The Performance Ethic Programme (pep) in Tata Steel

Implementation

Tata Steel CEO on 1 April 2000 launched the Performance Ethic Programme (PEP). Also called as Performance Ethic, it was to delineate a code of conduct relating to performance. PE programme was designed to nurture and retain employees and ensure that a career with Tata Steel is the most rewarding. Following were the objectives of the programme:

To increase the focus on attracting, developing and retaining people - the most valuable asset. This was done by

1. Creating development opportunities for rapid growth of Tata Steel employees.
2. Enhancing performance management by setting targets appropriately, and evaluating then with transparency, providing specific and actionable feedback and implementing individual development programmes.
3. High performers were rewarded and performance improvement policy created

To improve the quality and time taken for decision making by increasing freedom provided and enhancing accountability

CEO is the one to initiate such change, but the success depends on the support from his senior team to steer the change. Hence, a PEP steering committee was formed, consisting of high achievers with long stake in the organisation. Also, a Performance Ethic Team was formed, Mishra was appointed Assistant General Manager (Performance Ethic).

The first challenge faced by the PEP team was “how to develop a positive attitude in people towards PEP; establish the urgency for the change and explain the change management process. To be successful, everyone must have a strong conviction in the change process – everyone must cross the threshold of conviction”, Dr. Irani declared.

To establish a sense of urgency for the change, a ‘Dialogue Session’ was organised wherein all officers could vent their grievances, and give their views and suggestions and present their demands. The discussions were free, frank and uninhibited.

Tata Steel with its state-of-the-art facilities, technology and manufacturing processes, now needed to focus on people. To realise the growth aspirations, it now needs to focus on people processes. This is done by the PE process. It will redesign the organisational structure and processes to create a high performing organization of motivated and energized managers. These can be achieved only when there is a radical change in the mindset of organisation as a whole which is currently inured to the concept of lifetime employment.

Elements of PE Programme

It proposes a new organisational structure to enhance growth of businesses, decision-making flexibility, accountability, and encourage high levels of teamwork among managers and units. The new structure will have five work levels based on their impact on company performance (Impact Levels 1 to 5). Competencies required for each job in each impact level is determined. Then executives are accessed for their competencies. Finally, matching the requirement of jobs with competencies of executives will be done and not the other way round. The process neds to be objective, scientific and systematic. The evaluation needs to be impartial, transparent and fair. Every job must be staffed with the officer best suited for it. This will be done over the next one and half years.

PEP seeks to introduce a new Performance Management System (PMS) and a new Human Resources (HR) policy.

The PMS will include setting Key Result Areas (KRAs) for every level, defining clear measures of performance and targets, and regularizing performance reviews

The HR Policy start a system to identify, reward and nurture strong performers and provides development opportunities for everyone. Appraisals will be transparent and fair. Compensation will be marked to market and linked to performance. Performance feedback based on the targets will be linked to development and compensation of employees.

The staffing will happen based on the importance of the jobs in the company’s operations, growth and business performance. The importance of any job at any time will depend on the company’s strategy. So, today’s not so important job can be converted into an important job tomorrow and vice-versa. This process began with 100 most important jobs, followed by 250-300 jobs in Nov 2000, and for the remaining jobs in the second half of 2001. Employee job fitment as defined above will be done including the employees past performance, and assessed future potential assessed using development workshops. Over the course of one and half years, all officers will go through the assessment process.

Also, implementation of PE programme could well end up seeing several executives ‘downgraded’ according to current job profile. Those who add less value through their jobs would simply fall into a lower level. Also, promotions without any real change on the job content will stop. It would lead to faster decision making as the barriers are reduced and lower level management is empowered.

Communication during PEP

The content, timing of the communication had to be planned. Also, CEO was going to be the lead in the communication initiatives. The content will be prepared by the PEP committee, and face to face communication was preferred, and intranet was leveraged to increase interaction. A website was also created to spread awareness about PEP. CEO shared monthly progress reports about the PEP with all executives and departmental heads. The letters were written in the second person for a more direct impact

As the first cycle started, the focus of the communication was on organization redesign, the criteria for assessors and the assessment process, followed by information about the staffing process. A Dialogue Session with the wives of executives was organised (attended by over 1000 wives) so that they can clear any doubts which they may have, as they were important influencers of executives

“The focus was on the positive and the raising of hopes for a brighter future was overplayed as against the absence of talk of severance. We would also need to train managers to break the bad news to people. That was going to be stressful.” Four senior executives were assigned to be as “Listening Posts”, so that employees can share any concerns or feedback that you wish to communicate, which could be anonymous as well.