Chennai Petroleum PMS

8/3/2019 Chennai Petroleum PMS

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22 Jan 2011

PERFORMANCE MANAGEMENT

SYSTEMAND

Chennai Petroleum Corporation Limited( A group company ofIndianOil)

PERFORMANCE RELATED PAYat


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CPCL in Brief

Performance Management System

Performance Related Pay

CONTENTS


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CPCL (erstwhile MRL) wasestablished as a JV - PSUwith

GOI - 74 % NIOC, Iran - 13 %

AMOCO, USA - 13 %

AMOCO disinvested in1985. GOI disinvested toIOC in March, 2001

Now CPCL is a groupcompany of IndianOilwith shareholding of

51.89%. NIOC -15.40%,FI & others 32.71%

Inception

6th January, 1967


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Manali Refinery - Expansion1984 Capacity expanded to 5.6 MMTPA

1985 Propylene plant added1993 Capacity debottlenecked to 6.5 MMTPA

2004 Capacity was further expanded to 9.5 MMTPA

2010 Capacity enhanced to 10.5 MMTPA

Shri Rajiv Gandhi, Prime MinisterDedicating Expansion Project to the

Nation

Shri Rajiv Gandhi, Prime MinisterDedicating Expansion Project to the Nation


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Second Refinery at Cauvery

Basin1993 Refinery commissioned with 0.5 MMTPA capacity

2002 Capacity debottlenecked to 1.0 MMTPA

2003 A jetty constructed to receive crude oil


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Hexane

Extracts

Wax

Crumb Rubber Modified

Bitumen

Petrochemical Feedstocks

LPG

MS (Petrol)

SK (Kerosene)

ATF

Naphtha

HSD

LDO

FO

LSHS Bitumen

Lube Oil Base Stocks


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Performance ManagementSystem

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Purpose

Set up as a robust, transparent performancemeasuring system to reward according to

individual/ team performance, suitablydifferentiating higher performance, based on welldefined performance measures.

CPCL implemented e-PMS for officers in 2008-09

Three performance appraisal years completed. Departmental promotion, individual based

incentive and PRP disbursed based on ePMSoutput ratings and scores

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HR action point identified based on DPE O.M. dated26.11.2008, 09.02.2009 and 02.04.2009

Achieving Performance Differentiation (Bell CurveApproach) with Transparency

Introduced system intervention in e-PMS to improve Performance Bell Curve approach

Transparency and

Provide opportunity to make representation against the

entries and final grading

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ePMS seeks to determine individualperformance and potential through a system thatis:

Objective Transparent

Aligned to the Business needs

Robust

Easy to Use and Manage

Each of the above is better achieved in an

e-enabled system

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Goal Setting driven down to all grades

Improvement in Target Setting process

through stretch tool and 5 levels oftarget

Appraisal on Role Based Key Result

Areas and Competencies and levelbased Values and Potential

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Role based KRAs and KPIs

Special KRAs/Additional KRAs

Weightage to KPIs

Stretch Tool for target setting

Self Appraisal and Final rating

Performance diary

Monitoring of status

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AlignmentAlignment :: MOU targets cascadingMOU targets cascading

ObjectivityObjectivity :: Measurable targetsMeasurable targets

ConsistencyConsistency :: Standard Unique RolesStandard Unique RolesDifferentiationDifferentiation :: Stretch tool,ContinuousStretch tool,Continuous

rating scale, ratingrating scale, rating

distributiondistribution

TransparencyTransparency :: On line display of On line display of

Performance score &Performance score &

integrityintegrity

DevelopmentDevelopment :: Feedback & Reward schemeFeedback & Reward scheme14

ePMSePMS Features &Features &

MeasurementMeasurement


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Performance

Planning

Mid Year review

& feedback

Feedback

and Review

April - June

October

April

Ongoing monthlyreview and feedback

Final PerformanceAppraisal

April-May


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D/E grades

KRA

55%

Competency

20%

Value

10%

Potential

15%

H grades

KRA

45%

Competency

20%

Value

15%

Potential

20%

The relative weightages are as follows:

F/G grade

KRA

45%

Competency

20%

Value

15%

Potential

20%

A/B/C grades

KRA

60%

Competency

15%

Value

10%

Potential

15%


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Performance Planning

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Appraisee

completes

Performance

Plan on KRAsection by

setting

targets,

assigning

weightages

for each KPI

chosen in hisplan

Appraiser

assigns

stretch on

each chosentarget,

makes

modificatio

n if needed

& Appraiser

signs-off on

the Plan

Plan is

sent to

Reviewer

for inputsand Final

Sign-off

Final

Performance

Plan for

Appraisee is

ready


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Stretch is the degree of difficulty built intothe target at the time of performanceplanning

Ensures uniformity in degree of loading oftargets

Ensures balance across similar roles

Average stretch in a reporting groupcontrolled

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Dimensions of Stretch

Target relative to previous years

achievement Dependence of uncontrollables

Complexity

Skill requirements

Need for Innovation

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Performance Appraisal

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Competencies

Moving from critical attributes to competencies.Competencies are like an iceberg.

Competencies are the underlying characteristics ofindividual/s i.e. Knowledge, Skills, Attitudes,Values, Self-Concepts, Traits and Motives that havea causal relationship with effective and/ or superiorperformance in a job situation.

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Deep Rooted Lasting Predictive Measurable Trainable


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Performance AppraisalPerformance Appraisal--Soft SkillsSoft Skills

Values


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Adaptability to change

Collaboration

Cost Consciousness/

Resource utilisation

DependabilityQuality of Work /

Output

Managing Change

Boundary

Management

Entrepreneurial

LeadershipEnhancement of

Quality and Output

Senior ManagementJunior Management

Ability to shoulder higher responsibilities

Potential


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5-point continuous scale

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Significantly

below

expectations

Moderately

below

expectations

Just Meets

Expectations

Moderately

above

expectations

Significantly

above

expectations

1..1.999

Unsatisfactory

2...2.999

Fair

3.3.849

Satisfactory

3.85....4.349

Very Good

4.35...5.0

Outstanding


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Appraisee

completes

Self

Appraisal

on KPIs &

submits

Appraiser

determines

Rating on

each KPI,

Competency

, value and

potentialelement

System

calculates the

PMS Score as

per weightages

of elements and

overall weight of

sections based onKPI

competencies,

values and

potential

Reviewer

validates each

rating and

makes

changes, if any

Final KPI score

is used for PRP.

Overall grade is

finalised by

Countersigning

officer. This is

used for DPC

The overall

grade and

assessment of

integrity

communicated

through online

display


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PMS Calculation Sheet

DGM LevelKRA Weight Rating Stretch Individual KPI Score

45% (weight * rating * stretch)

KPI 1 20% 3.5 0.85 0.595

KPI 2 30% 4.7 0.75 1.058

KPI 3 40% 4.2 0.95 1.596

KPI 4 10% 2.0 0.60 0.120

KPI Score 3.369

Competency Weight Rating Individual Competency Score

20% (weight * rating)

Competency 1 33% 3 0.990Competency 2 33% 4 1.320

Competency 3 33% 3 0.990

Competency Score 3.300

Values Weight Rating Individual Values Score


Values 1 33% 4 1.320

Values 2 33% 3 0.990

Values 3 33% 4 1.320

Values Score 3.630

Potential Weight Rating Individual Potential Score


Potential 1 33% 4 1.320

Potential 2 33% 5 1.650

Potential 3 33% 4 1.320

Potential Score 4.290

Overall score 3.578

Overall Score= (KPI rating * KPI weight + Competency rating * Competency weight + values rating * Valuesweight + Potential rating * Potential weight )


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Well defined Roles /targets/clear expectationfor all officers

Performance cycle aligned with fiscal year Appraisal process streamlined/Better

monitoring/Online robust MIS Opportunity to differentiate performance (bell

curve approach) on a continuous linear scalefrom 1 to 5 and reward accordingly

Online display of Overall grade andassessment of integrity

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Smooth and timely

implementation of DPEguidelines on Variable pay/PRP

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As a part of Pay revision to Officers payment ofVariable Pay / Performance Related Pay (PRP) is

permitted

PRP is payable grade-wise, 40% of Basic Pay at

the minimum level and 200% at MDs level PRP to be linked to MOU Performance, Nil to

100%

PRP will come out of profits

60% from current years profit (max 3% of PBT) and

40% from 10% of incremental profit

This 3% / 5% of PBT is the Available Amount

PRP to be

max. 5%

of PBT

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PRP to be linked to Robust & transparent PMS.

Performance Ratings of Individual Officers to be

fitted into a Bell Curve so that not more than

10 to 15% of Executives are

Outstanding/Excellent. Similarly, 10% of

Executives should be graded as Below Par

To constitute a Remuneration Committee todecide the PRP pay pool and policy for its

distribution across the executives.

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The CPCL Board of Directors in its meeting held on27.07.2009 constituted a Remuneration Committee, headedby an Independent Director

The details of the Remuneration Committee of Board ofDirectors are given below :

1. Shri L.Sabaretnam - Chairman

2. Shri Venkatraman Srinivasan - Member

3. Shri B.N.Bankapur - Member

4. Shri N.C.Sridharan - Member

5. Shri S.Venkatramana - Member

Remuneration Committee

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PRP is calculated as under:

PRP Payout = P x Q x R x S x T

P = Annual Basic PayQ = Prescribed eligibility level for Companys MOU

Rating

R = Grade Incentive

S = Performance RatingT = Ratio of required amount to available amount

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MOU Rating PRP Eligibility

Excellent 100%

Very Good 80%

Good 60%

Fair 40%

Poor NIL

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Prescribed eligibility level for Companys MOU

Rating (Q) shall be as under:


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Grade Incentive Percentage (R) shall be as under:

Grade Grade Incentive

MD 200%

Directors 150%

H 70%

E, F & G 60%

C & D 50%A & B 40%

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Grade-wise Entitlement


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Performance Rating (S) Percentageapplicable to Officers shall be as follows:

S will be based on Individual Performance(S1) as well as Team Performance (S2) in thefollowing ratio:

Grade A-G = 50:50

GradeH = 25:75

Performance Rating

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Individual Performance Rating(S1) Percentage applicable toOfficers shall be as follows:

Category Percentile % ofPopulation

PRP Payout

I >85 15 100%

II >55 & upto 85 30 90%

III >25 & upto 55 30 80%

IV >10 & upto 25 15 70%

V 10 10 60%

VI 2.000-2.999 40%

VII


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S2 Team Performance Ratings

As effective performance of Teams is crucial for theachievement of organizational goals and to promoteteam spirit amongst the employees Team PerformanceRatings were introduced for arriving at performanceratings of the Individual Officer.

S2 - Based on achievement of stretched MoU Targetsfor the year 2009-10.

The Parameters under the stretched MoU Targets are

Operating Cost, Strategic Initiatives, PlantAvailability Factor, Accident free man hours, TPM,Inventory management, Safety incidents, etc

In 2009-10, 92.5% of targets were achieved.

Performance Rating

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Ratio of Available Amount to Required Amount (T) for

payment of PRP

Ratio of Available Amount to Reqd. Amount

Year PBT (Rs/ cr)

3% PBT(currentyear

profit)(Rs./cr)

2% PBT(incrementalprofit)

(Rs./cr)

CurrentyearPRP

(Rs/cr.)

Incremental PRP(Rs/cr.)

2007-08 1721.63 51.64 NA 15.61(T=1)

----

2008-09 Net loss NA NA Nil Nil

2009-10 683.7 20.51 13.67 cr 10.9

(T=1)

Beingfinalized

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FinancialYear

CAT I CAT II CAT III CAT IV CAT V

2007-08 14 24 34 20 8

2008-09 - - - - -

2009-10 15 30 29 15 11

Figures in %


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