A

Project Report

On

“Performance Appraisal In ONGC”

In the partial fulfillment of Master of Business Administration ( MBA )

(Session 2009-2011)

Guided by:- Approved by:- Mr. Amit Tripathi Mr. Sunil Mathew Sr. HR Executive DGM (IE)HR Department HR DepartmentONGC D.DUN ONGC D.DUN

Submitted by:-Rashmi Rana

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CERTIFICATE

This is to certify that the project report on “Performance Appraisal In ONGC” submitted by Ms. Rashmi Rana a regular student of Guru Ram Das Institute of Management & Technology Dehradun, session 2009-2011 has been carried under my supervision and guidance. She has shown keen interest and has put in her best efforts to make this project a success. Thus this certificate of Excellence is hereby granted to her for her outstanding performance.

The report has been brought out by her under my supervision.

Approved By:- Guided By:- Mr. Amit TripathiMr. Sunil Mathew Sr. HR Executive DGM (IE) HR Department ONGC, D.DUN ONGC ,D. DUN

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ACKNOWLEDGEMENT

I feel a great pleasure to acknowledge my indebtness to my guide Mr. Amit Tripathi (Sr. HR Executive ONGC D.DUN Uttarakhand). It is a pleasure to express my thanks and gratitude to all the persons in ONGC Dehradun where I got the chance, support and encouragement that enabled me to conduct my study within the stipulated period of time.

I sincerely express my gratitude for their indigenous and able guidance, constant encouragement and for the discussion they had with the tenure of my work.

Thanks are also due to all members of HR Department, ONGC Dehradun for their constant guidance.

I once again take the opportunity to convey my heartiest thanks to all those who were connected with project directly and have provide me with a wonderful experience and learning opportunity.

Rashmi Rana GRD IMT Dehradun

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Oil and Natural Gas Corporation Limited

OVERVIEW OF ONGC LTD.

Born as a modest corporate entity within serene Himalayan settings on 14th August 1956 as Commission, Oil and Natural Gas Corporation Limited (ONGC), has grown into a full fledged horizontally integrated upstream petroleum company. Today, ONGC is a flagship public sector enterprise and India’s highest profit making corporate, which has achieved the landmark since inception, ONGC has produced more than 600 million metric tones of crude oil and supplied more than 200 billion cubic meters of gas, thus fuelling India’s economy.

ONGC – AN INTERNATIONAL E&P COMPANY

ONGC Group of companies compares of Oil and Natural Gas Corporation Limited (ONGC – The Parent Company); ONGC Videsh Limited (OVL – a wholly owned subsidiary of ONGC); ONGC Nile Ganga BV (ONGBV – a wholly owned subsidiary of OVL) and Mangalore Refinery and Petrochemical Limited (MRPL – a subsidiary of ONGC).

ONGC Videsh Limited (OVL) is overseas arm of ONGC, engaged in Exploration and Production Activities. It trans-nationally operates E&P Business in 10 countries, making ONGC the biggest Indian Multinational Corporation. In recent years, it has laid footholds in hydrocarbon acreage in various countries including Ivory Cost and Australia. ONGC Nile Ganga BV is a wholly owned subsidiary of OVL and has equity in producing fields in Sudan.

ONGC envisages organizing Import/International Sale of Crude Oil and Export of Petroleum Products through Tendering Procedure for all the group Companies. However it would be restricted to the Companies/ Firms/ Vendor registered with ONGC on its approved Vendor Lists.

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Oil and Natural Gas Corporation

Type State-owned Public enterprise

Industry Oil and Gas

Founded 14 August 1956

Headquarters Dehradun, Uttarakhand, India

Key peopleR. S. Sharma

(Chairman & MD)

Products

Petroleum

Natural gas

Petrochemicals

Revenue ▼ US$ 21.447 billion (2010)

Net income ▲ US$ 4.089 billion (2010)

Total assets ▲ US$ 37.264 billion (2010)

Total equity ▲ US$ 22.590 billion (2010)[1]

Employees 33,924 (2010)

Website www.ongcindia.com

HISTORY

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FoundationIn August 1960, the Oil and Natural Gas

Commission was formed. Raised from mere Directorate status to Commission, it had enhanced powers. In 1959, these powers were further enhanced by converting the commission into a statutory body by an Act of [Indian Parliament]

1947 - 1960 During the pre-independence period, the Assam Oil

Company in the north-eastern and Attock Oil company in north-western part of the undivided India were the only oil companies producing oil in the country, with minimal exploration input. The major part of Indian sedimentary basins was deemed to be unfit for development of oil and gas resources.

After independence, the national Government realized the importance oil and gas for rapid industrial development and its strategic role in defense. Consequently, while framing the Industrial Policy Statement of 1948, the development of petroleum industry in the country was considered to be of utmost necessity.

Until 1955, private oil companies mainly carried out exploration of hydrocarbon resources of India. In Assam, the Assam Oil Company was producing oil at Digboi (discovered in 1889) and the Oil India Ltd. (a 50% joint venture between Government of India and Burmah Oil Company) was engaged in developing two newly discovered large fields Naharkatiya and Moran in Assam. In West Bengal, the Indo-Stanvac Petroleum project (a joint venture between Government of India and Standard Vacuum Oil Company of USA) was engaged in exploration work. The vast sedimentary tract in other parts of India and adjoining offshore remained largely unexplored.

In 1955, Government of India decided to develop the oil and natural gas resources in the various regions of the country as part of the Public Sector development. With this objective, an Oil and Natural Gas Directorate was set up towards the end of 1955, as a subordinate office under the then Ministry of Natural Resources and Scientific Research. The department was constituted with a nucleus of geoscientists from the Geological survey of India.

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A delegation under the leadership of Mr. K D Malviya, the then Minister of Natural Resources, visited several European countries to study the status of oil industry in those countries and to facilitate the training of Indian professionals for exploring potential oil and gas reserves. Foreign experts from USA, West Germany, Romania and erstwhile U.S.S.R visited India and helped the government with their expertise. Finally, the visiting Soviet experts drew up a detailed plan for geological and geophysical surveys and drilling operations to be carried out in the 2nd Five Year Plan (1956-57 to 1960-61).

In April 1956, the Government of India adopted the Industrial Policy Resolution, which placed mineral oil industry among the schedule 'A' industries, the future development of which was to be the sole and exclusive responsibility of the state.

Soon, after the formation of the Oil and Natural Gas Directorate, it became apparent that it would not be possible for the Directorate with its limited financial and administrative powers as subordinate office of the Government, to function efficiently. So in August, 1956, the Directorate was raised to the status of a commission with enhanced powers, although it continued to be under the government. In October 1959, the Commission was converted into a statutory body by an act of the Indian Parliament, which enhanced powers of the commission further. The main functions of the Oil and Natural Gas Commission subject to the provisions of the Act, were "to plan, promote, organize and implement programmes for development of Petroleum Resources and the production and sale of petroleum and petroleum products produced by it, and to perform such other functions as the Central Government may, from time to time, assign to it ". The act further outlined the activities and steps to be taken by ONGC in fulfilling its mandate

• 1961 - 1990

Since its inception, ONGC has been instrumental in transforming the country's limited upstream sector into a large viable playing field, with its activities spread throughout India and significantly in overseas territories. In the inland areas, ONGC not only found new resources in Assam but also established new oil province in Cambay basin (Gujarat), while adding new petroliferous areas in the Assam-Arakan Fold Belt and East coast basins (both inland and offshore). ONGC went offshore in early 70's and discovered a giant oil field in the

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form of Bombay High, now known as Mumbai High. This discovery, along with subsequent discoveries of huge oil and gas fields in Western offshore changed the oil scenario of the country. Subsequently, over 5 billion tonnes of hydrocarbons, which were present in the country, were discovered. The most important contribution of ONGC, however, is its self-reliance and development of core competence in E&P activities at a globally competitive level.

After 1990

The liberalized economic policy, adopted by the Government of India in July 1991, sought to deregulate and de-license the core sectors (including petroleum sector) with partial disinvestments of government equity in Public Sector Undertakings and other measures. As a consequence thereof, ONGC was re-organized as a limited Company under the Company's Act, 1956 in February 1994.

After the conversion of business of the erstwhile Oil & Natural Gas Commission to that of Oil & Natural Gas Corporation Limited in 1993, the Government disinvested 2 per cent of its shares through competitive bidding. Subsequently, ONGC expanded its equity by another 2 per cent by offering shares to its employees.

During March 1999, ONGC, Indian Oil Corporation (IOC) - a downstream giant and Gas Authority of India Limited (GAIL) - the only gas marketing company, agreed to have cross holding in each other's stock. This paved the way for long-term strategic alliances both for the domestic and overseas business opportunities in the energy value chain, amongst themselves. Consequent to this the Government sold off 10 per cent of its share holding in ONGC to IOC and 2.5 per cent to GAIL. With this, the Government holding in ONGC came down to 84.11 per cent.

In the year 2002-03, after taking over MRPL from the A V Birla Group, ONGC diversified into the downstream sector. ONGC will soon be entering into the retailing business. ONGC has also entered the global field through its subsidiary, ONGC Videsh Ltd. (OVL). ONGC has made major investments in Vietnam, Sakhalin and Sudan and earned its first hydrocarbon revenue from its investment in Vietnam.

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ONGC OBJECTIVES

Optimize production of Hydrocarbons.

Self reliance in technology.

Promoting indigenous efforts in oil and gas equipment, materials and services.

Assist in conservation of hydrocarbons, more efficient use of energy and development of alternative sources of energy.

Develop scientifically oriented and technically component HR through motivation and training.

Environment protection.

Generate adequate resources for investment.

SWOT ANALYSIS

STRENGHTS

1. ONGC LTD is the leader in oil production industry.2. ONGC has a very efficient and professional management team.3. ONGC being an international company has sufficient resources

and capital to invest..

WEAKNESS

1. ONGC is facing difficulties to produce oil from aging reservoirs.

OPPURTUNITY

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1. Energy utilization of buried coal resources (700-1700M), estimated 63BT-Equivalent to 15000 BCM.

THREATS

1. Security of personnel and property especially crude oil continues to be a cause of concern in certain area.

2. In some exploration campaigns company involves high technology, high investment and high risks.

Oil and Natural Gas Corporation Limited is one of the leading enterprises in the country with significant contribution in the industrial and economic growth of the country. Born as a modest corporate, ONGC has grown today, into a full fledged horizontally integrated upstream petroleum company within house service capabilities and infrastructure in the entire range of Oil and Gas Exploration, Production and related activities.

Vision

“ To be global leader in integrated energy business through sustainable growth, knowledge, excellence and exemplary governance practices”.

Mission

Dedicated to excellence by leveraging competitive advantages in R & D & Technology with involved people.

Strive for customer delight through quality products & services. Imbibe high standards of business ethics and organizational

values. Abiding commitment to safety, health and environment to enrich

quality of community life. Foster a culture of Trust, openness and mutual concern to make a

stimulating and challenging experience for our people.

CORPORATE CITIZENSHIP

Education.

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Health care and Family welfare.

Community Development.

Promotion of sports and culture.

Development of infrastructural facilities.

Development of the socially and economically weaker sections of the

society benefit and welfare.

Dominant Indian Leadership

Retain dominant position in Indian petroleum sector and enhance India’s energy availability.

COMPETITIVE STRENGTH

All crudes are sweet and most (76%) are light, with sulphur percentage ranging from 0.02-0.10, API gravity range 26°-46° and hence attract a premium in the market.

Strong intellectual property base, information, knowledge, skills and experience.

Maximum number of Exploration Licenses, including competitive NELP rounds. ONGC has bagged 120 of the 238 Blocks awarded in the 8 rounds of bidding, under the New Exploration Licensing Policy (NELP) of the Indian Government. ONGC has begged 17 out of 31 blocks awarded in NELP round VIII (14 as operator).

ONGC owns and operates more than 22000 kilometers of pipelines in India, including nearly 4500 kilometers of sub-sea pipelines. No other company in India, operates even 50 per cent of this route length.

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ONGC achieves highest Reserve Accretion in last two decades

1. Discoveries and Reserve Accretion :The Ultimate Reserve accretion of ONGC including its Joint Ventures in domestic fields in 2009-10 has been 87.37 MTOE (Million tonne oil and oil equivalent gas) against the MoU Target of 76.28 MTOE(114.5% achievement). Ultimate Reserve accretion in ONGC operated fields has been 82.98 MTOE; the highest ultimate reserve accretion in the last 20 years. Significant finds of the last fiscal are Kasomarigaon in Assam, South Mahadevpatnam & Pennugonda in KG onland, GK-28-1 in Kutch offshore and PER-1 in Mumbai offshore. Kasomarigaon and Pennugonda discoveries have already been put on production.

2. ONGC maintains Production levels : The combined Oil & Gas production of ONGC, including OVL and ONGC’s share in PSC-JVs registered 61.04 million tones of oil and oil equivalent gas (MTOE) during the year 2009-10; marginally less compared to production during FY’09 i.e., 61.23 MTOE. This year, ONGC achieved all the production targets except that for crude oil. Crude oil production registered 24.858 MMT against the target of 25.764 MMT (97%); whereas gas production has been 104% against the target.

Details FY’10Target Actual %

Crude oil (MMT) 25.764 24.858 96.48Natural Gas 22.248 23.109 103.88Gas sales(BCM) 16.985 18.240 107.39Vap production 3309 3457 104.47

Natural Gas production from ONGC operated domestic fields and OVL fields registered increase of 2.77% and 7.25% respectively. However, gas production from PSC JV fields registered a decline of 15.73% mainly on account of 27% decrease in production from Tapti field and 5% decrease in production from Panna & Mukta fields.

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ORGANISATION STRUCTURE & WORK AREAS

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GROWTH PLANSGROWTH PLANS

IN FOREIGN COUNTRIES

ONGC expended its global operation through its subsidiary OVL, by making sizeable capital investment in Vietnam, Sakhalin (Russia), Myanmar and Sudan. They acquired 25% in Nile project in Sudan, 20% stake in Sakhalin Oil field and other major project in Myanmar

IN INDIA

Technology up gradation : -Technological obsolesce is the main factor that is faced by ONGC and to cope up with this problem it decided to employ advanced technology-enabled like Increased Oil Recovery (IOR) and Enhanced Oil Recovery(EOR). And another technology was Supervisory Control and Data Acquisition (SCADA). It also adopted modern technology called Virtual Reality Interpretation (VRI) to enhance the oil recovery.

Strategic Vision: 2001-2020

To focus on core business, ONGC has set strategic objectives of:

Doubling reserves (i.e. accreting 6 billion tonnes of O+OEG).

Improving average recovery from 28 per cent to 40 per cent.

Tie-up 20 MMTPA of equity Hydrocarbon from abroad.

The focus of management will be to monetize the assets as well as to assetise

the money.

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Performance Highlights FY’10

Total 21 Discoveries made in FY’10 which include 11 New Prospects (1 Deep water, 3 Shallow water, 7 Onshore) and 10 New pools (6 onshore, 4 offshore).

ONGC’s ultimate reserve accretion of 82.98 MTOE from domestic acreages is highest in 20 years.

Crude production declines 2%, from 27.13 MMT to 26.46 MMT.  Natural Gas production increases 1%, from 25.43 BCM to 25.60 BCM

Net Profit of Q4FY’10 increases 71%, from Rs 2,207 Crore to Rs. 3, 776 Crore.

Annual net profit of ONGC increases 4%, from Rs. 16,126 Crore to Rs.16, 768 Crore in FY’10.

Subsidy payout of Rs.4, 999 Crore as compared to Rs. 852 Crore in Q4FY’09.  On annualized basis, subsidy payout of Rs.11, 554 Crore as compared to Rs. 28, 225 Crore in FY’09.

Dividend:  Recommended payout of Rs. 33 per share (including interim dividend Rs. 18 per share) aggregating to Rs. 7,058 Crore (FY ’09- Rs,32 per share aggregating to Rs 6844 crore)

ONGC Videsh Ltd. (OVL) in FY’10

1. Production of 8.87 MTOE of O+OEG, as compared to 8.78 MTOE in FY’09

2. Profit after tax Rs. 2,115 Crore, down 25% over Rs. 2,853 Crore

in FY’09 (lower average crude oil prices in the international market)

3. OVL led Consortium selected to acquire stake for development of Heavy Oil field in Venezuela

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Mangalore Refinery & Petrochemicals Ltd. (MRPL) in FY’10

1. Refinery Crude Throughput 12.50 MMT, down from 12.59 MMT in FY’09

2. Capacity utilization 129%; the highest among Indian Refineries.

3. Turnover Rs. 36,081 Crore, down 15% from Rs. 42,719 Crore in FY’09 (due to fall in international prices of refined petroleum products)

4. Profit-after-tax Rs. 1,112 Crore, down 7% Rs. 1,193 Crore in FY’09

HUMAN RESOURCE IN ONGC

Keeping with the strong focus on continuous development, ONGC seeks to build and nurture world class human capital for leadership in its every business. It is essential to keep pace with the latest technology and ensure continuous development of people. Empowerment initiatives have become part of ONGC’s corporate rejuvenation campaign. The company believes in continuous learning and does not hesitate to approach external experts. ONGC has created many departments for the HR practices. ONGC works under major groups drilling, exploration and engineering/technical. These groups performed exceptionally well with focus aligned with business growth. The experts in each field are empowered to become the decision makers and are given managerial post at basins/ assets. Human Resource at ONGC helps employee to set target and perform well.

HR VISION

"To attain organizational excellence by developing and inspiring the true potential of company’s human capital and providing opportunities for growth, well being and enrichment".

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HR MISSION

"To create a value and knowledge based organization by inculcating a culture of learning, innovation & team working and aligning business priorities with aspiration of employees leading to development of an empowered, responsive and competent human capital".

HR OBJECTIVES

- To develop and sustain core values- To develop business leaders for tomorrow- To provide job contentment through empowerment, accountability and responsibility- To build and upgrade competencies through virtual learning, opportunities for growth and providing challenges in the job- To foster a climate of creativity, innovation and enthusiasm- To enhance the quality of life of employees and their family- To inculcate high understanding of 'Service' to a greater cause.

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What is performance Appraisal ?

“Performance appraisal is a systematic and objective way of judging the

relative worth or ability of an employee in performing the task.

Performance appraisal helps to identify those who are performing their

assigned tasks and those who are not and the reasons for such

performance.”

HISTORY OF PERFORMANCE APPRAISAL

The history of performance appraisal is quite brief. Its roots in the early 20th century can be traced to Taylor’s pioneering Time and Motion studies. As a distinct and formal management procedure used in the evaluation of work performance, appraisal really dates from the time of the Second World War not more than 60 years ago.Yet in a broader sense, the practice of appraisal is a very ancient art. In the scale of things historical, it might well lay claim to being the world’s second oldest profession!The human inclination to judge can create serious motivational, ethical and legal problems in the workplace. Without a structured appraisal system, there is little chance of ensuring that the judgments made will be lawful, fair, defensible and accurate. The observations and understanding of the performance appraisal process helped reduce a monumental task into something much more manageable. Also, performing performance appraisals on highly technical people is much more difficult than doing them for employees that are performing routine or production oriented tasks. For production employees, developmental aspects and expectations for job growth are typically not as great. This is not always the rule. There are always a few employees who come along who want and need developmental planning.

MODERN PERFORMANCE APPRAISAL

Performance appraisal may be defined as a structured formal interaction between a subordinate and supervisor, that usually takes the form of a

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periodic interview (annual or semi-annual), in which the work performance of the subordinate is examined and discussed, with a view to identifying weaknesses and strengths as well as opportunities for improvement and skills development.In many organizations – but not all – appraisal results are used, either directly or indirectly, to help determine reward outcomes. That is, the appraisal results are used to identify the better performing employees who should get the majority of available merit pay increases, bonuses, and promotions.By the same token, appraisal results are used to identify the poorer performers who may require some form of counseling, or in extreme cases, demotion, dismissal or decreases in pay. (Organizations need to be aware of laws in their country that might restrict their capacity to dismiss employees or decrease pay.)Whether this is an appropriate use of performance appraisal – the assignment and justification of rewards and penalties – is very uncertain and contentious matter.

PURPOSE OF PERFORMANCE APPRAISAL

A major responsibility of a supervisor is that of coaching and counseling

those under his/her supervision so that employees are able to achieve

higher levels of job performance while experiencing a greater sense of

individual job satisfaction and accomplishment. The collective and

effective performance of employees assists the University in

accomplishing strategic goals and fulfilling its mission. Individual

performance appraisals serve as important tools to facilitate professional

job growth while providing relevant information to management

regarding compensation and other personnel related decisions.

Performance appraisal is an on-going process – the Essence of which is

to enhance open, honest and timely communication between employees

and supervisors. While supervisory feedback about individual

performance is best communicated at the time of the specific

observation, a formal written appraisal is required annually to reinforce,

summarize and document the informal discussions that have occurred

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over the evaluation period. A mid- year performance assessment is

recommended and is intended to enhance communication and review

progress to date on goals and action plans. Goal setting is an important

element of the performance appraisal system. Both employee and

supervisor should actively participate in this process so that meaningful

and relevant goals are developed for the subsequent appraisal period.

Goals should be explicit, measurable, attainable, and realistic and time

specific.

Performance appraisal is used for:

1. Identifying employees for salary increases, promotion, transfers

and lay off or termination of services.

2. Determining training needs for further improvement in

performance.

3. Motivating employees by indicating their performance levels.

4. Establishing a basis for research and reference for personnel

decisions in future.

PERFORMANCE STANDARDS AND GOALS

Performance standards & goals are the basis from which employee

performance is measured. Effective goals & objective must be specific,

measurable, and reasonable.

Specific Objective and precise language is essentials when developing

performance goals & objective.

Measurable Goal & objective should be written so that

accomplishment, non accomplishment con is objectively measured.

Reasonable Goals and objective should be reasonable given time

frames, circumstances and departmental unit expectations.

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Goals of the Performance Appraisal System

For supervisors, the process of performance management is one of the

most important leadership responsibilities. The performance appraisal

system has three primary goals:

1. To provide a formal means of constructive, open and honest

communication between the employee and his\her supervisor.

2. To enhance employee development through performance

feedback and through the identification of future professional

development activities.

3. To measure and document job performance as a basis for making

promotion, compensation and other personnel management

decisions.

Who Should Conduct the Appraisal?

The individual (supervisor) who has the authority to make hiring

recommendations and to assign work to the employee should be the

person responsible for completing the appraisal. Supervisors who do not

directly observe or otherwise measure the outcomes of a given

employee’s job performance should seek input from individuals who do

directly observe the employee (e.g., a crew leader, group leader, area

coordinator, other workers). This may be the case, especially in larger

departments\units. It is the responsibility of department\unit heads and

supervisors to prepare written performance appraisals and to conduct

timely appraisal meetings. If a given supervisor should delay or neglect

to conduct an appraisal, the affected employee is encouraged to initiate

such or may contact the Department of Human Resources for assistance.

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Advantages of performance appraisal They provide a record of performance over a period of time.

They provide an opportunity for a manager to meet and discuss performance with an employee.

Provide the employee with feedback about their performance and how they completed their goals.

Provide an opportunity for an employee to discuss issues and to clarify expectations with their manager.

Offer an opportunity to think about the upcoming year and develop employee goals.

Can be motivational with the support of a good reward and compensation system.

 Disadvantages of performance appraisal

If not done appropriately, can be a negative experience.

Are very time consuming, especially for a manager with many employees.

Are based on human assessment and are subject to rater errors and biases.

If not done right can be a complete waste of time. Can be stressful for all involved

Purposes of Traditional Performance Appraisals

Performance appraisal for evaluation using the traditional approach has

served the following purposes:

Promotion, separation, and transfer decisions.

Feedback to the employee regarding how the organization viewed

the employee’s performance.

Evaluations of relative contributions made by individuals and

entire departments in achieving higher level organization goals.

Reward decisions, including merit increases, promotions, and

other rewards.

Ascertaining and diagnosing training and development decisions. 23

Criteria for evaluating the success of training and development

decisions.

Information upon which work scheduling plans, budgeting, and

human resources planning can be used.

PURPOSE OF DEVELOPMENT PERFORMANCE APPRAISAL

The developmental approach to performance appraisal has been related

to employees as individuals. This approach has been concerned with the

use of performance appraisal as a contributor to employee motivation,

development and human resources planning.

The following additional purposes are:

Provided employees the opportunity to formally indicate the

direction and level of employee’s ambition.

Show organizational interest in employee development.

Provide satisfaction and encouragement to the employee who has

been trying to perform well.

Expectations of a Manager in doing a Performance Appraisal

The following is typically expected from company managers when

doing performance appraisal:

Translate organizational goals into individual job objective.

Communicate management’s expectations regarding employee

performance.

Provide feedback to the employee about job performance in light

of management’s objectives.

Coach the employee on how to achieve job

objectives/requirements.

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Diagnose the employee’s strengths and weaknesses.

Determine what kind of development activities might help the

employee better utilize his or her skills improve performance on

the current job.

Benefits of Appraisal — Motivation and Satisfaction

Performance appraisal can have a profound effect on levels of employee motivation and satisfaction - for better as well as for worse.

Performance appraisal provides employees with recognition for their work efforts. The power of social recognition as an incentive has been long noted. In fact, there is evidence that human beings will even prefer negative recognition in preference to no recognition at all.

If nothing else, the existence of an appraisal program indicates to an employee that the organization is genuinely interested in their individual performance and development. The strength and prevalence of this natural human desire for individual recognition should not be overlooked. Absenteeism and turnover rates in some organizations might be greatly reduced if more attention were paid to it. Regular performance appraisal, at least, is a good startsitive influence on the individual's sense of worth, commitment and belonging.

Training and Development

Performance appraisal offers an excellent opportunity - perhaps the best that will ever occur - for a supervisor and subordinate to recognize and agree upon individual training and development needs.

During the discussion of an employee's work performance, the presence or absence of work skills can become very obvious - even to those who habitually reject the idea of training for them!

Performance appraisal can make the need for training more pressing and relevant by linking it clearly to performance outcomes and future career aspirations.

From the point of view of the organization as a whole, consolidated appraisal data can form a picture of the overall demand for training. This

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data may be analyzed by variables such as sex, department, etc. In this respect, performance appraisal can provide a regular and efficient training needs audit for the entire organization.

 Recruitment and Induction

Appraisal data can be used to monitor the success of the organization's recruitment and induction practices. For example, how well are the employees performing who were hired in the past two years? Appraisal data can also be used to monitor the effectiveness of changes in recruitment strategies. By following the yearly data related to new hires (and given sufficient numbers on which to base the analysis) it is possible to assess whether the general quality of the workforce is improving, staying steady, or declining.

 Employee Evaluation

Though often understated or even denied, evaluation is a legitimate and major objective of performance appraisal. But the need to evaluate (i.e., to judge) is also an ongoing source of tension, since evaluative and developmental priorities appear to frequently clash. Yet at its most basic level, performance appraisal is the process of examining and evaluating the performance of an individual. Though organizations have a clear right - some would say a duty - to conduct such evaluations of performance, many still recoil from the idea. To them, the explicit process of judgments can be dehumanizing and demoralizing and a source of anxiety and distress to employees. It is been said by some that appraisal cannot serve the needs of evaluation and development at the same time; it must be one or the other. But there may be an acceptable middle ground, where the need to evaluate employees objectively, and the need to encourage and develop them, can be balanced.

Effects on bias on Performance Appraisal

1) Frustration

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When the Appraisal system is biased then the employee will suffer from the frustration. Certain employees may be unfairly advantaged, while others are disadvantaged, by bias effects in the judgements of supervisors

2) Awareness Training Supervisors need to be informed of the types of subtle bias that can interfere with their performance as appraisers. They need to understand that the in-group/ out-group bias, for instance,

reduces the morale and motivation of their subordinates.

3) Developing Poor Performers Incentives, financial or non-financial, may offered to encourage supervisors to make special efforts to help poor performers improve. Supervisory appraisals, for example, might stress the importance of working with poor performers to upgrade their

performance. The possibilities are extensive.

4) Counseling, Transfer, Termination There is always the possibility that an employee who receives poor appraisal results is in fact a chronic poor performer. No employer is obliged to tolerate poor performance forever. Consistently poor appraisal results will indicate a need for counseling, transfer or termination. The exact remedy will depend on the circumstances.

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PERFORMANCE APPRAISAL SYSTEM AT ONGC

Performance appraisal report is an index of an employee’s work performance over a given period of time. It is crucial for his or her career growth as it indicates the strengths, weaknesses, training needs, nature of job being performed and problems faced in work situation.

The objectives of the performance appraisal system at ONGC are:

To set norms and targets of work performance, as well as, to monitor the work progress of employees.

To facilitate placement of employees in accordance with their suitability for different types of assignments.

To provide an objective basis for determination of merit, efficiency and suitability for the purpose of promotion.

To identify areas requiring exposure for training and development.

The performance appraisal system seeks to evaluate:

The work performance of an employee on the present job in relation to the expected levels of performance, both qualitative and quantitative.

The extent of development achieved by the employee during the period under review.

Evaluation of behavioral attributes, attitudes and abilities. Evaluation of potentials for assuming higher responsibility.

Importance of Performance Appraisal

PARs are required for manpower resource development activities like:-

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• Quantification of work plan and performance• Potential assessment for career growth and promotions• Placements and Lateral shifting etc.• Strategic assignments /board level selection in respect of senior officers• Deputation • Mapping developmental needs• Talent management initiatives• Grooming and succession planning• Recognition & Awards• Motivating productivity and identification of true performers.

The appraisal covers:

Performance during the period from 1st April to 31st march of every year.

All regular employees of the company. a) Non Executives. b) Executives

The appraisal form PAR is filled in respect of all such employees who have served for a period of at least four months in the organization during the relevant year.

Procedure

PAR in respect of an employee is required to be assessed by levels indicated below:

By the reporting officer under whom employee is working. By the reviewing officer. The reporting officer for writing PAR of an employee of class III/IV

and E-0 level category will be the executive under whose control the employee is working. The reviewing officer will be of one grade above the grade of reviewing officer. The PAR’s in respect of class III/IV employees duly reviewed is maintained at Region/Institute/Headquarters group wise in the concerned establishment section/PAR sections.

The PAR in respect of E-0 to E-6 level executives is being maintained in PAR departments at headquarters of R&P division.

As regards E-7 and above all such reports which are received from Regions/Institutes/Headquarters are maintained at CMD’s office.

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The reviewing officer will be the officer to whom the executive reports for his day to day work. Review of the PAR will be done by the executives to whom the reporting officer is responsible for his functions. Accepting authority will be the executive higher than the reviewing officer at different levels depending upon the nature of the grades as per delegation of powers in PAR rules.

The performance appraisal reports of executives of E-6 level i.e. Deputy general manager and above will be submitted to concern functional Director for final review and acceptance.

The performance appraisal reports of executives of E-5 level i.e. chief manager and equivalent will be reviewed by the RD/ED/Nominee of the Director concerned.

The performance appraisal of the executive upto E-4 level i.e. manager and equivalent would be reviewed by the functional head/GM/GGM not less than E-7.

Performance Appraisal Format for Executives

I. Personal Data (Annexure- 4)

This includes personal details of the individual being appraised.

II. Self AppraisalIn this section the appraisee is required to mention the tasks achieved in the appraisal period including enabling and constraining factors. These achievements are then rated by the individual itself and the appraiser.

III.A. Performance Appraisal (Annexure- 5)

Performance appraisal is done on the basis of Key Result Areas and a certain weightage is assigned to each.

Following are the Key Result Areas:

Performance in respect to volume 40Quality of output 30Timeliness of jobs completed 30

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The total of the score gained by the individual is noted and termed as P.

B. Potential Appraisal

Potential of the candidate is appraised on the scale of 1 to 5 keeping the existing role aswell as future positions in perspective.Scale 1 to 5 is given for (1-poor, 2-fair, 3-good, 4-very good, 5-excellent)Potential is appraised on the basis of following traits:· Result oriented approach· Willingness to accept challenges· Diligence and reliability· Initiative· Professional competence· Communication skills· Commitment and dedication· Personal conduct and discipline· Leadership· Inter personal relationshipTotal of score gained by an individual in this section is again noted and termed as Q.

C. Work done for HINDI: In this section assessment of the work done in official language is done.

D. Overall Grade

Total score(S) is calculated asS = a * P + b * 2 * Q

Where a & b are weightage for performance and potentials. This weightage is as per the Level.

Level a bE1 0.9 0.1E2 0.8 0.2E3 0.7 0.3E4 0.6 0.4E5 0.5 0.5E6 0.4 0.6

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The grading system

A+ 95 and aboveA 85 and above but less than 95A- 75 and above but less than 85B+ 65 and above but less than 75B 55 and above but less than 65C 45 and above but less than 55D less than 45

IV.A. Assessment by Reviewing Officer

B. Training Needs:

The appraisee himself mentions the training requirements which are then remarked by the appraiser.

C. Co- Review:

V. Moderation: This means re- evaluation of PAR of an appraisee and the grade awarded by the accepting authority to correct any aberrations.

VI. Assessment by accepting officer: The accepting authority will minutely examine the observations made by the first appraiser and the reviewing authority, and also the self appraisal of the appraisee, and after taking due considerations of all the aspects, determine overall grade and also comment on the total performance. The final grade given by the accepting authority after detailed and due consideration to the rating by the 1st and 2nd appraisers, will be the decisive grade of the appraisee executive. In case this final rating is different from those of the 1st and 2nd appraiser, adequate justification must be mentioned by the accepting authority. There must be adequate explanation by the 1st and 2nd Appraisers and the accepting authority for any grade assigned to the appraisee. In the absence of adequate explanation the report will be considered incomplete and returned back to the appraisers for confirming to the directives contained in the instructions. At last the PAR is disclosed.

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PAR Process (Paper PAR)

Introduction to e - PAR System in ONGC

"Electronic performance monitoring" refers to the use of technology to monitor the employee’s performance. Many organizations have incorporated technologies in the Performance appraisal and management processes. The electronic and computerized systems are being used to monitor and evaluate the performance of the employees.

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E-PAR was introduced in ONGC in June 2008 for executives from E1-

E6.

Need for e-PAR

1) Address the need for a transparent, multidimensional evaluation system in alignment with industry practices.

2) Introduce Performance Contracting and objective evaluation.

3) Supplement efforts to enable speed up HR processes like Promotions, Special Assignments, Deputation out Rewards and Incentives etc. through system.

4) Streamlining of PAR Process.

E-PAR Benefits

E-PAR shall have following distinct advantages:-

Uniform application of the system Single point Data capturing and Authentication System driven Control and monitoring mechanism Reduced cycle time and Adherence to Time Schedules Enhanced Data Security Authenticity and audit trail of transaction Availability of online information Performance based Rewards and Incentives for future

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E-PAR Process flow:

Disclosure of PAR ratings to the appraisee is doneon completion of the PAR cycle.

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Research Instrument: QuestionnaireScope of the Study: The scope of the study is limited to Dehradun.

Sample Size: 70 (E1 to E6)Population of the Study: All E1-E6 employees in ONGC Dehradun.

Sampling Method: Personal survey method through preparation of questionnaire

METHOD OF DATA COLLECTION

PRIMARY DATAThe primary data to be selected was based upon the response of the respondents to the questionnaire designed. The questionnaire consists of open ended questions.

SECONDARY DATAThe secondary data was collected by referring through manuals, journals and intra net, web sites, and the final data was analyzed systematically to achieve the desired result.

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Q1.Are you satisfied with the existing PAR System?

Interpretation:-

Yes 75% No 08% Can’t Say 17%

75% employees are satisfied with the present PAR system.

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Q2. Do you think PAR system increases employee motivation?

Interpretation:-

Yes 58% No 38%Can’t Say 04%

58% employees think that existing PAR system increases motivation.

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Q3. Are you well aware of your KRA/KPIs.

Yes 65% No 30% Can’t say 5%

65% employees are well aware of their KRA/KPIs.

Q4. Do predefined KRA/KPI render any help in filling up E-PAR.

Yes 55% No 30% Can’t say 15%

55% employees agree that predefined KRA/KPIs help in filling up E-PAR.

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Q5. Should promotion be purely based on performance appraisal?

Yes 28% No 58% Can’t say 14%

58% employees do not agree that promotion should purely be based on performance appraisal.

Q6. Are training & development needs of executives identified by the PAR System?

Yes 28% No 42% Can’t say 30%

42% employees disagree that training & development needs of executives are identified by the PAR system.

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Q7. Performance appraisal system in ONGC is well communicated.

Yes 72% No 14% Can’t say 14%

72% employees agree that PAR system in ONGC is well communicated.

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Q8. Do you think PAR process improves communication between appraiser and appraise?

Yes 65% No 14% Can’t say 21%

65% employees think that PAR process improves communication between appraiser and appraisee.

Q9. Should PAR rating be used to fix annual increments?

Yes 28% No 57% Can’t say 15%

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As per the result 57% employees disagree that PAR rating be used to fix annual increment.

Q10. PAR system in ONGC is equitable.

Yes 50%No 35% Can’t say 15%

50% employees agree that PAR system in ONGC is equitable.

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Q11. Existing PAR system effectively monitors work progress (quantitatively & qualitatively).

Yes 63%No 18%Can’t say 20%

63% employees agree that existing PAR system effectively monitors work progress.

Q12. The existing PAR system is helpful in reducing grievance among the employees?

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Yes 32% No 42% Can’t say 26%

42% employees disagree that PAR system is helpful in reducing grievances.

Q13. Are you aware of weightage given to PAR in deriving the value of PRP?

Yes 36% No 43%Can’t say 21%

43% employees are not aware of weightage given to PAR in deriving the value of PRP.

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Q14. E-PAR is a better system compared to paper PAR.

Yes 75% No 8% Can’t say 17%

75% employees agree that e-PAR is better than paper PAR.

Q15. DO you think there is a need of “external consultants” in PAR system?

Yes 35% No 43% Can’t say 22%

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43% employees think that there is no need of “external consultants” in PAR system.

Q16. DO you think existing PAR system facilitates career growth of employee.

Yes 50% No 28% Can’t say 22%

50% employees think that existing PAR system facilitates career growth of employee.

Q17. Do you think PAR system encourages team spirit?

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Yes 65% No 14% Can’t say 21%

65% employees think that PAR system encourages team spirit.

Q18. Do you think E-PAR is more objective than paper par?

Yes 78% No 14% Can’t say 08%

78% employees think that E-PAR is more objective than paper PAR.

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Q19. The current method used in PAR system is sufficient to evaluate the performance and potential of employees.

Yes 58%No 28% Can’t say 14%

58% employees think that current method used in PAR system is sufficient to evaluate the performance and potential of employees.

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Q20. Rate the effectiveness of PAR system in ONGC.

Excellent 8% V.Good 14% Good 42% Average 36%

64% respondents find the effectiveness of PAR System has been rated as “Good” or above.

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Major Findings

The existing PAR system in ONGC is perceived to be effective (64% respondents rating it as “Good or above”). It is also seen as sufficient to evaluate the performance and potential of employees. Majority of employees are satisfied with the existing performance appraisal system (75%).

Majority of respondents think that PAR system increases employee motivation (58%). Existing PAR system in ONGC is perceived to be equitable. 58% respondents do not feel that existing PAR system does not reduce grievance among the employees.

Majority of respondents find predefined KRA/KPI helpful while filling up e-PAR. However, almost one third of respondents were not well aware of their KRA/KPIs in the system.

Majority of respondents feel that Promotion and Annual Increment should not be based on PAR system (58%). It is also seen that 43% respondents are not aware of weightage given to PAR in deriving the value of PRP.

42% respondents felt that training & development needs of executives are not identified by the PAR system.

Existing PAR system in ONGC is perceived to be well communicated (72%). It is also seen as sufficient to monitors work progress (quantitatively & qualitatively).

Majority of employees think that PAR process improves communication between appraiser and appraisee and it also encourages team spirit (65%). It also seen as sufficient to facilitates career growth of employee.

E-PAR is perceived to be more objective than paper PAR.

Majority of respondents do not find any need of “external consultants” in existing PAR system.

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RECOMMENDATIONS

The performance appraisal system of ONGC is of good quality. Majority of employees find the existing PAR system as effective and are satisfied.With the introduction of new e-PAR system, the PMS is refined further. On the basis of the responses a few steps may be considered to further strengthen the performance appraisal system.

The detailed feedback, covering all the parameters of PAR, should be provided to the employees. So that they may be in a position to know where they stand exactly and can identify their performance gaps and prepare accordingly for the future.

Training plays a vital role in the development of an individual and helps improve the performance. Note may be taken of the training requirements shown by the appraisee/ appraiser.

More predefined KRA/KPIs should be defined and to be provided in the system to cover more jobs/ assignments.

Relation between PAR Ratings and PRP (Performance Related Pay) should be made communicated to the employees before beginning of the appraisal cycle.

E-PAR may be introduced as soon as possible for the class 3, 4 and E-0 level, because E-PAR is perceived to be more objective than paper PAR.

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ANNEXURE 1

QUESTIONNAIRE

Personal Profile:-

Discipline :-

Level :-

Age :-

1. Are you satisfied with the existing performance appraisal system?a) Yes ( ) b) No ( ) c) Can’t say ( )

2. Do you think PAR system increases employee motivation?a) Yes ( ) b) No ( ) c) Can’t say ( )

3. Are you well aware of your KRA/KPI.a) Yes ( ) b) No ( ) c) Can’t say ( )

4. Do predefined KRA/KPI render any help in filling up e-PAR?a) Yes ( ) b) No ( ) c) Can’t say ( )

5. Should promotion be purely based on performance appraisal? a) Yes ( ) b) No ( ) c) Can’t say ( )

6. Are training & development needs of executives identified by the PAR system?

a) Yes ( ) b) No ( ) c) Can’t say ( )

7. Performance appraisal system in ONGC is well communicated.a) Yes ( ) b) No ( ) c) Can’t say ( )

8. Do you think performance appraisal process improves communication between appraiser and appraise?

a) Yes ( ) b) No ( ) c) Can’t say ( )

9. Should PAR rating be used to fix annual increment?a) Yes ( ) b) No ( ) c) Can’t say ( )

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10. PAR system in ONGC is equitable.a) Yes ( ) b) No ( ) c) Can’t say ( )

11. Existing Performance Appraisal system effectively monitors work progress ( quantitatively & qualitatively).

a) Yes ( ) b) No ( ) c) Can’t say ( )

12. The existing PAR system is helpful in reducing grievance among the employees?

a) Yes ( ) b) No ( ) c) Can’t say ( )

13. Are you aware of weightage given to PAR in deriving the value of PRP?

a) Yes ( ) b) No ( ) c) Can’t say ( )

14. E-PAR is a better system compared to paper PAR. a) Yes ( ) b) No ( ) c) Can’t say ( )

15. Do you think there is a need of “external consultants” in PAR system?

a) Yes ( ) b) No ( ) c) Can’t say ( )

16. Do you think existing PAR System facilitates career growth of employee.

a) Yes ( ) b) No ( ) c) Can’t say ( )

17. Do you think PAR System encourages team spirit? a) Yes ( ) b) No ( ) c) Can’t say ( )

18. Do you think E-par is more objective than paper par? a) Yes ( ) b) No ( ) c) Can’t say ( )

19. The current method used in PAR system is sufficient to evaluate the performance and potential of employees?

a) Yes ( ) b) No ( ) c) Can’t say ( )

20. Rate the effectiveness of performance appraisal system in ONGC.1) Excellent2) Very Good3) Good4) Average 5) Poor

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ANNEXURE 2

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ANNEXURE 3

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ANNEXURE 4

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ANNEXURE 5

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BIBLIOGRAPHY

HUMAN RESOURCE MANAGEMENT (C.B.Gupta)

HUMAN RESOURCE MANAGEMENT (L.M.Prasad) PERSONEL MANAGEMENT (K.Aswathappa)

www.ongcindia.co m

www.ongcreport.com

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