Connecting People: October 2008

Wednesday, October 29, 2008

NATIONAL BANK FOR AGRICULTURE AND RURAL DEVELOPMENT (NABARD) NABARD, an apex development bank, was set up on the recommendations of CRAFICARD Committee on July 12, 1982 under NABARD Act 1981 with a capital of Rs.100 crore contributed by Central Govt. and RBI, with its main office in Mumbai, by merging the Agriculture Credit Deptt and Rural Planning and Credit Cell of RBI and took over the entire functions of Agriculture Refinance and Development Corporation (ARDC). NABARD is managed by Board of Directors consisting of Chairman, Managing Director other directors. NABARD raises funds through National Rural Credit - Long Term operations, National Rural Credit-Establishment fund, through bonds and debentures guaranteed by Central Govt, borrowing from RBI, Central Govt. or any other organisation approved by Central Govt and funds from external sources. It credit functions include providing credit to agriculture, small and village and cottage industries through banks by way of refinance facilities to commercial banks, RRBs, Coop Banks, Land Development Banks and other Financial Institutions like KVIC. Its developmental functions are co-ordination of various institutions, acting as agent of Govt. and RBI, providing training and research facilities. The regulatory functions include inspection of RRBs and Coop Banks, receipt of returns and making of recommendations for opening new branches. EXPORT IMPORT BANK OF INDIA It is apex institution for co-ordinating the working of institutions in India engaged in financing exports and import of goods and services. With initial authorized capital of Rs. 200 crore (increased to Rs.500 and then to Rs.2000 crore) Exim Bank was established on Jan 01, 1982 (and started functioning wef March 01, 1982) under Export Import Bank of India Act 1982, which took over the export finance activities of IDBI. It raises funds by way of bonds and debentures, borrowing from RBI or other institutions, raising foreign deposits. It undertakes following kind of functions:-direct finance to exporter of goods. -direct finance to software exports and consultancy services. -finance for overseas joint ventures and turnkey construction project -finance for import and export of machinery and equipment on lease basis -finance for deferred payment facility -issue of guarantees -multi-currency financing facility to project exporters. -export bills re-discounting -refinance to commercial banks in India -guaranteeing the obligations. SMALL INDUSTRIES DEVELOPMENT BANK OF INDIA (SIDBI) SIDBI was established under SIDBI Act 1988 and commenced its operations wef April 02, 1990 with head quarters in Lucknow and branches all over the country, as a subsidiary of IDBI. It took over the IDBI business relating to small scale industries including National Equity Scheme and Small Inds Development fund. The objective of establishment of SIDBI, in particular, is to strengthen and broad-base the existing institutional arrangement to meet the requirement of SSI and tiny industries. Its functions include: -administration of SIDF and NEF for development and equity support to small and tiny industry. -providing working capital through single window scheme -providing refinance support to banks/development finance institutions. -undertaking direct financing of SSI units. -coordination of functions of various institutions engaged in finance to SSI and tiny units. NATIONAL HOUSING BANK (NHB) NHB, the apex bank for Housing, was established on July 09, 1988 under NHB Act 1987, as a wholly owned subsidiary of RBI with head quarters in New Delhi. The bank was set up with the main purpose of setting up of an institution to operate as a principal agency to promote housing finance institutions and to provide financial and other support to these institutions. NHB can raise sources by issue of bonds and debentures, borrowing from RBI under short term loans and long term operations, borrowing from Central govt and other approved institutions. Its functions are: -promotion and development of housing finance institutions. -refinance to banks and other housing finance institutions for credit facilities granted by them for housing. -inspection of books of accounts of housing finance institutions -technical, administrative and advisory assistance to housing finance institutions. -providing underwriting and guarantee facilities to housing finance institutions. -arranging financing and resources for institutions engaged in housing facilities. -advising Central and other govt. in the matter of housing and housing finance. -collection and publication of information and data relating to housing finance. -maintaining control over corporate housing finance institutions. INDUSTRIAL INVESTMENT BANK OF INDIA (formerly IRBI) IIBI was initially set up as Industrial Reconstruction Corporation Limited during 1971 when it was renamed Indl Reconstruction bank of India wef Mar 20, 1985 under IRBI Act 1984 to take over the function of IRC. During 1997 the bank was converted to a joint stock company by naming it Industrial Investment Bank of India. Its earlier functions were to provide finance for industrial rehabilitation and revival of sick industrial units by way of rationalisation, expansion, diversification and modernisation and also to co-ordinate the work of other institutions for this purpose. agricultural and rural requirements. INDUSTRIAL FINANCE CORPORATION OF INDIA Ltd (IFCI)IFCI was established under IFCI Act 1948 during July 1948 as India’s first development bank. The main objective for which IFCI was established, are to make medium and long term credit available to the industrial undertakings and to assist them in creation of industrial facilities. Its functions include: -direct financial support (by way of rupee term loans as well as foreign currency loans) to industrial units for undertaking new projects, expansion, modernisation, diversification etc. -subscription and underwriting of public issues of shares and debentures. -guaranteeing of foreign currency loans and also deferred payment guarantees. -merchant banking, leasing and equipment finance During 1994, IFCI was converted into a joint-stock company and came out with a public issue of shares. It is managed by a Board of Directors. It floated institutions such as TFCI, ICRA etc. INDUSTRIAL CREDIT AND INVESTMENT CORPORATION OF INDIA (ICICI)ICICI was set up during 1955 as a private company with a view to provide support to industry in India by way of rupee and foreign currency loans, particularly the private international investment and World Bank funds to assist the industry in the country in private sector. It functions include: -assistance to industrial undertakings for new projects, expansion, modernisation, diversification etc. in the shape of rupee loans or foreign currency loans. -subscription and underwriting of capital issues -guaranteeing the payment for credits. -merchant banking, equipment leasing and project counselling. It floated a number of institutions successfully which include credit rating agency CRISIL, ICICI Banking Corporation, SCICI (since merged with it) a Mutual Fund etc. During Sept 1998 it changed its name to ICICI Ltd. Of late, it has started providing working capital support to industrial undertakings. INDUSTRIAL DEVELOPMENT BANK OF INDIA (IDBI)IDBI is the apex institution in the area of long term industrial finance. It was established under the IDBI Act 1964 as a wholly owned subsidiary of RBI and started functioning on July 01, 1964. Under Public Financial Institutions Laws (Amendment) Act 1976, it was delinked from RBI. IDBI is engaged in direct financing of the industrial activities as well as in re-finance and re-discounting of bills against finance made available by commercial banks under their various schemes. The objectives of this institution are to create a principal institution for long term finance, to coordinate the institutions working in this field for planned development of industrial sector, to provide technical and administrative support to the industries and to conduct research and development activities for the benefit of industrial sector. It raises funds by way of market borrowing by way of bonds and deposits, borrowing from Govt. and RBI, borrowing abroad in foreign currency and lines of credit. Its functions include: -direct loans (rupee as well as foreign currency) to industrial undertakings as defined in the Act to finance their new projects, expansion, modernisation etc. -soft loans for various purposes including modernisation and under equipment finance scheme -underwriting and direct subscription to shares/debentures of the industrial companies. -sanction of foreign currency loans for import of equipment or capital goods. -short term working capital loans to the corporates for meeting their working capital requirements. -refinance to banks and other institutions against loans granted by them. Of late, with the reforms in the financial sector, IDBI has taken steps to re-shape its role from a development finance institution to a commercial institution. It has floated its own bank IDBI Bank as also a Mutual Fund. During the financial year 1999-2000 IDBI’s total sanctions were Rs.28308 cr (19.2% increase), the total assets were Rs.72169 cr, net worth at Rs.9025 cr, capital adequacy ratio of 14.5%, DER 6.8:1 and PBT Rs.1027 cr (1301 cr previous years). To meet emerging challanges, it has been introducing new products, setting up Mergers & Acquistions Divn, increasing fee based business such as corporate advisory services, credit syndication, debenture-trushtee ship etc., setting up of IT sector subsidiary-IDBI Intech Ltd, venture capital fund, joint ventures and transfer of not less than 51% of IDBI’s share capital in SIDBI to PSBs as a result of SIDBI (Amendment) Act 2000 effective from 27.03.2000.
Financial Institutions
Financial sector plays an indispensable role in the overall development of a country. The most important constituent of this sector is the financial institutions, which act as a conduit for the transfer of resources from net savers to net borrowers, that is, from those who spend less than their earnings to those who spend more than their earnings. The financial institutions have traditionally been the major source of long-term funds for the economy. These institutions provide a variety of financial products and services to fulfil the varied needs of the commercial sector. Besides, they provide assistance to new enterprises, small and medium firms as well as to the industries established in backward areas. Thus, they have helped in reducing regional disparities by inducing widespread industrial development.
The Government of India, in order to provide adequate supply of credit to various sectors of the economy, has evolved a well developed structure of financial institutions in the country. These financial institutions can be broadly categorised into All India institutions and State level institutions, depending upon the geographical coverage of their operations. At the national level, they provide long and medium term loans at reasonable rates of interest. They subscribe to the debenture issues of companies, underwrite public issue of shares, guarantee loans and deferred payments, etc. Though, the State level institutions are mainly concerned with the development of medium and small scale enterprises, but they provide the same type of financial assistance as the national level institutions.
National Level Institutions
A wide variety of financial institutions have been set up at the national level. They cater to the diverse financial requirements of the entrepreneurs. They include all India development banks like IDBI, SIDBI, IFCI Ltd, IIBI; specialised financial institutions like IVCF, ICICI Venture Funds Ltd, TFCI ; investment institutions like LIC, GIC, UTI; etc.
1. All-India Development Banks (AIDBs):- Includes those development banks which provide institutional credit to not only large and medium enterprises but also help in promotion and development of small scale industrial units.
§ Industrial Development Bank of India (IDBI):- was established in July 1964 as an apex financial institution for industrial development in the country. It caters to the diversified needs of medium and large scale industries in the form of financial assistance, both direct and indirect. Direct assistance is provided by way of project loans, underwriting of and direct subscription to industrial securities, soft loans, technical refund loans, etc. While, indirect assistance is in the form of refinance facilities to industrial concerns.
§ Industrial Finance Corporation of India Ltd (IFCI Ltd):- was the first development finance institution set up in 1948 under the IFCI Act in order to pioneer long-term institutional credit to medium and large industries. It aims to provide financial assistance to industry by way of rupee and foreign currency loans, underwrites/subscribes the issue of stocks, shares, bonds and debentures of industrial concerns, etc. It has also diversified its activities in the field of merchant banking, syndication of loans, formulation of rehabilitation programmes, assignments relating to amalgamations and mergers, etc.
§ Small Industries Development Bank of India (SIDBI):- was set up by the Government of India in April 1990, as a wholly owned subsidiary of IDBI. It is the principal financial institution for promotion, financing and development of small scale industries in the economy. It aims to empower the Micro, Small and Medium Enterprises (MSME) sector with a view to contributing to the process of economic growth, employment generation and balanced regional development.
§ Industrial Investment Bank of India Ltd (IIBI):- was set up in 1985 under the Industrial reconstruction Bank of India Act, 1984, as the principal credit and reconstruction agency for sick industrial units. It was converted into IIBI on March 17, 1997, as a full-fledged development financial institution. It assists industry mainly in medium and large sector through wide ranging products and services. Besides project finance, IIBI also provides short duration non-project asset-backed financing in the form of underwriting/direct subscription, deferred payment guarantees and working capital/other short-term loans to companies to meet their fund requirements.
2. Specialised Financial Institutions (SFIs):- are the institutions which have been set up to serve the increasing financial needs of commerce and trade in the area of venture capital, credit rating and leasing, etc.
§ IFCI Venture Capital Funds Ltd (IVCF):- formerly known as Risk Capital & Technology Finance Corporation Ltd (RCTC), is a subsidiary of IFCI Ltd. It was promoted with the objective of broadening entrepreneurial base in the country by facilitating funding to ventures involving innovative product/process/technology. Initially, it started providing financial assistance by way of soft loans to promoters under its 'Risk Capital Scheme' . Since 1988, it also started providing finance under 'Technology Finance and Development Scheme' to projects for commercialization of indigenous technology for new processes, products, market or services. Over the years, it has acquired great deal of experience in investing in technology-oriented projects.
§ ICICI Venture Funds Ltd:- formerly known as Technology Development & Information Company of India Limited (TDICI), was founded in 1988 as a joint venture with the Unit Trust of India. Subsequently, it became a fully owned subsidiary of ICICI. It is a technology venture finance company, set up to sanction project finance for new technology ventures. The industrial units assisted by it are in the fields of computer, chemicals/polymers, drugs, diagnostics and vaccines, biotechnology, environmental engineering, etc.
§ Tourism Finance Corporation of India Ltd. (TFCI):- is a specialised financial institution set up by the Government of India for promotion and growth of tourist industry in the country. Apart from conventional tourism projects, it provides financial assistance for non-conventional tourism projects like amusement parks, ropeways, car rental services, ferries for inland water transport, etc.
3. Investment Institutions:- are the most popular form of financial intermediaries, which particularly catering to the needs of small savers and investors. They deploy their assets largely in marketable securities.
§ Life Insurance Corporation of India (LIC):- was established in 1956 as a wholly-owned corporation of the Government of India. It was formed by the Life Insurance Corporation Act,1956 , with the objective of spreading life insurance much more widely and in particular to the rural area. It also extends assistance for development of infrastructure facilities like housing, rural electrification, water supply, sewerage, etc. In addition, it extends resource support to other financial institutions through subscription to their shares and bonds, etc. The Life Insurance Corporation of India also transacts business abroad and has offices in Fiji, Mauritius and United Kingdom . Besides the branch operations, the Corporation has established overseas subsidiaries jointly with reputed local partners in Bahrain, Nepal and Sri Lanka.
§ Unit Trust of India (UTI):- was set up as a body corporate under the UTI Act, 1963, with a view to encourage savings and investment. It mobilises savings of small investors through sale of units and channelises them into corporate investments mainly by way of secondary capital market operations. Thus, its primary objective is to stimulate and pool the savings of the middle and low income groups and enable them to share the benefits of the rapidly growing industrialisation in the country. In December 2002, the UTI Act, 1963 was repealed with the passage of Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002, paving the way for the bifurcation of UTI into 2 entities, UTI-I and UTI-II with effect from 1st February 2003.
§ General Insurance Corporation of India (GIC) :- was formed in pursuance of the General Insurance Business (Nationalisation) Act, 1972(GIBNA ), for the purpose of superintending, controlling and carrying on the business of general insurance or non-life insurance. Initially, GIC had four subsidiary branches, namely, National Insurance Company Ltd , The New India Assurance Company Ltd , The Oriental Insurance Company Ltd and United India Insurance Company Ltd . But these branches were delinked from GIC in 2000 to form an association known as 'GIPSA' (General Insurance Public Sector Association).
State Level InstitutionsSeveral financial institutions have been set up at the State level which supplement the financial assistance provided by the all india institutions. They act as a catalyst for promotion of investment and industrial development in the respective States. They broadly consist of 'State financial corporations' and 'State industrial development corporations'.
State Financial Corporations (SFCs) :- are the State-level financial institutions which play a crucial role in the development of small and medium enterprises in the concerned States. They provide financial assistance in the form of term loans, direct subscription to equity/debentures, guarantees, discounting of bills of exchange and seed/ special capital, etc. SFCs have been set up with the objective of catalysing higher investment, generating greater employment and widening the ownership base of industries. They have also started providing assistance to newer types of business activities like floriculture, tissue culture, poultry farming, commercial complexes and services related to engineering, marketing, etc. There are 18 State Financial Corporations (SFCs) in the country:-
1. Andhra Pradesh State Financial Corporation (APSFC)
2. Himachal Pradesh Financial Corporation (HPFC)
3. Madhya Pradesh Financial Corporation (MPFC)
4. North Eastern Development Finance Corporation (NEDFI)
5. Rajasthan Finance Corporation (RFC)
6. Tamil Nadu Industrial Investment Corporation Limited
7. Uttar Pradesh Financial Corporation (UPFC)
8. Delhi Financial Corporation (DFC)
9. Gujarat State Financial Corporation (GSFC)
10. The Economic Development Corporation of Goa ( EDC)
11. Haryana Financial Corporation ( HFC )
12. Jammu & Kashmir State Financial Corporation ( JKSFC)
13. Karnataka State Financial Corporation (KSFC)
14. Kerala Financial Corporation ( KFC )
15. Maharashtra State Financial Corporation (MSFC )
16. Orissa State Financial Corporation (OSFC)
17. Punjab Financial Corporation (PFC)
18. West Bengal Financial Corporation (WBFC)
State Industrial Development Corporations (SIDCs) :- have been established under the Companies Act, 1956, as wholly-owned undertakings of State Governments. They have been set up with the aim of promoting industrial development in the respective States and providing financial assistance to small entrepreneurs. They are also involved in setting up of medium and large industrial projects in the joint sector/assisted sector in collaboration with private entrepreneurs or wholly-owned subsidiaries. They are undertaking a variety of promotional activities such as preparation of feasibility reports; conducting industrial potential surveys; entrepreneurship training and development programmes; as well as developing industrial areas/estates. The State Industrial Development Corporations in the country are:-
1. Assam Industrial Development Corporation Ltd (AIDC)
2. Andaman & Nicobar Islands Integrated Development Corporation Ltd (ANIIDCO)
3. Andhra Pradesh Industrial Development Corporation Ltd (APIDC)
4. Bihar State Credit and Investment Corporation Ltd. (BICICO)
5. Chhattisgarh State Industrial Development Corporation Limited (CSIDC)
6. Goa Industrial Development Corporation
7. Gujarat Industrial Development Corporation (GIDC)
8. Haryana State Industrial & Infrastructure Development Corporation Ltd. (HSIIDC)
9. Himachal Pradesh State Industrial Development Corporation Ltd. (HPSIDC)
10. Jammu and Kashmir State Industrial Development Corporation Ltd.
11. Karnataka State Industrial Investment & Development Corporation Ltd. (KSIIDC)
12. Kerala State Industrial Development Corporation Ltd. (KSIDC)
13. Maharashtra Industrial Development Corporation (MIDC)
14. Manipur Industrial Development Corporation Ltd. (MANIDCO)
15. Madhya Pradesh State Industrial Development Corporation Ltd. (MPSIDC)
16. Nagaland Industrial Development Corporation Ltd. (NIDC)
17. Orissa Industrial Infrastructure Development Corporation
18. Omnibus Industrial Development Corporation (OIDC), Daman & Diu and Dadra & Nagar Haveli.
19. Pudhucherry Industrial Promotion Development and Investment Corporation Ltd. (PIPDIC)
20. Uttar Pradesh State Industrial Development Corporation
21. Punjab State Industrial Development Corporation Ltd. (PSIDC)
22. Rajasthan State Industrial Development & Investment Corporation Ltd. (RIICO)
23. Sikkim Industrial Development & Investment Corporation Ltd. (SIDICO)
24. Tamil Nadu Industrial Development Corporation Ltd. (TIDCO)
25. State Infrastructure & Industrial Development Corporation of Uttaranchal Ltd. (SIDCUL)
26. Tripura Industrial Development Corporation Ltd. (TIDC)

TCS VISION
"TCS will be recognized and respected as professional, innovative, profitable information, and knowledge based logistics/services enterprise. TCS embeds internet based technologies into its internal operating structures and as business solutions for customers; with customer, employee and shareholder interests at the core of its operations; demonstrating a clear concern for ethical conduct and good corporate citizenship; with the objective of growing into a regional and global player, with emphasis on the Middle East, Europe and North America".
TCS Mission
To provide our customers a service of excellence at a world-class level based on honesty and dedicated work practices and the continued search for the increase of efficiency in the logistics of cargo transportation.
Codes of Conduct

Code of Conduct for Non-Executive Directors
Non-Executive Directors of a company will always act in the interest of the company and ensure that any other business or personal association which they may have, does not involve any conflict of interest with the operations of the company and his role therein.

Non-Executive directors will comply with all applicable laws and regulations of all the relevant regulatory and other authorities as may be applicable to such Directors in their individual capacities.

Non-Executive directors will safeguard the confidentiality of all information received by them by virtue of their position.

WorkplaceTCS managers will review the work environment and suggest improvements in line with this policy. The policy will also initiate energy conservation, waste recycling, and paper reduction, in priority areas. The measures and initiatives emerging as a result of this policy will be documented as processes. These processes will also ensure compliance with applicable health, safety, and environment regulations in all offices of TCS. A continual improvement plan will be initiated to achieve excellence in environment management.
CSR activities:
TCS has always recognized the responsibility Corporates should have towards the wider communities they operate in. Be it girl child education in South Asia in collaboration with UNICEF or adult literacy programs in South India, TCS believes in using IT as an instrument for social development and change. Other TCS' community initiatives have been in areas addressing environmental and civic problems; setting up and maintaining infrastructure for urban beautification, pollution reduction and healthcare; waste management in the office environment, tree plantation and water treatment.

Corporate Governance
Strong leadership and corporate governance are essential to providing value to our investors.
TCS receives Golden Peacock Global Award for corporate social responsibility
Tata Consultancy Services (TCS) has been selected winner of the 'Golden Peacock Global Award for Corporate Social Responsibility (Asia) - 2007' for corporate social responsibility (CSR) in the 'Large Business' category by the Institute of Directors, the international body of company directors.
TCS was conferred the award based on an assessment, by an independent jury, of the company's integration of CSR concerns with corporate functioning, responsiveness to the needs of different stakeholders, and development of innovative partnership models to fulfil social responsibilities.TCS Environmental Policy
TCS' commitment to environment stems from the Tata Group’s abiding concern for environment and society. TCS is into Information Technology (IT) consulting business and services, which by its nature of operation has low impact on the environment. TCS will strive to provide a healthy work environment to all its employees and conduct environment friendly business at all its offices. To achieve these goals, TCS has published this Environmental Policy. In line with its continuous improvement and experience certainty process initiative, TCS will continuously enhance its Environmental Policy, which encompasses air, water, natural resources, people and their interrelation.

· Respect Health, Safety, and Environment issues of employees, clients, vendors and local community.
· The Company will set, monitor, review objectives and targets related to environment management.
· TCS will assess and seek to minimize the impact of its business activities on environment by optimizing energy and power consumption and the use of consumables and hardware through recycling or reuse.
· Our Environmental Policy will be communicated to all our employees, business associates and made available to the public on request.

Corporate Sustainability

Both on its own and as part of the Tata organization, TCS actively implements programs and initiatives for the betterment of society, communities, and the environment, and has been since its inception in 1968.
TCS believes in giving back to all communities in which it operates, and in using IT as an instrument for social development and progress. We are deeply committed to education, the environment, and setting up and maintaining infrastructure for urban beautification, pollution reduction and healthcare; waste management in the office environment, tree plantation and water treatment.

DOWN SIZING
An IBM employee told The Hindu that about 1,500 employees have been shown the door in the past month. Pampered with fancy salaries and cushy working conditions, these employees find the developing situation deeply disturbing. Pay cuts, as in the Tata Consultancy Services now, are virtually unheard of. “Though the company has the right to deduct the ‘variable component,’ we are worried at an impending downsizing,” says Ravi K. of TCS. Twenty per cent of the variable pay of all TCS employees has been deducted.
IT employees find themselves worried about their future as companies are undergoing a retrenchment therapy. IT giants IBM and Tata Consultancy Services (TCS) have already asked many of their employees to leave. Though yet to be confirmed officially, 1,500 employees in IBM were asked to find other jobs, while TCS has already sent 500 employees off. Another major who made a drastic cut in employees is Yahoo, laying off 1000 employees.

Pay cuts, as in the TCS now, are virtually unheard of. "Though the company has the right to deduct the 'variable component,' we are worried at an impending downsizing," says Ravi K of TCS. Twenty percent of the variable pay of all TCS employees has been deducted.

Mergers and acquisitions

Tata company
Acquired company
Country
Stake acquired
Value
2000

February
Tata Tea and Tata Sons
Tetley Group
UK
100 per cent(wholly-owned)
GBP271 million
2001

November
Tata Sons (TCS)
Computer Maintenance Corporation (CMC)
India

2002

February
Tata Sons
Tata Communications(formerly VSNL)
India
100 per cent (wholly-owned)
GBP271 million

September
Indian Hotels
Regent Hotel (renamed Taj Lands End)
India
Effective 100 per cent stake
Rs450 crore

December
Tata Teleservices
Hughes Telecom (India)
India
50.83 per cent
Rs858.83 crore
2003

July
Tata Communications(formerly VSNL)
Gemplex
US

2004

January
TCS
Airline Financial Support Services India (AFS)
India
100 per cent (wholly-owned)
GBP271 million

March
Tata Motors
Daewoo Commercial Vehicle Company
Korea
100 per cent (wholly-owned)
KRW120 billion ($102 million / Rs465 crore)

March
Tata Communications(formerly VSNL)
Dishnet DSL's ISP division
India

March
TCS
Aviation Software Development Consultancy India (ASDC)
India

June
Tata Chemicals
Hind Lever Chemicals
India
Amalgamation

July
TCS
Phoenix Global Solutions
India

November
Tata Communications(formerly VSNL)
Tyco Global Network
US

2005

February
Tata Steel
NatSteel Asia Pte
Singapore
100 per cent (wholly-owned)
S$468.10 million

February
Tata Motors
Hispano Carrocera
Spain
21 per cent
Euro12 million (Rs70 crore)

March
Tata Chemicals
Indo Maroc Phosphore S.A. (IMACID)
Morocco
Equal partner
$38 million (Rs166 crore)

April
Tata Motors
Tata Finance
India
Merger

July
Indian Hotels
The Pierre
US
$9 million
Lease of the property

July
Tata Industries
Indigene Pharmaceuticals Inc
US
<30 per cent
Not disclosed

July
Tata Communications(formerly VSNL)
Teleglobe International
US

August
Tata Tech
INCAT International
UK

August
Trent
Landmark
India
76 per cent
$24.09 million (Rs103.60 crore)

September
TACO
Wündsch Weidinger
Germany

Euro7 million

September
Tata Communications(formerly VSNL)
Tata Power Broadband
India

October
Tata Tea through Tata Tea (GB)
Good Earth Corporation & FMali Herb Inc
US
100 per cent (wholly-owned)
$31 million

October
TCS
Financial Network Services
Australia

October
TCS
Pearl Group
UK
Structured deal

November
TCS
Comicrom
Chile

December
Indian Hotels
Starwood Group (W Hotel)
Sydney
100 per cent (wholly-owned)
$29 million

December
Tata Chemicals
Brunner Mond
UK
63.5 per cent (December 2005)
Rs508 crore (December 2005)

36.5 per cent (March 2006)
Rs290 crore (March 2006)
2006

January
Tata Metaliks
Usha Ispat, Redi Unit
India
100 per cent (wholly-owned)
Rs115 crore

January
Tata Interactive
Tertia Edusoft Gmbh
Germany
90 per cent
Not disclosed

Tertia Edusoft AG
Switzerland
90.38 per cent

February
TCS
Tata Infotech
India

April
Tata Steel
Millenium Steel
Thailand
67.11 per cent
$167 million (Baht6.5 billion)

May
Tata Tea through Tata Tea (GB)
JEMCA
Czech Republic
Assets: intangible and tangible
GBP11.60 million

June
Tata Coffee
Eight O' Clock Coffee Company
US
100 per cent (wholly-owned)
$220 million (Rs1015 crore)

September
Tata Tea through Tata Tea (GB)
Joekels Tea Packers
South Africa
33.3 per cent
GBP0.91 million
2007

January
Tata Steel
Corus
UK
100 per cent

March
Tata Steel
Rawmet Industries
India

Rs101 crore

April
Indian Hotels
Campton Place Hotel
US

$58 million

April
Tata Power
Acquired Coastal Gujarat Power
India

April
Tata Tea through Tetley Group
Vitax and Flosana trademarks
Poland

April
Tata Communications (formerly VSNL) through Neotel
Transtel Telecoms (TT)
South Africa

$33 million(approximately)

June
Tata Power
PT Kaltim Prima Coal and PT Arutmin Indonesia
Indonesia
30 per cent equity stake

October
TRF
York Transport Equipment (Asia)
Singapore
51 per cent stake

2008

January
Tata Chemicals
General Chemical Industrial Products
US
100 per cent stake

January
Tata Projects
Artson Engineering
India

March
Tata Motors
Jaguar and Land Rover brands
UK

$2.3 billion (approximately)

March
Telco Construction Equipment Company (Telcon)
Serviplem SA
Spain
79 per cent

March
Telco Construction Equipment Company (Telcon)
Comoplesa Lebrero SA
Spain
60 per cent

June
Tata Communications
China Enterprise Communications Limited (CEC)
China
50 per cent equity interest

ENVIRONMENT
The Tata ethos places a special emphasis on environmental and ecological issues. The Group's efforts to preserve and regenerate the environment find expression in the slew of projects and programmes it has undertaken in and around its facilities and operations. A focus area for the Group, in this context, is the climate change crisis.

Overview: The Tata Group's beliefs on sustainability have led to a corporate policy that emphasises environment preservation. Tata companies work on projects that include repairing green cover, reducing effluents and emissions, maintaining local ecologies and improving long term corporate sustainability.

Policies: The Tata Group has a set of explicit guidelines on environmental and ecological issues, and a broad range of policies aimed at helping Tata companies protect, conserve and restore our natural resources.

Climate change: The Tata Group is facing up to the challenge of climate change and making it integral to its processes. Coordinating and directing the climate change efforts of the Group's companies are some of the senior-most Tata leaders.

Sunday, October 26, 2008

RETAIL IN INDIA-EMERGING CHALLENGES
INTRODUCTION:The India Retail Industry is the largest among all the industries, accounting for over 10 per cent of the country’s GDP and around 8 per cent of the employment. The Retail Industry in India has come forth as one of the most dynamic and fast paced industries with several players entering the market. But all of them have not yet tasted success because of the heavy initial investments that are required to break even with other companies and compete with them. The India Retail Industry is gradually inching its way towards becoming the next boom industry.
The total concept and idea of shopping has undergone an attention drawing change in terms of format and consumer buying behavior, ushering in a revolution in shopping in India. Modern retailing has entered into the Retail market in India as is observed in the form of bustling shopping centers, multi-storied malls and the huge complexes that offer shopping, entertainment and food all under one roof.
A large young working population with median age of 24 years, nuclear families in urban areas, along with increasing workingwomen population and emerging opportunities in the services sector are going to be the key factors in the growth of the organized Retail sector in India. The growth pattern in organized retailing and in the consumption made by the Indian population will follow a rising graph helping the newer businessmen to enter the India Retail Industry.
In India the vast middle class and its almost untapped retail industry are the key attractive forces for global retail giants wanting to enter into newer markets, which in turn will help the India Retail Industry to grow faster. Indian retail is expected to grow 25 per cent annually. Modern retail in India could be worth US$ 175-200 billion by 2016. The Food Retail Industry in India dominates the shopping basket. The Mobile phone Retail Industry in India is already a US$ 16.7 billion business, growing at over 20 per cent per year. The future of the India Retail Industry looks promising with the growing of the market, with the government policies becoming more favorable and the emerging technologies facilitating operations.
Purchasing power of Indian urban consumer is growing and branded merchandise in categories like Apparels, Cosmetics, Shoes, Watches, Beverages, Food and even Jewellery, are slowly becoming lifestyle products that are widely accepted by the urban Indian consumer. Indian retailers need to advantage of this growth and aiming to grow, diversify and introduce new formats have to pay more attention to the brand building process. The emphasis here is on retail as a brand rather than retailers selling brands. The focus should be on branding the retail business itself. In their preparation to face fierce competitive pressure, Indian retailers must come to recognize the value of building their own stores as brands to reinforce their marketing positioning, to communicate quality as well as value for money. Sustainable competitive advantage will be dependent on translating core values combining products, image and reputation into a coherent retail brand strategy.
EMERGING CHALLENGES FOR RETAIL IN INDIA:
Indian Retail Industry is going to face many challenges in terms of Political, Economic, Socio-Cultural, Technical in the recent period. The major Challenges that the industry is facing are
High Cost of Real Estate.
Lack of Trained Human Force.
Protestation from Political Parties in Protection of Unorganized sector.
Restriction of FDI in retail by the government.
Unable to Provide Goods which are liked by the rural customers, who constitute 90% of India’s Population.
Absence of Developed Supply chain and Integrated IT Management.
High Cost of Real Estate:-
Retail Industry is facing trouble in acquiring required land to establish their malls. The actual space required for each type of Retail format is as follows.
• Large supermarkets, typically (3,500 - 5,000 sq. ft)
• Mini supermarkets, typically (1,000 - 2,000 sq. ft)
• Convenience store, typically (750 - 1,000 sq. ft)
Real estate is becoming a major problem for retailers because the persons involved in real estate business say that they get more profits if they sell same land to the residential areas compared to commercial purposes. If the Retailers are in a position to ready to pay, they have to pay huge amounts to purchase the land to set up their malls. If they want to take the land for lease retailers have to pay the amount more than the amount paid by the customers who take the land for residential purpose. Another reason why retailers are facing with land problem is that there is no adequate government land, hence government is also not in a position to provide land to retailers.
Lack of Trained Human force:-
Employees who need to work in these malls need some training. Educated youth are high in the country but they are not showing interest to work in these malls. Hence employers are looking at rural youth who are educated. But these employees do not have the required qualities like interacting with different customers when customers come to malls or does not have the clear knowledge about different products and other required training.
Protestation from Political Parties in Protection of Unorganized Sector:-
Organized retail is facing much protestation from different political parties. These Political Parties are protesting against the organized retail because they want to protect the Unorganized sector which is in existence from many years and if the organized retail is promoted Unorganized retailers are going to face many problems and so many people who are involved in this sector are going to lose their jobs.
Not only the Political Parties but some Trade Associations also protested against these companies. Here is a case of Reliance, how the association protested against it in Kerala. In Kerala India's largest State-level traders' association, the Kerala Vyapari Vyavasayi Ekopana Samiti (KVVES), has threatened to boycott all Reliance products if Reliance Fresh goes ahead with its plans to set up shop in Kerala. The KVVES has asked Reliance Fresh authorities to publicly announce, by June 1, that they will not open a single outlet in kerala. The traders warned reliance that if they do not stop their plan to open stores in kerala they will stop the use of reliance petroleum and reliance cell phones whose main consumers are the traders. The KVVES on Thursday wrote to Reliance Fresh authorities to shelve their plans to open some 200 outlets in the State, mainly Kochi, Kozhikode and Thiruvananthapuram. The outlets would sell vegetables, fruits, groceries, dairy products, confectionary and other daily needs.
Restriction of FDI in Retail by the Government:-
FDI is not allowed in retail industry to maximum possible extent because of which economy for the retail sector may not be increased. India’s retail trade is largely in the hands of the unorganized sector. Large super markets, malls and departmental stores are a recent phenomenon. They are mostly owned and managed by Indian promoters. In India there are approximately 40 million people and 11 million outlets in India’s retail sector. A person selling fruits and vegetables on a cart or a more stationary wayside shopkeeper selling grocery articles or food items represents the majority of retail traders in India. Each of these vendors occupy not more than 30-40 square feet of space at best, less than that of the parking space appropriated by the car of a consumer who comes to the big malls. Being unorganized they have no access to bank loans and are constantly under threat of eviction from the government.
100 % FDI in retailing in not allowed per say, foreign retailers can operate in India through joint ventures, where the Indian partner is a export house, Franchising/Local manufacturing/Sourcing from small-scale sector, Cash and carry operations. Wal-Mart’s tie up with Bharti and its 22 subsequent tie up with India will be through Cash and Carry operations. In India Retailing is not regarded as an industry very few banks are willing to invest in this sector. As per the present policy, retailing is subject to lot of laws and regulations at central, state and municipal/local levels. Some of these laws and restrictions are listed below.
- Restrictive zoning legislation limits availability of land for retail/ commercial purposes
- Restrictions on interstate movement of food grains deprive farmers from getting remunerative prices.
- Restrictive Labour laws
- Urban land ceiling regulations, restrictions on shop opening timings, requirements for shops
to close once a week
- There is no uniform tax structure - multiple layers of taxes.

Absence of Developed Supply chain and Integrated IT Management:
supply chain management for consumer goods in India is extremely challenging, due to complex taxation structures, large geographic distances, and high fragmentation of the consumer base. Exports, not local food needs, are made the objective. Thus while the supply chain for local markets are highly evolved and sophisticated, in the context of exports, it is perceived as deficient. The Bank has called this a "logistical tax".
Three factors explain India’s high logistical tax:
(a) geography, which is important but not decisive;
(b) poor transport and storage infrastructure, as well as policies that have led to the uneven utilization of existing infrastructure, and the slow creation of new infrastructure; and
(c) high marketing costs due to the fragmentation of the supply chain.
Threat of the Corporate Hijack of Retail:
The Threat of the Corporate Hijack of Retail Giant corporations like Wal-Mart and Reliance have started to try and take over the Indian retail sector. Currently the value of the retail market is estimated at around $ 270 billion with a growth 6 rate of 5.7 per cent per annum according to the Indian retail report. The size of small retail is big, the size of big retail is small, a mere Rs. 250 billion in 2004 or 3% and Rs. 485 billion or 4.7% per cent of the retail market in 2006. However, the large scale corporate retail is projected to grow at the rate of 28% to 30% per annum, reaching Rs. 1000 billion or $ 70 billion by 2010 from the current size of US $ 8.7 billion. The tenfold increase in corporate retail will be at the cost of small scale retail, which employs nearly 10% of India’s population. A number of cultural categories and policy instruments are being used to make corporate retail grow.
The first strategy is to define the small scale self-organized retail as "unorganized" and the large scale corporate retail as "organized". The real difference is however not unorganized vs organized. It is self-organized vs. corporate. Can an unorganized system provide food to millions of Indians since ages, and at the same time provide adequate returns to millions of farmers? Can an unorganized system act as the major link between rural and urban societies, where both of them are so much interdependent on each other? The question that arises then is why the existing system of business of food grains, fruits and vegetables is termed unorganized. Is it only the mega retail enterprises of the corporate giants, which are organized? Or unorganized retail is a term used by the corporations for their vested interest. So that they can organize it according to themselves, and control the whole food market from farm to fork in India.
As per the definition retail industry comprises of organised and unorganised sectors. Corporate retailing refers to trading activities undertaken by licensed retailers, that is, those who are registered for sales tax, income tax, etc. These include the corporate-backed hypermarkets and retail chains, and also the privately owned large retail businesses. Unorganised retailing, on the other hand, refers to the traditional formats of low-cost retailing, for example, the local kirana shops, owner operated general stores, paan/beedi shops, convenience stores, hand cart and pavement vendors, etc.
In India around 97%-98% of the retail industry is unorganized. Among the organized ones The already established retailers in India are Pantaloon Retail, Shoppers’ Stop, Spencers, HyperCITY, Lifestyle, Subhiksha , Trent while the new entrant is Reliance Retail. Wal-Mart with its Indian partner Bharti(the company that owns Airtel) is expected to come up with its first store by the beginning of 2008. It is ridiculous to think that the existing system is unorganised, as there is no farmer in the country, who does not have an access to a mandi, and there is no mandi in the country which is not connected to other mandis. The supply chain is so well arranged that no part of the country is devoid of basic necessities. Where ever there has been a demand, the supply has reached and it has reached on just prices. In a country with large numbers of people, and high levels of poverty, this model of retail democracy is the most appropriate in terms of ecological sustainability and economic viability.
The Changing Indian consumer
The following are the factors which drive the big retailers for seeing India as a lucrative market for its business. Indians with an ability to spend over USD 30,000 a year (PPP terms) on conspicuous consumption represent 2.8% of the entire population. But with a population base of 1.07 billion people, this number amounts to 30 million people, a market next only to USA, Japan and China. Apart from the government policy (mentioned in the following section) the retail growth is also driven by the following factors
Economic growth: This has meant greater disposable incomes for the Indian middle class, which currently comprises 22% of the total population. This figure is expected to increase to 32% by 2010. Disposable incomes are expected to rise at an average of 8.5% p.a. till 2015.
Demographics: More than 50% of the population is less than 25 years of age and strong growth is expected to continue in this age bracket.
Urbanization: The Indian urban population is projected to increase from 28% to 40% of the total population by 2020 and incomes are simultaneously expected to grow in these segment.
Credit availability: Retail loans have doubled in the last three years to reach USD 38.7 bn by 2005. All the above figures represent only about the rich and middle class of the country. Because of the Big consumer market that India offers, the government gives no heed to the concerns of unorganized 97% of the retail trade in India. People of all classes depend upon these traders for their daily supplies. When the government sees the numbers only on financial and profitable terms the numbers of the social cost that has to be sacrificed are huge.

CPM on Corporate retail
Communist party of India (Marxist) has been vehement in their criticism of FDI in retail. They are advocating a framework for a National Policy on Regulating Organized Retail. Small retailers need protection and policy support in order to compete with organized retail. The Ministry of Housing and Urban Poverty Alleviation has formulated a National Policy for Urban Street Vendors. The policy proposes several positive steps to provide security to street vendors considering it as an initiative towards urban poverty alleviation. However, what is required is a more comprehensive policy, which addresses the needs of small retailers, especially in terms of access to institutional credit and knows how to upgrade their businesses.
A regulatory framework for organized retail should also be framed. Since the operations of organized retailers impact upon various sectors of the economy, policy guidelines should be framed involving all the relevant Departments, namely Commerce, Agriculture and Urban Development. Moreover, since regulation of the large format retailers would mainly be in the domain of the states and local bodies, State Governments have to be consulted and involved in the process of framing. According to the CPM, In addition, the UPA Government should also abandon the moves to permit FDI in retail trade through the back door, as in the case of the joint venture between Wal-Mart and Bharti whereby the former proposes to operate in the cash-and-carry segment while the latter in the front-end. It is more than obvious that this proposed joint venture is nothing but a subterfuge, to circumvent the existing policy regime, which does not allow FDI in retail. The entry of giant MNCs like the Wal-Mart, TESCO, Carrefour etc, besides accelerating manifolds the already rapid growth of organized retail, would also sabotage any attempt by the Government to regulate the sector in order to protect the interests of the small retailers and farmers.
The UPA Government should take a categorical position on this issue. Not allowing MNCs to operate in the retail sector should be the starting point of the national policy on retail. CPM does not want a single large format retailer to be allowed to capture a large market share. They want to restrict the number of retail outlets that a 24 single private entity can open in a city, state as well as region and does not want a national level monopoly be allowed to develop in the retail sector. There are Several Government marketing agencies, which exist, both at the Central as well as State levels With a few exceptions, these agencies have been experiencing decay, owing to various factors. CPM wants these marketing agencies should be revived and encouraged to grow and compete with private large format retailers.
The latter half of the 20th century saw the emergence of super markets as the dominant grocery retail form in North America and Europe. As the income of the consumers rose and the shoppers sought for convenience and new tasted the supermarkets were able to expand the products offered. Saturated home markets, fierce competition and restrictive legislation have relentlessly pushed major food retailers into the globalization mode. Since the mid-1990s, numerous governments have opened up their economies as well, to the free markets and foreign investment that has been a plus for many a retailer.
The Kerala Example
While the Central governments is looking out ways in which Global retail chains can be attracted to the country by making their entry hassle free, the state of Kerala is all set to bring in a law to ban corporate retailers, both Indian and MNCs, in the state. The law department is working on the bill, The Kerala State Essential Commodities Act —2007, which is expected to get a cabinet clearing soon, before being introduced in the assembly. This would be the first attempt of its kind in the country. According to Food minister Mr Divakaran, the Left in Kerala doesn’t intend to draw the line for big retailers at peddling food grains, as Buddhadeb Bhattacharjee did for Bengal. The new legislation will be a blanket ban and the new bill is expected to, more than make up for "the lack of teeth" in the Central Essential Commodities Act.
In Kochi, Reliance has already opened six of its proposed 70 supermarkets and hypermarkets in the state and the government does not want any more new licenses issued to any of the retail chains. The existing chains will be wiped out in a phased manner and all the local bodies are directed, not to issue any more licenses. The government alleges that reliance operates all its stores in the cities and not in the rural areas. The government is banking on the fact that the left rules all the five corporations in the state which should help them in wiping out the existing chains slowly. The legislation has the backing of the state’s powerful traders lobby, the Vyapari Vyavasayi Ekopana Samiti. According to the Food Minister, the government is putting things in place to make up for the absence of big retail corporates in the state by having 35,000 PDS shops use that space and going to add 17,000 more large outlets to the 3,000 that the State Civil Supplies Corporation now runs, thus stopping the Corporates from tapping the state’s huge rural market. The government has also decided to take on the corporate brand pull by setting up the state's largest hypermarkets on its own, at Thiruvananthapuram, Kottayam and Kochi. That is besides some 14 huge 'People's Bazaars' to come up in each district, selling provisions, vegetables and everything else for day-to-day living, with appropriate price support from the government. This example of kerala shows that there is an alternate arrangement possible and entry of big Indian corporations and MNC’s are not inevitable.

INTRODUCTION
Performance management reminds us that being busy is not the same as producing results. It reminds us that training, strong commitment and lots of hard work alone are not results. The major contribution of performance management is its focus on achieving results -- useful products and services for customers inside and outside the organization. Performance management redirects our efforts away from busyness toward effectiveness.
Recently, organizations have been faced with challenges like never before. Increasing competition from businesses across the world has meant that all businesses must be much more careful about the choice of strategies to remain competitive. Everyone (and everything) in the organization must be doing what they're supposed to be doing to ensure strategies are implemented effectively.
This situation has put more focus on effectiveness, that systems and processes in the organization be applied in the right way to the right things: to achieve results. All of the results across the organization must continue to be aligned to achieve the overall results desired by the organization for it to survive and thrive. Only then it be said that the organization and its various parts are really performing.
Performance measurement is the process of assessing progress toward achieving predetermined goals. Performance management is building on that process, adding the relevant communication and action on the progress achieved against these predetermined goals.
Performance management includes activities to ensure that goals are consistently being met in an effective and efficient manner. Performance management can focus on performance of the organization, a department, processes to build a product or service, employees, etc. Information in this topic will give you some sense of the overall activities involved in performance management.
Performance Management System
· clarifying the relationship between the employee’s work assignment and the purpose and goals of the work unit and the Agency,
· measuring all employees’ performance by comparing the actual results to the expectations,
· documenting the amount of improvement since the last appraisal,
· comparing the employee’s performance with others doing the same or similar jobs,
· rewarding employees who exceed expectations,
· motivating employees to achieve excellent performance,
· making fair and equitable personnel management decisions,
· enhancing communication between the employee and the supervisor as well as between the supervisor and the manager, and
· establishing, monitoring progress, and meeting organizational goals by top management.
Types of Performance Management

Application Performance Management (APM) refers to the discipline within systems management that focuses on monitoring and managing the performance and availability of software applications. APM can be defined as workflow and related IT tools deployed to detect, diagnose, remedy and report on application performance issues to ensure that application performance meets or exceeds end-users’ and businesses’ expectations.
Business performance management (BPM) is a set of processes that help businesses discover efficient use of their business units, financial, human and material resources.
Operational performance management (OPM) focus is on creating methodical and predictable ways to improve business results, or performance, across organizations.
SCOPE OF PERFORMANCE MANAGEMENT
Typically, we think of performance in organizations, we think on the performance of employees. However, performance management should also be focused on: 1. the organization2. departments (computer support, administration, sales, etc.)3. processes (billing, budgeting, product development, financial management, etc.)4. programs (implementing new policies and procedures to ensure a safe workplace; or, for a nonprofit, ongoing delivery of services to a community)5. products or services to internal or external customers6. projects (automating the billing process, moving to a new building, etc.)7. teams or groups organized to accomplish a result for internal or external customers
Key Benefits of Performance Management
1. PM focuses on results, rather than behaviors and activitiesA common misconception among supervisors is that behaviors and activities are the same as results. Thus, an employee may appear extremely busy, but not be contributing at all toward the goals of the organization. An example is the employee who manually reviews completion of every form and procedure, rather than supporting automation of the review. The supervisor may conclude the employee is very committed to the organization and works very hard, thus, deserving a very high performance rating.
2. Aligns organizational activities and processes to the goals of the organizationPM identifies organizational goals, results needed to achieve those goals, measures of effectiveness or efficiency (outcomes) toward the goals, and means (drivers) to achieve the goals. This chain of measurements is examined to ensure alignment with overall results of the organization.
3. Cultivates a system-wide, long-term view of the organization. Richard A. Swanson, in Performance Improvement Theory and Practice (Advances in Developing Human Resources, 1, 1999), explains an effective performance improvement process must follow a systems-based approach while looking at outcomes and drivers. Otherwise, the effort produces a flawed picture. For example, laying off people will likely produce short-term profits. However, the organization may eventually experience reduced productivity, resulting in long-term profit loss.
4. Produces meaningful measurementsThese measurements have a wide variety of useful applications. They are useful in benchmarking, or setting standards for comparison with best practices in other organizations. They provide consistent basis for comparison during internal change efforts. They indicate results during improvement efforts, such as employee training, management development, quality programs, etc. They help ensure equitable and fair treatment to employees based on performance.
Other Benefits of Performance Management
Performance Management (PM): 1. Depersonalizes issues. Supervisor's focus on behaviors and results, rather than personalities.
2. Validates expectations. In today's age of high expectations when organizations are striving to transform themselves and society, having measurable results can verify whether grand visions are realistic or not.
3. Helps ensure equitable treatment of employees because appraisals are based on results.
4. Optimizes operations in the organization because goals and results are more closely aligned.
5. Cultivates a change in perspective from activities to results.
6. Performance reviews are focused on contributions to the organizational goals, e.g., forms include the question "What organizational goal were contributed to and how?"
7. Performance is seen as an ongoing process, rather than a one-time, shapshot event.
Goal
Overall Goal and Focuses of Performance Management
The overall goal of performance management is to ensure that the organization and all of its subsystems (processes, departments, teams, employees, etc.) are working together in an optimum fashion to achieve the results desired by the organization.

Ongoing Activities of Performance Management
Achieving the overall goal requires several ongoing activities, including identification and prioritization of desired results, establishing means to measure progress toward those results, setting standards for assessing how well results were achieved, tracking and measuring progress toward results, exchanging ongoing feedback among those participants working to achieve results, periodically reviewing progress, reinforcing activities that achieve results and intervening to improve progress where needed. Note that results themselves are also measures.

Process
The three stages which are critical in managing performance in the organizational contact are:
1. Establishing Communicating Organizational Goals.
Each department, agency, and institution is required to complete an annual plan of work. This plan should contain the organization’s goals. After communicating them throughout the organization, these goals should set the direction of the organization and of the individual work plans for employees. Goals are usually communicated downward but should be established based on feedback from throughout the organization.
2. Monitoring Progress toward these Goals. Throughout the work cycle, top management should continually monitor progress toward these goals through its employees’ work performance. If sufficient progress in not made or cannot be made, the goals may need to be revised and/or redirected based on the feedback received. If additional resources are needed and the goal is important to the organization, management should see that they are provided.
3. Evaluating Organizational Goals. At the end of the work cycle, management must decide if organizational goals were met based on whether or not employees performance met expectations. After outputs have been determined, management uses information obtained from throughout the organization to determine their accountability to the
public, funding sources, and to the employees who did the work. After recognizing team effort, the cycle then begins again for the next year.
The Office of State Personnel is not responsible for implementing or monitoring this process. It is included because without these organizational goals, there would be groups of people performing different tasks unrelated to each other and the mission of the
organization.

Performance management and improvement can be thought of as a cycle:
Performance planning where goals and objectives are established
Performance coaching where a manager intervenes to give feedback and adjust performance
Performance appraisal where individual performance is formally documented and feedback delivered In its most basic form, performance appraisal (or review) activities include documenting achieved results (hopefully, by also including use of examples to clarify documentation) and indicating if standards were met or not. The appraisal usually includes some form of a development plan to address insufficient performance.
Performance development plan Typically, this plan conveys how the conclusion was made that there was inadequate performance, what actions are to be taken and by whom and when, when performance will be reviewed again and how. Note that a development plan for employee performance management may be initiated for various reasons other than poor performance. (More on
A performance problem is any gap between Desired Results and Actual Results. Performance improvement is any effort targeted at closing the gap between Actual Results and Desired Results.
Components of performance management
Employee performance management includes:
planning work and setting expectations,
continually monitoring performance,
developing the capacity to perform,
periodically rating performance in asummary fashion, and
rewarding good performance
In an effective organization, work is planned out in advance. Planning means setting performance expectations and goals for groups and individuals to channel their efforts toward achieving organizational objectives. Getting employees involved in the planning process will help them understand the goals of the organization, what needs to be done, why it needs to be done, and how well it should be done.
The regulatory requirements for planning employees' performance include establishing the elements and standards of their performance appraisal plans. Performance elements and standards should be measurable, understandable, verifiable, equitable, and achievable. Through critical elements, employees are held accountable as individuals for work assignments or responsibilities. Employee performance plans should be flexible so that they can be adjusted for changing program objectives and work requirements. When used effectively, these plans can be beneficial working documents that are discussed often, and not merely paperwork that is filed in a drawer and seen only when ratings of record are required.
In an effective organization, assignments and projects are monitored continually. Monitoring well means consistently measuring performance and providing ongoing feedback to employees and work groups on their progress toward reaching their goals.
Regulatory requirements for monitoring performance include conducting progress reviews with employees where their performance is compared against their elements and standards. Ongoing monitoring provides the opportunity to check how well employees are meeting predetermined standards and to make changes to unrealistic or problematic standards. And by monitoring continually, unacceptable performance can be identified at any time during the appraisal period and assistance provided to address such performance rather than wait until the end of the period when summary rating levels are assigned.
In an effective organization, employee developmental needs are evaluated and addressed. Developing in this instance means increasing the capacity to perform through training, giving assignments that introduce new skills or higher levels of responsibility, improving work processes, or other methods. Providing employees with training and developmental opportunities encourages good performance, strengthens job-related skills and competencies, and helps employees keep up with changes in the workplace, such as the introduction of new technology.
Carrying out the processes of performance management provides an excellent opportunity to identify developmental needs. During planning and monitoring of work, deficiencies in performance become evident and can be addressed. Areas for improving good performance also stand out, and action can be taken to help successful employees improve even further.
From time to time, organizations find it useful to summarize employee performance. This can be helpful for looking at and comparing performance over time or among various employees. Organizations need to know who their best performers are.
Within the context of formal performance appraisal requirements, rating means evaluating employee or group performance against the elements and standards in an employee's performance plan and assigning a summary rating of record. The rating of record is assigned according to procedures included in the organization's appraisal program. It is based on work performed during an entire appraisal period. The rating of record has a bearing on various other personnel actions, such as granting within-grade pay increases and determining additional retention service credit in a reduction in force.
In an effective organization, rewards are used well. Rewarding means recognizing employees, individually and as members of groups, for their performance and acknowledging their contributions to the agency's mission.
A basic principle of effective management is that all behavior is controlled by its consequences. Those consequences can and should be both formal and informal and both positive and negative.
Good performance is recognized without waiting for nominations for formal awards to be solicited. Recognition is an ongoing, natural part of day-to-day experience. A lot of the actions that reward good performance — like saying "Thank you" — don't require a specific regulatory authority. Nonetheless, awards regulations provide a broad range of forms that more formal rewards can take, such as cash, time off, and many nonmonetary items. The regulations also cover a variety of contributions that can be rewarded, from suggestions to group accomplishments.

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