ITC:

PERFORMANCE
EVALUATION of
CORPORATE
R&D FUNCTION

Human Resources Case Study

ITC: Performance Evaluation of Corporate
R&D Function
ABC Ltd. is one of India's foremost companies and a diversified conglomerate with
businesses spanning Fast Moving Consumer Goods, Hotels, Paperboards and Packaging,
Agri Business and Information Technology. ABC’s state-of-the-art R&D Centre known as
Integrated Research Centre (IRC), is at the core of driving science-led product
innovation to support and build ABC’s portfolio of world-class products and brands. The
IRC team, comprising over 400 qualified scientists, has a mandate to work on
future-ready science platforms, design differentiated products to address unique needs
and deliver superior benefits to Indian consumers. IRC has evolved over the last 50 years
and is presently equipped with world-class scientific infrastructure and state-of-the-art
facilities to create knowledge and build intellectual property through experimental
research, rapid prototyping and process development. Over 800 patents have been filed
in a relatively short period of time, bearing testimony to IRC’s vitality and capabilities.
(Refer Annexure I for ABC’s structure)

IRC has a hybrid organization structure i.e., Research & Development is conducted both
within a centralized corporate function i.e., Corporate R&D and within various other
functions like Product Development, Regulatory, Quality Assurance, Technology transfer
etc. which are directly aligned to specific FMCG businesses. Under Corporate R&D,
Centres of Excellence (CoEs) in Biosciences, Agri-sciences, Materials sciences with focus
on science areas like Health & Wellness, Beauty & Hygiene, Silviculture & Crop sciences,
Food Science & Technology and Sustainable Packaging (each headed by a Principal
Scientist, Refer Annexure II) have been established to drive R&D programs catering to
various businesses of ABC. These CoEs have delivered several patented, pathbreaking
innovations such as translucent soap bar with suspended glitter particles for Personal
Care Business, world’s smoothest premium chocolate for Foods Business, high pulp
yielding Tittifona tree clone for Paperboard & Packaging Business, India’s first
biodegradable coating for Agarbatti packaging for Matches & Agarbatti Business, etc.
These are just a few examples of deep science led product innovation delivered by IRC.

Corporate R&D function seeded 15 years back, is the discovery arm of IRC engaged in
deep scientific research, developing cutting edge technologies poised to deliver
strategic and game changing outcomes for various businesses thus keeping ABC ahead
of the curve. The portfolio comprises of medium to long term projects covering areas
like new product, processes and technologies addressing superiority, differentiation and
de-risk.

Corporate R&D is headed by Chief Scientist, Dr. Sagar Shinde, who has been with IRC for
15 years and promoted to the position of Chief Scientist three years back. He has been
an R&D man throughout his career and is deeply committed to establish Corporate R&D
function as the leading innovator in FMCG and other sectors where IRC is operating. In
the last three years, he has taken on the mandate to drive better business alignment and
his leadership has been pivotal in bringing agility and outcome focused approach to
Corporate R&D programs resulting in successful completion of more than 25 projects
across business categories. Despite the Corporate R&D team’s efforts, the annual
performance rank of the function over the last few years has not been satisfactory.
On May 5, 2024, Dr. Sagar was reviewing the plans for the year, when he received an
email from CHRO of ABC on the annual performance rank of the Corporate R&D
function. Much to his dismay, the rank for FY 23-24 was modest and same as previous
year. He was anticipating an improved rank, given the continuous efforts to build
business alignment and outcomes delivered in FY 23-24. Perplexed and disappointed,
Dr. Sagar called upon Mr. Balbir Khanna, HR Head of IRC to discuss the matter. Balbir
comes with a rich experience of 14 years across several businesses of ABC and has been
transferred to IRC about a year back.

Dr. Sagar started “This is quite demotivating for the team; despite working closely with
business teams, regular reviews with leadership and taking critical projects to
completion, we have not been able to find favourable feedback. I think we need a more
comprehensive evaluation process customized for deep science-based function like
Corporate R&D”; “What are your thoughts Balbir?”

Balbir responded, “Feedback is sought from businesses for each Corporate function
(Corporate R&D, Legal, Taxation, Secretarial, Audits, Corp Communications, Corp HR
etc.) at the end of the financial year on defined KRAs. Customer feedback is the most
critical metric for all corporate functions and ultimately cannot be ignored. However, I
believe that we need to do a deep dive on the current evaluation process and take a
balanced perspective both from our scientists and business stakeholders in order to
move forward. Let’s call for a meeting with all the COE Heads”. (Refer Annexure III for
current performance evaluation process applicable to all corporate functions of ABC
Ltd.)

Dr. Sagar started the meeting, “Our annual performance rank for FY 23-24 is 2B. Though
we have sustained our standing but of course this is not where we desire to be. We have
been able to move the needle forward with respect to business alignment with
continuous efforts throughout the year, however the overall feedback is still not
favourable. While few businesses have given positive feedback, some have cited issues
like “no commercial outcomes yet”, “project moving beyond agreed timelines” etc.
Clearly, the current performance evaluation process isn't working for us”.

Mr. Balbir: “Seeking feedback is a robust way of evaluating performance and is a

common practice across organizations for corporate functions. As I understand, we have
clear project charters agreed with business on the scope and timelines of each project
and feedback is sought on mutually agreed KRAs. However, given our past experience
and feedback shared by Dr. Sagar, we need to take hard look at what is not working for
us. Is it the evaluation process? Is it the alignment with business stakeholders? Is it the
overall perception of Corporate R&D? or something else!!!!

Dr. Tony (Agro Forestry): Businesses have tangible outcomes like NTO, PBIT etc.
whereas Corporate R&D is a deep science-based function and its outcomes cater to
medium- and long-term projects to build capabilities for ABC’s businesses. These
capabilities do not translate into business outcomes year over year. While business
stakeholders are aware; are they cognizing for it sufficiently while sharing feedback on
annual performance?

Dr. Sridhar (Crop Sciences): I second Dr. Tony; even the scope from the business
changes during the course of the project given the dynamic market scenario. My team
was working on a yield improvement project, which we delivered to the business within
the agreed timeline, but the business expanded the scope of the project. Shouldn’t this
be a new project charter and evaluated accordingly?

Dr. Ramesh (Material Sciences): Sometimes, projects also get shelved by businesses
because of change in market scenario. While I understand the reality, but business
should also consider and rate the project as per mutually agreed KRAs and not just on
the tangible outcomes.

Dr. Bajaj (Foods): The projects handled by Corp R&D have varied levels of complexity
and probability of success with lead time periods ranging from 2 years (Bio sciences)
to 8 years (Agri sciences). Projects come to Corporate R&D typically after the respec-
tive Product Development teams in the business have already attempted them and
found them complex and more long term in nature. Hence vagaries of change in
hypothesis, alteration of timelines, modification of scope etc. are realities that need to
be cognized for at the performance evaluation stage. Over and above, meeting time-
lines are dependent on seamless interactions for people and infrastructure that is not
typically under control of Corporate R&D.

Balbir: I agree, these are elements which are unique to Corporate R&D. But these areas
should be ironed out at the KRA design stage and during regular project reviews with
the business teams. A more proactive approach from our side may help!!!

Dr. Sunita (Personal Care): Implementation of outcomes and its impact depend on the
business maturity and category. I will give an example; Last year my team was working
on creating a new differentiated eye gel with superior protection from harmful sun
rays. My team built the prototype and delivered to the business product development
team. But as the project was nearing closure, the business decided to put it on hold
and postponed the launch by 2 years as the business wanted to focus on other product
categories. At R&D, we thought the project was successfully completed from our side,
but much to our disappointment, we didn’t get favourable feedback.

Dr. Karishma (Chemistry & Measurements): Driving external collaborations, building IP

assets, creating new infrastructure capabilities, influencing the operating regulatory
environment, driving sustainability and digital transformation etc. are also some of the
key objectives for Corporate R&D. IRC has done an excellent job in this area but busi-
nesses do not have full visibility on such areas. Customer feedback is only sought on
specific projects and this area doesn’t get adequate recognition.

Dr. Sagar: To keep future innovation funnel ready, new ideas have to be conceptualized
which have to be whetted in the lab for their technical feasibility. Once these ideas
mature to a stage where a project brief can be written along with business, then it is
taken up as a live project with the business. These scoping projects may not be in the
radar of the business in the short term.

Dr. Sagar concluded; The points raised by all of you seem valid. I am requesting Balbir
to review the current processes and design and propose a more comprehensive perfor-
mance evaluation process for Corporate R&D function covering processes both at R&D
and Business end.

Mr. Balbir Khanna came back to his office well aware that a tricky expedition lies ahead.
He knew it would be difficult to convince stakeholders to have an alternate process for
performance evaluation of Corporate R&D function, but he was determined to give it a
good shot. He assigned the responsibility to his teammate, Ms. Shruti Agarwal, Senior
Manager, Talent Management, to devise a performance evaluation methodology which
caters to the unique elements of Corporate R&D. Ms. Shruti was particularly passionate
to take this up and started putting her mind to it.
 As budding talent managers, can you help Ms. Shruti devise an alternative approach to
the performance evaluation of the Corporate R&D. Address the following questions in
your proposal:

1. Give detailed analysis of the pros & cons of current performance evaluation process
both from Business as well as from Corporate R&D perspective.
2. Prepare a more comprehensive and revamped performance evaluation methodology
which can suitably cater to the unique elements of Corporate R&D.
3. Strategies that can be adopted to enhance business alignment for Corporate R&D.

You may choose to bring outside in perspective from comparator organizations

(reputed Indian & MNC organizations operating in similar industries and large
conglomerates) to generate valuable insights.

You may choose to bring outside in perspective from comparator organizations

(reputed Indian & MNC organizations operating in similar industries and large
conglomerates) to generate valuable insights.
 Annexure I
Structure of ABC Ltd.

Chairman & Managing Director

(ABC Ltd.)

Director 1 Director 2 Director 3 Director 4

Foods Business Taxation Agri Business Hotels

Matches & Paperboard &

Accounts
Aggarbatti Packaging
Corporate
Human Resources
Personal Care Audits

Legal
Corporate R&D
Corporate
Communications

All Directors together form the Central Management Committee (CMC) which is headed
by Chairman & Managing Director of ABC Ltd
Corporate Functions

Annexure II
Corporate R&D (IRC) – Structure

Dr. Sagar
Balasubramaniam
(Chief Scientist)

Dr. Tony K Dr. Sridhar Shyam Dr. Ramesh Kumar Dr. Ritesh Bajaj
(Principal Scientist- (Principal Scientist- (Principal Scientist- (Principal Scientist-
Agro Forestry) Crop Sciences) Material Sciences) Foods)

Dr. Sunita Rampal Dr. Karishma Singh

(Principal Scientist- Mr. Balbir Khanna
(Principal Scientist-
Chemistry & (Head HR)
Personal Care)
Measurements)
 Annexure III
Current Performance Evaluation Process for
Corporate Functions
A. At the end of the Financial Year, all the Corporate Functions share their KRAs
(typically broad 4-5 KRAs) with Corporate Human Resources (CHR). CHR consolidates
the KRAs and shares the same with respective Business Heads / CEOs for their
confidential feedback in the following format.

Feedback / Comments
KRAs (sample for Corp R&D for FY 23-24) Business Rating
(Mandatory if rating is 3 or 4)

KRA 1 – Development of XPC serum Personal Care 1 to 4

KRA 2 – Development of technology for

Personal Care 1 to 4
anti-microbial analysis

KRA 3 – Development of Organic Aromatic

Personal Care 1 to 4
Handwash

OVERALL RATING PERSONAL CARE 1 to 4

KRA 1 – Vanilla coated candy with fruit syrup, Foods Business 1 to 4

density 1.2

KRA 2 – Vitamin F based milk prototype Foods Business 1 to 4

KRA 3 - Development of Vitamin D rich kids

Foods Business 1 to 4
nutrition shake

OVERALL RATING FOODS BUSINESS 1 to 4

Respective Business Heads / CEOs are expected to rate each KRA on a scale of 1 to 4
and also provide overall rating for Corporate R&D on the same rating scale.

Rating scale –
1- Exceptional
2- Strong
3- Meets some Expectations
4- Below Expectations

If the business has not worked with the specific Corporate Function - Not sufficient/Nil
Interaction can be given.

B. All corporate functions also submit a brief appreciation note for the review of the
CMC. The note captures key highlights of the function and touches upon areas from an
organizational perspective on which only CMC may have visibility.
C. The ratings and feedback by the businesses, combined with the appreciation
note is presented to the Central Management Committee (CMC) by Corporate Human
Resources. Basis this, CMC arrives at an annual performance rank for each function as
per the following scale. This scale is applicable for all Corporate functions and
changing the same is not in the scope of this case study.

Overall Rank Scale: -

1A 1B 2A 2B 3 4

Highest Lowest