DIC/TOOL PUSHER

To ensure ______ % completion of planned upgrading or dry docking repairs of rig

DRILLING

RIG INCHARGE / DIC/TOOL PUSHER

Aim to have Nil safety observations by safety enforcement agencies.

DRILLING

RIG INCHARGE / DIC/TOOL PUSHER

To coordinate for ……% availability of well material in time

Standard KPIs as per discipline and

role/work area

Goal Setting Currently Standard List of KPIs by Discipline

Job description with key activities Illustrative

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Goal Setting Future Enhancement: Standard KRAs / KPIs derived from Job Descriptions

Drilling, Tool PusherDrilling, Tool PusherIllustrative

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Periodic review Identified focus area: training managers in giving effective feedback

• Training sessions to enable managers to provide developmental feedback to their work-groups

•Providing constructive feedback is a science and an art.

•Managers need to be enabled with the right tools and knowledge to provide feedback?

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ModerationFuture Enhancements

Bell Curve formed at Corporate level

• From ease of implementation perspective

Bell Curve formed by Discipline and grouping of Levels

• From perspective of comparison within same line of work

Bell Curve generated mathematically

• From feasibility of implementation perspective

Bell Curve to be formed at Business Unit (BU) and Accepting Officer level

• Increases proximity to appraise for a better line of sight

Bell Curve to be formed by BUs and grouping of Levels

• From perspective of comparison within same work unit

Bell Curve to increasingly be based on discussions and deliberations

• Slow shift from a change management perspective

Current Way Forward

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GovernanceFocus areas identified: Senior Management Involvement

Increased Senior Management Involvement:

►Giving message of importance and seriousness to the process through out the organization

►Some possible interventions

Include people performance review as part of Business review meetings by top management

Strong focus on adherence to timelines and intervention by senior executives in cases of deviation

Penalizing lax managers in their People Management KPI

- Where rating has been given without due justification.

- Deviations from timelines are seen.

- Developmental feedback is not provided in mid term review.

A recap …..

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PMS at ONGC a robust process…… and the continuous efforts for further enhancements

An Online PMS system on SAP platform for all employees

Iterative process of Goal Setting at the start of the year

Standard KRAs and KPIs for each discipline with transition to Role orientation.

Mid year review for course correction / developmental aspects.

Three tier Appraisal system.

‘Forced Distribution’ using Bell Curve approach.

Transition to flexible five bucket performance ratings.

Moving from ‘Closed & Confidential’ to an ‘Open & Transparent’ system

Thank You

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Salient features of Existing PMS

I. e-PAR format and process flow configured in SAP platform

II. Access to Appraisee and Reporting Officer thrice a year

III. Assessment components - Performance and Potential

a) Performance Appraisal (P) :Divided in 4 KRAs:

• KRA 1: Quantitative & Timeliness – has option of 5 KPIs.• KRA 2: System Improvement • KRA 3: HSE/Office Management and• KRA 4: Qualitative Aspects

b) Potential Appraisal (Q) : Attributes divided into 10 parameters

iv) Mid-term Review: The system facilitates Mid-term Review of KPIs

v) Final Appraisal Report: The final assessment would be done at the end of assessment year. Weightage for Performance & Potential varies with level of executives.

I. e-PAR format and process flow configured in SAP platform

II. Access to Appraisee and Reporting Officer thrice a year

III. Assessment components - Performance and Potential

a) Performance Appraisal (P) :Divided in 4 KRAs:

• KRA 1: Quantitative & Timeliness – has option of 5 KPIs.• KRA 2: System Improvement • KRA 3: HSE/Office Management and• KRA 4: Qualitative Aspects

b) Potential Appraisal (Q) : Attributes divided into 10 parameters

iv) Mid-term Review: The system facilitates Mid-term Review of KPIs

v) Final Appraisal Report: The final assessment would be done at the end of assessment year. Weightage for Performance & Potential varies with level of executives.

1. The System:1. The System:

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2. The Performance parameters : KRAs (1/2)

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Weight-age

Appra-iser

b) Timeliness

a) Quantitative

b) Timeliness

a) QuantitativeKPI-5

b) Timeliness

a) QuantitativeKPI-4

b) Timeliness

a) QuantitativeKPI-3

b) Timeliness

a) QuantitativeKPI-2

b) Timeliness

a) QuantitativeKPI-1

KRA-1: Quantitative & Timeliness

(Quantitative -(e. g. output in terms in production / work over jobs / meterage / equipment availability / oil gain / LKMs / interpretation volume / %age completion of project / achievement of project milestones / targets / achievement of MOU parameters/ marks in case of trainees/UPS/SUPS schemes etc.)

AND

Timeliness- (e.g. response time / turn around time / adherence to schedules / time optimization etc.)

Note: No. of KPIs may depend on

assignments & level of executive (maximum 5 and minimum 1). Weightages against each KPI may also vary as per importance of KPI in each case. The total allocation against quantitative and timeliness may be aproportioned against the chosen KPIs.

Revie-wing

DescriptionKRA

TotalTotal

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10KRA-2: System Improvement

(e.g. efficient work procedures / adoption of technology / optimizing processes / cost optimization/ dissemination of new knowledge etc.)

100GRAND TOTAL (Performance – P)

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KRA-4: Qualitative – (e.g. depth of analysis/ research done/

reliability of data provided / reliability of end product/service / end

user feedback etc.) Overall Quality of Performance of all KRAs as per criteria below:

Attribute Range Excellent 17-20 Very Good 13-16

Good 9-12Average 5-8Below Avg. 0-4

10KRA-3: HSE (for field duty)/

(e.g. safe work practices/ environment protection/ adherance to sfety guidelines / availability of safety equipment/ compliance of statutory requirements etc. & achievements/innovation in these areas)

Office Management (for Office Duty)

(e.g. adherence to correct systems and procedures/ maintenance of records/ IT systems usage /optimizing processes /proactive peer support /workplace upkeep etc.)

ReviewingAppr-aiser

Weigh-tage

DescriptionKRA

The Performance parameters : KRAs (2/2)

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3. The Potential Attributes/Traits Scale for Potential Appraisal is from 1 to 5 (1-Poor, 2-Fair, 3-Good, 4-Very Good, 5-Excellent)

keeping the existing role as well as future positions in perspective.

Attribute / Trait Rating

Appraiser Rev. officer

1. Result oriented approach : Focuses on given targets to achieve them, willingness and ability to come up with ideas and alternatives for solving job related problems

2. Willingness to accept challenges: willing and able to handle challenges based on understanding of upcoming changes.

3. Diligence and reliability: Reliability to perform and complete assigned tasks well within schedules of time, cost and quality. Dependability.

4. Initiative : willingness and ability to start and complete tasks independently, self starter

5. Professional competence : awareness and understanding of the fundamentals and developments relating to one’s own job and demonstrating high level of performance

6. Communication skills : Ability in verbal and written communication, clarity of thought and expression

7. Commitment and dedication: towards organizational (departmental and corporate) goals.

8. Personal conduct, discipline and punctuality: behavioral pattern repeatedly demonstrated, shows regard to Rules of the Corporation

9. Leadership : Demonstrates ability to lead to accomplish the given task and also inspire others to do it, Mentor

10. Inter-personal relationship/ team member: Willingness and ability to work harmoniously within the team, extends cooperation and is respected and trusted.

TOTAL (Q)

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Weighted score (S) = a x P + 2 (b x Q)

Where a and b are the weightages for Performance and Potential respectively as given below for each level:

Weighted score (S) = a x P + 2 (b x Q)

Where a and b are the weightages for Performance and Potential respectively as given below for each level:

Level a b Level a b

E-1 0.9 0.1 E-4 0.6 0.4

E-2 0.8 0.2 E-5 0.5 0.5

E-3 0.7 0.3 E-6 0.4 0.6

Overall grade- A+ / A / A- / B+ / B / C / D (Encircle please)Overall grade- A+ / A / A- / B+ / B / C / D (Encircle please)

‘A +’ Score - 95 and above

‘A’ Score - (85 and above but less than 95 )

‘A -‘ Score – (75 and above but less than 85 )

‘B +’ Score – (65 and above but less than 75 )

‘B’ Score - (55 and above but less than 65 )

‘C’ Score - (45 and above but less than 55 )

‘D’ Score - (less than 45)

4. Determining the Overall Grade (Performance & Potential)4. Determining the Overall Grade (Performance & Potential) BACK

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Disclosure of PAR

System of disclosure of final PAR Grade and Marks adopted from 2008-09 thus bringing transparent assessment in PAR

• Individual is informed of final PAR Grades and Marks alongwith remarks, if any, recorded by the Accepting officer

• Disclosure started on 07th Nov. 2009

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Review and Appeal (1/2)

Aggrieved employee can represent to Appellate Authority through local PAR officer.

PAR officer will keep record & forward it to concerned Appellate Authority.

Each Appellate Authority to constitute Appeal Review Committee (ARC) comprising of 3 members from functional areas.

In case Appellate Authority is GM or L-II, ARC members should not be below E6 level. For all others Appellate Authority ARC members should not be below E7.

Meeting of Appeal review committee to be convened once in a year preferably in the month of September/October.

Appeal Review Committee may seek PAR record and also views of authorities involve in earlier PAR assessment.

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Appellate Authority to decide on appeal considering recommendations of Appeal Review committee. In case of Appellate Authority comprises of two Directors, they shall jointly decide on the appeal.

Revision can be only one step higher or lower in the overall grade/ Marks in case of executives. For non-executives individual attribute score may be increased or decreased by one mark.

CMD or Executive Committee can revise any step upward/ downward, in case Appellate Authority feels that revision of grades by more than one step is justified.

Decision of Appellate Authority conveyed to PAR office and in turn to the employee AND shall be binding forever.

Review and Appeal (2/2)

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The designated Appellate Authorities

Category Appellate Authority as approved in EC for Adverse, ‘B’ ‘C’ & ‘D’

Proposed for all other types of assessment, i.e. B+ and Above

Class III, IV, E0 L-II or GM Key Executive

E1-E2 Key Executive Admn Director

E3 Key Executive Admn Director

E4 Concerned Director Admn. & Func. Director

E5 Concerned Director Admn. & Func. Director

E6 CMD CMD

E7-E9 EC Executive Committee

a). Normal Reporting Chains

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Category Appellate Authority as approved in EC for Adverse, ‘B’ ‘C’ & ‘D’

Proposed for all other types of assessment, i.e. B+ and Above

L-IV Concerned Director Admn. & Functional Director

L-III CMD CMD

L-II CMD CMD

L-I Executive Committee Executive Committee

While the hierarchy in the route has been defined in the two tables, Appellate Authority must be minimum one rank higher than the Accepting Authority.

b). For Designated positions

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Time schedule for disposal of appeal

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The PAR officer should communicate within 15 days of receipt of completed PAR .

Activity Action by Completion days

Representation to Appellate Authority

Concerned Employee

30 days from receipt of communication but not later than the month of September.

Examination of the representation by Appellate Authority and decision.

Appellate Authority at Work-Centres / Hqrs.

45 days from receipt of representation by Office of Appellate Authority

Communication to the executive about the decision

PAR officer concerned

15 days from the receipt of the above mentioned decision by PAR officer

BACK

BACK

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Aligning PAR format to reflect role of Appraisee

Illustrative

Performance Appraisal

Rating Description

5 Achievement in excess of 100% of the target

4 Achievement between 91-100% of the target

3 Achievement between 76-90% of the target

2 Achievement between 61-75% of the target

1 Achievement of less than or equal to 60% of target

All KRAs and KPIs to be derived from roles (no

fixed KRAs)

Quantitative Self Appraisal to be introduced

to drive performance discussions

Guide for rating against set targets

Key thought: Role aligned KRAs with defined KPIs provide better clarity to appraisee, increase linkage to actual performance and reduce possible

subjectivity