The Management of Performance in Tata Steel

Published: 2021-09-10 20:25:08
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Category: Management, Strategy

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The First Cycle
The first cycle was completed by November 2000. This fixed the design of organization structure and assessment and staffing of top positions. Using the staffing process, the criterion for top positions had been applied to all 5100 executives out of which only 834 managers got short-listed. To select, Senior Management along with CEO debated on of these 834 cases and consensus was achieved on 235 candidates. Next, these 235 candidates went through multiple rounds of analyses and discussions at assessment centres. Finally, 100 managers were selected while the remainder would be considered in the next cycle.These 100 managers were selected in the staffing process with the objective of staffing the best person for each position – young, high potential talent and create cross functional and cross business opportunities while maintaining a degree of stability in the organization.
After the selection in November, 2000, now the dilemma was whether to announce this selection immediately or keep it confidential and directly order the implementation of the staffing on 1 April 2001. So, the question remained – how much to communicate and to whom. This dilemma occurred because the expectations of the employees also had to be managed. So there were limits to transparency in executing decisions.
The top management decided to communicate only to IL1 and IL2 selectees. In a special Dialogue conducted with these IL1 and IL2 selectees, the CEO informed them about their selection and asked to keep this confidential. However, word got out, looking like a deliberate leak. Later, the CEO had to admit in another dialogue that the selection had already been done. People felt hurt as they felt that the management had not been forthright. For the selection of IL3, another consultancy, Eicher, with expertise in the Human Resources area was brought in. They trained our in-house assessors and helped in the assessment process.
The Management of Performance
Tata Steel put behind it the laissez faire system of operation. This had issues of quantifying every person’s contribution and accountability was therefore clouded as too many people were doing too few jobs. PEP, outplaces a few people who are good. Now, two tracks are open to managers -a fast track for high performers and managers showing high potential and a normal track for average performers.
“Managers are not IL2 or IL3, jobs are. The impact level of a job will drive all elements of HR, including performance management and compensation guidelines. If you are in a lower impact level, it is because there were others whose profiles fit jobs in the higher impact levels better than yours did. The staffing has been done based on a fair and objective process of people measurement at Tata Steel. Those who improve their competencies, demonstrate good performance and have a good fit with the job profile will be staffed to higher impact levels as and when these become available. By the same logic, underperforming managers at higher impact levels and “over-stayers” – those who remain in a position for too long, and have not been found suitable for horizontal and vertical movement – will need to make way for prospective candidates for their jobs.” Now the value proposition for employees is but significant opportunities for personal growth instead of promotions.
The process of selecting a candidate is iterative. Names are short listed based on the assessment and a set of ‘test fit’ names come up for each job and the best fit made. Later during the matching process, a change may be required because a better fit may be found for the person in another job. This would need to ‘refill’ the previous job. So, this iterative process continues over several weeks. Thus, confidentiality is paramount. A person “test fitted” in a particular position would justifiably be aggrieved if somebody else is placed in what he sees as ‘his’ job. Thus, a balance between confidentiality and transparency is needed.
Staffing was a systematic process and consultants for selection provided additional credibility to the process. The organization design was created first and the elimination of people and positions followed later. Parameters used to judge people were – managerial assessment; functional assessment; learning ability and past performance. Evaluators did objective evaluation when they did not know the individual, which was followed by subjective evaluation by team of in-house evaluators who knew the past record of service and learning ability of the individual.
Many good people had to leave the organization as they did not fit into the framework. Officers were losing faith and confidence in the organization and were demoralized. Much more communication was needed for those who stayed, to explain what promotion meant in the new concept.
A special dialogue session for PEP was held on 23, March 2001 at the Tata Auditorium for all the executives to communicate the progress of PEP and the work that lay ahead.
Tata Steel became a de-layered organisation. Many jobs were merged, and some executives did not fit the competencies required of the jobs. Also, senior persons were not pushed down to lower impact levels. So, some people would not find a place in the new organization as on 1 May, 2001. The separation was done with dignity, decency and support. A generous Early Separation Scheme (ESS) package was offered to those who had to leave the company, and was posted on the intranet.
The outcome of Cycle 1 and Cycle 2 was that a total of 1050 managers have been matched to positions – 10 to IL1; 120 to IL2; 360 to IL3 and 460 to IL 4. About 22 vacancies in IL2 and IL3 would be directly recruited from outside. After May 2001 Tata Steel now had to create the organization redesign and staffing for IL 4 and IL5.
By May, around 170 executives had been found to be redundant and jobs of these executives would be severed with full financial support. In subsequent cycles 350 more would be let go. A transition support centre was set up, a placement agency hired to provide support by way of counselling, resume preparation, coaching placement and entrepreneurship development.

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