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Performance Management and Improvement in L&t - Case Study

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Table of contents

  1. Problem Statement
  2. Theoretical Causes of Problem
    Organizational Solution
    Performance Management and Improvement
  3. Conclusion

Larsen & Toubro (L&T) is a construction, manufacturing, engineering and technology based company where as L&T InfoTech focuses on Information technology and software services. It is one of the largest companies in India’s private sector. L&T has an international presence with a global spread of its branches. It continues to grow its global footprint with offices and manufacturing bases in numerous countries.

L&T was founded in Bombay (Mumbai) in 1938 by two Danish engineers, Henning Larsen and Soren Toubro. Both of them were committed to develop India’s engineering capabilities to meet the growing demands of the industry. Key features of L&T are Innovativeness, Financial Performance, Ethics and Transparency, Global Competitiveness, Talent Management Practices, Quality of Products and Services, Depth and Quality of Top Management. L&T’s business is supported by wide marketing and distribution network and has established a reputation for strong customer support. L&T believes that progress must be achieved in harmony with the society and the environment. A commitment to community welfare and environmental protection are also integral parts of its corporate vision.

Problem Statement

The digitization and productivity enhancement initiatives taken by the company boiled down to redundancies of roles and had to shed as a group of 14,000 in the six month.

Theoretical Causes of Problem

L&T being highly reputed and recognized globally, the quality standards are very high in the company where performance is important because having the employee with the right skill and right knowledge is the main aim as the firm will not suffer in the long run.

Due to advancement in technology and need for skilled workforce, the process of recruitment and performance management has become more stringent and structured in L&T. How aptly the resources are being used in the recruitment process and during their serving period in the company and managing the performance of the employees is an issue whereas hiring the right candidate for the job after scrutinizing the applications and sustaining the workforce is the main challenge of the L&T while maintaining the employee diversity.

Typically the company recruits 75% of the candidates through various campuses and 25% of them through web based recruitment. Company focuses on campus recruitments where mass hiring of the employees takes place but with very low skill set and faint job role attitude. Slow growth in performance of employees and lack of right skill set led to the overall lay off of employees of the company.

Organizational Solution

Recruiting good candidates is every company’s job. Human resource manager usually take the lead and coordinates the required activities, but every employee, every manager and every supervisor of the company has a role and share in the benefits of recruiting best applicants for the required position in the company. Flexible benefits for employees are provided in the sense to boost the overall job satisfaction and improve the productivity for the job role with a work-life balance. Performance management and improvement is carried out to improve the efficiency of the employees and to constructively improve the performance of that employee from the downfall by providing training and peer-manager discussions.

L&T considers people as the most important asset. They have teams with a diverse profile that include people from various backgrounds such as technologist and architects .The company choose people that are motivated in them self and have a strong sense of commitments with their clients. The people of this company have a nark in which they can tackle clients and going for an extra mile for appreciations The company is maintaining a strong value driven professional work environment where every employee feels respected and fulfilled. The company follows competency development approach which would allow them to maintain talent in the company.

HR Policies adopted by the company are:

  1. Selection and recruitment;
  2. Flexible Work arrangements;
  3. Performance management and improvement;

Larsen & Toubro follows a competency-based recruitment methodology, wherein the competence based job analysis basically means writing job description based on skills rather than job descriptions. This will emphasize what the employees must be capable of doing rather than having a list of duties they must perform. Recruiting good candidates is every company’s job. Human resource manager usually take the lead and coordinates the required activities, but every employee, every manager and every supervisor of the company has a role and share in the benefits of recruiting best applicants for the required position in the company.

Strategy applied by the company during recruitments:

  1. Knows the job requirements;
  2. Know what skill is required for that job;
  3. They know what they are looking for in the candidate;
  4. They know how to structure an interview.

This competency-based recruitment finds the employees who will be technically be competent and fit the company culture with the following strategies:

  • High performance work system – this kind of recruitment and selection application would help the employees to work in a self motivated way. The team member would have better communication efficiency as all will have the same sets of knowledge.
  • More strategic – this would help the organization to have a better ways of recruiting people by describing their job in more measurable, observable and behavioral competencies.
  • Performance management – aiming towards the employee’s training, appraisal and rewards on fostering rewarding the skills and competencies he or she needs to achieve his or her goals.

L&T expects its employees to maintain a high standard of conduct and work performance to make sure the business maintains its good reputation with customers and clients. Good personal conduct contributes to a good work environment for all. Based on the responsibilities career and private life the employees, the employees will require flexible work arrangement from their employer. The employees are given the freedom to send in their request based on their requirements. But the company will also have to look into the employments opportunity act. L&T will look in to the request based facts and circumstances, later decide whether to accept or reject the request of the employee.

Flexible work schedules have positive effects on employee productivity, job satisfaction. This has become quite popular in the last few years trying to reduce staff cost without having to make redundancies during recession. It can also help provide staff cover outside normal working hours and reduce the need for overtime.

This work flexibility will have the following benefits:

  • There will be a reduction in absenteeism which are unplanned, lateness and stress;
  • This will improve the staff availability and travel shift work;
  • The employee’s commitment would increase so this would increase the efficiency of the organization;
  • Give suitable work hours which would be beneficial for the employer as well;
  • The employee can work while kids are at school;
  • The employee can do more part-time work e.g. 2 days and 3 days;
  • Longer hours – less days.

This type would also improve ways of getting worked done so the building or the floor is utilized to its full capacity.

Performance Management and Improvement

The company follows the critical incident method, the manager keep a recorded of positive and negative contribution of the sub-ordinate‘s work related behavior. For company like L&T, the project manager of that particular team would handle this performance review and here will be particular time set by the management of the company for this. The manager would meet openly and constructively discuss the performance of that employee usually a general discussion. Based on the performance, trainings would be given to those employee if their performance is very bad The manager should make a note of that team should have notes and copies that which is required to should to the higher authority.

L&T uses this performance to improve the performance of the company. If the company is not happy with the performance of the employee the company may end that employees employment. Depending on the circumstance, the performance improvement action may include warning, counseling or retraining. L&T requires a certain minimum standard of performance which will be made clear to the employees that this would also help in appraisal. But if the employee does not meet to the standards of the company L&T will take appropriate action or in cases of serious misconduct or breach of policy may dismiss the employee. Every employees of L&T must understand their responsibilities and it is expected out of the by the company to meet the standards as required by L&T. The company also provides a chance to the employee to defend themselves before any action could take place.

  • Setting the departmental goals;
  • Define expected results;
  • Helps in performance review;
  • Helps in providing feedback;
  • Standards may be unclear; halo effect, central tendency, leniency, bias can also be problem;
  • Difficult to develop;
  • Can cause disagreement among employee and may be unfair if all employees are, infact excellent;
  • Time consuming;
  • Difficult to rate or rank employs relative to one another.

We need to understand as to why this performance improvement is required, firstly because they serve a useful career planning purpose; they provide an opportunity to review the employee’s career plan for his or her strength or weakness. Secondly this would help the manager and his/ her sub ordinate to develop a proper plan to identify the sub ordinates deficiency and reinforce the right strategy in overcoming that deficiency. Thirdly this would help the employer to turn their strategy’s goals into specific employee’s goal; this can be done only if the performance is reviewed periodically.

Critical incident method has several advantages such as this makes the supervisor think all over the year about the appraisal of the sub ordinate. It also provided examples of good and poor performance that the supervisor can use to explain the person’s rating but the down side of this critical incident method would be that the manager cannot use this foe comparing employee’s performance with others.


Larsen and Toubro (L&T) expects its employees to maintain a high standard of conduct and work performance to make sure the business maintains its good reputation with customers and clients. Good personal conduct contributes to a good work environment for the employees and the company. This HR policy and procedure of L&T provides the policies and procedures for managing and developing staff. It also provides guidelines which will be used to administer these policies, with the correct procedure to follow. In fact, the above mentioned facts are one among the HR policies, time to time it will be necessary to modify and amend some sections of the policies and procedures, or to add new procedures.

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