SMT.CHANDIBAI HIMATMAL MANSUKHANI COLLEGE

ULHASNAGAR- 421003

PROJECT REPORT ON

ECONOMICS

SUBMITTED BY

AKASH RANA

(ROLL NO: 46)

M.COM (SEM.I): REWARD SYSTEM AND STRATEGY OF TATA CO.

SUBMITED TO

UNIVERSITY OF MUMBAI

2015-16

PROJECT GUIDE

Prof. kishore karia

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Department of Commerce

CertificateThis is to certify that, Mr. AKASH RANA of M.Com.-I, Sem.-I (Roll NO-46) has successfully

completed the project titled “REWARD SYSTEM AND STRATEGY OF TATA CO.” under my

guidance for the Academic Year 2015-16. The information submitted is true and original as per my

knowledge.

Prof. kishore karia (Project Guide)

Prof. Gopi Shamnani Dr. Padma V. Deshmukh (Coordinator, M. Com Course) ( I/C Principal)

External ExaminerPAGE2

ACKNOWLEDGEMENT

I acknowledge the valuable assistance provided by SMT.CHANDIBAI HIMATMAL MANSUKHANI COLLEGE, for two years of degree course in M.Com.

I specially thank the principal Dr . Padma V. Deshmukh for Allowing us to use the facilities such as library, computer laboratory, internet etc.

I sincerely thank the M.Com co-ordinator Prof. Gopi Shamnani for Guiding us in the right direction go prepare the project.

I thank my guide Prof. kishore karia who has given his/her valuable time, knowledge and guidance to complete the project successfully in time.

My family and peers were great source of inspiration throughout my project their support is deeply acknowledged.

Signature

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DECLARATION

I, AKASH RANA OF SMT.CHANDIBAI HIMATMAL MANSUKHANI COLLEGE OF M.Com SEMESTER I, hereby declare that I have completed the project on ‘REWARD SYSTEM AND STRATEGY OF TATA CO.’ in the academic year 2015-16. The information submitted is true and original to the best of my knowledge.

(AKASH .P. RANA)

M.Com part-1, ROLL NO: 46

SEMESTER I

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INDEX

SR.NO PARTICULAR PAGE.NO

1 INTRODUCTION

2 Executive Summary

3 Objective

4 Company profile

5 Literature review

6 Reward System linked to Performance- Theoretical Background

7Types of rewards

8Management of rewards and incentive

9Performance appraisal

10Reward System linked to Performance in Tata

Communications

11SWOT analysis

12 CONCLUSION

13 BIBLOGRAPHY

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INTRODUCTIONRewards are what employees receive for performing well. Sometimes these rewards come from the organization in the form of money, recognition and promotions. Rewards can also consist of feelings from having performed well in work. It can be said that rewards are very powerful motivators of performance.

Organizations need various types of performance from their employees. They need them to become active members of the organization, they need them to do their job as it has been defined and they need their employees to improve their performance. In order to achieve improvements in performance different reward systems must be applied.

In the contemporary world, rewards for better performance and success matter more than the actual achievement itself. Indeed, as the global financial crisis showed, rewards were everything for the bankers as they strove for more reckless bets and increasing risk taking. Because of the system of flawed incentives, rewards were seen to the ultimate prize that was greater than the actual process of winning. Hence, rewards management has to be seen in the context of what are proper and just rewards and what are disproportionate rewards. The point here is that rewards ought to justify the performance and not exceed them. What we mean by this is that it is okay to reward a high performer for his or her stellar performance but not to the point where in the pursuit of rewards, the individual throws caution to the winds and indulges in unethical behavior.

For the present day generation, rewards matter more than the actual performance and this is reflected in their increasing demands from the employers for salary hikes and bonuses.

If not anything else, the millennial generation believes that excessive rewards are their due. Though this is not to say that only this generation behaves that way (this pattern can be seen in the Generation X as well), it is the case that undue emphasis is being placed on the rewards alone as opposed to the fulfillment one gets by getting the job done in a proper manner. If the baby boomer generation taught us anything, it is that doing the job for fulfillment sake is more important than the reward system in place. Of course, it goes without saying that in a world of diminishing resources, everyone is concerned with earning as much money as possible, and hence some of this behavior is indeed justified.

However, the point needs to be made that while rewards are one way to motivate individuals and incentivize good performance, they are not the be all and end all that everyone likes to believe. Hence, a proper reward system in organizations would be aligned with the correct strategic fit between internal motivation and external rewards and only when they are in balance can organizations grow in a healthy manner.

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  EXECUTIVE SUMMARY

In a competitive business climate, more business owners are looking at improvements in quality while reducing costs. Meanwhile, a strong economy has resulted in a tight job market. So while small businesses need to get more from their employees, their employees are looking for more out of the businesses. Employee rewards and recognition programs are one method of motivating employees to change work habits and key behaviors to benefit a small business. But first, we will look into managing the compensation aspect. The objective of this paper is to discuss the rewards and recognition policies and the process involved with reference to Tata Consultancy Services and its comparative analysis with other players in the industry. This report also brings out the flaws in the present system as well as suggests measures to overcome them.TCS follows a model which is far ahead of other traditional system, which is Economic Value Added (EVA). It is not just any reward structure, but an integrated management process aimed at achieving long term goals, instead short term. It makes sure that the unit performs in a sustainable and increasing manner. So in the same way every individual employee would be able to improve his/her performance considerably.

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OBJECTIVES:-

To Study of various reward systems in TCL.

Study of linkage between PMS & reward system.

To identify the gaps in the current reward system.

Reward System is an official system and this is done by performance-based measures, objective or subjective.

To reward employees fairly, equitably and consistently in correlation to the value of these individuals to the organization.

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INTRODUCTION TO THE COMPANY PROFILE

TATA GROUP AND ITS HISTORY: Tata Group is an Indian multinational conglomerate company headquartered in Mumbai, Maharashtra, India. It was founded in 1868 by Jamsetji Tata as a trading company with Rs. 21000 capital. It has operations in more than 80 countries across six continents. Tata Group has over 100 operating companies with each of them operating independently. Out of them 32 are publicly listed. The major Tata companies are Tata Steel, Tata Motors, Tata Consultancy Services (TCS), Tata Power, Tata Chemicals, Tata Global Beverages, Tata Teleservices, Titan Industries, Taj Hotels and Tata Communications. The Group's major companies are beginning to be counted globally. Tata Steel became the sixth largest steel maker in the world after it acquired Corus. Tata Motors is among the top five commercial vehicle manufacturers in the world and has recently acquired Jaguar and Land Rover. TCS is a leading global software company, with delivery centers in the US, UK, Hungary, Brazil, Uruguay and China, besides India. Tata Tea is the second largest branded tea company in the world, through its UK-based subsidiary Tetley. Tata Chemicals is the world's second largest manufacturer of soda ash. Tata Communications is one of the world's largest wholesale voice carriers. Tata Group remains a family-owned business, as the descendants of the founder (from the Tata family) own a majority stake in the company. Tata Sons is the promoter of all key Tata companies and holds the bulk of shareholding in these companies. Page 9

The chairman of Tata Sons has traditionally been the chairman of the Tata group. About 66% of the equity of Tata Sons is held by philanthropic trusts endowed by members of the Tata family. The Tata Group and its companies & enterprises is perceived to be India's best-known global brand within and outside the country as per an ASSOCHAM survey. In 2009, annual survey by the Reputation Institute ranked Tata Group as the 11th most reputable company in the world. The survey included 600 global companies. The Tata Group has helped establish and finance numerous quality research, educational and cultural institutes in India. The group was awarded the Carnegie Medal of Philanthropy in 2007 in recognition of its long history of philanthropic activities. The combined market capitalization of all the 32 listed Tata companies was INR 6.8 Trillion ($ 109 billion) as of March 2014. Tata receives more than 58% of its revenue from outside India. The Group employs around 350,000 people worldwide. The Tata name has been respected in India for 146 years for its adherence to strong values and business ethics. It encompasses seven business sectors: communications and information technology, engineering, materials, services, energy, consumer products and chemicals.

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TATA GROUP AT A GLANCE

#45 $109 BillionAnnual RevenueWorldwide Brand(Source: Brand Finance, 2012)

544502 (till 2013) ~ 60% Non IndiaEmployees Worldwide

#11 Over 150 Years in Most Reputed operations Company(Source: Reputation Institute, 2009)

UK Only Indian Entity On Forbes’ List of World’s 20 Most Group’s Largest Market Reputed Companies outside India

Over 100Operating Companies in 7 Sectors across 6 Continents

OUR BUSINESSES Chemical Sector

Tata Chemicals

Rallis India

Tata Pigments Limited

General Chemical Industrial Products

Brunner Mond

Magadi Soda Company Page 11

Consumer Products

Tata Tea Limited Tata Global Beverages Titan Industries Voltas Tata Swach Tata Salt

Energy

Tata Power Tata Power Delhi Distribution Limited Tata Power Solar Jamshedpur Utilities and Services Company Tata Projects

Engineering

Tata Motors Tata Technologies Limited Tata Consulting Engineers Limited Telco Construction Equipment Voltas Global Engineering Centre Tata Advanced Materials

Information systems and communications

Computational Research Laboratories Tata Consultancy Services Ltd. Neotel Tata Teleservices Virgin Mobile India Tata Communications VSNL International Canada

Services

Tata AIG General Insurance Taj Hotels Tata Housing Development Company Limited Tata Africa Holding Ginger Hotels Tata Capital

Steel

Tata Steel Tata Sponge Iron Tata Bearings TM International Logistics Tayo Rolls Tata Steel Europe

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LITERATURE REVIEW

Employee reward system In a competitive business climate, more business owners are looking at improvements in quality while reducing costs. Meanwhile, a strong economy has resulted in a tight job market. So while small businesses need to get more from their employees, their employees are looking for more out of the businesses. Employee rewards and recognition programs are one method of motivating employees to change work habits and key behaviors to benefit a small business. But first, we will look into managing the compensation aspect. COMPENSATION MANAGEMENT Traditional PM has mainly been financial measuring ratios such as ROI (Return on Investment), RI (Residual Income) and EPS (Earnings per Share). These metrics account for the costs associated with capital and help firms spot areas in which capital is being invested unprofitably. Although these financial data have the advantage of being precise and objective, the limitations are far greater, making them less applicable in today competitive market. Organizations that have adopted the traditional PM, have experienced great difficulty in trying to fit the measures with increasing new business environment and current competitive realities. While the traditional financial metrics are value-based, they are nonetheless lagging indicators. They offer little help for forward-looking investments, where future earnings and capital requirements are largely unknown investments such as new product introductions and capital or new market entry. This will lead to narrow short-term decision-making based on bottom-line financial results. On the other hand, most of the criticism of traditional PM stems from their failure to measure and monitor multiple dimensions of performance, by concentrating almost exclusively on financial measure. They solely concentrate on minimizing costs and increasing labor efficiency while neglecting other operational performance measures such as quality, responsiveness and flexibility.

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INTRODUCTION OF REWARD SYSTEM - A THEREOTICAL BACKGROUND

Wilson (1995) defines reward systems as follows: “A Reward system is any process within an organization that encourages, reinforces, or compensates people for taking a particular set of actions. It may be formal or informal, cash or noncash, immediate or delayed”. It can also be defined as “a structured method of evaluating and compensating employees based on their performance”. Rewards are what employees receive for performing well. Sometimes these rewards come from the organization in the form of money, recognition and promotions. Rewards can also consist of feelings from having performed well in work. It can be said that rewards are very powerful motivators of performance. Organizations need various types of performance from their employees. They need them to become active members of the organization, they need them to do their job as it has been defined and they need their employees to improve their performance. In order to achieve improvements in performance different reward systems must be applied. In a competitive business climate, more business owners are looking at improvements in quality while reducing costs. Meanwhile, a strong economy has resulted in a tight job market. So while small businesses need to get more from their employees, their employees are looking for more out of the businesses. Employee rewards and recognition programs are one method of motivating employees to change work habits and key behaviors to benefit a small business.

IMPORTANCE OF REWARD SYSTEM It is important for one's employees to know they are valued. W.P. Brick (2012) elevates this importance in Public Manager by writing, "Recognition and employee engagement are so critical to the operations and culture of a modern workplace they can only be ignored at great peril." In Entre Leadership, Dave Ramsey (2011) adds, "Where there is no recognition, it is very difficult to have passionate, creative, motivated team members". When it comes to valuing employees, the manager has nothing to lose when giving the recognition but much to lose by withholding praise. This is not to say that employees should be recognized for anything and everything, but that when a job is done exceptionally well, there should be recognition. Employee reward and recognition programs are of immense importance to an organization and will benefit the employee along with the organization.

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Most of what has been mentioned is considered common sense, but common sense does not seem very common. People should be rewarded and recognized for a job well done but often get overlooked in a corporation's pursuit of profit and a market advantage. But employee rewards and recognition can bring an organization profit and a market advantage! It all comes down to a firm's ability to understand the human need for acceptance, the definitions for rewards and recognition, the importance and benefits, and finally the various means of financial and nonfinancial options. Whether it costs money or is free for an organization, there is a need for employees to be acknowledged and it must be intentional.

REWARDS VS. RECOGNITION Although these terms are often used interchangeably, reward and recognition system should be considered separately. Employee reward systems refer to programs set up by a company to reward performance and motivate employees on individual and/or group levels. They are normally considered separate from salary but may be monetary in nature or otherwise have a cost to the company. While previously considered the domain of large companies, small businesses have also begun employing them as a tool to lure top employees in a competitive job market as well as to increase employee performance. As noted earlier, although employee recognition programs are often combined with reward programs, they retain a different purpose altogether. They are intended to provide psychological rewards a financial benefit. Although many elements of designing and maintaining reward and recognition system are the same, it is useful to keep this difference in mind, especially for small business owners interested in motivating staffs while keeping costs low.

DIFFERENTIATING REWARDS FROM MERIT PAY AND THE PEFORMANCE APPRAISAL In designing a reward program, a small business owner needs to separate the salary or merit pay system from the reward system. Financial rewards, especially those given on a regular basis such as bonuses, profit sharing, etc., should be tied to an employee’s or a group’s accomplishments and should be considered “pay at risk” in order to distance them from salary. By doing so, a manager can avoid a sense of entitlement on the part of the employee and ensure that the reward emphasized excellence or achievement rather than basic competency. Merit pay increases, as a result, are not part of an employee reward system. Normally, they are increase for inflation with additional percentages separating employees by competency. They are not particularly motivating since the distinction that is usually made between a good employee and an average one is relatively small.

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In addition, they increase the fixed costs of a company as opposed to variable pay increases, such as bonuses, which have to be “re-earned” each year. Finally, in many small businesses teamwork is a crucial element of a successful employee’s job. Merit increases generally review an individual’s job performance, without adequately taking into account the performance within the context of the group or business.

PURPOSES OF REWARD SYSTEMS

To recognize individual and team efforts

To re-enforce positive behaviors

To create a better working environment

To have a system that recognizes as many people as possible.

To attract and retain good employees

To reduce the absenteeism

To facilitating organizational culture and strategic objectives.

DESIGNING A REWARD PROGRAM The key characteristics of developing a reward program are as follows:

Identification of company or group goals that the reward program will support.

Identification of the desired employee performance or behaviors that will reinforce the company’s goals.

Determination of key measurements of the performance or behaviors, based on the individual or group’s previous achievements.

Determination of appropriate rewards.

Communication of program to employees.

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Reward system are concerned with two major issues: Performance and Rewards. Performance includes defining and evaluating performance and providing employees with feedback. Rewards included bonus, salary increase, promotions, stock awards and perquisites. Large corporations with several different businesses may have multiple reward systems. And while they may share some fundamental philosophies and values, they may differ accordingly to the particular business setting, competitive situation, and product life cycle. Thus, multiple reward systems can support multiple cultures within one organization. These components will be designed, developed and maintained on the basis of reward strategies and policies which are created within the context of the organizations between strategies. 1. Improve Organizational Effectiveness: Support the attainment of the organization’s mission, strategies, and help to achieve sustainable, competitive advantage. 2. Support and Change Culture: Under pin and as necessary help to change the organizational culture as expressed through its values for performance innovation, risk taking, quality, flexibility and team working. 3. Achieve Integration: Be an integrated part of the management process of the organization. This involves playing a key role in a mutually reinforcing and coherent range of personal policies and process. 4. Manageable: It helps to manage the undue administrative burdens imposed on managers and members of the personal department. 5. Motivate Employees: Motivate employees to achieve high level of quality performance. 6. Increased Commitment: Enhance the commitment of employees to the organization that will a) want to remain members of it, (b) develop a strong belief in and acceptance of the values and goals of the organization; and (c) be ready and willing to exert considerable effort on its behalf. 7. Fairness and Equity: Reward assesses can upgrade competence and encourage personal development.8. Improved Skills: The employees can upgrade competence and encourage personal development. 9. Improved Quality: Help to achieve continuous improvement in levels of quality and customer service. 10. Develop team working: An effective award system improves co-operation and effective team working at all level.

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REWARD SYSTEM LINKED TO MOTIVATION One of the primary purposes to use rewards in companies is to motive the employee to perform well. When we talk about motivation from managerial prospective it is important to bear in mind that: “You can’t motive other people. You can only influence what they’re motivated to do”. In other words we do things because it will fulfil some current or future personal goal or desire we have. It is therefore important for the corporate management to identify what motivates their employees and try to join their personal objectives with the ones of the company.

MASLOW – HIERARCHY OF NEEDS The motivation process can be described in the term of need theory which states that it is an unsatisfied need that motivates behavior. The best known theory within this category is written by Abraham H Maslow (1908-1970). An American psychologist in 1954. Maslow’s hierarchy of needs is one of the most famous theories in the term of individual motivation. Human need are by him divided into five different levels, physiological, safety, belongings, esteem and self-actualization. Maslow’s hierarchy of needs always illustrated in the pyramid, shown in the following figure.

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MASLOW’S NEEDS CLASSIFIED INTO FIVE CATEGORIES: Physiological needs – are basic needs for survival such as food, water & sleep. Safety needs – consist of variety of safety needs such as security of employment, health & family. Social need – consist of friendship, family, love & intimacy. The esteem needs – presents the desire to be accepted & valued by others. Here we find the concept such as self-esteem, confidence, achievement, respect for others and respect by others. The need for self-actualization – here we find the motivation to one’s own maximum potential, self-fulfillment and try to become everything that one is capable of becoming. It includes the concept as morality, creativity, spontaneity, problem solving and some more.

HERZBERG’S MOTIVATION-HYGIENE THEORY (TWO FACTOR THEORY) To better understand employee attitudes and motivation, Frederick Herzberg performed studies to determine which factors in an employee’s work environment caused satisfaction or dissatisfaction. He published his findings in the 1959 book the Motivation to work. The following table presents the top six factors causing dissatisfaction and the top six factors causing satisfaction, listen in the order of higher to lower importance.

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Factors Affecting Job Attitudes

Leading to dissatisfaction Leading to SatisfactionCompany policy Achievements Supervision RecognitionRelationship with boss Work itselfWork conditions ResponsibilitySalary Advancement Relationship with peers Growth

From the above table of results, one observed that the factors that determine whether there is dissatisfaction or no dissatisfaction are not part of the work itself, but rather are external factors. Herzberg argues that these provide only short-run success because the motivator factors that determine whether there is satisfaction or no satisfaction are intrinsic to the job itself, and do not result from carrot and stick incentives.

EXPECTANCY THEORY Expectancy Theory (1964) is a motivational theory written by Victor Vroom, born 1932, in Canada. The theory states that motivation will be strong if the individual can expect that their effort & contribution will give meaningful rewards. It means that motivation is more likely when a clear relationship is exists between performance and outcome and the outcome is satisfying needs.

Motivation in work can be reached in two ways. Firstly, people can motivate themselves by working with things that satisfied their personal needs. Secondly people can be motivated by management using incentives such as pay, promotion, praise.

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TYPES OF REWARDS

Rewards serve many purposes in organizations. They serve to build a better employment deal, hold on to good employees and to reduce turnover. The principal goal is to increase people's willingness to work in one’s company, to enhance their productivity. Most people assimilate "rewards", with salary raise or bonuses, but this is only one kind of reward, extrinsic reward. Studies proves that salespeople prefer pay raises because they feel frustrated by their inability to obtain other rewards, but this behavior can be modified by applying a complete reward strategy. Besides verbal appreciation, tokens of appreciation, rewards (award trophies, framed certificates, special parking spaces, gift cards, pens or a free day off.) etc. are generally given to employees. The principal difficulty is to find a balance between employees' performance (extrinsic) and happiness (intrinsic) There are two kinds of rewards: Extrinsic Rewards- Tangible / Concrete Rewards. Intrinsic Rewards- Non Tangible / to give satisfaction to Individual.

Page 22Various categories of rewards that are given and can be given are:

Basic Pay: Basic Pay is defined as the rate fixed by applicable law or regulation. Examples of special types of pay included in Basic Pay are:

Night differential pay for wage employees

Environmental differential pay for employees who work under hazardous situations.

Premium pay for groups such as law enforcement officers

Locality-based comparability payments.

It is an essential factor which is closely related to job satisfaction and motivation. Although pay may not be a reward as this is a static amount which an employee will be paid every month, it will be considered as a reward if similar worker is paid less. Additional Hour’s Rewards: This is similar to that of overtime. However, it is paid to employees if they put in an extra hour of work for working at unsocial hours or for working long hours on top of overtime hours.

Commission: Many organizations pay commission to sales staff based on the sales that they have generated. The commission is based on the number of successful sales and the total business revenue that they have made. This is a popular method of incentive.

Performance Related Pay: This is typically paid to employees who have met or exceeded their targets and objectives. This method of reward can be measured at either team or department level.

Profit Related Pay: Profits related pay is associated with if an organization is incurring a profit situation. If the organization is getting more than the expected profits, then employees receive an addition amount of money that has been defined as a variable component of the salary.

Payment by Results: This is very similar to that of profit related pay. This reward is based on the number of sales and total revenue generated by the organization.

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Piece Rate Reward: Piece rate reward is directly related to output. The employees get paid on the number of pieces that they have produced. These pieces will be closely inspected to make sure that quality standards are being met.

Bonuses: Bonuses will be paid to employees who have met or exceeded their targets and objectives. This is aimed at employees to improve their performance and to work harder. There are several types of bonus programs followed by industries, some are as follows: Current Profit Sharing, Gain Sharing, Spot Bonus Award, Noncash Bonus, Sign-on Bonus, Mission Bonus, Referral Bonus, Retention Bonus, Holiday Bonus, etc.

Recognition: Employees will not always be motivated by monetary value alone. They do require recognition to be motivated and to perform well in their work.

Job Enrichment: This is a common type of recognition that is aimed at employees to get motivated. Job enrichment allows more challenging tasks to be included in the day-to-day tasks performed by the employee.

Job Rotation: Unlike job enrichment, job rotation refers to shifting employees between different functions. This will give them more experience and a sense of achievement. Teamwork: Teamwork is also considered as recognition. Creating teamwork between team members will improve performance at work. Social relationships at work are essential for any organization.

Empowerment: Empowerment refers to when employees are given authority to make certain decisions. This decision making authority is restricted only to the day to day tasks.

Training: Many organizations place a greater emphasis on training. This is considered as recognition for employees. Training could vary from on the job training to personal development training.

Benefits: Another element in the total rewards approach includes employee benefits. Benefits are programs that an employer uses to supplement the cash compensation that employees receive. These benefits provide a level of security for employees and their families, and may include health care insurance, time off, disability insurance and retirement programs. As such, benefits fall under the “satisfier” category.

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AWARDS: This again is an important type of recognition that is given to employees who perform better. Organizations have introduced award systems such as best performer of the month etc. and all these will lead employees to perform better. Rewards are basically the methods to extrinsically motivate employees. These awards can be MONETARY or NON MONETARY. Some of the commonly given awards in various organizations are: Service Awards: Each year that an employee commits to an employer, he offers great advantages to the business or organization. Employees gain more knowledge of their position and responsibilities over time, and the company does not have to set aside time and money hiring and training new employees. Employers often reward employees who remain committed with a recognition pin or a certificate acknowledging the number of years of continuous service. Employers may further reward long-term employees with an extra gift such as a watch or a special desk set, typically engraved with the employee’s name and the date they received the honor.

Employee of the Month: Some workers will consider being designated Employee of the Month a great honor. This award is commonly given to the one employee each month who has given exceptional service, had perfect attendance and gone the extra mile for the company to ensure all

customers are given the service they expect. These employees are often recognized during monthly staff meetings with a plaque or certificate recognizing their efforts. A designated parking space is another good idea, and displaying the plaque where customers can see it adds to the honor. Employers should take care in choosing employees in a manner that shows no favoritism. If others perceive that employees are chosen unfairly, the award can be counterproductive.

Attendance Awards: Companies depend on employees to be punctual and perform tasks to their potential so that the work load can be evenly distributed. Employees who strive to be at work during every scheduled shift and never come in late deserve to be recognized in a special way. Perfect attendance awards can be given in the form of a certificate, plaque or even as a cash bonus. Sometimes employers will give employees with perfect attendance a day off with pay or a gift certificate to a local restaurant in appreciation for their commitment to the company.

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Safety Awards: Safety awards are a great way for employers to recognize employees or teams for their continued adherence to safety guidelines. This kind is typically awarded when an employee or a group files no incident or accident reports over a given period of time, such as a month or year. These acknowledgements are often expressed in terms of the man (or woman) hours since the team last experienced in injury. Cash bonuses or gifts such as tickets to popular local events make great safety awards.

Company Advancement: The ultimate reward that every employee tends to strive for is company advancement. Employees generally work hard to earn recognition in an attempt to be promoted to a higher position within the company or receive an annual raise in pay. Employers should choose candidates for advancement carefully, avoiding favoritism and ensuring that the most reliable and skilled employees are advanced to higher positions.

Special Operating Unit Award: Individual bureaus may establish award programs which are appropriate to their particular interest in recognizing certain group of employees. There are a large variety of programs, ranging from recognition for scientific accomplishments to employee of the year. These award programs can be cash or non-monetary.

Cash-in-Your Account Award: A small cash award designed to recognize employees for going the extra mile in getting the job done. These awards do not recognize overall performance, but rather specific instances of exemplary performance. Awards range from Rs. 1000 to Rs. 10000 in Rs. 1000 increments.

Suggestion Award: Under the suggestion program, employee are granted an award for formal suggestions which have been evaluated and adopted. The amount of the award is determined by the amount of tangible and intangible benefits of the idea.

On the Spot Award: A small award which is granted as a means to recognize employees for those day-to-day efforts which contribute in a special way to get the job done.

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Certificates of Appreciation: Certificates granted to employees or non-employees who have made outstanding contributions or who have performed significant services to the Department.

External Awards: Awards sponsored by other agencies and non-government organizations given to corporate employees.

Group-Based Reward Systems Group-based reward systems are based on a measurement of team performance, with individual rewards received on the basis of this performance. While these systems encourage individual efforts toward common business goals, they also tend to reward under-performing employees along with average and above-average employees. A reward program which recognizes individual achievements in addition to team performance can provide extra incentive for employees.

WHAT IS PERFORMANCE MANAGEMENT It can be defined as a continuous process of assessing and measuring the performance of an individual and aligning it with the organizational goals. It is the job of the HR people to design an effective performance management system. Expansion for the word “Perform”, best explains it. P – Potential E – Enthusiasm R – Reliability F – Flexibility O – Orientation R – Reengineering M – Motivation

Why Link Reward to Performance To connect two ends of the rope, a knot is required; to make it lengthy and useful for long run. Likewise, the tie up between the reward and performance should be made for employee retention and their commitment to work, which ultimately improvise the contributing factor of the employee. Employees should perform well to be rewarded and the approach designed for this is “Pay for Performance”. Apart from the base pay, which is based on job description, a variable pay should be announced for their outstanding performance.

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Although the pay raise motivates the employees to an extent, ultimately they want them to be appreciated and recognized in a society for their work, here comes the employee recognition program. Many employees become less committed to work not because of their low pay structure, but for the lack of recognition. Both types of rewarding system should be ensured for higher motivation, retention, engagement and job satisfaction. A simple example for performance based reward system can be best explained by the game of cricket. When a bowler or batsman performs well in a match, his performance is rewarded by the cricket council through the title “Man of the Match” and cash award. It motivates the winner and also the team players to perform well for their team.

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PERFORMANCE MANAGEMENT, REWARDS AND AWARDS Performance management is the systematic process by which an organization involves its employees, as individuals and members of group, in improving organizational effectiveness in the accomplishment of agency mission and goals. Employee performance management includes:

Planning work and setting expectations.

Continually monitor performance.

Developing the capacity to perform.

Periodically rating performance in a summarized fashion, and

Rewarding good performance.

Performance appraisals and rewards are designed to show recognition to employees. Those who exemplify outstanding abilities in the workplace are celebrated through an appraisal and reward system. Managers may offer employee praise in a one-on-one setting, such as a performance evaluation, or in a group setting among peers.

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Archer North, a company that designs and develops employee performance appraisal and corporate evaluation systems, says that social recognition is powerful and is an effective forum for showing value in employees. Employee recognition programs boost the morale of employees and positively change the health of an organization. By instituting performance appraisal and reward systems, an employer lets its workers know that their hard work pays off and is appreciated. Reward system is a part of performance appraisal. When an employee do performance appraisal he uses reward system to appreciate the work done by the employee. Every company has its own reward system which has to be linked with its performance appraisal method. Reward systems are concerned with two major issues: performance and rewards. Performance includes defining and evaluating performance and providing employees with feedback. Rewards included bonus, salary increase, promotions, stock awards and perquisites. Purposes of Performance Management The purposes of performance management may be grouped as under: a) Informational Purpose

To let an employee know how his performance compares with job standards.

To assist in identifying special talents and abilities.

To identify employees needing performance improvement.

To allow employees to evaluate management.

b) Motivational Purpose

To establish closer employer-employee relationships and communicate the job development. Requirements and standards of performance in a periodic basis.

To provide financial rewards or recognition for a job well done.

To work out plans to solve performance problems.

To encourage initiative, creativity and develop a sense of ownership amongst the employees.

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c) Developmental Purpose

To identify individual employee training needs.

To identify individuals for potential development.

To help the employee strengthen current performance and prepare for higher responsibilities.

To show organizational interest in attracting and retaining capable employees.

d) Managerial Purpose

To translate organizational goals into individual job/performance objectives.

To communicate management’s expectations regarding employee performance.

To provide feedback to the employee about job performance in the light of management’s expectations.

To coach the employee on how to improve job performance on a periodic basis.

To diagnose the employee’s strength and weakness.

To determine what kind of development activities might help the employee better utilize his competencies / skills on the job.

Functions of Performance Managements:

To communicate vision of its objectives to all its employees.

To set departmental and individual performance targets which are related to wider objectives.

To conduct formal review of progress towards these targets.

To use the review process to identify training, development and reward outcomes and

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To evaluate the effectiveness of the whole process in order to improve effectiveness.

Benefits of Performance-based Rewarding approach An effective Performance-based Rewarding approach can bring out multiple benefits to an organization and employees,

Decreased attrition rate, which empowers employee retention in long run and commitment. Due to decreased attrition rate and increased employee retention, recruitment cost is less which helps in the financial stability of the organization.

Motivate employees to perform better, aligning with the organizational goals. Employees get a clear insight of what should be done to meet the goals.

Employee involvement (Participation Management) is increased which results in autonomy, more productivity and satisfaction. Employees feel that they are part of a big success, enabling more confidence and innovation in work.

Rather than working on routine jobs, employees volunteer to work on challenging jobs to increase their recognition levels in the working society. It enforces healthy competition among individuals to perform better.

Employee gets a chance to learn and enhance their skills, which highlights their development in career. For the real success of the system, it should be implemented without any bias or oversight. When employees perform well, he should be acknowledged rightly by the supervisors. HR department should not make this process to follow over a night; its importance has to be stressed to the supervisors and employees at all levels. When a perfect system is implemented, it results in higher retention of talented employees and greater profits to the organization.

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Management of rewards and incentives

An important aspect of human resource management which needs special attention in extension organizations is the development of a reward system which will attract, retain, and motivate extension personnel, as well as provide training and promotional opportunities. Extension organizations in Asian and African countries have a poor reward system. The extension agents are not only poorly paid but are paid late and after reminders or visits to head-quarters. Most of the extension services are run by government agencies and operate under rules and regulations of public administration. These rules do not have provisions for rewarding superior performance or for a wage system based on merit. Promotion criteria are based on seniority and length of service. Thus the bureaucratic structure of extension services is a basic hindrance to designing a better reward system. Among many of the government departments, the agricultural department and extension service have a low public esteem and poor pay structure.

The rewards and incentive system can be improved in several ways.

Rewarding Superior Performance:

Extension organizations have to develop a reward system which encourages superior performance so that pay and wage administration will be an effective tool to promote performance, motivation, and satisfaction. A clear job description, performance standards, and performance appraisal will help in evaluating extension work and rewarding people for meritorious service. Ways and means have to be found within the existing framework of public administration for basing pay on performance. For example, extension workers on the basis of their performance can be sent for higher education. Nonmonetary rewards such as recognizing the good ideas of field workers or awarding honorable titles will also help in improving performance. Extension personnel may also be encouraged to form professional societies to develop and communicate high standards, as well as to recognize superior performance.

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A professional monthly journal or newsletter can help extension agents to communicate innovative ideas and reinforce superior performance.

Improved Working Conditions at the Field Level:

The reward system must also be internally equitable. The relative importance of field-level extension functionaries has to be realized in terms of pay compensation and other amenities. Lower level extension workers often have to work under unpleasant and isolated conditions. A carefully planned system of field allowance will compensate this (Baxter, 1990). The living conditions of field extension workers must be improved by providing adequate facilities for housing, transport and medical and educational allowances for children.

. A career refers to all of the jobs that people hold during their working lives. Career planning is the process by which employees plan their career goals and paths. Career development refers to all of the technical and managerial skills employees acquire to achieve their career plans. Career advancement, which gives a picture of future opportunities in terms of promotion, is a motivating factor for performance and development of skills. Unfortunately, no career structure exists for extension personnel in many organizations. In developing countries like India, there are many cases where one joins as a village extension worker and retires in the same position after serving thirty to thirty-five years. As part of improving the rewards and incentives system, extension organizations have to develop suitable career paths and advancement for different categories of extension personnel on a systematic basis.

As part of career development, extension personnel should be provided with opportunities to develop their technical and managerial skills to enable them to occupy higher positions. Extension personnel should have a salary structure as well as promotion opportunities comparable to other professions like health or engineering. In Kenya, the pay and career opportunities of extension workers are comparable to other government employees. Recommendations have already been made to equate the status of agricultural extension with that of agricultural research by offering an equal salary structure, professional advancement, and incentives and rewards.

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Performance appraisalIn the previous sections, we discussed how extension personnel are recruited and trained and become part of a work group. These are all vital activities. However, the ultimate measure of effective human resources within an extension organization is the performance of extension personnel. Thus performance appraisal is important for effective human resource management. Performance appraisal is a process of evaluating employee performance in order to guide and develop the employee's potential. In many extension organizations which are government departments, the performance appraisal is nothing more than a confidential judgments of work done and a character report used to facilitate disciplinary action or promotion. The employees do not get feedback about their performance. Extension organizations need to have an open appraisal system to provide feedback and opportunities for open discussion with employees on their performance, because they have immense potential to grow and develop. This system can create a healthy working climate and employee motivation.

The performance appraisal which aims at facilitating employee development has the following major purposes:

(1) To provide feedback and guidance,

(2) To set performance goals,

(3) To identify training needs, and

(4) To provide inputs for management of pay administration, rewards, and promotion.

The steps involved in effective performance appraisal are:

(1) Identification of key performance areas and setting yearly objectives under each KPA,

(2) Identification of critical attributes for effective performance,

(3) Periodic review of performance,

(4) Discussion of performance with employees, and

(5) Identification of training and developmental needs page 35

Potential Appraisal:

The potential appraisal is a future-oriented appraisal by which the potential of an employee to occupy higher positions and to assume higher responsibilities is evaluated. The potential appraisal can help the extension staff to know their strengths and weaknesses and can motivate them to further develop their skills. Thus the potential appraisal helps in planning overall career development of employees. Some of the techniques used for the appraisal are self-appraisals, peer rating, the management by objectives (MBO) approach, psychological test and simulated work exercises, case analyses, and leadership exercises.

Performance Review and Counseling

An important purpose of the performance appraisal is to counsel and guide employees towards greater job effectiveness. Thus a system of performance counseling is needed in extension organizations. Performance counseling is provided by the manager to the subordinates to help them in the analysis of job performance, identification of training needs, and finding solutions to the problems which hinder job effectiveness. Counseling is an art of communication involving two people - manager and employee. Counseling differs from training in that the former involves a dyadic relationship and establishes more mutuality and confidentiality. The success of performance counseling depends upon the employee's interest, a climate of openness and mutuality, and the counseling process. Extension managers can use directive, nondirective, and cooperative counseling

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REWARD SYSTEM LINKED TO PERFORMANCE IN TATA COMMUNICATIONS

TCL has developed an unbreakable bond with sound HR practices in an environment that defies traditional roles and responsibilities. The company views its employees as assets, which as to be utilized efficiently. The TCL senior management constantly keeps track of the vast intellectual assets, their skills sets, the status of projects on which they are working, and the number of people available for being placed in other projects. TCL determines its manpower requirements based on inputs from senior consultants, who provide information on changes in the technology and the potential demand for new skills in the immediate future. This enables the HR department to plan and schedule recruitment and training programs. Figure 1 illustrates the role of HR, which evidently is that of a facilitator. So whether it is recruitment or even career development, HR is the catalyst which initiates and institutionalizes processes. To manage all the function of employees is herculean task but the smoothness of operations is intriguing. The HR structure, which allows flexibility and empowerment, is the solution. TCL takes care of every aspect of Human Resource Management, from recruitment to training and career development. The company combines its aim of recruiting skilled employee with the broader objective of improving educational standard in India. TCL is well recognized in the industry for its emphasis on employee training. Company is having its own training center in Dighi, Pune, where induction and other training are conducted by its expert trainer who provide functional and operational knowledge about the TCL and its subsidiaries. It keeps decent amount of budget from its annual sales on training. In addition to training, TCL also believes in grooming its employee into managers. In their first couple of years at the company, employees are put to work on different technological platforms and applications. The organization consciously does not try to develop its employee as specialists, as it knew that they would become useless once their area of specialization becomes obsolete. This approach was different from that of many other companies, who stressed specialization of their workforce.

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PERFORMANCE MANAGEMENT SYSTEM AT TCL Performance management system actually operates when whole system is designed carefully and it has been conveyed properly to employees in the same way. TCL follows an effective PMS system. The purpose of the Performance Management process is to have a systematic administration of the Performance Management activity in order to create a high performance culture in company and improve overall performance & capability of TCL. The goal setting process for employee is done in a manner that it enables employees to realize about their contribution to the organizations better performance. PERFORMANCE APPRAISAL TCL conducts appraisal twice a year.

Interim Review

Year-end Review

Performance appraisal is based on a review of performance against set Goals, and assessment of Performance & Potential. It also captures employee aspirations and the support required by employees from the organization in the Career Planning section. GOAL SETTING FOR INDIVIDUAL EMPLOYEE The Performance Management Process is a continuous cycle that begins with Goal Setting. Mutual goal setting is a must for developing agreed-upon measures for performance review. Effective goal setting provides the framework needed for managers and direct reports to discuss and monitor progress and to assess results. All goal setting is done using the SMART technique and could involve quantitatively / qualitatively measurable goals or milestone linked goals as appropriate. The measures for the various goals are selected on the basis of their suitability for assessing whether the desired performance is happening. In case of role change during the year, employee needs to update his Goal-Setting document, readjust his KRAs and weightages within 2 weeks of moving into his/her new role.

GOAL SETTING PROCESS An Employee fills up KRAs and update JD forms in consultation with Manager and submit it to Manager through its employee portal. Once manager is validate and approve then it would be consider for review and If any changes are required, the Manager can make the change or send the form back to the employee for making the change.

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INTERIM REVIEW PROCESS Interim review is conducted every year to review the performance midway through, provide performance feedback to employees, revisit the Goals set for them and make any revisions, if required. YEAR-END REVIEW PROCESS FLOW CHART The annual Performance Management process plays a pivotal role in imparting a comprehensive and formalized view of progress and growth of employees. Year-end process start in following manner. 1) Self-Appraisal & Managers Review 2) Energy Curve Consolidation 3) Sharing of Rating & Final Review

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b) Employees (rated VC / BCI during the year-end review) who demonstrate poor performance during the year. At the end of the defined performance Improvement Plan review period, if the employee do not improve to a grade better than VC, the employee is asked to resign. INTERNAL JOB POSTING POLICY: The intent of this policy is to facilitate and enable all regular employee of Tata Communications to apply and offer their candidature for all open positions based on their career aspirations, knowledge, skills and abilities they possess vis-à-vis the job requirement. All regular employees who have completed minimum 18 months in the current role will be eligible for IJP. It’s a framework for internal hiring process whereby employees get the flexibility to choose between various job options within TCL rather than pursuing options outside of company. REWARD & RECOGNITION IN TCL: TCL believes that flexibility and responsiveness in everything is critical to its long term success. These awards aim to recognize and reward outstanding individuals and teams who have gone beyond their role requirements and have taken initiatives that have had a positive impact on its short term and long term growth objectives. These awards have been distributed in following ways. REWARD SYSTEM LINKED TO LEADERSHIP SIGNATURES: More than ever before, companies are becoming global. Setting up operations in new geographies, gaining local market share and leveraging the low cost base through offshoring and outsourcing has now become a necessary strategic option for large companies. This is leading to large numbers of managers and leaders working with cross cultural teams, in different countries. From an employee’s point of view, many have co-workers across the globe. This throws up new challenges. The Leadership Signature Programme is the DNA of managers at Tata Communications and has been designed to create a common inspiring culture in the company. The objective is to groom and develop talent into future leaders who not only provide the right environment for the employees, but will also enable them to give their best so that they accomplish tough business goals. They will become good at the ‘how of leadership’. These 6 attributes are linked to reward system which are summarized below:

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SWOT Analysis:

Strengths: Competitive staff Cooperative Executives Islamic banking Corporate & Investment Banking Group provides all

requisite banking services for our corporate clientele in an efficient, dependable, consistent, and competitive manner – the objective being to become your “bank of first call” for all your financial needs.

The main strength is that they have provided the name of person, designation, department and phone number for easy contact for customers on their websites.

Askari bank established relationship with almost all top manufacturers and dealers of Samsung, Philips, LG and Dawlance.

At its website all the features of all the products are given separately and the eligibility criterion is also given.

 Weaknesses:

Profit rates are not higher than the competitors. Loan rates are higher than the competitors. 360 degree feedback system not applied in Askari bank. No break is given to employees, which sometimes make

them frustrated.  Opportunities:

The different products of Askari bank provides it with opportunities as its competitors are providing loan on easy term to the farmers for agriculture, livestock and vehicles like tractors, Suzuki.

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Threats:Competitor

ABN Amro Bank Saudi Pak Bank Habib Bank Muslim Commercial Bank

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CONCLUSION:

There is all the reward systems are being discussed briefly which could be there in an organization and which could possibly give to the employees by the management of an organization. There is also defined that how the reward system could effect the organization and also the employees life on the work place, it is also defined that how the compensation could be responsible for the betterment and success of a working organization.

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Recommendations:

I just want to add one thing that they would have to overcome the reference system and give the promotions who would be deserving not to the person who has the huge reference or relation with some high profiled.

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Bibliography:

http://www.google.comhttp://www.slideshare.com http://www.answers.com/topic/employee-reward-and-recognition-systems.com http://www.opm.gov/retirement-services/calculators/fegli-calculator/basic-pay/com http://www.ecommerce-now.com/images/ecommerce-now/HRM%20Strategies.htm http://www.businessperform.com/articles/performance-management/money_in_reward.html http://www.mbaskool.com/business-articles/human-resource/5260-performance-management-linking-reward-to-performance.html http://www.slideshare.net/search/slideshow?ft=all&lang=%2A%2A&page=1&q=rewards+system+linked+to+performance&qid=2f88a192-78c1-4801-8552-ed894b8a68e0&searchfrom=header&sort=&ud=any http://www.humanresources.hrvinet.com/performance-management-handbook http://www.hr-guide.com/ http://www.tatacommunications.com/ http://www.inc.com/encyclopedia/employee-reward-and-recognition-systems.html http://www.citehr.com/ http://ceo.usc.edu/working_paper/performance_management_and_rew.html http://corehr.wordpress.com/performance-management/performance-appraisal-methods/ http://www.citeman.com www.project-team-rewards.com

OTHER SOURCES:- (BOOKS AND NOTES )

1. A. M. Sarma- “Performance Management & Rewards System” published by Himalaya Publishing House Pvt. Ltd.

2. Prof. Mr. Pravin Late- “Organization Behavior” published by published by Himalaya Publishing House Pvt. Ltd.

3. Oxford Dictionary

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