Download - Creating_high_Performance Mr. Pathak GACL

Creating a high performance culture with the right HR strategy

By-S C Pathak

GM (HR)Gujarat Alkalies & Chemicals Limited

Theme

Human Capital Strategy – Getting the right people

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• One of the Key success factor of a high performingorganization is its Culture.

• Culture adopted by the organization determines it successand even sustainability. And this challenging task of creating ahigh performance culture can only be accomplished by the HRdepartment, with the right HR strategies.

• Why HR ?

Because it is the only department that deals with peopleprocess like recruitment, selection, training & development,performance evaluation, career planning promotion, transferetc.

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What is culture?

• Culture is the infrastructure and the fabric that binds people and processes together to generate results.

• 80% of Organisational culture exists by accident or default, rather than design. Most are shaped through critical incidents or key events that have happened in the history of the organization.

• Culture should be focused and have a balance between internal and external processes

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Role of HR Pre –Implementation

• To know what their culture is and what type of culture is the demand of market.

• To know the strength, weakness, opportunities and threats (SWOT analysis) of the organization.

• To elucidate the need for Change in the culture and seek the participation of the leadership and other employees in the change.

• The whole process should be by the people, for the people and of the people.

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What does the right HR Strategy should be for high Performance culture?

• HR should communicate to its employees the company’s Mission, Vision & goals .

• To ensure that the process follows a top-down approach.

• HR should support the employees / supervisors in forming KPIs / KRAs such that they are rational, linked with Organisational goals and reflect accurate impact on organizational targets.

• To link performance management system with reward, & other HR process.

• To recognize the high performers.

• To identify non-performers, counsel them, identify reasons for non-performance & organize training and development programs and motivate them.

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Case Study

Performance Management System

At

GACL

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Gujarat Alkalies & Chemicals Limited

GACL – A State Government PSU

Features that makes GACL a Unique PSU:• Operating in the competitive market unlike other state PSUs

• Steep competition in business as well as in job market

• Competitors: Grasim, DCM shriram, Nirma

Challenges to HR Deptt. of GACL :• Four year pay revision – not comparable with peer industries

• High Attrition Rate

• Scarce Technical Talent

• Non-comparable Pay Structure

Value Enhancement - Old v/s New PMS

Sr.No Old (PAR / CR) New PMS

1 Appraisal was only based on behavioral aspectsAppraisal is integrated with functional as well asbehavioral aspects

2 Non-numeric ratings were used for evaluation Five points rating scale is used.

3 No linkage to the organizational business goals Linked with organizational business goals and objective

4 No individual / functional targets for employees Targets are decided through active participation.

5No role clarity / job prioritization in carrying outone’s function

Role clarity through Key Performance indicators andprioritization through weightage given to it..

6 Ratings were not communicated to employeesFinal performance ratings are communicated to concernemployee.

7 No linkage to reward/ recognition. Employees is rewarded through variable pay.

8No linkage with other HR initiatives like careergrowth, job enlargement / enrichment etc.

Linkage with other HR initiative like Promotion,Performance counseling, training , job enlargement/enrichment etc.

9 No specific timeline for execution of jobs / targetsJobs linked to the “SMART” methodologySpecific, Measurable, Achievable, Realistic, Time-bound

The Implementation Phase:

Steering Committee

ChangeChampions

Clarityin

Communication

Rigorous Training Sessions

Help-DeskBy HR

Top Management

Support

SuccessParameters

1. Top Management Support:Active Involvement of Board of Directors & MD

2. A Steering committee: SeniorExecutives of GACL (to overseeprocess of implementation)

3. “Change Champions” atGround Level: Tworepresentative from eachdepartment (to directly interactwith all management staff asfacilitator)

4. Clarity in Communication:Through Training Programs,Office Orders, ChangeChampions

5. Rigorous Training Sessions:Covered Each employee inManagement Staff (Concept ,Objective and Benefit of newHR Initiatives)

6. Help-desk by HR: For one-to-one customized service & queryresolution. E-mail id to interactdirectly with HR & Head

The Concept – New PMS:

A framework to drill down the Organisational goals in

Individual’s performance targets

Scientific Evaluation – KPI based target setting

Integrated process which involves employee & his

superior

Aligning employee’s efforts with functional and

organisational goal – joint efforts towards improving

organisational performance as a whole.

Applicable to Management Staff only

New PMS – Linking with other HR

Processes

Linkage with –

• Reward & Recognition

• Training & Development

• Promotion Policy

• Job-rotation, Job-enrichment & Job-enlargement

• Performance Counseling

Fixed CTC(85% of Total CTC)

Total Pay (CTC)(100%)

Variable Pay(15% of Total CTC)

Organizational Performance

Individual Performance

Key Performance

Indicators(KPI)

Behavioral competency

Levels Org. Performance Ind. Performance

M1 – M4

(ED, CGM, GM, DGM)75% 25%

M5 – M8

(CM. Sr.Mgr, Mgr, Sr. Officer)50% 50%

M9 – M10

(Officer, Asstt. Officer)25% 75%

Variable Pay Methodology

Both Individual & organisational performance are

considered level wise for Performance rating and

calculation of variable pay while giving Individual

performance rating both Individual Performance &

behavioral competency are considered.

Levels KPIBehavioral

Competency

M1 – M4

(ED, CGM, GM, DGM)30% 70%

M5 – M8

(CM. Sr.Mgr, Mgr, Sr. officer)50% 50%

M9 – M10

(Officer, Asstt. Officer)70% 30%

Concept & Need of Compensation

restructuringConcept

Restructuring of existing salary components (allowance & perks) is carried outto provide option to the employee for

- Own tax planning.

- Increase cash in hand.

Need for Compensation Restructuring

High FBT / Retirals burden for GACL.

Encashment components with no perceived value to the employee ie. Liveries ,company’s car etc.

New young entrants prefers more cash in hand .

Large number of components, leading to administrative issues of managing / monitoring .

Outdated structure; not revised even after numerous changes in tax laws.

Cost to Company (CTC)

Fixed CTC(85% of CTC)

Variable Pay(15% of CTC)

Base Pay (40%)

Flexible Pay Plan (60%)

Total amount of Cost to company (CTC) is broken down as follows.

Variable pay is paid onetime as per performance rating.

Base pay is decided by company

Flexible pay components are decided by an employees within the allotted cap

GACL – Compensation re-structuring

Components of Old Compensation Structure1.Basic2.F.D.A.3.V.D.A.4.H.R.A.5.C.C.A.6.Washing Allow..7.Canteen Subsidy8.Education Exp. 9.P.S.D. Allowance10.Medical reimbursement11.Chem. Handling Allow.12.Gardening Allow.13.Conveyance 14.Company Car15.Education Asst.16.Birth day gift17.L.T.A.18.P.F.19.PA Policy 20.EDLI Insurance 21.Superannuation22.Bonus/Ex-Gratia23.Uniform/Liveries24.Gratuity25.Phone26.Medical27.Electricity28.Furniture29.Uniform & Liveries

Components of New Compensation structure..

A. Base Pay (to be decided by GACL)1. Basic2. PF3. Gratuity

B. Flexible Pay Plan (to be decided by employee)

4. Superannuation5. Conveyance6. LTA7. HRA8. Education Asst.9. Hostel Allowance10. Canteen11. Washing Allowance12. Medical Allow.13. Variable Special Allowance

Restructuring of components

Role of HR at GACL during the Initiatives

HR department deliberated the PMS & Compensation with members of

committees in all vital decisions during the implementation process.

HoD- HR conducted a series of informatory sessions with the Corporate &

Functional heads.

During training sessions HoD –HR addressed queries / fear / notions of the

employees and explained them individually whenever required.

A team of Officers of HR department facilitated each and every management

employee in fixing KPIs (SMART method) by linking them to the

Organizational goal and deciding components in flexible pay plan.

HR – Team along with IT department developed PMS & compensation

module and trained all mgt. employees for using the online module . Hence

the whole system is paperless.

Now HR department is owner of new PMS linking variable pay and

implement flexible pay plan (Choice pay) from 2009 onwards.

Thank You