Rashi Baliyan(Summer Training Project)

7/29/2019 Rashi Baliyan(Summer Training Project)

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A STUDY ON PERFORMANCE APPRAISAL OF EMPLOYEES WORKING AT

GAIL GAS LIMITED , NOIDA(UP)

A Summer Training Project Report Submitted in the partial fulfillment of the requirement for the

award of the Degree of Bachelor of Business Administration2010-2013

Submitted by: Under the guidance of:

RASHI BALIYAN Ms. HIMANI GROVER

BHARATI VIDYAPEETH DEEMED UNIVERSITY

INSTITUTE OF MANAGEMENT& RESEARCH,

NEW DELHI

An ISO 9001:2008 Certified Institute

NAAC Re-Accredited Grade A University

Ranked In Top 50 B-School in India by Business India

Recipient of B-School Leadership Award from Star News

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Certificate of Originality

This is to certify that the project report entitled TO STUDY THE PERFORMANCE

APPRAISAL OF EMPLOYEES AT GAIL GAS LIMITED, NOIDA(UP) submitted to

Bharati Vidyapeeth University in partial fulfillment of the requirement for the award of

Bachelor of Business Administration is an original work carried out by Ms. Rashi Baliyan. The

matter embodied in this project is a genuine work done by Rashi Baliyan and to the best of my

knowledge and belief this project has not been submitted to this University nor to any other

University for the fulfillment of the requirement of the course of study.

Himani Grover

Assistant Professor

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Certificate

This is to certify that the Project entitled TO STUDY THE PERFORMANCE APPRAISAL

OF EMPLOYEES AT GAIL GAS LIMITED, NOIDA(UP) is an academic work done by

Rashi Baliyan submitted in the partial fulfillment of the requirement for the award of the Degree

of Course from Bharati Vidyapeeth University, New Delhi. It has been completed under the

guidance of Ms. Himani Grover (Faculty Guide) and Mr. Ravindra Deshmukh (Corporate

Mentor). We are thankful to Gail Gas Limited, Noida(UP) for having allowed our student to

undergo project work training. The authenticity of the project work will be examined by the viva

examiner which includes data verification, checking duplicity of information etc. and it may be

rejected due to non-fulfillment of quality standards set by the institute.

Dr. NITIN NAYAK

Director

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Acknowledgement

First of all, I would like to thank the Management at GAIL GAS LIMITED for giving me the

opportunity to do my two-month project training in their esteemed organization. I am highly

obliged to Mr. Ravindra Deshmukh(Sr. Officer, CGM) for granting me to undertake my training

at Noida(UP).

I express my thanks to all Managers under whose able guidance and direction, I was able to give

shape to my training. Their constant review and excellent suggestions throughout the project are

highly commendable.

My heartfelt thanks go to all the executives who helped me gain knowledge about the actual

working and the processes involved in various departments.

Rashi Baliyan

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PREFACE

GAIL has formed Subsidiaries and Joint Venture companies for City Gas Distribution and

Petrochemicals. GAIL is one of the pioneers to introduce City Gas Projects in India for gas

supplies to households, commercial users and for the transport sector by forming Subsidiaries/

Joint Venture Companies.

It is my pleasure to present this work after I had finished my training at Gail Gas Limited. This

training has expanded my horizon of knowledge in practical as well as theoretical area which is

vital for any student in management level studies.

Such training promotes a student to boost his potential and the inner qualities and thereby come

to know about their reality that how the theoretical knowledge works in actual sense in any

working unit. This has indeed proved to be very useful to me. All information given here is to the

best of my knowledge and I sincerely apologize if any incorrect data is found.

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INDEX

S.NO. Particulars PAGE NO.

1. INTRODUCTION1.Overview of the industry as a whole

2.Profile of the company

3.Problems of the Company

4.Competitors of the company

5.SWOT Analysis of the company

2. RESEARCH METHODOLOGY

1.Statement of problem

2.Objective and scope of study

3.Research Design And Its Types

4.Data Collection method

5.limitation of study

3.

CONCEPTUAL DISCUSSION

1.Review of Literature

2.New Development Of Company

4. DATA ANALYSIS

1. Data collection sources

2. Sampling technique

5. FINDINGS AND CONCLUSION

BIBLIOGRAPHY

ANNEXURE

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CHAPTER 1

INTRODUCTION

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OVERVIEW OF INDUSTRY

Overview of Industry Structure

The structure of the natural gas industry has changed dramatically since the mid-1980's. In the

past, the structure of the natural gas industry was simple, with limited flexibility and few options

for natural gas delivery. Exploration and production companies explored and drilled for natural

gas, selling their product at the wellhead to large transportation pipelines. These pipelines

transported the natural gas, selling it to local distribution utilities, who in turn distributed and

sold that gas to its customers. The prices for which producers could sell natural gas to

transportation pipelines was federally regulated, as was the price at which pipelines could sell to

local distribution companies. State regulation monitored the price at which local distribution

companies could sell natural gas to their customers.

Getting Natural Gas to Market - Prior to Deregulation and Pipeline

Unbundling

Thus, the structure of the natural gas industry

prior to deregulation and pipeline unbundling was

very straightforward. However, with regulation of

wellhead prices, as well as assured monopolies

for large transportation pipelines and distribution

companies, there was little competition in the

marketplace, and incentives to improve service and innovate were few. Regulation of the

industry also led to natural gas shortages in the 1970s, and surpluses in the 1980s.

The natural gas industry today has changed dramatically, and is much more open to competition

and choice. Wellhead prices are no longer regulated; meaning the price of natural gas is

dependent on supply and demand interactions. Interstate pipelines no longer take ownership of

the natural gas commodity; instead they offer only the transportation component, which is still

under federal regulation. LDCs continue to offer bundled products to their customers, although

retail unbundling taking place in many states allows the use of their distribution network for the

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Source: NGSA


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transportation component alone. End users may purchase natural gas directly from producers or

LDCs.

One of the primary differences in the current structure of the market is the existence of natural

gas marketers. Marketers serve to facilitate the movement of natural gas from the producer to the

end user. Essentially, marketers can serve as a middle-man between any two parties, and can

offer either bundled or unbundled service to its customers. Thus, in the structure mentioned

above, marketers may be present between any two parties to facilitate the sale or purchase of

natural gas, and can also contract for transportation and storage. Marketers may own the natural

gas being transferred, or may simply facilitate its transportation and storage. Essentially, a

myriad of different ownership pathways exist for natural gas to proceed from producer to end

user.

Simplified Structure of Industry after

Pipeline Unbundling

The diagram shows a simplified representation of

the structure of the natural gas industry after

pipeline unbundling and wellhead price

deregulation. It is important to note that the actual

ownership pathway of the gas may be

significantly more complicated, as the marketer

or the LDC are not the final users. Either of these two entities may sell directly to the end user, or

to other marketers or LDCs.

The regulatory environment of the day has a dramatic effect on shaping the structure of the

industry.

The actions of the federal government and its related agencies and departments can also have a

significant impact on the structure and functioning of the natural gas industry.

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Source: NGSA


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Industry Makeup

Now that the basic structure of the natural gas

industry has been discussed, it is possible to

examine the business characteristics and relevant

statistics of each industry segment.

An excellent source for statistics and information

on the natural gas industry and its various sectors is the Energy Information Administration

(EIA). The EIA was created in 1977 as the statistical arm of the Department of Energy, charged

with developing energy data and analyses that help to enhance the understanding of the energy

industry.

Below are some statistics (based on EIA data for the year 2007) on the makeup of the natural gas

industry. Follow the links to view the most up to date information on each sector:

Producers- There are over 6,300 producers of natural gas in the United States. These

companies range from large integrated producers with worldwide operations and interests

in all segments of the oil and gas industry, to small one or two person operations that may

only have partial interest in a single well. The largest integrated production companies

are termed 'Majors', of which there are 21 active in the United States.

Processing- There are over 530 natural gas processing plants in the United States,

which were responsible for processing almost 15 trillion cubic feet of natural gas and

extracting over 630 million barrels of natural gas liquids in 2006.

Pipelines - There are about 160 pipeline companies in the United States, operating over

300,000 miles of pipe. Of this, 180,000 miles consist of interstate pipelines. This pipeline

capacity is capable of transporting over 148 Billion cubic feet (Bcf) of gas per day from

producing regions to consuming regions.

Storage- There are about 123 natural gas storage operators in the United States, which

control approximately 400 underground storage facilities. These facilities have a storage

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capacity of 4,059 Bcf of natural gas, and an average daily deliverability of 85 Bcf per

day. The EIA maintains a weekly storage survey, monitoring the injection and

withdrawal of stored natural gas. This survey gives a good indication of the status of the

natural gas market, measuring the natural gas that is extracted or stored at any one time in

response to the demand for natural gas.

Marketing - The status of the natural gas marketing segment of the industry is

constantly changing, as companies enter and exit from the industry quite frequently. As

of 2000, there were over 260 companies involved in the marketing of natural gas. In this

same year, about 80 percent of all the natural gas supplied and consumed in North

America passed through the hands of natural gas marketers. The volume of non-physical

natural gas that passes through the hands of marketers is very large, and can be much

greater than the actual physical volume consumed. This is an indication of vibrant,

transparent commodity markets for natural gas. For instance, in 1998, it is estimated that

for every thousand cubic feet of natural gas consumed, about 2.7 thousand cubic feet

passed through natural gas marketers.

Local Distribution Companies - There are about 1,200 natural gas distribution

companies in the U.S., with ownership of over 1.2 million miles of distribution pipe.

While many of these companies maintain monopoly status over their distribution region,many states are currently in the process of offering consumer choice options with respect

to their natural gas distribution`

Natural Gas Market Overview

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The nature of the natural gas market is similar to other competitive commodity markets: prices

reflect the ability of supply to meet demand at any one time. The economics of producing natural

gas are relatively straightforward. Like any other commodity, the price of natural gas is large a

function of demand and the supply of the product.

When demand for gas

is rising, and prices rise

accordingly, producers will respond by increasing their exploration and production capabilities.

As a consequence, production will over time tend to increase to match the stronger demand.

However, unlike many products, where production can be increased and sustained in a matter of

hours or days, increases in natural gas production involve much longer lead times. It takes time

to acquire leases, secure required government permits, do exploratory seismic work, drill wells

and connect wells to pipelines; this can take as little as 6 months, and in some cases up to ten

years. There is also uncertainty about the geologic productivity of existing wells and planned

new wells. Existing wells will naturally decline at some point of their productive life and the

production profile over time is not known with certainty. Thus, it takes time to adjust supplies in

the face of increasing demand and rising prices.

The supply response to prices was demonstrated emphatically following the winter of 2000-2001

as producers substantially increased production investments and activities in response to higher

prices. Likewise higher prices (and the U.S. recession) also reduced demand for natural gas. The

supply and demand responses led to a new equilibrium in 2002 between supply and demand at

market clearing prices far below the 2000-2001 peak.

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Natural Gas Volatility and Price Levels at Henry Hub


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In an environment of falling gas prices, the converse will be

true. Producers will respond to lower natural gas prices over

time by reducing their expenditures for new exploration and

production. Production decline in existing wells will decrease

productive capacity. At the same time, the lower prices will

increase the demand for natural gas. This, in turn, will

ultimately result in upward pressure on gas prices. This

relationship between changes in the price of natural gas and

variations in the supply of and demand for natural gas is

sometimes referred to as the "natural gas market cycle."

In the short term, and in relation to existing producing wells, the supply of natural gas is

relatively inelastic in response to changes in the price of natural gas. Contrary to some views,

producers do not routinely shut in wells when natural gas prices are low. There are several

economic drivers that provide an incentive for producers to continue producing even in the face

of lower prices.

First, if production is halted from a natural gas well it may not be possible to restore the

well's production due to reservoir and wellbore characteristics.

Second, the net present value of recapturing production in the future may be negative

relative to producing the gas today -- i.e., it may be better to produce gas today than to

wait until the future to produce the gas. If a producer chooses not to operate a well, the

lost production cannot be recovered the next month but is instead is deferred potentially

years in the future. There are no guarantees that the prices for gas in the future are going

to be higher than prices today.

Third, some gas is produced in association with oil, and in order to stop the flow of

natural gas, the oil production must be stopped as well, which may not be economic.

Finally, a producer may be financially or contractually bound to produce specific

volumes of natural gas.

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Source: NGSA


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Producers and consumers react rationally to changes in prices. Fluctuations in gas prices and

production levels are a normal response of the competitive and liquid North America gas market.

While the price of the natural gas commodity fluctuates, it is this inherent volatility that provides

the signals (and incentives) to both suppliers and consumers to ensure a constant move towards

supply and demand equality.

COMPANY PROFILE

GAIL (India) Limited is Indias flagship Natural gas company, integrating all aspects of

the natural gas value chain ( including exploration, production, processing, transmission

distribution and marketing) and its related services. GAIL is also expanding its business

to become a player in international market. The company dominates the gas sector,

transporting 95% of the total piped gas. It also operates seven plants to process natural

gas into LPG, apart from having a small presence in the petrochemicals and oil and gas

exploration sectors. Company has expanded its operations into gas processing ,

petrochemicals, LPG transmission and telecommunications. It has also expanded its

presence in power and liquefied natural gas re-gasification. Company has set up Gas

Technology institute near Delhi. This institute is fully functional with well equipped

laboratories for research and development related mainly to the gas sector. It would

pursue joint R&D projects in India and abroad in association with oil and gas

companies, research institutions and universities. The company was previously known as

Gas Authority Of India Limited. It insignias principal gas transmission and marketing

company. It was set up by the Govt. of India on August 1984 to create gas sector

infrastructure. GAIL India is the countrys largest gas transmission company and handled

82 million standard cubic meters per day (mmscmd) out of 111 mmscmd of gas supplies

in FY08. The company has a pipeline network of 7000 kms in place. Its pipeline is the

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lifeline for major gas consumers from the power and fertilizer sectors. GAIL is a

significant player in downstream petrochemicals business with a production capacity of

410,000 tons per annum. It is also an early mover in city gas distribution with 8 joint

ventures and a wholly owned subsidiary, GAIL Gas, is being incorporated. The company

has plans to enter into more than 230 cities. GAIL is listed by Forbes as one of the

worlds 2000 largest public companies in 2010. GAIL commissioned the 2800 km Hazira-

Vijaipur-Jagdishpur(HVJ) pipeline in 1991. During 1991-93 three LPG plants were

constructed and some regional pipelines acquired, enabling GAIL to begin its gas

transportation in various parts of India. GAIL began its city gas distribution in New

Delhi in 1997 by setting up nine compressed natural gas (CNG) stations. In 1999, GAIL

set up northern Indias only petrochemical at Pata.

VISION

Be a leading company in natural gas and beyond with global focus, committed to

customer care, value creation for all stake holders and environment responsibility.

MISSION

Accelerating and optimizing the effective and economic use of natural gas and its

fractions to the benefits of national economy.

Business description in brief

Currently, the business set up is as such

1. 7 LPG gas processing units to produce 1.2 MMTPA of LPG and other

hydrocarbons.

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2. 1,922 km of LPG transmission pipeline network with a capacity to transport

3.8 MMTPA of LPG.

3. 13,000 km of OFC network offering highly dependable bandwidth for telecom

service provider.

4. 6,700 km of natural gas high pressure trunk pipeline with a capacity to carry

148 MMSCMD of natural gas across the country.

5. 27 oil and gas exploration blocks and 3 coal bed methane blocks.

6. Joint ventures company in Delhi, Mumbai, Kanpur, Agra, Pune for supplying

Piped Natural Gas(PNG) to households and commercial users and CNG to

transport sector.

7. GAIL has been entrusted with the responsibility of reviving the LNG terminal

at Dabhol as well as sourcing LNG.

Market share in India

Leader in Gas Transmission: It enjoys the market share in India of

85% of the natural gas market

88% in gas transmission

15% of petrochemical consumption

The company enjoys a market share of 88% in the natural gas and LPG

Transmission. Currently it has huge trunk pipeline of the length of around 5,400 Kms across

various regions in India. The capacity of the pipeline is to carry 130 mmscmd of natural gas of

which it carried 77mmscmd of natural gas. Significant contribution arrives from the HVJ

pipeline with the length of 2,800 km and carrying capacity of around 60 mmscmd. 2,800 km

long Hazira Vijaipur - Jagdishpur (HVJ) pipeline and 610 km Dahej-Vijaipur pipeline (DVPL)

cater to all the gas based power plants, fertilizer plants, and industries along the entire West-

North corridor of India.

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Source-integrated energy policy

Revenue generated from various sectors

The exploration business has an advantage of high margins. In spite of that the revenues are

bound to increase with exploration being added to the portfolio. The transmission and

petrochemical business is bound to benefit from the exploration venture due to vertical

integration.The polymer production capacity of Pata has increased from 3, 10,000 TPA to 4, 10,000 TPA by

addition of new cracker furnace and a new polymer unit.

Petrochemical is one of the major thrust areas of your Company and is

contributing significantly in the profitability of the Company.

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The business of the GAIL is divided in the six segments named as Gas transmission, Gas trading,

LPG transmission, Petrochemicals, Liquid HC and unallocated sector. The revenue for gas

transmission segment increased by 4% in comparison to 2006-07, similarly for the Gas

trading sector it increased by 8%. LPG segment seen a growth of 12 % while the petrochemicals

sector saw growth of 18%, Unallocated sector saw the highest growth of 76% followed by

Liquid HC of 33%.This shows the success path of company.

Subsidiaries and Joint ventures

Company has been the pioneer for City Gas Projects in India. With natural gas emerging as the

fuel of choice in the country, Company believes that the next decade will belong to the city gas.

It was the first Company to introduce City Gas Projects in India for supplies to households,

commercial users and for the transport sector by forming Joint Venture Companies.

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Subsidiaries are as follow:

GAIL Gas limited

Company has formed a wholly owned subsidiary named GAIL Gas Limited for implementing

City Gas Projects and CNG corridor in the country. The subsidiary company will act as a vehicle

for bidding

for laying pipeline infrastructure in the country.

GAIL Global (Singapore) Limited

Company has a wholly owned subsidiary, namely, GAIL Global (Singapore) Pte. Ltd. to manage

investments abroad. Company is looking for further business opportunities through this

subsidiary

company.

Brahmaputra Cracker and Polymer Limited

Company has 70% equity share with Oil India Limited (OIL), Numaligarh Refinery Limited

(NRL), and Govt. of Assam, each having 10% equity share. The authorized capital of the

company is Rs. 1,200 Crores. A Feedstock Supply Agreement has been signed between

Brahmaputra Cracker and Polymer Limited (BCPL), and all the three suppliers viz., Oil

and Natural Gas Company Limited, Oil India Limited and Numaligarh Refinery Limited.

Financial closure for the project is likely to be completed during the year 2008-09.

Joint Ventures

Avantika Gas Limited (AGL)

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AGL is a Joint Venture of GAIL and Hindustan Petroleum Corporation Limited (HPCL) for

implementation of City Gas Projects in the cities of Madhya Pradesh. AGL has started project

implementation activities in the city of Indore. Company has 22.5% stake in the Company along

with HPCL as equal partner.

Bhagyanagar Gas Limited (BGL)

BGL is currently operating three Auto LPG stations in Hyderabadand one AutoLPG station in

Tirupathi. It is currently operating six CNG stations in Vijayawada and three CNG stations in

Hyderabad. Company has 22.5% stake in the company along with HPCL as equal partner.

Central U.P. Gas Limited (CUGL):

CUGL is currently operating five CNG stations in Kanpur, one CNG station in Bareilly and one

CNG station in Kanpur is under commissioning. CUGL is building MDPE network for supply of

PNG to domestic, commercial and industrial sectors in the city of Kanpur. Company has 22.5%

stake in the company along with BPCL as equal partner.

Green Gas Limited (GGL):

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GGL is currently operating four CNG stations in Lucknow and three CNG stations in Agra. GGL

will also take up project implementation in other cities of Western UP on the basis of gas

availability and project viability. Your Company has 22.5% stake in the company along with

IOC as equal partner.

Indraprastha Gas Limited (IGL)

IGL is supplying piped gas to around 1 Lac domestic, 276 commercial, 16 small industrial

consumers and CNG to over 1.35 Lacs vehicles through 153 CNG stations. IGL is catering to

worlds largest CNG bus fleet of over 11,000 buses in Delhi. Company has 22.5% stake in

the company along with BPCL has equal partner.

Mahanagar Gas Limited (MGL)

MGL has set up 128 CNG stations catering to over 1.85 Lacs vehicles spread over Mumbai,

Thane, Mira- Bhayandar and Navi-Mumbai areas besides supplying PNG to over 3.40 Lacs

domestic, 907 commercial and 36 small industrial consumers. Company has 49.75% stake in the

company along with British Gas as equal partner.

Maharashtra Natural Gas Limited (MNGL)

MNGL is a Joint Venture of your Company and Bharat Petroleum Corporation Limited (BPCL)

for implementation of City Gas Projects in Pune city. MNGL is developing necessary

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infrastructure for supply of CNG and PNG in the city. Company has 22.5% stake in the company

along with BPCL as equal partner.

Petronet LNG Limited (PLL)

PLL was formed for setting up of LNG import and regasification facilities. PLL has a long term

LNG supply contract with Ras Gas, Qatar for import of 7.5 MMTPA. PLL Dahej terminal is

being expanded to 10 MMTPA capacity. Company has 12.50% stake in the company along with

BPCL, IOC and ONGC as equal partners.

Ratnagiri Gas and Power Private Limited

(RGPPL)

RGPPL is a Joint Venture Company between your Company, NTPC, Financial Institutions and

MSEB. Your Company has 28.33% stake in the company along with NTPC as equal partner. The

capacity of the Ratnagiri Gas & Power Station is 2,150 MW. Company has made an

investment of Rs. 500Crores and has approved additional equity of Rs.475 Crores to RGPPL, out

of the Rs. 475 Crores; an amount of Rs. 92.90 Crores has been paid during the month of

May,2008.

Tripura Natural Gas Company Limited (TNGCL)

TNGCL is presently supplying gas to 6600 domestic, 104 commercial, 21 industrial consumers

and has set up one CNG station in Agartala city. Company has 29% stake in the company.

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Company has approved formation of JV for City Gas Projects in Vadodara with Vadodara

Mahanagar Seva Sadan (VMSS) with 26 percent equity, while VMSS will have 24 per cent

equity. The balance 50 per cent equity will be held by strategic investors and public. A JV

agreement has also been signed with HPCL for city gas projects in Rajasthan.

Business operation

1) Upstream Operation

Overview

Every cloud has a silver lining and every adversity hides an opportunity. GAIL'sExploration and

Production (E&P) unit was born in just such a scenario. As the Indian Economy opened up

around the year 2000, the business environment changed dramatically. For GAIL, liberalization

meant competition in core business i.e. midstream and downstream national gas distribution No

longer could they rely on statutory support mandating secured sources of Natural Gas. The

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reserves contained in existing contracted fields were fast depleting. Apart from securingsources

for Natural Gas, there were other compelling reasons for GAIL to get into E&P:

Integration in supply-chainLarge gap in Gas demand and supply

National Gas securityBalancing of Business portfolio

Global opportunity

So that GAIL ventured into E&P in 2001. At the end of 2007-08, it has invested Rs.11.5 billion

in this segment. It is involved in oil & gas exploration activities overacreage of 1.7 square km. It

has participating interest ranging from 10 to 80 percent in following.

24 domestic blocks

3 overseas blocks

3 CBM

GAIL is currently participating in 27 exploration blocks, in Basins such as Mahanadi, Mumbai,

Cambay, Assam-Akaran, Tripura Fold Belt and Cauvery. GAIL has partnership in these blocks

with various companies such as ONGCL, GSPCL, OIL, Hardy Exploration & Production,

Petrogas, JOGPL, Daewoo, OVL, IOCL, Korea Gas Corporation, Hallworthy, BPCL, HPCL and

Silver wave. GAIL also has stake in 3 overseas blocks (A-1 and A-3 blocks in Myanmar and

Block-56 in Oman).Of these, nine are offshore blocks and eighteen onshore blocks, of which 13

are deep water and 5, are shallow water. Coal Bed Methane (CBM) is stored in coal seams and

was generated during the process of coalification. It occurs within these seams either as free gas

in fractures or in dissolved form in water. The consortium of GAIL (India) Ltd., Arrow Energy

(India) Pty Ltd., EIG Energy Infrastructure Group AB has been awarded 3 CBM Blocks in

CBM-III Bidding round. The Tata Power Company is also a consortium partner in two of the

awarded blocks. These blocks are in Rajmahal (Jharkhand), Mand Raigarh(Chattisgarh) and Tata

Pani Ramkola (Chhattisgarh)

2) Midstream Operation (Petrochemicals)

Overview

The company has seven gas LPG processing plant with total capacity of 1.2 mtpa 4plants are

situated along the Hazira Vijaipur Jagdishpur pipeline (two at Vijaipur in Madhya Pradesh , one

at vaghodia in Gujarat, and one at oriya in Uttar Pradesh , and one each in Lakwa Assam , Usar ,

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Maharashtra an d Gandhinagar Gujarat). The total liquid hydrocarbon production was over 1.348

million tonnes, which included

1.043 MT of LPG 0.156 tm of propane and 0.074 tm of pentane the companys board of director

has recently approved them doubling capacity of its pata petrochemical complex in UP to 0.8

mtpa .the installed polymer capacity at pata is 0.41 mta, which will be increased by leveraging

existing facility and augmenting them. Company is setting up 280000 tpa petrochemical plant in

Assam at an investment of Rs 54.6 billion. It has also signed an agreement with HPCL, OIL,

Mittal investment and France total to set up another petrochemical complex and crude oil

refinery at Vishakhapatnam in AP.GAIL has a 70% equity stake in Brahmaputra cracker and

polymer limited. The other equity partners are OIL, Numaligarh Refinery Limited and the Govt

of Assam is having a 10% equity stake`

Pipeline Operation

Interstate pipelines provide open access for shipment of natural gas. Gas enters aninterstate

pipeline from gathering systems and from interconnecting pipelines. Beginning at individual

wellheads, gathering systems usually consist of smaller diameter pipe operating at lower

pressure. Gas conditioning is usually performed to reduce contaminants such as water from

gathered gas before it is compressed into the transmission system. Gas leaves the transmission

system through deliverypoints to other interstate pipelines, local distribution companies and

directly to end users such as industrial facilities and power plants. Local distribution systems

deliver gas to residential, commercial and industrial end users. The basic components of an

interstate pipeline include steel pipe, valves, and compression, processing and storage facilities.

Pipe sizes vary widely with much of the pipe in the 20-inch to 36-inch diameter range and wall

thickness of about onequarterto one-half inch. A typical range of operating pressures for a

transmission system is 300 to 1440 psig. Powered by natural gas or electricity, compression is

one of two types: reciprocating or centrifugal. Processing facilities extract undesirable

contaminants (such as hydrogen sulfide and water) and marketable hydrocarbons (such as

propane and gasoline). Storage facilities have been developed from depleted oil fields, coal

mines, salt domes, aquifers and reefs.These facilities can be used for peak-shaving hourly

demands and short-term, as well as, seasonal storage of gas. Much of the gas that is transported

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on interstate pipelines is nominated, that is, scheduled in advance of actual gas flow. Deliveries

into local distribution companies

that serve weather-sensitive markets, however, cannot be known with absolute certainty. Such

demand is met in part with "no-notice" service, which is usually supplied from inventories of the

customers' gas, which is stored in the pipeline's storage facilities.

3) Downstream operation

Natural Gas usage in Indian cities has been limited primarily due to the scarcity of supply.

However this scenario is undergoing change with several LNG projects/transnational pipelines

under implementation, which together with newdomestic Gas finds are expected to shore up the

supply deficit in the next few years. Meanwhile the market for city gas distribution is also set to

grow at an accelerated pace. The CNG demand got a boost with the Supreme Court directive on

pollution reduction in 12 major cities in India. The domestic segment is also expected to grow

with the government's intentions to remove the subsidy on LPG cylinders in a phased manner in

3-5 years making piped gas even more economical.

4) Overseas Operation

GAIL has a 10 % equity stake in block A! Ink Myanmar where huge gas reserve hasbeen

discovered recently. It also has a 10 % stake in block A3. It has stake in block 56 in Oman.

However GAILS share in the blocks has been reduced following: Myanmars national oil

company exercising its step in rights to 8.5%. In 2003 -04.GAIL acquired equity stakes in

CGD project of fayumgas and shell gas in the Egypt. GAIL has setup a wholly owned subsidiary

on Singapore , christened GAIL Global private limited, two undertake overseas investment , the

subsidiary a 15% equity stake in the Egyptian national gas company- one of the largest natural

gas distributing companies in the private sector in Egypt. The company also has a 50% stake in a

JV formed with china gas holding limited to undertake projects in china, India and other

countries.

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CHALLENGES FACED BY GAIL

The changes in the business environment and the exposure to the global markets have led to

various complexities like, taxation, statutory compliances, have become a major challenge for

the top management of any company

In order to reduce the time for decision making, the adoption of the international best practices

through BPR has also become a challenge.

The technology boom and its adoption in the business, say ERP, is also a major challenge.

The employees of the company are its greatest assets and the biggest challenge is to retain and

train them for better efficiency.

Today PSU are required to run on commercial lines but at the same time they are under

obligation to fulfill the responsibilities towards the society.

Customers is the king and to satisfy him is the primary goal of any commercial organization.

With the growing awareness among the customers for better quality for money, the total quality

revolution is a need of the hour.

A company has 2 options- it may ignore the parivartan taking place in the commercial world or

be proactive in facing the challenges thrown upon it.

But sitting like a frog in a closed well does not solve the problems for any commercial

organization having profit as its motive.

We therefore need to be alive to the challenges and face them head on because there are new

entrants in the markets and extra efforts need to be made for retaining the market share and to

improve the bottom line of the company.

STEPS TAKEN BY GAIL TO COPE UP THE CHALLENGES

Draft Pipeline policy

GAIL uses Natural Gas for the production of LPG and petrochemicals and currently paying the

market price for internal consumption of the gas. The cost of production has gone up and GAIL

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is looking for various areas for cost reduction.All out efforts are being made for increasing its

volume share in the market.

Regulatory Environment

The Petroleum & NG regulatory Board bill is expected to be passed in the winter session of the

parliament. GAIL has made representations to the govt. that for better utilization of the scare

resources of the country a national As per the draft pipeline policy, the company that has the gas

has the rights to market and transmit the same to the consumers on a common carrier principle.

Therefore GAIL is taking proactive action for identifying the potential reliable customers at one

end and looking for availability of gas either through its own E&P efforts like Myanmar and as

LNG from global suppliers of gas like from Oman, Malaysia, Australia, Qatar, Iran etc. GAIL

has a track record of completing the projects without any time and cost overruns, however, GAIL

is not complacent and is constantly upgrading its skills in project management.

Pricing policy

APM has been dismantled in the gas sector and situation of near monopoly of GAIL is a thing of

past . New entrants are making their presence felt in this sector and GAIL needs to keep the costs

under control to be competitive in terms of prices and transmission tariffs.

Gas grid is required to be managed by a national company like GAIL. The country cannot afford

to have multiple pipelines by various operators and keep them under utilized. Representations

have also been made for exempting GAIL from bearing the LPG and Kerosene subsidy burden.

To monitor the developments in this area a separate cell has also been created in GAIL.

Unbundling Process

For the unbundling of the gas sector there are 3 steps accounting separation, physical

separation and legal separation. GAIL has taken an advanced step by separating its accounts for

the trading and transmission activities of gas. As and when there is a requirement from the

regulator, action would be taken for the physical and the legal separation.

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BLUE SKY PROJECT

After the completion of first mega cross county HVJ Pipeline, GAIL considered City Gas

Projects as one of the important business segment. Realizing the importance of environmental

and economical benefits of using natural gas as an alternative fuel for vehicles, GAIL had set up

a pilot project in 1992-93 to introduce CNG in Delhi, Mumbai and Vadodara along with the

Piped Natural Gas for domestic, commercial and industrial usage. GAIL identified following 22

major cities across the country for formation of state wise JVCs for implementation of Blue Sky

Project : Mumbai, Delhi, Agra, Kanpur, Lucknow, Pune, Ahmedabad, Sholapur, Hyderabad,

Bangalore, Chennai, Kolkata, Rajahmundry, Vijayawada, Allahabad, Jhansi, Mathura, Gwalior,

Indore, Ujjain, Kota, Kochi. The approximate project cost for a city is about Rs. 500 crores. On

an energy equivalent basis, natural gas costs an average of 68% less than petrol and about 38%cheaper than diesel in Delhi. Natural gas, is a clean-burning fuel that reduces vehicle

maintenance such as extended interval of oil change and standard spark plugs last longer. Natural

gas, unlike liquid fuels, cannot be siphoned from a vehicle. Fuel theft is an on-going concern of

commercial operators, using Petrol and Diesel. Generally, the price of Piped Natural Gas is

linked to the alternative fuel available in that segment with a price benefit of minimum 10%. The

main reason for price discount is to encourage the usage of Piped Natural Gas.

The proactive initiative under CSR, to set up Air Pollution Related Disease Diagnostic Centres

(APRDDCs) in the above mentioned 22 cities has been successfully accomplished.

APRDC is a new concept in the area of health care related to air pollution to provide diagnostic

facilities and treatment to people who are unable to afford even baseline investigations for the

diagnosis of respiratory diseases. As we know, our country has more than 80% people who

cannot get treatment in big hospitals on chargeable basis, this initiative of set up in Govt.

hospitals, will benefit to the needy who can avail treatment in case of acute emergencies for

survival. APRDC would also work as R&D for the development of facilities for diagnosing

suspended particles, which are known to cause various heart diseases and the levels of these

particles at present are at alarming level in the environment. GAIL would ensure that the

hospitals in which, these equipment are installed will not only take care of the equipment but

also provide service to the humanity.

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GOVERNMENT SUPPORT IN THE IMPLEMENTATION OF

PROGRAMMES

GAIL identifies social welfare programmes in consultation with the local/statutory/social groups

like Gram Panchayat, Revenues offices, Collectorates, State Authority, District hospitals/CMOs,

Headmasters/Principals of the local school. The approved activities are implemented by the

respective work centres through NGOs/local authorities. At present, GAIL is not getting any

direct support from the government for CSR activities. However, while implementing these

programmes, a few challenges faced are elaborated below:

Under its Community Development activity, GAIL adopted three villages in Haryana. In the

initial year womenfolk were reluctant to undertake vocational training in beauty culture,

stitching, tailoring nutrition etc. Lot of efforts were made to convince the women to participate in

the development activities with the result that after the completion of three years majority of the

women were trained in one or the other activity, thus, achieving the desired target of

empowerment

Under the Drinking water/sanitation activity, GAIL planned to install water tanks in the drought

prone areas of Rajasthan for eradicating the water problems. The women had to travel long

distances to fetch drinking water. In the initial phase, the project had a lot of problems like

supplying the potable water, laying of pipeline, site for installing the water tanks, etc. However,

the project was successfully accomplished with the support of local persons and the state

authorities. Under the healthcare activities, family planning camps were to be organized in the

interior villages of Pata, District Auraiya. Though the programme was of the national agenda,

people were hesitant to attend the Govt. camps. But when GAIL organized the camps, they came

forward and the programme became a grand success.

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CORPORATE SOCIAL RESPONSIBILITY OF GAIL

GAIL has set high standards of discharging corporate social responsibilities and earmarks 1% of

profit after tax of the previous financial year for CSR programmes. These funds are channelised

towards economic, environmental and social upliftment of communities in and around our work

centres. A major education initiative called e-Shiksha has been launched for villages at our plants

at Pata in UP and Vijaipur in MP. A GAIL Charitable and Education Trust has been created with

a fund of Rs. 20 crores to award financial support on merit cum means basis to school going

children as well as professionals. The initiatives taken by the company focuses on

competitiveness to meet the new challenges posed by dynamic business environment and include

a number of e-initiatives for increasing business process efficiency and development of

manpower. The stakeholders are apprised of our CSR activities by various communications, like,GAIL website, Annual Reports and Right to Information Act.

Key Players Analyzed

Oil India Ltd., Oil and Natural Gas Commission, Indian Oil Corporation, Hindustan Petroleum

Corporation Ltd., Bharat Petroleum Corporation Ltd., Gas Authority of India Ltd., and Reliance

Industries Ltd

Pipeline Growth Hinges On Gas Sector Reforms

Latest data on eight core infrastructure sectors show that fall in natural gas output pulled down

overall growth in these sectors. Heres a peep in to the dynamics of natural gas industry in India

and its impact on gas pipeline industry.

Production

A large part of gas demand in India was unmet until April 2009 when Reliance Industries Ltd

started production from its Krishna-Godavari basin. This resulted in a 47% surge in overall gas

output in the country. Previously, it was mainly state-owned Oil and Natural Gas Corporation

Ltd and Gail (India) Ltd that supplied to the Indian market.

Initially, output by Reliance Industries at the KGD6 basin was expected to go up to 80 million

metric standard cubic meter per day (mmscmd). But it peaked at 60 mmscmd and fell below 50

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mmscmd because of technical issues, the company claims. Reliance said the reservoir turned out

to be different from what initial surveys had shown.

Reliance Industries has roped in BP as a joint venture partner to acquire 30% stake in Reliances

21 oil and gas blocks, including D-6, for $7.2 billion. Reliance expects BPs expertise in the

sector will help boost output. However, it claims that ramp-up in production will take two to

three years.

Due to lower availability of gas in the country, imports of liquefied natural gas surged in the

current financial year. Imports of gas in June soared 62.5% while it rose 39.5% during the

quarter on a year-on-year basis.

Global demand for natural gas has risen sharply. Demand for LNG from Japan surged as 80% of

its nuclear power capacity is not functional after the Fukushima nuclear disaster. Thus, nuclear

plants in that country are using natural gas as an alternate fuel. This has resulted in a surge in

Asian spot LNG prices up to $17 per mmbtu. Bank of America-Merrill Lynch in its report

estimates that price may rise to $25 per mmbtu, in a worst case, if all reactors shut down.

It must be noted that cost of imported natural gas is as high as $14 per mmbtu compared with

$4.2 a unit supplied by Reliance Industries. Prices of gas supplied by the company will be

renewed in 2014. At that time, a ramp-up in capacity is sure to help Reliance boost its revenues

and profitability.

Demand Scenario

Demand for gas in India mainly comes from power, fertiliser and refineries. Assuming a surge in

production from the KG basin, a number of gas-based power plants were planned.

Given the fall in domestic production, what does it mean for gas transmission

industry?

The two gas transmission companies in India include Gail and Gujarat State Petroleum Ltd

(GSPL). India began LNG imports in 2004 with Petronet LNG starting imports at its Dahej

terminal in Gujarat under long- term contract with Ras Gas of Qatar. Another LNG import

terminal was commissioned by Shell and Total at Hazira in Gujarat during the same year.

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In anticipation of a strong demand for natural gas from user industries and slow growth expected

in domestic gas production, LNG imports are expected to rise in coming years. As a result,

companies are investing heavily in LNG terminals that are used to store and re-gasify imported

LNG.

SWOT ANALYSIS

Strengths:are as follow

GAIL (India) LIMITED is the countrys largest gas transmission company inIndia with 88%

market share. Through that Gail acts as a single gas transmission company, and taking the

leverage through this dominance.

1. GAIL (India) LIMITED currently owns and operates around 58% of the totalonshore

pipeline network, which shows its potency.

2. GAIL is present in complete value chain of Gas business, through

transmission, gas processing to marketing.

3. Gail (India) has signed a technology license agreement with Mitsui Chemicalsfor a

second high-density polyethylene (hdPE) plant at its Pata petrochemicalcomplex in Uttar

Pradesh, India.

4. Vertical integration in complete Gas business leading to cost reduction.

5. GAIL is dominating player in natural gas trading. Through 85% market shareGail is

showing its control in the market.

6. Major petrochemicals involvement is also showing its strength.

7. Strong Revenue Growth (turnover of Rs. 18,008 Crores in FY 2007-08, a 12%increase,

as against Net Sales of Rs. 16,047 Crores in the previous year)

8. GAIL is Going global in exploration business, company is growing in all itsbusiness

segmentsControls gas transmission infrastructure for example: Pipe lines.

Share of LNG import projects and strong and Diversified Asset Portfolio

Weakness:

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The biggest problem which is faced by GAIL is High Subsidy burden whichis reducing LPG

realization. As a PSUGail has to accept all rules and regulation of government.

1. There is no tax benefit with respect to Section 80IA since Demerger isdelayed.

2.GAIL has less visibility over the contracts for new expansions in transmission

business.Gail has very limited financial or operational freedom as a government

undertaking.

Cost and efficiency disadvantages

1. Lack of upstream gas exposure

2. Limited Exposure to Global Markets

3. Weak Capital Returns

Opportunities:

1.GAIL finds huge gas in KG and Mahanadi basin increasing the availability ofnatural

gas.Petrochemical industry expected to grow at CAGR of 17% over a period of 3years.

This growth need petrochemicals capacity expansion.

2. The overall gas production is set to double within 3 to 4 years thus demandmeeting the

supply .This may result in government deregulating the naturalgas prices.

3. Leveraging pipelines for Telecom.

4. Entering into exploration business, which is going to boost the realization.

5. Potential for efficiency gains

6. Transmission system upgrading/expansion

7. Strong domestic energy demand growth.

8. Increasing Demand for LNG

9. Expanding Indian Natural Gas Market

Threats:

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1. Rise in natural gas prices can lead to reduction in margin in petrochemicalbusiness. The

main problem is that the price of gas is regulated by thegovernment.

2. Domestic marketing makes the company subject to threat of subsidy burdenand pricing

policies of petroleum ministry.

3. Petrochemical prices may go down in the next two years on account of capacity additions

in the industries.

4. Rising investment requirement for new upcoming project.

5. Changes in national energy policy.

6. Intense Domestic Competition

7. Shift to Alternative Sources of Energy like hydro energy, nuclear energy, windenergy,

thermal energy.

8. Fluctuation in Gas and Petrochemical Prices

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CHAPTER 2

RESEARCH METHODOLOGY

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STATEMENT OF THE PROBLEM

The research intends to study the different approaches of appraisals adopted by Companies

involved in gas sector and employee attitude, employee Satisfaction and industrial morale. It

also analyses the most commonly occurring errors within performance appraisal methods and to

understand the level of effectiveness of 360 appraisal in the industry.

NEED AND IMPORTANCE OF THE STUDY

This study is conducted with respect to understanding the different appraisal systems conducted

in the gas industry and their effects thereafter in the same. Due to time and resourceconstraints,

the study was restricted to the gas industry in GAIL(India) Limited, NOIDA Region

OBJECTIVES OF THE STUDY

The objective of my study of performance appraisal in GAIL( India) Limited is:

1. To study the appraisal system of GAIL and evaluate its benefits in the context of

GAIL.

2. To study the effectiveness of the existing system of performance appraisal at

GAIL.

3. To study whether performance appraisal actually helps the employees to

understand their own strengths and weakness with respect to their role and

functions of the company.

4. To study the effect of performance appraisal on the relation of employee and his

superiors.

5. To determine whether performance appraisal system really provides an opportunity

to the employees for self reflection and individual goal settings.

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SCOPE OF STUDY

The present study intends to provide an integrated picture of the level of employment

attitude towards performance appraisal system in GAIL(India) Limited. The study was

conducted in GAIL(India) Limited, Noida, in different departments. The study covers the

feedback from different employees of GAIL (India) Limited, Noida towards the

performance appraisal system of the firm.

LIMITATIONS OF THE STUDY

The biggest limitation of my study was the 2 months time period of internship which

was not enough to understand performance appraisal of a company. Another limitation of

this study was I have made this project on GAIL (India) Limited. In such a small period,

getting the views and opinions of the interviewees (employees) was a difficult task.

DATACOLLECTION SOURCES:

Research work was done from two sources:

1. Primary data

2. Secondary data

Primary data:

It was collected by questionnaire and interview in the organization. The questionnaire

comprised of closed and attitude questions. The opinion on existing performance appraisal

and their affectivity were collected through questionnaire which was circulated to all the

employees at all levels and the results have been analyzed on the basis of agree and

disagree. The methodology for collection of data also included interviews and discussion

with the top management of the organization.

Secondary data:

It was collected by reviewing different literatures, from published books, management

journals, articles published by other researchers on 360 degree appraisal.

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Sampling

The total sample size for this project was 50 employees at GAIL. The information

collected through above methods have been tabulated, analyzed and interpreted. Finally,

an overall assessment of the top management; supervisory staff has been made towards

improving the effectiveness of the organization.

TYPES OF RESEARCH

The present project is Descriptive in nature. It is done to portray accurately the

characteristics of a particular individual situation or a group. The major purpose of the

descriptive research is the description of the state of affairs as it exist at resent. The

main characteristics of this method are that the researcher has no control over the

variables; he can only report what has happened or what is happening.

SAMPLING TECHNIQUE

The sampling technique adopted for the study is Non- Probability Sampling Technique

according to the convenience of the researcher.

A questionnaire was administered to employees of GAIL infohub of different

Departments like Finance Department, HR Department, Business Information System

Department, O& M Department .

SAMPLE SIZE

Data is collected using a sample of 50 employees of GAIL infohub.

SAMPLE DESCRIPTION

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The sample mainly consist of data from the primary sources that are utilized for the

purpose of this study. This is done by means of administrating questionnaire to

employees in different departments. Secondary data like company journals, newsletters,

records etc., were also relied on for retrieving further information.

INSTRUMENTAL TECHNIQUE

Questionnaire

ACTUAL COLLECTION OF DATA

Both secondary and primary sources of data are utilized for the purpose of this study.

Primary data is collected by means of administering a questionnaire to the employees of

GAIL infohub of different Departments like Finance Department, HR Department,

G.P.C.T Department, Business Operation System Department and Gailtel Department.

Secondary data is collected from various records, manuals and other sources of HR

Department.

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CHAPTER 3

CONCEPTUAL DISCUSSION

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Literature survey and details on Performance Management System

Performance appraisal is a formal structured system of measuring and evaluating an employees

job related behaviors and outcomes to discover how and why the employee is presently

performing on the job and how the employee can perform more effectively in the future so that

the employee organization and society all benefit

According to Flippo performance appraisal is the systematic, periodic and an impartial rating

of an employees excellence in the matters pertaining to his present job and his potential for a

better job." The work performance of the subordinate is examined and discussed in the form of

periodic interview with a structured formal interaction between a subordinate and supervisor to

identify weaknesses and strengths of the subordinate as well as opportunities for improvement

and skills development. The performance of each and every individual employee plays a major

role to achieve organization goals and to sustain its growth in the present competitive world. The

employees performance should assess continuously to make their contribution to higher extend.

Objectives of Performance Management System

To review the performance of the employees over a given period of time.

To judge the gap between the actual and the desired performance.

To help the management in exercising organizational control and provides feedback to - the

Employees regarding their past performance.

To help strengthening the relationship and communication between superior and Subordinates,

management and employees.

To diagnose the strengths and weaknesses of the individuals so as to identify the training and

development needs of the future, it also helps to reduce the grievances of the employees

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Provide information to assist in the other personal decisions in the organization.

Provide clarity of the expectations and responsibilities of the functions to be performed-

by the employees. It helps to judge the effectiveness of the other human resource functions of the

organization such as recruitment, selection, training and development.

The sources of performance appraisal are

Manager and Supervisor Appraisal Self-Appraisal Subordinate Appraisal Peer Appraisal

and Team Appraisal

Customer Appraisal

What is Performance Management?

There are few comprehensive definitions of Performance Management. HM Treasury describe

Performance Management as Managing the Performance of an organization or individual.

Whilst this is not a precise definition grounded in literature it demonstrates the breadth of

performance management and hence the difficulties in defining its scope, activities and practices.

It demonstrates that performance management is concerned with the management of

performance throughout the organization and as a result is a multidisciplinary activity.

Further, in their Glossary of Performance Terms the Improvement Development Agency further

suggest that

it involves you understanding and acting on performance issues at each level of your

organization, from individuals, teams and directorates, through to the organization it-self.

As well as involving performance measurement, systems and processes, performance

management is about managing people and the way people within an organization operate

and work together. Issues such as leadership, decision making, involving others,

motivation, encouraging innovation, and risk taking are just as important to bring about

improvement

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This definition further demonstrates the breadth of the subject highlighting some of the activities

involved in managing performance, requiring a range of different skills and functional

approaches. This provides challenges of terminology when we discuss the subject. Academic

research in particular tend to be undertaken in functional subject areas and often within

organizations managers sit in functions and take a functional perspective on the subject of

performance. Despite this the clear multidisciplinary, the field of performance management has

developed from diverse origins. Different measurement and management techniques and

approaches have developed independently. Financial and particularly management accounting

have been concerned with measuring and controlling the financial performance of organizations,

operations have been concerned with shop floor performance often focusing on improving

throughput and efficiency whether that be from a manufacturing or a service perspective,

strategy have been concerned with developing plans to deliver future objectives (including

planned performance) and personnel (or HR) have been concerned with managing the

performance of people. It is relatively recently that performance management from these

desperate disciplines has begun to converge and recognize the need for integration into a

multidisciplinary approach to managing performance.

The management discipline which most often associates itself with the term is in Human Re-

sources, performance management is often associated with the management of the performance

of people. However even in the HR field best practice emphasizes the contribution of people to

the achievement of organizational performance.

Approaches to performance management

Performance management and measurement are closely associated with the rise of interest in

Management by Objectives (MBO) from the 1950s onwards. MBO involves senior managers

setting indicators and targets in relation to desired outcomes but allowing local managers the

autonomy to innovate to achieve these. However, more contemporary authors suggest that

performance measurement is often used to insert more rigid controls over organisational

processes to standardize delivery and improve efficiency. Integrating performance measurement

with organizational learning provides an opportunity to learn lessons from previous de-livery,

confirming or denying underlying assumptions which act as a guide to action. Performance

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measurement in the public sector has been implemented generally in the context of increasing

privatization of public services and as a mechanism to ensure that contractors or public sector

arms length delivery organizations act in the ways that the purchaser of services would want.

Other prominent objectives underpinning performance measurement in the public sector relate to

the potential to use performance data to aid public and political accountability. Performance

measurement systems take different types of performance indicators and attempt to link them

together, particularly to show the relationship be-tween inputs (the resources devoted to a

particular issue), outputs (the immediate results of activity, such as the number of interventions

completed) and outcomes (the ultimate effects of interventions).

Performance measurement systems

I. Balanced Score Cards

II. Performance Prisms.

Balance Score Cards

Performance measurement does though have some acknowledged problems; notably the

diversion of resources into data collection and measurement as opposed to delivery and so called

perverse incentives where individual or organizational behavior is diverted away from the

ultimate objectives of the organization. Performance measurement in Public Employment

Services The role of the PES is to facilitate the bringing together of the supply and demand for

labour, through both passiveandactivemeasures. Research on the use of performance

measurement in PES suggests that it is widely used but that there have been many instances of

common problems including perverse incentives to encourage creaming and parking behavior

where easy to place clients are prioritized over those requiring more help and who are arguably a

more appropriate focus for PES attention. There is also a concern in the literature to avoid

incentivizing PES and their contractors to promote short-term rather than long-term outcomes,

with some suggesting that longer-term measures of the sustainability and/or quality of

employment gained as a result of PES interventions are needed to address this concern. The last

decade has also seen a number of different initiatives in Europe to compare performance, for

instance through the European PES Benchmarking Project.

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- The work ofKaplan and Norton (1992); and Keegan et al. (1989) emphasizes the fact that

the set of measures used by an organization has to provide a "balanced" picture of the

business. The set of measures should reflect financial and non-financial measures; internal and

external measures; and efficiency and effectiveness measures.

- The populated framework of measures should provide a succinct overview of the

organizations performance. For example, the simplicity and intuitive logic of the Balanced

Score-card has been a major contributor to its widespread adoption as it is easily understood by

users and applied to their organization.

- Each framework demonstrates the need for organizations to implement a set of performance

measures that is multi dimensional. This reflects the need to measure all the areas of

performance that are important to the organizations success. However there is no consensus

over what the dimensions of performance are. The EFQM model provides the broadest indication

of dimensions of performance to be measured.

- The Performance Measurement Matrix (PMM) provides comprehensiveness. It is possible to

map all possible measures of an organizations performance onto the framework and identify

where there are omissions or where there is a need for greater focus. However, the PMM

provides little indication of the different dimensions of performance that should be measured.

- The Tableau de Bord, along with the work ofBititci et al. (1998), explicitly demonstrates the

fact that performance measures should be integrated both across the organizations functions

and through its hierarchy, encouraging congruence of goals and actions.

Evolution of the Scorecard Concept

By far the most well known and accepted approach to organizational performance management

is the Balanced Scorecard. Although when first introduced in 1992 it was promoted as a

performance measurement sys-tem, the Balanced Scorecard has evolved somewhat. That

evolution highlights some important issues regarding the management of organizational

performance. Originally the Balanced Scorecard prompted users to identify an equal number of

measures in each of four perspectives: Financial perspective; Customer perspective; internal

perspective; Innovation and Learning perspective. This demonstrated the need to balance

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financial and non-financial measures; internal and external measures; leading and lagging

measures; and short and long-term measures. The approach encouraged managers to overcome

the shortcomings of traditional financial measurement and ensuring that managers dont take a

narrow view of performance based on too few measures.

Performance PRISM

Designing performance measurement systems is all about deciding which measures to select, and

just as importantly, which measures to ignore. The principle behind the Performance Prism is

that the number of measures should be limited to give clarity to what the organization is trying to

achieve. Therefore The Performance Prism approach helps to build a stakeholder focused

measurement and management system by answering a number of key questions:

1. Stakeholder satisfaction .Who are our key stakeholders and what do they want and need?

2. Stakeholder contribution. What do we want and need from our stakeholders on a reciprocal

basis?

3. Strategies. What strategies do we need to put in place to satisfy these twin sets of wants and

needs?

4. Processes. What processes do we need to put in place to enable us to execute our strategies?

5. Capabilities. What capabilities do we need to put in place to allow us to operate and improve

these processes?

It should be noted that the Performance Prism is not a prescriptive measurement framework.

Instead, the Performance Prism is a tool which can be used by management teams to influence

their thinking about what the key questions are that they want to address when seeking to designtheir performance measures and measurement systems, and so manage their business. This

approach it is argued, would satisfy both the resource-based theory of the firm (i.e. what

resources form the firm) and the resource dependency view (i.e. what resources are critical to

obtain). By using this approach organizations can explicitly link the processes that they

undertake to the wants and needs of their stakeholders. At this level it is possible to make

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decision about priori-ties and objectives for individual activities and processes, and understand

how actions at that level will affect stakeholders and their satisfaction. As management systems

are de-signed to support the achievement of the organizations strategy it is important that when

the organizations strategy changes so do the measures used to assess whether it is being

executed. So regardless of the framework used to develop the original measures, over time these

should change to reflect the organisations changing circumstances and hence a measurement

and management system should always be bespoke to reflect the strategy being pursued. The

performance measurement revolution has prompted many organizations to implement new

performance measurement and management systems, often at considerable expense. However,

unlike the environment in which organizations operate, many such initiatives appear to be static.

Senge (1992) argues that, in today's complex business world, organizations must be able to learn

how to cope with continuous change in order to be successful.

Processes and Systems for Managing Performance

It is common to see performance reports used by Executives which consist of tables of data or

limited visualizations of data which provide little insight into the actual performance situation or

action that is required to improve.

In the field of quality management, the Demming Cycle (sometimes known as the Shewhart or

PDCA Cycle) is a well established improvement methodology which incorporates four stages

Plan, Do, Check, Act. Primarily the Deeming cycle is applied to individual processes however its

constituent phases lie at the heart of performance management as they integrate planning, action

and monitoring of performance to ensure continuous improvement and the achievement of

objectives. Furthermore the deeming Cycle is all about learning learning in a systematic way

what works and what does not Extension of the deeming cycle principles to organizational level

performance management can bring problems be problematic. It has become increasingly

difficult to convert the large amounts of data available into meaningful information. Managers

today complain of drowning in data while thirsting for information. Organizations seem to be

generating data at a much faster rate than any manager can master, and in parallel to that, the

useful life of that data is collapsing. One of the most enduring traits of the information age is

that we have focused too much on mastering transaction data and not enough on turning it into

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information and knowledge that can lead to business results. If the skills and knowledge of

executives is to be fully exploited then the performance review process should focus their

attention on dis-cussing the issues raised by the performance measures and the actions necessary

to meet organizational objectives, rather than trying to interpret what the measures actually say.

Furthermore, Marchand et al highlight the need to integrate IT, people and practices to deliver

insights and business results. This can be achieved by focusing on reporting insights to

executives rather than performance data in practice this means:

1. Restructuring meetings based on the objectives of the organization.

2. Focusing the agenda on the key performance outcomes represented on the organizations

strategy map. The agenda should be a series of key questions for each of the key objectives i.e. Is

the objective being achieved? and If not why not?

3. Analysis and interpretation of data should be dealt with by specialists in these tasks (the role

of Performance Analysts) who identify what insights performance data provides.

4. Performance analysts should be responsible for analyzing performance measurement data

presenting to executives the answers to the questions (backed up by analyzed data) rather than

providing the raw data itself. Analysis includes identification of the root causes of performance

issues and analysts are encouraged to propose possible future actions based on their analysis.

This enables the executives to focus their attention on discussing the issues raised and the actions

necessary to meet organizational objectives.

5. Communities of Practice to enable analysts to learn from each other, enabling improvement of

analysis skills. They allow learning about best ways of communicating to the key decision

makers, visualization of messages and telling the story of the organizations performance.

6. Meetings should change from discussing performance data to identifying and agreeing future

actions. Because this is a more effective use of time, board meetings can be more efficient. They

should be supported by an issues management process that ensures actions are prioritized based

on importance and that actions are completed as and when necessary.

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A systematic process for using performance measurement to check whether strategy is being

implemented and whether performance is improving in line with strategic objectives as de-

scribed represent a process of single-loop strategic learning.

Target setting and milestone setting have also been stressed as a critical for the effectiveness of

performance management and management. Guidelines regarding the identification and selection

of these elements seem to be insufficient in the SPM literature. Kaplan and Norton (1996), for

example, only recommend the use of stretch targets. Ahn (2001) proposes that the

interdependencies between the measures should be taken into account when quantifying the

values of the targets to be attained each year. There is little evidence in relation to the use of

targets across broad multidimensional perspectives of performance.

Methods of PMS

There are two types:-

Traditional Method:-

1. Straight ranking method

2. Man-to-Man comparison

3. Paired comparison

4. Grading

5. Graphic rating

6. Checklist

7. Free essay

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Modern Method:-

1.MBO

2.360 Degree Appraisal

3. Human asset accounting Method

4. Behaviorally anchored rating method

MODERN METHOD

1. MBO

Management by Objectives (MBO) is a process of agreeing upon objectives within an

organization so that management and employees agree to the objectives and under-stand what

they are in the organization.

The essence of MBO is participative goal setting, choosing course of actions and decision

making. An important part of the MBO is the measurement and the comparison of the

employees actual performance with the standards set. Ideally, when employees themselves have

been involved with the goal setting and the choosing the course of action to be followed by them,

they are more likely to fulfill their responsibilities.

2.360 DEGREE APPRAISAL

360-degree feedback, also known as multi-rater feedback, multisource feedback, or

multisource assessment Performance-appraisal data collected from 'all around' an employeehis or her peers, subordinates, supervisors, and some-times, from internal and external

customers. Its main objective usually is to assess training and development needs and to provide

competence-related information for succession planningnot promotion or pay increase.

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The results from 360-degree feedback are often used by the person receiving the feedback to

plan training and development. Results are also used by some organizations in making

administrative decisions, such as pay or promotion. When this is the case, the 360 assessment is

for evaluation purposes, and is sometimes called a "360-degree review."

3. BEHAVIOURALLY ANCHORED RATING SCALE

BARS Behaviorally Anchored Rating scales is a method that combines elements of the

traditional rating scales and critical incidents methods. In order to construct BARS seven steps

are followed as mentioned below:

Examples of effective and ineffective behavior related to job are collected from people with

knowledge of job.

These behaviors are converted in to performance dimensions.

A group of participants will be asked to reclassify the incidents. At this stage the incidents for

which there is not 75% agreement are discarded as being too subjective.

Then the above mentioned incidents are rated from one to nine on a scale.

Finally about six to seven incidents for each performance dimensions- will be used as BARS.

This is by far the best method used for a performance appraisal.

4. HUMAN ASSET ACCOUNTING METHOD

The HAAM refers to activity devoted to attaching money estimates to the value of a firms

internal human organization and its external customer goodwill.

The current value of a firms human organization can be appraised by periodic measurements of

Key causal &Intervening enterprise

Key causal variables

1.Organization's management policies

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2.Business leadership

3. Strategies

4. Skills and behaviors

5. Decisions

Intervening enterprise variables

1. Loyalties

2. Attitudes

3. Motivations

4. Communication

5.Decision making

TRADITIONAL METHOD

1. STRAIGHT RANKING METHOD

This is the most commonly used category rating method. The appraiser checks the appropriate

place on the scale for each task listed.it is giving a rank to a person on his job performance

against that of another member of a competitive group by placing him as number one or two or

three in total group. It is a merit based rating.

2. PAIRED COMPARISON METHOD

Each employees every trait is compared with all others in pairs one at a time using the same

scale for performance. The numbers of times each individual is compared with another is

recorded in a paper .These numbers yield the rank order of the entire group.It makes judgment

easier than ordinary ranking method.

It is not suitable when group is large.

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3. GRADING METHOD

The rater considers certain features such as analytical ability, selfexpression,job knowledge,

leadership etc. and marks them accordingly to a scale.

The actual performance is then compared with these grades and he is allocated the grade which

best describes his performance.

4. GRAPHIC OR LINEAR RATING

The factors included in this rating system are Employee Characteristics & Employee

Contribution.

Employee Characteristics are:-

Initiative

Leadership

Dependability

Attitude

Enthusiasm

Loyalty

Creative ability

Emotional ability

Decisiveness

Employee Contribution:-

1. Quantity and quality of work

2. The responsibility assumed

3. Specific goals achieved

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4. Regularity of attendance

5. Versatility etc.

These traits are evaluated to a continuous scale.

5. FORCED CHOICE DISTRIBUTION METHOD

It was evolved after a great deal of research conducted for the military services during World

War II .

It attempts to correct a raters tendency to give consistently high or low ratings to all the

employees.

E.g.-The employee is

a) Is punctual and careful

b) Is a hard worker and co-operative

c) Is dishonest and disloyal

d) Is disinterested in work.

The rater is asked to indicate which of the four phrases are most and least descriptive of the

employee.

6. CHECKLIST METHOD

Under this a rater does not evaluate employee performance, he supplies reports about is and the

final rating is done by the personal department. A series of questions are presented concerning an

employee and checks to indicate if the answer to a question about an employee is positive or

negative.

E.g.:-

1. Is the employee really interested in his job? Yes/no

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2. Does he show uniform behavior to all? Yes/no

It is difficult to assemble, analyses, and weigh a number of statements about employee

characteristics and contribution.

7. FREE EASSAY METHOD

Under this method, the supervisor makes a free form, open-ended appraisal of the employee in

his own words and puts down his impression about the employee.

No attempt is made to evaluate the employee in quantitative manner.

DRAWB

Documents

Rashi Baliyan(Summer Training Project)