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Performance Management System

&PRP in BSNL

DPE WORKSHOP CHANDIGARH

30-05-2011

Presentation byD P De, Sr GM( Establishment) & Madhu Arora, GM(Restructuring)

BSNL Corporate office

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Index

• Challenges before BSNL

• Recent Performance of BSNL

• PBT and PRP Payments

• Group Performance Management System(GPMS) in BSNL

• Way forward for Individual PMS (IPMS)

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Total no. of Employees

Executives 56,290Non- Executives 2,26,400Total 2,82,690

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Total no. of Employees

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Challenges before BSNL

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Key Challenges Faced by BSNL

•Fixed to Mobile Substitution:• Declining Landline Revenues

– From Rs 20,421 Cr, in 05-06 to Rs 8268 Cr in 09-10

•Stiff Competition in Mobile Sector:

•High Manpower Cost

•Skill set of employees

•Service in non-remunerative Areas

Key Challenges Faced by BSNL

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Performance of BSNL-Last few years…

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%age Telephone Market Share of BSNL

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Year Wired lines Wire Less Grand Total

WLL GSM Total

31.03.2001 86.46 0 0 0 77.73

31.03.2002 87.21 43.14 0.27 3.11 74.33

31.03.2003 86.92 45.34 17.78 20.05 69.98

31.03.2004 86.60 10.13 20.09 17.44 54.41

31.03.2005 86.72 10.17 23.01 19.41 47.69

31.03.2006 85.22 8.66 24.8 19.96 39.27

31.03.2007 82.75 7.97 22.59 18.66 31.29

31.03.2008 80.05 6.69 18.82 15.64 24.10

31.03.2009 77.42 5.28 16.2 13.32 18.98

31.03.2010 75.34 3.78 15.01 11.88 15.66

28.02.2011 72.78 2.44 14.87 11.41 14.00

%age Telephone Market Share of BSNL

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Financial Performance

Parameters

2006-07

2007-08

2008-09

2009-10

Income 39,715 38,053 35,812 32,045

Expenditure

31,466 33,636 34,354 34,078

Net Profit 7,806 3,009 575 (-)1,823

In Rs Crores

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Financial Performance

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PRP and Productivity Linked Incentive Payments in BSNL

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Prior to DPE guidelines of 26-11-2008 on PRP,

Productivity linked Incentive was being paid

in BSNL

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LAST 3 YEARS’ PERFORMANCE

FINANCI-AL YEAR

PBT 3% of PBT

2% of PBT

5% of PBT

DISTRIB-UTABLE PROFIT

TOTAL PLI PAID

1 2 3 4 5 6 7

2007-08 4451.55 133.55 89.03 222.58 2708.45 362.29

2008-09 1271.63 38.15 25.43 63.58 574.85 113.89

2009-10 -2197.48 -65.92 -43.95 -109.87 -1822.65 NIL

IN RUPEES CRORES

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PLI GUIDELINES ADOPTED

S. NO. MOU GRADING / PROFIT MULTIPLICATION FACTOR

1. EXCELLENT 1.4

2. VERY GOOD 1.1

3. GOOD 0.85

4. FAIR 0.75

5. POOR/ NO PROFIT BY COMPANY

NO INCENTIVE

PLI AMOUNT = BASIC PAY X MULTIPLICATION FACTOR CORRESPONDING TO MOU GRADING SUBJECT TO MINIMUM AND MAXIMUM LIMITS

CATEGORY MINIMUM MAXIMUM

NON-EXECUTIVE RS. 7,000 RS. 10,000

EXECUTIVE RS. 10,000 RS. 12,500

SUBJECT TO 50% CEILING LIMIT OF PERKS AND ALLOWANCES TO BE PAID WITH THE APPROVAL OF BOARD, KEEPING IN VIEW THESE GUIDELINES

CASUAL LABOURERS @ RS. 3000 (FIXED)

PLI GUIDELINES ADOPTED

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PAYMENTS OF PLI/PRP

2007-2008• MOU GRADING WAS ‘FAIR’• EXECUTIVES AND NON-EXECUTIVES :

0.75 TIMES OF BASIC PAY SUBJECT TO RESPECTIVE MINIMUM AND MAXIMUM LIMITS

• CASUAL LABOURS AND TSMs : Rs 3000

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PAYMENTS OF PLI/PRP2008-2009

• REMUNERATION COMMITTEE INFORMED OF DPE DECISION REGARDING PERFORMANCE MANAGEMENT SYSTEM (PMS) & PERFORMANCE RELATED PAY (PRP)

• COMMITTEE NOTED THAT CONSULTANT IS IN PROCESS OF DEVELOPING PMS; DISTRIBUTABLE PROFIT Rs 575 CRORES

• COMMITTEE RECOMMENDED FOR 50% OF MINIMUM PLI PAYABLE AS PER GUIDELINES

• BOARD AGREED TO ABOVE• NON-EXECUTIVES AND EXECUTIVES PAID: Rs 3500 &

Rs 5000 RESPECTIVELY• CASUAL LABOURS AND TSMs : Rs 1500

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PAYMENT OF PLI/ PRP2009-2010

• PBT WAS Rs. (-) 2197 CRORES• NO ADMISSIBILITY OF PLI OR PRP AS

COMPANY HAD INCURRED LOSSES• MATTER WAS PLACED BEFORE

REMUNERATION COMMITTEE• REMUNERATION COMMITTEE

RECOMMENDED NO PLI/ PRP PAYABLE IN VIEW OF OPERATIONAL LOSS DURING YEAR 2009-2010 AND LIKELY LOSSES DURING 2010-2011.

• NO PLI/ PRP PAID

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PMS in BSNL

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Importance of PMS

• PMS very crucial- especially in context of challenges

before BSNL and company’s current situation

• What is measured well is managed well

• Brings objectivity, fairness, transparency in

assessment- Builds Credibility of process

• Harmonize individual, group and Company goals

• Motivate employees for superior performance from

each, to the best of his/her ability

Importance of PMS

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Performance Management System in BSNLPerformance Management System in BSNL

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Group Performance Management System (GPMS) Covers all BSNL employees in 19 group types

Each Territorial Circle, non-Territorial Circle, SSA is a Group

Key Performance Indicator(KPI) based score cards designed for objective and transparent assessment of performance

GPMS in operation since last year.

Web based IT application developed which facilitates on-line data entry and evaluation.

GPMS score to form the basis of PRP, other financial incentives

Group Performance Management System (GPMS)

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As part of GPMS design, all BSNL employees have been structured along 19 groups

Category of groupsCategory of groups Group TypeGroup Type

1. Consumer Fixed Access 2. Consumer Mobility 3. Enterprise 4. New businesses5. Corporate Affairs6. HR (Incl. Legal and Vigilance)7. FinanceSub-totalTerritorial CircleSub-total1. Project Circle2. Maintenance Region3. Inspections (earlier T&D)4. QA5. Telecom Stores6. Telecom Factory7. ITPC8. NCES9. Data N/W10. Training CircleSub-totalSSAs

Total

Number of group typesNumber of

group types

11111117111111111111

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Number of groups

Number of groups

11111117

26265411131113

21330

384

Corporate office

Territorial circles

Non Territorial Circles

SSA

As part of GPMS design, all BSNL employees have been structured along 19 groups

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Organisation redesign

Metrics for appraisal and scoring are drawn from various dimensions to give a fair appraisal

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WeightingTargetMeasureObjective

Weighting and mix

The appropriate mix of KPIs will depend on the role and on the

importance of each perspective

There should be no more than 5–7 objectives in total; more could result in lack of focus, potentially undesirable trade-offs, and reduced performance

FinancialWhat impact can this person have, in terms of

financial measures?

Customer / MarketHow can this person maximize customer

satisfaction?

Operations / ProcessesWhat are the operations / processes relevant to this person that most drive performance?

Employee developmentWhat can this person do to most actively

facilitate the development of others?

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Key performance indicatorsKey performance indicators

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Individual PMS (IPMS)-Way Forward

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Going forward- Individual performance evaluation

• Aimed at measuring individual’s performance in most objective manner.

• Individual Performance Management System(IPMS) being introduced

• Scorecards contain key performance indicators(KPIs) specific individual’s job (IPMS scorecards).

Going forward- Individual performance evaluation

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Plan for IPMS Implementation through out the country

• KPI based IPMS scorecards being prepared for each role at Executive level

• IPMS planned for progressive implementation throughout the organization.

• Linkages of Performance Appraisal with IPMS achievements

Plan for IPMS Implementation through out the country

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Bell Curve Approach

• Bell curve methodology not yet implemented

• Experience sharing by other PSUs will help BSNL

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GPMS score and PAR rating

• IPMS is being progressively rolled out and would be integrated with ERP implementation

• BSNL is taking various strategic initiatives to improve its competitive position and financial performance

• PMS is being strengthened and several other measures are being taken to foster performance oriented work culture in the organization

• The company hopes to turn around by next year and would thus become eligible for PRP payments

Till such time that the Individual PMS is implemented, GPMS

would be utilized as Performance Appraisal rating (PAR) of each executive in a group

GPMS score and PAR rating

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