Page 150 - DMGT517_PERFORMANCE_MANAGEMENT_SYSTEM

Unit 12: Performance Management Linked Reward System

Notes

Performance-based Compensation Structure in
Crompton Greaves Ltd.

Introduction
This case study deals with the introduction of a Performance-Based Compensation (PBC)

package in Crompton Greaves (CG) in 1994. After a thumbnail profile of the company, the
rationale for introducing PBC, its objectives, the structure, the process, and learnings are
discussed.
CG is the largest multi-technology, and multi-locational electrical products manufacturing
private sector company in the country. It has a sales turnover of `17,000 millions and a
workforce of 8,000 people. The company is headed by a Managing Director with four
business groups and three functional areas at the corporate level.

The organization has broadly five layers of management:
1. Strategic Business Unit (SBU) and corporate functional chief-president
2. Multi-profit centre chief (in-charge of more than one profit centre)—Senior Vice

President/Vice President/Sr. General Manager

3. Profit centre head – Sr. General Manager/General Manager
4. Departmental head – Dy. General Manager/Sr. Manager
5. Sub-departmental head/frontline supervisor – Manager/Asst. Manager
Over the years, several managerial designations have come into existence within the fi ve
layers of this hierarchical structure due to operational factors such as seniority, needs of the
organization and needs of individuals.
Pre-requisites for PBC Schemes
For successful implementation, monitoring and evaluation of a PBC Scheme, there are
certain conditions which should be met in the organization. The organization should
possess the following:

1. A corporate culture of confidence and mutual trust.
2. An image of management, being one among employees of fairness and equity
3. Clear communication throughout the organization about the mission, values, vision,
objectives and goals of the organization.
4. HRM processes that are adequately positioned, including non-monetary employee
development systems.
5. A professional style of management.
6. A working environment that is conducive to give employees professional and personal
space for functioning.
7. Above all, scheme that is “SMART”, that is:
S : Specifi c
M : Measurable
A : Achievable
R : Realistic
T : Time-bound
Contd....

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