Performance Management and Appraisal in Mahindra & Mahindra Finance Submitted by- Choudhuri Milan Mohapatra, roll no-04 Kimi Rout, roll no-05 Loveleena Lenka, roll no-06 LOGO Contents Company Profile Performance management in Mahindra & Mahindra Performance appraisal in Mahindra & Mahindra Findings Conclusion Company profile ? Mahindra & Mahindra Financial Services Limited (M&M FSL), a subsidiary of Mahindra & Mahindra Limited was incorporated on 1st January 1991 as Maxi Motors Financial Services Limited. ? One of India’s leading non-banking finance companies, focused on the rural and semi-urban sector, ?
The company’s product portfolio includes right from finance for two wheelers, tractors, farm equipment, cars and utility vehicles to commercial vehicles and construction equipment also have a group of experts providing investment advice, surveying available market products and choosing the most suitable to customers’ needs. ? M FSL had received certificate of commencement of business on 19th February of the year 1991. ? The company’s name was changed from Maxi Motors Financial Services Limited to Mahindra & Mahindra Financial Services Limited on November 3, 1992. During the year 1993, the company had commenced financing of M&M Utility Vehicles as part of its work. M&M FSL had opened its first branch outside Mumbai, at Jaipur in the year 1995. ? Regional office – Mahindra and Mahindra finance services limited , Mahindra tower , rasulgarh, Bhubaneswar, was established in 1998. ? Controls the entire activity of the organisation through its 14 branches and 200 manpower ? In India 565 branches and more than 10,000 manpower ? Company is having asset base of 18,000crores and having headquarter at Mumbai, Mahindra tower, 4th floor. vision To be leading financial services provider in semi-urban and urban area. MISSION ? We do not have a group wide statement . Our core purpose is to make all of us want to get up and come to work in the morning GOAL ? Our goal is to be the preferred provider of retail financing services in the rural and semi-urban areas of India, while our strategy is to provide a range of financial products and services to our customers through our nationwide distribution network. Organization hierarchy structure MANAGING DIRECTOR VICE PRESIDENT ZONAL HEAD PRODUCT HEAD REGIONAL HEAD AREA HEAD
TERRITORY MANAGER BRANCH MANAGER COLLECTION EXECUTIVE BUSINESS EXECUTIVE Performance Management ? An iterative process of goal-setting, communication, observation and evaluation to support, retain and develop exceptional employees for organizational success. Performance Management Diagram COMMUNICATION GOAL SETTING Performance Management OBSERVE EVALUATE Requirement of Managing Performance and appraising it ? To reach organizational mission and goals ? Encourage and reward behaviors aligned with organizational mission and goals. ? Curb or redirect non-productive activities.
Performance Management System in M&M Finance Ltd. Bhubaneswar BUSINESS GOALS STRATEGY, VISION, MISSION & BUDGET ORGANIZATION’S OBJECTIVES DEPARTMENTAL / FUNCTIONAL OBJECTIVES PERFORMANCE MANAGEMENT SYSTEM IN M&M FINANCE LTD. BHUBANESWAR ROLE / INDIVIDUAL OBJECTIVES KEY RESULT AREA (KRAs) Performance appraisal ? Setting goals for the appraisal system ? Developing criteria for successful performance ? Creating metrics for evaluating performance ? Selecting reviewees and reviewers ? ? Considering the timing of feedback Organizing logistics for the report and meeting Giving candid and constructive feedback ? Following up to ensure that the system works Objectives of Performance Appraisal ? Provide a basis for promotion/ transfer/ termination. ? Enhance employees’ effectiveness by helping to identify their strengths and weaknesses & Inform them about expected levels of performance. ? Develop inter-personal relationships. ? Improve communication. ? Establish Performance Standards & Communicate the Standards. ? Give employees feedback on performance ? Identify employee training needs ? Provide the opportunity for organizational diagnosis and development ?
Facilitate communication between employee and employer ? Validate selection techniques and human resource policies to meet federal Equal Employment Opportunity requirements. ? To improve performance through counseling, coaching and development. Employees Expectation ? Clear expectations ? Positive/constructive feedback on a regular basis ? Involvement in goal setting ? Be treated fairly and consistently ? Sharing of information and resources ? Job/career enrichment opportunities FINDINGS Planning for the Process ? Review employee’s job description ? Understand the performance measurement system Review notes from the year ? Understand employee expectations FINDINGS ? Performance appraisal Its high essential product for balanced growth & development of any organization and well as for an individuals for the organization. ? Objective for managing performance 1. To be fair . 2. measuring the performance in all aspects. 3. Rating given must be justified. • Performance appraisal is important – ? ? ? ? Reward good performance Feedback to employees Employee development Documentation for future managers, legal purposes METHOD USED FOR PERFORMANCE APPRAISAL Rating scale: from 1 to 5 A. 1 is rated as lowest and 5 is rated as highest • 1-unexpected • 2-must improved • 3-good • 4-Consistent superior • 5- Expectation surpassed B. Bell curve method Rating Scales ? The rating scale method offers a high degree of structure for appraisals. Each employee trait or characteristic is rated on a bipolar scale that usually has several points ranging from “poor” to “excellent”. ? The traits assessed on these scales include employee attributes such as cooperation, communications ability, initiative, punctuality and technical (work skills) competence. The one major provision in selecting traits is that they should be in some way relevant to the appraisee’s job. ? The traits selected by some organizations have been unwise and have resulted in legal action on the grounds of discrimination. Performance Extremely good Behavioral Anchored Rating Scales Points Behavior 7 Can expect trainee to make valuable suggestions for increased sales and to have positive relationships with customers all over the country. Good 6 Can expect to initiate creative ideas for improved sales. Above average Average 5 4 Can expect to keep in touch with the customers throughout the year.
Can manage, with difficulty, to deliver the goods in time. Below average Poor 3 2 Can expect to unload the trucks when asked by the supervisor. Can expect to inform only a part of the customers. Extremely poor 1 Can expect to take extended coffee breaks & roam around purposelessly. In Mahindra N Mahindra after rating ? They reward their employees on the basis of their performance ? Increment growth over last year cost to compute (CTC) ? Employees whose ratings are 3, 4, 5. they get increment in the salary year wise as following • • • 3-10% 4-15% 5-20% Employees having rating scale 1- Just kicked out • Company give notice to leave the organisation within 1month ? Employees having Rating scale 2- 6months time for their improvement and after that measure their performance again ? Branch head is rated once in the year Advantages ? The greatest advantage of rating scales is that they are structured and standardized. This allows ratings to be easily compared and contrasted – even for entire workforces. ? Each employee is subjected to the same basic appraisal process and rating criteria, with the same range of responses.
This encourages equality in treatment for all appraises and imposes standard measures of performance across all parts of the organization. ? Rating scale methods are easy to use and understand. The concept of the rating scale makes obvious sense; both appraisers and appraises have an intuitive appreciation for the simple and efficient logic of the bipolar scale. The result is widespread acceptance and popularity for this approach. Disadvantages ? Trait Relevance The selected rating-scale traits are not clearly relevant to the jobs of all the appraises.
It is inevitable that with a standardized and fixed system of appraisal that certain traits will have a greater relevance in some jobs than in others. ? For example, the trait “initiative” might not be very important in a job that is tightly defined and rigidly structured. In such cases, a low appraisal rating for initiative may not mean that an employee lacks initiative. Rather, it may reflect that fact that an employee has few opportunities to use and display that particular trait. The relevance of rating scales is therefore said to be context-sensitive.
Job and workplace circumstances must be taken into account. ? Systemic Disadvantage Rating scales, and the traits they purport to measure, generally attempt to encapsulate all the relevant indicators of employee performance. There is an assumption that all the true and best indicators of performance are included, and all false and irrelevant indicators are excluded. ? This is an assumption very difficult to prove in practice. It is possible that an employee’s performance may depend on factors that have not been included in the selected traits.
Such employees may end up with ratings that do not truly or fairly reflect their effort or value to the organization. Employees in this class are systemically disadvantaged by the rating scale method. ? Perceptual Errors This includes various well-known problems of selective perception (such as the horns and halos effect) as well as problems of perceived meaning. ? Selective perception is the human tendency to make private and highly subjective assessments of what a person is “really like”, and then seek evidence to support that view (while ignoring or downplaying evidence that might contradict it). This is a common and normal psychological phenomenon. All human beings are affected by it. In other words, we see in others what we want to see in them. ? An example is the supervisor who believes that an employee is inherently good (halo effect) and so ignores evidence that might suggest otherwise. Instead of correcting the slackening employee, the supervisor covers for them and may even offer excuses for their declining performance. ? On the other hand, a supervisor may have formed the impression that an employee is bad (horns effect).
The supervisor becomes unreasonably harsh in their assessment of the employee, and always ready to criticize and undermine them. ? Perceived Meaning Problems of perceived meaning occur when appraisers do not share the same opinion about the meaning of the selected traits and the language used on the rating scales. ? For example, to one appraiser, an employee may demonstrate the trait of initiative by reporting work problems to a supervisor. To another appraiser, this might suggest an excessive dependence on supervisory assistance – and thus a lack of initiative. As well, the language and terms used to construct a scale – such as “Performance exceeds expectations” or “Below average skill” – may mean different things to different appraisers. ? Rating Errors The problem here is not so much errors in perception as errors in appraiser judgment and motive. Unlike perceptual errors, these errors may be (at times) deliberate. ? The most common rating error is central tendency. Rating all the employee in a narrow range in the middle of the rating scale (e. g. , “satisfactory” or “adequate”), regardless of the actual performance of a subordinate.
Thus the spread of ratings tends to clump excessively around the middle of the scale. Forced distribution method No. of employees 10% 20% poor 40% 20% 10% Excellent Below average good average Force distribution curve Forced Distribution ? Forced distribution is a form of comparative evaluation in which an evaluator rates subordinates according to a specified distribution. Unlike ranking methods, forced distribution is frequently applied to several rather than only one component of job performance. ? Use of the forced distribution method is demonstrated by a manager who is told that he or she must rate ubordinates according to the following distribution: 10 percent low; 20 percent below average; 40 percent average; 20 percent above average; and 10 percent high. In a group of 20 employees, two would have to be placed in the low category, four in the below-average category, eight in the average, four above average, and two would be placed in the highest category. The proportions of forced distribution can vary. For example, a supervisor could be required to place employees into top, middle, and bottom thirds of a distribution. Forced distribution is primarily used to eliminate rating errors such as leniency and central tendency, but the method itself can cause rating errors because it forces discriminations between employees even where job performance is quite similar. For example, even if all employees in a unit are doing a good job, the forced distribution approach dictates that a certain number be placed at the bottom of a graded continuum. For this reason, raters and ratees do not readily accept this method, especially in small groups or when group members are all of high ability.
The advantages of bell curve PAM are: 1. 2. 3. 4. 5. 6. 7. 8. 9. It brings objectivity to the PAM process It helps in normalization of the appraisal process It lends itself to predictable performance patterns It guides appraisers on how to follow an uniform rating process/pattern It helps appraisers from abstaining in ‘playing God’, Horne’s effect, ‘hypercritical effects’ or ‘playing central tendency’ in appraisal ratings. It helps management in planned attrition and in predicting promotions/job enlargements/job enrichments/rewards/incentives, etc.
It may help in retention since it showcases an objective appraising methology/pattern. It systematically identifies high performers for commensurate rewards and identifies low/weak performers for training/forced attrition. On a predictive index, it provides a bird’s eye view of the uniform, systematic performance patterns across grades/levels/functions in the organization. DISADVANTAGE 1. It seems rigid and impractical, especially for small/medium. It may reduce organizational flexibility. 2. organizations since it does not allow flexibility even for one-off cases. 3.
It does not promote ‘performance adjustments‘ 4. It makes ‘extreme raters” sceptical since it does not allow them to rate as they wish causing anxiety or discontentment 5. It may be difficult to simulate/follow since outstanding performers or weak performers may not essentially be 10%-20% (say), year-on- year. 6. The methodology may not be easily understood by all appraisers 7. Training inadequacy in appraisers may yield disastrous results 8. Implementation may be difficult since HR has to ensure constant compliance. 9. Being a ‘forced-distribution’ method, it may face dissent from appraisers 10.
It may not adjust well with skill/managerial demand-supply situation. CONCLUSION ? Our purpose of the field visit was to understand how performance management and appraisal are conducted practically in the organizations and we would like to conclude by saying that “A well-designed performance appraisal system supports an integrated human resource strategy which enables the attainment of organizational and business goals” & different appraisal systems are followed by the organizations depending on their structure, and work pattern.
SUGGESTION ? The organization must change the appraisal system according to the changing business atmosphere to maintain the dynamic equilibrium in the competition at the same time satisfying its employee as they are the major asset of any organization. LOGO