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PERFORMANCE MANAGEMENT SYSTEM & PRP IN MMTC LIMITED. COMPANY’S PROFILE. MMTC Limited is a Miniratna Company under the administrative control of Department of Commerce, Ministry of Commerce & Industry, Government of India.
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COMPANY’S PROFILE MMTC Limited is a Miniratna Company under the administrative control of Department of Commerce, Ministry of Commerce & Industry, Government of India. Set up in 1963, MMTC Limited is the largest International Trading Company of Govt. of India and the first Public Sector Enterprise to be accorded the status of ‘FIVE STAR EXPORT HOUSE’. Its vast International Trade Network spans almost in all countries in Asia, Europe, Africa, Oceania and America giving MMTC a global market coverage.
MMTC’S TRADE PROFILE • The major items of trade include Minerals, Non-Ferrous Metals, Precious Metals, Coal & Hydro Carbon, Agro Products, Fertilizers and Fertilizer raw material. • MMTC is major player in the minerals trade and is the single largest exporter of minerals from India. • MMTC is the largest importer of gold and silver in the Indian sub continent. • MMTC is also engaged in manufacture/and retail sale of silverwares and artifacts made of silver in the brand name ‘SANCHI’.
PERFORMANCE MANAGEMENT SYSTEM • To link individual performance to company objectives • To build a culture of performance • To encourage two-way communication • To make evaluation objective and reduce subjectivity • To identify high performers and provide career progression opportunities to them.
Draft of plans and Signing of Memorandum of Understanding Creating Strategy Linked Performance Management Development of Strategic Goals At the Top Level Cascading Down of Goals at various Division Level and other levels below Cascading Down of Goals at the Regional Level
KPA based Performance Appraisal process • Joint review of performance • Document changes in KPAs if any • Identify KPAs, constituents, weightages, measures and targets Step 1 Step 2 • Assessment of KPAs, Competencies, Values and Potential by appraiser • Training and Development Plans • Review by reviewing officer PMS Process Step 4 Step 3
Features of KPA based PMS • Covers all Executives below Board level. • Drawn from the business plans, objectives and functions of Division . • Number of KPA indices not more than eight, out of which development of subordinate, a mandatory field. • The unit of measurement based on SMART principle (Specific, Measurable, Attainable, Relevant & time- bound).
GUIDELINES • KPAs are determined along with target of performance and their weightage in beginning of the year. • As far as possible targets are based on SMART principle (Specific, Measurable, Attainable, Relevant & time-bound). • Decided by one to one discussions held between the appraisee & appraiser. • Competencies, Potential & value is assessed by the appraiser on the basis of his/ her observations. • The appraiser recommends for training for the development of appraisee.
CONDITIONS FOR IMPLEMENTING PRP • MMTC is MOU signing Company and has earned profit in 2007-08, 2008-09 & 2009-10. • MMTC has a robust and transparent Performance Management System, which includes KPA based appraisal system. • MMTC has Independent Directors on its Board. • Remuneration Committee : • MMTC has formed a Remuneration Committee headed by an Independent Director.
PRP Variable Pay / Performance Related Pay (PRP) is made integral part of compensation package w.e.f. 2007-08. PRP depends on several factors- • PRP is paid on the basis of MOU rating of the Company ranging from 100% for Excellent to no PRP for ‘Poor rating’ of the Company. • MOU rating of MMTC was ‘Excellent’ in last 3 years. CONTD.
PRP • PRP is directly linked to profit of MMTC- • 60% of PRP with a ceiling of 3% of PBT comes from profit of the company and 40% of PRP comes from 10% of incremental profit. Total PRP limited to 5% of PBT exclusively for executives. • As 2007-08 was base year and there was no incremental profit in year 2008-09 only 60% of the PRP was distributed to Executives during these 2 years. • During 2009-10 Company achieved highest ever net profit. PRP with in maximum 5% PBT ceiling has been disbursed to Executives • PRP depends on the grade of the Executives- • Percentage ceiling increases from 40% at junior level to 200% for CMD. CONTD.
PRP • PRP also depends on performance of executive. Executives with ratings- Outstanding, Very Good, Good, Above Average and Average performance ratings get PRP up to 100%, 80’%, 60%, 50% and 40% . No PRP for ‘Poor Rating’. • From financial year 2011-12 Above Average performance rating (50% PRP) has been removed to make PRP scheme at par with DPE 5 tier rating system.
Constraints faced • Implementation of new Appraisal System- • Apprehension among Executives for new System- Workshop organized to explain importance, benefits of new KPA based Appraisal System. • Implementation of Bell Curve • Regulation of PRP in case of less than 3 months appraisal period.
PRP FACTORS 1) MOU RATING EXCELLENT 100% VERY GOOD 80% GOOD 60% FAIR 40% POOR NIL 2) GRADE INCENTIVE E0 TO E3 40% E4 TO E5 50% E6 TO E7 60% E8 TO E9 70% DIRECTORS 150% CMD 200%
