Apurva Project 1

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Field Survey Report on the topic

Leadership Practices in NTPC

SESSION 2009-11

UNDER SUPERVISION OF: SUBMITTED BY:

MR.MUNISH SHARMA APURVA

SR.H.R. Officer PG/15/024

NTPC, NOIDA.


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TABLE OF CONTENTS

Page No.

DECLARATION (iii)

PREFACE (v)

ACKNOWLEDGEMENT

INTRODUCTION (1)

RESEARCH OBJECTIVES (62)

RESEARCH METHODOLOGY (64)

GRAPHS AND INTERPRETATION (67)

FINDINGS (83)

CONCLUSIONS (87)

SUGGESTIONS (92)

LIMITATIONS (94)

BENEFITS (96)

BIBLIOGRAPHY (98)

ANNEXURE


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DECLARATION


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DECLARATION

I am Apurva (PGDM3rd) from School Of Management Sciences, Varanasi.

Hereby declare that the survey report on The Leadership Practices NTPC is

the result of my own efforts and is raised on information collected and guidance

given by my mentor & faculty members.

The survey report is correct to the best of my

knowledge & this report so far has not been published anywhere else.

Date:-. Signature

Place: -.


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PREFACE


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PREFACE

It is a great privilege for me to place this survey report before the reader. The

report is concerned about The Leadership Practices in NTPC . This report is

presented in very simple and understandable language on the basis of primary

data.

Lastly I would like to state that although every possible care has been taken to

make the report error free but still the possibility of some error keeping

inadvertently cannot be ruled out. I shall be feeling highly obliged to all reader if

some are brought to my notice. Critical evaluation welcome and shall begratefully acknowledged.

I sincerely express my gratefulness to all those who directly or indirectly, helped

me in this project. I firmly believe that there is always scope for improving and

accordingly I shall look forward for welcome suggestion in this direction from all

the reader and subject spiel, which shall be thankfully acknowledged.


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ACKNOWLEDGEMENT


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ACKNOWLEDGEMENT

First of all I would like to bow before all the mighty presence of God without

whose mercy this project would have not been possible.

I am extremely grateful to Mr. Munish Sha rma for giving me this opportunity to

carry out this project work.

I also thanks to the respondent and my friends, without whose co -operation this

would not have been possible.


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National Thermal Power Corporation

NTPC Limited

Type Public

Industry Electricity generation

Founded 1975

Headquarters New Delhi, India

Key people Sri R.S. Sharma, Chairman &

Managing Director

Products and

services

Electricity-generation,

distribution and trading

Total assets Rs. 93,562.70 crore

Employees 24899(2010)

Website www.ntpc.co.in


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INTRODUCTION

NTPC Ltd., a Power Generation Company as defined under Section 2(4) A of the

Electricity (Supply) Act, 1948, was incorporated as National Thermal Power

Corporation on 7 th November, 1975 with the mandate for planning, promoting and

organizing integrated development of thermal power (including Associated

Transmission Systems) in the country.

The Company acquired its new identity, NTPC Limited in November 2005.

This new identity signif ies that the Company has diversified its operations beyond

thermal power segment and has added new business activities by way of

forward, backward and lateral integration, to become an integrated power

company with presence across the entire energy value c hain.

Today NTPC Ltd. is the largest power generating in India, classified as a

schedule A Company. Acknowledging its potential to be a global giant, it was accorded the Navratna

status in 1997.This gives NTPC enhanced autonomy and delegation of power in

several aspects including decisions on capital expenditure, formation of joint

ventures and subsidiaries and organizational restructuring. It has a vision to

become A world class integrated power major, powering Indias growth, with

increasing global presence.

Towards the aim of powering Indias growth, the company has embarked upon

an ambitious capacity addition programme to become a 50,000 MW company by

the year 2012 and to have an installed capacity of 75,000 MW plus by the year

2017.

In pursuit of its vision to become an integrated power major, the company has

diversified into hydropower generation, coal mining, power trading, gas/oil

exploration and production and manufacturing of equipments, etc. The company

is also making forays into nuclear power generation and generation of power

through renewable energy sources. The company has also entered into joint

ventures with leading players in the power sector for providing consultancy and

services like Design Engineering, R&M, O&M Services, etc. both in India and

abroad.

As of 31.03.2008, the company had 14 coal based power plants, 7 combined

cycle power plants, 3 hydroelectric power projects, 6 subsidiaries and 11 joint

ventures/projects under operation/implementation spread across the country.


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Various projects having an aggregate capacity of 16680 MW including 3750 MW

under joint venture are under construction.

NTPC is associated with rural electrification work under Rajiv Gandhi Grameen

Vidyutikaran Yojana and improving the performance of state owned power plants

under the Partnership in Excellence programme launched by Ministry of Power.

NTPC is entering into a higher orbit of performance and growth with many

opportunities and challenges. The Company crossed the 400 billion mark in

terms of gross revenue (Rs. 400.113 billion) and the 200 billion mark in terms of

power generation (200.84 billion units) in the year 2007 -08. Its net profit was Rs

74,148 million.

NTPCs generation capacity was 19.11% of the countrys installed capacity as on

31.03.2008 while if accounted for 28.51% of the entire electricity generated in the

country. The generating capacity of NTPC wasn29,394 MW in 2007 -08 including

2,044 MW under joint ventures.

The company has an authorized capital of Rs 10,000 crores, paid up ca pital of Rs

8,245.5 crores and a net worth of Rs 52,638.6 crores. Further NTPC has made

an impressive contribution of Rs 57,00.97 crores to the Central Exchequer.

Vision: NTPC has a vision to become A world class integrated power

major, powering Indias growth, with increasing global presence.

Mission: Develop and provide reliable power, related products and services

at competitive prices, integrating multiple energy sources with innovative

and eco-friendly technologies and contribute to society.


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Core Values : (B-COMIT)

o Business Ethics

o Customer Focus

o Organizational & Professional Pride

o Mutual Respect and Trust

o Innovation & Speed

o Total Quality for Excellence

Objectives: To realize the above vision and mission, eight key corporate

objectives have been identified:

o Business portfolio growth

o Customer Focus

o Agile Corporation

o Performance Leadership

o Human Resource Development

o Financial Soundness

o Sustainable Power Development

o Research and Development

NTPC provides efficient, reliable and green critical power solutions and

uninterruptible power supply systems to enable business continuity. With expert

power system engineers and nationwide services and support, the Company

ensures that other organizations have the power to perform.

The HR Philosophy

To facilitate the organization in fulfilling its strategic objectives with a People first

approach, we have developed a HR Philosophy Model through which we plan to

attain our goals. As per the model, at the periphery lies the role of HR to facilitate

the organization in fulfilling its Corporate Social Responsibility and facilitate good

governance practices. Within this framework, lies the role of HR to establish good

customer relationship.


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At the heart of the Model, lies the role of HR to create a Learning Organization

based on four building blocks i.e. building Competence, Commitment, Culture

and Systems. All the roles performed by HR

professionals require them to be System Designers, Inte rnal Consultants, System

Monitors and Impact Assessors.

Building Competence

Building competence refers to acquiring the right manpower and further

developing them. NTPC has a formalized and standardized manpower planning

process. The annual plan and the manpower plan are put together and the

forecast of all the manpower requirements are made based on the business

requirements, skill availability, market demands, attrition rate, future requirements

etc. Recruitment is done based on plans.

Training is imparted in order to build competence within the organization. A

paradigm shift was made in the Training philosophy and approach to Training by

emphasizing that it must be need based instead of resource based. A specific

scheme of level wise planned trainin g interventions was drawn up covering entry

level (E1) to Business Unit Head level (E8), along with need based interventions

designed after rigorous Training Need Analysis. Training in soft skills has also


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been taken up simultane ously. Foreign Training a nd Long Term Educational

Programmes have been started through tying up with reputed academic

institutions.

Commitment Building

In order to build a sense of loyalty and commitment towards the organization, HR

has helped in building a distinct Corporate Identity with the help of NTPC Flag

and NTPC Song. This has helped the employees identify with the Company and

its Mission/Goals.

NTPC Reward System was developed to recognize and motivate people aft er an

extensive Benchmarking exercise involving PSUs and leading Private

companies practices. Township/Family Welfare activities are taken from time to

time been for improving the Quality of Life in our Pro jects Townships, and

providing opportunities for all round development of children/families ofemployees.

CultureBuilding

HR plays a major role in culture building through following means. 1.

Communication: NTPC has a Communication Plan that reflects the companys

philosophy to promote greater lab or-management cooperation. A communication

matrix has been framed for up - ward, downward as well as lateral

communication. It comprises of both, formal and informal, channels of

communication. 2. Creating Cultural Artifacts: Cultural artifacts such as NTPCSong, NTPC flag, slogans exist. We publish a series of story books called the

Timeless Treasures or Anmol Ratan which contains short stories that

exemplify our values and culture 3. Vision and Value Actualization. 4. Reward

system: Individual, team and Institutional rewards have been developed in order

to motivate employees and develop

Systems Building

The mechanism followed in our HR Model for Systems Building is: Design the

System, act as Internal Consultant in setting it up, Monitor its implementa tion,and finally Assess the Impact through feedback, etc. Based on this assessment

the System can be reviewed or strengthened.

Learning Organization The ultimate goal of HR is to create a learning

organization i.e. an organiz ation that is flexible, res ponsive and adaptive. It is an


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organization, which is constantly increasing its capabilities at individual and

organizational level.

Learning Organization The ultimate goal of HR is to create a learning

organization i.e. an organ ization that is flexible, responsive and adaptive. It is an

organization, which is constantly increasing its capabilities at individual and

organizational level.

Key HR Practices

The HR practices have been designed to deliver the key HR objectives in line

with organizational HR philosophy. These are:

1. Manpower Planning

2. Recruitment

3. Performance Management

4. Career Planning

5. Training & Development

6. Leadership Development,

7. Succession Planning

8. Reward & Recognition

9. Compensation & Benefits

10. Employee Welfare

11. Organizational Communication

12. Labor-Management Cooperation

y Structure of HR Function: - For strategy execution, the HR func tion in NTPC

has a 3-tier structure. While the Corporate HR department is responsible for

policy formulation, the Regional HR enables the Units to execute these policies.


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To deliver the various functions of HR, the HR department at each locatio n is

divided into Sections. Ad ministratively, all HR sections report to their Head HR at

the location whil e functionally they report to the Functional Group Head at

Corporate Center where the policies are formulated.


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Our HR vision speaks of developing our employees into world class professionals

and to make NTPC a Learning organization. NTPC subscribe s to the belief that

efficiency, effectiveness and success of the organization depends largely on the

skills, abilities and commitment of the employees who constitute the most

important asset of the organization. Therefore, a lot of emphasis is laid on

training and development of employees. All training and employee development

initiatives in NTPC spring from the 4 building blocks of NTPCs HR philosophy

model Competence Building, Commitment Building, Culture Building and

Systems Building. Systems for talent management in NTPC comprise of:

1. Talent Induction

2. System for Employee Engagement

3. Training Long term and Short Term, and Special Training Interventions

4. Performance Management System

5. Career Pathing

6. Leadership Development

7. Succession Planning

8. Exit Management

Strategies

The tremendous power appetite of the country whetted by economic growth,

rising living standards and requirements of a huge population translates into

abundant growth opportunities for NTPC. To ac tualize Our Vision and to meet the

challenges in our business, the Company is ready with the following strategies

leveraging its resources and strengths and to exploit the growth opportunities:

y Maintain market leadership: Plan to become 75000 MW capacity by 2017

y Further improve our operating performance

y Pursue our fuel security : Backward integration into mining and gas sectors

y Diversify fuel mix : Venture into Hydro, Nuclear and renewable sector

y Develop merchant power capabilities: To sell power at market based price

y Strengthen our diversified businesses


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y Adopt advanced technologies ; Adopt super critical and ultra super critical

technologies

y Emphasize research and development: Invest upto 1% of annual profit after

tax in R&D.

y Invest in employee development

y Expand our Corporate Social Responsibility initiatives: Through CSR-CD

and NTPC Foundation.

Risk Management

The company has to sustain its growth, retain its leadership position in the

country and at the same time improve its operational efficiency. In o rder to

reduce dependence on conventional fuel, the company is foraying into hydro,

nuclear and non-conventional energy sources. As a step in backward integration,

the Company is entering into coal mining business and also natural gas value

chain.

Power generation business involves many risks and potential impacts including

failure or loss of generation, safety and environment hazards, obsolescence of

technology, inadequate supply of fuel and water, legal risks, breach of

information security, financial ri sks, sustaining market share, sustaining

realization, delay in project execution, inability to attract and retain skilled and

experienced manpower, threats to security of people and property, impact of

natural calamities, impact of government policies and performance below

expected or contracted levels of output or efficiency.

NTPC has taken adequate measures to address the above mentioned risks by

developing appropriate systems and practices. In order to institutionalize the risk

management in NTPC, a risk management policy was formulated in fiscal 2005.

After careful analysis of business environment, corporate plan and business

practices and with a view to enhance business performance, NTPC has adopted

a two-pronged strategy - the short term as well as long term measures to mitigate

the risks and put in place a reporting system which would enable critical risks

beyond certain tolerance levels to be reported for further action.


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In order to imbibe the best practices prevalent in the industry, NTPC has also

appointed a reputed consultant to develop the enterprise risk Management

framework. After holding detailed deliberations involving all the units of the

Company, an entity wide Risk Register is under development and an enterprise

wide Risk Reporting Framewo rk would be implemented in 2008 -09.

Corporate Social Responsibility: NTPC ltd. believes that its resources and

employees can profoundly impact the world around it. The spirit of volunteerism

promoted by the Company has resulted in 25 NGOs being run by our employees

for CSR activities. The focus areas for NTPC's CSR initiatives include

(i) Empowering the physically challenged

(ii) Womens empowerment, including educational facilities for girls

(iii)Vocational education and training

(iv) Health care support

(v) Community development and infrastructure building

(vi) Rural electricification

Most of the Stations are located in remote Rural Areas, which are socio -

economically backward and deficient in the basic civic amenities. NTPC

undertakes comprehensive Community Development in the neighborhood area of

operating stations under CSR -CD. The work is being done essentially in the areas

of Primary Education, Community Health, Basic Infrastructure Development,Vocational Training, etc. In addition, Quality Circ les (QCs) have been started in

neighborhood villages of 10 stations. The NTPC employees participate in various

CD activities through Employee Voluntary Organization for Initiative in Community

Empowerment (EVOICE). In addition, the following major communit y initiatives

were undertaken:

y In the field of education, NTPC is committed to provide support for setting

up a technical polytechnic at Uttaranchal, at Kaladungi District, Nainital.

Support for a Womens Polytechnic at Gopeshwar, District Chamoli is also

pledged.

y With a view to improve the employability of the village youth residing in

the vicinity of NTPC Stations/ Projects and also to improve availability of

skilled manpower around Projects, NTPC is providing sponsorship to

candidates from villages in t he vicinity of NTPC stations/ Projects for ITI

training at Government/ Government recognized private ITIs in the trades

of welder, fitter, instrument mechanic and electrician. Close to 750 village

youth have been sponsored during the financial year.


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y Support has been extended by NTPC for delivery vehicles for mid -day

meal programmes for the children of Government. Schools located in the

National Capital Region through Food Relief Foundation of ISKCON.

y Empowerment of women is akin to empowerment of the society as awhole as women inculcate values and discipline in their offspring who

grow up to form the backbone of the nation. Self -reliance and

opportunities of self -employment imbibe them with confidence and enable

them to generate additional income bes ides contributing to domestic

work. In accordance, NTPCs support has also been extended for

assistance in self-reliance for 200 tribal girls/ women in tribal area of

Jhamar Kotra in Udaipur District of Rajasthan Assistance is being

extended for construction of School cum Multipurpose Building for Girls in

Village Shaulana, District Ghaziabad, Uttar Pradesh through Nari Jagriti

Abhiyan, Hardwar.

y Assistance is committed for construction ofone floor each forGirls Hostel

in District Ongole and Guntur of Andh ra Pradesh.

y In Kerala, NTPC has provided support to Allapuzha medical College

Hospital for one dialysis machine. The hospital will provide free medical

facilities to the economically under privileged patients.

y In Orissa, NTPC has extended support for infra structure works like area

lighting, water treatment plant and open car parking in and around Shri

Jagannath Temple, Puri.

y For all-round improvement in community living, at Angul District in Orissa,

assistance is committed for construction of Building and I ndoor Hall for

Orissa Table Tennis Academy, Angul.

y As a CSR initiative in the field of Health, NTPC is providing support to

Hyderabad Eye Research Foundation for three specialized Eye Centers

at Bhubaneswar Eye Hospital, Bhubaneswar, and Orissa. The centers

were inaugurated on 10 October 2007, by Honble Union Minister of

Power. These Centers will provide free medical facilities to the

economically under privileged patients.

y NTPC has also extended support for project Uddhav Kyari a 54 -acre

grove situated in village Nandgaon in Mathura district of Uttar Pradesh,

involving regeneration of the grove through Braj Foundation.


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Robust Financials of the company

y Net Sales of Rs 370,501 million during 2007 -08 as against Rs 325,952 million

registering an increase of 13.67%. Gross Revenue is Rs 400,177 million during

2007-08 as against Rs 353,807 million for the year 2006 -07, an increase of

13.11%.

y Profit after tax for the year 2007-08 is Rs 74,148 million as compared to Rs

68,647 million during the year 2006 -07, an increase of 08.01%.

y Highest total dividend @ 35% amounting to Rs 28, 859 million for the year 2007 -

08.

y Contributed Rs 57,009.7 million to exchequer on ac count of corporate tax,

dividend and tax thereon and wealth tax.

y Market capitalization of the company is over Rs 1621 billion (US $ 40.33 billion

approximately) making it the third largest company as on 31.3.2008.y Highest ever-capital expenditure of Rs 875 19 million during 2007 -08.

100% realization of the billing for the fifth year in succession.

Key Impacts, Challenges and Opportunities

The power industry in India has been historically facing imbalances between

demand and supply. Although the power gene ration capacity has increased

substantially in recent years, it has not kept pace with the continued growth of

Indian economy. To address the persistent shortages, the Government of India

has taken significant steps to restructure the industry, attract inv estment and plan

for fast track capacity addition through incentivized policy initiatives. These

include policy intervention such as Electricity Act, 2003, National Electricity Policy

2005 and Tariff Policy 2006. Further the Government has also liberalize d policies

relating to transmission and distribution sectors.

NTPC faces numerous challenges, being the largest power generating company

in the country, with a market share of approximately 19.11% in terms of installed

capacity and producing 28.51% of the total electricity generated in India. With

the responsibility of operating a capacity of around 30,000 MW and an ever -

increasing urgency of timely capacity addition, the responsibilities and challenges


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associated to achieving its organizational goals are increasing. However, as the

leader in the power industry, NTPC understands that the only way to sustain

growth is to combat challenges, continually seek opportunities and formulate

appropriate strategies.

y Key impacts

NTPC has generating stations based on coal and gas... NTPC is taking a number

of initiatives towards preservation of the environment by providing state -of-the-art

pollution control systems, strict environment monitoring, judicious use of natural

resources (coal, gas, water and land), study of impact on ambient air due to

plants operations, etc. Strict control is exercised during operation of the plants to

optimize use of fuel. Key impacts of the business of NTPC may be summarized

as:

y Acquisition of Land : Conversion agricultural and fo rest to industrial land use -

displacement of people/loss of homesteads and livelihoods.

o Ash Generation: Conversion agricultural and forest land to waste land in the

form of ash disposal sites.

o WaterConsumption: Withdrawal of water and generation of effluents

o Air Quality: Air emissions due to combustion of fossil fuels

o Afforestation: Maintenance of ecological balance

o Safety Concerns: Fire and safety hazards

Contribution:-

y NTPC today accounts for 29% of Indias total power generation through a large

and efficient fleet of 22 power generating stations (total capacity 31,000 MW

plus).

y NTPC is steadily moving towards its stated objective of becoming a 75,000 MW

Plus Company by the year 2017.

y NTPC is pursuing strategic integration along the power -value-chain through its

entry into coal mining, power equipment manufacturing, power tradin g, power

distribution and its lateral diversification into hydro, new renewables and nuclear

power.

y Presently our installed capacity is 31,134 MW including 2,294 MW under joint

ventures.


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y A capacity of 17,830 MW is under construction and 7,092 MW is under bidding.

Feasibility Reports have been approved for a capacity of 4,705 MW.

y Feasibility Reports for a capacity of nearly 20,000MW are under different stages

of preparation.

y

Further, NTPC is effectively pursuing strategic integration along the power -value-chain through its entry into coal mining, power equipment manufacturing, power

trading, power distribution and its lateral diversification into hydro, new

renewables and nuclear power. NTPC has embarked on a journey of becoming

the most valuable company in the country, one of the largest integrated power

majors in the world and a leader in GREEN POWER by the year 2032.

No. of Locations 121 (2008 -09)

No.of branches are as follows: -

Coal Based Power Stations

With 15 coal based power stations, NTPC is the largest thermal power generating company i

country. The company has a coal based installed capacity of 24,885 MW.

COAL BASED(Owned by

NTPC)STATE

COMMISSIONED

CAPACITY(MW)

1. Singrauli Uttar Pradesh 2,000

2. Korba Chhattisgarh 2,100

3. Ramagundam Andhra Pradesh 2,600

4. Farakka West Bengal 1,600

5. Vindhyachal Madhya Pradesh 3,260


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6. Rihand Uttar Pradesh 2,000

7. Kahalgaon Bihar 2,340

8. NCTPP, Dadri Uttar Pradesh 1,330

9. Talcher Kaniha Orissa 3,000

10. Feroze Gandhi, Unchahar Uttar Pradesh 1,050

11. Talcher Thermal Orissa 460

12. Simhadri Andhra Pradesh 1,000

13. Tanda Uttar Pradesh 440

14. Badarpur Delhi 705

15. Sipat-II Chhattisgarh 1,000

Total 24,885

Coal Based Joint Ventures:

COAL BASED

(Owned by JVs)STATE

COMMISSIONED

CAPACITY

1. Durgapur West Bengal 120

2. Rourkela Orissa 120

3. Bhilai Chhattisgarh 574

4. Kanti Bihar 110

Total 924


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NTPC has increased thrust on hydro development for a balanced portfolio for

long term sustainability. The first step in this direction was taken by initiating

investment in Koldam Hydro Electric Power Project located on Satluj river in

Bilaspur district of Himachal Pradesh. Two other hydro projects under

construction are Tapovan Vishnugad and Loharinag Pala. On all these projects

construction activities are in full swing.

HYDRO BASED STATEAPPROVED

CAPACITY(MW)

1. Koldam (HEPP) Himachal Pradesh 800

2. Loharinag Pala (HEPP) Uttarakhand 600

3.Tapovan Vishnugad

(HEPP)Uttarakhand

520

Total 1,920

Organizational structure

Board of Directors

The Chairman and Managing Director is the highest executive officer of NTPC. .

NTPC Limited is a Government Company within the meaning of section 617 of

the Companies Act, 1956 as the President of India holds 84.5%(after

disinvestment the stake by Indian government on 19october2009) of the totalpaid-up share capital.

y As per Articles of Association, the power to appoint Directors including Chairman

and Managing Director vests in the President of India. The combined posts of the

Chairman and Managing Director ensure single person authority and

accountability.


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y In terms of the Articles of Association of the Company the strength of the Board is

not to be less than four Directors or more than twenty Directors. These Directors

may be either whole -time functional Directors or part -time Directors.

Composition of the Board

y As on 31st March 2008, the Board comprised of thirteen Directors out of which

seven were whole-time functional Directors including the Chairman and

Managing Director.

y Two Directors were nominees of the Government of India.

y The Board also had four independent Directors, appointed by the Government of

India through a search committee constituted for the purpose. The Directors bring

to the Board wide range of experience and skills .

During the year 2007-08, there were only four Independent Directors on the

Board of the Company, against the requirement of nine. The listing agreements

with stock exchanges stipulate half of the Board members to be independent

directors. The company has requested Government of India to initiate necessary

steps for appointment of adequate number of Independent Directors so that

Board composition is in compliance with the Listing Agreement.

For appointment of functional directors including Chairman and Managing

Director, job description and required qualification and experience have been

approved by the Board, which is updated from time to time keeping in view the

changed scenario in industry. For appointment of independent directors,

Government of India has set up a search committee in which Chairman and

Managing Director of a PSU is a representative. DPE has also prescribed that the

independent director to be appointed shall have an experience of not less than 10

years at the level of Joint Secretary an d above in the Government; Chairman and

Managing Director/ MD in Corporate Sector; Professor level in an Academic

Institution or professionals of repute like eminent Chartered Accountant/ Cost

Accountants at the level of Directors of Institutes/ Heads of D epartment; persons

of eminence with proven track record from Industry, Business or Agriculture.


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The age limit of the Chairman and Managing Director and other whole -time

functional Directors is 60 Years. The Chairman & Managing Director and other

whole time Functional Directors are appointed for a period of five years from the

date of taking charge or till the date of superannuation of the incumbent, or till

further instructions from the Government of India, whichever event occurs earlier.

Government Nominee Directors representing Ministry of Power, Government of

India retire from the Board on ceasing to be officials of the Ministry of Power.

Independent Directors are appointed by the Government of India usually for

tenure of three years.

Stakeholder Engagements

Stakeholder engagement in NTPC involves dialogue between the company and

one or more of its stakeholders. There are, however, important reasons for the

company to engage with some of its stakeholders. In NTPC stakeholder

engagement is a part o f continuous learning and a means of providing the

company with the benefits associated with diverse perspectives.

The total stakeholder base of the company encompasses Government of India,

financiers, investors, customers, media, community, employees, r egulators,

suppliers, partners and statutory bodies. In the year 2004, the company launched

its Initial Public Offer (IPO), making the shareholders a major stakeholder. Thus

major stakeholders include:

o Government

o Shareholders

o Investors

o Partners

o Customers

o Suppliers

o Neighborhood Communities

o Mediao Statutory Authorities

o Employees

y Government: The Company was formed in the year 1975 as a wholly -owned

entity of Government of India and the Government of India held 89.5% of the

paid-up share capital of the Company in 2007-08. The working of the Company is


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subject to quarterly reviews by the Government at its Secretary level.

Government has also nominated its representatives on the Companys Board and

monitors the performance of the Company through various means such as the

Parliamentary Committees, Comptroller and Auditor General of India, Ministry of

Power, Department of Public Enterprises and the Members of the Parliament. All

these agencies have been giving a number of feedbacks on various facets of

operation of the Company. The Company, after assessment of such feedback,

submits action taken reports to these agencies.

y Shareholders: In 2004, NTPC came out with an IPO of equity shares including

an offer for sale by Govt. of India The Company has more than 6,50,000 retail

shareholders. The Company besides appointing a Share Transfer Agent for

servicing these shareholders has set up an in -house Investor Services

Department to ensure proper and timely redressal of grievances of these small

shareholders. The department along with the Company Secretariat constantly

takes feedback from these shareholders to bring out improvement in the services

being provided.

y Investors: In 2007-08, 10.5% of the paid-up capital was held by the public out of

which Foreign Institutional I nvestors and Mutual Funds held 8%. The Directors of

the Company constantly interact with the Institutional Investors to explain to them

the strategies and plans of the company. During such interactions, investors have

expressed various viewpoints on the se ctor and business of the company and the

management has, in turn, addressed their concerns and explained the measures

taken by the Company.

y JV Partners: NTPC has formed a number of joint venture companies for

undertaking specific business activities. The names of these companies are;

NTPC-SAIL Power Company Pvt. Ltd., NTPC-Aistom Power Services Pvt. Ltd.,

Utility Powertech limited, NTPC Tamilnadu Energy Co. limited, Ratnagiri Gas and

Power Private ltd., PTC India Limited, Aravali Power Company Pvt. Ltd., NTPC

SCCL Global Ventures Pvt. Ltd., Meja Urja Nigam Private limited, NTPC BHEL

Power Projects Pvt. Ltd., BF-NTPC Energy Systems Ltd.

y Customers: The State Electricity Boards, JV partners, Government of India and

users of consultancy services are the major customer groups. NTPC organizes

customer workshops to meet and obtain the feedback from them. Regular

meetings are held with customers in each region for operating plants. All capacity

additions are planned in consultation with the customers for meeting t heir future

requirement of power. Customer Focus being one of the Core Values of the


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Company, NTPC makes it a point to regularly participate in all Regional Electricity

Board Meetings, which has representation of all customers of the region. These

meetings are held on a regular basis, 3 -4 times in a year and provide a forum for

feedback regarding current requirements of the customers. Customers attend

these meetings along with concerned functional executives of NTPC from such

areas like commercial, operati ons, etc. and issues pertaining to the respective

areas are discussed and resolved to the mutual satisfaction of customers and

NTPC. Technical co-ordination committee meetings and Board Meetings are

attended at a very senior level in which NTPC ensures reg ular participation for a

very fruitful interaction with its customers. Views expressed by the customers are

given due importance in formulating future business plans and strategies

y NTPCs Customer Initiatives: Customer focus is an article of faith for the

Company. CRM (Customer Relationship Management) is at the core of the

Companys business approach. NTPC strives to source fuel and inputs at low

cost in order to provide power at the least possible cost. It reaches out to the

customers through various ini tiatives like performance improvement support,

extending training facilities, customer support services, customer meets and

customer satisfaction index.

y Suppliers: Good supplier relations and supplier network are must for successful

construction and operation of a plant. Therefore, they are identified as one of the

stakeholders. NTPC organizes pre -bid conferences with suppliers to learn about

the latest developments in the relevant field and to incorporate these in the

bidding documents before the tenderin g process commences for award of major

packages.

y Community: Public interest groups affected by the setting up of projects have

their concerns, needs, aspirations and requirements. These may be with

reference to environment, R&R or any other relevant aspec t. Public hearings and

meetings with local interest groups are a cohesive part of project implementation

programme to satisfy the local communities and the Project Affected People

(PAP). The process of consultation is continued even after setting up the pl ant.

y Statutory Authorities: The Company has to adhere to various statutory and

mandatory rules and regulations and licenses have to be obtained for setting up

and running the plant. All such government and local authorities and their

requirements are identified and met with.

y Media: There are effective communications and regular interactions with media

(both print and electronic) on various occasions including publication of quarterly


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results, annual results and other important events. Annual press meet i s held in

the first week of April every year.

y Employees: The employees of the company are the most important stakeholders

of the Company. Professional and career growth opportunities, employee

satisfaction, social welfare, health, safety and quality of li fe are the issues and

interests that have to be addressed with respect to them.

Products and Services:

y Electricity Generation

y Power Distribution

y Power Trading

y Consultancy Services (including training in Power Technologies)

y Coal Mining

y

Manufacturing of Electrical Transformersy Manufacturing Ash Bricks and Ash Cement,

y Oil & Gas Exploration.

Names/ No. of Geographical Markets - India, SAARC,

West Asia, Asia Pacific, Africa

Major Competitors of NTPC (2009) in Rs. crore

NAME OF

COMPANIES

Last Price Market Cap. Sales

Turnover

Net Profit Total Assets

NTPC 202.10 166,640.84 44,126.08 8,201. 0 9 ,562.70

Power Grid Corp 107.00 45,034.60 6,675.85 1,690.61 41,999.41


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NHPC 30.05 36,963.73 2,671.85 1,075.22 30,214.65

Reliance Power 152.45 36,539.22 -- 248.90 13,792.81

Tata Power 1,310.00 31,087.25 7,236.23 922.20 13,890.56

Reliance Infra 1,060.20 25,961.15 9,868.61 1,066.54 19,239.62

Adani Power 119.00 25,942.42 -- -1.87 7,277.7

Neyveli Lignite 144.00 24,159.02 3,354.91 821.09 13,526.93

JSW Energy 122.00 20,008.67 - -

Torrent Power 300.00 14,173.45 4,424.96 405.09 6,485.70

Strengths

o Leadership position in the Indian power sector

o Strong cash flow

o Sound customer relations and commercial performance

o High operational efficiency of coal -based stations

o Long term agreements for coal and gas supply

o Strategic locations near fuel source

o Effective project implementation

o Ability to turn around underperformin g stations

o Experienced in-house engineering capabilities

o Advanced information technology platform

o Strong balance sheet

o Government support

o Competent and committed workforce

o Emphasis on corporate governance


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Challenges

o Fuel linkages/ fuel security issues

o Project execution/implementation issues

o Sustaining market realization due to poor financial health of many SEBs.

o Sustaining market share in wake of Competition.

o Stringent environmental norms and vulnerability due to climate change

regulations in the future may add to cost of generation.

o To lead the sector in environment protection including effective Ash utilization,

peripheral development and energy conservation practices.

o Rehabilitation and resettlement of Project affected persons

o Capacity constraints of power equipment manufacturers

o Diversification of business portfolio

o Mobilization of adequate financial resources at competitive rates for capacity

addition plans

Opportunities

o Expand generation capacities by setting up thermal/hydro, nuclear capacities.

o Aggressively enter and establish presence in nuclear power and renewable

energy.

o Broad based fuel mix vizcoal (domestic and imported), gas, hydro power,

nuclear power, etc with a view to mitigate fuel risks and maintain

competitiveness.

o Development and commercial deployment of renewable/non -conventional energy

sources

o Backward integration into fuel management through acquisition and development

of coal mines to exercise greater control and understanding of supply economics.

o Strengthening of revenue collec tion by trading, setting up of merchant power

plants, direct sale to bulk customers and forward integration into distribution

business.


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Organizations for theyear2009. NTPCwasaworthywinnerafterarigorous

two-stageassessment includingasitevisit, followedbyscru

EnvironmentAwards

The Sunday Indian Special ega Excellence Indias Best Environment

riven Company Award 2009.

Institutedby Planman edia .

NTPCawardedThe Sunday Indian Special ega Excellence- "India's Best

Environment rivenCompany Award-2009". Thisaward isaspecial award to

recognizeandapplaud thecommitment ofNTPC imited towardsenvironment

andecology.

4th ater igest aterAward2009-10

NTPCwasawarded the ater igest aterAward2009-10 in theCategory

Best water anagement Public Sectors . aterAwardswereset up in2006

by ater igest tohonordistinguishedworkcarriedout byvariouscompanies

inordertosaveandconservewater.

SafetyAwards

Safety Award2009

reentechFoundation

Awardceremonyheld in oaon ay4, 2009.

NTPC's Barh STPP awarded SilverAward inConstruction Sector for

outstandingach ievement in Safety anagement by reentechFoundation.

Best Environment anagement Station Award forSafety

Institutedby irect orateofFactoriesand Boilers, Orissa

Shri alan Prasad, Executive irector, TalcherKanihareceiveda Shieldanda

Certificate from Shri Puspendra Singhdeo, inisterof State, abour&


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Employment ofOrissaon6th uly, 2009at Bhubaneswar.

TalcherKanihaofNTPCwasawarded Best Environment anagement Award

forSafety in the 6th State Safety AwardCeremony

Com anyRankings

PlattsTop250 lobal energyCompany for2009

Institutedby Platts loba l EnergyCompany.

NTPC td. asearnedarankingof onoverall global performance in the

Industry Sector. NTPChasalsobeenrankedNo.1 in Independent Power

Producers in Asiaandranked2nd in Independent PowerProducers lobally

withoverall performanceat rankNo.10 in Asia.

Plattsrankingsarebasedon fourkeymetrics asset worth, revenues, profits

andreturnon investedcapital.

Indias Biggest News akers Survey

BusinessToday

NTPChasbeenrankedNumberOneNews akerin the PowerSectorof India

by the BusinessToday Indias Biggest News akers Survey.

Thesurvey took intoaccount publicrelationsand imagebuildingeffortsof the

Corporates, theirvisibility uotient and ualityofexposureaswell as image

score todetermine IndianCorporateswhogot thebest presscoverage.

Business Standard's "BS1000" companies

Business Standard

NTPCrankedamongst top10companiesby thepremierbusinessdaily

Business Standard in the'BS 1000' listingof India'scorporategiants for theyea

2009. NTPCranked9th in the list of1000companies.

Therankingsarebasedon thenet salesof the top1000 listedcompaniesdurin

2008-09.

HRAwards

reat PlacestoWorkAward2009

oint Studyconductedby reat Places to ork Institute IndiaandThe


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Economic Times

NTPC bagged 4 Awards at the Great Places to Work Awards -2009. NTPC has

been ranked 1st among Large Organizations (with over 10,000 employees),

the Best PSU (Public Sector Undertaking) and 1st in Industry Verticals

rankings in the Manufacturing and P roduction Segment by a Joint Studyconducted by Great Places to Work Institute India and The Economic times.

AMITY HR Excellence Award

Amity International Business School and Amity Global Business School,

NOIDA.

NTPC was awarded Amity HR Excellence Award for the exemplary

acceleration and development of the organization by managing a talent pool in

a talent scarce macro environment, thus achieving unprecedented growth by

utilizing its human capital. This award acknowledges the impeccable global HR

practices followed by the organization that have led its astounding growth

towards being recognized as one of the best and most admired company in its

domain.

NCPEDP-Shell Helen Keller Award 2009

National Centre for Promotion of Employment for Disabled People (NCPEDP)

NTPC awarded for NCPEDP Shell Helen Keller Awards 2009 in the

Category'C':Companies/organizations /institutions who share NCPEDP's vision

and through their pol icies and practices demonstrate their belief in equal rights

and gainful employment for persons with disabilities

Vishwakarma Rashtriya Puraskar (VRP) 2007

Instituted by Ministry of Labour.

VRP provides public recognition of such outstanding achievement on the part

of the workers at the national level.

Best Companies to Work For 2009

Survey done by Business Today

NTPC has been ranked Second in the Core Sector w ith Index Score of 98 out

of 100 and ranked 21st in the 25 toppers list based on a survey of 8,742

respondents in 1000 organizations across 800 cities.


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SCOPE Meritorious Award for Best Practices in Human Resource

Management

Instituted by Standing Conference of Public Enterprises (SCOPE)

NTPC has been awarded the Gold Trophy for SCOPE Meritorious Award for

Best Practices in Human Resource Management for the year 2008 -09.

Corporate Governance Awards

Golden Peacock Global Award for Excellence in Corporate Governance 2009

Golden Peacock Global Awards have been instituted by World Council for

Corporate Governance.

ICSI National Award for Excellence in Corporate Governance 2009

The Institute of Company Secretaries of India

NTPC Limited has been awarded ICSI National Award for Excellence in

Corporate Governance 2009 .

y Quality Awards

International Gold Star Award for Quality 2009

Instituted by BID, a leading organization of Europe focused on promoting the

quality culture.

NTPC- CenPEEP received the international Gold Star Award for Quali ty 2009

in recognition of outstanding commitment to Quality contributing towards the

success for India in the business world. This award is recognition of the pro -

active work carried out by NTPC.

Current announcements:-

Government of India, Deptt. Of Public Enterprises, Ministry of Heavy Industries

& Public Enterprises vide Office Memorandum dated 19th May, 2010 has

conveyed grant of Maharatna status to NTPC apart from three other Central

Public Sector Enterprises (CPSEs). Since, presently NTPC has re quisite


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number of non-official Directors on its Board, therefore, only NTPC is eligible to

exercise delegated Maharatna powers.

onsequent upon grant of Maharatna status, the Board of Directors of NTPC

shall be, inter-alia, empowered to make equity investm ent to establish financial

oint ventures and wholly -owned subsidiaries and undertake mergers &acquisitions, in India or abroad, subject to a ceiling of 15% of the net worth,

limited to Rs.5000 crore in one project as against earlier limit of Rs.1000 cror e.

The exercise of Maharatna powers would be subject to the same conditions

and guidelines as laid down by the Government in respect of Navratna CPSEs

from time to time.


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Topic : Leadership practices in NTPC

LEADERSHIP

Definition: -

Leader is making people do what they dont want to do & liking it

Harry S.Truman

It is the ability to influence a group towards the achievement of goals .

Leadership is stated as the process of social influence in which one person can

enlist the aid and support of others in the accomplishment of a common task.

Theories of leadership

Trait theory tries to describe the characteristics associated with effective

leadership. Some of them are follows: -

1. Drive. Leaders exhibit a high effort level. They have a relatively high desire for

achievement, they're ambitious, they have a lot of ene rgy, they're tirelessly

persistent in their activities, and they show initiative.

2. Desire to lead. Leaders have a strong desire to influence and lead others.

They demonstrate the willingness to take responsibility.

3. Honesty and integrity. Leaders build trusting relationships between themselves

and followers by being truthful or no deceitful and by showing high consistency

between word and deed.

4. Self-confidence. Followers look to leaders for an absence of self -doubt.

Leaders, therefore, need to show self -confidence in order to convince followers of

the rightness of goals and decisions.

5. Intelligence. L eaders need to be intelligent enough to gather, synthesize, and

interpret large amounts of information; and to be able to create vis ions, solve

problems, and make correct decisions.'

6. Job-relevant knowledge. Effective leaders have a high degree of knowledge

about the company, industry, and technical matters. In -depth knowledge allows


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leaders to make well-informed decisions and to understand the implications of

those decisions.

Behavioral Theory

Assumptions

Leaders can be made, rather than are born.

Successful leadership is based in definable, learnable behavior.

Description

Behavioral theories of leadership do not seek inborn traits or capabilities.

Rather, they look at what leaders actually do.

If success can be defined in terms of describable actions, then it should be

relatively easy for other people to act in the same way. This is easier to teach and

learn then to adopt the more ephemeral 'traits'

A number of studies looked at behavioral styles the three most popular studies,

done at the University of Iowa, Ohio State, and the University of Michigan.

One of the first studies of leadership behavior was done

by Kurt Lewin and his associates at the University of lowa.In their studies, the

researchers explored three leadership behaviors or styles: autocratic, democratic,

and laissez-faire.

y Autocratic: - Autocratic style describes a leader who typically tends to

.centralize authority, dictate work methods, make unilateral decisions, and

limit subordinate participation.

y Democratic:- The democratic style of leadership describes a leader who

tends to involve subordinates in decision making, delegate authority,

encourage participation in deciding work methods and goals, and use

feedback as an opportunity for coaching subordinates .

y Laissez faire: - Laissez faire style leader generally gives the group complete

freedom to make decisions and complete the work in whatever way it sees fit.

The most comprehensive and replicated of the behavioral theories resulted from

research that began at Ohio State University in the 1940s.These studies sought

to identify independent dimensions of leader behavior. Beginning with over 1,000

dimensions, they eventually narrowed the list down to just two categories that


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accounted for most of the leadership behavior described by subordinates. They

called these two dimensions initiating structure and consideration.

y Initiating structure:-

The term initiating structure refers to the extent to which a leader is likely to

define and structure his or her role a nd those of subordinates in the search for

goal attainment. It includes behavior that attempts to organize work, work

relationships, and goals. For example, the leader who's characterized as high

in initiating structure assigns group members to particular tasks, expects

workers to maintain definite standards of performance, and emphasizes

meeting deadlines.

y Consideration:-

The term consideration is defined as the extent to which a person has job

relationships characterized by mutual trust and respect for subordinates'

ideas and feelings. A leader who is high in consideration helps subordinates

with personal problems, is friendly and approachable, and treats all

subordinates as equals. He or she shows concern for (is considerate of) his

or her followers' comfort, well-being, status, and satisfaction.

Extensive research based on

these definitions found that a leader who is high in Initiating structure and

consideration (a high-high leader) achieved high subordinate performance and

satisfaction more frequently than one who rated low on either consideration,

initiating structure, or both. However, the high -high style did not always yield

positive results. For example, leader behavior ch aracterized as high on initiating

structure led to greater rates of grievances, absenteeism and turnover, and lower

levels of job satisfaction for workers performing routine tasks. Other studies found

that high consideration was negatively related to perfo rmance ratings of the

leader by his or her superior. In conclusion, the Ohio State studies suggested that

the high-high style generally produced positive outcomes, but enough exceptions

were found to indicate that situational factors needed to be integrate d into the

theory.

The University of Michigan Studies

Leadership studies completed at the University of Michigan's Survey Research

Center, at about the same time as those being done at Ohio State, had similar


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research objectives: to identify behavioral characteristics of leaders that were

related to performance effectiveness.

The Michigan group also came up with two dimensions of leadership behavior

that they labeled employee oriented and production oriented.

y Employee oriented : - Leaders who were employee oriented were described as

emphasizing interpersonal relations; they took a personal interest in the needs of

their subordinates and accepted individual differences among members.

y Production oriented: - The production-oriented leaders, in contrast, tended to

emphasize the technical or task aspects of the job, were concerned mainly with

accomplishing their group's tasks, and regarded group members as a means to

that end.

The conclusions of the Michigan researchers strongly favored leaders

who were employee oriented. Employee -oriented leaders were associated with

high group productivity and higher job satisfaction. Production -oriented leaders

were associated with low group productivity and lo wer worker satisfaction.

The Managerial Grid

A two-dimensional portrayal of leadership based on concerns

for people and for production .


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Although thereare81positionson thegrid, the five keypositions identifiedby

Blakeand outonareas follows:

1,1. Im overished: The leader exerts a minimum of effort to accomplish the

work.

9,1. Task: The leaderconcentrateson taskefficiencybutshows littleconcern for

thedevelopment andmoraleofsubordinates.

1, 9. Countryclub: The leaderfocusesonbeingsupportiveandconsiderateof

subordinates to theexclusionofconcern for taskefficiency.

5,5. Middle of the road: The leader maintains adequate task efficiency and

satisfactorymorale.

9,9. Team: The leaderfacilitates taskefficiencyandhighmoralebycoordinating

and integratingwork-relatedactivities.

From these findings, Blake and outon

concluded that managersperformbest usinga9,9style. nfortunately, thegrid

offersnoanswers to thequestionofwhat makesamanageraneffective leader,


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but only a framework for conceptualizing leadership style. In fact, there's little

substantive evidence to support the conclusion that a 9,9 style is most effective in

all situations.

Situational and contingency theories

According to the theory, what an individual actually does when acting as a leader

is in large part dependent upon characteristics of the situation in which he

functions.

Fiedler contingency model

The theory that effec tive groups depend on a proper match between a leader's

style of interacting with subordinates and the degree to which the situat ion gives

control and influence to the leader.

Fiedler identified three contingency dimensions that, he argued, define the key

situational factors for determining leader effectiveness. These are as follows:

1. Leader-member relations: The degree of confidence, trust, and respect

subordinates has for their leader; rated as either good or poor.

2. Task structure: The degree to which the job assignments are formalized and

procedurized; rated as either high or low.

3. Position power: The degree of influence a leader has over power -based

activities such as hiring, firing, discipline, promotions, and salary increases; rated

as either strong or weak

Each leadership situation must be evaluated in terms of these three contingency

variables. Altogether, by mixing the three contingency variables, there are eight

possible different situations in which a leader could find him - or herself. He further

classified these eight situations as being very favorable, moderately favorable, or

very unfavorable for the leader. As shown in Figure situations I, II and III were

classified as very favorable ' Situations IV , V and VI were moderately favorable.

And finally, situations VII and VII' were described as very unfavorable. In order to

define the specific contingencies for leadership e ffectiveness, Fiedler studied 200

groups in which he compared relationship - versus task-oriented leadership styles

in each of the eight situational categories. He concluded that task -oriented


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leaders tended to perform bett er in situations that were very favorable to them;

And In situations that were very unfavorable. In contr ast, relationship-oriented

leaders seemed to perform better in moderately favorable situations.

Remember that according to Fiedler an individual's le adership style is fixed.

Therefore there are really only two ways to improve leader effectiveness. First,

you bring in a new leader who better fits the situation. For instance, if the group

situation currently rates as highly unfavorable but is led by a relationship -oriented

leader, the group's performance could be improved by replacing that person with

a task- oriented leader. The second alternative is to change the situ ation to fit the

leader. This is by restructuring tasks or increasing or decreasing the power that

the leader has over factors such as salary increases, promotions, and disciplinary

actions.

Category 1 II III IV V VI VII VIII

Leader-member Good Good Good Good Poor Poor Poor Poor

relations

Task structure High High Low High High High Low Low

Position power Strong Weak Strong Weak Strong Weak Strong Weak

Situation I, II III are favorable

Situation IV, V VI are moderately favorable

Situation VII VIII are unfavorable

As a whole, reviews of the major studies undertaken to test the overall

validity of the Fiedler model lead to a generally positive conclusion. That is,

there's considerable evidence to support the model. But additional variables are

probably needed to fill in some gaps in the model. Moreover, there are problems

with the LPC, and the practicality of it needs to be addressed. For instance, the

logic underlying the LPC isn't well understood, and studies have shown that

respondents' LPC scores aren't stable. In addition, it's probably unrealistic to

assume that a person can't change his or her leadership style to fi t the situation.

Often, effective leaders can, and do, change their styles to meet the needs of a


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particular situation. Finally, the contingency variables are complex and difficult for

practitioners to assess. It's often difficult in practice to determine how good the

leader-member relations are, how structured the task is, and how much position

power the leader has.

Despite its shortcomings, the Fiedler model provides us with evidence that

we can differentiate effective leadership style and situation.

The Hersey-Blanchard Situational Theory

One of the most widely followed leadership models is the situational leadership

theory of Paul Hersey and Kenneth Blanchard. Situational leadership is a

contingency theory that focuses on followers. Successful leadership is achieved

by selecting the right leadership style, which Hersey and Blanchard argue is

contingent on the level of the followers' matur ity. This approach has been used as

a major training device at such Fortune 500 companies -as BankAmerica,

Caterpillar, IBM, Mobil Oil, 'and Xerox, as well as being widely accepted in all the

U.S. military branches. Although the theory hasn't un dergone extensive

evaluation to test its validity, we include it here because of its wide acceptance

and its strongly intuitive appeal.

Situational leadership is a contingency theory that focuses on the followers

maturity.

The emphasis on followers in determining leadership effectiveness

reflects the reality that it's they who accept or reject the leader. Regardless of

what the leader, does, effectiveness depends on the actions, of his or her

followers. This important dimension has been overworked or underemphasized in

most leadership theories. The term readiness, as defined by Hersey and

Blanchard, is the ability and willingness of people to take responsibility for

directing their own behavior.

Situational leadership uses the same two leadership dimensions thatFiedler identified: task and relationship behaviors. However, Hersey and

Blanchard go a step further by considering each as either high or low and then

combining them into four spec ific leadership styles, described as follows:

y Telling (high task-low relationship): The leader defines roles and tells people

what, how, when, and where to do various tasks.


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y Selling (high task-high relationship) : The leader provides both directive

behavior and supportive behavior.

y

Participating (low task-high relationship): The leader and follower share indecision making; the main role of the leader is facilitating and communicating.

y Delegating (low task-low relationship) : The leader provides little direction or

support.

The final component in Hersey and Blanchard's theory is defining four stages of

follower readiness:

y R 1: People are both unable and unwilling to take responsibility for doing

something. They're neither competent nor confident.

y R2: People are unable but willing to do the necessary job tasks. They're

motivated but currently lack the appropriate skills.

y R : People are able but unwilling to do what the leader wants.

y

R4: People are both able and willing to do what is asked of them.y At stage Rl (low levels of readiness), followers need clear and specific directions.

y At stage R2, both high-task and high-relationship behavior is needed. The high -

task behavior compensates for the followers' lack of ability, and the high -

relationship behavior tries to get the followers psychologically to buy into the

leader's desires.

y R creates motivational problems that are best solved by a supportive,

nondirective, participative style.

y Finally, at stage R4, the leader doesn't have to do much because followers are

both willing and able to take responsibility.


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Path-Goal Theory

Currently, oneof themost respectedapproaches tounderstanding leadership is

path-goal theory. eve lopedby obert ouse, path-goal theory isacontingency

model of leadership that extracts key elements from theOhio State leadership

researchand theexpectancy theoryofmotivation.

Theessenceof the theory is that it's the leader's job toassist hisorher followers

inattaining theirgoalsand toprovide thenecessarydirectionand/orsupport to

ensure that theirgoa lsarecompatiblewith theoverall objectivesof thegroupor,

organization. The term "path-goal" isderived from thebelief that effective leaders

clarify thepath tohelp their followersget fromwhere theyare to theach ievement

of their work goals and make the journey along the path easier by reducing

roadblocksandpitfalls.

According topath-goal theory, a leader'sbehavior isacceptable tosubordinates

to the degree that they view it asan immediate sourceof satisfactionoras a

meansof futuresatisfaction. A leader'sbehavior ismotivational to theextent that

it 1)makes Subordinateneed-satisfactioncontingent oneffectiveperformance,

and 2) provides the coaching, guidance, support, and rewards that are


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necessary for effective performance. To test these statements, House identified

four leadership behaviors:

y Directive leader: Lets subordinates know what's expected of them, schedules

work to be' done, and gives specific guidance as to how to accomplish tasks -

similar to initiating structure from the Ohio State studies

y Supportive leader :-Is friendly and shows concern for the needs of subordinates

essentially synonymous with the Ohio State dimension consideration.

y Participative leader: - Consults with subordinates and uses their suggestions

before making a decision.

y Achievement-oriented leader: -Sets challenging goals and expects subordinates

to perform at their highest level.

In contrast to Fiedlers view of a leaders

House assumes that leaders are flexible .Path goal theory that the same leader

can display any or all of these leadership styles depending on the situation.

Path-goal theory proposes two classes of situational

of contingency variables that moderate the leade rship behavior-outcome relation-

ship those in the environment that are outside the c ontrol of the subordinate

(factors including task structure, the formal authority system, and the work group)

and those that are part of the personal characteristics of the subo rdinate (locus of

control, experience, and perceived ability). Environmental factors determine the

type of leader behavior required if subordinate outcomes are to be maximized,

while personal characteristics of the subordinate determine how the environment

and leader behavior are interpreted. The theory proposes that leader behavior

will be ineffective when it's redundant with sources of environment structure or

incongruent with sub ordinate characteristics.

The following are some examples of hypotheses that have evolved out of path-

goal theory:

Directive leadership leads to greater satisfaction when tasks are ambiguous or

stressful than when they're highly structured and well laid out.


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Supportive leadership results in high employee performance an d satisfaction

when subordinates are performing structured tasks.

Directive leadership is likely to be perceived as redundant among subordinates

with high perceived ability or with considerable experience.

The more clear and bureaucratic the formal authority relationships, the more

leaders should exhibit supportive behavior and de -emphasize directive behavior.

Directive leadership will lead to higher employees satisfaction when there's

substantive conflict within a work group.

Subordinates with an internal locus of control (those who believe they control

their own destiny) will be more satisfied with a participative style.

Subordinates with an external locus of control will be more satisfied with a

directive style.

Achievement-oriented leadership will increase subordinates' expectancies that

effort will lead to high performance when tasks are ambiguously structured.

Research to validate hypotheses such as these is generally

encouraging although not every study has found positive support.23 However,

the majority of the evidence supports the logic underlying the theory. That is,

employee performance and satisfaction are likely to be positively influenced when

the leader compensates for shortcomings in either the employee or the work

setting. However, if the leader spends time explaining tasks when those tasks are

already clear or the employee has the abil ity and experience to handle them

without interference, the employee is likely to see such directive behavior as

redundant or even insulting.

Leader Participation Model

Back in 1973, Victor Vroom and Philip Yetton developed leader participation ,

model that related leadership behavior and participation to decision making.

These researchers argued that leader behavior must adjust to reflect the task

structure -whether it was routine, nonroutine, or anywhere in between. Vroom


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and Yetton's model is what we call a normative one since it provided a sequential

set of rules (norms) that the, leader should follow in determining the form and

amount of participation in decision making, as -determined by the different types

of situations. The model was set up as a decision tree incorporating seven

contingencies about task (whose relevance could be identified by making yes -or-

no choices) and five alternative leadership styles.

More recent work by Vroom and Arthur Jago has resulted

in a revision of this model. The new model retains the same five alternative

leadership styles but expands the contingency variables to twelve, including

factors such as the importance of technical quality of the decision, im portance of

subordinate commitment to the decision, level of leader information about the

decision, and likelihood of subordinate conflict over preferred solutions.

y Autocratic I (AI): You solve the problem or make a decision yourself using

information available to you at that time.

y Autocratic II (AII): You obtain the necessary information from subordinates and

then decide on the solution to the problem yourself. You may or may not tell

subordinates what the problem is in getting information from them . The role of

your subordinates in making the decision is clearly one of providing the

necessary information to you rather than generating or evaluating alternative

solutions. .

y Consultative I (CI): You share the problem with relevant subordinates indivi dually,

getting their ideas and suggestions without bringing them together as a group.

Then you make the decision that may or may not reflect your subordinates'

influence.

y Consultative II (CII): You share the problem with your subordinates as a group,

collectively obtaining their ideas and suggestions. Then, you make the decision

that may or may not reflect your subordinates' influence.


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y Group II (GII): You share the problem with your subordinates as a group.

Together you generate and evaluate alternativ es and attempt to reach an

agreement (consensus) on a solution.

Research testing the original leader participation model was

very encouraging. But the new model, which is a direct extension of the 1973

version, is also consistent with our current knowledge on the benefits and costs

of participation. So at this time we have every reason to believe that the revised

model provides an excellent guide to help managers choose the most appropriate

leadership style in different sit uations.

Emerging approaches to Leadership

y Attribution theory of leadership

y Charismatic leadership

y Transactional versus transformational leadership.

Attribution Theory of Leadership

The attribution theory of leadership says that leadership is merely an attribution

that people make about other individuals. Using the attribution framework,

researchers have found that people tend to characterize leaders as having traits

such as intelligence, outgoing personality, strong verbal skills, aggressiveness,

understanding, and industriousness. Similarly , the model of the high -high leader

of Ohio State study has been found to be consistent with people's attributions of,

makes a good leader. That is, regardless of the situation, a high -high leader, style

tends to be perceived as best. At the organizati onal level, the attribution

framework explains why people are prone to attr ibute either the extremely

negative or the extremely positive performance of an organization to its

leadership. It also helps explain the vulnerability of CEOs when their

organizations suffer major financial set -backs, regardless of whether they had

much to do with it. It also clarifies why these CEOs tend to be given credit fo r

extremely positive financial results, again regardless of how much or how little

they contributed.

One of the more interesting themes in the attribu tion theory of

leadership literature is the perception that effective leaders are generally

considered consistent or unwavering in their decisions. One of the explanations


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for why Lee Iacocca and Ronald Reagan (during his first term as U.S. President)

were perceived as leaders was that both were fully committed, steadfast, and

consistent in the decisions they made and the goals they set. Evidence indicates

that a heroic leader is perceived as being someone who takes up a difficult

unpopular cause but, through determination and persist ence, ultimately

succeeds.

Charismatic leadership

Charismatic leadership theory is an extension of attribution theory. It says that

followers make attributions of heroic or extraordinary leadership abilities when

they observe certain behaviors. Studies o n charismatic leadership have, for the

most part, been directed at identifying those behaviors that differentiate

charismatic leaders from their noncharismatic counterpart.

Key characteristics of Charismatic Leaders

1. Self-confidence:-Charismatic leaders have complete confidence in their

judgment and ability.

2. Vision: - They have an idealized goal that proposes a future better than that

the status quo .The greater the disparity between the status quo, the more likely

that followers will attrib ute extraordinary vision to think leaders is leader.

. Ability to articulate the vision:-They are clarifying and state the vision in

terms that are understandable to others. This articulation demonstrates an

understanding of the follower needs and hence, acts as a motivating force.

4. Strong convictions about the vision : - Charismatic leaders are perceived as

being strongly committed, and willing to take on high personal risk, incur high

costs, and engage in self -sacrifice to achieve their vision.

5. Behavior that is out of the ordinary:-They engage in behavior that is

perceived as being novel, unconventional and counter to norms. When

successful, these behaviors evoke surprise and admiration in followers.6. Appearance as a change agent :-Charismatic leaders are perceived as

agents of radical change rather than as caretakers of the status quo.

7. Environment sensitivity: - They are able to make realistic assessments of the

environmental constraints and resources needed to bring about change.

Transactional versus Transformational Leadership: -


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Transactional leaders who guide or motivate their followers in the direction of

established goals by clarifying role and task requirements while transformational

Leaders provide individualized consideration, intellectual stimulation and posses

charisma.

Transformational leadership is built on the top of transactional

leadership is built on top of transactional leadership. Tr ansformational leadership

produces levels of subordinate effort and performance that go beyond what

would occur with a transactional approach alone.

Leadership Development in NTPC

NTPC has a system of Leadership Development called LEADS (Lea dership

Assessment and Development system). This is a system that enables

measurement of leadership effectiveness, gap identification against an identified

set of leadership competencies, and leadership d evelopment. LEADS has three

major initiatives, consisting of

A LEAD-Centre (Assessment and Development Centers) for Senior leadership

positions at the level of AGMs and GMs in NTPC. It is conducted with help of

external consultants.

An IT enabled 360 degree feedback system called LEAD Circle for Senior

leadership positions at the level of AGMs, GMs and EDs. Under this, feedback

from a selected group closely associated with the protge is taken though an

online method.

A psychometric tool called Hogan Development Survey to assess th e profile of

senior level executives.

The assessments from all the three initiatives are converted in to Individual

Development Plan (IDP) for each executive to ensure that the process of

development and growth is meaningful. The identified po tential executives are

sent to a customized leadership development program in collaboration with IIM,

Bangalore which also has a foreign module. Other development initiatives are

individual coaching and action learning. The input from LEADS is taken for

Succession Planning. 100% coverage of eligible sen ior managers in LEADS has

been achieved. A total of 253 General Man agers and Assistant General

Managers have been covered under the program.


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Leadership Development at NTPC

The system of Performance and Competence for Excellence (PACE) was

introduced in NTPC as an important organizational transformationalinitiative in the year 2004. The system envisaged assessment of competence,

values and potential of executives in order to create a culture of high

performance, openness and providing developmental feedback i n the

organization..With the passage of time, si gnificant developments were made

in the field of competency measurement and development. It was felt that the

linear mode of assessment which is based on the assumption that the

superior(s) has an absolute right to judge the subordinates performance is

not full-proof. New tools such as Assessment & Development Centers (ADC)

and multi rater feedback system like 360 -degree feedback system came into

existence. These scientifically developed systems were readily adopted by

leading organizations world wide. NTPC too, introduced Leadership

Assessment Development system (LEADs) in the year 2005.LEADs

was applicable to the level of AGMs, GMs and EDs of NTPC. However, in the

current competitive business scenario a need has been felt to develop

leadership capabilities at all levels in the organization. Moreover, it has also

been desirable to provide leadership development inputs to potential

employees at an early stage of their career so that the employees have a

clear understanding of what is expected of them in t he future, and also, they

have sufficient time to develop the desired competencies. These timely inputs

would also ensure a healthy talent pipeline as well as smooth succession

planning process in NTPC.

As per the system of LEADS the following competencie s were chosen as the

Leadership competencies and individuals during the Assessment Centers

were assessed on the same.

Driving Performance Focus: is a desire for doing ones work well or for

competing against a standard of excellence. The focus of this co mpetency

is on the outcome and on over achieving the outcome (result

orientation). An individual demonstrating this competency sets standards

by raising the bar based on his/ her past performance of others. The

individual demonstrates persistence and a strong personal belief to


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succeed despite obstacles. The individual demonstrating this competency

has focus on achieving high standards of quality within optimal cost

and time.

Enduring Impact and Influence: This competency reflects a persons desireto influence the thought process of others towards a favorable strategicoutcome. This implies an intention to persuade, convince or impress othersin order to seek their support. This competency also focuses on buildingand maintaining relationships or network of contacts with people forachieving work related goals. It is an ongoing process that incorporatesimpactful communication, presentation and negotiation skills. Thiscompetency also focuses on an awareness of power relationships withinand outside NTPC for creating the desired impact and influence.

Creating Customer Delight: for a leader is the ability to orient and drive self

and others to satisfy customer needs. It implies an underlying desire and

understanding of the importance of providing excellent service to delight the

customer. It includes the ability to build and maintain customer relationshipin order to retain the customer. It also includes the ability to proactively

identify and satisfy implicit and explicit needs of customers. The customer

may be an external or internal customer.

Making Active Problem Solving & Decision: This competency has two

clusters- Problem solving and Decision Making. Problem Solving: is

this ability of a leader to systematically think

Apurva Project 1

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