Assignment of Performance and compensation management

Topic – Prepare a research based report to identify differences and similarities in performance
management system in Indian and multinational companies in India with relevant literature and
review.

Submitted to –Dr. Vidhu Gupta Submitted by – Samanpreet kaur

Manpreet kaur

Romanpreet kaur
Meaning of Performance management system

A Performance Management System (PMS) is a comprehensive approach that organizations

use to ensure that employees are working towards the achievement of the company's goals
and objectives efficiently and effectively. It encompasses various processes, tools, and
techniques to monitor, assess, and enhance individual and organizational performance.

Performance management is a tool that helps managers monitor and evaluate employees'
work. The goal of performance management is to create an environment where people can
perform to the best of their abilities and in alignment with the organization's overall goals.
Performance management is widely used in both the private and public sectors.

A performance management system tracks the performance of employees in a manner that

is consistent and measurable. The system relies on a combination of technologies and
methodologies to ensure people across the organization are aligned with – and contributing
to – the strategic objectives of the business. The system is collaborative, with managers and
employees working together to set expectations, identify employee goals, define
performance measurement, share employee performance reviews and appraisals, and
provide feedback. When properly defined and consistently applied, a performance
management system increases overall workforce productivity. Employees are more invested
in their work and turnover is minimized while revenue per employee is maximized.
 Literature review
Faozen, Faozen & Sandy, Shah, 2024)Performance management is the process of planning,
supervising, and improving the performance of individuals, teams, and the organization. The
goal is to increase productivity, set performance goals, measure performance, provide
feedback, develop performance, and support effective decision making. In performance
management, new approaches that are more oriented towards employee development and
engagement have replaced traditional approaches that focus on evaluation and control. This
research methodology is based on literature review and discusses competency-based
approaches, goals, and continuous feedback. Employee involvement in performance
management provides benefits such as increased satisfaction, motivation, individual and
team performance, skill development, communication, collaboration, and the formation of a
motivating culture. Recognition and reward are also important in performance
management, as they can improve employee motivation, performance, retention, and long-
term contribution in the organization.

The goal, mission, and vision of a company bring its different departments from the
sale, Information Technology (IT), Business Analyst (BA), and, not limited to the
Performance management, is what constitutes a functioning enterprise. The PM is the
source of bringing together different parts of a company to function as a single entity.
According to ( Ammons and Roenigk (2020), successful PMT requires devolved decision
authority. That is, meaningful decision-making must be placed in the hands of managers at
the program level (department and sub-unit levels), where those best equipped with
insights can make needed changes. The authors' analysis sampled 62 selected cities and
countries.Their empirical findings showed a positive relationship between devolved
decision authority and reported Performance management success. Especially when
managers both have and perceive that they have meaningful discretion. The conceptual
underpinnings of Performance management are outlined in PMT doctrine (Moynihan,
2008). Also includes the principles and practices thought to be integral to the success of
Performance management.

Performance management and performance appraisal sound similar(Verma, Alekh &Singh,

Sompal, 2024). However, these two are different from each other. Performance
management is more than just an appraisal as it also includes management of an
employee’s performance in a positive way. This is a continuous process that includes various
steps such as setting the goals and expectations, establishing evaluation criteria, identifying
source and method of appraisal followed by communication of appraisal. Job performance
has various dimensions that are trait based like attitude, creativity, initiative, drive, and
accountability; behavior based like customer service; and result based like tangible output.

(Carl-Fredrik Lindberg, SieTing Tan, JinYue Yan, Fredrik Starfelt,2015)Key Performance

Indicators (KPIs) are important for monitoring the performance in the industry. They can be
used to identify poor performance and the improvement potential. KPIs can be defined for
individual equipment, sub-processes, and whole plants. Different types of performances can
be measured by KPIs, for example energy, raw-material, control & operation, maintenance,
etc. Actions for performance improvements can then be developed, prioritized and
implemented based on the KPIs and the benchmarking results. An alternative to
benchmarking, which is described in this paper, is to identify the process signals that are
strongest correlated with the KPI and then change these process signals in the direction that
improves the KPI. This method has been applied to data from a combined heat and power
plant and a suggestion are given on how to improve boiler efficiency.

Moynihan, D. P. (2008). The dynamics of performance management: Constructing

informal information. Georgetown University Press: Washington, DC

Faozen, Faozen & Sandy, Shah. (2024). Performance Management: A new approach in
performance management. 10.5772/intechopen.1002501.

Ammons, D. N., & Roenigk, D. J. (2020). Exploring Devolved Decision Authority in

Performance Management Regimes: The Relevance of Perceived and Actual Decision
Authority as Elements of Performance Management Success. Public Performance &
Management Review, 43(1), 28–52. https://doi.org/10.1080/15309576.2019.1657918

Moynihan (2008) focuses on the principle of devolved decision authority and its importance
as an element of PMT success. Devolved decision authority, the author suggests, becomes
most effective when both the grant of authority is real, and managers are willing to
acknowledge that they have it. The presence of both conditions
substantially increases the likelihood of PMT success.

Verma, Alekh & Singh, Sompal. (2024). Performance Management. DOI:10.1007/978-3-031-

46420-1_7
Carl-Fredrik Lindberg, SieTing Tan, JinYue Yan, Fredrik Starfelt,Key Performance Indicators
Improve Industrial Performance,Energy Procedia,Volume 75,2015,Pages 1785-1790,ISSN
1876-6102,https://doi.org/10.1016/j.egypro.2015.07.474.

Osiobe, Ejiro. (2021). A Literature Review and Overview of Performance Management: A

Guide to the Field. Journal of Business Market Management. 4. 2617-1724.
10.47752/sjbmm.41.1.11.
Tata Motors Limited is an Indian multinational automotive company, headquartered in
Mumbai and part of the Tata Group. The company produces cars, trucks, vans, and busses.
Subsidiaries include British Jaguar Land Rover and South Korean Tata Daewoo. Wikipedia
Stock price: TATAMOTORS (NSE) ₹979.75 +14.85 (+1.54%)
22 Mar, 3:30 pm IST - Disclaimer
Customer service: 1800 209 8282
Founder: J. R. D. Tata
Founded: 1945, Mumbai
Headquarters: Mumbai
Formerly: Tata Engineering and Locomotive Company Ltd. (TELCO)
Subsidiaries: Tata Technologies, Jaguar Land Rover, Jaguar Cars, MORE
Parent organization: Tata Group

Performance management system may be defined as a formal interaction between

employee and a manager. It is process used to communicate organisations goals and
objective, track and evaluate individual and organisation performance results. It is an on-
going process means managers have to evaluate each and every activity of the employees in
the organisation. Basically it is a methods by which the job performance of an employee is
evaluated in terms of quality, quantity and time. In other word, it is a process of evaluating
employees on continuing basis and coaching them and rewarding them on the basis on their
performance. Every organisation has some goals and objectives to achieve and to fulfil these
goals companies need to make planning and strategies. Moreover companies also need to
make sure that every employee in the company is working properly to achieve the both
companies as well as personal goals. So for this companies introduce performance
management system in which company sets targets and goals for the employee and then
monitor and evaluate them throughout the period, and then reward those who have
worked as excepted and send others on training who did not perform well. I thoroughly
analyse the performance management system in the TATA MOTORS.
First of all they describe the organisational and personal goal to each and every employee.
Secondly they tell each and every employee that what will be expecting from them at the
end of the month or years. Then they communicate properly to its employees, and they
monitor the entire employee throughout the years. At the end of the year they evaluate all
employees’ performance and give them reward and feedback on the time. Reward to those
who have worked really well, reward in term of monetary incentive, promotion and non-
monetary like some gifts and promotion within the organisation. they also provide proper
feedback to all its employee at the end of some specific period so that their employee can
get to know about their performance in the company and what they need to do.
In Tata motors they are following yearly analysis techniques to analyse their employees. In
the beginning of each financial year they set the target and objectives of both company and
of individuals as well. After the end of financial year they evaluate each and every
employees performance with the goals they have set at the beginning of the year, then they
reward those employees who have perform extremely well and satisfied. Reward in terms of
incentive in salaries, promotion to the next position and giving them some non-monetary
gifts as well, to just encourage them. To motivate its employee more they have introduce
the part of the salary increase to individual performance measures as variable pay. It means
in their salary structure, some part of the salary is variable and can be increased after
performance analysis of an employee. Currently between 6 to 8 per cent of the
compensation is variable pay, which they can increase after a year on the basis of the
employee performance. it is one of the best ways to motivate employee to perform better,
like in this kind of incentive techniques they mostly work harder and smarter to achieve the
company’s goals and objectives, as they clearly know that their promotion and increment in
salary linked directly with their performance. They also motivate and train those employee
who did not perform well in the company. They basically provide them proper training so
that they can work better in the upcoming years and can contribute towards the
organisational goals. They also communicate properly to their employee so that there
should not be any mistake in understanding the goals and objectives of the company. They
evaluate employee performance with the prescribed criteria then provide them with proper
feedback and reward.

They used90 degree appraisal techniques in the firm, means employee will get feedback
from one head it could be line manager or the head of the department. It is a single person
review system. Means at the end of the financial year, employee get feedback from the one
head only like from line Manager.

Tata Motors Limited, like many large organizations, likely has a comprehensive performance
management system in place to monitor, evaluate, and improve the performance of its
employees. Here's a detailed explanation of what such a system might entail:

Goal Setting: The performance management process often begins with setting clear and
measurable goals for each employee. These goals are aligned with the company's overall
objectives and may be established collaboratively between managers and employees.

Regular Feedback: Tata Motors likely emphasizes regular feedback sessions between
managers and their direct reports. These sessions provide an opportunity to discuss
progress towards goals, identify areas for improvement, and offer praise for
accomplishments.

Performance Appraisals: Periodic performance appraisals are conducted to formally

evaluate employees' performance. These assessments may include a review of goal
attainment, competencies demonstrated, and overall contributions to the organization.

360-Degree Feedback: Tata Motors may utilize a 360-degree feedback system, where
employees receive input on their performance from multiple sources, including peers,
subordinates, and supervisors. This comprehensive feedback can provide a more holistic
view of an employee's strengths and areas for development.

Training and Development: Based on performance appraisals and feedback, Tata Motors
likely invests in training and development initiatives to help employees enhance their skills
and capabilities. This could include technical training, leadership development programs, or
coaching opportunities.

Recognition and Rewards: High performers at Tata Motors may be recognized and
rewarded for their contributions to the organization. This could take the form of monetary
bonuses, promotions, or non-monetary rewards such as public acknowledgment or
additional responsibilities.
Performance Improvement Plans: For employees who may be struggling to meet
performance expectations, Tata Motors may implement performance improvement plans.
These plans outline specific actions and milestones for improvement, with regular
checkpoints to monitor progress.

Succession Planning: As part of its performance management system, Tata Motors likely
engages in succession planning to identify and develop future leaders within the
organization. This ensures a pipeline of talent ready to fill key roles as they become vacant.

Continuous Monitoring and Adaptation: The performance management system at Tata

Motors is likely dynamic and adaptive, with continuous monitoring of performance metrics
and regular reviews to assess the effectiveness of the system. Adjustments are made as
needed to ensure alignment with organizational goals and changing business needs.

Overall, Tata Motors' performance management system plays a crucial role in driving
employee engagement, fostering development, and ultimately, contributing to the
company's success in the highly competitive automotive industry.
Reliance Industries Limited is an Indian multinational conglomerate headquartered in
Mumbai. Its businesses include energy, petrochemicals, natural gas, retail,
telecommunications, mass media, entertainment, and textiles.
Owner: Mukesh Ambani
Subsidiaries: Reliance Retail, Jio-bp, Jio Platforms, Network18, MORE
Stock price: RELIANCE (NSE) ₹2,906.55 +4.60 (+0.16%)
Founder: Dhirubhai Ambani
President: Mukesh Ambani
Headquarters: Mumbai
Revenue: 9.75 lakh crores INR (US$120 billion, 2023)
Founded: 1957, Maharashtra

An effective Performance Management System should achieve the following:-

  Review the employment cycle of every employee,
 Beginning with the recruiting process,
 Employee development,
 Ending with effective exit interviews.
 Employee’s knowledge, skills, and abilities with the organization's human capital
needs and business objectives.
 Provide managers and employees with the tools necessary to focus on short-term
and
Long-term goals that contribute to both career and organizational success.

LEVELS TO EVALUATE THE PERFORMANCE APPRAISAL TECHNIQUES ARE:

 SALES EXECUTIVE
 SENIOR MANAGER

SALES EXECUTIVE:
For the sales executive different methods can be used as follows:
1) Field review method
2) MBO

Field review method-In this method evaluation is done on the basis of 2 phases so as to to
reduce the biasness and to reach at the consensus. Phase I: Interviewing the line managers
to evaluate their respective employees. This phase is handled by HR functionary. Phase: II:
HR functionary, generally, appoints a small group of rater to rate the each and every
employee for every managerial unit.

MBO- It is a system wherein the superior and subordinate managers of an organization

jointly define their common goals, define each individual’s major areas of responsibility in
terms of results expected to him and use these measures as guides for operating the unit
and assessing the contribution of each of its members. It establish a link between
organizational and individual performance and it is easy to implement and measure.
Employees feel motivated and it enhances the performance.

Evaluation of the Measurement System

 Reliance should conduct the performance appraisal in the month of April annually.
Employee need to set goals yearly in the month of April.
  Employee has to select all 4 verticals and under each vertical, choice of objectives
and challenge's are given and employee has to choose.
 One of the additional goal can be set by the employee.
 Quarterly Meeting will be done by immediate manger and it will be of purely
“Professional Discussion”. Employees has to take initiative of its own and invite
manager for this discussion.
 Quarterly Meeting will be in June, September and December. In meeting, Graph
Representation of employee performance will be shared by manager quarterly. And
Guidelines and problem faced in the critical situation to be discussed.
 Based on their performance, increments will be given in their pay.
 If an employee achieves or exceeds the target given along with their team will be
provided with attractive cash and incentives.
 They should specifically targets working women and men who could be the potential
consumers.
 They should have its own training division for its entire employee Development.
Employees will be given 20 days of training to enhance their skills requirements.

APPRAISAL & REWARDAPPRAISAL

 New Appraisal System based on KRAs & Targets·

 Review of Targets at regular Intervals·

REWARD

o Promotions based on Performance·

o Productivity & Profit-linked Incentive Schemes·

o Mainly involved monetary incentives

From my point of view, adoption of “Management by Objective” and “Field review

Method” is perfect for RELIANCE SALES EXECUTIVE POSITION because –
 It believes in Employee Driven Process.
Transparent Process
No partiality will be seen in the whole process. Fair decision will be made.
Employee can stand of his own words for its objectives and goals.

SENIOR MANAGER:
For the senior manager different methods can be used as follows:
360 Degree appraisal method-

Many firms have expanded the idea of upward feedback into what the call 360-
degree feedback. The feedback is generally used for training and development,
rather than for pay increases. Most 360 Degree Feedback system contains several
common features. Appropriate parties – peers, supervisors, subordinates and
customers, for instance – complete survey, questionnaires on an individual. 360
degree feedback is also known as the multi-rater feedback, whereby ratings are not
given just by the next manager up in the organizational hierarchy, but also by peers
and subordinates. Appropriates customer ratings are also included, along with the
element of self-appraisal. Once gathered in, the assessment from the various
quarters are compared with one another and the results communicated to the
manager concerned.

Evaluation of the Measurement System

1. In 360 degree appraisal technique: SELF and MANGER EVALUATION FORM is also
there which is known as Employee Performance Review Form. In this, goals are given
with percentage weightage like –

a. Achieve Excellence in Project Delivery 50%

b. Achieving Excellence in Client Facing Skills 25%

c. Standardized Processes & Methodology for Key Service Offerings 25%.

2. Senior employees are judged from different perspectives and it helps them to
identify the changes required to be more acceptable, and it also helps them to
enhance their skills.
 3. It reduces the biasness as subordinates as well the peers can judged the
performance of the senior level employees.
4. Appraisals that are based on Balanced Scorecard, can tracks the achievement of
employees at four levels -

 Financial perspective - contribution in terms of revenue growth, cost reduction

and improved asset utilization.
 Customer perspective - Looks at the differentiating value proposition offered by
the employee.
 Internal perspective -Refers to the employee’s contribution in creating and
sustaining value.

Learning and growth – are self-enhancing motivators.

APPRAISAL & REWARDAPPRAISAL

 People Development an important KRA

 Build & Sustain Relationships Idea Leadership
 Handling Complexity
 Superior Execution
 Drive for Results

REWARD

 Promotions based on Performance

 Both monetary as well as non-monetary incentives are involved(mainly non-
monetary)

Suggestion’s

From my point of view, adoption of “Balance scorecard” and “360 degree appraisal method”
is perfect for RELIANCE SENIOR MANAGER POSITION because:

• BALANCE SCORECARD is a good method. It give the clear picture of how

performance management process is done.
 • 360 DEGREE APPRAISAL provides feedback from every perspective and reduces the
biasness at each and every level

Though 360 degree is not effective in India as people still hesitate to use this method
because –

 The organizations are ruled as per hierarchy

 Subordinates do not open up about their boss.
 Managers Nature
 Power and Politics exists in organization
 Majorly, vertical communication (Top to Down).
But it could be one of the most effective methods for evaluating the performance of
the senior level employees.