Turbo Blower Station The 3 Turbo Blowers along with its all auxiliaries provides cold blast to the stoves of new BF # 5. Boiler, STG, BPTG & Blowing Station The unit comprising 3 Boiler arrangements, 2 Steam Turbo Generators and 1 Back Pressure Turbo Generator generates power as well as cold blast to feed the Blast Furnace and the stoves. Torpedo Ladles & Repair Shop The 10 Torpedo Ladles with features like higher capacity and lesser scope of hot metal temperature loss are being used for transferring hot metal from the new Blast Furnace #5 to Steel Melting Shop or Pig Casting Machine. It is noteworthy that, these torpedoes are being used for the first time in SAIL. The Torpedo Ladle Repair Shop handles jobs like refractory lining, ladle inspection, ladle heating and cooling. Pig Casting Machine The twin strand 1500 TPD capacity Pig Casting Machine has average strand speed 9 m/min. SMS-II The new top blown Basic Oxygen Furnace (3rd converter of SMS-II) of capacity 1.584 MT Liquid steel per year is designed with provision for adoption of combined Oxygen blowing from top and inert gas stirring (with Argon and Nitrogen) from bottom. The new RHOB is also a first time feature of RSP that helps in producing higher strength and high quality special grade steel Slab Caster # 3 Conventional (1 X 1 Strand) With a capacity to produce slabs with width up to 2500 mm which makes it one of the widest in the country, the main objective of the New Slab Caster3 is to make slabs for the 4.3-metre-wide New Plate Mill. It can handle slab tonnage up to 30 tonnes, while the old casters have the capacity of 16 to17 tonnes. Built with latest design and state-of-the-art technology the Caster is equipped with modern features such as ladle to tundish slag detection system, vertical high speed mould with automatic width adjustment, hydraulic mould oscillator, automatic mould level controller, breakout prediction system, air mist spray cooling system, dynamic spray cooling system, continuous straightening, automatic 127
torch cutting machine, slab pusher cum piler arrangement, transverse torch cutting machines and computerized process control system (Level II) to name a few. New Plate Mill The new 4.3-metre-wide Plate Mill has been installed having initial capacity of 1.0 MT (0.92 MT saleable), which can be augmented to a capacity of 1.8 MT (1.674 MT saleable). The Plate Mill equipped with state-of-art technology produces wide range of plates with close tolerances to meet stringent international standards. The 4Hi reversing mill is designed for roll force up to 90 MN, with hydraulic automatic gauge control, roll bending and shifting facilities and provision of online thickness, profile and width measurement and an automated accelerated cooling system to produce high strength TMCP rolled plates including for pipe grades up to API XL 100 with lower cost. The mill is designed with High capacity levelers with hydraulic control and under load positioning system, high capacity double side Trimming and Cross-cut-shears up 50 mm capacity to produce distortion free plates. For operation with a lean manpower and to avoid loss of material identity throughout the production process, the Plate Mill will be equipped with online ultrasonic testing facility and advanced control systems and material tracking facilities. 3.2.3 Product Mix of Rourkela Steel Plant SAIL’s Rourkela Steel Plant is a unique unit under SAIL with a wide variety of special purpose steels. The use of its products abound. Its HR coils find application in manufacturing LPG cylinders, automobiles, railway wagon chassis and other high- strength type steels. It is SAIL’s only plant that produces silicon steels for the power sector, high quality pipes for the oil and gas sector and tin plates for the packaging industry. Its wide and sophisticated product range includes flat, tubular and coated products. Special Plate Plant, Rourkela, is emerging as a major special steels centre for defence equipment. It produces armoured plate for the T-90 and Arjun (tank), and the BMP-2 infantry combat vehicle, which are built at Avadi and Medak respectively by the Ordnance Factory Board. Its annual capacity of 2,000 tonnes is being upped to 12,000 tonnes. The AB/A grade steel used in making India’s first fully homemade Aircraft carrier INS Vikrant (2013) were produced in Rourkela Steel Plant. Products: Plate mill plates, HR plates, HR coils, ERW pipes, SW pipes, CR sheets and coils, Galvanized 128
sheets, Electrolytic tin-plates silicon steel sheets, Heavy and chequered plates, Electrical steel (CRNO/CRGO), GP coils and sheets/GC sheets. 3.2.4 Main Products & Services offered by Rourkela Steel Plant Plates : Construction, Fabrication, Boiler Industry, Ship Building, Automobiles, Railways, Heavy Machinery, Power Plant Equipments, Transportation of Petroleum products and water transportation containers. Armoured Plates : T-90 Tanks, MBT Arjun Tanks, Strip building, Anti Mines Vehicle, Atomic Research. HR Coils : Tube/Pipe making, Cold reducing, Cold forming, Hamilton Poles, Cycle Industry, LPG, Railways, Automobiles, Industrial Flooring etc. CR Sheets/Coil : Furniture, Household Appliance, Fabrication, Cold Forming, Drum & Barrels, Tube making, Cycle Industries, Railways, Agricultural Equipment, Packaging, Coating etc. Galvanized Plain / : Furniture, Household Appliances, Cooler Body, Air Corrugated Sheets Conditioning Duct, Roofing Storage Bins, Silos, Fabrication, Construction, etc. CRNO : Electric Motors, Relays, Transformers, Rotating Electrical Machineries, Laminations etc. ERW Pipes : Oil, Gas & Water Transportation, Slurry Transportation, Ash Handling, Construction etc. SW Pipes : Oil, Gas & water Transportation, Sewerage 3.2.5 Major Units of Rourkela Steel Plant Ore Bedding and Blending Plant - Ore Bedding & Blending Plant (OBBP) has a base mix preparation system with on-ground bedding, blending and conveying facilities. Set up under the earlier modernization programme to provide pre-mix feedstock to Sinter Plant-I & -II, the plant has an annual despatch capacity of 500,000 tonnes of material. The facilities in OBBP include major installations like wagon unloading (tipplers & track hoppers), iron ore crushing and screening system, raw material storage yard, rod mills and 129
roll crushers for flux and coke crushing, proportioning bins and elaborate conveying systems. Coke Oven - RSP has five 4.7-metre-tall coke oven batteries (COBs) that produce coke as the input for blast furnaces. The coke ovens are equipped with wagon tipplers, automatic handling and conveying facilities, coal blending provisions, coke wharfage crushing together with screening and conveying systems. Sintering Plant - RSP’S Three sinter plants feed sinter to the blast furnaces with a combined capacity of 6.87 MT per annum. Sinter Plant-II is operating at more than its rated capacity since the year 2000. This has facilitated the increased usage of sinter in blast furnace burden. Blast furnaces - The Five blast furnaces (Parvati, Lakshmi, Saraswati, Annapurna & Durga) of RSP, with a combined capacity of 4.5 MTPA, produce hot molten metal for steel production. Recently commissioned Blast furnace-5 named as “Durga” is the largest Blast Furnace in India. SMS-I - Apart from a computerized LD process which has enhanced shop capability, the LA Vacuum Metallurgy Technique has been also adopted for secondary refining of steel. This facilitates production of special steels for application in electrical machines, pipe making, tin plate, boilers and auto chassis members. The shop was originally designed to produce ingots for conversion to slabs through the Slabbing Mill route. However, after the discontinuation of the ingot route, SMS-I produces slabs through casting machines. SMS-II - Provided with the latest steel making, secondary refining (ladle furnace and argon rinsing) facilities and two single-strand slab casters to produce 1,355,000 tonnes of steel slabs annually, the shop is equipped with automation through three levels of computerized control, LD gas cleaning and recovery, power distribution system, water and utility services. Plate Mill - RSP’s 3.1-meter-wide, 4 high reversing mill is equipped with online thickness measurement facilities. Provision for inspection by customer’s nominees, online ultrasonic testing and checking ensure dispatch of superior quality plates to customers. The Plate Mill also has a walking beam-type furnace with a capacity of 100 tonnes/hour for slab heating. The mill has a production capacity of 485,000 tonnes per annum. Hot Strip Mill - The facilities of the 1.44 MT per annum mill has: Two new walking beam type reheating furnace (225 TPH) Roughing/sizing stand RoVo with automation Automated coil box Quick roll change system in Roughing Stand-1 and finishing mills Coil marking, sampling and conveying systems. 130
Cold Rolling Mill - Produces about 678,000 tonne of cold rolled sheets per annum, RSP’s Cold Rolling Mill has a modern 5-stand tandem mill and a 4-high 1700-mm reversing mill. The tandem mill is equipped with automatic gauge control, x-ray gauge, data logging and thyristorisation. Electrolytic Tinning Line The continuous electrolytic tinning line produces a shining tin-coated surface in a variety of coating thicknesses. The tinplate shearing lines are equipped with sensitive pinhole detectors and an automatic sorting system. Galvanising Lines Two continuous hot-dip galvanising lines are equipped with jet-coating facilities. There are 2 multi-roller-corrugating machines as well which produce corrugated sheets. Silicon Steel Mills - This unit produces steel for the electrical industry through various operations carried out in sophisticated, continuous/semi-continuous processing lines and a 4-high reduction mill. Advanced process control and product testing facilities ensure product quality. Pipe Plants - A highly sophisticated Spiral Welded (SW) Pipe Plant is equipped with submerged arc welding process and produces large diameter pipes. Hydrostatic pressure testing, ultrasonic testing and eddy current testing are some of the features which ensure quality control. The Electric Resistance Weld (ERW) Pipe Plant caters to the smaller diameter pipe consumers. This plant has been recently upgraded to enable it to produce API grade pipes. A 3-LPE Pipe Coating Plant has been commissioned in November 2008. This unit produces value-added pipes by providing 3-layers of Poly Ethylene coating on ERW and SW pipes of Rourkela Pipe Plants. Set up with technical knowhow from M/s Socotherm Spa, Italy, the unit is in strict compliance with the Pollution Control norms as per European standards. Traffic & Raw Material - The Traffic & Raw Material Department deals with procurement and supply of raw materials to various user departments, internal movement of in-process and other material from one unit to another and dispatch of finished products in railway wagons to outside parties or SAIL warehouses. Raw materials play the most vital role in RSP’s production of 1.9 million tonnes (MT) of steel per annum. The annual input requirement of the plant includes 2.3 MT of coking coal, 1.5 MT of boiler coal, 1.8 MT of iron ore lumps, 1.5 MT of iron ore fines, 1.6 MT of fluxes and other materials like tin, zinc, aluminium and ferro-alloys. The department maintains 350 wagons, 40 locomotives and a network of 240 km rail tracks across the plant. Quality Management - Total Quality Management (TQM) that was adopted in RSP since January 1992 today forms the core of all our business strategies. Today the entire 131
works zone as well as Personnel and Steel Township have been certified to ISO 9001: 2008 QMS. Silicon Steel Mill and Environmental Engineering Department were the first departments to be certified with ISO 14001 Environment Management System (EMS) in the year 2000. Subsequently, SP-II, HSM, PM, SWPP, ERWPP, SPP and Steel Township were certified to ISO 14001:2004 EMS. RSP’s Steel Township is the first Township of SAIL to be certified for both ISO 9001 QMS and ISO 14001 EMS. Entire RSP has been certified to internationally acclaimed Occupational Health & Safety Assessment Series (OHSAS 18001: 2007). n order to have synergy and synchronization in implementation of various management systems, concept of Integrated Management System (IMS) has been initiated in RSP. An IMS Policy covering Quality, Environment, Occupational Health & Safety and Social Accountability of RSP has been introduced. RSP is the first unit in SAIL to adopt IMS policy. Environment Management - As a responsible corporate citizen, RSP has taken effective measures in the area of pollution control in byproduct coke oven batteries, Battery No: 4 and 7m tall Battery No: 6. RSP has taken adequate steps to check emissions from coke ovens and has installed air-cooled self-sealing doors resulting in significant reduction in door emissions; doors were designed, manufactured and supplied by Simpex Castings Ltd, Bhilai India. Almost all major units of the plant, including its Personnel Department and Steel Township, are certified to ISO:9001 standards. RSP’s Silicon Steel Mill, Sintering Plant II, Environment Engineering Department, Plate Mill, Hot Strip Mill, ERW and SW Pipe Plants, Special Plate Plant as well as Steel Township have been awarded ISO:14001 certifications for Environment Management. 3.2.6 Awards received by Rourkela Steel Plant Srishti Good Green Governance Award for 2010 Global CSR Leadership & Excellence Awards in 2013 CII-ITC Sustainability Award 2013 Greentech Environment Gold Award National Energy Conservation Award (2nd Prize) Best Corporate Stall 3.2.7 Organizational Set up of Rourkela Steel Plant The plat is headed by Chief Executive Officer (CEO), who reports to the Chairman, SAIL. At the Plant-level, the Top Management comprises CEO and Executive 132
Directors (EDs) and General Managers (GMs). The senior level is made up of the HODs, who report to their respective functional heads. The middle level comprises of Sectional Heads at Dy. General Manager (DGM) / Asst. General Manager (AGM) level) and the frontline executives consist of Senior Managers down to Junior Managers. The SAIL Board comprises of a Chairman, whole time Directors and Non-Executive Directors including independent Directors. CEO is a permanent invitee to the board. 3.2.8 Production Performance of RSP Rourkela Steel Plant (RSP) a unit of the Maharatna Company Steel Authority of India Limited (SAIL) has registered its best ever production performance in all major areas like Hot Metal production from Blast furnace-5, Crude Steel and Saleable Steel in the financial year 2016-17. During the said year the New Blast Furnace-5 made 27,57,210 Tonnes of steel which is an increase of 30.5% over the previous year. All time high records were also set in the field of Total Sinter (5270089 Tonnes), Total Crude Steel (2932460 Tonnes) and Total Saleable Steel (2741972 Tonnes). The average rate of pushing in the New Coke Ovens Battery-6 was 87.9 per day as compared to 74.9 of previous year, while another key unit which has come up as part of the Modernization and Expansion i.e. New Plate Mill rolled out 5,40,388 Tonnes of plates which is a rise of 249% over the previous fiscal which was 2,16,953. With this the total plates production in RSP too touched a new high at 10,00,415 Tonnes. The status of production performance of RSP during the last ten years is mentioned in the table 3.1 given below: Table 3.1: Status of Production Performance YEAR SINTER HOT METAL INGOT/CRUDE STEEL SALEABLE STEEL 1942144 2006-07 3068158 2123936 1990165 2067735 1988570 2007-08 3444207 2229410 2092832 1997318 2030321 2008-09 3229045 2200015 2082125 2080125 2144344 2009-10 3390727 2267765 2127785 2248247 2547499 2010-11 3361119 2303301 2160439 2423764 2741972 2011-12 3452153 2309012 2170211 2012-13 3616593 2365824 2207282 2013-14 3762875 2538322 2291340 2014-15 4890946 3156769 2791535 2015-16 4935407 3042177 2729205 2016-17 5270089 3093948 2932460 Source: Financial Year Book 2015-16 (SAIL – Rourkela Steel Plant) Note : (Quantity in Metric Tonnes) 133
Several success stories were also scripted on the techno-economic front that plays a major role in the financial aspect of the plant. The Coke Rate in the year 2016-17 was 419 kg per Tonne of Hot Metal which is a big improvement over the previous best of 464 kg per Tonne of Hot Metal recorded in 2014-15. Similarly, the Specific Energy Consumption during the year was all time best at 6.430 Giga Calories per Tonne of Crude Steel and Blast Furnace productivity touched the highest ever figure of 2.067 Tonnes/ metre cube/day in the year 2016-17. 3.2.9 Financial Performance of RSP The main objective of a business undertaking is to earn profits. Earning of profit is vital for survival of any business organization. Efficiency of any organization can be judged through its profitability. Profitability of the firm is highly influenced by internal and external variables, i.e., size of organizations, liquidity management, growth of organizations, component of costs and inflation rate, efficiency of production etc. Profit before tax automatically increase if cost of production reduces. Table 3.2: Status of Financial Performance YEAR PROFIT BEFORE TAX CUMULATIVE -1183.25 2006-07 1336.40 218.08 1229.28 2007-08 1401.33 2569.07 3440.96 2008-09 1011.20 4086.89 4450.26 2009-10 1339.79 4662.46 4894.50 2010-11 871.89 2370.98 1013.75 2011-12 645.93 2012-13 363.37 2013-14 212.20 2014-15 232.04 2015-16 -2523.52 2016-17 -1357.23 Source : Financial Year Book 2015-16 (SAIL – Rourkela Steel Plant) Note : [Rupees in Crores; Year-wise Profit (+) / Loss (-)] The main reasons for loss during couple of years to Steel Authority of India is increase in the international prices of imported coal, decrease in NSR (Net Sales Realizations) due to surplus production of steel in the international market and weak demand. Also decrease in consumption of per capita steel in international market. The status of Financial Performance of RSP during the last ten years is mentioned in the table 3.2 given hereinabove. 134
3.2.10 Human Resource at Rourkela Steel Plant Organizations are made of people. Their effectiveness depends on the performance of the people constituting them. There was a time when employees used to be considered as liability. Over the time the organizations have realized the importance of its human resources and they are no more being considered as liability but a valuable and strategically important asset. The employees are partner in business. The transformation in the attitude and the outlook towards people in organization has led to development of Personnel Management, which is now-a-days also known as Human Resource Management. The primary purpose of Personnel Management is to contribute to the profitability and survival of an organization by effective Management of its total human resources. In doing so, however, it seeks to strike a balance of the macro (social justice), micro (organizational effectiveness), functional (personnel policies and procedures) and personal (individual goals, quality of work life) objectives. Manpower The human resource at RSP consists of highly qualified employees who continue to add and enhance the knowledge, skill and experience of steel making for more than fifty years by now. However, being a PSU, RSP also has an obligation to provide employment in large scale to local displaced people, etc. who are in unskilled / semi-skilled category and the company imparts skill development trainings to such employees. The manpower of RSP during the last ten years is mentioned in the table 3.3 given hereinbelow: Table 3.3: Manpower Status of RSP YEAR (AS ON) EXECUTIVE NON-EXECUTIVE GRAND TOTAL 15445 01-04-2017 1724 13721 16458 16939 01-04-2016 1906 14552 17631 18279 01-04-2015 2016 14923 18185 18822 01-04-2014 2124 15507 19455 20192 01-04-2013 2224 16055 21105 01-04-2012 2221 15964 01-04-2011 2306 16516 01-04-2010 2204 17251 01-04-2009 2107 18085 01-04-2008 2179 18926 Source: Manpower Planning Group – SAIL Manpower 135
Labour Productivity Labour productivity (LP) is considered as an indicator of productivity of the workforce directly engaged in the production process of any organization. Organization projects LP as an improvement factor and makes an effort to bring it at par with the competitors in the industry or world class organizations. Being a manufacturing industry, SAIL gives continuous thrust to enhance its LP to bring it at par with other Steel Manufacturers. Basically, there are two ways to enhance the LP, either by reducing manpower or by increasing production. In SAIL, substantial improvements have been noticed in LP due to manpower right sizing and production improvement as an outcome of adopting advance technologies in operations. The present method of calculating LP in SAIL is based on the methodology prescribed in the PM’s trophy scheme. As per this method the main components of LP calculation are (i) Crude Steel (CS) Production during the period, (ii) Pig Iron (PI) production during the period and (iii) Works - Technical Manpower during the period. LP for a particular period (monthly, quarterly, yearly) calculated as follows: Crude Steel Production + 50 % of Saleable Pig Iron 365 LP = ---------------------------------------------------------------- X ---------------------------- Average Works (Technical) Manpower Duration for which LP being calculated (Number of days) The LP of SAIL is calculated every month based on the average LP of 5 ISPs. The unit of LP is Crude Steel Production in Tonnes /Man/Year. The status of labour productivity of RSP during the last ten years is mentioned in the table 3.4 given below : Table 3.4: Status of Labour Productivity YEAR LABOUR PRODUCTIVITY YEAR LABOUR PRODUCTIVITY 189 2016-17 283 2011-12 181 173 2015-16 261 2010-11 162 158 2014-15 271 2009-10 2013-14 216 2008-09 2012-13 197 2007-08 Source: Manpower Planning Group – Labour Productivity Note: (Unit: Tonne; Crude Steel/Man/Year) The performance of the company during the year 2016-17 was adversely affected due to lower net sales realization, steep increase in imported coal rates, higher salaries & wages, higher interest charges, higher depreciation due to capitalization of new facilities. 136
However, the adverse factors have been partially offset by higher sales volume, reduction in techno economic parameters. SAIL continued its thrust on optimum utilization of funds by better fund management. This included replacement of high cost short term loans with low cost debts, timely repayment of loans, including interest, strategic parking of surplus funds with scheduled banks, advance actions for future fund raising, etc. to meet our growth objectives. Further, the company hedged the foreign currency risk on buyer's credit depending on market conditions. All new facilities at RSP under expansion programme have been commissioned. The production levels at RSP are on the increase. With the new facilities in place, RSP is targeting an increase in high end quality steel to achieve better sales realization. Higher production volume, focus on production of more special grade steel along with the achievement of improved techno economic parameters will help the company in offsetting the burden of high interest and depreciation thereby improving the financials. 137
CHAPTER - IV PERFORMANCE MANAGEMENT SYSTEM IN GLOBAL AND NATIONAL SPHERE
CHAPTER - IV PERFORMANCE MANAGEMENT SYSTEM IN GLOBAL AND NATIONAL SPHERE 4.1 Performance Management System in International and Domestic Environment While performance management is an area of immense personal interest, it has recently gained prominence as a topic of discussion, with many Global as well as Indian companies initiating big as well as small changes to the way they approach the measurement and management of performance. Over the last four decades, the outlook towards managing performance has come full circle. From the qualitative evaluation of erstwhile confidential reports, organizations, globally and in India, moved towards greater objectivity, quantification and relative ranking. From early 2014, it has been observed that an interesting trend among global organizations, especially in the technology and consulting space, to make their performance management approach more development-focused and less dependent on relative ranking and normalization. This has also encouraged their Indian counterparts to critically evaluate their current performance processes and make modifications. This phenomenon made us wonder whether it was ideal for Indian organizations across sectors to embrace these global changes. The goal of performance management is to enhance the performance of the individual and the organization by evaluating and rewarding performance in an equitable and reliable manner. In this section, performance management systems observed in some of the following Global as well as Indian Steel Industries, are described briefly as follows: Global Steel Industries ArcelorMittal Baosteel Nippon Steel & Sumitomo Metal Corporation Ansteel Group Nucor Corporation 138
Indian Steel Industries Essar Steel Jindal Iron & Steel Company Limited Visa Steel Limited Bhushan Steel Limited OCL Iron & Steel Limited 4.1.1 Arcelor Mittal ArcelorMittal S.A. is a Luxembourg-based multinational steel manufacturing corporation headquartered in Boulevard d’Avranches, Luxembourg. It was formed in 2006 from the takeover and merger of Arcelor by Mittal Steel. ArcelorMittal is the world’s largest steel producer, with an annual crude steel production of 98.1 million tons as of 2014. It is ranked 123 in the 2017 Fortune Global 500 ranking of the world's biggest corporations. ArcelorMittal is the successor to Mittal Steel, a business originally set up in 1976 by Mr Lakshmi N Mittal, chief executive officer and chairman of the Board of Directors. ArcelorMittal was created through the merger of Arcelor and Mittal Steel in 2006. ArcelorMittal is the world’s leading steel and mining company. Guided by a philosophy to produce safe, sustainable steel, it is the leading supplier of quality steel products in all major markets including automotive, construction, household appliances and packaging. ArcelorMittal is present in 60 countries and has an industrial footprint in 19 countries. The core philosophy is to produce safe, sustainable steel. In so doing, our top priority is safety and our goal is to be the world’s safest steel and mining company. HR Guiding Principles The Guiding Principles for ArcelorMittal's human resources policies reflect the core values: sustainability. quality, and leadership - and recognize that the HR polices must both develop ArcelorMittal’s people as a key driver of business results and promote the integration of the company as a single global enterprise while respecting local laws and practices. These guiding principles, deployed through local companies, will support the men and women of ArcelorMittal in their efforts to fulfill ArcelorMittal’s brand promise of ‘Transforming Tomorrow’. 139
ArcelorMittal promotes the safe, healthy, and productive work environment. All companies of ArcelorMittal have the responsibility to provide their employees with a safe and healthy environment. All employees have a responsibility to eliminate actions or circumstances that undermine this environment to ensure that they are fit and able to work every day, and to support their colleagues’ health, safety and productivity through the principles of ‘Shared Vigilance’. ArcelorMittal supports the employees’ efforts and aspirations to contribute at their full potential. It is the management’s responsibility to develop, train and inspire future leaders through a robust programme of mutual goal setting, regular feedback and coaching, training and appropriate promotional and developmental opportunities. It is the employees’ responsibility to pursue their own development opportunities, support their colleagues’ development and generally contribute to continuous improvement across the entire Company. We encourage but also expect outstanding technical mastery and exceptional excellence. ArcelorMittal is a merit-based organization. ArcelorMittal promote and reward based on merit and performance paying particular attention to our culture of continuous improvement which is based on action-orinented benchmarking in all functions and on learning from both our success and our shortfalls. ArcelorMittal prefers to promote from within, and we highly value the power derived from diverse backgrounds and experiences. The company’s policy is to provide equal employment opportunities to all types of jobs at all levels of the workforce and prevent unlawful discrimination. Continuous team-based improvement is a way of life at ArcelorMittal. ArcelorMittal actively benchmark the performance and processes both internally externally. They view their global scope as an advantage and require all operations and functions to collaborate in order to raise the company’s future performance to the standards of today’s champions. ArcelorMittal aspire to be the very best in all they do and are committed to simplifying, harmonizing and streamlining our activities and processes 140
wherever possible. High performance and productivity are central in the company’s sustainability and thus to its capability to provide good jobs with good incomes wherever they operate. ArcelorMittal aspires to attract, recruit, retain and motivate highly talented individuals through a rewarding value proposition. Compensation standards are based upon relevant benchmarks taking into account regional practices and customs, and always comply with applicable labour laws and regulations as well as pay system rewards performance. Mutual trust it is a key element of relationships within ArcelorMittal. ArcelorMittal promote transparent HR processes and invite constructive input to improve those processes. ArcelorMittal respect employees privacy and dignity and only personal information that is required either for the effective operation at the company or by law, shall be collected. Such information is treated as confidential and is released only to those who have a clear, legitimate needs to know. ArcelorMittal requires that all employees disclose potential conflict of interest and take actions to eliminate them promptly if required to do so. ArcelorMittal is committed to being a responsible highly respected institution – not least because of its human-resources policies. ArcelorMittal respect employees’ legal rights to freedom of association, third party consultation, collective bargaining and employee participation. They are committed to a high quality and high-level social dialogue with trade unions, employee representatives and other relevant stakeholders and will not tolerate abusive practices such as the exploitation of child labour. More broadly, they strive to establish superior relationships with all stakeholders who can shape our human resources reputation and to create a climate in which ArcelorMittal employees are motivated to carry forward Corporate Responsibility initiatives. Career Development ArcelorMittal Warszawa gives its employees many opportunities for their personal development. Apart from professional trainings, specialist and postgraduate studies in Poland, ArcelorMittal offers a number of foreign-based studies organized within the ArcelorMittal Group's Corporate University. The university runs training 141
programs dedicated to different groups of employees: leadership & management academy for managers, Functional Academies - development of qualifications in particular areas, as well as E-Academy - an e-learning platform. Job Market Online is a special tool for professional development promoting mobility and internal recruitment within the Group. It enables our employees to review job vacancies in all plants of the Group, apply for particular positions or send in their CVs. At present, Job Market Online is addressed to managers, however, in the future it will be available to all employees of the Group. ArcelorMittal welcomes applications from graduates of all university faculties as well graduates of vocational and technical schools, such as electricians, mechanics, automation specialists etc. Professional experience is welcome. An ideal candidate should be: flexible, a team player, creative & eager to develop 4.1.2 Baosteel China Baowu Steel Group Corp., Ltd., commonly referred to as Baowu Steel, is a state-owned iron and steel company headquartered in the Baosteel Tower in Pudong, Shanghai, China. Baosteel is the fifth-largest steel producer in the world measured by crude steel output, with an annual output of around 35 million tons (China's total steel production in 2015 was 803.8 million tons). It employs 130,401 employees as of the end of 2012, has annual revenues of around $21.5 billion, and produces a mix of products. Baosteel Group Corporation (hereinafter referred to as Baosteel) is a typical enterprise arising from China’s reform and opening, for just on December 23, 1978, the very day following the closing of “the Third Plenary Session of the CPC (Communist Party of China) Eleventh Central Committee”, Baosteel Group Corporation (“Baosteel”) had its first pile driven into the earth beside the Yangtze River in the north of Shanghai, China. Upon the development in over 30 years, Baosteel has grown into one of the most competitive iron and steel company with the highest level of modernization in China. By the end of 2014, Baosteel had a workforce of 130,000 spreading all over the globe. Baosteel, with iron and steel as its main business, manufactures premium steel products with high technologies and a high added value and fosters three major product categories, namely carbon steel, stainless steel and special steel. Though Baosteel has worldwide marketing network, the premium products not only satisfy the demand on the domestic market but are also exported to more than forty countries and regions in Asia, Africa, 142
Europe and America, extensively applied to the industries such as automobile, household appliances, petrochemical, machinery, energy, transportation, metalwork, aeronautics and astronautics, nuclear power and electronic instruments. In the sector of auto sheets, Baosteel has become the first manufacturer capable of supplying the first, second and third generation of advanced high-strength steel in the world. Bound up with the development of steel business, Baosteel has also endeavoured to develop diversified business in steel related industries. With focuses on the steel supply chain, technology chain and resources utilization chain, Baosteel has intensified its efforts to integrate internal and external resources and improve its comprehensive competitiveness and industrial status, and formed such related industrial segments as resources development and logistics, secondary steel processing, engineering technical services, coal chemical, financial investment, production services and information services, which have maintained a synergetic development with the steel business. In terms of operating performance, Baosteel keeps a top position in the domestic industry and among the leading global iron and steel enterprises. Year 2016 continued witnessing Baosteel on the Fortune Global 500 list for the thirteenth consecutive year and ranked at the 275th place. In addition, Baosteel was also awarded the honor of the “Most Admired Chinese Company” for another year, the only listed company in China’s iron and steel industry. The three major credit rating agencies in the world assigned Baosteel the highest credit rating among the global comprehensive iron and steel companies. In the new year, Baosteel will deepen the reform in various aspects, speed up strategic transformation, focus on structural adjustment, reduce losses and increase profits and capability enhancement in safety and environmental protection system so as to maintain and improve the best operating performance in the industry. Looking into the future, Baosteel is positively driving its strategic transformation from steel to materials, from manufacturing to services, and from China to the world, and endeavouring to be a leader in steel technology, a driver of the green industry chain and a corporate model with common development of employees and the company. Baosteel is firmly determined to pursue its strategic goal of being the most competitive enterprise in the world, and shall also be an honest, friendly, creative and well-respected outstanding company in the world. 143
Corporate Mission Becoming a top steel product, technology and service provider in the world. Corporate Vision Become the leader in the iron & steel technology; Become the driver of green industry; Become a corporate model for the common development of staff and the Corporation Core Values Integrity and Synergy Human Resources Baosteel's human resources work centers around the company's new round strategic development planning, always adheres to people-oriented, fully respects the value of employees, lays stress on the harmonious development of employee and enterprise, promotes the construction of employee development mechanism, employee incentive mechanism and employee communication mechanism unremittingly, in an effort to build Baosteel into \"the corporate model for common development of employee and enterprise\". Employee Development Mechanism Standing at the height of talents management, basing ourselves upon the combination and integrity of “corporate demands and employees' demands”, we strive to turn the unconscious and natural growth of talents into conscious and tractive growth of talents, so as to make the employees feel that their career prospect is bright, their career development is perceivable, their career path is wide and their career environment is fair. Employee Incentive Mechanism We actively study and apply various flexible incentive means, pay attention to turn single incentive into all-round incentive, and march toward long-term incentive from current incentive; try out and promote flexible welfare system, effectively expand the growth space of employee welfare, sufficiently mobilize the initiatives of various circles and inspire the staff's enthusiasm for second pioneering. 144
Employee Communication Mechanism We set up the evaluation traction mechanism comprehensively in which the employees are the end inspectors and end taster, ensure the managers of each level to go to the grass-roots to listen to the civilian's opinions, so that the implementation effect of each management policy, system and measure can be evaluated and inspected by the employees, and the mechanism and channel for smooth information communication can be built up. 4.1.3 Nippon Steel & Sumitomo Metal Corporation Nippon Steel & Sumitomo Metal Corporation, was formed in 2012 with the merger of Nippon Steel and Sumitomo Metal. Nippon Steel was formed in 1970 with the merger of Fuji Iron & Steel and Yawata Iron & Steel. It is the world's 3rd largest steel producer by volume as of 2015. Nippon Steel & Sumikin Engineering Co., Ltd. (NSENGI) is the engineering company representing the NIPPON STEEL & SUMITOMO METAL GROUP. NSENGI hone and develop the plant equipment technologies and steel utilization technologies that they have amassed in the steel manufacturing industry to promote social and industrial infrastructure projects across the globe. Nippon Steel & Sumikin Engineering Co., Ltd. (NSENGI) began as the engineering division of Nippon Steel (now Nippon Steel & Sumitomo Metal Corporation) in 1974. Over a period spanning 40 years since our foundation, NSENGI have expanded our operating bases to countries and regions outside of Japan such as China, Southeast Asia, India, Germany, Brazil, and the United States. We work globally, responding to the needs of various steel industry, energy industry, government, local authority, and private sector clients from each of the territories in which we operate. Nippon Steel & Sumikin Engineering Co., Ltd. is committed to contributing to the development of global society and industries. To this end, NSENGI address various challenges faced by the clients, as well as latent needs of society, with optimal engineering capabilities that combine cutting-edge technologies and groundbreaking ideas. They pursue this commitment with passion and a sense of responsibility that have been passed on as our corporate heritage since our inception as the engineering 145
department of Nippon Steel Corporation (Now Nippon Steel & Sumitomo Metal Corporation), a leading global steelmaker. Today, the world is faced with the challenges of an increasingly higher order. They include protecting the global environment, developing and making effective use of new energy sources, and building a safe, secure and efficient social infrastructure. They believe that the mission of engineering firms does not end with the construction of social and industrial infrastructures. The mission is to provide comprehensive solutions that also encompass operation and maintenance, thereby helping increase the value of our clients’ business and create a sustainable society. The Nippon Steel and Sumikin Engineering Group will continue to work to meet the expectations of our clients in our six business domains – steel plants, environmental solutions, energy solutions, marine engineering and construction, building construction and steel structures, and pipelines –as well as new business areas, by fully leveraging our global network and expertise cultivated over many years. Mission: Leveraging technologies and ideas that go one step ahead, we will provide optimal engineering solutions to our clients so that we can contribute to the development of global society and industries. Human Resources Policy Based on the recognition that human resources are the most important management resources, Nippon Steel & Sumikin Engineering Group will promote the best human resource development practices that can make both the company and its individuals feel true innovation and growth. In addition, while fulfilling the social responsibility in the field of labor and human rights, Nippon Steel & Sumikin Engineering Group aim to be a group in which each employee can continue working responsibly with passion. The best human resource development practices will be as follows: 1. They will promote a human management system based on ability that encourages employees to demonstrate their ability and enthusiasm to the maximum. 146
2. They will develop human capital who can exercise leadership combined with global mentality and local perspective, placing importance on ‘Market & Client focus’, ‘Networking’ and ‘Improvement & Innovation’. 3. They will support employee efforts to take responsibility to proactively develop their own abilities and careers in order to become first-rate professionals on their own initiative, and will provide them with the opportunities and an environment for continued growth. 4. They will improve both the employment / working conditions and the workplace environment for employees of various backgrounds to be able to work together with enthusiasm and motivation while respecting diversity and achieve the best results as a team through cooperation. 5. They will respect fundamental human rights and eliminate discrimination based on race, creed, sex, age, nationality, religion, thought, or disability, etc. They will observe all laws and social norms regarding labour and human rights both within Japan and in related countries, and promote training and activities to build awareness. Nurturing of Global Human Resources In order to secure and develop human resources who are capable of working globally, Nippon Steel & Sumikin Engineering Group promote activities such as early work abroad experiences, study abroad opportunities in designated regions, and internal courses. We strengthen the development of local staff at our overseas operation bases (including group companies) to construct an organization that is more deeply rooted in the local area. Each year, we continuously employ international students. We carry out the same training as with our other Japanese employees in the expectation that they will play an active role in our global markets in the future. Activities at Overseas Operation Bases Nippon Steel & Sumikin Engineering Co., Ltd. (NSENGI) currently employs approximately 1,500 local staff at our 17 overseas operations bases (including group companies). Thai Nippon Steel & Sumikin Engineering & Construction Corp., Ltd. (TNS), for example, is based in Thailand - a country with which we have long-standing ties. TNS has over 30 years history since its establishment and employs approximately 850 workers. TNS implements continuous employee training through a unique program. 147
Local staff are deeply involved in the company, even within its central management. As an entire group, they will further strengthen the training of local staff in the future to build an organization that develops stronger local roots. 4.1.4 Ansteel Anshan Iron and Steel Group Corporation (Ansteel Group in short; less popularly Angang Group) is a Chinese state-owned steel maker. The corporation was under the supervision of State-owned Assets Supervision and Administration Commission of the State Council. It is headquartered in Anshan, Liaoning. According to World Steel Association (Chinese companies data was provided by China Iron and Steel Association), the corporation was ranked the 7th in 2015 the world ranking by production volume. Angang Steel Co. Ltd. (Ansteel) is the second-largest Chinese state-owned steel producer. Founded in 1997 and headquartered in Anshan, in northeastern China. Ansteel Group Corporation was originated from the combination of Anshan Iron and Steel Group Corporation and Panzhihua Iron & Steel Group Corporation in May 2010. Anshan Iron and Steel Group Corporation was the first large-sized steel maker and the earliest steel production base created after New China was proclaimed. Therefore, it was known as the “Cradle of the Chinese Steel Industry” and the “Eldest Son of the Steel Industry of the Republic”; Pangang is the largest vanadium maker in China and second largest in the world, the largest titanium raw material production base and also an important production base of titanium pigment, railway steel, seamless pipe and special steel. After reorganization, Ansteel Group has formed cross-regional, multi-base and international operation layout and became a steel enterprise with the most complete layout and the greatest resources advantages in China. Ansteel Group was awarded the “Innovative Enterprise” title by the State, “National Model Unit of Intellectual Property Right Among Enterprises and Institutions” in the first batch, Achievement Award of Enterprise Technological Center determined by the state and the first steel enterprise with complete capacity of technology export in China. In 2011, Ansteel took the 462nd place among the 500 Largest Global Corporations. Now, Ansteel Group has the production capacity of 38.60 million tons of raw steel and pig iron. At present, steel industry is in the period of significant structure adjustment. We will accelerate transformation and upgrading according to our actual development situation. In strategy, we will change from attaching importance on growth and layout in 148
the past to improving the whole competitiveness, focus on the target of “to build the most competitive transnational steel group in the world and become the leading enterprise of steel industry in China”, greatly implement Six Development Strategies : “to be stronger in high-quality steel, to be larger in resource advantages, to be optimum in characterized vanadium and titanium, to be better in non-steel industry, to be more complete in innovation and transformation and to be more stable in transnational operation” and promote industry transformation and upgrading. Therefore, Ansteel Group Corporation determined its strategic development target in the “Twelfth Five-Year Plan”, i.e. by 2015, Ansteel will get into the world top 5 steel makers by annual raw steel output, leading the development of the international steel industry, so as to become a most competitive super large-sized transnational corporation with coordinated development of diversified industries, which is extra strong in the steel industry in the world, takes the leading position in the world's vanadium industry and the first place in the domestic titanium industry. Facing new situations and new tasks, Ansteel has much higher requirement of development. All the Ansteel people will be more confident to tackle problems, collect all wisdoms and efforts, work hard and make their contributions to realize the strategic target of the enterprise development and promote the enterprise development better and better. HR Strategy Talent Strategy For an enterprise, talents are the top resource in the scientific development. According to the strategic target and overall task requirements of Ansteel Group, talent team development shall take \"Proper scale, reasonable structure, utilization oriented, key points focused, and innovation system\" as the principle, establish the talent development concept of “Sincerity, respect, progress and win-win”, stick to the implementation of talent strengthening enterprise strategy, care for people, take “mutual development of enterprise and its employees” as the starting point, continuously improve and innovate the talent priority development system and mechanism, optimize the talent development environment, perfect talent assessment system, strengthen talent management regulation ensuring system, and provide a solid guarantee with talent teams, to make Ansteel a “most internationally competitive, super large scaled international group which leads the development of world iron and steel industry”. 149
Talent introduction Take serving for the middle and long term development and planning of Ansteel as the purpose, stick to the talent introduction principle of “Overall planning, key point focused, open and fair, selecting on merit” pursuant to the guidelines of “reasonable levels, classified implementation”, and introduce hundreds of graduates and experienced talents in all fields yearly, to lay a solid foundation for the continuous development of the enterprise. Talent cultivation Take the human resource planning target to create “A talent highland of basing on Ansteel, being advanced in the industry, leading the development of iron and steel industry”, regard \"three talent teams\" construction as a key point, give an overall planning and all-round consideration, implement the integrate development strategy of talent resource, make a series of talent development policies and measures, strive to provide a platform for learning and exercising of employees, and continuously enhance the quality of employee team through post communication, tutor teaching students, holding competitions, selecting talents for further education in colleges, career navigation, etc. Talent utilization Stick to the principle of “using the capable ones, replacing the average ones, relieving the incapable ones”, take selecting preferred by competition as the key point, gradually establish and perfect the talent appointment mechanism, encouragement mechanism, supervision and exam & assessment mechanism, smooth the promotion channel for various talents, and actively establish the sound environment of “develop talents, use talents and make the talents fully exert their capability”. Provide a platform and space to exert their capabilities through the implementation of open selection, post competitive selection, talents communication, putting on field practice, etc. Take establish and perfect engineering technical posts, high skill talents rank order and promotion and encouragement regulations of various talents as key points, and actively explore effective talent management measures, to make excellent talents on various fields show themselves. Post-doctors' Working Ansteel, as a large-scale modernized iron and steel company in China, has world leading production facilities, technical processes and extensive scientific research projects, and high starting points of research projects and secured research funds, 150
warmly welcomes doctors from home and abroad to Ansteel for postdoctoral researches and Ansteel will provide them with preferred working and living conditions. To provide a deluxe flat with two bedrooms and one living room equipped with necessary working and living facilities. To pay RMB4500yuan/per month for living allowance. To offer RMB60.000 yuan grant for research by Liaoning Provincial Government. To ensure the employment or enrollment of the families and children along with the post doctor. To arrange a tutor and an assistant for each post doctor, to provide a nice working environment and the most advantageous scientific research and experimental conditions, to ensure them to work sound and smooth. After expiration of working period in postdoctoral station, he or she should keep working in Ansteel. 4.1.5 Nucor Corporation Nucor Corporation is an American producer of steel and related products. It currently ranks as the largest steel producer in the United States of America and is the largest \"mini-mill\" steelmaker (i.e. it uses electric arc furnaces to melt scrap steel as opposed to blast furnaces to melt iron). Nucor is North America's largest recycler of any material and recycled 16.9 million tons of scrap in 2015. It is headquartered in Charlotte, North Carolina, United States. The history of Nucor dates back to 1899, when Ransom E. Olds (Olds) established a car manufacturing company called Olds Motor Works. After running Olds Motor Works successfully for seven years, Olds sold the unit in 1906. He established Reo Car Company (Reo), which manufactured trucks and buses in addition to cars. Reo stopped making cars in 1936 and by 1955 formed Reo Holding which merged with Nuclear Consultants Inc. to form Nuclear Corporation of America (Nuclear). Nuclear was originally set up to manufacture nuclear instruments and other electronic gadgets, besides providing expertise in conducting radiation studies. While this business was profitable at the time, it failed to gather momentum. Nuclear then acquired a number of high-tech companies. The company however continued losing money till 1960, when it was 151
acquired by a New York based investment banker. Nucor is known for its culture and its commitment towards employees. In the age of downsizing and layoffs, Nucor has not laid off a single employee nor shut down any of its plants. It is also credited with not reporting loss in any business quarter for last 30 years (1972 - 2002). Both analysts and company sources attribute the company's success to its culture. In the early 60s, the company made an unsuccessful bid to acquire Coast Metals. At this juncture, Nuclear requested Ken Iverson (Iverson), a Coast Metals employee to help it identify other companies in the metal business that it might acquire. On Iverson's recommendation, Nuclear acquire Vulcraft, a steel joist manufacturing firm in Florence, South Carolina. In 1962, Iverson joined Nuclear as Vice President and took charge of the 200-person joist division. In late 1963, Iverson built a second plant at Nebraska. By 1965, the Vulcraft division was doing well. It was manufacturing steel joists at a time when a good building boom was underway. The new management headed by Iverson and Sam Siegal, the CFO, sold off the unprofitable half of the company. They then set out to build on the profitable bases of Vulcraft operations in Florence and in Norfolk, Nebraska. Iverson commented: \"Our strategy was what executives now call 'Focusing on our core competencies' although that's not what we called it. We just placed the few chips we had left on the businesses that were turning a buck.\" In 1966, Nuclear shifted its corporate headquarters from Phoenix, Arizona to Charlotte, North Carolina. Nucor's new headquarters, twelve thousand square feet of rented office space in a Charlotte office park, was a nondescript office staffed by 22 people on the fourth floor of a building. The office decor was Spartan, simple, and functional. Iverson later commented: \"I take pride in Nucor's little headquarters. To me, a big headquarters isn't grand. It is a waste of money- a gross tribute to some executives' ego.\" Since Nucor depended on imports for 80% of its steel requirements, Iverson decided to integrate backwards into steel production, building the first steel mill in 1969. The mill employed more than 500 people and had three electric arc furnaces which operated 24 hours a day and 5 ½ days a week. It made relatively simple products like steel bars that did not pose much competition to big steel producers. Later however, the company started producing a wider range of products, and began to compete with the big producers on cost efficiency, flexibility, and innovation. The company changed its name to Nucor in 1972 and in the same year added another joist plant in Indiana. Nucor started making steel decks in 1977 (with the addition of steel plants in Texas in 1975 and another in Nebraska in 1977) and cold finished steel 152
bars in 1979. In 2015, the company produced and sold over 25 million tons of steel. Nucor operates 23 scrap-based steel production mills. Nucor produces steel bars (carbon and alloy steel), beams, sheet / flat rolled steel, plate, steel joists, joist girders, steel deck, fabricated concrete reinforcing steel, cold finished steel, steel fasteners, metal building systems, light gauge steel framing, steel grating, expanded metal, and wire and wire mesh. Nucor’s HR Policies According to company sources, Nucor's recruitment process, reward system and work culture are responsible for the company's success over the years. The Nucor recruitment process focuses on employing people with the right frame of mind rather than people with relevant skill sets. The reward system at Nucor emphasizes fair pay based on productivity. Further, Nucor also established a fair grievance redressal system which allows any employee to approach the management with his or her complaints. Analysts are of the opinion that Nucor is a perfect example of how a company's organizational culture can influence its performance. Organization Structure Unlike most Fortune 500 companies which had around 8-10 management layers between the CEO and the employees, Nucor had only four management layers. Nucor sought to maintain lean staffing, minimal bureaucracy and a streamlined organizational structure. The most common joke at corporate headquarters was that with four promotions, a supervisor could become CEO. When Nucor first approached $1 billion in revenues, pressure increased on Iverson to add more layers of management. The same happened when Nucor reached the $2 billion and $3 billion milestone. Nucor's Success Formula Nucor's management strongly believed that the company's success was mainly due to its culture and not technology. Nucor attributes its success to decentralized management philosophy, performance based compensation, egalitarian benefits, customer service, quality, and technological leadership. None of Nucor's plants, whether built from scratch or acquired, are unionized, and Nucor is opposed to unions, believing them to be a destructive force in the US steel industry. No Nucor plant has ever held a successful union certification election, even though Nucor management has not engaged in the controversial \"union busting\" tactics adopted by 153
some companies, and has never laid off an employee due to a work shortage. Nucor workers refer to themselves as teammates, working together towards a common goal. Decisions are pushed down to the person closest to the problem, instead of up to management. That allows decisions and improvements to be made faster, and often better. Recruitment Unlike many companies which emphasized more on technical skill set, while recruiting, Nucor recruited people with right mindset even though they lacked technical skills. Commenting on the company's recruitment philosophy, James Coblin, General Manager - personnel services (1995), said, \"We can teach them to make steel.\" Nucor looked for people who could communicate frankly with others and work with minimum supervision. Reward System Nucor's employees were paid according to their productivity. Employees were given certain production goals, and their pay depended on realizing these goals. Though the hourly wages at Nucor were only $9 per hour compared to the industry average of $18 per hour, yet, Nucor employees earned more than their counterparts in the industry due to the company's reward system which linked pay with productivity. Commenting on the employees pay at Nucor, Jim Coblin, Vice President HR said, \"The only reason to work here is to try to get rich. Money is important to our people.\" According to analysts, Nucor's incentive plans not only encouraged the employees to perform well at individual level but also encouraged them to excel at the team level as the incentive plans took the performance of the teams into consideration. Nucor's incentive plans also resulted in healthy competition among the company's different plants. For instance, workers at Nucor's Hickman plant worked hard to break the production records of Nucor-Yamato plant. The internal competition among Nucor plants was one of the main reasons for Nucor's high productivity. Commenting on the competition among the mills, Daniel DiMicco (DiMicco), CEO said, \"We encourage positive competition that isn't destructive. Everybody wants to have leadership [in the company]. It goes down to the employee level.\" Work Culture Along with a good reward system, Nucor's management also focused on providing conducive work environment which fostered trust and teamwork among employees. Nucor empowered its employees to take decisions with minimal interference from the 154
top management. Each plant operated as an independent business unit. The General Managers at Nucor plants were given considerable freedom to take decisions regarding sourcing of raw-materials, finalizing marketing strategies, finding customers, setting production targets and HR requirements. One of Nucor's General Managers remarked, \"The beautiful part of Nucor is that we are not constrained. 4.1.6 ESSAR Steel ESSAR Steel is one of India’s leading integrated steel producers operates in four regions – India, Canada, the Middle East and the US, with an annual production capability of 10 million tonnes supported by a 20 million tonne pellet facility. The manufacturing operations comprise iron ore beneficiation, pellet making, iron making, steel making, and downstream facilities, including a cold rolling mill, a galvanizing and pre-coated facility, a steel-processing facility, an extra-wide plate mill and three pipe mills with coating facilities. Essar Steel produces over 300 grades of steel conforming to quality standards of international certification agencies. A global chain of Essar Hypermarts supplies customized shipments of steel to smaller customers. The company also operates India’s first online B2B steel marketing platform, called eHypermart, where customers can buy both steel and allied products. HR Decisions & Performance Improvement ESSAR, is committed to providing their employees outstanding developmental opportunities that align with their personal aspirations. ESSAR endeavor to build a culture of nurturing and holistic development thereby enabling them to actualize their potential and grow as robust professionals. ESSAR is an equal opportunity employer to cherish and value diversity of thought, gender, skill sets and experiences to match the diversity in the business lines. The commitment to nurturing and encouraging women in the ESSAR workforce has been prolific and it takes great pride in being partners in the value journey of our exceptional Women Leaders, many of whom today serve on the Boards of ESSAR group companies. ESSAR strongly believe in developing the power of human potential by designing and deploying world-class cutting edge talent management solutions. One of the primary employee value propositions is to offer meaningful career exposures to employees by leveraging world-class 155
performance and talent management systems and processes powered by SAP Success Factors (SAP: Stands for Systems, Applications, Products in Data Processing), providing cross-exposures and fast-tracking careers through internal mobility programs and designing unique cadre programs that meet specific business needs. ESSAR’s guiding philosophy makes learning the intrinsic responsibility of individual Employees, not a top-down initiative fueled by management directive alone. In line with “Total Rewards” approach, ESSAR offer both transactional and relational rewards to the employees. While transactional rewards emanate from the contractual agreement of employment, the relational rewards bear testimony to the employee's emotional involvement and personal stake in the welfare and prosperity of the organization. ESSAR is committed to an environment of coaching and mentoring that transforms the employee's contractual obligation into an emotional engagement, further nuanced with continuous learning and development. ESSAR promise Essarites a unique ESSAR experience that they would value and cherish throughout their career with ESSAR, and beyond. Performance Management System Employees’ key performance areas (KPA) identified at the start of the year will be the parameters on which employees’ performance will be reviewed. Mid-year review and appraisals help employees know how they are faring, build on their existing strengths, and improve themselves in identified areas. ESSAR’s immediate supervisors are mentors and coaches, who are expected to give employees ongoing feedback and coaching to develop themselves. High-performance and high-potential employees are identified for a fast-track programme, and rewarded with top-of-the-market compensation, retention bonuses and attractive training. Technology adopted for Automation of Business/HR Practices The Essar Group was one of the earliest adopters of Technology for automating Business/ HR Practices by being one of the first implementers of SAP in the early 90s. It recently became the first Asian conglomerate to implement all ten modules of Success Factors (having earlier implemented Performance Management, Goal Management, Employee Profile, Career Development and Planning and Succession Management). It 156
has received multiple laurels including the prestigious Learning Elite Awards (CLO USA), Best Project Implementation Award (SAP-Success Factors) and the SAP Ace Award for its Success Factors implementation which is globally recognized as a Best Practice by SAP. Performance and Goal Management: Essarites can use Success Factors’ cutting edge functionalities to create goals, cascade and align goals, view the Annual Business Plan, conduct Reviews and provide Developmental Inputs all at a click of a button! Career Development and Planning and LMS: Essarites can assign world- class cutting edge e-modules and continuing education options (Coursera) to address Development Gaps identified during Performance Reviews to actualize their Potential. It is a one stop shop for employees to bridge observed gaps and learns at their ‘own pace’ with over 1000+ customized learning resources available on the world-class Learning+ Platform. Succession Planning: Leaders across Essar actively leverage success factors functionalities to identify Key Critical Positions, Segment Talent according to the 3x3 Performance Potential Matrix and identify Successors- all at a click of a button! Social Learning: Essar’s world-class Social Learning Platform which enables knowledge sharing and collaboration by allowing employee to create blogs, wikis, discussion groups, use decision tools, conduct polls and surveys and learn from best practices across geographies and Essar Businesses. Compensation Planning: The entire Compensation Planning and Restructuring Process including disbursement of Annual Performance Linked Incentives is conducted online and therefore offers a transparent mechanism for allocating Rewards across Talent Segments. Recruitment and Onboarding: The entire recruitment cycle is effectively executed using the using the Success Factors Functionalities. Next Moves: Internal Postings as part of the Next Moves Process helps employees leverage the scale of the Essar Group and apply for permanent/ short term STINTs in other Essar Businesses. Innovation and Business Excellence: Essar is committed to Innovation and Excellence in Business Operations and the ESBE/ Steel Smart Portal helps 157
Essar employees (in the Steel Business Group) share their insights and ideas which are in turn evaluated by a Technical Board and applied (on merit). Essar Expertise Locator: Allows Essarites to book their Coaching Slots with senior leaders on a particular theme of interest all at a single click of a button. Employee Central: Employee Central is Essar’s world class HRIS platform which is the central repository for all data and employment information across locations. This forms the bedrock for each of Success Factors’ individual modules and is maintained by a dedicated group of Central and Business Administrators. 4.1.7 Jindal Iron & Steel Company Limited A leading primary integrated steel producer, JSW Steel is owned by the JSW Group. It started steel manufacturing in the year 1982 and today has six plants in India (in Karnataka, Tamil Nadu and Maharashtra). Its value-added portfolio includes hot-rolled steel, pickled and oiled steel, cold-rolled close annealed steel, galvanized steel, color- coated steel, electrical steel, and specialized rolled long steel. In 2015, the company produced 12.63 million metric tonnes of crude steel. Jindal Iron & Steel Company Limited - India's largest integrated galvanizing facilities in India accounting for 17% of total galvanizing production in the country. Engaged in Hot Rolling, Cold Rolling and Galvanizing business. Export of 75% of production to over 45 countries. Plant Locations - Vasind and Tarapur, Maharashtra Capacity - GP/GC 710,000 tpa, HR 280,000 tpa, CR 750,000 tpa Human Resources Development It is believed that people hold the key to achieve organizational excellence. The Human Resources function is the process owner for constantly upgrading people skills, realizing their potential and helping them lead purposeful lives. JISCO has deployed comprehensive systems of Recruitment, Performance Management and Training and Development. The HR function of the company caters to the needs of nearly 1,528 employees. Major Initiatives JISCO's guiding principles (Code of conduct) were adopted with an objective to integrate values and ethics in all transactions. 158
Job Swaps: The organization has done job swaps at the top management level to develop cross-functional competencies. Depending upon the skills and aspirations of the employees and the organizational needs, job rotations are done at all levels. One of the key HR initiatives last year was BRACE (Business Results Achievement through Competence & Ethics), an in-house executive development programme, for our young managers. Spanning over three months, it offered latest insights in managerial skills. Managers undergoing this programme were released from their daily operational responsibilities to enable them to focus on the programme. A SWOT analysis is being carried out for the entire management staff, to help them better understand their potential and prepare their individual development plan. Action Oriented Leadership programs are being initiated for senior level management, developing cross-functional areas, to keep them in tuned with the changing environment. In the point of Appraisals: The organization aims to reward merit. This is achieved by having in place, a structured performance appraisal system, which is upgraded keeping in abreast with the latest developments. The key components of our performance appraisal system are: a. Quarterly reviews. b. Measurement against goals, skill employment and potential to take up higher responsibilities. c. For the year 2001, Peer Appraisal has been introduced for senior level. The process of mentoring is being developed in-house to guide young talent. Employees have been sent abroad for benchmarking studies. Life-enrichment series are organized to focus on how to tackle challenges in business and personal fronts. Training & Development HRD Centre, a large training facility at Vasind is the focal point of training in the company. The faculty includes HR staff, line / functional Managers and external experts. Training in technical areas is supplemented with managerial and behavioural training. 159
Appraisals The organization aims to reward merit. This is achieved by having in place, a structured performance appraisal system. The key components of our performance appraisal system are: a. Quarterly reviews b. Measurement against goals, skill employed and potential to take up higher responsibilities. 4.1.8 VISA Steel Limited VISA Steel Limited is a flagship company of the VISA Group, which has business interests in Steel, Power, Cement, International Trading and Urban Infrastructure etc. VISA Steel is a leading player in the Special Steel, Ferro Chrome and Metallurgical Coke Business in India. It has its Registered office in Bhubaneswar; Corporate office in Kolkata and Branch offices across India. The Company has a strong backing of experienced Promoters, reputed Board of Directors and qualified team of professionals. VISA Steel’s shares are traded on the BSE and NSE. The Company is setting up an integrated 1 million TPA Special Steel Plant at Kalinganagar Industrial Complex in Odisha. The first phase of 0.5 million TPA Special Steel Long Product Plant is fully operational. The facilities include a 225,000 TPA Pig Iron Plant, 300,000 TPA Sponge Iron Plant, 500,000 TPA Steel Melt Shop (with EAF, LRF and VD) & 500,000 TPA Rolling Mill (Bar & Wire Rod Mill). The success of VISA Steel is due to the performance of its people. It focuses on its human capital by keeping our employees highly motivated with a sense of ownership and belongingness. VISA Steel strives to attract the best talent and develops them for a long and mutually rewarding relationship. The spirit of excellence drives all VISA Steel employees, who relish the thrill of challenging work assignments. VISA Steel offers a dynamic working environment, with merit-based growth and attractive remuneration. With a culture focused on continuous learning and development, on-the-job training is supplemented with appropriate need-based and value-added training programmes to foster growth. Management practices are designed to encourage transparency, develop employees to their potential and maximize their productivity. VISA Steel is committed to equal employment opportunities for attracting the best available talent, ensuring a cosmopolitan workforce and enriching the quality of life of its employees. 160
HR Policies The Human Resource Strategy evolves around three critical elements - Recruitment, Training & Development and Retention. Recruitment: VISA Steel has a recruitment policy focused on recruiting the right quality, at the right time, for the right position. Recruitment is done at all levels depending upon the requirement and vacancy, which is approved by the Managing Director. We recruit Management Trainees, Graduate Engineer Trainees and Diploma Engineer Trainees through campus interviews at engineering and management schools across India. Mid-career recruitment is done through advertisement, consultants and also through direct applications and contacts. The persons recruited can be appointed at any of our locations across Corporate Office or Registered Office or Plants depending upon the requirement of the organization and the aptitude of the concerned individual. Employees can be transferred from one location to another within VISA Steel and also from one company to another company of the VISA Group depending on exigency of work and business need. Training & Development: Training & Development of employees is of immense importance; hence we give prime focus to this important aspect of Human Resource Development. Training to employees is given on a need-based basis, which may be according to the need of the individual and / or the need of the organization. Training Need Assessment is also done at the time of appraisal. We have a system of in-house training where internal trainers impart training to the employees at regular intervals. For external trainings, employees are either sent for outside programmes or external faculties are invited to conduct training programmes at the Company premises. Both types of training programmes are useful in development of our employees. Retention Strategy: VISA Steel has been able to attract and retain the best talent from the industry due to its transparent and professional work culture and excellent working environment. We thrive on happy and motivated employees and have empowered them with responsibilities to develop a sense of organizational ownership. A combination of transparent rules and policies of the Company, congenial work environment, fast pace of growth of the Company, the vision and foresightedness of the management have enabled us to attract and retain the best talent in the company. 161
4.1.9 Bhushan Steel Limited The largest producer of auto-grade steel in India, Bhushan Steel ranks third on the secondary steel producer list in the country. Its products include Hot Rolled Coil, CRCA, CRFH, Galvanized Coil and Sheet, Galume Coil and Sheet, Color Coated Coils, Color Coated Tiles, High Tensile Steel Strips, Hardened & Tempered Steel Strips, Precision Tubes, HFW/ERW Pipe (API Grade), 3LP Coated Pipes, Billets and Sponge Iron. Performance Management System Performance Management System in Bhushan Steel Ltd. includes: (a) Planning work and setting expectations, (b) Continually monitoring performance, (c) Developing the capacity to perform, (d) Periodically rating performance in a summary fashion, and (e) Rewarding good performance. For an organization, the focus should not be just to have the best people; but also to retain them and get the best out of them. In BSL, the operative performance management system consists of: A process for communicating employee performance expectations, maintaining ongoing performance dialogue, and conducting annual performance appraisals; A procedure for addressing employee performance that falls below expectations; A procedure for encouraging and facilitating employee development; Training in managing performance and administering the system; and A procedure for resolving performance pay disputes. The Process of Managing Performance Supervisors and managers are responsible for managing the performance of their employees. Each company’s policy shall specify how the four phases of performance management will be carried out. Companies shall adopt performance management practices that are consistent with the requirements of this policy and that best fit the nature of the work performed and the mission of the organization. The performance management process in BSL is the combination of all these individual processes at different levels: Stage 1: Communicating employee performance expectations At the beginning, supervisors meet with their employees, establish expectations regarding their employees’ performance, specify how employees’ actual 162
performance will be measured and their success determined, and impart to them an understanding of how meeting these expectations will contribute to the achievement of the company’s mission. Stage 2: Maintaining ongoing performance dialogue Employees are responsible for meeting their performance expectations and their progress towards meeting expectations is measured, reported, discussed, and documented throughout the work cycle. To meet or exceed their efforts to support the performance expectations, supervisors use appropriate technique. When there is a change in expectations during the course of the work cycle, supervisors also communicate these changes and modify work plans as necessary. Stage 3: Conducting annual performance appraisal Now at the end of the work cycle, supervisors evaluate employees’ performance during the past year compared to their performance expectations. They use verifiable information collected and documented throughout the cycle to determine the extent to which actual performance has met the expectations defined in the work plan. The evaluation is documented by the H.O.D. on a standard form defined by the company. The company has different appraisal forms for different work forces like workers, staff and senior staff. BSL uses a 5-level rating scale for reporting overall performance. Prior to discussing the completed performance appraisal with an employee, supervisor review the appraisal with the next level manager to ensure that ratings are appropriate and consistent. Then supervisor signs and date the completed appraisal indicating that the employee is reviewed on his/ her performance for the last year. Stage 4: Providing actionable coaching and feedback By using the appraisal form the company becomes aware of the performance of all the employees and their remarks which were given by their HODs. Addressing poor performance: In case of the poor performance, the supervisor documents the performance that falls short of expectations by preparing a corrective action plan or other documentation. The documentation specifies: The performance problem, The steps to be taken to improve performance, including the time frame of the improvement, The consequences of failure to improve, and 163
A follow-up date These performance deficiencies that occur during the performance cycle are referred in the annual performance appraisal. In BSL, to overcome the poor performance, the company provides training to the employees. Appraisal Technique Used in Bhushan Steel Limited The annual appraisal in Bhushan Steel uses GRAPHIC RATING SCALE technique to identify the performance of the employees. In this method, an employee’s quality and quantity of work is assessed in a graphic scale indicating different degrees of a particular trait. The factors taken into consideration include both the personal characteristics and characteristics related to the on-the-job performance of the employees. For example, a trait like Job Knowledge may be judged on the range of average, above average, outstanding or unsatisfactory. Here the performance dimensions are measured on the scale of 10 to 2. The need for Performance Ratings: Whatever may be the model used, final assessment (in the form of ratings or assignment of points), becomes very useful for development as well as administrative decisions. If appraisals do not result in such ratings or points being assigned to appraises on different KPAs (or objectives) and behavioral and managerial dimensions, it becomes difficult to know subsequently how well the individual is progressing. PMS Data Used for HR Decisions and Performance Improvements Effectiveness of performance appraisal system depends on how well the data generated by the system are utilized and to what extent the employees see the data is being utilized. Appraisal data can be applied for development decisions as well as for HR management. The following categories of development decisions could be taken on the basis of the appraisal data: I. Organizing company training programmes; ii. Sponsoring executives for external training; iii. Job rotation; iv. Career development; v. Potential development; and vi. Delegation. 164
The following HR decisions could also be made on the basis of appraisal data: I. Performance rewards; ii. Placement and transfers; iii. Promotions; iv. Change of duties. In Bhushan Steel Ltd., the appraisal data is used for identifying the training needs. Basically they follow a system of \"Appraisal Based Training\". Here the company on one end identifies the areas of improvement and on the other hand develops the employees by giving them coaching towards their weaknesses. Training in BSL In BSL, the Performance management system has Training as an important part for the growth and the development of the person as an employee as well as an individual. Training in BSL starts from the identification of its need in the company and for that the company uses tools called Training matrix and Annual training calendar. Induction / Orientation: This is the training that is mandatory for each employee to take when they enter in the organization. This training is about the culture of the company, its safety measures and other expectations that company has from its employees. It is a manufacturing industry, and safety is one of the major things that they take care of, so that no one gets hurt or injured. Safety training is given to each employee when they join in the company. Appraisal based training: This is the training given to the employees who are presently working in the company. When their performance is measured, they are assessed and the training is given on the identified weaknesses. That is why it is called appraisal based training because this training is given after doing the appraisal and it is basically meant to develop the employees. Appraisal data is used to develop the employees and Bhushan Steel do it through identifying its employees training needs, and organize company’s training programmes. Training Needs Analysis The training need analysis is done on the basis of the annual appraisal of the employees. The supervisor is the person who always works with his employees; he knows their strengths and weaknesses. So, while filling the appraisal form, if he thinks that any 165
employee is lacking somewhere due to any problem like communication, motivation or any other technical thing, he identifies a training need for that employee in his/ her appraisal form. The training in BSL is divided into two parts i.e. Technical and Non- Technical. The training sessions are identified through the training matrix and the training calendar of the company. Steps involved in making the Annual Training Calendar are: Step 1: HR department send a Training matrix to the H.O.D. of every department. This matrix consists of the names of the employees of the concerned department and the Head of the Department fill that matrix with respect to the employees’' technical and non-technical abilities. This training matrix is then send back to the HR department. Step 2: Now the data is collected by the HR department Step 3: Costing is the main factor that affects the training needs of a company. The next step is to calculate the cost of the prescribed training. After getting approval from head of the HR department, further moves are taken. Step 4: As the cost of the training is approved, the Annual Training Calendar is prepared. In which the training sessions are bifurcated into the 12 months period. 4.1.10 OCL Iron & Steel Ltd OCL Iron & Steel Limited [OISL] was established in the year 2001-02 as coal based Direct Reduced Iron [DRI] production unit at Rajgangpur, District Sundergarh, Orissa. It is strategically located in the Iron Ore and Coal rich belt of Eastern India with Govt allocated Iron Ore and Coal Blocks in proximity. OISL further forayed in to steel making by setting–up Steel Melt Shop (SMS) and billet casting facilities. Through the Memorandum of Understanding [MoU] dated 27th Nov 2004 with Orissa state Govt., OISL has affirmed their commitment to establish an integrated steel plant of capacity 0.25 MTPA. OCL Iron & steel Ltd (OISL) has taken initiative in expansion of the plant by setting-up additional DRI Kilns, Coal Washery, Power Plant, Steel Melt Shop, Rolling Mills and associated Raw Material Handling System, Utility & Electricals. Connectivity to the state grid was established for the export of excess power generated in the plant. The company has been provisionally allocated mines or iron ore at Kundaposi near Barbil and Coal at Radihkapur near Talcher. This makes OISL self-sufficient in terms of its raw 166
materials. OISL has further plans to develop mines and go for Iron Ore Benefication and Pellet Plant at the pit head. HR Vision To enable OISL people to be a family of world class professionals with optimizing human capital through restructuring ethics with a strong commitment to business and society. HR Policies The coverage of OISL HR Policies on the basis of functions of HRM are classified as follows: 1. Social Responsibility: Equal treatment of employees by providing healthy, safe and conducive working conditions. 2. Employment Policies: Provision of equal employment opportunities- selecting the candidates based on job requirements. 3. Promotion Policies: Promotion Policies would attempt to provide fair treatment to employees based on performance, seniority at work. 4. Development Policies: These policies also cover the areas like career planning and development, performance management, organizational change and organizational development. 5. Relations Policies: Relations Policies cover the areas of human relations policies such as motivation, morale, communication, leadership, grievance procedure, disciplinary procedure, employee counseling, etc. These policies also cover the areas of Industrial Relations like Union recognition, Union Representation, Collective Bargaining, Prevention and Settlement of Industrial Disputes, Participative Management, etc. Taking into consideration of the above parameters, HR Policies are formulated as under: Functions of HRM The function of HRM can be broadly classified into two categories, such as: (1) Managerial Function & (2) Operative Function. Managerial Function: Managerial function of Personal Management involves Planning, Organizing, Directing and Controlling. All these functions influence the operative function. 167
a) Planning: It is a pre-determine course of action. Planning is determination of personal programs and changes in advance that will contribute to the organizational goals. b) Organizing: Organization is a structure and a process by which co-operative group of human beings allocates its task among its members, identifies towards common objectives. c) Directing: The next logical function after planning and organizing is the execution of plan. The basic function of Personnel Management at any level is motivating, commanding, leading and activating people. The willing and effective Co-operation of employees for the attainment of organizational direction. d) Controlling: After planning, organizing and directing the various activities of the personnel management, the performance is to verified in order to know that personnel functions are performed in conformity with the plans and directions. Controlling also involves checking, verifying and comparing of the actual with the plans, identification of deviations, if any and correcting of identified deviations. Thus, action and operation are adjust to pre-determined plans and standard through control. Auditing, training Programmes, analyzing labour turnover records, directing moral surveys, conducting separate interviews are some of the means of controlling the Personal management function. Operative Function: The Operative function of human recourse management is related to specific activities of Personnel Management i.e. employment, development, compensation and Employee relations. All these function are interacted by managerial function. Further, these functions are to be performed in Conjunction with management function. Performance Management System in OISL Employees are considered for promotion based on annual performance appraisal report including annual increment. Although the said practices are followed seriously by the HR Department with proper care and confidence, in many cases, genuine employees are debarred to get promotion and good annual increment due to biasness and favoritism of bosses/ Departmental Head. In true sense, real performance management system is absent, particularly assessment of workmen’s performance in OISL as opined by majority union officials and Workmen. 168
Career Planning and Development Career goals are the future positions one strives a part of a career. Career planning is the process by which one selects career goal and the path of these goals. Career development is the process of designing and implementing goals, plans and strategies to enable the employees needs while allowing individuals to achieve their career goals. OISL Promotion policy provides staff and executives for promotion in every two years subject to excellent performance based on Performance Appraisal reports. The young employees are encouraged for elevation by assigning them higher responsibility through Performance development assessment and proper training on the basis of identification of Key Performance attributes. However, organization also allows for outside talent in certain cases where internal competent people are not available, when major expansion, diversification and growth plans are in offing. In case of non-performers, the company use to take disciplinary action by issuing warning letters and stoppage of annual increment etc. A long term focus of career planning and development will increase the effectiveness of human resource management. Both, employees Career as well as organization’s Development are taken into consideration while preparing career planning policy. Rewards and Recognitions Since inception, OISL created a culture of rewards and recognitions through celebration of various achievements, events and recognizing the contributions behind such success. Innovation, Creativity & Competition OISL introduced numerous initiatives which seek to enhance the creativity, Innovation, functional aptitude and team work of employees. These initiatives include national open competition for executive talent. Knowledge Management & Skill Up gradation in OISL To meet our ultimate objective of becoming a learning organization, an Integrated knowledge management system has been developed, which Facilitates tacit knowledge in the form of learning and experiences of employees to be Captured and summarized for future reference. Training and Development OISL training and development policy offers competitive advantages by removing Performance deficiencies, making employees stay long, minimizing accidents and Meeting future employee needs. OISL subscribes to the belief that efficiency, 169
effectiveness and success of the organization, depends largely on the skills, abilities, and commitment of the employees. OISL training policy envisages a minimum of 4 man days of training per employee per year. We have developed our own comprehensive training infrastructure. This chapter has discussed the performance management system observed in global as well as Indian steel industries. To understand the implementation of performance management systems in global manufacturers, the cases of five global as well as five Indian steel industries have been discussed in detailed. The performance management system, which the firm intends to implement will enable it to satisfy the expectations of its stakeholders in the long run. The firm will follow all important phases that are related to the new strategy to ensure the system is aligned to the long term vision that guides its operations in the industry. More importantly, performance management systems implemented by the firms will focus on opening up decision making processes to enable employees to develop their professional skills in the long term. As a result, this will allow employees to contribute to the long term success of the organization by proposing valuable ideas which will improve the quality of results attained. Appraisal systems which the organization will use will enable it to be fair to all its employees to encourage them to attain good results in their respective workstations. In summary, three clear trends that affect performance management systems have emerged. First, individual values and needs are diverse and changing, and the heterogeneity of the workforce is increasing. Second, technology is embedded into almost every aspect of work, including performance management. Third, global expansion is increasing the diversity of employees and the cultural contexts in which they work. Industrial organizations must consider all three trends for performance management systems to be aligned with organizational goals and individual needs. 170
CHAPTER - V PERFORMANCE MANAGEMENT SYSTEM OF ROURKELA STEEL PLANT
CHAPTER - V PERFORMANCE MANAGEMENT SYSTEM OF ROURKELA STEEL PLANT The earlier executive performance appraisal system (EPAS) was introduced in Steel Authority of India Limited (SAIL) in 1986. The system has continued since then with minor modifications. Today SAIL exists in a world that is substantially different from what it used to be in t h e eighties and nineties. In tune with the changing world, lessons learnt from excellent companies all over the world, new opportunities and challenges of globalization, a need was felt to change the appraisal system of SAIL. In 2007, inputs from various reviews conducted in the past, interaction at plants/units level with t h e cross section of executives, executive associations, top management and study of best practices of other organizations worldwide in PMS were used to review and design the new EPMS. The Executive Performance Management System (EPMS) attempts to address the current needs of the company for building leadership among SAIL executives. Similarly, in January 2015, a new system of Non-Executive Performance Management System was introduced in SAIL. According to this, the existing system of assessment of Confidential Character Report (CCR) i.e. Performance Appraisal System of the non-executive employees by Reporting Officers and Reviewing Officers, through manual mode by filling up of CCR forms, shall be done through the online system and the same system will be made available on SAIL Intranet for the Reporting Officers as well as Reviewing Officers. 5.1 Executive Performance Management System The Executive Performance Management System is aimed at performance and development planning and assessing the performance, potential, competencies and values of executives’ up to E-7 grade. PESB format for E-8 and E-9 grades will remain unchanged. Objectives To enable employees to plan their work, utilize their capabilities and maximize their contributions. 171
To create a performance culture through continuous performance improvements of individual employees, teams and the organization. To identify and develop leadership talent for the future. Components Performance Planning. Assessing and Developing Competencies for the future. Development Planning On-line system of EPMS Performance Review and Assessment Final Performance categorization of Ratings by the Performance Management Committee (PMC) Communication of Performance Rating to the Executives (Transparency) Assessment of assessors. Leadership development and Competency building through 360 Degrees Feedback and Assessment and Development Centers Team appraisals Performance linked pay and other rewards 5.1.1 Performance Planning Purpose and Philosophy Performance planning will contribute significantly to role clarity, competency utilization, potential development and performance improvements. By the use of this component, the following outcomes are expected to be achieved: The departments will be clear about their activities and key performance areas (KPAs) at the beginning of the year. Every department or section will bring a sharp focus on its key activities, processes involved and planned results / outcomes. Every officer will be clear about what activities he/ she is expected to undertake, with what time investments and with what results/outcomes. There will be clear cut understanding of the way each individual executive’s contributions are related to and/or effect the achievement of departmental and organizational goals and achievement of APP. The process is also expected to lead to better time and competency management of executives and thus contribute to organizational efficiencies. 172
Planning of performance is to be done at t h e individual, sectional and departmental level. This will flow from a Departmental Goal Setting Cascade exercise, which will be done in a workshop form. The Goal Alignment Cascade Workshops would be a process of sequentially breaking down organizational objectives and targets into those of various levels in the organization, i.e., Plants/ Units and then Departments to Individuals concerned. The individual KPAs (Key Performance Areas) would also include KPAs over and above these cascaded ones which are applicable to Units, departments, functions and individuals. Operational Details In the beginning of the performance year (i.e. April every year), all departments are to plan their Team & Individual Key Performance Areas (KPAs) in line with the departmental goals through a Goal Alignment Cascade Workshop keeping in view the APP of the Plant/ Unit. Individual KPAs along with maximum marks/weightages and criteria for evaluation are to be assigned in consultation with Reporting Officer and concurrence of HoD. The KPAs shall have total weightage of 60 points for E1 to E5 and 50 points for E6 & above level executives. KPAs are to be further classified as under: Routine KPAs (i.e. jobs of routine nature and at the same time critical contributions of the officer like filing of statutory returns for an accounts officer or plant supervision for a shift in-charge); Non-routine KPAs / Special Projects: Non-routine KPAs are the key contributions of the role holder other than the routine activities. Special projects are to be undertaken at the initiatives of the executive concerned. Special projects are those which are not a part of the current job, tasks and responsibilities, but undertaken by the individual on his initiative to make a difference in the organization and demonstrate his leadership competencies. These projects may become critical inputs for future leadership assessments. The special project KPAs should be contributions beyond the role of the officer concerned and are meant to develop future potential leadership qualities of the individual. Senior officers should encourage their juniors to undertake at least one special project in a year and allocate around 5% of the officer’s time for the same. As we go up in the managerial hierarchy, it is envisaged that the percentage of Non - routine KPAs / Special Projects will increase. 173
The performance plan to also indicate the time to be spent by each executive on each of the KPAs and should have a shared understanding between the Individual Executive & his Reporting Officer of the nature of activities to be undertaken, time estimates and linkages with departmental goals or targets. Goal Alignment Cascade Workshops / Departmental Planning: The KPAs will be based on the Performance Planning and Goal Alignment Cascade (PP&GAC) Workshops to be conducted at the beginning of April each year. The responsibility of conducting the performance planning and goal alignment workshops rests with the respective HODs and this need to be completed by 15th April each year and with full involvement of all executives of the department. The executives should come prepared to such workshops with their preliminary draft KPAs based on their understanding of APP, previous year’s performance and the new thrust areas and contributions they propose to make. The departments will ensure that the workshops identify the critical activities required to be undertaken and completed by each department or section or function during the year with specific time frame and milestones. A large part of the KPAs for each officer would be planned by the end of this Workshop and each executive will be required to only document the same taking into consideration his/her unique contribution, role requirements and opportunities to make an impact. During the finalization of KPA, care is to be taken that the KPAs are planned involving SMART features i.e., Specific, Measurable, Attainable, Realistic and Time Bound. Individual as well as Reporting Officer should also try to prepare measurable criteria for evaluation of KPAs so that performance against KPAs can be measured objectively. 5.1.2 Assessing and Developing Competencies for the future – Competencies, Potential and Values Purpose and Philosophy By now it is well established that as one moves higher in managerial hierarchy, the managerial and leadership competencies become more critical. In future, younger managers will be taking up leadership and top management positions in SAIL. For facilitating their success at a later stage, managerial and leadership competencies need to be developed from early stages itself. To prepare executives for 174
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