World of Work at Thermax

A REPORT ON

"LINKAGE BETWEEN PERFORMANCE MANAGEMENT AND COMPENSATION AND BENEFITS AT THERMAX GLOBAL HOUSE”

WAKDEWADI, SHIVAJINAGAR, PUNE

Under the Guidance of

Mr.Sharad Gangal,

Executive Vice President Member,

THERMAX LTD THERMAX GLOBAL HOUSE, MUMBAI PUNE HIGHWAY,

SHIVAJINAGAR,Pune-411003.

Submitted by

Prof. Vivekanand Gaikwad,

HR Department,IMERT,Pune

Duration :- 3 May 2018 to 8 June 2018

 OBJECTIVES:-

To study the Performance Management System Cycle of Thermax Pvt Ltd.

• To study the performance planning through Individual Contribution Plan.
• To study the performance Appraisals Methods.
• To understand the salary breakups and components.
• To understand the variable pay.
• To understand the compensation philosophy and compensation management system.

Brief Introduction of the concept:-

Performance management is a system designed to identify the ways to achieve organizational goals through constant assessment and feedback leading to improvement of employee performance. Performance management, unlike the performance appraisal or annual evaluation process, is an ongoing assessment of employees in a manner geared to match their goals to the organizational goals. It also makes strong use of goal-setting and metrics to identify progress and areas of individual strengths.

When most people hear the term compensation they think about "what a person is paid". Although this is true, it is only one aspect of a complex topic. Compensation includes not only salary, but also the direct and indirect rewards and benefits the employee is provided with in return for their contribution to the organization. To determine compensation, organizations should develop a compensation and rewards program. This type of program outlines an equitable process for compensating employees. A well-structured program with a good balance of wages, benefits and rewards will support an organization to remain competitive in today's labour market and ensure sustainability in the future.

Company Profile:-

Thermax Limited is engaged in the business of manufacture and sale of boilers, heating and cooling equipment, industrial chemicals, and water and waste management equipment. The Company also undertakes turnkey contracts for power plants, and provides operation and maintenance services for the same. The Company operates through two segments: Energy and Environment. The energy segment includes products, such as boilers and heaters, absorption chillers/heat pumps, power plants, solar equipments, and related services. The Environment segment includes products, such as air pollution control equipment/systems, water and waste recycle pant, ion exchange resins and performance chemicals, and related services. Its products include air pollution control products; chemicals; steam accessories; engineering, procurement and construction (EPC) power plants, and absorption cooling products. The Company caters to both domestic and international markets.

Learning from the world of work:-

• Performance Management System Cycle:-

PMS Cycle starts with setting organizational and individual goals, after setting the goal performance is always monitored by the superior in the organization. Mid-year review is conducted after six months.

Performance appraisals is conducted after the end of the year and give the rewards and punishments to their employees as per the performance of employees, during the process supervisor and manager always motivate to their employees to increase the performance.

• Goal Book is maintained through Individual contribution plan:-

Performance planning done through the individual contribution plan (ICP) with the goal alignment. Alignment is done from top to bottom and every subunits, HOD, Manager and individual employees are allotted the goal, that they are supposed to attain within given time.

• Individual Contribution Plan (ICP) Categories:-

i. Customer

ii. Operations

iii. People

iv. Finance

• Performance Appraisals Methods:-

Among these methods some methods are used in the organisation, forced distribution method is very popular method in Thermax. A statistical distribution is as follow;

Outstanding-                         05%,

Very Good-                           65%,

Good-                                    25%,

 Unsatisfactory                      05%

This method was evolved by Tiffen to eliminate the central tendency of rating most of the employees at a higher end of the scale. The method assumes that employees’ performance level confirms to a normal statistical distribution i.e., 10,20,40,20 and 10 per cent. This is useful for rating a large number of employees’ job performance and promo ability. It tends to eliminate or reduce bias.

Pay for Performance:-

Knowledge based organizations these days follow the performance based plan offering awards to employees for cost saving, bonuses for perfect attendance or merit pay based on supervisor appraisals. The objective of the PFP is to develop a productive efficient and effective organization which enhances employee’s motivation and effectiveness. Thermax follows the Pay for performance methods to motivate employees.

• Salary break ups and components:-

• Compensation Philosophy and system:-

Alignment to the company goal and open feedback are the two pillars of Thermax performance management system. A sound performance planning system ( Individual Contribution plan) form foundation of the whole performance management system. A systematic representation of Thermax system is as follows:-

• Variable Pay:-

Performance Parameters for Business Heads:-

Profit Before tax,

Revenue Recognition,

Order Booking,

Operational Excellence (Operations, Organizations building and Innovation)

Computation of individual pay-out based on performance of organization, SBU Performance and Individual goals.

Organization should achieve 80% of Performance for employees as Managers, Team Leaders, Function Heads, SBU and BU Heads to get variable pay.

Individual Contributors to get variable pay based on their Performance only.