Govt meddles with Performance Appraisals in PSUs

The Govt first does not increase salaries as expected...now it pre-determines how many outstanding performers can be there in a PSU.. How can performance be pre-determined? By fixing a cap on how many people can be marked as Outstanding Performers, are they not actually suppressing performance. On one hand this Govt talks of performance linked pay and on other hand they are putting a cap!!

Incidentally this is a part of Rao Commission Report.. and this too should have been objected by OSOA.. and all PSU associations!!
http://m.economictimes.com/PDAET/articleshow/4078175.cms

POLICYCentre reworks appraisal system for PSU staff5 Feb, 2009, 1055 hrs IST, Sushmi Dey & Dheeraj Tiwari, ET Bureau

NEW DELHI: The government is putting in place a performance management system in public sector companies to have a uniform mechanism for distributing performance-linked bonus to employees. At present, these companies have their own parameters for rewarding executives.

“The second pay revision committee proposed to develop a robust and transparent performance management system for central public sector enterprises (CPSEs). The proposal has found favour in the government. The department of public enterprises and other administrative ministries are now working in conjunction to put the new system in place,” a department of heavy industry official, who wished not to be named, said.

Under the new system, the government will ask CPSEs to adopt a “Bell Curve Approach” while grading its executives, he said. Only 10-15% of the executives in a public sector undertaking will be graded as “outstanding or excellent” in their performance appraisal. According to the new system, about 10% of officers in a company would be graded as “below par”, he added.

Some companies have a similar appraisal system. “We already have a sophisticated performance management system in place, which is much like the new one that the government has prescribed,” Bharat Heavy Electricals (Bhel) chairman and managing director K Ravi Kumar said. According to a Bhel official, the company is the first PSU to implement electronic network-based paperless appraisal process. In Bhel, the executives set key result areas (KRAs) and targets for themselves, which are assessed and revised every year by a committee.

When the new system is in place, all CPSEs will be mandated to sign MoUs with their respective controlling ministries. The MoU rating will then form the basis of performance-related pay for executives in these companies. “CPSEs that do not enter into MoU will not be eligible for any performance-related pay,” the official said.