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IN-COMPANY TRAINING REPORT ON ANALYZING THE PERFORMANCE APPRAISAL SYSTEM OF TATA AIG LIFE INSURANCE CO.LTD AT

TATA AIG LIFE INSURANCE

SUBMITTED IN THE PARTIAL FULLFILLMENT OF THE RQUIREMENT OF BACHELOR OF BUSSINESS ADMINISTRATION (BBA) GURU JAMBHESHWAR UNIVERSITY OF SCIENCE AND TECHNOLOGY, HISAR Training Supervisor : Mr. Lalit Nagpal (Branch Manager) Submitted By: Mohd Khalid Malik Enrollment No.: 09511242259

SESSION 2009 – 2012

GURU JAMBHESHWAR UNIVERSITY OF SCIENCE AND TECHNOLOGY HISAR – 125001

ACKNOWLEDGEMENT
I am deeply indebted to Mr. Lalit Nagpal ( Branch Manager) for his constant support, guidance and inspiration in completion of the internship program and preparation of this document. My sincere thanks to him for finding time out of his busy schedule and giving us invaluable suggestions. I am also grateful to other employee of TATA AIG for their encouragement and help. I would like to express my sincere gratitude to TATA AIG for giving me an opportunity to complete my summer internship program in their esteemed organization. Last but not the least; I would like to thank my parents and friends for their moral support throughout the project.

MOHD. KHALID MALIK

STUDENT UNDERTAKING
I hereby declare that the Summer Training Report conducted at “Analyzing the Performance Appraisal System of TATA AIG” submitted in partial fulfillment of the requirement of Bachelor of Business Administration (BBA) from Guru Jambheshwar University, Hisar. It is my original work and the same has not been submitted for the award of any other degree / diploma / fellowship or other similar titles or prizes.

(Mohd. Khalid Malik)

PREFACE
The title of my project is “TO STUDY THE PERFORMANCE APPRAISAL SYSTEM OF TATA AIG”. The objective of the project is to study and determine the satisfaction level of the Employees in the company. This project report is a review based on theory as well as research. It is more of Descriptive research with more of qualitative analysis than quantitative. The research report starts with overview of Insurance Industry which includes concept, characteristics, importance, benefit, Indian Insurance Industry, history, IRDA, FDI. TATA AIG Life Insurance origin, TATA Group, AIG Group, Awards & Achievements, Mission, Vision, Products at TATA AIG and its organizational structure and explains company’s PERFORMANCE APPRAISAL SYSTEM in detail. In Research Methodology, the objective of the Research, Research Design, Data Sources, Sampling techniques, Sample size, methods of data collection, tools and techniques of analysis of data and the limitation of the study are mentioned in the report. A proper questionnaire has been prepared to study the satisfaction level of the employees in TATA AIG. The report is made useful for readers by incorporating Suggestions and Recommendations for all concerned on how to make a grand success of appraisal system followed by their organizations. In conclusion, the project report will enable one to understand the concept of Performance Appraisal in TATA AIG The report will also help us to understand benefits and drawbacks of present appraisal system. the

TABLE OF CONTENT
CONTENTS Chapter 1 - Introduction 1.1. Overview of the Industry 1.2. Profile of Organization o o o o o Origin Recent Achievements Mission & Vision Products Organisation Structure 42-63 1-16 17-43 PAGE NO.

1.3 Introduction to performance appraisal system Chapter 2 - Objectives & Methodology 2.1. Objectives of the Study 2.2. Research Methodology o Research Design o Sources of data Sampling Technique o Sample size o Methods of data collection o Tools and techniques of analysis 2.3. Limitations of the Study Chapter 3 - Data Analysis & Interpretation Chapter 4 - Findings Chapter 5 - Recommendations ANNEXURES BIBLIOGRAPHY 87

65 65-66

66 68-85

89

CHAPTER 1 INTRODUCTION

1.1

OVERVIEW OF THE INSURANCE INDUSTRY

CONCEPT OF INSURANCE Insurance is a “contract in writing whereby one party, called the Insurer, agrees in consideration of either a single or a periodical payment called the premium, to indemnify another party called the insured, Definition indicates that an Insurance a risk coverage device against payment of a sum assured, known as premium. Life insurance provides a monetary benefit to a decedent's family or other designated beneficiary, and may specifically provide for burial, funeral and other final expenses. Life insurance policies often allow the option of having the proceeds paid to the beneficiary either in a lump sum cash payment or an annuity. CHARACTERSTICS • An agreement enforceable in law: Insurance is an agreement which is enforceable in law. It cannot be otherwise, it is a non – transferable such an agreement which must satisfy all the essentials of a contract. • Two parties – the Insurer and the Insured: An Insurance contract, like others, must have two parties - the Insurer who agrees to compensate whenever specified event or events take place, and the Insured who agrees to pay the consideration as agreed upon. • Premium: The insured agrees to pay either a single or a periodical premium for which the insurer converse and incase the specified event(s) happens he agrees to pay the compensation specified therein. Promise of indemnity from specific Risk: The insurer agrees to compensate when the specific events take place. This is a promise of indemnity from a specific risk by the insurer. This is certainly the most important characteristics of an Insurance contract

IMPORTANCE OF INSURANCE An insured businessman feels safe and free. Anyone who takes up life policy or general policy like fire, natural calamity, accident etc., makes himself free not only free from family liability but with greater enthusiasm and better vision can work for the society as a whole. The society is benefited. The insured gets a worthy insured. The economy gets a boost because small savings collected in the form of premiums may be invested in Nation building and economic progress. This brings a sense of gratitude to the entire population. Prosperity, social advancement, political stability and better commercial and industrial world may become the order of the day because of Insurance contract. BENEFITS OF INSURANCE • • • • • • • • • • • At least one policy should be there Protection to family Responsibility Family responsibility Risk management and multiple benefits Money multiplication Comfortable requirement Life coverage Compulsory savings An asset Social tool of security

• • • • • • • •

Sharing of losses Peace of mind Planning for special financial event(s) Safe guard against serious health situation Sense of security Wealth creation Children future Tax benefit

INDIAN INSURANCE INDUSTRY
The Insurance sector in India is governed by Insurance Act 1938, the Life Insurance Corporation Act, 1956 and General Insurance Business (Nationalisation) Act, 1972, Insurance Regulatory and Development Authority (IRDA) Act, 1999 and other related Acts. With such a large population and the untapped market area of this population, Insurance happens to be a very big opportunity in India. Today it stands as a business growing at the rate of 15-20 percent annually. Together with banking services, it adds about 7 percent to the country’s GDP. Inspite of all this growth the statistics of the penetration of the insurance in the country is very poor. Nearly 80% of Indian population are without Life insurance cover and Health insurance. This is an indicator that growth potential for the insurance sector is immense in India. It was due to this immense growth that the regulations were introduced in the insurance sector and in continuation “Malhotra committee” was constituted by the Government in 1993 to examine the various aspects of the industry. The key element of the reform process was participation of overseas insurance companies

with 26% capital. Creating a more efficient and competitive financial system suitable for the requirements of the economy was the main idea behind this reform. Since then the insurance industry has gone through many sea changes. The competition LIC started facing from these companies were threatening to the existence of LIC. Since the liberalization of the industry, the insurance industry has never looked back and today stands as one of the most competitive and exploring industry in India. The entry of the private players and the increased use of the new distribution are in the limelight today. The use of new distribution techniques and the IT tools has increased the scope of the industry in the long run.

A BRIEF HISTORY OF THE INSURANCE SECTOR IN INDIA
The business of life insurance in India in its existing form started in India in the year 1818 with the establishment of the Oriental Life Insurance Company in Kolkata. Some of the important milestones in the life insurance business in India are: • 1912: The Indian Life Assurance Companies Act enacted as the first statute regulate the life insurance business. • 1928: The Indian Insurance Companies Act enacted to enable the government to collect statistical information about both life and nonlife insurance businesses. • 1938: Earlier legislation consolidated and amended to by the Insurance Act with the objective of protecting the interests of the insuring public. • 1956: 245 Indian and foreign insurers and provident societies taken over by the central government and nationalized. LIC formed by an Act of Parliament, viz. LIC Act,



1956, with a capital contribution of Rs. 5 crore from the Government of India. The General insurance business in India, on the other hand, can trace its roots to the Triton Insurance Company Ltd., the first general insurance company established in the year 1850 in Calcutta by the British. Some of the important milestones in the general insurance business in India are:



1907: The Indian Mercantile Insurance Ltd. set up, the first company to transact all classes of general insurance business.



1957: General Insurance Council, a wing of the Insurance Association of India, frames a Code of conduct for ensuring fair conduct and sound business practices.



1968: The Insurance Act amended to regulate investments and set minimum solvency margins and the Tariff Advisory Committee set up.



1972: The General Insurance Business (Nationalization) Act, 1972 nationalized the general insurance business in India with effect from 1st January 1973. 107 insurers amalgamated and grouped into four companies’ viz. the National Insurance Company Ltd., the New India Assurance Company Ltd., the Oriental Insurance Company Ltd. and the United India Insurance Company Ltd. GIC incorporated as a company.

The Insurance Regulatory and Development Authority
The Insurance Regulatory and Development Authority (IRDA) is a national agency of the Government of India, based in Hyderabad. It was formed by an act of Indian Parliament

known as IRDA Act 1999, which was amended in 2002 to incorporate some emerging requirements. Mission of IRDA as stated in the act is "to protect the interests of the policyholders, to regulate, promote and ensure orderly growth of the insurance industry and for matters connected therewith or incidental thereto." ROLE OF IRDA Section 14 of IRFDA Act, 1999 lays down the duties, powers & functions of IRDA. The power & functions of the Authority shall include: 1. Issue to the applicant a certificate of registration, renew, modify, withdraw, suspend or cancel such registration. 2. Protection of the interests of the policy holders, insurable interest, settlement of insurance claim, surrender value of policy & other terms & conditions of contracts of insurance. 3. Specifying requisite qualifications, code of conduct, & practical training for intermediary or insurance intermediaries & agents; 4. Calling for information from, undertaking inspection of, conducting enquiries & investigations including audit of the insurers, intermediaries, insurance intermediaries & other organizations connected with the insurance businnes; 5. Control & regulations of the rates, advantages, terms & conditions that may be offered by insurer in respect of general insurance business not so controlled & regulated by the Tariff Advisory Committee under the section 64U of the Insurance Act, 1938 (4 of 1938). 6. Adjudications of disputes between insurers & intermediaries.

Opening doors for private players and FDI
The insurance premium in India accounted for a mere 2% of GDP as against the world average of 7.8% and G-7 average of 9.2% during 90s. The insurance premium as a percentage of savings in India is 5.95% as compared to 52.5% in UK. The nationalized insurance companies could barely unearth the vast potential of the Indian population since the policies lacked flexibility and the Indian life insurance products are not linked to the contemporary investment avenues. LIC had a total premium income of $5 billion during 1995-96 and General Insurance recorded a net premium of $1.3 billion. LIC’s income has grown substantially on an average of 10% as against the industry’s 6.7% in the rest of Asia. LIC has catered its services to more than 5 million people living below poverty line with a subsidized premium rate. Claim settlement ratio of LIC stood at 95% and GIC at 74% which much higher than the global average of 40%.

1.2

PROFILE

OF

ANALYZING

THE

PERFORMANCE

APPRAISAL SYSTEM

ORIGIN JOINT VENTURE
Tata AIG Life Insurance Company Limited is a joint venture between Tata Group and American International Group, Inc. (AIG). Tata Group is one of the oldest and leading

business groups of India. Tata Group has had a long association with India's insurance sector having been the largest insurance company in India prior to the nationalization of insurance. The Late Sir Dorab Tata, was the founder Chairman of New India Assurance Co. Ltd., a group company incorporated way back in 1919. American International Group, Inc is the leading U.S. based international insurance and financial services organization and the largest underwriter of commercial and industrial insurance in the United States. AIG has one of the most extensive life insurance networks in the world. THE AIG GROUP American International Group, Inc. (AIG) is the world's leading international insurance and financial services organization, with operations in approximately 130 countries and jurisdictions. AIG member companies serve commercial, institutional and individual customers through the most extensive worldwide property-casualty and life insurance networks of any insurer. In the United States, AIG is the largest underwriter of commercial and industrial insurance and is one of the top three life insurers. AIG's global businesses also include financial services, retirement savings and asset management. AIG's financial services businesses include aircraft leasing, financial products, trading and market making. AIG's growing global consumer finance business is led in the United States by American General Finance. AIG also has one of the largest U.S. retirement savings businesses through AIG SunAmerica and AIG VALIC, and is a leader in asset management for the individual and institutional markets, with specialized investment management capabilities in equities, fixed income, alternative investments and real estate. AIG's common stock is listed in the New York Stock Exchange, as well as the stock exchanges in London, Paris, Switzerland and Tokyo.

TATA GROUP The Tata Group is India's best-known industrial group with an estimated turnover of around US $ 14.25 billion (equivalent to 2.6 % of India's GDP). Known for its stick fast to substance to business ethics, it is India's most respected private business group. With more than 220,000 employees across 91 major companies, it is also India's largest employer in the private sector. Founded by Jamsetji Tata in the 1860s, the Tata Group's early years were inspired by the spirit of nationalism. The Tata Group initiate several firsts in Indian industry: India's first private sector steel mill, first private sector power utility, first luxury hotel chain and first international airline, amongst others. In more recent times, the Tata Group's initiating spirit continues to be showcased by companies like Tata Consultancy Services (TCS), today Asia's largest software and services company, and Tata Motors, the first car maker in a developing country to design and produce a car from the ground up. The business operations of the Tata Group currently contain seven business sectors Engineering, Materials, Energy, Chemicals, Consumer Products, Services, and Communications and Information Systems. The scale of the Tata Group's operations is increasingly turning global. Tata Tea was the first Indian MNC in the global tea industry; Tata Steel is one of the world's lowest cost producer of steel; Tata Chemicals is one of Asia's largest manufacturer of soda ash; Titan is one of the world's top six manufacturerbrands in the watch segment, and Tata Motors is amongst the top six commercial vehicle manufacturers in the world. The Tata Group is increasingly focusing on new technology areas, and has the largest footprint in the information technology and communication sector in India. Besides being the largest software services provider in the country, it is also one of the leading private sector telecom service providers and is also India's largest international long distance and Internet services provider. The Tata brand is recognized as the largest homegrown brand in India and the most respected brand. The Tata Group's stable of brands also includes many national and some internationally renowned product and service brands, including Tata Indica, Tata Indigo,

Indigo Marina, Tata Safari, Tata Indicom, Taj Group of Hotels (Luxury, Business and Leisure), indiOne, Tata Tea, Tetley, Tata Salt, Tata Steelium, Tata Shaktee, Tata Tiscon, Tata Bearings, Titan, Tanishq, Voltas and Westside.

AWARDS AND ACHIEVEMENTS
 October 27th, 2004 - Tata AIG Life half-yearly Total Premium up 118% to Rs 194.3crore  October 8th, 2004 - Tata AIG Life announces Star Kid Talent Search with the launch of Star Kid child endowment policy  August 16th, 2004 - Tata AIG Life Insurance becomes India’s first private life insurance company to launch 24X7 fully automated online renewal premium payment kiosk.  July 16th, 2004 - Tata AIG Life expands distribution network: Opens Office in Sikar Establishes state-of-the-art training center for advisors and corporate agents.  July 15th, 2004 - Tata AIG enhances distribution channel Ties-up with the Orissa State Co-operative Bank for Banc assurance.  June 25th, 2004 - Tata AIG’s ‘Green Channel Settlement’ to make accident repairs and claims easier than never before.  Tata AIG Life wins LOMA award for outstanding professional development of employees  Tata AIG Life Insurance Company’s Total Premium increases by 253 % to Rs 254 crores over 1,60,000 new individual lives insured during FY 2003-2004



TATA AIG Life Insurance and United Bank of India enter into Banc assurance partnership



Tata AIG General reports premium income at Rs. 353 crores and maiden profit of Rs. 15 crores.



TATA AIG Life total sum assured up 239% to Rs 5321 crore from 1570 crore

Mission
Enhance our customers’ well-being

Vision
To be the most trusted life insurance company that values customers’ financial well-being, consistently delivering best-in-class solutions and respected by all.

BOARD OF DIRECTORS NAME
Suresh Mahalingam Vivek Sood Ivan Chak

DESIGNATION
Director Chief Financial Officer Head of Life Profit Centre, Accident & Health and Vice President

PRODUCTS
LIFE NEED SOLUTIONS Risk plan: It is important to ensure people loved one's financial security to meet the uncertainties and make people families feel fully protected.

TATA AIG LIFE Raksha TATA AIG Life Life plus Health plans: Losing our health can at times severely impact our family as well. All of us are at a high risk and need to protect ourselves and our families.

TATA AIG LIFE Health First TATA AIG LIFE Health Protector Saving plans: Insurance saving plans can help you organise specific needs like saving for your child's education, marriage, settlement in life, purchase of a house, retirement and other financial goals.

TATA AIG LIFE Maha Guarantee Flexi TATA AIG LIFE Assure Golden Years

Child plans: They are investment opportunities that take care of the rising educational expenses and ensure healthy returns at crucial phases to take care of your child's needs.

TATA AIG LIFE Insurance Gyan Kosh TATA AIG LIFE Star Kid Retirement plans: Retirement is a very crucial phase in one's life. It can be enjoyable for some while unsettling for the others. Make sure to secure your retirement with Retirement Plans from Tata AIG Life.

TATA AIG LIFE Assure Golden Years TATA AIG LIFE Easy Retire Wealth plans: We all have dreams and aspirations like buying a house, giving our children the best education and having a comfortable life after retirement. These dreams can be fulfilled only by planning our finances well through wealth creation plans. TATA AIG LIFE Insurance InvestAssure Gold Supreme

TATA AIG LIFE LAKSHYA SUPREME TATA AIG LIFE Insurance InvestAssure Maximizer GROUP INSURANCE Group Pensions: Tata AIG Life is the first private insurance company to offer Group Pensions products in India to cater all retirement benefits.

Employment Benefits: The Corporate Solutions-Employee benefits is a range of corporate insurance plans of solutions to employers of all sizes, ranging from SME, local enterprises to multinational companies. The insurance solution provides cover not only in case of mortality but also provides security and benefit in case of terminal illness. Credit Life : Credit Life Insurance Plans are developed to offer comprehensive protections to organizations / groups issuing credit to it's customers such as home loan, personal loan, auto loan, education loan and credit cards etc. Tata AIG Life Credit Shield Plus is a comprehensive insurance plan that offers Death, Total & Permanent Disability, Total & Temporary Disability and Critical Illness Benefits under a single coverage.

Micro Insurance Insurance: is an important savings tool for people living in small towns and villages. Micro Insurance products from Tata AIG Life can help reduce the effects of financial losses by providing adequate financial cover.

ORGANIZATIONAL STRUCTURE

Chairman

MD Zonal Manager

Regional Manager

Retail Marketing MMMarkeMMar

Alternative Chanel

Operation Chanel

Human Resource

Territory Manager

Territory Manager

Team Manager

HR Executive

Branch Manager

Branch Manager

Operation Manager

Asst. B.M.

Channel Executive

Business Dev. Mgr. Sales Dev. Mgr.

In Tata Aig branch(vikaspuri), the sales team following the typical organization structure:

Hierarchy in branch of Tata Aig

AREA SALES MANAGER

SALES AREA SALES MANAGER MANAGER

AREA SALES MANAGER

UNIT MANAGER

UNIT MANAGER

UNIT MANAGER

ADVISORS

ADVISORS

ADVISORS

FUTURE PLANS OF TATA AIG
TATA-AIG life aims to expand to a network of over 140 offices in 60 major cities. In addition, it aims to be US $1 billion Company with more than three million customers. It also plans to build a profitable and sustainable innovative product portfolio and increase its equity capital from the present level of RS. 276, corers over the next three years. TATA -AIG plans to increase its employee strength to 2,500 from the present 1,000 to support this growth. Moreover, the company’s agency channel, consisting presently of 30,000 personal financial advisers, will increase to over 1,00,000. The company’s alternate channels of distribution are targeting a threefold rise in partners to over 600. Presently, TATA-AIG life’s social and ruler insurance programme across rural India is operational in 12 states. It has a dedicated team that looks only at rural insurance. The

programme is managed with several rural organizational like NGO struts, co-operative and women’s federations. In fact, there are over 40 rural organizational, which are insurance programme.

TATA-AIG life’s various currently involved in the social of TATA-AIG life, and rural alternate channels of distribution it is successfully selling and servicing policies to the rural populace. The company has also received an international grant from the department for international development of the UK ministry of finance to build Self-Sustaining models of insurance of rural areas. A proposal put forth by TATA-AIG life was evaluated by a panel of independent actuaries, and subsequently a grant was extended on a matching funds basis towards implementation of social and rural insurance project for the adult landless daily wage workers in Andhra Pradesh over the 2003-06 periods. In august 2004, TATA-AIG life launched a 24*7 fully automated kiosk at the company’s New Delhi office. With the easy to use kiosk, customers can make secure, real–time renewal premium payments in matter of seconds at no additional cost. TATA-AIG life has bagged several prestigious awards, including the international awards, in insurance sector, LOMA (life office management association), for outstanding professional life insurance education of its company’s employees. With a vision to be the best life insurance company in India with a long-term customer focus and financial prudence, TATA-AIG life is set to lead India’s life insurance sector from the front.

COMPETITORS INFORMATION
PUBLIC SECTOR LIFE INSURANCE CORPORATION PRIVATE SECTOR

S.No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Date of Reg. 14.08.2000 15.11.2000 24.11.2000 10.01.2001 31.01.2001 12.02.2001 30.03.2001 02.08.2001 03.08.2001 06.08.2001 03.01.2002 14.05.2002 06.02.2004 17.11.2005 14.07.2006 04.09.2007 19.12.2007 08.05.2008 27.06.2008 27.06.2008

Name of the Company HDFC Standard Life Insurance Company Ltd. Max New York Life Insurance Company Ltd. ICICI Prudential Life Insurance Company Ltd. OM Kotak Mahindra Life Insurance Company Ltd. Birla Sun Life Insurance Company Ltd. Tata AIG Life Insurance Company Ltd. SBI Life Insurance Company Ltd. ING Vysya Life Insurance Company Private Ltd Allianz Bajaj Life Insurance Company Ltd. MetLife India Insurance Company Pvt. Ltd. AMP SANMAR Assurance Company Ltd. Aviva Life Insurance Company India Pvt. Ltd. Sahara India Insurance Company Ltd. Shriram Life Insurance Company Ltd. Bharti AXA Life Insurance Company Ltd. Future Generali India Life Insurance Company Limited IDBI Federal Life Insurance Company Ltd. Canara HSBC Oriental Bank of Commerce Life Insurance Company Ltd. AEGON Religare Life Insurance Company Ltd. DLF Pramerica Life Insurance Company Ltd.

SWOT ANALYSIS
Both Strengths and Weaknesses are inherent with the company while opportunities and. Threats are usually outside factors, which affect the existence of the company at large. Let us make the SWOT Analysis for TATA AIG Life Insurance company.

STRENGTHS
• • • • • • The early bird advantage More penetration in the rural part of India The trust they have created so far Established agency network during the last decades The incomparable supremacy in the number of agents More awareness among the people

WEAKNESSES
• • • • The marketing approach is not that much professional The sluggishness of the activities has given at time a bad repute Insurance companies are often slow to respond to changing needs. Indian saving rate is for about 22% but less than 7% of it is spent on insurance • There are more competitors for agencies to complete with banks and internet players.

OPPORTUNITIES
• • The ability to cross self financial services is barely being tapped Technology is improving to the point that paperless transactions are available • The client’s increasing need for an “insurance consultant” can open new ways to service the client and generate income

THREATS
• Increasing expenses and lower profit margins will hit hard on the smaller agencies and insurance companies. • As the number of agents are considerably huge, efficient management of all the field force need greater strain and effort • • The aggressive style of marketing by the private players is a threat to LIC. More and companies are coming into the field and the existing ones have to struggle hard to keep the customers loyal and to get more customer

1.3

INTRODUCTION ANALYZING THE PERFORMANCE

APPRAISAL SYSTEM
In the business world investment is made in machinery, equipment and services. Quite naturally time and money is spent ensuring that they provide what their suppliers claim. In other words the performance is constantly appraised against the results expected.

When it comes to one of the most expensive resources companies invest in, namely people, the job appraising performance against results is often carried out with the same objectivity. Each individual has a role to play and management has to ensure that the individual’s objectives translate into overall corporate objectives of the company. Performance Management includes the performance appraisal process which in turn helps identifying the training needs and provides a direction for career and succession planning. Understanding Performance Management

PERFORMANCE MANAGEMENT

CORPORATE GOALS

DETERMINE INDIVIDUAL OBJECTIVES LINKED TO CORPORATE GOALS ENSURE RESPONSIBILITY AND ACCOUNTABILITY

PERFORMANCE APPRAISAL

PERFORMANCE LINKED INCREMENTS/ INCENTIVES/ REWARDS

TATA AIG LIFE PERFORMANCE APPRAISAL SYSTEM
An overview of the performance management process cycle Planning

Planning is the first step in the performance management process cycle and provides the foundation for an effective process. Planning helps to encourage commitment and understanding by linking the employee’s work with the organization’s goals and objectives. The planning phase also establishes expectations of how the work is to be performed. Results, rather than activities, should be the focus in evaluating performance. Managing Managing is the second component of the performance management cycle. This step distinguishes performance management as a process from performance appraisal as an activity. Within this context, managing consists of: • Maintaining a positive approach to work. • Updating and revising initial objectives, performance standards and job competency areas as conditions change. • Requesting feedback from a supervisor. • Providing feedback to a supervisor. • Suggesting career development experiences. • Employees and supervisors working together, managing the performance management process. Reviewing Reviewing is the third step in the performance management process cycle. It includes: • Comparing actual results against expected results; • Receiving and providing feedback. • Engaging in a constructive dialogue to reinforce positive performance and opportunities for improvement; and,

• Recalibrating expectations for the next performance management process cycle: planning, managing and reviewing. Employee responsibilities during the performance management cycle Planning • Working with their supervisor to understand performance objectives identified for their position. • • • • Processing the performance objectives their supervisor has identified. Agreeing on performance expectations for the next performance cycle. Establishing milestones. Committing to goal achievement.

Managing • • • • • • Maintaining a positive approach to their work. Providing updated information about progress in meeting performance objectives Offering suggestions to enable improved performance. Suggesting career development experiences Asking for feedback from their supervisor. Actively listening to coaching feedback provided by their supervisor.

Reviewing • Coming to the performance review meeting prepared to discuss their achievement of performance objectives. • Identifying strengths and opportunities for improvement.



Suggesting professional developmental opportunities.

PERFORMANCE APPRAISAL SYSTEM IN TATA AIG LIFE INSURANCE
It aims at the four factors mentioned below:-

PERFORMANCE
DEVELOPMENT

POTENTIAL

CAREER REWARD

The company performance appraisal is calculated through:

1. Employee G sheet The Goal Sheet documents KRA i.e. the Key Responsibility Area (critical success parameters for the roles. Measures of success for employee’s role against which performance would be evaluated in January. Here is an example of an Employee Goal Review Sheet Employee Goal Review Sheet Employee Vishal Name: Supervisor Name: Bajaj Rohit Mittal Department: Agency Sales Associate Partner Date of Joining: 12/Dec/2008

Position:

Location:

Delhi GO10

-

Sr

KRAs (Key How will we MOS result areas) achieve these GPA Score 25

Wtg Resp Self Comments % *(P/S/C) 10 P P P 3.28

Self Rating 1

1 1. Achieve Plan GPA 2.5 AFYP 2 2. Achieve Plan LCAS

Plan Vs Actual 15

52.43(200% of plan 1 275 cases(152% of 1 the plan

3 3. Achieve Plan Paid Cases 180 Plan Vs Actual 10 4 4. Achieve Plan

Recruitment Plan Vs Actual 10 P 18 recruits 1 Standards -16 Manpower 5 5. Achieve Plan Growth (Active Plan Vs Actual 5 P 100% active agents 1 Agents ) -75% Proactivity6 6. Achieve Plan Plan Vs Actual 5 P 83%proactivity 1 60% 7 7. Achieve Plan Retention-85% Plan Vs Actual 5 P 67% 4 Here the Employees Goals are compared from what they were asked to achieve (PLAN) and what they actually (ACTUAL) achieved.

RATING SCALE Rating 1 Definition Outstanding Clearly superior/ exemplary performance. Contributions regularly surpass Position requirements. Clear case of Role Model .Rarely needs guidance. 2 Exceeds Expectation Performance is frequently above standard for the position. Significicant Contributions are evident. Handles assignments with thoroughness Perfection . Needs guidance occasionally. 3 Meet Expectations Fully acceptable and consistent performance. Needs encouragement and Guidance. 4 Needs Improvement Does not consistently meet performance standards for the position. Clear Need for improvement. 5 Fails to Meet Expectation Performance deficiencies are evident. Regularly fails to meet essential Position requirements. The Employees in TATA AIG are first asked to rate themselves according to their performance and later on they are rated by their immediate supervisor.

2. Employee M review Sheet This potential assessment sheet has the standard (desired proficiency level for the role, it forms the benchmark to asses the employee during the M review) for all the competencies (combination of observable employee applied knowledge, skills and behavior which create competitive advantage for an organization. It focuses on how an employee creates value versus what is actually accomplished. The M review Sheet is divided into 3 categories: 1. Core (30% Weightage is given) Competency -Result Orientation Sets challenging goals for self and team based on company and department’s goals. Accepts accountability for consequences of decisions and actions. Manages progress against milestones. Ensures goals are met by proactively anticipating or reacting quickly to find and implement solutions for hurdles in the way of meeting goals. Puts in required time to accomplish difficult objectives, keeps working tirelessly to meet exceed stated goals Can shift attention quickly and accurately between multiple tasks and take a decision to change priorities, when called for. Measures and evaluates performance of team members and counsels them about improving performance. -Working With and Through Others Displays a work-sharing attitude with team mates to work well together; shares all useful information and resources. Builds relationships and networks internally. Assists team members and leaders whenever it is necessary. Always cooperates within and outside the function to get work done. Accepts different roles of other team members and interacts with them effectively. Leads small teams, if required and provides them support and helps to integrate their efforts. Updates others and shares knowledge/information proactively.

-Innovation Develops or adapts existing processes for greater efficiency and/or improved quality. Recommends new ideas, novel applications or changes in one's own or team/work group's work practices. Implements innovative solutions to problems which may involve taking appropriate risk. -Customer Centricity Assumes responsibility to make products and/or services more likely to meet customer needs and therefore result in purchase/buy-in and/or satisfaction. Fosters attitude among group, to ensure the meeting of customer needs/ satisfaction. Sets up processes, systems, procedures and monitoring which will facilitate this. Constantly upgrades and improves these, to be more responsive. Builds-in correct responses in system to reduce exceptions which get escalated to self and builds capability of team to handle issues properly by themselves. Proactively sets goals to make customer products and/or services better. 2. Functional (60% Weightage is given) Competency -Technical Expertise Has deep understanding of all significant areas in own knowledge domain, and basic understanding of related domains necessary to perform complex tasks at a superior level. Has comprehensive knowledge of TATA AIG processes, systems and procedures related to the function and a good understanding of industry best practices and benchmarks. Seen as the internal expert. Conducts training/coaches new recruits to own function, and mentors those at lower competency levels. -Managerial Expertise Leads teams both operationally as well as for special projects. Prioritizes work in line with operational/project objectives, assures proper distribution of tasks within team, ensures coordination, obtains and allocates resources and manages time, budget, quality and other output parameters, effectively. Coaches individual team members, encourages innovation

and personal contributions, confronts where necessary, and eases interpersonal tensions firmly but without compromising self-esteem. Participates in the selection of staff and if applicable, decides about selection of agents. -Problem Solving and Decision Making Collects and collates information efficiently, and processes it for solving complex problems, under guidance. Develops networks within and outside the company for this purpose. Solves simple or routine or day-to-day problems in own functional area in accordance with defined procedures. Recognizes problems when they arise, thinks of possible causes and applies solutions to similar situations. Seeks advice when facing a difficult problem, well in time. -Business Acumen Has a broad knowledge of the insurance business and its drivers in India. Is familiar with the general product types and how they are distributed/sold. Has basic knowledge of the various functions in the company and their interrelationships. Has a basic understanding of the industry trends and its implications for own role. 3. Leadership (10% Weightage is given) Competency -Role Modeling Core Values Understands and acts according to TATA AIG’s values and operating principles, and acts as a role model to others. Does not tolerate transgressions and deals with such situations personally or with the help of a superior. Takes a personal stand on issues when values are concerned and seeks clarifications for self and others when there is a seeming “conflict of priorities” between different values. -Strategy Planning and Execution Has a deep understanding of how own and team’s operating objectives mesh in with company’s business strategy. Identifies business patterns, opportunities and barriers in

future, using information from various sources and modifies approach and plan accordingly, with the concurrence of superior. Monitors implementation of plan and take steps well in time, to ensure time and budget goals are met. . Sales Manager Standards - Salient Features • Sales Manager standards would be there for the following key business drivers: • • • • • Adjusted AFYP Paid Cases Recruitment Active Agent

At the end of any given month, the YTD performance of the Sales Manager will be compared with the YTD Standards which will be calculated based on the Sales Manager vintage

CHAPTER 2 OBJECTIVES AND RESEARCH METHODOLOGY

2.1 OBJECTIVES OF THE STUDY
The objectives of the study are mentioned below :• • • • • To study existing appraisal system in TATA AIG Life Insurance. To find the expectation of appraiser and appraisee. To determine the satisfaction level of the appraisee. To reveal the various loopholes in the appraisal system if any To find the effectiveness of the appraisal system

RESEARCH METHODOLOGY
The methodology followed for conducting this study includes the specification of research design, sample design, questionnaire design, data collection and statistical tool used for analyzing the collected data.

Research Design
The research design used for this study is of the descriptive type. Descriptive (statistical) research studies are those studies which are concerned with describing the characteristics of a particular individual or a group. A research design provides the framework to be used as a guide in collecting and analyzing data. Example is market survey.

Sources of Data Collection
The sources of data collection used in the research are segregated in primary & secondary sources. • • Primary data Secondary data

Primary source : The data is collected through Questionnaire.

Secondary source
. Secondary source of data collection:• • • • • Websites Magazine Brochure Books on Insurance marketing Newspaper

Sampling Technique
In this research, the non probability technique and convenience sampling has been used for study. Convenience Sampling is a sample of study subjects taken from a group which is conveniently accessible to a researcher.

Sample Size
Sample Size: 100 respondents Selection of study area: Vikapuri, New Delhi branch. Research Period: 8 week Respondents: The Associate Sales Manager, Sales Managers, Associate Partner and Branch Head of TATA AIG Life Insurance.

Methods of Data Collection
The below mention methods of data collection are used for the study:• Questionnaires

1) Dichotomous questions(Yes/No) 2) Rating Scale questions (Satisfied, partly satisfied, not satisfied) 3) Multiple Choice questions • • Interview Observation

Tools and techniques of analysis
The below mentioned Statistical tools are used for study and interpretation of data is being done:• • Bar Graphs Pie chart

2.3 LIMITATIONS OF THE STUDY
• • • • The employees were not very keen to fill up the questionnaire. To create good image, respondents may give responses vary from the facts. There was hardly any scope to interact with the employees. Some of the employees did not either understand the questions or they were not aware of the policies of the company.

CHAPTER 3 DATA ANALYSIS AND INTERPRETATION

1.
• •

Do you know what exactly is expected from you at work? Yes No

RESPONSE Yes No

PERCENTAGE 95% 5%

Awareness Of Responsibility

No 5%

Yes 95%

Interpretation: From the graph it can be seen that majority i.e. 95% of employees are aware about their responsibilities, which implies that the appraisers have efficiently communicated to the appraisees all the parameters that will be taken into account during appraisal.Whereas only 5% of them are not aware.

2. Are you satisfied with the appraisal system? • • • Partially satisfied Satisfied Most Satisfied RESPONDENTS Partially Satisfied Satisfied Most Satisfied PERCENTAGE OF RSPONDENTS 18% 50% 32%

Satisfaction Level

18% 32% Partially Satisfied Satisfied Most Satisfied 50%

Interpretation : From graph it can be seen that majority i.e. 50% of the respondents are satisfied with the appraisal system.32% of them are most satisfied whereas 18% are partially satisfied .But none of the employees is dissatisfied with the appraisal system. 3. Are you aware of performance ratings? • Yes



No RESPONSE Yes No PERCENTAGE OF RESPONDENTS 95% 5%

Awareness About Performance Rating
No 5%

Yes 95%

Interpretation : This clearly shows that majority i.e. 95% of the employees are aware about the performance ratings that are taken into account while conducting a performance appraisal.Whereas only 5% are unaware.

4. What should be the timing of Appraisals ? • Monthly

• •

Quarterly Annually RESPONSE Monthly Quarterly Annually PERCENTAGE OF RESPONDENTS 86% 9% 5%

Timing Of Appraisal

5%

9% Monthly Quarterly Annualy

86%

Interpretation : This shows that 86% of the organisation conduct their Performance Appraisal programs annually. A very small percentage of the organisation conduct Performance Appraisals on a monthly(5%) and quarterly(9%) basis and this is specifically followed for the new employees.

5. Does the credibility of Appraiser affect the Performance Appraisal System? • • Yes No

RESPONSE Yes No

PERCENTAGE OF RESPONDENTS 63.3% 39.36%

Credibility Of Appraiser

No, 36.36%

Yes, 63.63%

Interpretation : According to 64% of the employees/appraisees the credibility of the appraiser is extremely important and it has an effect on the overall Performance appraisal program.Whereas 36% feels that credibility of the Appraiser does not effect the Appraisal System. 6. Is there a complaint channel for the employees who are dissatisfied with the performance appraisal system? • • Yes No

RESPONSE

PERCENTAGE OF RESPONDENTS

Yes No

73% 27%

Complaint Channels For Employees

No 27%

Yes 73%

Interpretation : 73% of the Employess feels that there is proper Complaint Channel existing in the organisations for the employees who are dissatisfied with the performance appraisal system. Whereas 27% feels that there is no proper Complaint Channels For Employees.

7. Are the standards on the basis of which the performance appraisal is carried out communicated to the employees before hand? • • Yes No PERCENTAGE OF RESPONDENTS

RESPONSE

Yes No

86% 14%

Standard Communicated To Employees

No 14%

Yes 86%

Interpretation : From this it can be seen that there is a clear majority i.e. 16% among the employees who say that the standards on the basis of which the performance appraisal is carried out is communicated to the employees before hand. And only a handful of others i.e. 14% feel that the standards are not communicated to them. 8. Who conducts the performance appraisal? • • • • • Immediate Supervisor Self Rating Peer Appraisal Rating Committee Appraisal by subordinates

RESPONSE Immediate Supervisor Self Rating Peer Appraisal Rating Committee Appraisal by Subordinates

PERCENTAGE OF RESPONDENTS 60% 30% 2% 6% 2%

Perform ance A ppraisal is C onducted by

% 2 % 6

2 %

Im e ia S p rv r m d te u e iso S lf-R tin e a g P e A p isa e r p ra l 6% 0 R tin C m itte a g o m e A p isa b S b rd a s p ra l y u o in te

3% 0

Interpretation : According to majority i.e. 60% of Employees Performance Appraisal is conducted by the Immediate Supervisor whereas 30%of them consider it to be self rating while a minority of 6% think it is done by Rating Committee,2% think it is done by Peers and rest 2% by Subordinates. 9. Is the performance Appraisal successful in giving a clear understanding of the appraisee’s job to both appraiser and appraise? • • YES NO

RESPONSE Yes 91%

PERCENTAGE OF RESPONDENTS No 9%

Clear Understanding Of Appraisees Job

No 9%

Yes 91%

Interpretation : 91% of the Employees has a very clear and thorough understanding of Appraisees job.Whereas only 9% of them fails to get a clear understanding of the Appraisses job.This shows that the performance Appraisal programs are successful in giving a clear understanding of the appraisee’s job to both appraiser and appraisee.

10. Does the appraisal system provide a good communication between the topmanagement plans and business goals to staff below? • • Yes No

RESPONSE Yes No

PERCENTAGEOF RESPONDENTS 86% 14%

Good Communication Between Top Management And Business Goal
No 14%

Yes 86%

Interpretation : 86% of the employees feel that the Appraisal Systems provide a good communication flow of the top-management plans and business goals to the staff below. Whereas only 14% of them think that the communication is ineffective.

11. What do you think is the effect of a poor appraisal system? • • • Demotivation Ineffective Team Work Both

Demotivation 60%

Ineffective Team Work 13%

Both 27%

Effect Of Poor Appraisal System

27% De-motivation Ineffective teamwork 13% 60% Both

Interpretation : According to majority of Employees i.e. 60% of them, Poor Appraisal System will lead to De-motivation. Whereas 27% of them believe that it will lead to both De-motivation and Ineffective teamwork. And only 13%i.e the minority feels that it will lead to Ineffective teamwork.

.

CHAPTER 4 FINDINGS

FINDINGS
• From the survey results its evident that both the appraisee’s and appraisers expectation from Performance appraisal system are the same i.e. “Determination of Promotion or Transfer” and “Salary Administration and Benefits” • Through this the appraiser can also motivate the employees who felt that they had no growth in the organisation and serves the purpose of employee development.Thus performance appraisals can be used as a significant tool fo career planning. • Analyzing ones own strengths and weaknesses is the best way of identifying the potentials available, rather than the other person telling. Self-appraisal is a tool to analyze oneself. • One of the most important findings was that almost all the employees wanted selfrating to be a part of performance appraisal program carried out by the organisation. • From the responses of the appraisee we can also see that Self rating is encouraged by the organisations.Infact the company follows a very effective Rating system in which The Employee frst rate their own self after that they are rated my their supervisor and then by the HR head. By self rating themselves the appraisee would go through a process of reflection and review.

CHAPTER 5 RECOMMENDATIONS

RECOMMENDATIONS

Below mentioned are the recommendations given to improve the performance appraisal system. • • It should be transparent and un-biased Feasibility and chances of success should be kept in mind before setting goals and targets • Market scenario and overall sentiment on the product and brand acceptance should also be kept in mind and given weightage. • • Input activity should have weightage equal to output or results.
TATA AIG has a very good Appraisal system and the same should be followed in

the future. • Efficiency of Performance appraisal system can be increased through motivation, awareness about the system etc. • A more transparent Appraisal system must be adopted to facilitate good achievement & it should be a positively constructed process.

ANNEXURES

QUESTIONNAIRE
Questions for Appraisee Name: ________________________ Contact No: __________________________ Address : Sex: Age:

1. Do you know what exactly is expected from you at work?

a. Yes

b. No

2. Are you satisfied with the appraisal system?

1

2

3

4

5

(1 = Least satisfied; 5 = Most satisfied)
3. Are you aware of performance ratings?

a. Yes

b. No

4. What should be the timing of Appraisals ?

a. Monthly b. Quarterly c. Half Yearly d. Annual e. Anytime
5. Does the credibility of Appraiser affect the Performance Appraisal System?

a. Yes

b. No

6. Is there a complaint channel for the employees who are dissatisfied with the

performance appraisal system? a. Yes b. No

7. Are the standards on the basis of which the performance appraisal is carried out

communicated to the employees before hand? a. Yes b. No

8. Who conducts the performance appraisal”?

a. Immediate supervisor b. Peer appraisal c. Rating committees d. Self-rating e. Appraisal by subordinates
9. Is the performance Appraisal successful in giving a clear understanding of the

appraisee’s job to both appraiser and appraise? a. Yes b. No

Does the appraisal system provide a good communication between the top-management plans and business goals to staff below? a. Yes b. No

10. What do you think is the effect of a poor appraisal system?

a. De-motivation b. Retention c. Ineffective teamwork

BIBLIOGRAPHY

BIBLIOGRAPHY

Books
• • Gupta, C.B., Human Resource Management, 2nd Edition, 2003, New Age International Pvt. Ltd , New Delhi. Kothari, C.R., Research Methodology, 2nd Edition, 2005, New Age International Pvt. Ltd , NewDelhi. MAGAZINES • Business Week – “Tata Aig introduces series ii of Fund under InvestAssure”-2nd July 2011

Website
• • • www.irdaindia.org/ www.ficci.com/ www.tata-aig-life.com/

-

.

.

Hence a single performance appraisal system can satisfy needs of both the Appraiser and appraisee. Therefore the Performance appraisal program would be designed in such a way that the appraiser would be able to analyse the contribution of the employee to the orgaisation periodically and all the employees who have been performing well would be rewarded suitably either by an increase in the salary or a promotion.

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