http://ajc.sagepub.com/
Asian Journal of Management Cases
http://ajc.sagepub.com/content/8/1/61
The online version of this article can be found at:
DOI: 10.1177/097282011000800106
Asian Journal of Management Cases
Sara Alvi and Zafar Iqbal Qureshi
Performance Appraisal Challenges at Sui National Gas Pipelines Ltd (SNGPL)
Published by:
http://www.sagepublications.com
Additional services and information for
Asian Journal of Management Cases can be found at:
Email Alerts:
http://ajc.sagepub.com/cgi/alerts
Subscriptions:
http://ajc.sagepub.com/subscriptions
Reprints:
http://www.sagepub.com/journalsReprints.nav
Permissions:
http://www.sagepub.com/journalsPermissions.nav
Citations:
http://ajc.sagepub.com/content/8/1/61.refs.html
Downloaded from
ajc.sagepub.com at K.R.E.T'S TRIDENT INSTITUTE on August 11, 2011
A
SIAN JOURNAL OF MANAGEMENT CASES, 7(2), 2010: 113–134
P
ERFORMANCE APPRAISAL CHALLENGES
AT
SUI NATIONAL GAS PIPELINES LTD (SNGPL)
Sara Alvi
Zafar Iqbal Qureshi
The case describes the multifarious challenges confronted by the management of
SNGPL. First, the Senior General Manager, HR, has to identify the main objectives
that the management would like to realize through its performance appraisal system
(PAS). Second, SGM, HR, also needs to recommend the main features of a robust
PAS. Third, what changes need to be made in the current appraisal form to make it
user friendly. Fourth, should the company shift from its current absolute appraisal
system to a relative grading system? If so, would a relative grading system help in
discriminating between the ‘solid’ and ‘not-so-solid’ performers? Lastly, would the
problem of strictness versus leniency be resolved through the adoption of relative
grading system?
Keywords:
Performance objectives, leniency versus strictness, ‘solid’ performer,
essential features of PAS, absolute appraisal, relative grading system
Towards the end of June 2009, Brig. (Retired) Zulqarnain Ahmad, Senior General
Manager (SGM), Human Resources (HR), Sui Northern Gas Pipelines Limited (SNGPL),
was confronted with the challenge of reforming the performance appraisal system
of his company. A task that had initially appeared easy to accomplish had now become
rather daunting. Serious concerns had been aired by employees regarding the
objectivity and lack of timely feedback in the appraisal system.
The complex nature of the appraisal form as well as the degree of leniency and
strictness on the part of many appraising managers was also a concern. The board of
the company on the one hand had asked the SGM, HR, to reform the existing system
A
SIAN JOURNAL OF MANAGEMENT CASES, 8(1), 2011: 61–87
S
AGE PUBLICATIONS LOS ANGELES/LONDON/NEW DELHI/SINGAPORE/WASHINGTON DC
DOI:
10.1177/097282011000800106
This case study was prepared by Sara Alvi, Research Associate, under the supervision of
Professor Zafar Iqbal Qureshi at Lahore University of Management Sciences, to serve as a
basis for class discussion rather than to illustrate either effective or ineffective handling of an
administrative situation.
Downloaded from
ajc.sagepub.com at K.R.E.T'S TRIDENT INSTITUTE on August 11, 2011
A
SIAN JOURNAL OF MANAGEMENT CASES, 8(1), 2011: 61–87
62 S
ARA ALVI AND ZAFAR IQBAL QURESHI
while, on the other hand, it had told him to examine the possibility of incorporating
the relative appraisal method instead of the current absolute evaluation method in
the modifi ed system, since it was felt that this method would help in separating the
wheat from the chaff.
Lacking any broad agreement among the management team regarding the enforcement
of the relative appraisal method, Zulqarnain pondered over the issue of designing
a robust appraisal system and thought of how to move forward. He needed to identify
the key objectives of the new appraisal system as well as its key ingredients. He knew
the urgency with which he had to complete the task since his board wanted next year’s
appraisal to be carried out under the reformed appraisal system.
SNGPL: T
HE COMPANY
Sui Northern Gas Pipelines Limited (SNGPL) was the largest gas company in the
country serving more than 3.4 million consumers in North and Central Pakistan
through an extensive network in Punjab and Khyber-Pakhtoonkhwa (formerly North
West Frontier Province [NWFP]). The company had over 46 years of experience in
the operation and maintenance of high-pressure gas transmission and distribution
systems. It had also expanded its activities and undertaken the planning, designing
and construction of pipelines, both for itself and other organizations. SNGPL was incorporated
as a private limited company in 1963 and converted into a public limited
company in January 1964 under the Companies Act 1913, now Companies Ordinance
1984, and was listed on all the three stock exchanges of the country.
SNGPL transmission system extended to all provinces of Pakistan, from Baluchistan
to Peshawar in Khyber-Pakhtoonkhwa comprising over 7,347 km of transmission
system (main lines & loop lines). The distribution activities that covered 1,624 main
towns along with adjoining villages in Punjab and Khyber-Pakhtoonkhwa were organized
through eight regional offi ces. The distribution system consisted of 67,449 km
of pipeline.
S
TRATEGIC MILESTONES
Since its inception in 1963, SNGPL had successfully completed over 11 mega projects.
Some of the strategic milestones achieved by the company included extension of
Sui Multan section to Faisalabad—Lahore and then linked with Dhulian–Rawalpindi–
Wah system to form a common grid and substantial increase in system capacity.
Downloaded from
ajc.sagepub.com at K.R.E.T'S TRIDENT INSTITUTE on August 11, 2011
A
SIAN JOURNAL OF MANAGEMENT CASES, 8(1), 2011: 61–87
S
UI NATIONAL GAS PIPELINES LTD 63
Gas supply was also extended to major cities in Khyber-Pakhtoonkhwa. Additionally,
a project called Project IX was in hand to transmit and distribute gas supply from
newly discovered gas fi elds.
A
BOUT THE COMPANY
The company had clearly described its vision, mission and core values in its formal
documents. For instance, the mission of the company was stated in the following
words: ‘A commitment to deliver gas to all doorsteps in our chosen areas through
continuous expansion of our network, by optimally employing technological, human
and organizational resources, best practices and high ethical standards’. The vision
and the core values of the company are given in Exhibit 1.
The organizational structure of SNGPL had multiple layers of management. The
Managing Director of the company was its Chief Executive and he was assisted by two
Deputy Managing Directors. The Senior Management team included Senior General
Managers and General Managers (see Exhibit 2). The Board of Directors, the apex
governance structure, consisted of thirteen directors including the Chief Executive
(see Exhibit 3). Five members of the board represented the government, since it was
the majority shareholder.
The board had three important committees: Audit, Finance and Human Resources.
The committees made recommendations to the Board of Directors regarding their
respective functions. The Managing Director (MD) was empowered to take operational
decisions for the effi cient working of the company and was accountable to the board
for this.
T
HE HR FUNCTIONS OF THE COMPANY
At the top of the HR department’s pyramid was the Board, HR committee. This committee
comprised six non-executive board directors and the Chief Executive of the
company. The primary function of the HR committee was to make recommendations
to the board for maintaining a sound human resource system in the company, an
effective procedure for employees’ development, a sound compensation programme
and specifi c succession plans for senior management positions (see Exhibit 4).
The HR department was also expected to perform all of the above functions including
recruitment of non-management staff. One of the key responsibilities assigned to the
department included the improvisation of the existing performance appraisal system.
Downloaded from
ajc.sagepub.com at K.R.E.T'S TRIDENT INSTITUTE on August 11, 2011
A
SIAN JOURNAL OF MANAGEMENT CASES, 8(1), 2011: 61–87
64 S
ARA ALVI AND ZAFAR IQBAL QURESHI
One of the critical areas under the functional umbrella of the department included
periodic labour contract negotiations.
Importance was given to the training and development of the employees for which
the company had established a training institute. This institute was also managed by
the HR department.
There was an overlap between the roles of the HR department and the HR committee.
At times uneasiness was expressed by the HR staff regarding the overawing role of the
HR committee. Some rationalization of these roles of the two entities was aired from
time to time. However, the board on its part did want to exercise fi rm control over
the HR practices and systems in the company to avoid wasteful expenditure resulting
from keeping redundant staff.
SNGPL P
ERFORMANCE INDICATORS
SNGPL had a customer base of 3,416,634. There were three categories of customers—
industrial, commercial and domestic. The domestic customers (3,358,439) formed
the biggest chunk followed by commercial (52,242) and industrial (5,953) consumers.
SNGPL consumers comprised commercial, domestic, general industry, fertilizer and
power and cement sectors. Annual gas sales to these consumers were 584,895 MMCF
(multi-million cubic feet) worth PKR 168,933 million during July 2008 to June 2009.
SNGPL had 6,944 employees who were divided into operations (6,652) and project
(342). During the year ended 30 June 2009, SNGPL earned a net profi t after tax of
PKR 931 million (see Exhibit 5).
C
OMPANY’S STRATEGIC OBJECTIVES
The overall strategic objectives of SNGPL according to the management were as
follows:
1. Improve the quality of service to the customers’ satisfaction by implementing
OGRA (oil and gas regulatory agency) performance and service standards
2. Play its role in the country’s economic prosperity by industrial outreach through
gas supply to reduce dependability on imported liquid fuels and to save foreign
exchange
3. Endeavour to bring down unaccounted gas (UFG) losses to internationally
acceptable levels
4. Create awareness and enforce adherence to health, safety and environment
(HSE) policies and standards
Downloaded from
ajc.sagepub.com at K.R.E.T'S TRIDENT INSTITUTE on August 11, 2011
A
SIAN JOURNAL OF MANAGEMENT CASES, 8(1), 2011: 61–87
S
UI NATIONAL GAS PIPELINES LTD 65
5. Emphasize human resource development (HRD) for quality work and customer
satisfaction
6. Maximize the sale of available gas from indigenous sources by entering into new
areas through development and expansion of the requisite infrastructure
7. Introduce policies and practices leading the company from a monopoly situation
into a competitive market, thus facilitating the impending privatization
8. Improve fi nancial discipline through product investment and borrowing
9. Improve internal controls and risk management to achieve maximum operational
effi ciency of the system
10. Automate the company’s systems and processes through enterprise resource
planning (ERP) for better effi ciency and internal control
11. Upgrade measurement facilities to ensure accuracy in quality and quantity of
gas at custody transfer points
12. Motivate employees through market compatible emoluments and create a conducive
working environment
P
ERFORMANCE GOAL SETTING
The management believed that in order to achieve the strategic objectives of SNGPL
the employees needed to be evaluated against these objectives and for that an
effective performance appraisal system would be essential. The BOD set the annual
targets for the company. The MD and his senior management team then identifi ed
performance goals for individual departments. Eventually, the department heads set
targets for each individual at the department level. This top-down approach of target
setting, a hallmark of typical public sector organizations, was at odds with consultative
performance target setting widely used by the corporate sector commensurate with
the management by objective approach.
P
ERFORMANCE APPRAISAL SYSTEM (PAS) AT SNGPL
The company had an appraisal system in place to measure employees’ performance.
This was based on business objectives and key tasks assigned to an employee during
the year. The performance appraisal was done fi rst at the departmental level leading
to functional/teams’ level and lastly at the organizational level. The management
had instituted this system thinking that in this way it could assess the value addition
to organizational performance at various levels—individual, team and department.
This could, in turn, lead to fair annual rewards distribution.
Downloaded from
ajc.sagepub.com at K.R.E.T'S TRIDENT INSTITUTE on August 11, 2011
A
SIAN JOURNAL OF MANAGEMENT CASES, 8(1), 2011: 61–87
66 S
ARA ALVI AND ZAFAR IQBAL QURESHI
The PAS was not viewed favourably by the employees. According to one employee,
‘We don’t get timely feedback to remove any shortfall in our performance’. Another
employee said, ‘No counseling is provided to the employee to overcome their weaknesses’.
Many employees also expressed concerns at different times regarding some
managers being too lenient while others were too strict in evaluating their direct
reports. The PAS mainly consisted of a form that evaluated the current employee’s
performance without much clarity about the goals which the management wished
to achieve through it.
T
HE PERFORMANCE APPRAISAL FORM
The performance appraisal form being used at present consisted of three parts—
Performance Appraisal Document, PAD-I, PAD-II and PAD-III (see Exhibit 6). PAD-I
related to objectives for the coming year, PAD-II evaluated the achievement against
predetermined objectives, whereas PAD-III was meant to assess the competencies
associated with objective realization.
The setting of the annual objectives was based on the SMART principle (specifi c,
measureable, attainable, result-oriented and time-bound). These objectives were assigned
different weightings based on their relative importance. PAD-III, which assessed
various competencies, was reportedly meant to assess two types of competencies—core
competencies and advanced competencies.
The core competencies included oral communication, written communication,
negotiation skills, product knowledge and procedures and policies. As against core
competencies, these advanced competencies included customer focus, sales focus,
result focus, building relationships and network, understanding the business, problem
solving, concern for quality, listening and responding, demonstrating initiative and
teamwork.
These competencies varied from one functional area to another. According to one
manager, ‘Emulating managers against different competencies was quite a complex
exercise since none of us knew the difference in these competencies in different
functional areas’. Another manager said, ‘Many of us feel that there is no difference
in managerial roles regardless of the functional areas. The only difference could be
in the business objectives assigned to different managers during the year’.
SGM, HR, had to fi nd a way to fi rst simplify the appraisal form and secondly to develop
a directory of competencies with their operational defi nitions to facilitate the
job of managers while appraising their direct reports.
Downloaded from
ajc.sagepub.com at K.R.E.T'S TRIDENT INSTITUTE on August 11, 2011
A
SIAN JOURNAL OF MANAGEMENT CASES, 8(1), 2011: 61–87
S
UI NATIONAL GAS PIPELINES LTD 67
One of the key concerns that senior managers had expressed time and again related
to the components of the PAS. Was the appraisal form the only element in creating
an effective PAS? If not, what should be the other salient features of the system?
Questions had been raised before but defi nitive answers had not been provided. This
time, however, there were persistent demands from across managerial layers in the
company to have a thorough debate on this.
A
DDITIONAL CHALLENGES
The board wanted to reinforce the principle of meritocracy in the company and
had to reward the ‘solid performers’ who were outstanding in value addition and
effective team players as well. The SGM, HR, had been asked to look into the current
performance appraisal practices and to identify whether or not they discriminated
between the ‘solid’ and ‘not-so-solid’ performers. This was the background against
which the issue of relative appraisal grading came up under the discussion of the
senior management team.
The second factor that confused many managers related to the overarching
objectives of the appraisal system of the company. Was the objective evaluative or
developmental?
During the discussion of the senior management team, a number of objectives
were identifi ed which, it was hoped, would constitute the revised appraisal system.
Some of the ideas generated in the brainstorming session of the management team
were as follows:
Provide objective performance appraisal
Recognize superior long-term performance
Provide the basis for annual rewards
Determine potential for career growth
Assess the development needs of all employees
Achieve greater objectivity and fairness, and evaluation on clearly defi ned criteria
that broadly defi ne desired behaviour
Increase timely feedback for overcoming performance shortfalls
Encourage teamwork
Increase the consistency and confi dentiality of the process
Make it more discriminating between different performance categories to ensure
just distribution of annual rewards
Downloaded from
ajc.sagepub.com at K.R.E.T'S TRIDENT INSTITUTE on August 11, 2011
A
SIAN JOURNAL OF MANAGEMENT CASES, 8(1), 2011: 61–87
68 S
ARA ALVI AND ZAFAR IQBAL QURESHI
While arguing for and against different evaluation objectives, some managers focused
more on identifi cation of developmental needs than any other objectives. There was,
however, another group which was more emphatic for using appraisal for rewards
and promotion decisions. But there was a group of middle managers who wanted to
understand how evaluation could be carried out in a more discriminating manner for
equitable distribution of rewards and other personnel-related decisions. This last point
generated some discussion on absolute versus relative evaluation systems.
On his part, the SGM, HR, felt that he needed to organize another brainstorming
session in which to fi nally make a decision about the precise objectives which should
underlie the future performance system of the company. Additionally, he wanted the
brainstorming session to debate the issue of absolute versus relative evaluation system.
Above all, the SGM, HR, also wanted the brainstorming session to debate as to
what should be the different ingredient of a performance appraisal system. Was the
appraisal form in itself the complete system? Or were there other features which the
present system in vogue in the company had missed out?
Though the performance appraisal form in use was viewed as comprehensive, it
was very time consuming since it took a lot of the appraiser’s time to evaluate each
employee. In addition, the SGM, HR, also discovered that supervisors considered tasks
that required extensive writing and recalling of events very laborious. The managers
also considered the form to be burdensome since it increased their workload, especially
towards the end of the year when the entire appraisal exercise was expected to be
completed. This was also the time when managers were under immense pressure to
achieve their performance targets agreed upon at the start of the year. The managers
further complained that the appraisal forms were not user friendly. For instance, there
were certain items in the form which even though were not applicable to a certain
employee were still being fi lled.
The problem of consistency and confi dentiality was also highlighted by the managers
as another problem area. Leniency versus strictness was also a concern among
both the appraisers and appraisee.
Other issues involved in SNGPL’s performance appraisal system were the appraiser’s
bias towards an employee, evaluator’s weakness to defend poor ratings if
given to an employee, the notion of ‘protecting my staff’ which led to overrating during
appraisals, a casual attitude while fi lling out the performance appraisal form and
organizational politics. These factors led to problems in the performance appraisal
system and these issues surfaced every now and then causing frustration among
Downloaded from
ajc.sagepub.com at K.R.E.T'S TRIDENT INSTITUTE on August 11, 2011
A
SIAN JOURNAL OF MANAGEMENT CASES, 8(1), 2011: 61–87
S
UI NATIONAL GAS PIPELINES LTD 69
employees. Also, as this was an absolute performance appraisal system, it meant that
it asked the appraiser to make a judgment about an employee’s performance solely
on performance standards.
Employees’ feedback on the performance appraisal system showed that they expressed
frustration with the way the performance appraisal was being conducted at
SNGPL. They wanted the performance appraisal system to be fair and that differences
in performance levels across employees should be measured objectively for enhanced
motivation that could affect their performance. The current system failed to address
any of these employee concerns.
SGM, HR, while brooding over the concerns fl agged by the employees wondered
if transition to relative grading system of appraisal would be helpful in addressing
different concerns.
R
ELATIVE GRADING AND THE NORMAL DISTRIBUTION CURVE
The relative grading system of appraisal was a performance evaluation tool which was
used by managers to classify employees into pre-determined performance distribution
bands.
Meisler (2003) had defi ned relative grading (forced distribution) as follows:
It’s a workforce-management tool based on the premise that in order to develop and
thrive, a corporation must identify its best and worst performers, then nurture the
former and rehabilitate and/or discard the latter. It’s an elixir that in these slowgrowth
times has proved irresistible to scores of desperate corporate chieftains—but
indigestible to a good many employees.
Organizations had started using this performance evaluation tool because this
approach helped the company identify, on the one hand, leaders and on the other,
slackers within the organization and reward or punish them accordingly. This approach
was dictated to force managers to enable the performance evaluation process to objectively
refl ect on how each team member was performing, relative to others, with the
ultimate goal being to encourage competition among employees to achieve superior
performance against their annual targets (see Exhibit 7).
Jack Welch, retired Chief Executive Offi cer of General Electric (GE), was most
often associated with forced ranking, since GE used this performance management
Downloaded from
ajc.sagepub.com at K.R.E.T'S TRIDENT INSTITUTE on August 11, 2011
A
SIAN JOURNAL OF MANAGEMENT CASES, 8(1), 2011: 61–87
70 S
ARA ALVI AND ZAFAR IQBAL QURESHI
tool to eliminate the bottom 10 per cent performers each year. Many other companies
and organizations had also become aware of the relative grading system’s various
benefi ts.
1
While discussing the relative versus absolute appraisal method with various
managers, the SGM, HR, had heard differing viewpoints. Some managers were saying
that it would be diffi cult to implement such a complicated system, while others were
of the view that they needed to know how such a system worked in actual practice
before accepting or rejecting it.
R
ESPONDING TO PERFORMANCE APPRAISAL CHALLENGES
In view of the many concerns aired in the management meeting as well as the task
assigned by the board to him, the SGM, HR, was wondering what changes should be
made to the existing system. One of the views being considered was of normal distribution
curve. GM, HR, SNGPL, had also learned that a forced distribution system could
be used to bring consistency to the performance appraisal system.
The examples cited were of GE’s ‘Vitality Curve’ that corresponded with the normal
curve of distribution and was a relative measure of performance appraisal (see
Exhibit 8). In GE, the employees were forced to a distribution 20-70-10 model. This
model meant that 20 per cent of the people were top performers and most productive,
70 per cent of the workforce worked adequately but the last 10 per cent were nonperformers
and were fi red. SGM, HR, SNGPL, also learned that many local companies
had successfully implemented this concept.
Among those that implemented this system included Pakistan Tobacco as well as
Pakistan State Oil (PSO). Pakistan Tobacco Company used a fi ve-level scale and adopted
a forced distribution of 3 per cent in top performance bands, 14 per cent in the next
band, 66 per cent in the middle and 4 percent for below average and the remaining
3 per cent for unsatisfactory category. On the basis of this experience, however, the
top two and bottom two levels were further refi ned for relative ranking as 1/2/2/1
(
+/–3 SD).
PSO on the other hand, adopted an evolutionary approach to forced distribution.
Year 1 and year 2 were evaluated on 5/20/50/20/5 (Outstanding, Above Average,
Average, Below Average and Inadequate). In Year 3, PSO eliminated the inadequate
category based on 5/20/55/2 and an SD
+/–2 (see Exhibit 9).
1
Donaldson, Charlotte A. ‘Performance Management: Forced Ranking’. Available at http://edweb.sdsu.
edu/people/arossett/pie/Interventions/forcedranking_1.htm, accessed July 2009.
Downloaded from
ajc.sagepub.com at K.R.E.T'S TRIDENT INSTITUTE on August 11, 2011
A
SIAN JOURNAL OF MANAGEMENT CASES, 8(1), 2011: 61–87
S
UI NATIONAL GAS PIPELINES LTD 71
SGM, HR, while thinking about determining the forced distribution bands for his
company liked the way the bands had been decided by the earlier-mentioned publicsector
as well as private-sector companies. He thought that such forced distribution
could be helpful in a public-sector organization like SNGPL because it would not only
measure the relative performance of the employees but also identify leaders and weak
performers in the organization. He considered adopting forced distribution for SNGPL
of 5/15/75/3/2 with an SD of
+/–2 (see Exhibit 8) but was not sure how his managers
would react to it. Were there any other performance band options that might easily
sell with his managers?
M
OVING FORWARD
SGM, HR, had to grapple with many issues in reforming the current PAS but the
most ticklish of these was the forced distribution method. The simplifi cation of the
form was not considered by him to be too daunting a task. He could surely make it
more user friendly by seeking inputs from different managers. Similarly, he also felt
that clarifying the main objectives of the PAS could also be achieved without much
diffi culty.
While brooding over the many issues identifi ed in the present PAS, SGM, HR,
wondered how he should proceed in tackling the same. Should he bring about different
changes simultaneously or should he sequence his interventions to facilitate their
implementation? He was also contemplating about the process he should pursue to
fi nalize his recommendations before presenting them to the company board.
R
EFERENCE
Anderson, David R., Dennis J. Sweeney and Thomas A. Williams. 2008.
Essentials of Statistics
for Business and Economics
, 5th ed. Cincinnati, Ohio: South-Western College Pub.
Meisler, Andy. 2003. ‘Dead Man’s Curve’.
Workforce Management, July. Available at Business
and Company Resource Center database.
Welch, Jack and David Byrne. 2001. ‘Jack: Straight from the Gut’.
Business Plus, 11 September.
Downloaded from
ajc.sagepub.com at K.R.E.T'S TRIDENT INSTITUTE on August 11, 2011
A
SIAN JOURNAL OF MANAGEMENT CASES, 8(1), 2011: 61–87
72 S
ARA ALVI AND ZAFAR IQBAL QURESHI
Exhibit 1
Performance Appraisal Challenges at SNGPL
Mission and Vision—SNGPL
Our Vision
To be the leading integrated natural gas provider in the region seeking to improve the quality of life of
our customers and achieve maximum benefi t for our stakeholders by providing an uninterrupted and
environment friendly energy resource.
Our Mission
A commitment to deliver natural gas to all doorsteps in our chosen areas through continuous expansion of
our network, by optimally employing technological, human and organizational resources, best practices
and high ethical standards.
Core Values
Commitment
We are committed to our vision, mission and to creating and delivering stakeholder value.
Courtesy
We are courteous—with our customers, stakeholders, and towards each other and encourage open
communication.
Competence
We are competent and strive to continuously develop and improve our skills and business practices.
Responsibility
We are responsible as individuals and as teams—for our work and our actions. We welcome scrutiny and
we hold ourselves accountable.
Integrity
We have integrity—as individuals and as teams—our decisions are characterized by honesty and
fairness.
Source:
Company documents.
Downloaded from
ajc.sagepub.com at K.R.E.T'S TRIDENT INSTITUTE on August 11, 2011
A
SIAN JOURNAL OF MANAGEMENT CASES, 7(2), 2010: 113–134
Exhibit 2
Performance Appraisal Challenges at SNGPL
SNGPL Organizational Chart
Source:
Company documents.
Notes:
CFO: Chief Financial Offi cer; Chief St. Planning: Chief of Strategic Planning; Co. Sec.: Company Secretary; Cust. Srv.:
Customer Services; DMD: Deputy Managing Director; GM: General Manager; GM Mutlan (D): GM, Distribution, Multan;
HSE: Health Safety and Environment; HR: Human Resources; Info. Offi cer: Information Offi cer; IT/MIS: Information
Technology/Management Information Systems; Ops: Operations; FSA (T): Faisalabad; Org. Dev.: Organizational Development;
Plan. & Dev.: Planning and Development; R. Affair: Regulatory Affairs; SGM: Senior General Manager; Training and
Dev.: Training and Development; UFG: Unaccounted for Gas.
Downloaded from
ajc.sagepub.com at K.R.E.T'S TRIDENT INSTITUTE on August 11, 2011
A
SIAN JOURNAL OF MANAGEMENT CASES, 8(1), 2011: 61–87
74 S
ARA ALVI AND ZAFAR IQBAL QURESHI
Exhibit 3
Performance Appraisal Challenges at SNGPL
Board of Governors
Tariq Iqbal Khan,
Chairman
Mr Tariq Iqbal Khan is the Chairman/Managing Director of the National Investment Trust Limited. He
has more than 40 years of experience in the areas of fi nance, accounts, capital markets, corporate sector,
company law, tax, etc.
A. Rashid Lone,
Chief Executive/Managing Director
Director, Sui Southern Gas Company Limited, Interstate Gas Systems (Pvt) Limited and Petroleum
Institute of Pakistan. Mr Lone is also on the Board of Governors of the Lahore University of Management
Sciences (LUMS).
Muhammad Razi Abbas,
Director
Chief Financial Offi cer, Pakistan Electric Power Company (PEPCO) and Director, Pakistan Mineral
Development Corporation, Mari Gas Company Limited, Inter State Gas Systems (Pvt) Limited, Saudi-
Pak Industrial and Agriculture Investment Company, National Telecom Corporation, Private Power
Infrastructure Board, Gwadar Port Implementation Authority and Government Holdings (Pvt) Limited.
Mr Abbas has over 34 years of experience in various government-sector positions.
S.M. Asghar,
Director
Mr Asghar, Director, Dawood Hercules Chemicals Limited and Dawood Lawrencepur Limited, has vast
industrial experience in the fi elds of fi nance, taxation, law and corporate affairs.
A. Samad Dawood,
Director
Chairman, Central Insurance Company Limited, and Chief Executive, Dawood Corporation (Pvt.) Limited.
Director, Engro Chemicals Pakistan Limited, The Dawood Group, Dawood Hercules Chemicals Limited,
Dawood Lawrencepur Limited, Tenaga Generasi Limited, Patek (Pvt), etc.
Arif Ibrahim,
Director
Joint Secretary (Admin.), Ministry of Petroleum and Natural Resources and Director, Government
Holdings (Pvt.) Limited. Mr Ibrahim has vast experience of administrative, budgetary, parliamentary
business, banking and HR-related issues.
Abdul Bari Khan,
Director
Chief Executive Offi cer, Pakistan Industrial Development Corporation, Chairman, Pakistan Automible
Corporation, Ghee Corporation of Pakistan , Morafco Industries Limited, etc.
Umair Khan,
Director
Mr Khan, Managing Director, Sui Southern Gas Company Limited (SSGCL), was appointed as Director
on the Board of SNGPL on 27 September 2008.
Mian Raza Mansha,
Director
Chief Executive, D.G. Khan Cement Company Limited and Nishat Paper Products Limited. Director,
MCB Bank Limited, Nishat Power Limited and Nishat Hotels and Properties Limited.
Downloaded from
ajc.sagepub.com at K.R.E.T'S TRIDENT INSTITUTE on August 11, 2011
A
SIAN JOURNAL OF MANAGEMENT CASES, 8(1), 2011: 61–87
S
UI NATIONAL GAS PIPELINES LTD 75
Amanullah Shaikh,
Director
He has wide experience in the Petroleum Industry, LPG, Gas Distribution, Cross-country Pipelines,
Construction of Storage Terminals and Blending Plants.
Amer Tufail,
Chief Financial Offi cer
Mr Amer has over seventeen years post qualifi cation experience of local and international markets with
public and private entities and multilateral funding agencies on senior positions.
Uzma Adil Khan,
Company Secretary
Mrs Khan has wide experience in senior positions in textile, educational institutions and SECP.
Source:
Company documents.
Exhibit 4
Performance Appraisal Challenges at SNGPL
SNGPL—Human Resource Committee
Human Resource Committee
The human resource committee comprises six non-executive directors and the Chief Executive. It is
primarily responsible for making recommendations to the board inter-alia for maintaining a sound
organizational plan of the company, effective employees’ development, compensation programme
and specifi c succession plans for senior management positions. The terms of reference of the Human
Resource Committee are broadly as follows:
Functions
1. Review organization structure periodically to
evaluate and recommend for approval of changes in organization, functions and relationships
affecting Management positions equivalent in importance to those on the Management position
schedule;
establish plans and procedure which provide an effective basis for Management’s control over
company’s manpower;
determine appropriate limits of authority and approval procedures for personnel matters
requiring decision at different levels of Management.
2. Review the employees’ development system to ensure that it
foresees the company’s Senior Management requirement;
provides for early identifi cation and development of key personnel;
brings forward specifi c succession plans for Senior Management positions;
provides training and development plans.
Downloaded from
ajc.sagepub.com at K.R.E.T'S TRIDENT INSTITUTE on August 11, 2011
A
SIAN JOURNAL OF MANAGEMENT CASES, 8(1), 2011: 61–87
76 S
ARA ALVI AND ZAFAR IQBAL QURESHI
Compensation and Benefi ts
Review data of competitive compensation practices and review and evaluate policies and programmes
through which the corporation/company compensates its employees.
Review salary ranges, salaries and other compensation for CEO and Senior Management/Executive
Directors reporting to the CEO.
Source:
SNGPL Annual Report, 2009.
Exhibit 5
Performance Appraisal Challenges at SNGPL
Profi t and Loss Account (for the Year Ended 30 June 2009)
2009 2008
Gas sales 160,714,737 123,404,537
Add: Differential margin 8,219,094 750,496
168,933,831 124,155,033
Cost of gas sold 151,337,339 109,107,461
Gross profi t 17,596,492 15,047,572
Rental and service income 990,101 916,351
Surcharge and interest on gas sales arrears 1,200,822 703,328
Amortization of deferred credit 1,096,033 790,289
3,286,956 2,409,968
20,883,448 17,457,540
Operating expenses
Distribution cost 15,011,529 11,797,778
Administrative expenses 1,723,200 1,379,080
4,148,719 4,280,682
Other operating expenses 2,975,305 957,194
Other operating income 1,210,008 1,446,568
Operating profi t 2,383,422 4,770,056
Finance cost 653,182 789,247
Profi t before taxation and share from associate 1,730,240 3,980,809
Share in profi t of associate—before tax 422
Profi t before taxation 1,730,240 3,981,231
Taxation 799,704 1,484,541
Profi t after taxation 930,536 2,496,690
Earnings per share—basic and diluted (Rupees)
1.69 4.55
(
Exhibit 5 continued)
Downloaded from
ajc.sagepub.com at K.R.E.T'S TRIDENT INSTITUTE on August 11, 2011
A
SIAN JOURNAL OF MANAGEMENT CASES, 8(1), 2011: 61–87
S
UI NATIONAL GAS PIPELINES LTD 77
(
Exhibit 5 continued)
2009 2008
Equity and Liabilities
Share capital and reserves
Authorized share capital 5,491,053 5,491,053
1,500,000,000 (2008: 1,500,000,000) ordinary shares of Rupees 10 each 15,000,000 15,000,000
Issued, subscribed and paid up capital
Revenue reserves 10,656,463 11,647,796
Total equity 16,147,516 17,138,849
Non–current Liabilities
Long term fi nancing
Secured – 62,500
Unsecured 1,798,312 2,717,963
Security deposits 11,439,969 9,068,102
Deferred credit 32,000,133 31,386,548
Deferred tax 8,178,211 7,562,412
Employee benefi ts 392,249 336,667
53,808,874 51,134,192
Current liabilities
Trade and other payables 49,785,736 27,416,384
Interest/mark–up accrued 552,160 396,323
Short term borrowing 950,858
Current portion of long term fi nancing 1,102,980 1,561,895
52,391,734 51,134,192
Total liabilities
106,200,608 80,508,794
Total Equity and Liabilities 122,348,124 97,647,643
Assets
Non–current assets
Property, plant and equipment 78,345,432 62,025,792
Intangible assets 270,845 168,825
Investment in an associate company 4,900 4,900
Long-term loans 235,060 224,645
Employee benefi ts 347,547 357,140
Long-term deposits and prepayments 7,482 7,138
79,211,266 62,788,440
Current assets
Stores and spare parts 2,171,953 2,287,084
Stock in trade—gas in pipelines 783,362 525,370
Trade debts 25,706,362 18,757,385
Loans and advances 136,766 148,403
Balance Sheet as at 30 June 2009
(
Exhibit 5 continued)
Downloaded from
ajc.sagepub.com at K.R.E.T'S TRIDENT INSTITUTE on August 11, 2011
A
SIAN JOURNAL OF MANAGEMENT CASES, 8(1), 2011: 61–87
78 S
ARA ALVI AND ZAFAR IQBAL QURESHI
2009 2008
Trade deposits and short-term prepayments 93,573 95,428
Interest accrued 13,634 40,988
Other receivables 11,176,987 2,235,441
Taxation—net 1,302,429 764,521
Sales tax recoverable 434,915 1,356,339
Short-term investments 511,096
Cash and bank balances 1,316,877 8,137,148
43,136,858 34,859,203
Total Assets 122,348,124 97,647,643
Source:
SNGPL Annual Report (2009).
Exhibit 6
Performance Appraisal Challenges at SNGPL
Performance Appraisal Form
PAD–I
PERFORMANCE APPRAISAL AND DEVELOPMENT
Name Employee #
Designation Year: Period Covered
Complete the following items on PAD and give to your supervisor prior to review and counseling
discussion
BUSINESS OBJECTIVES AND KEY TASKS FOR THE YEAR _________
1. Describe the objectives for the coming year, which should be specifi c,
measurable, attainable, results oriented and time bound (SMART)
Relative Priority
2. Training syllabus and strategy will be reviewed and changed to meet the
present objectives and goals of the organization.
CUSTOMER:
3. Different management courses for personality development will be arranged.
We intend to arrange training for 50% of management staff in coordination with
all departments.
CUSTOMER:
4. As our company is heading towards ISO – 14001, we will contribute our part
in coordination with HSE department. Necessary training for our staff will be
arranged.
(
Exhibit 5 continued)
(
Exhibit 6 continued)
Downloaded from
ajc.sagepub.com at K.R.E.T'S TRIDENT INSTITUTE on August 11, 2011
A
SIAN JOURNAL OF MANAGEMENT CASES, 8(1), 2011: 61–87
S
UI NATIONAL GAS PIPELINES LTD 79
CUSTOMER:
5. To induct new batches of trainee engineers diploma apprentices and trainee
operators and ensure effi cient running of existing batches of trainees.
CUSTOMER:
6. To uplift T.P. building and improve training infrastructure.
CUSTOMER:
7. Evaluation of auditors will be done for their skill development and further
improvement in quality management system.
CUSTOMER:
8. To arrange 2 Nos. surveillance audits for ISO-9000
Agree that the above objectives and targets are a fair basis for planning and
evaluating the work.
Employee Signature Supervisor’s Signature Manager’s Signature
PAD–II
PERFORMANCE APPRAISAL AND DEVELOPMENT
Name Employee #
Designation Year: Period Covered
BUSINESS OBJECTIVES AND KEY TASKS Achievement Status
for Year ___________
Performance Criteria to be
Filled by the Supervisor
OBJECTIVES
Describe the Objectives of the Last Year.
Statement should be Specifi c, Measurable,
Attainable, Result Oriented and Time
Bound
Relative priority
Summarize in Qualitative
Terms, the Extent
Objectives were Met and
Level of Performance
Criteria Achieved
Exceeds
Meets
Partially Meets
Does not Meet
Employee’s
Input
Supervisors
Review
SAFETY: Zero loss time injury
throughout the year at Utility Unit.
Adherence to safe working practices,
compliance with mandatory PPE’s
during the year.
1
TRAINING: Training of Utility Unit
staff for DCS and train new engineers
& supervisor.
1
(
Exhibit 6 continued)
(
Exhibit 6 continued)
Downloaded from
ajc.sagepub.com at K.R.E.T'S TRIDENT INSTITUTE on August 11, 2011
A
SIAN JOURNAL OF MANAGEMENT CASES, 8(1), 2011: 61–87
80 S
ARA ALVI AND ZAFAR IQBAL QURESHI
BUSINESS OBJECTIVES AND KEY TASKS Achievement Status
for Year ___________
Performance Criteria to be
Filled by the Supervisor
OBJECTIVES
Describe the Objectives of the Last Year.
Statement should be Specifi c, Measurable,
Attainable, Result Oriented and Time
Bound
Relative priority
Summarize in Qualitative
Terms, the Extent
Objectives were Met and
Level of Performance
Criteria Achieved
Exceeds
Meets
Partially Meets
Does not Meet
Employee’s
Input
Supervisors
Review
PRODUCTION: Safe and smooth utility
unit operation with respect to product
utility, quantity, effi cient emergency
handling, startup all shutdown
throughout the year
1
POLLUTION CONTROL: Site stream
effl uents to be kept within limits as
per utility plane.
1
Changes in plan during review period:
Training & ISO-9000 department.
Employee’s Signature Supervisor’s Signature Manager’s Signature
PAD–III
PERFORMANCE APPRAISAL AND DEVELOPMENT
Name Employee #
Designation Year: Period Covered
Dimensions of Performance
The Dimensions (a) to (o) Pertain to any
Executive Management, Professional and Technical
Job. Assess the Employee on All these Dimensions.
Supervisors/Managers should also be Assessed on
Dimensions (p) to (r).
Exceeds
Requirements
Meets Requirement
Partially Meets
Requirements
Does Not Meet
Requirements
Include Specifi c
Work Examples
from Corporate
Objectives & Key
Tasks (PAD-II)
and Continuing
Responsibilities
a. Ability to Learn:
Involves the capability and commitment to learn and
gain command over functional knowledge required
to do the job.
(
Exhibit 6 continued)
(
Exhibit 6 continued)
Downloaded from
ajc.sagepub.com at K.R.E.T'S TRIDENT INSTITUTE on August 11, 2011
A
SIAN JOURNAL OF MANAGEMENT CASES, 8(1), 2011: 61–87
S
UI NATIONAL GAS PIPELINES LTD 81
Dimensions of Performance
The Dimensions (a) to (o) Pertain to any
Executive Management, Professional and Technical
Job. Assess the Employee on All these Dimensions.
Supervisors/Managers should also be Assessed on
Dimensions (p) to (r).
Exceeds
Requirements
Meets Requirement
Partially Meets
Requirements
Does Not Meet
Requirements
Include Specifi c
Work Examples
from Corporate
Objectives & Key
Tasks (PAD-II)
and Continuing
Responsibilities
b. Adaptability to Time Pressure and Changing
Priorities:
Involves effectively adapting to tight deadlines,
heavy workload and sudden or frequent changes in
priorities, in order to accomplish objectives.
c. Communication Skills:
Involves writing and speaking clearly, concisely and
persuasively, may involve either formal presentation
or informal communication.
d. Comprehensive and Analytical Skills:
Involves applying comprehensive, reasoning
and analytical goals to accomplish job objectives,
understanding and using all aspects of data or
information; comprehending spoken information.
e. Coordination and Teamwork:
Involves exhibiting leadership and teamwork when
working and coordinate the activities of employees
from more than one work group, unit or organization
exhibiting to assist others.
f. Creativity and Innovation:
Involves generating creative ideas, solutions and
techniques using useful application.
g. Decision-making and Business Judgment:
Involves the judgment and decision making skills
necessary, thrive at conclusions which result in
productive, profi t or cost reducing actions. Skills
may include understanding events and their
impact, making decisions on absence of complete
information, making decision on the basis to
capitalize on ‘windows of opportunity’. Making and
accepting risks involved in business decisions.
(
Exhibit 6 continued)
(
Exhibit 6 continued)
Downloaded from
ajc.sagepub.com at K.R.E.T'S TRIDENT INSTITUTE on August 11, 2011
A
SIAN JOURNAL OF MANAGEMENT CASES, 8(1), 2011: 61–87
82 S
ARA ALVI AND ZAFAR IQBAL QURESHI
Dimensions of Performance
The Dimensions (a) to (o) Pertain to any
Executive Management, Professional and Technical
Job. Assess the Employee on All these Dimensions.
Supervisors/Managers should also be Assessed on
Dimensions (p) to (r).
Exceeds
Requirements
Meets Requirement
Partially Meets
Requirements
Does Not Meet
Requirements
Include Specifi c
Work Examples
from Corporate
Objectives & Key
Tasks (PAD-II)
and Continuing
Responsibilities
h. Initiative and Self-Monitoring:
Involves recognizing needed information or resource;
taking initiative to carry out the activities of the
position; monitoring and insuring quality and
thoroughness of own work while refraining from
devoting effort to non-productive, peripheral details.
i. Interacting with Others:
Involves interacting effectively with others; relating
appropriately to persons at various levels in the
organizations; exhibiting appropriate behaviour,
particularly in diffi cult situations: responding
productively to constructive criticism; maintaining
motivation even in the face of disappointment.
j. Planning and Organizing:
Involves planning own work schedule, setting and
monitoring personal performance goals, and taking
action to accomplish those goals.
k. Customers/Clients Orientation:
Involves gathering information from internal and
external customers/clients concerning their needs;
advocating customers/client’s (position within the
organization; taking action to ensure alignment
between customer/clients needs and those of the
supplier.
l. Environment & Safety Awareness and
Environment Friendly:
Involves assessing impact of potential impact on
environment and safety of actions or decisions, and
making appropriate adjustments; performing in a
safe manner and achieving safe and environment
friendly performance by those supervised
(if applicable).
(
Exhibit 6 continued)
(
Exhibit 6 continued)
Downloaded from
ajc.sagepub.com at K.R.E.T'S TRIDENT INSTITUTE on August 11, 2011
A
SIAN JOURNAL OF MANAGEMENT CASES, 8(1), 2011: 61–87
S
UI NATIONAL GAS PIPELINES LTD 83
Dimensions of Performance
The Dimensions (a) to (o) Pertain to any
Executive Management, Professional and Technical
Job. Assess the Employee on All these Dimensions.
Supervisors/Managers should also be Assessed on
Dimensions (p) to (r).
Exceeds
Requirements
Meets Requirement
Partially Meets
Requirements
Does Not Meet
Requirements
Include Specifi c
Work Examples
from Corporate
Objectives & Key
Tasks (PAD-II)
and Continuing
Responsibilities
m. Quantity of Work:
Involves quantity of work performed such as volume
of work, timelines, adherence to deadlines, number
of activities managed, effi ciency with which work is
done, etc.
n. Quality and Continuous Improvement:
Involves quality of performance such as
completeness, freedom from errors, analytical
soundness, creation of useful work products, etc.,
includes standards of professional excellence,
reliability, prevention of error, completeness, and
identifying and causing continuous improvements
including, when appropriate, changes to the way
work is done and to administrative and other
systems.
o. Business Practice Standards:
Includes adherence to proper business practices,
ethics and other key corporate policies, promotion of
good internal controls, etc.
p. Organization/Unit Management Skills:
Involves managing the ongoing business of an
organization or nit, such as establishing and
communicating the organization’s/unit’s goals
and objectives: establishing and communicating
its practices and procedures: developing strategy
to accomplish goals/objectives; planning and
requiring needed resources (for example, fi nances
personal equipment, etc.) Carrying out plans for
accomplishing effectiveness of strategies and actions
taken, stewardships of results.
(
Exhibit 6 continued)
(
Exhibit 6 continued)
Downloaded from
ajc.sagepub.com at K.R.E.T'S TRIDENT INSTITUTE on August 11, 2011
A
SIAN JOURNAL OF MANAGEMENT CASES, 8(1), 2011: 61–87
84 S
ARA ALVI AND ZAFAR IQBAL QURESHI
Dimensions of Performance
The Dimensions (a) to (o) Pertain to any
Executive Management, Professional and Technical
Job. Assess the Employee on All these Dimensions.
Supervisors/Managers should also be Assessed on
Dimensions (p) to (r).
Exceeds
Requirements
Meets Requirement
Partially Meets
Requirements
Does Not Meet
Requirements
Include Specifi c
Work Examples
from Corporate
Objectives & Key
Tasks (PAD-II)
and Continuing
Responsibilities
q. Supervision of Employees:
Involves the overall process of supervising,
developing and evaluating employees, such as: work
scheduling and task assignments: directing the work
of others; coaching and counseling; determining
and providing needed training for employees’
performance. May include supervisory relief
assignments.
r. Leadership Abilities:
Includes the ability to inspire, motivate and
command the aspect of others by providing vision,
directions, support and feedback; demonstrated
effectiveness in getting others work towards common
objectives and goals; ability to delegate effectively.
Other Major Dimensions (if any)
Prepared by: Reviewed by
Supervisor Signature and Date Manager’s Signature and Date
Source:
Company documents.
Note:
Supervisor should request the employee to fi ll out PAD-II in ink. During the performance
review session, changes made by the supervisor should be detailed by both the employee and
supervisor.
(
Exhibit 6 continued)
Downloaded from
ajc.sagepub.com at K.R.E.T'S TRIDENT INSTITUTE on August 11, 2011
A
SIAN JOURNAL OF MANAGEMENT CASES, 8(1), 2011: 61–87
S
UI NATIONAL GAS PIPELINES LTD 85
Exhibit 7
Performance Appraisal Challenges at SNGPL
The Normal Distribution Curve
2
Properties of the Normal Distribution Curve
1. The form, or shape, of the normal distribution is a bell-shaped curve (Anderson et al. 2008).
2. The exact shape of the normal distribution (the characteristic ‘bell curve’) was defi ned by a function
that had only two parameters: mean and standard deviation.
3. A characteristic property of the normal distribution was that 68% of all of its observations fell within
a range of
±1 standard deviation from the mean, and a range of ±2 standard deviations included
95% of the scores. In other words, in a normal distribution, observations that had a standardized
value of less than –2 or more than
+2 had a relative frequency of 5% or less.
Source:
Anderson et al. (2008).
2
Available at http://orionwell.fi les.wordpress.com/2008/07/normal-distribution.gif, accessed July
2009.
Downloaded from
ajc.sagepub.com at K.R.E.T'S TRIDENT INSTITUTE on August 11, 2011
A
SIAN JOURNAL OF MANAGEMENT CASES, 8(1), 2011: 61–87
86 S
ARA ALVI AND ZAFAR IQBAL QURESHI
Exhibit 8
Performance Appraisal Challenges at SNGPL
General Electric and SNGPL Distribution Curve
Sources:
Welch and Byrne (2001) and company documents.
Downloaded from
ajc.sagepub.com at K.R.E.T'S TRIDENT INSTITUTE on August 11, 2011
A
SIAN JOURNAL OF MANAGEMENT CASES, 8(1), 2011: 61–87
S
UI NATIONAL GAS PIPELINES LTD 87
Exhibit 9
Performance Appraisal Challenges at SNGPL
PTC and PSO Normal Distribution Curve
Source:
Company documents.Downloaded from ajc.sagepub.com at K.R.E.T'S TRIDENT INSTITUTE on August 11, 2011
No comments:
Post a Comment