Page 151 - DMGT517_PERFORMANCE_MANAGEMENT_SYSTEM

Performance Management System

Notes The raison detre for CGs PBC for Executives

Some of the major reasons for introducing a PBC Scheme for executives in CG are as
follows:
1. The Government of India’s decision to open up the Indian economy and markets
for global competition made it imperative for the organization to make strategic
interventions for gaining a competitive edge over other global players. The performance-
based compensation scheme was introduced in the organizational effi ciency.
2. CG’s compensation package was not competitive compared to other leading
organizations in similar business in the country.

3. The organization realised that to retain its competitive edge in the market and to

achieve profitable and sustainable growth, it had to make certain HRD interventions
to motivate the employees.
4. CG’s business of telecom, information technology (IT) products, etc., one of its
strategic business, had been incurring losses for quite some time. With IT emerging
as a ‘sunrise industry’, the organization was finding it difficult to attract and retain

talented professionals.
5. There was a distinct trend for rapid increase in executive remuneration in the
country.
In the light of the above, CG made some critical HRD intervention. These included:
1. Restructuring and re-engineering of the organization.
2. Creation of Strategic Business Groups.

3. Redesigning the appraisal system to be compatible with the PBC Scheme.
4. Hastening the process for implementing Total Quality Management (TQM) and to
bring the total population within its umbrella by 1998.

5. Introduction of a PBC package for senior executives.
6. Establishing an HRD centre to further hasten competency and capacity building of
employees.
The management felt that due to TQM campaign launched in the company as back as 1990,
the environment in the organization was conducive for introducing a performance-based
compensation scheme.
Intensive discussions were held within the hierarchy of the management. On the basis
of the consultations within different levels of management, the fi nal performance-based

compensation scheme was finalized and introduced.
Of the various HRD interventions mentioned above, we will discuss only the PBC for
senior executives.
Objectives of the PBC Scheme of CG

The major objectives of the scheme are:
1. To make CG’s compensation package for executives comparable with that of the fi rst
three companies in similar business in the country.
2. To attract talented young professionals into the IT group without distributing the
basic CG compensation structure.
3. To strengthen performance-compensation linkage in SBUs.
Contd....

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