Program & Batch: PGDM 2018-2020

Term: III

Course Name: HUMAN RESOURCE MANAGEMENT

Name of the faculty: PROF. A UDAY BHASKAR

Topic/ Title: A STUDY OF PERFORMANCE MANAGEMENT PRACTICES AT

AVON MOLDPLAST LIMITED

Group Number: 7

Group Members: S.No Roll No. Name

1 180101018 Arjun Rao

2 180101050 M S V Samhita

3 180101065 Pradyoth K

4 180101117 Unnati Vaid

5 180102097 Sarat Chandra

6 180103096 Kamal Gupta

7 180103127 Manul Agarwal

TABLE OF CONTENTS

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 PARTICULARS PAGE NO.

Executive Summary 3

Introduction 4

Review of Literature 6

Problem Statement 7

Conceptual Model for the Study 8

List of Variables 11

Research Methodology 12

Analysis of the Data 15

Report Findings 17

Implications for Managers & Researchers 18

EXECUTIVE SUMMARY

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Performance Management of employees plays a critical role in achieving the firm’s objectives and goals.
Aligning the employee’s goals to that of the company increases the productivity of the firm, thereby
contributing to achieve the company’s business and strategic objectives. Performance Appraisal also
forms a part of this system, whereby the performance of the employees is evaluated and linked to their
compensation or any other incentive.

For the purpose of our study, we researched the Performance Management practices followed at Avon
Moldplast Limited. Employees with various roles and responsibilities are present in the organization
working at different designations. The company prepares a list of Key Responsibility Areas (KRAs) for
each designation and assigns weights to each area. The performance of the employee is then evaluated
for each area and the overall performance level is calculated. The employees’ rewards or promotions
are dependent on this performance level.

A very unique feature of this Performance Management System is that the Performance Level of all the
employees is displayed on the board for everyone to see. Since the inception of this form of evaluation,
the results prove that the motivation to work amongst the employees has increased and they look
forward to work hard and improve their Performance levels.

INTRODUCTION

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Performance Management of employees is crucial for any organization in today’s world in order to
achieve their goals and objectives. Aligning the organizations’ mission and vision with the employees’
skills, career plans, performance results and competency requirements will result in creating a high
performance workforce, working towards achieving the overall business strategy.

Performance Management includes not only monitoring and evaluating the periodic performance of the
employees but also the activities which ensure that the goals of the organization are consistently being
met by the employees. Performance Appraisals are one such method to evaluate the employee
performance at the same time connecting this performance with employee benefits and compensation.

Managing the employee performance and aligning their objectives facilitates in the effective and
efficient delivery of business objectives and strategic goals. This also contributes in achieving great
financial results for the company and paves the way for a motivated workforce.

For the purpose of this study, we are researching the Performance Management practices and
procedures followed at Avon Moldplast Limited.

Established in the year 2002 at Ghaziabad in Uttar Pradesh, Avon Moldplast Limited is medium-sized,
furniture manufacturing company, producing quality molded furniture. Catering to wide sections of
consumers, the brand AVON has a product portfolio consisting of Baby chairs & desks, Chairs, Tables and
Stools. AVON mold is an ISO 9001:2015 company and follows the principles laid down for best
manufacturing practices. The company got listed at the National Stock Exchange Ltd (NSE) in July 2018.

Mr. Sushil Aggarwal is the Chairman of the company with his son Mr. Sahil Aggarwal serving as the
Managing Director. The Vision of the company is to deliver innovative and comfortable range of
products at competitive prices and thus become the market leader in the furniture industry across all
categories. With experience of 17 years, AVON is leveraging its competency in latest technology,
infrastructure, and talent to go pan India with vision to operate across continents by delivering
happiness through great designs, different verticals and great products.

Located at Vijay Nagar in Ghaziabad, our team visited the AVON office twice, once on 21 st December
2018 and the second visit was on 31 st December 2018. On both the occasions, other than the
employees, we also got the opportunity to interact with the Managing Director, Mr. Sahil Aggarwal.

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 REVIEW OF LITERATURE

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The article that this literature review will be based on is “The Impact of Human Resource Management
on Organizational Performance: Theory and Research” by Jean-Marie Hilltrop.

The article can be found at: https://ac.els-cdn.com/S026323739600059X/1-s2.0-S026323739600059X-

main.pdf?_tid=bd322b44-4833-4f77-9ecc-
0df5bbf3786d&acdnat=1546857975_ef915d92a5fa4664e72cfff9d8fdfde7

Hiltrop was a Senior Partner at Inter-Cultural Consulting in Geneva, Switzerland. The article is broadly
divided into two parts with the first half of the report looking at relevant theoretical models and the
second half of the report looking at research from reports which have analyzed the effects of the
distinctive HR practices and their effects on the organizational performance and their outcomes.
However, while reading the report the group had to keep in mind that this report was published in 1996,
which meant that some of the findings may be outdated. Despite this, the group decided to move
forward with the findings from this report could give the group a key understanding of how and where
some of the “best practices” used today come from.

Hiltrop studies some models which have linked Human Resource Management and Organizational
Behavior. As of the time this report was written there was a very little evidence that showed a
relationship between Human Resource Management and Organizational Behavior. However, the trend
between these two is increasing and there is evidence which indicates that the corporate Human
Resource policies can affect and influence the overall performance of the organization.

The trend that started appearing during this time period showed that if organizations started
implementing the ‘best’ human resource management policies that the overall performance (financial)
of the organization starts to go up. Moreover, the ‘best’ policies can encourage the overall employee
behavior and have them have an overall positive attitude towards the company. However, Hiltrop
understood that the ‘best’ practices changes from location to location and can vary widely and even
contradict each other depending on the location. Hiltrop tries to raise questions regarding this in her
report.

The article raises 4 questions in the conclusion which the group was extremely interesting:

1) Is there a significant difference between the HRM policies and practices of high-performance
versus low-performance?

2) If so, what are the key internal and external contextual factors that affect the design and
implementation of these HRM Practices?

3) To what extent, and how, can the HRM practices that support the success of high-performance
organizations be introduced into a low performance company?

4) What does all this mean for the way organizations attract and motivate people?

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The group believes that these four questions helped guide the way present HRM policies are being
created and how organizations are implementing them today.

PROBLEM STATEMENT

The main purpose of this report is to study the Performance Management practices and procedures
followed by Avon Moldplast Limited and understand the implications these actions have on the
employees of the organization.

CONCEPTUAL MODEL

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Analyzing the Performance Management System (PMS) of Avon Moldplast Limited, one can see a
complete deviation from the current industry practices. To assess any PMS and define its merits and
demerits, we needed to find a model. We needed to apply and analyze the system in place using this
model. The model that we found most relevant with the PMS in place was ‘The Matching Model.’ We
analyzed the given system using this model developed by Dr. Fombrum, Dr. Tichy and Dr. Devanna in
Michigan School.

The Human Resource Cycle (Matching Model)

Matching Model (Descriptive Theory of HRM):

This model ensures a way to achieve the organizational objectives by applying the above five major
functions of HRM effectively. The work and contribution of the system has to be evaluated in using
appropriate techniques for reliable outputs. Some rewards need to be offered on the basis of those
results of appraisal and the performance of employees.

According to the matching model, performance management is totally dependent on HR development

procedures and programs of the organization. It is believed that the whole of HRM is a cyclical process
where every function is interdependent. Hence, the value of each function is important for exceeding
the organizational objectives. In the matching model, it tries to encapsulate all key functions of HRM and
to utilize the information more comprehensively.

The model analyzed in this study would come under the Descriptive theory. In this theory, whole HRM
process is considered as one element, and the proponents assume that every aspect such as aims,
objectives, vision, missions, policies and procedures, stakeholders etc. belong to the organization as
ingredients for achieving the desired objectives. The matching model developed by the Michigan school
is a real example for the descriptive theory.

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Each employee is divided into various departments and provided with a customized Job Description. It
mentions the roles and responsibilities for the duration and the expected targets. The performance is
analyzed using these systems and is displayed publically. The JD’s presented consists of 10 Position Titles
in operations, namely:

1. Stores
2. Maintenance
3. Mold Maintenance
4. Plant Head
5. QMS
6. Product Supervisor
7. QC Engineer
8. Welder
9. Mixing Supervisor
10. Mold Maintenance Head

The snapshot of the JD of a Mold Maintenance Engineer is given below:

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After noting the performances of each employee, an appraisal or assessment is done. Depending upon
that, the employee is further recommended training or provided with a reward. The rewards vary from
bonuses, salary increments to promotions.

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 LIST OF VARIABLES

The Matching Model consists of 5 variables:

1. Selection
2. Performance
3. Appraisal
4. Rewards
5. Development

These variables are worked upon while assessing an employee for performance. The performance
variables or Key Performance Indicators varies from employee to employee. For a Maintenance
Engineer, following were the KPI variables (actual snapshot of the employee):

After analyzing each and every performance, a combined performance sheet was made and the
performance was displayed on a board to all the employees. So, the HR department would work on
multiple performance variables weighed each of the variables differently.

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 RESEARCH METHODOLOGY

Details of Sample:

The sample of this research is formed by 26 employees at Avon Furniture ranging from various
departments such as:

Maintenance

Production

Quality Management System

Welding

Mixing

Mould Maintenance

Methods of Data Collection:

Factory Visit: The Factory Plant of Avon Furniture, located in Ghaziabad, was visited twice by the group
to collect the relevant data. At the factory, we got to visit the Daily Performance tracking room, known
as the “War Room”. Daily targets and updates on performance for all the workers in the factory were
recorded on a board having two trackers: Improvement Task Assignment Tracker and Production
Planning and Scheduling Tracker.

Inside War Room- Performance Tracker

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Job Descriptions: We got access to the Job Descriptions of 9 Job Titles in 8 different Departments. Please
refer to a sample Job Description Sheet for Position Tile: Engineer from Quality Department.

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Key Responsibility Areas (KRA): We got access to the KRA of various teams (including Sales and
Marketing, Production team) and Departments (like Quality, Maintenance, etc). Please refer to a sample
Management Policy Deployment & Related Objectives sheet for a Maintenance Engineer.

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 ANALYSIS OF THE DATA

By studying the Job Descriptions and KRA appraisal sheets, we could analyze the Performance
Management and Appraisal process at Avon Moldplast Limited.

 The technique used for Appraisal Performance is a form of Graphical Rating Scale method, in
which for each person’s KRA are listed. KRA, or Key Responsibility Areas, are based on the job
description of a person and are used when assigning tasks that they are expected to perform.
Employees are solely responsible for the specific KRAs assigned to them. KRAs are a larger goal.
 Based on the KRA, KPA are listed. KPIs, or Key Performance Indicators, are a subset of KRAs. This
would mean that a person’s performance would be measured based on the results shown. KPIs
can be exactly measured.
 Monthly targets are set for each employee and KRA weightage is assigned to each KRA.
 Rating is assigned as a measure of success.
 Based on the final ratings KRA results sheet is made. A sample of the same is attached below.

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  The employee’s performance is categorized as Excellent, Good, average and poor on the basis of
this result and accordingly bonuses are provided.

Excellent 80% and above

Good 70% - 79%

Average 60% - 69%

Poor <60%

 Employees with Excellent performance are rewarded in from of the entire team and a picture of
the facilitation is displayed on the board.

Timely reviews can help in improving an employee’s performance. The shorter the period between
reviews, the better it is. Performance reviews and generally conducted on a monthly basis as per the
company policy. Keeping track of every employee’s review cycle can be tricky. Managing these via email
and setting reminders are time consuming, and can result in complications. Therefore the company lists
the same on a notice board in the War Room.

The system is transparent and to ensure that there is no feeling of bias in the employees, daily
tracker and the monthly review is on display.

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 REPORT FINDINGS

The Performance Management System presented was implemented in January’18. The above graph
shows the rejection ratio of the products being reduced every month since the inception of this model.
The graph depicts number of rejected products manufacture per million. This shows the link/connection
between the employee’s performance levels and the product rejection ratio.

The company aims to bring the rejection per million to below 5000. As per the trends, they look to be on
course to achieve it by March’19.

Months

Here, the graph presents the total number of machine breakdowns from April’18 to
December’18. It showed a drastic downward slope, finally reducing the number of breakdowns
to ‘zero’ in December’18. The current aim of the company is to maintain the number of
machine breakdowns to zero for the next quarter as well.

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 IMPLICATIONS

A transparent appraisal system helped in improving overall organizational performance:-

 Employees understood the significance of their contributions towards the organizational

goals and objectives.
 Ensuring each employee understands what is expected from them and equally
ascertaining whether the employees possess the required skills and support for fulfilling
such expectations helped the company in a long way. Also if at all they lack a particular
skill, they trained them with a training program.
 The company was able to ensure proper aligning & linking of objectives and facilitated
effective communication throughout the organization. Since every employee knew each
other’s contribution, it formed an effective bond and respect among them.
 This facilitated a cordial and a harmonious relationship between an individual employee
and the line manager based on trust and empowerment. This was because there was no
mistrust between them as each and every KRA indicator was out in open and implied
their genuine performances.

Risk/disadvantages of a transparent appraisal system:

 Excessive transparency acts a distraction in a number of ways. Employers who share too
much information about the business run the risk of creating unwanted stress for
employees who may constantly be thinking about how their job impacts the bigger
picture on an organizational level and can start a dirty competition among the
employees.
 Sharing sensitive information, like the financial struggles of the business with all the
employees, can cause instability and could chase good employees out the door for fear
of their livelihood/job security.
 This analysis was done with just 1 year of data, as it was implemented in January’18. The
short term reflection of the model seems to be positive, but it may or may not have a
different long term implication. Thus, to find the long term implication, a more thorough
and long term study needs to be conducted for the same.

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