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acumen school of BUSINESS, new delhi2010PROJECT REPORT ON PERFORMANCE APPRAISAL IN MARUTI UDYOG Kuldeep, Sandeep,Mini, Bunty model town 3, g7, new delhi<br />-9525384810<br />2564542-15337843434005715<br />459105043815<br />2435311-580064-228085-219761<br />7048502216153419475288290<br />Submitted to:Mr. AKSHAT JAIN<br />Submitted for the partial fulfillment of the requirement<br />For the award of degree of “Master OF Businessadministration”<br />MBA II Sem.<br />SUBMITTED TO<br /> Mr. AKSHAT JAIN <br />466725441960<br />3533775225425<br />Acknowledgement<br />We are sincerely thankful to all those people who have been giving us any kind of assistance in the making of this project report.<br />We express our gratitude to Mr. AKSHAT JAIN who has through his vast experience and knowledge has been able to guide ussuccessfully towards the completion of the project. We express our gratitudeto Acumen school of Business (NewDelhi).<br />We would hereby, make most of the opportunity by expressing our sincerest thanks to all our facultySpeciallyMs. CHANDNI & Mr. ACHAL ARYA whose teachings gave us conceptual understanding and clarity of comprehension, which ultimately made our job easier. Credit also goes to all our friends <br />Whose encouragement kept us in goodstead.Their continuous support has given us the strength and confidence to complete the project without any difficulty.<br />Last but not the least we would like to acknowledge our gratitude to the respondents without whom this survey would not have been complete. <br />We are also thankful to authority of MARUTI UDYOG (GURGAON & IMT) for providing us the information. <br /> Group (MBA Semester-2)<br />Mini Miglani<br /> Kuldeep Pareek<br />Bunty marshal<br /> Sandeep Kumar<br />Preface <br />Human resource should not be looked upon in a vacuum or in isolation. It is an essence taking a view of the whole business organization and its ultimate objective concern for marketing must penetrate all areas of the enterprise. Humans are asset of company not expense. Human resource manager helps to the employees of their career and job satisfaction <br />This project is a study of performance appraisal system adopted by maruti udyog. The rationale behind this particular study is to find out the present system to awards and promotion of the employees and their perception and need of the employees towards management.<br />It was a exciting experience to conduct a research on behalf of maruti udyog pertaining to the study of the Automobile Sector.<br />To carry out this research a sample study was pursued where the target was made to the people of Delhi region (NCR, Gurgaon). Various statistical and analytical tools and techniques are applied to ascertain and depict the present scenario.<br />Conclusion and there by recommendation has been arrived at by proper and justified<br />Interpretation of the result derived from the above said analytical tools and techniques.<br />METHODOLOGY<br />In conducting the whole Analysis of Performance Appraisal Systems we have used two main sources of data collection, Primary and Secondary. In primary data sources we have mainly focused on Questioner as a tool for collecting data from executives of organizations under consideration. We developed a questioner having following main questions in it:<br />What Performance Appraisal System mean to your organization?<br />How many methods of Performance Appraisal your organization is using presently?<br />Why your organization is using that particular Performance Method?<br />How much it is important to your organization?<br />Why there is need to appraise employees?<br />Is your organization using sabbaticals? <br />Are you satisfied with your job in Maruti<br />Are you paid efficient money for their work<br />Are you get promotion acc to your experience<br />What are your first requirement from company <br />Are you sharing holder of co.<br />How much you respect your job<br />What are you doing if company chuck out you without any pre-notification <br />Secondly we have used survey to some extent in our data collection for Analysis of Performance Appraisal Systems; in this regard we have surveyed 3 to 4 employees of each organization from customer relation officer to assistant Human Resource manager. <br />They gave information regarding performance appraisal system that they are satisfied with the overall performance management system but they showed some reservations regarding their long term benefits.<br />The appraisal needs to be thoughtfully prepared with good examples which support the points the manager wants to make. The manager needs to review the definition for the job and appraise the performance in relation to the written job description. In addition, the job description often isn't sufficient to clarify the manager's expectations since the job description is normally written for groups of jobs rather than specific positions. The supervisor usually does the actual appraising. The HR department serves a policy making and advisory role. The supervisor needs to conduct an appraisal interview in which the written appraisal is presented.<br />Finally we have used internet or online reviews of different analysts regarding performance appraisal system of each organization. In these reviews we found that majority of the analysts were satisfied with the overall performance appraisal system. But they have pointed out that each organization has to revise the overall performance management system regarding employee compensation and motivation.<br />Executive summery <br />It was in 1970 that Sanjay Gandhi envisioned the manufacture of maruti which is known popularly as the people’s car it is maruti which is known to give wheels to the nation. The first car of mauti was rolled out on Dec. 14, 1983 after s collaboration with Suzuki motors.<br />This survey is conducted by us of HR is no longer a non-core function and in the ongoing talent war, itwill play a critical role in employee engagement and retention.<br />HR in our companies is still in a nascent stage and needs to grow in every direction and should act as the core competence for the organisation. In this article the need for modern HR is clearly seen. One of the solutions to the above said problems which I felt is PERFORMANCE APPRAISAL, which should be conducted effectively and efficiently to completely eliminate such problems.<br /> Maruti udyog is using 360 Degree Performance appraisal method. Company Conduct an appraisal interview before rewarding someone. What are the methods for appraising?<br />This project is benefitted for a company for essential for a successful appraisal system. <br />We study the objectives of performance appraisal in Maruti Udyog and conditions for effective counseling. It is necessary to appraise an employee. There is clarity what is expected from the employee. According to performance feedback is given to Maruti Udyog and then suggestions and innovations are rewarded with the help of training and development programs in improving employees’ performance. <br />contents<br /><ul><li>Acknowledgement
Thanks letter</li></ul>Review of literature <br />Performance appraisal has widened as a concept and as a set of practices and in the form of performance management has become part of a more strategic approach to integrating HR activities and business policies. As a result of this, the research on the subject has moved beyond the limited confines of measurement issues and accuracy of performance ratings and has begun to focus more of social and motivational aspects of appraisal. This article identifies and discusses a number of themes and trends that together make up the developing research agenda for this field. It breaks these down in terms of the nature of appraisal and the context in which it operates. The former is considered in terms of contemporary thinking on the content of appraisal (contextual performance, goal orientation and self awareness) and the process of appraisal (appraiser–appraise interaction, and multi-source feedback). The discussion of the context of appraisal concentrates on cultural differences and the impact of new technology. <br />A performance management system includes the following actions: -<br />Develop clear job descriptions.<br />Select appropriate people with an appropriate selection process.<br />Negotiate requirements and accomplishment-based performance standards, outcomes, and measures.<br />Provide effective orientation, education, and training.<br />Provide on-going coaching and feedback.<br />Conduct quarterly performance development discussions.<br />Design effective compensation and recognition systems that reward people for their contributions.<br />Provide promotional/career development opportunities for staff.<br />Assist with exit interviews to understand WHY valued employees leave the organization.<br />Profile of company<br />Maruti on strong foundation:- <br />Maruti Suzuki India Limited is a publicly listed automaker in India. It is a leading four-wheeler automobile manufacturer in South Asia. Suzuki Motor Corporation of Japan holds a majority stake in the company. It was the first company in India to mass-produce and sell more than a million cars. It is largely credited for having brought in an automobile revolution to India. It is the market leader in India. On 17 September 2007, Maruti Udyog was renamed to Maruti Suzuki India Limited. The company's headquarters remain in Gurgaon, near Delhi.<br />Maruti Suzuki is one of India's leading automobile manufacturers and the market leader in the car segment, both in terms of volume of vehicles sold and revenue earned. Maruti Udyog Limited (MUL) was established in February 1981, though the actual production commenced in 1983. Through 2004, Maruti has produced over 5 Million vehicles. Marutis are sold in India and various several other countries, depending upon export orders. Cars similar to Marutis (but not manufactured by Maruti Udyog) are sold by Suzuki in Pakistan and other South Asian countries.Until recently, 18.28% of the company was owned by the Indian government, and 54.2% by Suzuki of Japan. The Indian government held an initial public offering of 25% of the company in June 2003. As of May 10, 2007, Govt. of India sold its complete share to Indian financial institutions. With this, Govt. of India no longer has stake in Maruti Udyog.<br />The company annually exports more than 30,000 cars and has an extremely large domestic market in India selling over 500,000 cars annually. Maruti 800, till 2004, was the India's largest selling compact car ever since it was launched in 1983. More than a million units of this car have been sold worldwide so far. Currently, Maruti Alto tops the sales charts.<br />Due to the large number of Maruti 800s sold in the Indian market, the term "Maruti" is commonly used to refer to this compact car model. Till recently the term "Maruti", in popular Indian culture, was associated to the Maruti 800 model.<br />Maruti Suzuki India Limited, a subsidiary of Suzuki Motor Corporation of Japan, has been the leader of the Indian car market for over two decades.<br />REGISTERED AND CORPORATE OFFICE:<br />11th Floor, Jeevan Prakash Building,<br />25, Kasturba Ganghi Marg,<br />New Delhi – 110001<br /><ul><li>KEY DATA
VISION</li></ul>The leader in the India Automobile Industry, Creating Customer Delight and Shareholder’s Wealth; A pride of India”<br /><ul><li>MISSION</li></ul>To provide maximum value for money to their customers through continuous improvement of products and services.<br />74295098425<br />80962567310<br />A BIT ABOUT ITS PARENT COMPANY ITS OWNER<br />Suzuki Motor Corporation is a Japanese multinational corporation that specializes in manufacturing compact automobiles, a full range of motorcycles, All-Terrain Vehicles (ATVs), outboard marine engines, wheelchairs and a variety of other small internal combustion engines. Suzuki is the 12th largest automobile manufacturer in the world, employs over 45,000 people, has 35 main production facilities in 23 countries and 133 distributors in 192 countries.<br />"Suzuki" is pronounced in Japanese as "soo-zoo-kee" Suzuki, with emphasis on a high "kee". It is almost always wrongly pronounced as "suh-ZOO-kee" with a stressed "zoo". This pronunciation is used by the English-speaking public and by the Suzuki company in marketing campaigns directed towards this demographic<br />In 1909, Michio Suzuki founded the Suzuki Loom Company in the small seacoast village of Hamamatsu, Japan. Business boomed as Suzuki built weaving looms for Japan's giant silk industry. Suzuki's only desire was to build better, more user-friendly looms. In 1929, Michio Suzuki invented a new type of weaving machine, which was exported overseas. Suzuki filed as many as 120 patents and utility model rights. The company's first 30 years focused on the development and production of these exceptionally complex machines.<br />Despite the success of his looms, Suzuki realized his company had to diversify and he began to look at other products. Based on consumer demand, he decided that building a small car would be the most practical new venture. The project began in 1937, and within two years Suzuki had completed several compact prototype cars. These first Suzuki motor vehicles were powered by a then-innovative, liquid-cooled, four-stroke, four-cylinder engine. It featured a cast aluminum crankcase and gearbox and generated 13 horsepower (9.7 kW) from a displacement of less than 800cc.<br />With the onset of World War II, production plans for Suzuki's new vehicles were halted when the government declared civilian passenger cars a "non-essential commodity." <br />After the war, the Japanese had a great need for affordable, reliable personal transportation. A number of firms began offering "clip-on" gas-powered engines that could be attached to the typical bicycle. Suzuki's first two-wheel ingenuity came in the form of a motorized bicycle called, the "Power Free." Designed to be inexpensive and simple to build and maintain, the 1952 Power Free featured a 36 cc two-stroke engine. An unprecedented feature was the double-sprocket gear system, enabling the rider to either pedal with the engine assisting, pedal without engine assist, or simply disconnect the pedals and run on engine power alone. <br />The system was so ingenious that the patent office of the new democratic government granted Suzuki a financial subsidy to continue research in motorcycle engineering, and so was born Suzuki Motor Corporation.<br />In 1953, Suzuki scored the first of many racing victories when the tiny 60 cc "Diamond Free" won its class in the Mount Fuji Hill Climb.<br />By 1954, Suzuki was producing 6,000 motorcycles per month and had officially changed its name to Suzuki Motor Co., Ltd. Following the success of its first motorcycles, Suzuki created an even more successful automobile: the 1955 Suzulight. Suzuki showcased its penchant for innovation from the beginning. The Suzulight included front-wheel drive, four-wheel independent suspension and rack-and-pinion steering -- features common on cars half a century later.<br />History of maruti udyog <br />In 1970 , Sanjay Gandhi the son of Indira Gandhi envisioned the manufacture of an indigenous , cost effective , low maintenance compact car for the Indian middle class . Indira Gandhi’s cabinet passed a unanimous resolution for the development and production of a people’s car. Sanjay Gandhi’s company was christened Maruti limited. The name of the car was chosen after a Hindu deity named Maruti Ltd. That time Hindustan Motors’ Ambassador was the chief car and the company had come out with a new entrant the premier Padmini that worked slowly gaining a part of the market share dominated by the ambassador. For the next ten years the Indian car market had stagnated at a volume of 30,000 to 40,000 cars for the decade ending 1983.<br />Sanjay Gandhi was awarded the exclusive contract and license to design, develop and manufacture the “People’s Car.” These exclusive rights of production generated some criticism in certain quarters, which was directly targeted at Indira Gandhi. Over the next few years the company was sidelined to Bangladesh liberation war and emergency.<br />In the early days under the powerful patronage of Sanjay Gandhi the company was provided with free land, tax breaks and funds. Till the end of 1970 the company had not started the production and a prototype test model was welcomed with criticism and skepticism. The company went into liquidation IN 1977. The media perceived it to be another area of growing corruption. Unfortunately Maruti’s started to fly only after the death of Sanjay Gandhi, when Suzuki motors joined the government of India as a joint venture partnered with 50% share. After his death Indira Gandhi decided that the project should not be allowed to die. Maruti’s entered into this collaboration with Suzuki motors. The collaboration heralded a revolution in the Indian car industry by producing the maruti-800. It created a record of taking 13 months time to go from design to rolling out cars from a production line.<br />The production of Maruti-800 in 1983 marked the beginning of a revolution in the Indian automobile industry. It brought in the latest technology of that time more fuel efficiency and lower prices that led to the creation of a huge market for all car segments as the Indian, middle class grew in size. This in turn brought in more players in this segment. A number of auxiliary car parts making units were set up as more car manufacturers realized it was more cost effective to make their car parts in India rather than importing them. <br />Maruti’s major influence was in helping the component industry in the country because of its emphasis on localization and indigenization. As in the beginning that sector hadn’t grown much Maruti’s had to start dozens of joint ventures with Indian entrepreneurs. It got them from foreign collaborations that led to collaborations for other manufacturers so that over a period of time the whole component industry was able to upgrade itself and improve its quality who had given their income leading to major existing export potential vehicle components. It also brought in better methods of financing that allowed more people who given their income levels could not afford to buy a car on their own, to buy cars. It still remains the leader not only in the terms of market share but also in customer satisfaction surveys. It has consistently topped J.D. power quality surveys, including 2005. By the year 1993 the company had sold 1, 96,820 cars. By March 1994 it produced 1 million vehicles becoming the first Indian company to cros the 2 million mark in October, 1997 and rolled out 4 millionth vehicles as Alto-LX .Then it introduced Wagon-R followed by Swift. Swift has been a great success in the market .In 2007 Maruti came up with SX4 and Grand Vitara.<br /><ul><li>Maruti has largest production capacity vis‐à‐vis its peers in India.
Suzuki will invest ~$3.0 bn over next 4‐5 years in</li></ul>Capacity at Manesar to be increased from 100,000 cars to 300,000 cars by FY10, leading to overall capacity of 960,000 units/ year.<br /><ul><li>We believe that increase in sales network will enable Maruti to retain its leadership in India
Incremental capacities at the Manesar plant to also be used for exports (A‐star) and supplying to Nissan.</li></ul>.<br />Board of director <br />Managing Director And CEOShinzo Nakanishi Director (Production) Tsuneo Ohashi Director (Marketing & Sales) Shuji Oishi Director O Suzuki Chairman (Non-Executive) R C Bhargava Directors Amal Ganguli D S Brar Manvinder Singh Banga Pallavi Shroff Company Secretary Anil Rustgi Whole-time Director Keilchi Asai Additional Director Kenichi Ayukawa Director D S Brar Tsuneo Kobayashi <br />Objectives of Study<br />Primary Objectives<br />To study the performance appraisal system in MARUTI UDYOG.<br />To study the transformation of performance appraisal form traditional to modern.<br />To get an insight into the relative importance of performance appraisal in MARUTI UDYOG .<br />To study the effectiveness of performance appraisal system in MARUTI UDYOG.<br />To study the practical application of performance appraisal.<br />To compare appraisal system of different organization and find out the most common parameters for appraisal in MARUTI UDYOG.<br />How can companies use performance appraisal as an effective tool to achieve organisational effectiveness and efficiency.<br />Secondary Objectives.<br />To observe the work environment in organization.<br />To get experience and expertise in making projects.<br />To enhance our communication skills.<br />To increase our confidence.<br />To making everything in observable like our confidence <br />Chapter 1 literature review<br />Preview of Automobile Industry<br />The automobile industry, one of the core sectors, has undergone metamorphosis with the adventof new business and manufacturing practices in the light of liberalization and globalization.<br />The sector seems to be optimistic of posting strong sales in the next couple of years in view of areasonable surge in demand.<br />The Indian automobile market is gearing towards having international standards to meet the needs of the global automobile giants and become a global hub. Players areStrategizing to consolidate their position and gradually increase market penetration with<br />the launch of new models, targeting different segments. Since the sector is price driven,<br />huge investment is envisaged to remain competitive through cost advantage, for which<br />indigenization is highly important. <br />The product becomes dearer if it is manufacturedusing imported parts. IT in the automobile sector plays a crucial role.. Some players areworking towards development of efficient production systems that control the entire production process with high precision and accuracy.Such systems working on real timeoperating systems allow efficient control of different parts of manufacturing and production.<br />It is essential to leverage skills of different engineering disciplines to build these kinds of<br />integrated systems.Analysts foresee high scope in the electronics for auto sector and expect the retailing of suchelectronics products to contribute a major chunk of future revenues.The government is increasing the research anddevelopment (R&D) fund for the automobileindustry over and above the Rs 1400 crores earmarked for eight years. All laboratories in the country researching on automobile technology, such as BHEL which is developing cell technologyas alternative fuel, have also been brought together through the setting up of a national R & Dworking group. <br />The group is working out a plan to link all major laboratories across the country to give a thrust to automotive research. Indian automobile sector being a driver of product and process technologies, and has become a excellent manufacturing base for global players, because of its high machine tool capabilities, extremely capable component industry, most of the raw material locally produced, low cost manufacturing base and highly skilled manpower Not only a large number of worldmanufacturers have set up production bases in India but also a large number of foreign companies are<br />collaborating with the auto component suppliers and vendors. Indian Automobile Components Industry has been making rapid strides towards achievement ofworld-class Quality Systems by imbibing ISO 9000/QS 9000 Quality Systems whereby the <br />Indian Automotive industry has become more competitive in the export market due to its<br />technological and quality advances, so much so that in quality conscious markets such as Europeand America, it is emerging as a major player, based on its performance. India today exports: Engine and engine parts, electrical parts, drive transmission<br />& steering pats, suspension & braking parts among others.<br />The sector is striding inroads into the rural middle class after its inroads into the<br />urban markets and rural rich. It is trying to bring in varying products to suit requirements<br />of different class segments of customers. States like Rajasthan, Uttar Pradesh, Maharashtra, Andhra Pradesh and West Bengal are vying to woo global players with proposals including heavy tax exemptions and to create a more investor friendly regime, each state is proposing to provide all regulatory clearances at express speed.<br />The Government should promote Research & Development in automotive<br />industry by strengthening the efforts of industry in this direction by providing suitable<br />fiscal and financial incentives. The current policy allows Weighted Tax Deduction under I.T. Act, 1961 for sponsored research and in-house R&D expenditure. This will be improved further for research and development activities of vehicle and component manufacturers from the current level of 125%. In addition, Vehicle manufacturers will also be considered for a rebate on the applicable excise duty for every 1% of the gross turnover of the company expended during the year on Research and Development carried either in-house under a distinctdedicated entity, faculty or division within the company assessed as competent and qualified for the purpose or in any other R&D institution in the country. <br />This would include R & D leading to adoption of low emission technologies and energy saving devices. Government will encourage setting up of independent auto design firms by providing them tax breaks, concessional duty on plant/equipment imports and granting automatic approval. Allocations to automotive cess fund created for R&D of automotive industry shall be increased and the scope of activities covered under it enlarged.<br />Automobile industry – Wheels of Change<br />India had its date with this wonderful vehicle first time in 1898. Then for the next fifty years, cars were imported to satisfy domestic demand. Between 1910 and 20's<br />the automobile industry made a humble beginning by setting up assembly plants in<br />Mumbai, Calcutta and Chennai. The import/assembly of vehicles grew consistently after<br />the 1920's, crossing the 30,000 mark in 1930. In 1946, Premier Automobile Ltd (PAL)<br />earned the distinction of manufacturing the first car in the country by assembling 'Dodge<br />DeSoto' and 'Plymouth' cars at its Kurla plant. Hindustan Motors (HM), which started as<br />a manufacturer of auto components graduated to manufacture cars in 1949.<br />Thanks to the Licence Raj which restrictedforeign competitors to enter the Indian car market, Indian roads were ruled by Ambassador Car fromHindustan Motors and the Fiat from Premier Auto Ltd. for many of the initial years.<br />In 1952, the GOI set up a tariff commission to devise regulations to develop an<br />indigenous automobile industry in the country. After the commission submitted its<br />recommendations, the GOI asked assembly plants, which did not have plans to set up<br />manufacturing facilities, to shut operations. As a result General Motors, Ford and other<br />assemblers closed operations in the country. The year was 1954 and this decision of the government marked a turning point in the history of the Indian car industry. The GOI also had a say in what type of vehicle each manufacturer should make. Therefore, each<br />product was safely cocooned in its own segment with no fears of any impending<br />competition. <br />Also, no new entrant was allowed even though they had plans of a fullfledged<br />manufacturing program. The restrictive set of policies was chiefly aimed at building an indigenous auto industry. However, the restrictions on foreign collaborations<br />led to limitations on import of technology through technical agreements. In the absence<br />of adequate technology and purchasing power, the car industry grew at a snail's pace in<br />the 60’s. The demand for cars in 1960 was to the tune of 15,714. In the next two decades the number increased to 30,989 i.e. a CAGR of only 3.5 per cent.<br />The other control imposed on carmakers related to production capacity and<br />distribution. The GOI control even extended to fixation of prices for cars and dealer commissions. This triggered the start of a protracted legal battle in 1969 between some carmakers and GOI. Simply put, the three decades following the establishment of the passenger car industry in India and leading upto the early 1980s, proved to be the 'dark<br />ages' for the consumer, as his choice throughout this period was limited to two models<br />viz. Ambassador and Padmini. It was only in 1985, after the entry of Maruti Udyog, that<br />the car makers were given a free hand to fix the prices of cars, thus, effectively abolishing all controls relating to the pricing of the end product.<br />In the early 80's, a series of liberal policy changes were announced marking<br />another turning point for the automobile industry. The GOI entered the car business, with a 74% stake in Maruti Udyog Ltd (MUL), the joint venture with Suzuki Motors Ltd of<br />Japan. <br />The very face of the industry was changed for ever in 1983 with the entry of public sector Maruti Udyog in a joint venture with the Suzuki Corporation of Japan. Car<br />sales grew by 42 per cent yoy in 1985 after Maruti 800 was launched. Thanks to MUL car sales registered a CAGR of 18.6 per cent i.e. from 1981 to 1990. In 1985, the GOI announced its famous broadbanding policy which gave new licenses to broad groups of automotive products like two and four-wheeled vehicles.<br />Though a liberal move, the licensing system was still very much intact. MUL introduced<br />'Maruti 800' in 1983 providing a complete facelift to the Indian car industry. The car was<br />launched as a "people’s car" with a price tag of Rs 40,000. This changed the industry's<br />profile dramatically. Maruti 800 was well accepted by middle income families in the<br />country and its sales increased from 1,200 units in FY84 to more than 200,000 units in<br />FY99. However in FY2000, this figure came down due to rising competition from<br />Hyundai's 'Santro', Telco's Indica and Daewoo's 'Matiz'.<br />MUL extended its product range to include vans, multi-utility vehicles (MUVs) and<br />mid-sized cars. The company has single handedly driven the sales of cars in the country cornering around 79.6% market share. With increasing competition from new entrants, this market share has plummeted to almost 62% in FY2000. A brief 3-year downturn till 1993 and car sales bounced back to register a 17 per cent growth rate in 1997.Since then, the economy slumped into recession and sales of cars remained quite stagnant FY97 and FY99. The Financial year 2000 has, however been the turnaround year for the Auto industry with the economy looking up. <br />The automobile industry, crossed the half million mark for the first time in FY2000.<br />Overwhelmed by newer models from new and existing players had led to an impressive<br />shift from a constrained supply situation to a surplus one. Within the past decade, about<br />30 models have entered the Indian market with a number of models still awaiting<br />launch. The de-licensing of auto industry in 1993 opened the gates to a virtual flood of<br />international auto makers into the country with an idea to tap the large population. Also<br />the lifting of quantitative restrictions on imports by the recent policy is expected to add<br />up to the flurry of foreign cars in to the country.<br />The Indian Automobile industry registered one of the strongest growth rates in<br />FY’04. Aided by sustained economic recovery, the industry registered high growth rates<br />in all major segments. The growth story was led by Medium and Heavy Commercial Vehicles (M&HCVs)registering a 40% growth while Light Commercial Vehicles (LCVs) recorded a 32% jump in total sales. Passenger cars also registered an impressive 34% growth in FY’04 and total sales volume crossed the 1 million mark for the first time. Interestingly, two wheelers registered the lowest but healthy growth rate of 13% in FY’04. While motorcycle volumes tripped on a high base, scooters registered a 10%<br />growth after 4 years of continuous decline. Three wheelers grew by 23% in FY’04.<br />Apart from strong economic growth in all sectors, low interest rate regime, normal<br />monsoon, continued infrastructure investment, fiscal measures like cut in excise duty (in<br />case of cars), etc provided impetus for the growth.<br /> The year also saw a sharp 56% rise in export volumes with all the sectors registering more than 40% growth, signalling the rising international competitiveness of the industry. Profitability improvements were recorded in companies across segments driven by rise in volumes and lower interest costs to some extent, notwithstanding the rise in prices of certain inputs like steel.<br />Though the peak customs duty had been reduced to 20% in January 2004 and Special Additional Duty was abolished, the domestic industry still enjoys adequate protection, with no import threats. The potential borne by the industry is well exhibited by the growing number of international players setting up base in India and increasing<br />competitiveness in the industry.<br />Many companies have entered the car manufacturing sector, to tap the middle and<br />premium end of car industry.<br />Structure<br />The Indian automobile industry can be broadly classified into:<br />2 /3 Wheelers<br />Passenger Cars<br />Commercial Vehicles (LCV/HCV/MCV)<br />UV (Utility vehicles)<br />Tractors<br />Chapter 2 HISTORY OF INDIAN AUTOMOBILE MARKET<br />INDIAN AUTOMOBILE MARKET<br />The Indian market confounds global carmakers simply because of the way it is<br />segmented. In the West, automobiles are generally segmented according to platforms --<br />that is chassis-engine combinations. Price plays a factor but only up to a point. In India,<br />though, price plays the primary role in segmentation.<br />Consider first the segments in the European or American market. At the bottom,<br />you have city cars' -- which include the Daewoo Matiz, the Hyundai Santro, the Maruti<br />800, Alto, Fiat Uno, the Zen as well as the Wagon R. Next come the budget minis --<br />which would include cars like the Suzuki Swift (our own Esteem). The next segment, the<br />superminis, would take in cars like the Opel Corsa, the Ford Ikon. Above the superminis<br />are small family cars -- which include models like the Opel Astra and the Ford Escort.<br />Medium-sized family cars are bigger and include cars like the Opel Vectra and Peugeot<br />406. Compact executive cars are small but immensely prestigious and include the BMW<br />3 series and the Mercedes C class. Executive cars embrace their bigger brothers -- the<br />BMW 5 series and the Mercedes E class. Only a handful of cars are classified as true-blue luxury cars namely-- Jaguar XJ8, the BMW 7 series. And of course there are the nicheslike sports, sports utility, and exotics.<br />The Indian market, of course, is quite differently segmented. The Maruti 800 and Zen fall in a class by their own -- and are referred to as the sub-Rs 2.5-lakh cars. The next<br />is the Rs 3-4 lakh segment -- which includes all the other cars that would normally be<br />classified as city cars in Europe. Strictly speaking, the Tata Indica should fall in the<br />super-mini category because of its specifications -- but because of price, it competes in<br />the same segment.<br /> Above Rs 4 lakh and all the way up to Rs 10 lakh is the luxury car range. It is loosely divided into two halves -- with Maruti Esteem, Ford Ikon, Hyundai Accent, Daewoo Cielo, Opel Corsa and Honda City 1.3 falling in the bottom layer, and the Opel Astra, Honda City 1.5 and Ford Escort in the upper range. The last segment is of premium car segment, which includes cars like Mercedes Benz and BMW.<br />Scooters India Ltd (SIL), US-based Amerigon and Bangalore-based Maini Group<br />are negotiating a joint venture to manufacture an electrical passenger car. Priced at Rs<br />1.75 lakhs, the car will target the segment between two-wheelers and petrol/diesel based cars. Assembly from imported Completely Knocked Down (CKD) kits will start as soon as an agreement is finalised among the partners. This venture represents a major <br />manufacturing shift for SIL, a public sector enterprise, which so far has only produced<br />two- and three-wheelers. It also plans to introduce an electric three-wheeler model,<br />already in use in Nepal, into the Indian market.<br />Bajaj Auto has introduced its diesel three-wheeler in Hyderabad. The vehicle has<br />a 416 cc engine and is priced at Rs 83,000, lower than its nearest competitor the Greaves Garuda, which is priced at Rs 85,000 (in Hyderabad). Bajaj’s petrol three-wheelers already account for 85 per cent of the India market. Its new product, consequentially, could erode its own base.<br />Indian Automobile industry has become more competitive in the export market<br />due to its technological and quality advances, so much so that in quality conscious<br />markets such as Europe and America, Indian automobile industry is emerging as a major player judging by its performance. India today exports: Engine and engine parts,<br />electrical parts, drive transmission & steering pats, suspension & braking parts among<br />others.<br />Different players in Automobile industry<br />Jagdish Khattar. Y.S. Kim. Ratan Tata. S.G. Awasthi. The four men are peers. Each has<br />unequivocally established himself as one of the winners in the first round of the car wars.Between them, they control almost 80% of the Rs 30,500-crore Indian automobile market.<br />The battle royale in the Indian car market has entered the next phase. As the dust and<br />excitement of the dozens of new models introduced in the past one year settles down, the winners have pulled way ahead of the also-rans. One old assumption has been vindicated that over 80% of the Indian car market is still confined to the small, sub-Rs 4 lakh models. And those mid-size and bigger models can only provide the icing on the cake, not the cake itself to any manufacturer.<br />Maruti found out that price is no longer the most important factor in winning car battles.<br />Daewoo's Awasthi admits candidly that he learnt precisely the opposite lesson -- that<br />price does matter. Kim of Hyundai found out the hard way that you could get your<br />pricing and value equation just right and still land up with egg on your face if you tried to<br />cut corners in the technology game. Ratan Tata learnt that providing an internationally<br />designed car with a great value proposition didn't get you far if you couldn't provide<br />global quality standards. Both the Indica and the Matiz had to upgrade their engines in<br />less than one year after launch, the Honda City had to bring in both a new body and a<br />more powerful engine, and Hyundai had to start offering a new variant with the power<br />steering option barely a year after it hit the market.<br />From now on, the battle is expected to get more vicious. In 1999-2000, the car market<br />bounced back from the recession by showing a 55.83% growth! But now, no one expects the market to grow by more than 10-15% per annum. The really big volume gains will come from wresting market share away from rivals rather than because the market itself is growing exponentially.<br />Chapter 3 THEORITICAL FRAMEWORK<br />PERFORMANCE APPRAISAL INTRODUCTION <br />People differ in their abilities and their aptitudes. There is always some difference between the quality and quantity of the same work on the same job being done by two different people. Therefore, performance management and performance appraisal is necessary to understand each employee‘s abilities, competencies and relative merit and worth for the organization. Performance appraisal rates the employees in terms of their performance. Performance appraisals are widely used in the society. The history of performance appraisal can be dated back to the 20th century and then to the second world war when the merit rating was used for the first time. An employer evaluating their employees is a very old concept. Performance appraisals are an indispensable part of performance measurement. Performance appraisal is necessary to measure the performance of the employees and the organization to check the progress towards the desired goals and aims. The latest mantra being followed by organizations across the world being – ―get paid according to what you contribute‖ – the focus of the organizations is turning to performance management and specifically to individual performance. Performance appraisal helps to rate the performance of the employees and evaluate their contribution towards the organizational goals. If the process of performance appraisals is formal and properly structured, it helps the employees to clearly understand their roles and responsibilities and give direction to the individual‘s performance.It helps to align the individual performances with the organizational goals and also review their performance. Performance appraisal takes into account the past performance of the employees and Focuses on the improvement of the future performance of the employees. FEATURES OF PERFORMANCEAPPRAISAL 1) Setting SMART Goals for Employees: Goal setting provides leaders, managers and employees with web-based tools to set SMART goals and track progress on frequent intervals. 2) Evaluate Employee Performance: Employee Appraisal ensures objective and accurate evaluation of your employee‘s performance and helps you find the strengths and weakness of the employee. 3)Coach and Train Employees to improve their performance: To continually improve performance of your organization you need to continuously training employees to update their skills and competencies. Training Management allows you manage employee training effectively. 4) Define competitive employee compensation plans: Employee compensation plan helps you to remain competitive in your business and attract and retain talented employee. 5)Promote right employees to critical positions: Organizations success by placing right employee in right positions. <br />OBJECTIVE OF PERFORMANCE APPRAISAL <br />Objectives of Performance appraisal: <br />To review the performance of the employees over a given period of time. <br />To judge the gap between the actual and the desired performance.<br />To help the management in exercising organizational control<br />Helps to strengthen the relationship and communication between superior – subordinates and management – employees<br />To diagnose the strengths and weaknesses of the individuals so as to identify the training and development needs of the future. <br />To provide feedback to the employees regarding their past performance<br />Provide information to assist in the other personal decisions in the organization.<br />Provide clarity of the expectations and responsibilities of the functions to be performed by the employees<br />To judge the effectiveness of the other human resource functions of the organization such as recruitment, selection, training and development<br />To reduce the grievances of the employees <br />PERFORMANCE APPRAISAL SYSTEMS <br />Issues like promotions, demotions, bonuses and pay will affect the success or failure of a 360 degree performance appraisal. Keep in mind that performance appraisal systems are used to define employee goals, employee contributions and determine the employee‘s results in meeting those goals and contributions. It is a genuine review of past employee performance.<br />PERFORMANCE APPRAISAL - PUNISHMENT TOOL OR ORGANIZATIONA CATALYST <br />Performance Appraisal is one of the core HR activities. It is the assessment of the employee‘s job performance. It is completely based on employee‘s job description and objectives to be achieved.<br />Performance Appraisal (PA) has 2 basic purposes. First, PA serves an administrative purpose. It provides information for making salary, promotion and layoff decisions as well as providing documentation for justifying these decisions. Second, rather more importantly, performance appraisal serves a developmental purpose. <br />This information can be utilized for determining training needs, career planning and succession planning. Employees have mixed views about performance appraisals. <br />According to one segment, it is for the betterment of the employees and the organization. Those employees, who work efficiently and effectively, will get the agreed intrinsic as well as extrinsic benefits. It is being regarded as an excellent method of keeping everyone motivated. The better you perform, the more you get. <br />On the contrary, some employees suggest to their managers that companies should get rid of performance appraisals as it is a bitter process which has the ability to create emotional pressures and stress for the employees.<br />A manager‘s bias also plays its role. Furthermore, he might lack proper training for evaluating employees‘ performances. Their perception is that ―no matter how well we perform, our contributions will never be acknowledged.<br />Annual performance<br />The annual performance appraisal might be the most important meeting you have with your employees all year. Appraisals offer an opportunity to clarify job descriptions, set goals and objectives, formulate sensible compensation decisions, and decisively address any performance challenges. <br />Properly handled, performance appraisals can correct personnel issues and set employees on a positive course for the coming months. Handled poorly, they have the potential to demoralize employees, provoke EEO complaints, and erode trust in management. <br />This session is a must for managers and human resource professionals who are frustrated with the typical ineffectiveness of performance management discussions in advancing organizational goals and promoting positive employee relations.<br />360 DEGREE PERFORMANCE APPRAISAL<br />INTRODUCTION<br />Unlike, the traditional top-down appraisal where a supervisor appraises the performance of their subordinate, 360 Performance Appraisal incorporates multiple perspectives by using feedback from a variety of sources. 360 degree feedback, also known as 'multi-rater feedback', is the most comprehensive appraisal where the feedback about the employees‘ performance comes from all the sources that come in contact with the employee on his job. <br />360 degree respondents for an employee can be his/her peers, managers (i.e. superior), subordinates, team members, customers, suppliers/ vendors - anyone who comes into contact with the employee and can provide valuable insights and information or feedback regarding the ―on-the-job‖ performance of the employee.<br />360 degree appraisal has four integral components: 1. Self appraisal 2. Superiors appraisal 3. Subordinate‘s appraisal 4. Peer appraisal. <br />Self appraisal gives a chance to the employee to look at his/her strengths and weaknesses, his achievements, and judge his own performance. Superior‘s appraisal forms the traditional part of the 360 degree appraisal where the employees‘ responsibilities and actual performance is rated by the superior. Subordinates appraisal gives a chance to judge the employee on the parameters like communication and <br />motivating abilities, superior‘s ability to delegate the work, leadership qualities etc. Also known as internal customers, the correct feedback given by peers can help to find employees‘ abilities to work in a team, co-operation and sensitivity towards others.<br />Its the most costly and time consuming type of appraisal.These programs tend to be somewhat shocking to managers at first. "reaction: Shock, Anger, Rejection,Acceptance,Help".The problems may arise with subordinate assessments where employees desire to "get the boss" or may alternatively "scratch the back" of a manager for expected future favors. The organization implementing this type of performance appraisal must clearly define the mission and the scope of the appraisal. Otherwise it might prove counterproductive.One of the reason for which 360 degree appraisal system might fail is because the organizations attempt to assimilate the 360-degree method within a traditional survey research scheme. In traditional survey research, investigators attempt to maximize data collection with as many items/questions as possible and with large sample sizes. In the case of 360-degree appraisal, creating measurement instruments with many items will substantially increase non-response errors.<br /> In addition, large sample sizes are not typically possible considering that perhaps 4 or 5 sources will rate an employee’s performance. As such, statistical procedures that rely on large sample sizes in order to ensure statistical validity might not be appropriate.Organizations must consider other issues like safeguarding the process from unintentiona,respondent ratingerrors.The culture shock that occurs with any system that creates "change." And especiallwith a modern system like 360 degree performance appraisal; must be taken care of.================================================== ==========================The design and implementation of the 360 degree feedback system requires thoughtful planning. Are the employees accepting the system? Are the goals, procedures and benefits of the system clearly defined? Is the rating instrument relevant, valid and reliable? Please carefully review the recommendations made in this article that have been derived from extensive research on how to ensure the success of the 360 degree feedback,system.CritaeraFactors for Success . <br />In order for the 360 degree feedback system to be successful there must be employee acceptance of the system. Both perceived accuracy and justice are considered critical factors for system acceptance. If the system is unjust or has errors, it will be dismissed for obvious reasons. Fortunately, reputable providers of 360 degree feedback have often delivered hundreds of thousands of ratings, and are experienced in maximizing the likelihood of system acceptance. There are three key steps to using the 360 degree feedback system successfully:<br />1. make it fit into the organization; <br />2.make it psychometrically sound; <br />3.use with care. <br />Make it Fit .<br />Try to make the 360 feedback fit into the culture of the organization. In doing so it will appear less threatening and more fair . <br />Increase Employee Participation . <br />To increase the perception of justice, employees should be encouraged to be active participants in the evaluation. A multiple source feedback works best in an environment that is team-oriented and cooperative. Giving individuals the opportunity to voice their opinions about the system's construction, process, and results will increase employee buy-in, acceptance, and will yield useful suggestions.<br />Train Feedback Providers .<br />It is also important to train the feedback providers to be sensitive, respectful and polite. Treating employees in a friendly and respectful manner, and offering constructive advice will make them more open to accepting the performance appraisal system.<br />Communication is Key .<br />People tend to be suspicious of things they do not understand. Thus, it is important to communicate to the employees the precise way in which ratings are to be combined, as well as the purpose, benefits and procedures of the 360 degree feedback system. It is particularly important to communicate the intended uses of the information.<br />Make it psychometrically Sound .<br />Ensure that the Instrument is Applicable .<br />A good assessment should be reliable and valid. It must measure what it proposes to measure, consistently and accurately. The 360 degree feedback system only works effectively if it measures the relevant job performance, knowledge, skills, abilities and personality characteristics necessary for high levels of job performance. Thus, the first step is to identify, define, and incorporate these job performance behaviors, knowledge, and skills into the appraisal system.<br />Increase Rater Familiarity .<br />Select raters who are well acquainted with the employee. Rater familiarity is linked to accuracy and fairness in performance ratings. To evaluate rater familiarity, some 360 degree feedback systems include a rating for familiarity and provide the option of indicating "inadequate opportunity to observe" for performance characteristics. To increase reliability and decrease the impact of individual biases a large sample of raters should be selected. Reliability continues to increase when up to twenty raters are included, but adequate reliability can be obtained using 6 or more raters . <br />Promote Rater Accuracy .<br />Both 'self' and 'other' appraisal accuracy should be promoted and rewarded. The nature of the 360 degree feedback system should reduce the problem of rater accuracy, as the use of multiple raters will average out individual biases. Furthermore, there is an apparent tradeoff when using either 'self' or 'other' ratings. Other-ratings are perceived to be more accurate, however, they may also be perceived by the employee to be less fair. The inverse is true for self-ratings. Clearly, both rating methods have advantages and disadvantages; thus, a performance appraisal system that combines both 'self' and 'other' <br />Ratings will be the most beneficial.<br />Use with Care . <br />When implementing the 360 degree feedback system it is important to be consistent across employees (all of the employees should have an equal opportunity to participate in the system), and administered frequently. A consistent system will be perceived as more accurate and fair. A one-time 360 feedback exercise is not recommended — they are best when at least a three to five term is planned. Furthermore, evaluating performance over time provides employees with benchmarks for development . <br />Review<br />When implementing the 360 degree feedback system it is imperative to gain employee acceptance at the outset. The following guidelines will help make the system fair and accurate:<br />1. ensure that the 360 degree feedback system is consistent with the culture of the organization and the expectations of the employees; <br />2.conduct an information campaign that highlights the benefits and fairness of 360 feedback, and outline the process in some detail. <br />3.ensure that the rating instruments are relevant, valid, and reliable; <br />4.emphasize the importance of the raters being familiar with the employee's performance and provide raters the opportunity of "opting out" if they are not; <br />5encourage and train raters on how to provide accurate ratings; <br />6.promote a participative environment where individual feedback is rewarded; <br />7.administer the performance appraisal system regularly and consistently; <br />8.continue to communicate information about the 360 degree feedback system; <br />9.treat employees with sensitivity and respect; <br />10.ensure that offensive or actionable coworker feedback is not returned to an employee. <br />Strategies for Success .<br />Don't force it on peopleExplain what it is, what it does, how it's used, and its' benefits to all concerned, continuallyEmphasize confidentialityDisconnect it from any compensation decisions (raises, bonuses, etc.) - make it developmentalProvide information on its purpose and process to assessorsConduct structured feedback workshops for feedback recipientsSpend time with those people having difficulty with their feedbackKnow the instrument you're using thoroughlyProvide seamless coordination and support for distributing and collecting the assessment instrumentsMake sure your vendor provides back-up support in case problems occur with the instruments or the process .Be trained in how to facilitate a 360° process. There's more to it than meets the eye. Align your 360° process with the organization's culture, procedures, and practices. Support and reinforce it.==================================================<br />Guaranteed Strategies For 360° Disaster<br />*Use it inappropriately: Take an instrument designed for developmental purposes and use it to reward or punish performance (Performance Appraisal).*Use 360° feedback without systemic support in place. Examples include:<br />*No facilitated workshops to support the receiving of feedback <br />*No institutionalized process or procedures are put in place to support, safeguard, and reinforce its benefit to the organization *Lower levels of the organization use it but not the upper levels*No up front explanation of the process to assessors or assesses*Insufficient administrative support to distribute, collect, and process assessment instruments*Failure to provide support for feedback recipients. More examples:*Data "dumped" on users; no framing or context provided. ("Here, read this and get back to me.") *When contradictory or negative feedback is received, no trained facilitator is on hand to help the assessee work through it. *When feedback is rejected, no facilitator or coach is available to probe the assessee's resistance, or search for ways to allow them to "hear" the feedback*Unethical behavior within the organization:*Breach of confidentiality by report processor or facilitator (leaking or talking about a person's results). *"Hammering" recipients with their results after they've shared it with facilitator or boss *Threatening assessors to reveal how they assessed someone<br />*Recriminations against those who provided (or didn't provide) feedback to the assesses<br />Feedback is almost always a sensitive subject. People are often cautious, sometimes fearful, and occasionally emotional about it. A good facilitator or administrator recognizes and appreciates the sensitive nature surrounding 360° feedback and takes serious steps to insure the integrity of the process and support of the individual. Once the process has been breached by any of the above actions, it will be difficult to recover. Spend the time up front doing the homework necessary to make the process successful. The results will be more than worth it.<br />INTRODUCTION TO INDIAN AUTOMOBILE INDUSTRY<br /><ul><li> The Automobile sector is one of the fastest growing manufacturing sectors in India</li></ul>The world leaders in the sector are evincing keen interest in establishing manufacturing facilities for manufacturing and assembling components.<br />A politically stable and vibrant State, Andhra Pradesh is centrally located with the<br />support of seaports, international airports, assured and reliable power supply,<br />abundant water, broad base of auto component manufacturers, highly trained, skilled<br />and disciplined manpower and is therefore, the preferred location for Automobile<br />industries.<br />INDIAN FOUR WHEELER INDUSTRY <br />Evolution<br />The Indian automobile industry developed within the broader context of import substitution during the 1950s. The distinctive feature of the automobile industry in India was that in line with the overall policy of State intervention in the economy, vehicle production was closely regulated by an industrial licensing system till the early 1980s that controlled output, models and prices. The cars were built mostly by two companies, Premier Automobiles Limited and HM. However, the Indian market got transformed after 1983 following the relaxation of the licensing policy and the entry of MUL into the car market. In 1991, car imports were insignificant, while component imports were equivalent to 20% of the domestic production, largely because of the continuing import of parts by MUL. The liberalization of the Indian automotive industry that began in the early 1990s was directed at dismantling the system of controls over investment and production, rather than at promoting foreign trade. Multinational companies were <br />allowed to invest in the assembly sector for the first time, and car production was no longer constrained by the licensing system. However, QRs on built-up vehicles remained and foreign assemblers were obliged to meet local content requirements even as export targets were agreed with the Government to maintain foreign exchange neutrality. The new policy regime and large potential demand led to inflows of foreign direct investment (FDI) by the mid-1990s. By the end of 1997, Daewoo, Ford India, GM, DaimlerChrysler and Peugeot had started assembly operations in India. They were followed by Honda, HMIL, and Mits<br />Current Scenario<br />Major Players<br />Bajaj Tempo Limited, DaimlerChrysler India Private Limited, Fiat India Automotive Private Limited, Ford India Limited, General Motors India Limited, Hindustan Motors Limited, Honda Siel Cars India Limited, Hyundai Motor India Limited, Mahindra & Mahindra Limited, Maruti Udyog Limited, Skoda Auto India Limited, Tata Motors Limited, Toyota Kirloskar Motors Limited.<br />Current scenario in Passenger Car Category<br />The dominant basis of competition in the Indian passenger car industry has changed from price to price-value, especially in the passenger car segment. While the Indian market remains price sensitive, the stranglehold of Economy models has been slackening, giving way to higher-priced products that better meet customer needs. Additionally, a dominant trend in the Indian passenger car segment is the increasing fragmentation of the market into sub-segments, reflecting the increasing sophistication of the Indian consumer. With the launch of new models from FY2000 onwards, the market for MUVs has been redefined in India, especially at the upper-end. Currently, the higher-end MUVs, commonly known as Sports Utility Vehicles (SUVs), occupy a niche in the urban market, having successfully shaken off the tag of commercial vehicles attached to all MUVs till recently. Domestic car manufacturers are now venturing into areas such as car financing, leasing and fleet management, and used-car reconditioning/sales, to complement their mainstay-business of selling new cars.<br />COMPETITIVE FORCES IN INDIAN PASSENGER CAR MARKET<br />Critical Issues and Future Trends<br />The critical issue facing the Indian passenger car industry is the attainment of break-even volumes. This is related to the quantum of investments made by the players in capacity creation and the selling price of the car. The amount of investment in capacities by passenger car manufacturers in turn depends on the production<br />Threat from the new players: Increasing<br />· Most of the major global players are present in the Indian market; few more are expected to enter.<br />· Financial strength assumes importance as high are required for building capacity and maintaining adequacy of working capital.<br /> Access to distribution network is important.<br /> Lower tariffs in post WTO may expose Indian companies to threat of imports.<br /> Chapter 4 about marutiudyog<br />“Synopsis on MARUTI Udyog Limited (Mul)”<br />Maruti Suzuki is one of India's leading automobile manufacturers and the market leader in the car segment, both in terms of volume of vehicles sold and revenue earned. Until recently, 18.28% of the company was owned by the Indian Government, and 54.2% by Suzuki of Japan. The Indian government held an initial public offering of 25% of the company in June 2003. As of 10 May 2007, Govt. of India sold its complete share to Indian financial institutions. With this, Govt. of India no longer has stake in Maruti Udyog.<br />Maruti Udyog Limited (MUL) was established in February 1981, though the actual production commenced in 1983 with the Maruti 800, based on the Suzuki Alto kei car which at the time was the only modern car available in India, its' only competitors- the Hindustan Ambassador and Premier Padmini were both around 25 years out of date at that point. Through 2004, Maruti has produced over 5 Million vehicles. Marutis are sold in India and various several other countries, depending upon export orders. Models similar to Marutis (but not manufactured by Maruti Udyog) are sold by Suzuki and manufactured in Pakistan and other South Asian countries.<br />The company annually exports more than 50,000 cars and has an extremely large domestic market in India selling over 730,000 cars annually. Maruti 800, till 2004, was the India's largest selling compact car ever since it was launched in 1983. More than a million units of this car have been sold worldwide so far. Currently, Maruti Alto tops the sales charts and Maruti Swift is the largest selling in A2 segment.<br />Due to the large number of Maruti 800s sold in the Indian market, the term "Maruti" is commonly used to refer to this compact car model. Till recently the term "Maruti", in popular Indian culture, was associated to the Maruti 800 model.<br />Maruti Suzuki India Limited, a subsidiary of Suzuki Motor Corporation of Japan, has been the leader of the Indian car market for over two decades.<br />Its manufacturing facilities are located at two facilities Gurgaon and Manesar south of New Delhi. Maruti’s Gurgaon facility has an installed capacity of 350,000 units per annum. The Manesar facilities, launched in February 2007 comprise a vehicle assembly plant with a capacity of 100,000 units per year and a Diesel Engine plant with an annual capacity of 100,000 engines and transmissions. Manesar and Gurgaon facilities have a combined capability to produce over 700,000 units annually.<br />More than half the cars sold in India are Maruti cars. The company is a subsidiary of Suzuki Motor Corporation, Japan, which owns 54.2 per cent of Maruti. The rest is owned by the public and financial institutions. It is listed on the Bombay Stock Exchange and National Stock Exchange in India.<br />During 2007-08, Maruti Suzuki sold 764,842 cars, of which 53,024 were exported. In all, over six million Maruti cars are on Indian roads since the first car was rolled out on 14 December 1983.<br />Maruti Suzuki offers 15 models, Maruti 800, Omni,Esteem, Baleno, Alto, Versa, Ritz, Gypsy, A Star, Wagon R, Zen Estilo, Swift, Swift Dzire, SX4, and Grand Vitara. Swift, Swift dzire, A star and SX4 are maufactured in Manesar, Grand Vitara is imported from Japan as a completely built unit (CBU), remaining all models are manufactured in Maruti Suzuki's Gurgaon Plant.<br />Suzuki Motor Corporation, the parent company, is a global leader in mini and compact cars for three decades. Suzuki’s technical superiority lies in its ability to pack power and performance into a compact, lightweight engine that is clean and fuel efficient.<br />Maruti is clearly an “employer of choice” for automotive engineers and young managers from across the country. Nearly 75,000 people are employed directly by Maruti and its partners.<br />The company vouches for customer satisfaction. For its sincere efforts it has been rated (by customers)first in customer satisfaction among all car makers in India for nine years in a row in annual survey by J D Power Asia Pacific.<br />Maruti Suzuki was born as a government company, with Suzuki as a minor partner to make a people's car for middle class India. Over the years, the product range has widened, ownership has changed hands and the customer has evolved. What remains unchanged, then and now, is Maruti’s mission to motorise India.<br />Partner for the joint venture<br />Pressure started mounting on Indira and Sanjay Gandhi to share the details of the progress on the Maruti Project. Since country's resources were made available by mother to her son's pet project. A delegation of Indian technocrats was assigned to hunt a collaborator for the project. Initial rounds of discussion were held with the <br />giants of the automobile industry in Japan including Toyota, Nissan and Honda. Suzuki Motor Corporation was at that time a small player in the four wheeler automobile sector and had major share in the two wheeler segment. Suzuki's bid was considered negligible.<br />In the initial rounds of discussion the giants had their bosses present and in the later rounds related to the technical discussions executives of these automobile giants were present. Osamu Suzuki, Chairman and CEO of the company ensured that he was present in all the rounds of discussion. Osamu in an article writes that it subtly massaged their (Indian delegation) egos and also convinced them about the sincerity of Suzuki's bid. In the initial days Suzuki took all steps to ensure the government about its sincerity on the project. <br />Suzuki in return received a lot of help from the government in such matters as import clearances for manufacturing equipment (against the wishes of the Indian <br />machine tool industry then and its own socialistic ideology), land purchase at government prices for setting up the factory Gurgaon and reduced or removal of excise tariffs. This helped Suzuki conscientiously nurse Maruti through its infancy to become one of its flagship ventures.<br />Joint venture related issues<br />Maruti Suzuki's A-Star vehicle during its unveiling in Pragati Maidan, Delhi. A-Star, Suzuki's fifth global car model, was designed and is made only in India. Besides being Suzuki's largest subsidiary in terms of car sales, Maruti Suzuki is also Suzuki's leading research and development arm outside Japan Relationship between the Government of India, under the United Front (India) coalition and Suzuki Motor Corporation over the joint venture was a point of heated debate in the Indian media till Suzuki Motor Corporation gained the controlling stake. This highly profitable joint venture that had a near monopolistic trade in the Indian automobile market and the nature of the partnership built up till then was the underlying reason for most issues. The success of the joint venture led Suzuki to increase its equity from 26% to 40% in 1987, and further to 50% in 1992. In 1982 both the venture partners had entered into an agreement to nominate their candidate for the post of Managing Director and every Managing Director will have a tenure of five year.<br />Initially R.C.Bhargava, was the managing director of the company since the inception of the joint venture. Till today he is regarded as instrumental for the success of Maruti Udyog. Joining in 1982 he held several key positions in the company before heading the company as Managing Director. Currently he is on the Board of Directors. After completing his five year tenure, Mr. Bhargava later assumed the office of Part-Time Chairman. The Government nominated Mr. S.S.L.N. Bhaskarudu as the Managing Director on 27 August 1997. Mr. Bhaskarudu had joined Maruti in 1983 after spending 21 years in the Public sector undertaking Bharat Heavy Electricals Limited as General Manager. Later in 1987 he was promoted as Chief General Manager, 1988 as Director, Productions and Projects, 1989 Director, Materials and in 1993 as Joint Managing Director.<br />The Suzuki Motor corporation didn't attend the Annual General Meeting of the Board with the reason of it being called on a short notice Later Suzuki Motor Corporation went on record to state that Mr. Bhaskarudu was "incompetent" and wanted someone else. However, the Ministry of Industries, Government of India refuted the charges. Media stated from the Maruti sources that Bhaskarudu was interested to indigenise most of <br />components for the models including gear boxes especially for Maruti 800. Suzuki also felt that Bhaskarudu was a proxy for the Government and would not let it increase its stake in the venture If Maruti would have been able to indigenise gear boxes then Maruti would have been able to manufacture all the models without the technical assistance from Suzuki. Till today the issue of localization of gear boxes is highlighted in the press the relation strained when Suzuki Motor Corporation moved to Delhi High <br />Court to bring a stay order against the appointment of Mr. Bhaskarudu. The issue was resolved in an out-of-court settlement and both the parties agreed that R S S L N Bhaskarudu would serve up to 31 December 1999, and from 1 January 2000, <br />Jagdish kumar Executive Director of Maruti Udyog Limited would assume charges as the Managing Director Many politicians believed, and had stated in parliament that the Suzuki Motor Corporation is unwilling to localize manufacturing and reduce imports. This remains true, even today the gear boxes are still imported from Japan and are assembled at the Gurgaon facility.<br />Production Milestones<br />➢ 1st vehicle produced, December 1983<br />➢ 1,00,000 vehicles produced by August, 1986<br />➢ 5,00,000 vehicles produced by June, 1990<br />➢ 10,00,000 vehicles produced by March, 1994<br />➢ 15,00,000 vehicles produced by April, 1996<br />➢ 20,00,000 vehicles produced by October, 1997<br />25,00,000 vehicles produced by March, 1999<br />➢ 30,00,000 vehicles produced by June, 2000<br />➢ 35,00,000 vehicles produced by December 2001<br />➢ 40,00,000 vehicles produced by April, 2003<br />➢ 45,00,000 vehicles produced by April, 2007-2008<br />Chapter 5 theortical approach<br />OVERVIEW<br />Performance appraisals are a systematic way of evaluating the standard of an employee’s performance.<br />Steps for developing a systematic performance appraisal<br />1. Identify key performance criteria<br />Development of key performance criteria should be based on a comprehensive job description and undertaken in consultation with employees.<br />2. Develop appraisal measures<br />In order to obtain accurate and valid performance appraisals, appraisal measures should be tailored to the specific job or “job family” (i.e., groups of similar jobs). An evaluation of factors in the work environment which help or hinder performance is also recommended. This ensures that realistic expectations are set for employee’s performance, and is also likely to increase the perceived fairness and acceptability of performance appraisals.<br />3. Collect performance information from different sources<br />Traditionally, it has been the sole responsibility of managers / supervisors to assess performance. However, other organisational members (e.g., clients, coworkers, subordinates) can be a valuable source of information as they are likely to have exposure to different aspects of an employee’s performance. Collecting information from multiple sources can increase the accuracy of performance evaluation (i.e., reduce bias), and increase employee’s perceptions of fairness.<br />4. Conduct an appraisal interview<br />The two central purposes of the appraisal interview are to:<br />1. Reflect on past performances to identify major achievements, areas for further improvement, and barriers / facilitators to effective performance<br />2. Identify goals and strategies for future work practice.<br />The appraisal interview should be a constructive, two-way exchange between the supervisor and employee, with preparation for the interview done by both parties beforehand.<br />5. Evaluate the appraisal process<br />The performance appraisal process should undergo regular review and improvement. For example, focus groups or surveys could be conducted to gauge employee’s perceptions of the appraisal process. A successful performance appraisal process <br />should demonstrate a change in both the ratings of employee’s performance and aspects of the work environment that impact upon work performance.<br />Best practice in performance appraisal<br />In essence, best practice in performance appraisals involves:<br />• Integrating performance appraisal into a formal goal setting system<br />• Basing appraisals on accurate and current job descriptions<br />• Offering adequate support and assistance to employees to improve their performance<br />(e.g., professional development opportunities)<br />• Ensuring that appraisers have adequate knowledge and direct experience of the employee’s performance<br />• Conducting appraisals on a regular basis.<br />Meaning and Definition of Performance Appraisal<br />Performance appraisal is a formal system that evaluates the quality of a employee’s performance. An appraisal should not be viewed as an end in itself, but rather as an important process within a broader performance management system that links:<br />.Organizational objectives<br />• Day-to-day performance<br />• Professional development<br />• Rewards and incentives<br />In simple terms, appraisal may be understood as the assessment of an individual’s performance in a systematic way, the performance being measured against such factors as job knowledge, quality, and quantity of output, initiative, leadership abilities, supervision, dependability, co-operation, judgment, versatility, health, and the like. Assessment should <br />not be confined to past performance alone. Potentials of the employee for future performance must also be assessed.<br />A formal definition of performance appraisal is:<br />“It is the systematic evaluation of the individual with respect to his or her performance on the job and his or her potential for development.”<br />A more comprehensive definition is:<br />“Performance appraisal is a formal, structured system of measuring and evaluating an employee’s job related behaviors and outcomes to discover how and why the employee is presently performing on the job and how the employee can perform more effectively in the future so that the employee, organization, and society all benefit.”<br />Traditional Performance Appraisal<br />The history of performance appraisal is quite brief. Its roots in the early 20th century can be traced to Taylor's pioneering Time and Motion <br />studies. But this is not very helpful, for the same may be said about almost everything in the field of modern human resources management.<br />During the First World War, appraisals concept was adopted by US army which was in the form of merit rating. It was man-to-man rating system for evaluation of military personnel. From the army this concept entered the business field and was restricted to hourly-paid workers. During 1920s, relational wage structures for hourly- paid workers were adopted in industrial units and each worker was used to be rated in comparison to other for determining wages rates. This system was called merit rating.The process was firmly linked to material outcomes. If an employee's performance was found to be less than ideal, a cut in pay would follow. On the other hand, if their performance was better than the supervisor expected, a pay rise was in order.<br />Little consideration, if any, was given to the developmental possibilities of appraisal. If was felt that a cut in pay, or a rise, should provide the only required impetus for an employee to either improve or continue to perform well. Sometimes this basic system succeeded in getting the results that were intended; but more often than not, it failed.<br />For example, early motivational researchers were aware that different people with roughly equal work abilities could be paid the same amount of money and yet have <br />quite different levels of motivation and performance. These observations were confirmed in empirical studies. Pay rates were important, yes; but they were not the only element that had an impact on employee performance. It was found that other issues, such as morale and self-esteem, could also have a major influence.<br />As a result, the traditional emphasis on reward outcomes was progressively rejected. In the 1950s in the United States, the potential usefulness of appraisal as tool for motivation and development was gradually recognized. The general model of performance appraisal, as it is known today, began from that time.<br />Modern Appraisal<br />Performance appraisal may be defined as a structured formal interaction between a subordinate and supervisor, that usually takes the form of a periodic interview (annual or semi-annual), in which the work performance of the subordinate is examined and discussed, with a view to identifying weaknesses and strengths as well as opportunities for improvement and skills development.<br />In many organizations - but not all - appraisal results are used, either directly or indirectly, to help determine reward outcomes. That is, the appraisal results are used to identify the better performing employees who should get the majority of available merit pay increases, bonuses, and promotions.By the same token, appraisal results are used to identify the poorer performers who may require some form of counseling, or in extreme cases, demotion, dismissal or decreases in pay. (Organizations need to be aware of laws in their country that might restrict their capacity to dismiss employees or decrease pay.)<br />Whether this is an appropriate use of performance appraisal - the assignment and justification of rewards and penalties - is a very uncertain and contentious matter.<br />Objectives of Performance Appraisal<br />Salary Increase<br />Performance appraisal plays a role in making decision about salary increase. Normally salary increase of an employee depends upon on how he is performing his job. There is continuous evaluation of his performance either formally or informally. This may disclose how well an employee is performing and how much he should be compensated by way of salary increase.<br />Promotion<br />Performance appraisal plays significant role where promotion is based on merit and seniority. Performance appraisal discloses how an employee is working in his <br />present job and what are his strong and weak points. In the light of these, it can be decided whether he can be promoted to the next higher position.<br />Training and Development<br /> Performance appraisal tries to identify the strengths and weakness of an employee on his present job. This information can be used for devising training and development programmes appropriate for overcoming weaknesses of employees.<br />Feedback<br />Performance appraisal provides feedback to employees about their performance. A person works better when he knows how he is working. This works in two ways, firstly, the person gets feedback about his performance. Secondly, when the person gets feedback about his performance, he can relate his work to the orgaisational objectives.<br />Pressure on Employees<br />Performance appraisal puts a sort of pressure on employees for better performance. If the employees are conscious that they are being appraised in respect of certain factors and their future largely depends on such appraisal.<br />Others<br />Identifying systemic factors that are barriers to, or facilitators of, effective performance.<br />To confirm the services of probationary employees upon their completing the<br /> probationary period satisfactorily.<br />To improve communication. Performance appraisal provides a format for<br /> dialogue between the superior and the subordinate, and improves<br /> understanding of personal goals and concerns. This can also have the effect of increasing the trust between the rater and the ratee.<br /> d) To determine whether HR programmes such as selection, training, and transfer have been effective or not.<br />How to Conduct a Performance Appraisal Process<br />The following five-step approach to conducting a systematic performance appraisal is recommended:<br />Identify key performance criteria<br />Develop appraisal measures<br />Collect performance information from different sources<br />Conduct an appraisal interview<br />Evaluate the appraisal process.<br />Step 1: Identify Key Performance Criteria<br />Perhaps one of the most challenging aspects of setting up a performance appraisal is deciding what to assess. In essence, four key dimensions of performance should be considered in a performance appraisal.<br />Key Dimensions of Performance<br />Competencies Knowledge, skills, and abilities relevant to performanceBehavioursSpecific actions conducted and / or tasks performedResults / outcomesOutputs, quantifiable results, measurable outcomes and achievements, objectives attainedOrganisational citizenship behavioursActions that are over and above usual job responsibilities<br />To ensure that the performance criteria are relevant to work practice and acceptable to appraisers and employees:<br /> I)Base the performance criteria on an up-to-date job description<br />ii) Develop criteria in consultation with appraisers and employees.<br />i)Base the performance criteria on an up-to-date job description:<br />Clear and explicit links between performance appraisal and a job description will ensure the relevance of the appraisal. If a detailed job description is not available or is out-of-date, it is strongly recommended that an accurate job description be developed prior to conducting a performance appraisal.<br />ii)Develop criteria in consultation with appraisers and employee:<br />Linking performance appraisals with job descriptions can help to focus the appraisal process on the key competencies, behaviours and outcomes associated with a particular role or position. It can also be useful to consult with employees to:<br />Ensure that key aspects of a role / position are represented in the job description, for example:<br />Conduct assessments<br />Plan interventions<br />Manage cases<br />Liaise with and refer to other providers<br />Keep up-to-date service records and case notes<br />Write reports<br />Develop a clear understanding of the relative importance of various competencies, <br />Behaviours and outcomes<br />Identify how these key competencies, behaviours and outcomes can be fairly and accurately assessed.<br />Employees are more likely to accept and be satisfied with the appraisal system if they participate in the development of appraisal criteria and measures, and in the process of conducting appraisals.<br />Strategies for facilitating employee’s participation include:<br />Engagement in formal meetings or informal discussions with supervisors to seek input and / or feedback on appraisal measures and criteria<br />Representation on groups / committees involved in the design and implementation of <br />performance appraisals Inclusion of self appraisals in the appraisal process.<br />Providing opportunities for employees to contribute to the performance appraisal of coworkers and managers / supervisors.<br />It is also important that employees perceive the appraisal system to be equitable and fair.<br /> Step 2: Develop Appraisal Measures<br />Once clear and specific performance criteria have been developed, the next step is to decide how to assess employee’s performance. It is recommended that a structured and systematic approach is taken to assessing performance. Problems that arise when an unstructured “blank sheet” approach is used include:<br />Increased chance of appraiser errors (i.e., reduced accuracy)<br />Knowledge, skills and abilities most critical to job performance may be overlooked<br />(i.e., feedback may have limited impact on performance effectiveness)<br />Reduced consistency between appraisers (i.e., evaluations may reflect differences<br /> between appraisers rather than actual differences in a employee’s performance)<br />Perceptions of “subjectivity” in evaluations, which may in turn, reduce employee’s <br />satisfaction with, and acceptance of appraisals.<br />There are three important considerations in the design of appraisal measures:<br />Generic versus individually tailored measures<br />Objective versus subjective assessments<br />Assessing the impact of the work environment on performance.<br />Generic versus individually tailored measures<br />Many workplaces use a generic rating form for all employees irrespective of their role or position within the organisation. Although this approach can save time and minimise cost, the accuracy and relevance of appraisals may be significantly diminished. The “one size fits all” approach of generic measures may overlook important performance criteria that are relevant to particular jobs, and may also include criteria that are irrelevant to others.<br />Where time and other resources permit, it is more appropriate to construct appraisal formats tailored to specific jobs or “families” of jobs. If the development of job-specific (i.e., individually tailored) appraisal formats is beyond the resource capacity of the organisation, an alternative would be to develop two groups of criteria:<br />1) Core competencies that have applicability to the performance appraisal of all employees <br />within the organisation<br />2) Additional competencies applicable only to some jobs and included in the performance <br />appraisal if relevant.<br />ii)Objective versus subjective assessments<br />A basic distinction between different types of appraisal measures concerns the use of objective or subjective criteria.<br />Objective assessments of work performance<br />Objective measures of job performance involve counts of various work-related <br />behaviours. Some common objective job performance measures include<br />Absenteeism (number of days absent) Accidents (number of accidents)<br />Incidents at work (number of incidents / assaults / altercations)<br />Lateness (days late) Meeting deadlines.<br />Objective measures can be relatively quick and easy to obtain (given good organisational record-keeping). However, it can be unwise to place too much emphasis on these types of objective measures. An exclusive focus on results / outcomes may mask factors that impact on employee’s performance that are beyond their control (e.g., client workload).<br />Subjective assessments of work performance<br />Subjective measures rely on the judgment of an appraiser (self, coworkers, or supervisor). Subjective assessments are commonly used in performance appraisals and often involve the use of rating scales. Subjective assessments are more likely to provide accurate performance appraisals when:<br />The behaviours and outcomes being assessed are stated in clear behavioural terms<br />The employee understands the measures (e.g., rating scales) being used to evaluate their <br />performance, and agree that the measures are fair and accurate (i.e., measures what it is <br />supposed to)<br />Measurement is as brief as possible whilst addressing essential behaviours and outcomes (frustration with long and unwieldy questionnaires may introduce error in responses<br />Assessing the impact of the work environment on performance<br />The goal of a performance appraisal is to support and improve employee’s performance and effectiveness. Therefore, it makes sense for an appraisal to include an assessment of factors in the work environment that help or hinder a employee’s capacity to perform effectively. Explicit assessment of environmental factors is also likely to increase the perceived fairness and acceptability of performance appraisals. <br />For example, an employee’s capacity to provide effective treatment interventions is influenced by factors such as:<br />Access to private, soundproofed, adequately sized rooms for counselling<br />Availability of validated, user-friendly assessment tools<br />Availability of reliable and approachable management / administration.<br />Step 3: Collect Performance Information from Different Sources<br />Once the appraisal measures are developed, the next step involves collection of accurate performance information. A common trap is to begin noting observations of employees just before conducting appraisals. This is likely to give an inaccurate picture of a employee’s performance. Ideally, employee’s performance should be observed in a systematic way over time (e.g., in a diary). This method ensures the accuracy of information about their performances.<br />Many employees in the organisation operate with a relatively high degree of autonomy. This combined with the heavy workload of most managers / supervisors, may limit opportunities to conduct regular observation of employee’s performance. In addition, perceptions of ongoing monitoring may foster a sense of surveillance which can damage staff morale.<br />A more suitable approach may be to keep critical incident reports that note specific examples of both excellent and unsatisfactory performances. Supervisors can also encourage employees to keep track of their own performance records such as emails or letters that commend them on their achievements.<br />Traditionally, it has been the sole responsibility of managers / supervisors to assess performance. However, other organisational members can be a valuable source of information as they are likely to have exposure to different aspects of a employee’s performance. This approach is known as 360-degree feedback. For instance, coworkers can provide valuable information on teamwork skills, and subordinates can provide useful information on leadership style.<br />There are many advantages to obtaining feedback on performance from sources other than supervisors or managers. Key benefits include:<br />Accuracy and reduced bias (incorrect information from one source can be corrected from another)<br />Increased likelihood that employees will perceive the performance appraisal system to be a fair and accurate reflection of their performance (compared to relying on supervisor ratings alone).<br />If time and resources are limited, it is recommended that supervisor appraisals be conducted in conjunction with self-assessment. Including self-assessments as part of the appraisal process is likely to enhance employee’s commitment to, and satisfaction with, the appraisal process. It also provides employees with an opportunity to identify barriers and facilitators to effective performance in their work environment.<br />Five different sources of performance appraisal information are considered here:<br />Manager / supervisor appraisals<br />Self appraisals<br />Coworker appraisals<br />Subordinate appraisals<br />Client appraisals.<br />Manager / supervisor appraisals:<br />Managers / supervisors play a central role in the appraisal process, and should always be included as one of the main appraisers. In essence, managers and supervisors have two roles in performance appra