MAHINDRA BUILDS THREE THINGS: PRODUCTS,

SERVICES, AND POSSIBILITIES.

Many companies united by a common purpose—to enable people to Rise. Operate in the key industries
that drive economic growth, enjoying a leadership position in utility vehicles, information technology,
tractors, and vacation ownership. Having a growing presence in the automotive industry, aerospace,
aftermarket, components, consulting services, defense, energy, financial services, logistics, real estate,
retail, and two wheelers. A US $11.1 billion multinational group based in Mumbai, India, we are more
than 117,000 people in over 100 countries.

Outlined below are some of the key practices being followed to ensure that this enormous group has the best offering
to make when it comes down to managing its key asset – The Employees…

Compensation Package
Overall Intent of Compensation Policy

The organization recognizes that its success depends upon the skills, competencies and performance of
its officers. We also believe that the way in which we compensate, reward and recognize as well as
promote our officers is a crucial factor in achieving our business and financial objectives. Towards
achievement of these objectives, we promote an entrepreneurial, team-based performance and result
oriented culture.

Objectives of the Compensation Policy -

- To attract, motivate and retain officers by compensating them competitively, based on comparison
with other companies in relevant industries.

- To provide an overall package of remuneration and benefits which addresses the normal
requirements of officers and their families.

- To align levels of compensation with the expected output of officers in terms of seniority, role
responsibility, skills and experience.

- To link elements of compensation with performance of each individual as well as the business.
Compensation Strategy

- We will regularly track market trends in terms of compensation levels and practices in relevant
industries through participation in structured surveys and informal consultation with a select group of
comparable organizations. This information will be used to internally review our compensation policies
and levels.

- Our package of remuneration and benefits will be designed to provide a degree of flexibility to
individual officers to structure key benefits in a way that best suits individual personal and family
requirements.

- Recognizing the need for long-term security, the compensation will include all statutory and other
retirement benefits.

- Broad bands of compensation levels will be equitably defined for each grade to reflect levels of
responsibility and provide a template when recruiting new officers.

- A pre-determined portion of remuneration will be linked directly to the annual performance of each
individual and the business. This proportion will vary for each grade in keeping with the levels of
responsibility.

Compensation Structure

The compensation structure consists of two categories of elements, summarized below. The details of
each are given in subsequent parts.

A. Total Cost to Company

B. Reimbursements

A. The first category consists of elements of compensation that are applicable to every individual and
are calculated on a ‘Total Cost to Company’ basis.

A.1 Fixed Pay

This consists of basic salary and retiral benefits

A.2 Benefits / Flexipay

This consists of all benefits and perquisites offered by the company at different grades. In those grades
where the composition and value of these benefits provide scope for an officer to structure these flexibly,
the company allows the officer to specify the amounts for each benefit within the overall individual
entitlement. A maximum limit is also specified for each benefit in line with the officer’s grade.

A.3 Performance Pay

This consists of an annual incentive. The amount paid is based on the individual’s annual performance as
well as the performance of the business. Each officer is informed of individual entitlement in the
appointment or compensation letter.
Appraisal year is April to March. In the case of cessation of employment, officer is not eligible for
Performance Pay pertaining to the appraisal year in which he/she has put in less than 6 months' service.

B. In addition to the above, the company provides certain other benefits. These are applicable to certain
grades or are benefits for which the money value cannot be predetermined. These are, therefore, kept
outside the calculation of Cost to Company. These consist of the following.

B.1 Medical Assistance

The company meets the medical needs of officers through a combination of reimbursement of medical
and hospitalization expenses. The limits for claiming reimbursement and the rules pertaining to
hospitalization benefits are covered in detail under reimbursments and facilities.

B.2 Lunch Subsidy

The company either provides canteen facilities or an allowance for lunch to its officers depending on the
location.

B.3 Club Deposit

The company arranges the use of Corporate Club Membership for officers.

B.4 Telephones / Cell Phones

The company provides telephone and cell phone facilities to officers based on grade and work
requirements.

B.5 Laptops

The company provides laptops to departments based on the work requirements.

B.6 Loans

The company provides short-term loans for specified purposes. These are meant to meet an individual’s
short-term needs for certain types of personal expenses, medical emergencies, special educational
expenses etc. Entitlements, maximum amounts of loan, interest rates, repayment terms and all related
details of procedure are available with Corporate HR department. Any officer requiring such assistance
can get details from this department.
 Performance Management System

Following is overall process of Goal Setting in M&M Ltd.

STRATEGY, VISION, MISSION & BUDGET

BUSINESS GOALS

ORGANIZATION’S OBJECTIVES

DEPARTMENTAL / FUNCTIONAL OBJECTIVES

ROLE / INDIVIDUAL OBJECTIVES

KEY RESULT AREA (KRAs)

The PMS process starts with setting of business goals & organisation’s objectives.
In M&M Ltd., organizational goals are set in the month of March every year. After this
step, departmental and individual goals are set. Here, in M&M Ltd., Top Down
approach is followed for goal setting.
Departmental Goal Setting:

For departmental goal setting, Balanced Score Card approach is adopted. It is derived
from the Business Plan and Functional Strategies.

In 1992, Robert S. Kalpan and David P. Norton’s concept of the Balanced Score Card
revolusionised conventional thinking about performance metrics. The balanced
scorecard measured performance on four perspectives:

a. Customer
b. Internal processes
c. Learning & Development
d. Financial
The balanced scorecard allows managers to look at the business from these four
important perspectives. The scorecard wasn’t a replacement for financial measures; it
was their complement.

It provides answers to four basic questions:

a. How do customers see us? (Customer perspective)

b. What must we excel at? (Internal processes perspective)
c. Can we continue to improve and create value? (Learning and
Development perspective)
d. How well do we look to our stakeholders? (Financial perspective)

In M&M Ltd., weightages are assigned to all four perspectives. The weightages may
vary according to the department. Balanced Score Card also depends upon business
plans for the particular year.
Individual Goal Setting:

After setting Departmental goals, Individual goals are set. Following diagram shows
various steps in the process of individual goal setting:

Feedback Communication
Survey for Workshop

Feedback &

Counseling KRA Setting

Mid-Term
Performance
Review
Appraisal

Step 1: Communication Workshop:

Communication workshop is conducted in months of May or June every year. It is

compulsory for all employees, right from operational level to strategic level. This
workshop is conducted for two days.

KRA setting and How to conduct appraisal are the topics which are covered on first and
second day respectively. It is useful to both appraisers as well as appraisees. It helps
appraisers for KRA setting and review meetings. It helps appraisees as they get to know
the whole procedure of KRA setting and the review which is useful for them during
review discussions.
Step 2: KRA setting:

Measurable goals for every individual, linked with the business goals are set before the
beginning of the financial year. Each individual has 3 to 5 KRAs. Each KRA set has a
weightage and the total of weightages is 100%.

All the targets i.e. KRAs are set after discussion between superior i.e. appraiser and
subordinate i.e. appraisee. Performance with respect of KRAs forms a basis for the
calculation of Performance payout amount for an individual.

There is a particular format in which KRAs are set (Annexure E). Level of Performance
(LOP) and Measure of Performance (MOP) are decided at the time of setting KRAs.

MOP means a measurable parameter which will indicate progress of GOAL set. E.g.
Goal - cost reduction has MOP - reduction in Variable Cost / Vehicle - 5%

LOP i.e. Level of performance is method to set targets for MOPs to indicate good,
superior and excellent performance.

E.g. Reduction in variable Cost per vehicle -

Level 3 - 5%

Level 4 - 10%

Level 5 - 15%

Normally, KRAs for the next year are set before the final review. Signatures of both i.e.
appraiser as well as appraisee are taken on the KRA sheet. The KRA sheets are sent to
Corporate HR Department.
Step 3: Mid – Term Review:

Mid – term reviews are conducted in the month of October. Mid – term reviews are done
with a view to know how much goals the appraisee has achieved. If the appraisee has
failed to achieve the targeted level then the superior can have a discussion with the
appraisee regarding this and the reason for not achieving the desired level of
performance is found out.

Step 4: Performance Appraisal (Review):

Performance appraisal or reviews are done in the month of May. Appraisees are
reviewed on the basis of achievement of KRAs, assessment of significant tasks other
than KRAs, if any, leadership competencies (M&M Ltd has adopted 7 leadership
competencies) and strengths of the appraisee.

Employee & Superior together fill up the appraisal form based on which the assessment
is carried out.

Performance appraisal is a one to one discussion between the appraiser & the
appraisee about

* Performance based on goals set & results achieved

* Training and the developmental needs for the employee

At the end of the appraisal process employee’s comment on the process of appraisal
feedback is recorded, to validate transparency & fairness of the appraisal process.

Discussion is held between appraiser & reviewer to jointly arrive at overall rating of the
employee. There is validation & moderation by Corporate HR. Distribution of letters to
all employees is carried out on 1st August.

In M&M Ltd., employees are rated on two scales:

- Performance Pay Rating

 - Overall Rating

Performance Pay Rating:

• The rating scale 5, 4, 3, 2, 1

• Rating would be based on the level of Performance on a specific KRA based on
the Achievement levels agreed at the beginning of the Financial Year.
• No Distribution norms will be applicable.

Overall Rating:

• The rating scale ES, S, G, MI, U

• DH level and above:-
50% competencies + 50% performance

• Below DH level:-
40% competencies + 60% performance

• Agreed distribution norms would be applicable.

For the performance pay calculation, the overall performance is divided into two parts:

· Business Performance
· Individual Performance

As an employee goes higher on hierarchy, the share of business performance increases

and that of the individual performance starts reducing. The following table shows
hierarchy wise (band wise) performance pay distribution:

Step 5: Feedback and Counseling:

In M&M Ltd., superior gives the feedback to the subordinate immediately after the final
performance appraisal. Following points explain the very purpose of Performance
Dialogue:
 • The appraiser and the appraisee together review overall performance of an
individual against agreed targets.
• Helps in identifying Areas for Improvement.
• Provides development opportunities for the growth of people.
• Agree / Generate Data for actions relating to Increments, Promotions, etc.

The next step that the Corporate HR department takes after collecting all performance
appraisals is checking whether all the performance appraisals are normally distributed.
If they are normally distributed, then Corporate HR department contacts the relevant
departments and then after discussion, final letters are sent to the employees on 1st
August every year.

- Employee engagement activities

Employee engagement activities / programs

1. Picnic at regular intervals

2. Movie at interval of 2 months

3. A daily column, written by CEO, on the intranet with company announcements / programs
etc.

4. Update via an overhead paging system, which is used to recognize employees for
significant business achievements.

5. Employee suggestion systems / quick responses.

6. Replay on the intranet about the president’s / CEO’s press conference.

7. Live version of internal house magazine.

8. CEO spending time in face to face communication with staff.

9. CEO based FAQ questions on company business.

10. ONLINE “ask the CEO” mailbox.

11. Monthly staff awards

12. Annual staff awards

13. Weekly blog related to serious business issues and staff to read / comments.

14. Appointment of disaster management team

15. Appointment of emergency management team

16. Problem solving committee.

17. Quality assurance committee.

18. Conducting soft skills training program as well as required training programs

19. Online real-time tracking of progress. Employees can view company progress towards
targets / goals.

20. Provide long term strategic vision for business growth.

21. Indoor Games as well as Outdoor games, like Chess, Cricket, Badminton etc..

22. Celebration of Employees Birthday.

 Employee Welfare

POLICY ON SCHOOL DONATION ON TRANSFER OR RELOCATION ON RECRUITMENT

Eligibility:

1) All employees on transfer within India

2) All new recruits who have to relocate their families as a consequence of joining M&M.

Situation:

Where paying a donation is unavoidable in order to secure school admission. The change of school must
be necessitated by transfer or relocation consequent to recruitment and should be for the 1st instance in
that location consequent to relocation/recruitment

Quantum:

Donations paid in the above circumstances will be reimbursed subject to the following ceiling:

1) For Mumbai, New Delhi, Kolkata, Bangalore, Chennai, Hyderabad

Rs.50,000/- or actual, whichever is lower subject to production of receipt, per child

2) For State Capitals (other than the above 6 metros)

Rs.35,000/- or actual, whichever is lower subject to production of receipt, per child

3) Rest of India

Rs.25,000/- or actual, whichever is lower subject to production of receipts, per child

Additional Conditions:

A. If it is not possible to obtain receipts, payments will be made directly to the school. No
reimbursement will be made from any payment made directly by an employee without obtaining a
receipt.
B. The policy covers school admission upto Std. X only and upto 2 children
C. Tuition fees, school activity fees, books, periodicals, or other refundable deposits will not be
allowed
st
D. Donation paid for 1 time admission (Nursery or Play school admissions) will not be reimbursed.
E. This policy will not apply to Officers who have requested for transfer.
F. Any deviation from the above policy will be referred to HR President.
Tax implications:

The income tax liability for an officer availing this facility will be applicable under the prevailing income tax
rules. Since the government may change these rules from time to time, it will be the responsibility of the
officer availing the facility to ascertain the liability before using this facility.

F. Educational Assistance For Officers

Effective Date:

3-May-04

Eligibility:

Officers of Mahindra & Mahindra Limited who have completed a minimum of one years continuous
service and have a balance of service till retirement of not less than two years.

Policy

Financial Assistance:

1. The course for which financial assistance is sought must be such that it would help the officer in
his day-to-day work, and is useful to the company.
2. The Departmental Head, while recommending financial assistance should specify the manner in
which the course will help the officer in his day-to-day work.
3. Assistance for correspondence or postal courses leading to University Degree will not be given.
4. Normally assistance will be given only for long term courses i.e. courses having a duration of one
year or more. Assistance for short term courses may be given at the discretion of the
Management if they are relevant to the officers' day-to-day work.
5. The officer seeking financial assistance should have at least one year's service with the Company
to his credit, at the time of admission.
6. Before seeking admission in colleges or such other institutions, the officer should invariably
obtain the permission of his Departmental Head, in writing, and copy send to the respective
Sector HR / Corporate HR.
7. In case of applications for financial assistance, information pertaining to the duration of the
course, tuition fees, etc. payable must be communicated to the respective HR.
8. Financial assistance would be subject to the officer clearing the examination in the first attempt.
9. If the applications conform to the conditions mentioned, 50% of the tuition fees will be reimbursed
on production of relevant receipts. The balance amount will be paid only after the officer
concerned passes the said examination.
10. The amount reimbursed would be 90% of the total course fees subject to a maximum amount of
Rs 1,50,000/-.
11. The officer concerned would have to undertake to serve the company for a minimum period of 2
years, failing which the fees will be recovered on a pro-rata basis.

Time Concession:

No time concession will be given. Lecture timings must be outside working hours.

Tax implications
The income tax liability for an officer availing this facility will be applicable under the prevailing income tax
rules. Since the government may change these rules from time to time, it will be the responsibility of the
officer availing the facility to ascertain the liability before using this facility.