Performance Management System

• 1.HUMAN RESOURCE MANAGEMENTPerformanceManagement SystemPharmaceutical Sector SUBMITTED BY: SANA MAHMOOD (10286)MONIKA KUMARI (11118)ZARLISH ZAHID (10301) ADIL HUSSAIN (9997) OWAIS NATHANI SUBIMITTED TO:Dr. KHALID AMIN Ms. DEEP KIRAN[Year] INSTITUTE OF BUSINESS ADMINISTRATION

2. ACKNOWLEDGEMENTFirst of all, we would like to thank THE ALMIGHTY ALLAH, for giving us the strength and health todo this project work.Then I would like to thank my teacher, Dr. Khalid Amin and Ms. Deep Kiran for guiding us throughoutthis project. We had some difficulties in doing this task, but they taught us patiently until we knew whatto do. Their guidance and support was valuable.We would also like to thank all the people with whom we interacted during the project, all theemployees of various insurance companies that we went to, without their support, openness, andinformation about the companies policies and system, we wouldnt have been able to complete ourreport.We would also like to thank Mr. Wasil Mehmood, HR Officer (Efroze Chemical Industries),Ms. Sabhat HR Manager (Pfizer), Ms. Zareena, HR Manager (GSK), without their support andinformation they share with us we wont be able to complete this report. 3. Table of ContentsEXECUTIVE SUMMARY........................................................................................................................................ 4PAKISTAN PHARMACEUTICAL INDUSTRY ..................................................................................................... 5Sale Profit After Tax .................................................................................................................................................. 6Efroze Chemical Industries ........................................................................................................................................ 7 Assessment of Efroze Chemical Industries ............................................................................................................ 8Glaxo Smithkline Pakistan Limited ......................................................................................................................... 11 Assessment of Glaxo SmithKline Pakistan Ltd. .................................................................................................. 13Pfizer ........................................................................................................................................................................ 16Conclusion: .............................................................................................................................................................. 19 Comparison between the companies: ................................................................................................................. 19Recommendations: ................................................................................................................................................... 20References ................................................................................................................................................................ 21Appendix .................................................................................................................................................................. 22 Questionnaire ....................................................................................................................................................... 22 4. EXECUTIVE SUMMARYThis report is assigned by our Instructor Dr. Khalid Amin and Ms. Deep Kiran to our group members,the sector given to us is Pharmaceutical. The purpose of our term report is to evaluate PerformanceManagement System of 3 different pharmaceutical companies. In this report we have discuss the currentsituation of pharmaceutical industries like where we in this sector? What role local pharmaceutical andinternational companies are playing? What is their share in GDP? In this term report we also includehow HR department of pharmaceutical companies are working? How they manage PerformanceManagement systemThis report consists of the following section and details. An Overview of Pharmaceutical industry of Pakistan? From History to current situation. Background of Company: This provides the history of the companies. Comparison between companies Performance Management System Conclusion Recommendations 5. PAKISTAN PHARMACEUTICAL INDUSTRYAccording to market research firm IMS Health, Top 50 companies (30 multinationals and 20 domestic) enjoyed an 83.5% market share in mid- 2000s. The top 100 had 94% of the Pakistani pharmaceutical market. Pakistans US$1.62bn pharmaceutical market is the 10th largest in Asia Pacific.Annual per-capita spending on medicines is US$10, which is far below the regional average of US$142.Market access is challenging and operational risks are high. Currently the industry has the capacity to manufacture a variety of product ranging from simple pills to sophisticated Biotech, Oncology and Value Added Generic compounds.Today Pakistan has about 400 pharmaceutical manufacturing units including those operated by 25multinationals present in the country. The industry meets around 70% of the countrys demand ofFinished Medicine. In term of share market domestic is almost evenly divided between the Nationalsand the MNCs.The National pharma industry has shown a progressive growth over the years, particularly over the lastone decade. The industry has invested substantially to upgrade itself in the last few years and today themajority industry is following Good Manufacturing Practices (GMP), in accordance with the domesticas well as international Guidance.Pakistans pharmaceutical and healthcare sectors are expanding and evolving rapidly, about half thepopulation has no access to modern medicines. Clearly this presents an opportunity, but much morework needs to be done by the government and industrys stakeholders. Pakistan political instability isbadly affecting the industryThe value of pharmaceuticals sold in 2007 exceeded US$1.4bn, which equates to per capitaconsumption of less than US$ 10 per year and value of medicines sold is expected to exceed US$2.3 Bby 2012.Pakistan is a developing pharmaceutical market, with a large population and economic progress evident,but per capita drug spending was rather low at around US$9.30 in 2007 6. The Pakistan pharma industry is relatively young in the international markets with an export turnover ofover US$ 100 Million as of 2007. Pakistan Pharma Industry boasts of quality producers and many units are approved by regulatoryauthorities all over the world.Data from the Karachi Stock Exchange reveals that there are eight listed pharmaceutical companies inPakistan. The majority are subsidiaries of foreign multinationals, with local representatives FerozsonsLaboratories and Highnoon Laboratories. Names FinancialSales Sales year endProfit BeforeSale Profittax After TaxAbbott Laboratories November 83.76.44.1 Pakistan Ltd Sanofi-Aventis Pakistan December51.2 1 0.5 Ltd Ferozsons Laboratories June11 3.52.6 LtdGlaxoSmithKline Pakistan December15835.4 23.1 Ltd Highnoon Laboratories December22.8.9 .7 Ltd Otsuka Pakistan LtdJune 12.51.2.8Searle Pakistan LtdJune 24.6 2.5 1.7 Wyeth Pakistan LtdDecember 28.1 2.7 1.7 Total392.6 53.6 35.1 7. Efroze Chemical IndustriesEfroze Chemicals Industries (Private) Ltd. came into existence in 1968 with the Dedication to theQuality Pharmaceuticals, to empower mankind by promoting mental and physical wellbeing acrossPakistan.Efroze Chemical Industries, a leading domestic pharmaceutical manufacturer, was established inKarachi in 1968. Its second factory was opened in 1999, with both facilities receiving internationalcertification shortly after. Total employees 375 people. Field staff consists of around 150 personnel.The company product portfolio involved in the promotion of over 50 branded products belonging todifferent therapeutic classes through its own distribution network. Its export operations, which started in1992, now supply over 20 developing markets in Africa, the Middle East, Asia and the former USSREfroze Chemcial Industies financial data Sales are estimated at US$10mn a year. Annual Growth Rate 8.25% in terms of rupee Annual Growth Rate 1.96% in terms of DollarStrength Considerable demand for cheap generic medicines in the country. International certification of production facilities. Foreign partnerships, especially in relation to R&D activities.Weaknesses Reliance on foreign-sourced raw materials. Strong competition from multinationals in the branded sector.OpportunitiesPositive economic performance and rising patient purchasing power.Government and international encouragement for drug exports.Threats Volatile political and economic climate. Depreciation of local currency making imports of raw materials more difficult. 8. Assessment of Efroze Chemical IndustriesFollowing are the brief summary of the questionnaire the solution taken by the HR managers toovercome the issues:Performance Management System of Efroze Chemical IndustryEfroze Chemcial industry is a leading national company in pharmaceutical sector. We contact theMr. Syed Wasil Mehmood the HR officer.1. According to the information he provide us that their company have a Performance ManagementSystem through which they evaluate the performance of their employees they evaluate individualperformance corresponding to the goals they set in the beginning of every month or quarterly.2. The Performance Management System is for all employees of the company that is 375 employees.Distribution of EmployeesField staff are 150Office staff 2253. The Performance Management System is for all kind of employees like Sales, operation, finance, HRand Admin employees but sale employees are more frequently evaluate then others because they directlyimpact the sales and profit of the company.He frequency of Performance Appraisal is different from department to department, like SalesEmployees and Operation Employees are more frequently evaluated as compare to other departmentemployees.Sales and Operation EmployeesOperation employees are evaluated frequently in order to quality control and sales employee is evaluatedin order to achieve sales target because they directly affect the sales of the company.4. The Performance Appraisal of Sales and Operation Employees are done on semi annualy basis. ThePerformance Appraisal H.R., Finance and Admin employees are done on annual basis.5. According to the H.R. Officer Mr. Mehmood there is not only one purpose of PerformanceManagement System. But every purpose is prioritizing according to the goals and objective of thecompany and according to the nature of job. For the employees of sale we first evaluate the performanceof sale rap, if the sales rep is facing any problem, we train them and then evaluate again, if the sales repcontinuously didnt show performance up till quarterly evaluation we terminate. And if show up animprovement he can be rewarded by incentive depending on his sales target. 9. 6. Promotion and placement is also an important purpose of Performance Management System. Theratings of employees are given the Head of Department of Department.7. According to Mr. Mehmood Performance Management System Helps in every aspect of the firm like Increase in sales Increase in Profit Reducing HR turnover Increasing HR Motivation.But he rates the area where performance Management benefits most.Benefits of PMS Increase in sale Reducing HR turnover Increase in Motivation8. The HR Department took exit interview of high post employees, profitable employees (thoseemployees achieve good rating) and of employees of high turnover department. They HR satisfactionlevel is good.9. The HR Department encourages employees of to give suggestions to improve the quality of work andmanagement. The HR manager arranges meetings with the HOD of other department within one or 2months. They receive above than 10 % suggestion from the Department Head. 10. Number Of Permanent Employees300250200150100 50020072008 200910.10 &11.The number of permanent employees is increasing in Efroze Chemicals according to the need ofeach department. Stake holders are not involved in Performance Management System. 11. Glaxo Smithkline Pakistan LimitedPosition in market:GlaxoSmithKline Pakistan Limited was created on January 1st 2002 through the merger of SmithKlineand French of Pakistan Limited, Beecham Pakistan (Private) Limited and Glaxo Wellcome (Pakistan)Limited- standing today as the largest pharmaceutical company in Pakistan, 79% owned by the UK drugmajor.GSK is the largest pharmaceutical company in Pakistan, with a growing export business toAfghanistan. GSK Pakistan is headquartered in Karachi and employs 1,800 people.As a leading international pharmaceutical company we make a real difference to global healthcare andspecifically to the developing world. We believe this is both an ethical imperative and key to businesssuccess. Companies that respond sensitively and with commitment by changing their business practicesto address such challenges will be the leaders of the future. GSK Pakistan operates mainly in twoindustry segments: Pharmaceuticals (prescription drugs and vaccines) and consumer healthcare (over-the-counter- medicines, oral care and nutritional care).Profits, Sales of the company:GSK leads the industry in value, volume and prescription market shares. We are proud of ourconsistency and stability in sales, profits and growth. Some of our key brands include Augmentin,Panadol, Seretide, Betnovate, Zantac and Calpol in medicine and renowned consumer healthcare brandsinclude Horlicks, Aquafresh, Macleans and ENO.According to its own 2008 annual report, GSK holds 11.39% of the market by value, 18.33%by volume, and 13.11% of the prescription market.Market share:GSKP Manager Corporate Communication Naufil Shahrukh told Dawn that the workforce ofGSKP, a public listed company, stood at 2,000 while the BMSP, a private limited company, hadmore than 200 employees on its payroll.On impact of acquisition, he said that the transaction, when complete, would increase GSKPspharmaceutical market share from estimated 11 per cent to approximately 13 per cent. However,there would be no increase in consumer market share. 12. He added that the acquisition was in line with GSKs emerging market strategy of growing itsinternational non-patent protected business.The combination of this business with the existing GSK business will build on GSK?s successfuloperations in the local market and will provide an opportunity for generating additional futuregrowth.SWOT Analysis by the GSK Company:Strengths: The largest pharmaceutical company in Pakistan, double the size of its nearest competitor Abbott Laboratories. Top three pharmaceutical products in terms of sales are GSK medicines. Hold over 50% of both the public and private vaccines sectors.Weaknesses: Strong competition from low-cost generic equivalents, both legal and counterfeit. Lack of reforms in government regulatory policy. Strict labor laws and high corporate income tax rate.Opportunities: Pakistan recognized as one of the fastest growing economies in the world. Economic growth resulting in an increase in consumer spending power. Continued need for vaccine supplies benefits GSK, which has a substantial vaccines portfolio. Sector modernization initiatives.Threats: Weak intellectual property laws and a lack of their implementation. Rising numbers of generics, which is a major barrier to multinational investment. Increasing inflationary trends without consequent increases in the prices of drugs Increasing inflationary trends without consequent increases in the prices of drugs significant counterfeit drug industry. Rising costs of raw and packaging materials having an adverse effect on the companys bottom line. 13. Some Issues GSK faced:Employee Retention:They resolved by focusing on transforming their culture to improve retention rates by enablingworkforce mobility. They make employees to look internally at opportunities within the organization viaPDP (PERFORMANCE DEVELOPMENT PROGRAM) process. They look after employees & takecare of their welfare revise remuneration & perks from time to time maintain good employee-employerrelations, execution of corporate polices & labor laws, emphasize on employees development & trainingneeds (in-house training + on the job training + safety training etc.)Human Resource measurement and benchmarking compensation:The solution to this problem GSK came up with is that an organized structure regarding all employeessalaries, updated personal files, global peoples. Software has been introduced by H.R wherebyemployees can access all their personal information and can make any changes they need to. Theystarted dealing with all kinds of sensitive issues and harassment cases if any. Salary benchmark surveysare conducted on a regular interval to balance the short term with the long term incentives. GSK adoptsa total compensation and benefits approach in the design of its salary packaging model. We aim toprovide: Optimum flexibility, choice; and targeted incentive programs to provide us with the bestopportunity to attract and retaining world class employees. Bonus plans are an integral component of theGlaxoSmithKline total compensation and benefits philosophy. A long term incentive scheme is offeredto senior managers. Employees are able to participate in the GSK employee share plan on reaching theeligibility criteria. Assessment of Glaxo SmithKline Pakistan Ltd.Performance Management system:1) The GSK pharmaceutical company does use performance management system by which the performance of employees is measured in terms of quality, quantity, cost and time to evaluate the employees job-related strengths and weaknesses and addresses adherence to a set of pre-defined organizational standards. And its good to have such performance system to meet the organizational goals effectively and efficiently.2) GSK Company is carrying out this appraisal on all the employees working under the roof. No matter how long it has been for an employee to work with them but they do this performance management system for them as well including the new hired employees so to continuously monitor the performance with the time.3) The company is applying the performance management system on all the employees from the entire department making up the organization to assess their performance so that if any of the employee from any department is lacking in any part of their job which actually hinders in achieving the organizational goal should be improve. 14. 4) They conduct regular appraisals to identify training needs and help employees set and achieve development objectives. Performance management system is carried out semiannually and its good thing to motivate the employees so that they may retain in organization for a long period and remain committed to their work. In this way Training and development opportunities by GSK which they employ for employees to help employees feel valued and engaged in their work. GSK provides work-related training courses for all employees, and leadership training for managers. These focus on providing people with the right behaviors and expertise for their jobs and the skills needed to apply their knowledge effectively. So their goal is for each individual to achieve their potential and contribute fully to company performance.5) GSK is using the PMS highly for assessing the performance (usefulness of employees) and for giving promotions to employees if they are at the level that they can be propped up. They also use this system for the basis for reward (increment bonus) to motivate them for employees who are motivated through the incentives. And for some reasons they are using performance management system for the purpose of Placement Ascertain training and development needs so the training for the special skills or the required skills for doing the job can be given to them. Purpose of using PMS Assess the performance Basis for rewards Basis for promotion ascertain training & development needs6) They measure the performance by rating the employees. This rating is giving by the head of the department or by the supervisor to subordinates. And for top managers they conduct 360 degree assessment so that they can have feedback from the employees they manage and colleagues.7) The benefits the GSK define by using the performance management system are reducing turnover, employees motivation, sales increment. But they focus on sales boost due to performance management system. Then also they said when employees are satisfied by giving the training for doing the job their turnover also get reduced.8) The HR Department encourages employees of to give suggestions to improve the quality of work and management. The HR manager arranges meetings with the HOD of other department within 2 15. months. 5% - 10% of the employees give the suggestions and welcomed openly to throw their suggestions.Benefits of PMSIncrease in saleReducing HR turnoverIncrease in Motivation9) The HR Department also conduct exit interview of companies high revenue generated employees, and the high post employees (those employees achieve good rating) and of employees of high turnover department. They defined HR satisfaction level good. This indicates that they are doing best in improving the processes of their business by knowing through the employees who leaves the organization.10) Corporate performance on implementing the performance management system has not given tous. They kept the whole information as confidential and dont want to discuss.11) Stakeholders involvement in the performance management system is not included.12) They operate 360 degree assessments for our top managers to ensure they receive objective feedbackon their performance from the employees they manage and colleagues that they work with, as wellas their manager. They conduct performance appraisal semiannually and performance review everyafter 2 months. 16. PfizerPfizer has a long history in the Pakistani pharmaceutical market. Its local presence is comprisedof three separate companies, namely Pfizer Laboratories, Parke Davis & Company andPharmacia (Pvt.) Pakistan. Pfizer has two manufacturing facilities in the country in Karachi andIslamabad. Operated to international manufacturing standards, the plants produce solids, semisolids(ointment and creams) and liquid dosage forms (syrups, suspensions and emulsions).In March 2006, Pfizer filed a lawsuit against the state-run Philippine International TradingCorporation (PITC) regarding plans for parallel imports of generic versions of the hypertensiondrug, Norvasc (amlodipine besylate) manufactured in Pakistan. The Philippine patent on the drugwas set to expire in 2007.Pfizer acquired Wyeth in early 2009. The smaller US company has manufacturing facilities inPakistan.Their Leading Products areCelebrex (celecoxib)Lipitor (atorvastatin)Diflucan (fluconazole)Strength The largest pharmaceutical company in the world, with a significant regional presence and expertise. Global scale to be further enhanced through Pfizers acquisition of Wyeth. Direct manufacturing presence in Pakistan. Diverse product portfolio..Weaknesses Strong competition from low-cost generic equivalents, both legal and counterfeit. Governments failure to raise drug prices since 2001. Lack of reforms in government regulatory policy. Biased treatment in favor of the local industry, which can influence government policy. Strict labor laws and high corporate income tax. 17. Opportunities Positive economic performance, rising spending power and continuing sector modernization.A government freight-subsidy scheme for drug exports and plans to reimburse 100% ofconsultancy costs on private-sector development of certified/accredited testing facilities.ThreatsGovernment resistance to aligning domestic patent law with international standards.Significant counterfeit drug industry. Persistently high inflation as well as rising costs of rawand packaging materials inPakistan negatively impacting financial performance, given the governments resistance toincrease drug prices.A volatile political and economic climate in Pakistan. 18. Assessment of PfizerFollowing are the brief summary of the questions the solution taken by the HR managers to overcomethe issues:Performance Management System Of PFIZER Pfizer is the worlds largest research-based pharmaceutical company. We contact Ms. Sabahat the HR officer. According to the information she provided us that their company have a Performance Management System through which they evaluate the performance of their employees they evaluate individual performance. The Performance Management System is for all employees of the company . The Performance Management System is for all kind of employees like Sales, operation, finance, HR and Admin employees but sale employees are more frequently The Performance Appraisal of all Employees are done on quarterly basis. According to their H.R. department there is not only one purpose of Performance Management System. But every purpose is prioritizing according to the goals and objective of the company and according to the nature of job. According to them promotion and placement is also an important purpose of Performance Management System and through this system they analyze the training and development needs and after accessing the performance of employees they will be rewarded. According to them their HR performance management system helps them mostly in increasing profits . They take regular feedback from their employees and through enter and exit interviews they claimed that their HR satisfaction level is excellent. The HR Department appreciates employees of to give feedbacks and suggestions to improve the quality of work and management. They receive above than 10 % suggestion from their employees. 19. Conclusion:Comparison between the companies: Efroze chemical IndustryGSK PharmaceuticalPfizer pharmaceutical Co. Co.1. They conduct performanceThey conduct performanceThey like Efroze Co. management system almostmanagement system on theconduct PMS for all but every employee but more employees from all theon sales man or sales frequently on the sales related departments equally.operation employees employees because theyfrequently. directly affect revenues of the company2. PMS conducted semiannually. PMS conducted PMS conducted semiannually. semiannually.3. PMS is used to assess the PMS is used to assess the Every purpose has given performance (usefulness ofperformance (usefulness ofthe equal priority employees). employees). according to the goals and Basis for reward (increment Basis for reward (increment objective of the company bonus)bonus)and according to the Basis for promotion Placement Basis for promotion nature of job. Ascertain training andPlacement development needs.Ascertain training and development needs.4. PMS is measured by giving PMS is measured by giving PMS is measured by ratings to the employees. ratings to the employees. giving ratings to the employees.5. They take regular feedbackThey take regular feedbackThey take regular from their employees andfrom their employees andfeedback from their through enter and exitthrough enter and exitemployees and through interviews they claimed thatinterviews they claimed enter and exit interviews their HR satisfaction level isthat their HR satisfactionthey claimed that their HR excellent.level is excellent. satisfaction level is excellent.6. Suggestions are welcomed andSuggestions are welcomedSuggestions are they are given more than 10%and they are given betweenwelcomed and they are of the feedbacks5%- 10% of the feedbacks. given more than 10% of the feedbacks7. Stakeholders are involved inStakeholders are notStakeholders are not PMS.involved in PMS.involved in PMS.8. Procedure for Appraisal is only 360 degree for managers Procedure for Appraisal is through giving the ratings. and ratings for employees only through giving the of lower level. ratings. 20. Recommendations:1. Performance management system should be job-related so for an effective performance management results it is recommended to confer with the employees job description. Bring into line the organizations goals with the jobs objective so that every employees work lead to the organizational goal.2. Communicate managements expectations to the employee so that a widespread understanding must exist between management and the employee regarding the job expectations, the nature of job to be accomplished and the standards by means of which the work is evaluated.3.Feedback should be offered to the employees concerning his performance and its relationship to the expectations set into view by management. It is also recommended that constructive instead of destructive feedback is given in the form of comments while being honest about the appraisal so that employee does not get discourage and also employees do not leave the organization especially for GSK pharmaceutical company.4. Since the goal of performance management system is to achieve the organizational goal we need to coach the employee before and after evaluating their performance. Provide the resources required for them to get to the managements expectations.5. Assess the employees performance on the basis of various methods. Like:6. By self appraisal in which the employee is asked byhis supervisor to weigh up his/her own work. By peer appraisal by which staff of equal rank within the organization are asked by their supervisor to evaluate the employee. Team Appraisal: In this type of appraisal employees who work as part of a team are asked by their supervisors to assess the teams work. 360-Degree or Full Circle Appraisal: the employees work is reviewed by congregation input from representatives of all the groups the employee intermingle with such as supervisor, peers, subordinates and clients. Management-by-Objectives: The employees achievements of work objectives that are set in association with his/her supervisor are evaluated. Through using these appraisal methods we have more clear evaluation of employees for their work done by them. Through these the employee is required to understand why the subordinate or peer have come to conclusions so he is able to correct any problems.Performance management system should be more frequently conducted on the newemployees than those of the older employees. 21. ReferencesBusiness Monitor international Ldt.http://www.efroze.comhttp://www.reportlinker.com/d011370589/Pharmaceutical-Business-in-Pakistan.htmlKarachi Stock exchange websitewww.gsk.com.pkwww.pfizer.com.pk 22. AppendixQuestionnairePERFORMANCE MANAGEMENT SYSTEM:Sector: PharmaceuticalCompany:Company is Multinational/National:Contact Person (Manager HR Department):Questions:Q1. Does your company have a Performance Management System for its employees? a. Yes b. NoQ2. Is the Performance Management System for all employees of your Company? a. For all Employees b. For selective employeesQ3. Does Your PMS cover all employees under the functions of: a. Sales Employees b. 3Operation Employees c. Finance Employees d. H.R. Employees e. Admin Employees f. All of the aboveQ4. Is Performance Appraisal done annually or more frequently? a. Annually b. More than once P/A 23. Q5. What is the purpose of Performance Management System?a. To access the performance (usefulness of employees).b. Basis for reward (increment bonus)c. Basis for promotion Placementd. Ascertain training and development needse. All of the aboveQ6. How are the results of the process measured?______________________________________________________________________________Q7. Do you think that HR Performance Management System helps your company ina. Increasing Profitsb. Increasing salesc. Reducing HR turnoverd. Increasing HR suggestionse. Increasing HR MotivationsQ8. Hr satisfaction level (measured through exit interview).a. Excellentb. Goodc. PoorQ9. How many numbers of employees give suggestions? a.10% b. 5-10% c. 1-4% d. None 24. Q10. Summary Corporate Performance of Company (last three Years)20072008 2009Net ProfitSalesHR TurnoverAbsenteeism (in %)Suggestions receivedNo. Of EmployeesQ11. Do the involvement of the stakeholders ensured in performance management system?a) Yesb) NoQ12. How it is used/ or method of carrying it out? Specify the method.