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Transcript of Khushi Project
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INTRODUCTION
ABOUT THE INDUSTRY
Life is very fragile and death is a certainty. We cannot control the uncertainties of life.
But, we can cover the risks surrounding us. Life insurance, simply put, is the cover for
the risks that we run during our lives. It protects us from the contingencies that could
affect us.
Life insurance is not for the person who passes away, it for those who survive. It is
the responsibility of every bread earner to guard against the events that could affect
the family in the unfortunate circumstance of his / her demise. Thus, having a life
insurance policy is very vital. Before going for a life insurance policy it is imperative
that you know about various types of life insurance policies.
Life insurance is an essential part of financial planning. The main purpose of
purchasing life insurance is to ensure that your dependents are financially protected in
the event of death. Life insurance is a way to plan for the future so you need to be sure
that the coverage you purchase fits your needs.
There are many options available to you when purchasing life insurance. Some
policies provide coverage for your lifetime and others provide coverage for a specific
number of years. With certain policies, you are able to combine different kinds of
insurance and even build up your cash value. Your choice should be based on your
needs and what you can afford.
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DIFFERENT POLICIES
Term Life Insurance
Term life insurance is an insurance policy that is in effect for a specific period of
time. If the insured dies within that timeframe, the beneficiary of the policy receives
the death payment. However, if the insured survives that period of time, the
beneficiary receives nothing and the policy is closed. Term life also provides the
ability to convert to a permanent kind of coverage at a later time. The main reasons
people buy term life insurance include:
Coverage for a specific amount of time until they are able to build up their assets.
Coverage for the amount of time the mortgage is for so in the event of an untimely
death, the mortgage is taken care of.
Coverage for those that cannot afford a permanent policy, especially newlyweds
and new parents.
Permanent Life Insurance
Permanent life insurance covers a longer period of time than term life or for the entire
life of the insured. This kind of insurance combines death benefits with a savings
component. The amount of money that is not used to cover the amount of the
insurance is invested by the company and builds up a cash value that may be used in a
variety of ways. You may borrow against a policy's cash value by taking a policy
loan. If you don't pay back the loan and the interest on it, the amount you owe will be
subtracted from the benefits when you die or from the cash value if you stop paying
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premiums and take out the remaining cash value. The cash may also be used to
increase your retirement income or to help pay for needs such as a child's tuition
without canceling the policy. However, to build up this cash, you'll pay higher
premiums. There are several types of permanent life insurance, including whole,
universal, variable universal, and survivorship universal.
Whole Life Insurance
A whole life insurance policy remains in full force and effect for the life of the
insured, with premium payments being made for the same period. Some whole life
policies let you pay premiums for a shorter period such as 20 years, or until age 65.
Premiums for these policies are higher since the premium payments are made during a
shorter period of time.
Universal Life Insurance
The premiums of a universal life insurance policy are split in two ways. The premium
you pay goes toward covering the cost of the insurance policy and the remaining
balance is invested and earns interest on a tax deferred basis. With this type of life
insurance you also receive a guaranteed minimum interest rate on the balance that is
invested.
Variable Life Insurance
Variable life insurance is an investment-oriented whole life insurance policy that
provides a return linked to an underlying portfolio of securities. The portfolio is a
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group of mutual funds including common stocks, bond funds, and money market
funds. This type of life insurance offers fixed premiums and a minimum death benefit.
The better the total return on the investment portfolio, the higher the death benefit or
value of the variable life policy.
Variable Universal Life Insurance
Variable universal life insurance is a combination of universal life insurance and
variable life insurance in that excess interest credited to the cash value account
depends on investment results of separate accounts (equities, bonds, real estate, etc.).
You have a choice as to how the cash value is invested -- stock and bond mutual
funds. However, there is no guaranteed minimum interest rate with a universal life
insurance policy.
Survivorship Universal Life Insurance
Survivorship universal life insurance provides a policy in which two people are
covered on one policy. The death benefit is paid upon the second death. The
premiums for this joint life policy are significantly lower than a regular policy. Many
people take this type of life insurance to help pay estate taxes after the deaths of both
a husband and wife.
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A BRIEF HISTORY OF THE INSURANCE INDUSTRY
The origin of insurance is very old. The time when we were not even born; man has
sought some sort of protection from the unpredictable calamities of the nature. The
basic urge in man to secure himself against any form of risk and uncertainty led to the
origin of insurance. The insurance came to India from UK; with the establishment of
the Oriental Life Insurance Corporation in 1818. The Indian life insurance company
act 1912 was the first statutory body that started to regulate the life insurance business
in India. By 1956 about 154 Indian, 16 foreign and 75 provident firms been
established in India. Then the central government took over these companies and as a
result the LIC was formed. Since then LIC has worked towards spreading life
insurance and building a wide network across the length and the breadth of the
country. 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. In 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. In 1972 The General Insurance
Business (Nationalization) Act, 1972 nationalized the general insurance business in
India with the effect from 1st January 1973. it was after this that 107 insures
amalgamated and grouped into four companies viz. the National Insurance Company
Ltd. and the United India Insurance Company Ltd. GIC incorporated as a company.
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LIFE INSURANCE BASICS
We buy life insurance because we want to make sure that our loved ones, especially
dependents, remain financially secure after we die. Income replacement is the
number1 reason why people buy life insurance. Non-working caregivers also have an
important, and oft overlooked economic value that should be covered by life
insurance. Life insurance is also purchased by those interested in achieving specific
business or estate transfer goals.
There are several choices when it comes to buying life insurance and there are huge
pricing differences in the market among different companies offering identical
coverage. Policies are now available from more than 1,500 life insurance companies
in the United States. Most financial planners recommend that each family income
provider carry no less than ten times their annual income in life insurance.
Heres an orderly way to go about shopping for life insurance: 1) assess your life
insurance needs, 2) decide on the most appropriate policy type, 3) set high standards
for the financial stability ratings of your insurance company and, then 4) shop until
you drop to find the best price.
Life insurance is a long-term proposition, which means that you should pay particular
attention, at time of purchase and throughout the life of the policy, to the financial
stability ratings of your life insurance company. While the average U. S. adult shops
for life insurance once every seven years, its not uncommon for people to keep life
policies in force for decades.
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ASSESSING YOUR LIFE INSURANCE NEEDS
The first step in life insurance planning is to analyze your life insurance needs or
rather, the economic needs of the dependents left behind:
Before purchasing a life insurance policy, you should consider your financial situation
and the standard of living you want to maintain for your dependents or survivors. For
example, who will be responsible for your final medical bills and funeral costs?
Would your family have to relocate or otherwise change their standard of living? The
assumption of immediate death is necessary to determine the current life insurance
needs for the family or individual.
Beyond the initial readjustment period, consideration has to be given to the longer
term financial needs of the remaining family members. Items of consideration should
include dependency period income for children, income for the surviving spouse,
mortgage and other debt payoffs, college education funds and an additional
emergency fund.
Because life insurance needs change over time, your life insurance program should be
reevaluated periodically. We recommend a review at least once every five years or
whenever you experience a major life event such as change income or assets,
marriage, divorce, the birth or adoption of a child, or purchase of a major item such as
a house or business.
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The Illinois Department of Insurance points out the reasons you might buy life
insurance will vary, depending on your age, financial situation and other factors.
Listed below are some examples:
Single person with no dependents: Funeral expenses; medical bills; debts, such as
credit cards or student loans; elderly parents who may be dependent upon you for
support. Note: Buying life insurance at a young age is cheaper. As you get older or
possibly incur a serious health condition, it will be more expensive or difficult to buy
a policy.
Single person with dependents: Funeral expenses; medical bills; outstanding debts;
caretaker expenses for your surviving dependents; education costs for surviving
children.
Couple with no children: Funeral expenses; medical bills; outstanding debts,
especially mortgage or car payments.
Couple with children:Funeral expenses; medical bills; outstanding debts, especially
mortgage payments; child-rearing expenses; education costs. Note: Even if one
partner does not work outside the home, you may want to consider life insurance to
help pay for childcare or other services performed by that partner.
Older couple: Funeral expenses; medical bills; impact on spendable income;
outstanding debts, such as a new home, second vacation home, or recreational
vehicle; impact on assets you may want to leave for children or grandchildren
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In theory, you should have a declining need for life insurance as you age because
fewer people remain dependent upon you for income support. Exception to this rule
would be for circumstances in which you want to protect a business entity or pay
estate taxes for heirs. If the purpose of buying life insurance is to pay estate taxes,
then youll only want coverage that is guaranteed for the remainder of your life and
that of your spouse as well.
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COMPANY PROFILE
COMPANY PROFILE
MAX INDI A LTD.
Max India Limited is a multi-business corporate, driven by the spirit of enterprise, focused on
Knowledge, People and Service oriented businesses of Healthcare and Life Insurance. Max
also maintains interests in Clinical Research, IT and Telecom Services, and Specialty Plastic
Products businesses
Healthcare
Life Insurance
Clinical Research
IT & Telecom Services
Specialty Plastic Products
Healthcare, at present, is our local business, centered in and around Delhi. Life Insurance has
a national reach. Information Technology and Clinical Studies are international in scope.
Taken together, they are the 'flags' of Max:
LOCAL
-Max Healthcare
-Max Ateev
NATIONAL
-Max New York Life
INTERNATIONAL
-Neeman Medical International
-Max Ateev
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Max is a young, modern Indian corporation, with a strong capability of recognizing
opportunities ahead of their time. Max has been able to form and strengthen international
alliances with global leaders across a wide spectrum of management activity. Max India is ledby a skilled team of professional managers and is recognized for commercially successful
manufacturing and service delivery businesses. Max has created enviable history marked by
tremendous growth in various fields and has been ranked among the "Top Two Hundred Most
Valuable Indian Companies" by Business India (October 2000).
Max's deep understanding of Indian consumer combined with a large pool of professionals
and an enterprising spirit have helped complement its relationship with industry leaders of
global stature like New York Life International LLC. of U.S.A. With a unique experience of
growing through the 'JV route' Max is proud of the excellent relations it has with each of its
partners. Max India already has successful and enduring partnerships with some of the most
respected specialist organizations in the world, some of which are Gist Brocades of the
Netherlands, Atotech Deutschland GMBH, Germany, and Hutchinson Telecommunications
Ltd., Hong Kong, Singapore General Hospital, Harvard Medical International Inc., USA.,
Lockheed Martin Global Telecommunications.
VISION
To be one of India's most admired corporate for service excellence and a successful multi-
business enterprise for its stakeholders i.e. customers, shareholders, employees, JV partners,
etc.
MISION
Establish niche service business in 2 areas of Healthcare, and Life Insurance. Rank in top 3
players in each niche. Partner with "Best in Class" world leaders. Maintain Traditional
Business
NEW YORK LI FE
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New York Life Insurance Company, has been ranked at Fortune 68, in the 2005 Fortune 500
listing of companies, is one of the largest providers of life insurance coverage in America.
Founded in 1845, the Company has over US$215 billion in assets under management.
The mission of New York Life is to maintain its superior 'financial strength', adhere to the
highest standards of 'integrity' and demonstrate 'humanity' by treating its customers, agents
and employees with compassion, consideration and respect.
New York Life Insurance Company has been among the highest rated companies by leading
independent rating agencies including - A.M. Best Company (A++), Fitch (formerly Duff &
Phelps) (AAA), Moody's Investors Service (Aa1) and Standard & Poor's (AA+) The company
has its headquarters in New York City and has operations in the United States, Argentina,
Hong Kong, SAR, India, Indonesia, Mexico, The Philippines, South Korea, Thailand and
Taiwan. The company maintains representative offices in the People's Republic of China and
Vietnam.
For the last 47 years, New York Life has had the highest number of agents who qualify
as members.
As a leader in the insurance industry, New York Life continues to bring to its operations new
management concepts, advanced technologies, new distribution and training systems and
innovative insurance products of the 'Million-Dollar Round Table'. The MDRT is the world's
most prestigious organization of insurance sales professionals.
MAX NEW YORK LIFE INSURANCE CO. LTD.
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Max New York Life Insurance Company Ltd is a Joint Venture between New YorkLife, a Fortune 100 company and Max India Limited, one of India's leading multi-
business corporations. Through its wide network of highly competent life insurance
Agent Advisors and flexible products and solutions, Max New York Life is
committed to creating a partnership for life with its customers in India.
In line with its values of financial responsibility, Max New York Life has adopted
prudent financial practices to ensure safety of policyholder's funds. It invests only in
debt instruments and meets both Indian and international disclosure norms. The
Company's paid up capital is Rs.527crore, which makes it among the highest
capitalized life insurer in India.
Max New York Life has identified Individual agents as its primary channel of
distribution. The Company places a lot of emphasis on its selection process, which
comprises four stages - screening, psychometric test, career seminar and final
interview. The agents are trained in-house to ensure optimal control on quality of
training. Max New York Life invests significantly in its training programme and each
agent is trained for 152 hours as opposed to the mandatory 100 hrs stipulated by the
IRDA before beginning to sell in the marketplace. Training is a continuous process
for agents at Max New York Life and ensures development of skills and knowledge
through a structured programme spread over 500 hours in two years. This focus on
continuous quality training has resulted in the company having amongst the highest
agent pass rate in IRDA examinations and over 126 of its agents becoming MDRT
members in 2005, which is among the highest among the private life insurers in the
country.
Max New York Life offers a suite of flexible products. It now has 22 life insurance
products and 9 options & 8 riders that can be customized to over 400 product
combinations enabling customers to choose the policy that best fits their need.
The 22 products are - Life Maker - Investment Plan, Life Maker - Pension Plan,
Whole Life Par, Level Term, Term Renewable and Convertible, Super saver bond,
Life Gain Endowment Plan, Life Pay Money Back Plan, 20 years Endowment Plan,
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Life Partner Plus (Participation) Policy, Easy Life - Retirement Plan, Endowment to
age 60 Plan, Life Maker - Pension Plan, Immediate Annuity, Children's endowment
18 & 24, Stepping Stones - A Child Money Back Plan, Amsure Bonus Builder,
Amsure Future Builder, Amsure Business Builder, Amsure Future Builder, Max
Mangal Endowment plan and Max Vriksha Money Back.
Tailoring a policy to best-suit individual requirements, even before a policy is sold, a
Personal Insurance Plan gives complete details of a policy with a year-on-year
summary of the
premiums to be paid, as well as the likely benefits that may accrue. Also all policies
come with a 'policy review period' offer that allows unconditional return of the policy
within 15 days from date of receipt.
The 9 Options & Riders are - Option to Participate in Progressive Bonus, Guaranteed
Insurability Option, Waiver of Premiums, Spouse Insurance, Personal Accident
Benefit, Dread Disease, Payor Benefit, Term Rider, 5 Year Term Renewable &
Convertible Rider
MISSION
Become one of the top 3 new life insurance companies
Become a national playerdominant in north India
Be the brand of first choice among all stake holders
Become the employer of choice.
Be the principal of choice for agents.
Max New York Life is a young vibrant company proud of the excellent track record it has
created for itself in a relatively short period of time. MNYL has today become one of the
most aggressive players in the Insurance services domain. A key factor in our success has
been our ability to attract some of the most talented people in any industry.
MNYL in many ways is a lens to India. We represent rich diversity in our workforce and this
is reflected in our open work environment. Within this diversity we have successfully created
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stakeholders. MNYL recognizes the need for appreciation for demonstrating our core values
thru behaviors. We provide a platform in the form of Cultural Ambassador to recognize
employees demonstrating our values of Caring, Honesty, Excellence, Knowledge, Integrity,and Teamwork.
Possibly then the best way to explain the MNYL culture would be to share our MNYL Values
and Beliefs.
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MAX NEW YORK LIFE VALUES AND BELIEFS
KNOWLEDGE
Knowledge constitutes expertise and our expertise is in helping people protect
themselves. Perfectly combining global expertise with local knowledge, we are the
Indian life insurance specialists. Max New York Life believes that for knowledge to
be of value it must be focused, current, tested and shared.
CARING
Max New York Life is redefining the life insurance paradigm to focus on the needs of
customers. The service process is responsive, personalized, humane and
empathetic. Every individual who represents the company is for us our
brand champion
HONESTY
Max New York Life is redefining the life insurance paradigm to focus on the needs of
customers. The service process is responsive, personalized, humane and empathetic.
Every individual who represents the company is for us our brand champion.
EXCELLENCE
Excellence at Max New York Life implies the ability to perform at a consistently
high level. Focused on the value of continuous improvement in people, processes and
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the organization, the company strives for the highest standards of quality in every
aspect of its business.
MAX NEW YORK LIFE- GROWING PRESENCE:
No. of cities 37
No. of Offices 57
No. of Agents 13000 +
No. of Policies 8, 00,000 +
Sum assured 23,500 cr. +
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Fig. 5
ACHIEVEMENTS
MNYL is the first life insurance company in India to be awarded the ISO 9001: 2000
certification.
MNYL was among the top 25 companies to work with in India, according to 2003
Business World Magazine, Great Workplaces In India, MNYL was ranked at the
20th
position. This survey is the local version of the Great Places to Work survey carried
out every year in 22 countries.
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We were among top five most respected private life insurance companies in India
according to 2004' Business World Most Respected survey. It makes it more special
as that year insurance as a category was included for the first time.
MDRT (MILLION DOLLAR ROUND TABLE)
The MDRT was founded by a group of dedicated agent leaders. In a sense, it may be said that
the field force of the business, despairing of company managements sales centric approaches
in agent education and training, turned to self-organised efforts in promoting self-education
philosophy and concepts. Thinking field men foresaw misfortune to the industry itself if the
faults of the agency system were continued. They also recognised that their plans must
permeate the whole industry to become effective and it would be necessary, therefore, toenlist the help of home offices.
MDRT is a world wide organization of the top producers of life insurance sales. 74 nations
and territories participate in it. New York Life is the no.1 in MDRT membership 50 years in a
row.
Max New York Life leads the MDRT among Indian private insurers. Max New York Life is
in top 100 MDRT global list ranked at the 49th position. 201 Max New York Life agent
advisors have qualified 2006 MDRT for the meeting to be held in San Diego.
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RATIONALE OF THE STUDY
Performance Appraisal is the important aspect in the organization to evaluate the
employees performance. It helps in understanding the employees work culture,
involvement, and satisfaction. It helps the organization in deciding employees
promotion, transfer, incentives, pay increase.
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OBJECTIVES OF THE STUDY
This project is aim at studying the system of performance appraisal. Performance
appraisal is the most significant and indispensable tool for the management as it
provides useful information for decision making in the area of promotions and
compensation reviews.
To carry out the study of Max Life Insurance, we framed the following objectives
1. Identification of the technique of performance appraisal followed in Max Life
Insurance.
2. Employee attitude towards the present appraisal system.
3. To identify and know the area for improvement system.
4. Review of the current appraisal system in order to:-
Enhance productivity
Attain global standards
5. To provide suggestions & recommendations from the study conducted.
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PERFORMANCE APPRAISAL SYSTEM
INTRODUCTION TO THE TOPIC
Human Resource (or personnel) management, in the sense of getting things done
through people, is an essential part of every managers responsibility, but many
organizations find it advantageous to establish a specialist division to provide an
expert service dedicated to ensuring that the human resource function is performed
efficiently.
People are our most valuable asset is a clich, which no member of any senior
management team would disagree with. Yet, the realities for many organizations are
that their people remain undervalued, under trained and underutilized.
Performance Appraisal is the process of assessing the performance and progress of an
employee or a group of employees on a given job and his / their potential for future
development. It consists of all formal procedures used in the working organizations to
evaluate personalities, contributions and potentials of employees.
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FUNCTIONS OF HUMAN RESOURCE MANAGEMENT
Following are the various functions of Human Resource Management that are
essential for the effective functioning of the organization:
1. Recruitment
2. Selection
3. Induction
4. Performance Appraisal
5. Training & Development
Recruitment
The process of recruitment begins after manpower requirements are determined in
terms of quality through job analysis and quantity through forecasting and planning.
Selection
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The selection is the process of ascertaining whether or not candidates possess the
requisite qualifications, training and experience required.
Induction
a) Induction is the technique by which a new employee is rehabilitated into the
changed surroundings and introduced to the practices, policies and purposes of
the organization.
Performance Appraisal
Performance evaluation should be a continuing process throughout the year,
with a formal performance evaluation interview conducted annually. The
intent is to communicate expectations, provide constructive feedback,
document accomplishments, compare current performance against
expectations and jointly formulate performance development plans.
Training and development
Training and development -- or "learning and development" as many refer to it
now -- is one of the most important aspects of our lives and our work. (Many
people view "training" as an activity that produces the result or outcome of
"learning" -- and learning is typically viewed as new knowledge, skills and
competencies or abilities.) In our culture, we highly value learning. Yet,
despite our having attended many years of schooling, many of us have no idea
how to carefully design an approach to training and development.
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WHAT IS PERFORMANCEAPPRAISAL?
Performance Appraisal is defined as the process of assessing the performance and
progress of an employee or a group of employees on a given job and his / their
potential for future development. It consists of all formal procedures used in working
organizations and potential of employees. According to Flippo, Performance
Appraisal is the systematic, periodic and an important rating of an employees
excellence in matters pertaining to his present job and his potential for a better job.
CHARACTERISTICS
1. Performance Appraisal is a process.
2. It is the systematic examination of the strengths and weakness of an
employee in terms of his job.
3. It is scientific and objective study. Formal procedures are used in the study.
4. It is an ongoing and continuous process wherein the evaluations are arranged
periodically according to a definite plan.
5. The main purpose of Performance Appraisal is to secure information
necessary for making objective and correct decision an employee.
PROCESS
The process of performance appraisal:
1. Establishing performance standards
2. Communicating the Standards
3. Measuring Performance
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METHODS OF PERFORMANCE APPRAISAL
The foregoing list of major program pitfalls represents a formidable challenge, even
considering the available battery of appraisal techniques. But attempting to avoid
these pitfalls by doing away with appraisals themselves is like trying to solve the
problems of life by committing suicide. The more logical task is to identify those
appraisal practices that are (a) most likely to achieve a particular objective and (b)
least vulnerable to the obstacles already discussed.
Before relating the specific techniques to the goals of performance appraisal stated at
the outset of the article, I shall briefly review each, taking them more or less in an
order of increasing complexity.
The best-known techniques will be treated most briefly.
ESSAY APPRAISAL
In its simplest form, this technique asks the rater to write a paragraph or more
covering an individual's strengths, weaknesses, potential, and so on. In most selection
situations, particularly those involving professional, sales, or managerial positions,
essay appraisals from former employers, teachers, or associates carry significant
weight.
GRAPHIC RATING SCALE
This technique may not yield the depth of an essay appraisal, but it is more consistent
and reliable. Typically, a graphic scale assesses a person on the quality and quantity
of his work (is he outstanding, above average, average, or unsatisfactory?) and on a
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variety of other factors that vary with the job but usually include personal traits like
reliability and cooperation. It may also include specific performance items like oral
and written communication.
FIELD REVIEW
The field review is one of several techniques for doing this. A member of the
personnel or central administrative staff meets with small groups of raters from each
supervisory unit and goes over each employee's rating with them to (a) identify areas
of inter-rater disagreement, (b) help the group arrive at a consensus, and (c) determine
that each rater conceives the standards similarly.
FORCED-CHOICE RATING
Like the field review, this technique was developed to reduce bias and establish
objective standards of comparison between individuals, but it does not involve the
intervention of a third party.
MANAGEMENT BY OBJECTIVES
To avoid, or to deal with, the feeling that they are being judged by unfairly high
standards, employees in some organizations are being asked to set - or help set - their
own performance goals. Within the past five or six years, MBO has become
something of a fad and is so familiar to most managers that I will not dwell on it here.
RANKING METHODS
For comparative purposes, particularly when it is necessary to compare people who
work for different supervisors, individual statements, ratings, or appraisal forms are
not particularly useful. Instead, it is necessary to recognize that comparisons involve
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an overall subjective judgment to which a host of additional facts and impressions
must somehow be added. There is no single form or way to do this.
The best approach appears to be a ranking technique involving pooled judgment.
The two most effective methods are alternation ranking and paired comparison
ranking.
1. Alternation ranking:
Ranking of employees from best to worst on a trait or traits is another method for
evaluating employees. Since it is usually easier to distinguish between the worst and
the best employees than to rank them, an alternation ranking method is most popular.
Here subordinates to be rated are listed and the names of those not well enough to
rank are crossed. Then on a form as shown below, the employee who is highest on the
characteristic being measured and the one who is the lowest are indicated. Then
choose the next highest and the next lowest, alternating between highest and lowest
until all the employees to be rated have been ranked.
2. Paired-comparison ranking:
This technique is probably just as accurate as alternation ranking and might be more
so. But with large numbers of employees it becomes extremely time consuming and
cumbersome.
Both ranking techniques, particularly when combined with multiple rankings (i.e.,
when two or more people are asked to make independent rankings of the same work
group and their lists are averaged), are among the best available for generating valid
order-of-merit rankings for salary administration purposes.
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Advantages
Instead of assuming traits, the MBO method concentrates on actual outcomes. If the
employee meets or exceeds the set objectives, then he or she has demonstrated an
acceptable level of job performance. Employees are judged according to real
outcomes, and not on their potential for success, or on someone's subjective opinion
of their abilities.
The guiding principle of the MBO approach is that direct results can be observed
easily. The MBO method recognizes the fact that it is difficult to neatly dissect all the
complex and varied elements that go to make up employee performance.
MBO advocates claim that the performance of employees cannot be broken up into so
many constituent parts, but to put all the parts together and the performance may be
directly observed and measured.
Disadvantages
This approach can lead to unrealistic expectations about what can and cannot be
reasonably accomplished. Supervisors and subordinates must have very good "reality
checking" skills to use MBO appraisal methods. They will need these skills during the
initial stage of objective setting, and for the purposes of self-auditing and self-
monitoring.
Variable objectives may cause employee confusion. It is also possible that fluid
objectives may be distorted to disguise or justify failures in performance.
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Benefits of Performance Appraisals
Measures an employees performance.
Helps in clarifying, defining, redefining priorities and objectives.
Motivates the employee through achievement and feedback.
Facilitates assessment and agreement of training needs.
Helps in identification of personal strengths and weaknesses.
Plays an important role in Personal career and succession planning.
Clarifies team roles and facilitates team building.
Plays major role in organizational training needs assessment and analysis.
Improves understanding and relationship between the employee and the
reporting manager and also helps in resolving confusions and
misunderstandings.
Plays an important tool for communicating the organizations philosophies,
values, aims, strategies, priorities, etc among its employees.
Helps in counseling and feedback.
Rating Errors in Performance Appraisals
Performance appraisals are subject to a wide variety of inaccuracies and biases
referred to as 'rating errors'. These errors can seriously affect assessment results.
Some of the most common rating errors are: -
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1. Leniency or severity: - Leniency or severity on the part of the rater makes the
assessment subjective. Subjective assessment defeats the very purpose of
performance appraisal. Ratings are lenient for the following reasons:
a) The rater may feel that anyone under his or her jurisdiction who is
rated unfavorably will reflect poorly on his or her own worthiness.
b) He/She may feel that a derogatory rating will be revealed to the rate to
detriment the relations between the rater and the ratee.
c) He/She may rate leniently in order to win promotions for the
subordinates and therefore, indirectly increase his/her hold over him.
2. Central tendency: - This occurs when employees are incorrectly rated near the
average or middle of the scale. The attitude of the rater is to play safe. This safe
playing attitude stems from certain doubts and anxieties, which the raters have
been assessing the rates.
3. Halo error: - A halo error takes place when one aspect of an individual's
performance influences the evaluation of the entire performance of the
individual. The halo error occurs when an employee who works late constantly
might be rated high on productivity and quality of output as well as on
motivation. Similarly, an attractive or popular personality might be given a
high overall rating. Rating employees separately on each of the performance
measures and encouraging raters to guard against the halo effect are the two
ways to reduce the halo effect.
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4. Rater effect:-This includes favoritism, stereotyping, and hostility. Extensively
high or low score are given only to certain individuals or groups based on the
rater's attitude towards them and not on actual outcomes or behaviors; sex, age,
race and friendship biases are examples of this type of error.
5. Primacy and Regency effects:- The rater's rating is heavily influenced either
by behaviour exhibited by the ratee during his early stage of the review period
(primacy) or by the outcomes, or behavior exhibited by the ratee near the end
of the review period (regency). For example, if a salesperson captures an
important contract/sale just before the completion of the appraisal, the timing
of the incident may inflate his or her standing, even though the overall
performance of the sales person may not have been encouraging. One way of
guarding against such an error is to ask the rater to consider the composite
performance of the rate and not to be influenced by one incident or an
achievement.
6. Performance dimension order: - Two or more dimensions on a performance
instrument follow each other and both describe or rotate to a similar quality.
The rater rates the first dimensions accurately and then rates the second
dimension to the first because of the proximity. If the dimensions had been
arranged in a significantly different order, the ratings might have been
different.
7. Spillover effect:- This refers to allowing past performance appraisal rating to
unjustifiably influence current ratings. Past ratings, good or bad, result in
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similar rating for current period although the demonstrated behaviour does not
deserve the rating, good or bad.
ROLES IN THE PERFORMANCE APPRAISAL PROCESS
a) Reporting Manager
Provide feedback to the reviewer / HOD on the employees behavioral traits
indicated in the PMS Policy Manual
Ensures that employee is aware of the normalization / performance appraisal
process
Address employee concerns / queries on performance rating, in consultation
with the reviewer.
b) Reviewer (Reporting Managers Reporting Manager)
Discuss with the reporting managers on the behavioral traits of all the
employees for whom he / she is the reviewer
Where required, independently assess employees for the said behavioral traits;
such assessments might require collecting data directly from other relevant
employees.
c) HOD (In some cases, a reviewer may not be a HOD)
Presents the proposed Performance Rating for every employee of his /her
function to the Normalization committee.
HOD also plays the role of a normalization committee member
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Owns the performance rating of every employee in the department.
d) HR Head
Secretary to the normalization committee
Assists HODs / Reporting Managers in communicating the performance rating of all
the employees.
e) Normalization Committee
Decides on the final bell curve for each function in the respective Business Unit
Reviews the performance ratings proposed by the HODs, specifically on the upward /
downward shift in ratings, to ensure an unbiased relative ranking of employees on
overall performance, and thus finalize the performance rating of each employee
KEY CONCEPTS IN PMS
In order to understand the Performance Management System at MAX LIFE
INSURANCE, some concepts need to be explained which play a very important role
in using the PMS successfully.
They are:
KRAS (KEY RESULT AREAS):
The performance of an employee is largely dependent on the KRA score achieved by
the employee during that particular year. Thus, it is necessary to answer a few basic
questions i.e.
What are the guidelines for setting the KRAs for an employee?
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the HR department pays due attention to these guidelines while preparing the
bell curves for various functions and the consolidated bell curve for all the
functions. These guidelines also help in deciding upon the promotion cases in
a year.
PERFORMANCE RATING PROCESS
EXCEPTIONAL CONTRIBUTOR (EC)
Performs consistently and
substantially above expectations in
all areas
Achieves a final score greater than
or equal to 115%
Consistently delivers on stretch
targets
Is proactive
Spots and anticipates problems,
implements solutions
Sees and exploits opportunities
Delivers ahead of time
SIGNIFICANT CONTRIBUTOR (SC)
Performs above expectations
in all areas
Achieves final score between
100-114%
Versatile in his/ her area of
operation
Develops creative solutions and
require little / minimal
supervision
Sets examples for others
Take ownership of own
development
Coaches others
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Sees the wider picture-impacts
across business
Focuses on whats good for the
business
Seen as role model by others
Recognized as exceptional by other
functions as well
Motivates others to solve problems
Develops others
Provides open and honest
feedback.
Able to establish and lead cross-
functional teams
Demonstrates business initiative
Is self motivated
Supportive team player
Leads own team very effectively
Demonstrate functional initiative
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PROJECT REPORT ON "PERFORMANCE APPRAISAL"
LITERATURE REVIEW AND CONCEPT FORMULATION
Human Resource (or personnel) management, in the sense of getting things done
through people, is an essential part of every managers responsibility, but many
organizations find it advantageous to establish a specialist division to provide an
expert service dedicated to ensuring that the human resource function is performed
efficiently.
People are our most valuable asset is a clich, which no member of any senior
management team would disagree with. Yet, the reality for many organizations are
that their people remain under valued, under trained and under utilized.
Following are the various functions of Human Resource Management that are
essential for the effective functioning of the organization:
1. Recruitment
2. Selection
3. Induction
4. Performance Appraisal
5. Training & Development
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PROCESS OF PERFORMANCE APPRAISAL
STEPS OF PERFORMANCE APPRAISAL
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ESTABLISHING PERFORMANCE STANDARDS
The first step in the process of performance appraisal is the setting up of the standards
which will be used to as the base to compare the actual performance of the employees.
This step requires setting the criteria to judge the performance of the employees as
successful or unsuccessful and the degrees of their contribution to the organizational
goals and objectives. The standards set should be clear, easily understandable and in
measurable terms. In case the performance of the employee cannot be measured, great
care should be taken to describe the standards.
COMMUNICATING THE STANDARDS
Once set, it is the responsibility of the management to communicate the standards to
all the employees of the organization.
The employees should be informed and the standards should be clearly explained to
the. This will help them to understand their roles and to know what exactly is
expected from them. The standards should also be communicated to the appraisers or
the evaluators and if required, the standards can also be modified at this stage itself
according to the relevant feedback from the employees or the evaluators.
MEASURING THE ACTUAL PERFORMANCE
The most difficult part of the performance appraisal process is measuring the actual
performance of the employees that is the work done by the employees during the
specified period of time. It is a continuous process which involves monitoring the
performance throughout the year. This stage requires the careful selection of the
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appropriate techniques of measurement, taking care that personal bias does not affect
the outcome of the process and providing assistance rather than interfering in an
employees work.
COMPARING THE ACTUAL WITH THE DESIRED PERFORMANCE
The actual performance is compared with the desired or the standard performance.
The comparison tells the deviations in the performance of the employees from the
standards set. The result can show the actual performance being more than the desired
performance or, the actual performance being less than the desired performance
depicting a negative deviation in the organizational performance. It includes recalling,
evaluating and analysis of data related to the employeesperformance.
DISCUSSING RESULTS
The result of the appraisal is communicated and discussed with the employees on one-
to-one basis. The focus of this discussion is on communication and listening. The
results, the problems and the possible solutions are discussed with the aim of problem
solving and reaching consensus. The feedback should be given with a positive attitude
as this can have an effect on the employees future performance. The purpose of the
meeting should be to solve the problems faced and motivate the employees to perform
better.
DECISION MAKING
The last step of the process is to take decisions which can be taken either to improve
the performance of the employees, take the required corrective actions, or the related
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Challenges of Performance Appraisal
In order to make a performance appraisal system effective and successful, an
organization comes across various challenges and problems. The main challenges
involved in the performance appraisal process are:
Determining the evaluation criteria
Identification of the appraisal criteria is one of the biggest problems faced by
the top management. The performance data to be considered for evaluation
should be carefully selected. For the purpose of evaluation, the criteria
selected should be in quantifiable or measurable terms.
Create a rating instrument
The purpose of the performance appraisalprocess is to judge the performance
of the employees rather than the employee. The focus of the system should be
on the development of the employees of the organization.
Lack of competence
Top management should choose the raters or the evaluators carefully. They
should have the required expertise and the knowledge to decide the criteria
accurately. They should have the experience and the necessary training to
carry out the appraisal process objectively.
Errors in rating and evaluation
Many errors based on the personal bias like stereotyping, halo effect (i.e. one
trait influencing the evaluators rating for all other traits) etc. may creep in the
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information. Permitting employees to review the results of their appraisal allows them
to detect any errors that may have been made. If they disagree with the evaluation,
they can even challenge the same through formal channels.
It follows then that formal procedures should be developed to enable employees who
disagree with appraisal results which are considered to be inaccurate or unfair. They
must have the means for pursuing their grievances and having them addressed
objectively. When management uses it as a whip or fails to understand its limitations,
it fails. The key is not which forms or which method is used. Performance appraisal
should be used primarily to develop employees as valuable resources. Only then it
would show promising results.
ELECTRONIC PERFORMANCE MONITORING
Electronic performance monitoring refers to the use of technology to monitor
the employees performance.
Organizations across the world are incorporating the use of various advanced
technologies for all functions at all levels. Many organizations have incorporated
technologies in the performance appraisal and management processes. The electronic
and computerized systems are being used to monitor and evaluate the performance of
the employees.
The concept of electronic performance management has been the latest trend in
performance surveillance in the foreign countries where almost every job has the
potentials of being monitored electronically. But with the increasing number of
MNCs, the trend is catching up fast in India.
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With the organizations using the latest technologies and soft wares, electronic
performance monitoring supports comprehensive, qualitative, and subjective
assessment of the individuals performance.
The main reasons for practicing electronic performance monitoring are
It improves productivity and the quality of work
Subjective work evaluation
Compliance with the organizational policies and the local laws
Helps in cost-control in the company
Helps in the security of the company information.
Despite all its advantages, the arguments given against the use of electronic
performance monitoring is that such systems interfere in the privacy of the employees
and some employees may take it against their dignity.
Using such system can have both positive and negative effects on the organizational
health. It is argued that, to ensure the positive effects of electronic performance
monitoring:
The employees should be explained and communicated clearly about the system:
The employees suggestions should be taken in designing the system
The employees should be involved in the implementation of the system
The organization should not solely rely on the system for the data on
employees performance.
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The system should be supported by effective two-way communication and
feedback.
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PERFORMANCE APPRAISAL METHODS
Tools of Performance appraisal methods include 11 methods / types which are as
follows:
1.CRITICAL INCIDENT METHOD
The critical incidents for performance appraisal is a method in which the manager
writes down positive and negative performance behavior of employees throughout the
performance period
2.WEIGHTED CHECKLIST
This method describe a performance appraisal method where rater familiar with the
jobs being evaluated prepared a large list of descriptive statements about effective and
ineffective behavior on jobs
3.PAIRED COMPARISON ANALYSIS
Paired comparison analysis is a good way of weighing up the relative importance of
options. A range of plausible options is listed. Each option is compared against each
of the other options. The results are tallied and the option with the highest score is the
preferred option.
4.GRAPHIC RATING SCALES
The Rating Scale is a form on which the manager simply checks off the employees
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3. Employee performance appraisal form
This form is a performance appraisal sample used for staff position.
4. Essay evaluation form
This form is based on essay evaluation method of performance appraisal.
5.Forced Choice formThis form is a performance appraisal sample based on forced choice method of
performance appraisal.
6. Weighted checklist form
This form is based on weighted checklist method of performance appraisal.
7.Rating scale formThis form is a performance appraisal sample based on rating scales method of
performance appraisal.
8. Employee self appraisal form
This form is a performance appraisal sample based on appraisal self by employee.
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3. Teamwork:
Establish and maintain effective working relationship with others.
Shares information and resources with others
Follows instructions of supervisor and respond to requests from others in the
team in a helpful manner.
Contributing work and effort to group performance to meet agreed upon
objectives and achieve team success
4. Job knowledge
Application of appropriate level of technical and procedural knowledge in
specific field
Degree of technical competence.
Understanding of job procedures, methods, facts and information related to
assignments.
Perform duties with minimal supervision but seek guidance where and when
appropriate to the job, consults the appropriate staff
5. Initiative
Consider the extent to which the employees sets own constructive work
practice and recommends and creates own procedures.
Self-starter, develop and implement new methods, procedures, solutions,
concepts, designs and/or applications of existing designs or procedures.
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12. Dependability
Performance appraisal of dependability includes elements as:
Consider the extent to which the employee completes assignments on time and
carries out instructions.
Starts work at appropriate time;
Respects time allowed for breaks and lunch;
Follows policies for requesting and reporting time off;
Helps ensure work duties are covered when absent;
Employees presence can be relied upon for planning purposes.
Attendance and punctuality meets supervisors requirements.
2. MANAGER PERFORMANCE APPRAISAL FORM
I / MANAGER INFORMATION:
o Name
o Date
o Job Title
o Date of Last Review
o Department:
o Appraiser Name
II/ PERFORMANCE ACHIEVEMENT
You should design table with columns as No, agreed objectives, weight, result,
total score.
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This table is used for objective performance.
III/ COMPETENCIES
1. Identify competencies needed for job, for example:
Technical skills
financial skills
Decision making ability
Analytical ability / problem solving
Initiative/perseverance/enthusiasm
Flexibility
Written communication skills
Oral communication skills
Customer focus
Teamwork
Organizational ability.
Negotiating skills
2. Rating scales can be:
1 = Exceptional
2Strong
3 = Fully Competent
4 = Continued Development
5 = Poor
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Financial skills
Decision making ability
Analytical ability / problem solving
Initiative/perseverance/enthusiasm
Flexibility
2. Rating scales can be:
1 = Exceptional
2Strong
3 = Fully Competent
4 = Continued Development
5 = Poor
N = Not Apply
IV/ DISCUSSIONS
1. Strengths (examples of where individual has excelled).
2. Developmental needs (areas that need strengthening, additional
experience/exposure).
V/ OVERALL RATING
1. Rating scales Exceptional
Strong
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Fully Competent
Continued Development
Poor to Position
2) Definition of each element: Exceptional (clearly outstanding performance). Performance falls within
top 510 % of employees at his/her level.
Strong (excellent performance). Performance falls within top 15% of the
employees at his/her level.
Fully Competent (solid performance). Consistently meets expectations.
Two-thirds of your employees should fall within this category.
Continued Development. Needs development in current position. Overall
performance is somewhat lower than expected for the current position.
Poor (unsatisfactory performance). Performance is clearly below what is
expected at current position/level.
New to Position. Employee has been in position for less than six (6) months.
VI/ EMPLOYEE COMMENTS
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4. ESSAY EVALUATION FORM
1. Definition of essay evaluation This method asked managers / supervisors to describe strengths and
weaknesses of an employees behavior. Essay evaluation is a non-quantitative
technique.
This method usually use with the graphic rating scale method.
2. Input of information sources Job knowledge and potential of the employee;
Employees understanding of the companys programs, policies, objectives,
etc.;
The employees relations with co-workers and superiors;
The employees general planning, organizing and controlling ability;
The attitudes and perceptions of the employee, in general.
3. Disadvantages of essay evaluation Manager / supervisor may write a biased essay.
Some evaluators may be poor in writing essays on employee performance.
Others may be superficial in explanation and use flowery language which may
not reflect the actual performance of the employee.
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6. Jobholders comments
5. FORCED CHOICE FORM
1. Design question Forced ChoiceRequirements of questions: both statements in the pair may be positive or negative.
Quality of work: ____quality is good____
Absent too often: ____works hard____
Learns quickly: ____work is reliable____
Performance is exemplary: ____usually tardy____
2. Deployment of Forced Choice form This form is conducted by line manager.
The rater is required to choose the most descriptive statement in each pair
of statements.
FORCED RANKING (FORCED DISTRIBUTION)
1. Definition of forced ranking (forced distribution)Forced ranking is a method of performance appraisal to rank employee but in order of
forced distribution.
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For example, the distribution requested with 10 or 20 percent in the top category, 70
or 80 percent in the middle, and 10 percent in the bottom.
The top-ranked employees are considered high-potential employees and are often
targeted for a more rapid career and leadership development programs.
In contrast, those ranked at the bottom are denied bonuses and pay increases. They
may be given a probationary period to improve their performance.
2. Application of Forced RankingGE, Ford Motor, Conoco, Sun Microsystems, Cisco Systems, EDS, Enron and a host
of other U.S. corporations have adopted similar policies of this method
Advantages and disadvantages of forced Ranking
Advantages: They create and sustain a high performance culture in which the workforce
continuously improves.
They force reluctant managers to make difficult decisions and identify the
most and least talented members of the work group.
Disadvantages They increase unhealthy cut-throat competitiveness;
They discourage collaboration and teamwork;
They harm morale;
They are legally suspect giving rise to age discrimination cases.
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4. Advantages and disadvantages of weighted checklist This method helps the manager in evaluation of the performance of the
employee.
The rater may be biased in distinguishing the positive and negative questions.
He may assign biased weights to the questions.
This method also is expensive and time consuming.
It becomes difficult for the manager to assemble, analyze and weigh a number
of statements about the employees characteristics, contributions and
behaviors.
WEIGHTED CHECKLIST FORM
1. Identify question:Based on elements of job performance, you can design questions as follows (for
example)
Employee cooperatively assists coworkers who need help
Employee plans actions before beginning work
Employee works overtime when asked to
Employee keeps work station well organized
Employee listens to advice but seldom follows it
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Judgment
Attitude. Exhibits enthusiasm and cooperativeness on the job
Cooperation. Willingness and ability to work with others to produce desired
goals.
Initiative.
3. Rating scalesRating scales can include 5 elements as follows:
Unsatisfactory
Fair
Satisfactory
Good
Outstanding
4. Advantages of the rating scales
Graphic rating scales are less time consuming to develop.
They also allow for quantitative comparison.
5. Disadvantages of the rating scales
More validity comparing workers ratings from a single supervisor than
comparing two workers who were rated by different supervisors.
Different supervisors will use the same graphic scales in slightly different
ways.
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Fair 2 points
Poor1 point
8. SELF APPRAISAL FORM
EMPLOYEE SELF APPRAISAL FORM
Review period: from ___to___
Name:
Department:
Position:
Job code:
Based on your job description and current work assignments, please answer questions
as follows:
1. Please list your most significant accomplishments or contributions during this
appraisal period.
2. Describe any factors, positive or negative, you feel may have helped or hindered in
meeting your formal or informal goals or objectives.
3. Have you successfully performed any new tasks or additional duties outside the
scope of your regular responsibilities? If so, please specify.
4. What skills do you have that you feel could be used more effectively?
5. Describe the areas you feel require improvement in terms of your professional
development. List the steps you plan to take and/or the resources you need to
accomplish this.
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6. In your opinion, how does the work you perform align with or support the
objectives of the University Mission Statement?
7. List 2-4 of your career goals for the coming year and indicate how you plan to
accomplish them.
8. Please evaluate yourself on the following factors: outstanding, very competent,
satisfactory, needs improvement
Interpersonal Skills
Time Management Skills
Teamwork
Innovation/Creativity
Please use this space to provide any additional comments.
Please attach additional sheets if necessary.
Employee Signature:
Date:
SELF EVALUATION FORM
Employee name:
Department:
Position:
Date:
Period of appraisal:
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1. What are your main job responsibilities?
2. Which job responsibilities do you view as most important? Why?
3. Have any new responsibilities been added or removed from your job this year? If
so, what?
4. Have there been any special circumstances that have helped or hindered you in
doing your job this year? If yes, how did they affect your work, and what were the
circumstances?
5. List your most significant accomplishments or contributions during the past year.
How do these achievements align with the goals/objectives outlined in your last
review?
6. Since the last review period, have you performed any new tasks or additional duties
outside the scope of your regular responsibilities? If so, please specify.
7. To which of the following factors would you attribute your professional
development since last year: offsite seminars/classes, onsite training, peer training,
on-the-job experience, better exposure to challenging projects, other. Please describe.
8. What would help you to do your job better and provide greater job satisfaction?
9. What are your goals for next year and what action will you take to accomplish
these goals?
10. What could your supervisor/manager do to support you in doing your job?
11. What additional support from your organization would help you do your job more
effectively?
12. What recommendations do you have that would make this a better place to work?
13. Indicate your career interests, including the type of assignment you would like
next.
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1. DEFINITION OF SELF APPRAISALSelf-appraisal is a method of performance appraisal that is done by employee
(appraise).
ADVANTAGES OF SELF APPRAISAL By having employees do some sort of self evaluation before the actual review
meeting, the review meetings can be shorter.
If done properly and tactfully, encouraging employees to self evaluation or
self appraise at any time during the year, including around the actual review
meetings, help convey the message that the process of performance
management and appraisal is a team effort, and not something the manager
does to the employee.
Whey self appraisal is an accepted and integrated part of the performance
management process, it encourages employees to self evaluate throughout the
year.
Self-ratings are particularly useful if the entire cycle of performance
management involves the employee in a self-assessment.
The developmental focus of self-assessment is a key factor.
Approximately half of the Federal employees in a large survey felt that self-
ratings would contribute to a great or very great extent to fair.
Self-appraisals are particularly valuable in situations where the supervisor
cannot readily observe the work behaviors and task outcomes.
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DISADVANTAGES OF SELF APPRAISAL Research shows low correlations between self-ratings and all other sources of
ratings, particularly supervisor ratings. The self-ratings tend to be consistently
higher. This discrepancy can lead to defensiveness and alienation if
supervisors do not use good feedback skills.
Sometimes self-ratings can be lower than others. In such situations,
employees tend to be self-demeaning and may feel intimidated and put on the
spot.
Self-ratings should focus on the appraisal of performance elements, not on the
summary level determination. A range of rating sources, including the self
assessments, help to round out the information for the summary rating.
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RATING ERRORS IN PERFORMANCE APPRAISALS
Performance appraisals are subject to a wide variety of inaccuracies and biases
referred to as 'rating errors'. These errors can seriously affect assessment results.
Some of the most common rating errors are: -
1. Leniency or severity: - Leniency or severity on the part of the rater makes the
assessment subjective. Subjective assessment defeats the very purpose of performance
appraisal. Ratings are lenient for the following reasons:
a) The rater may feel that anyone under his or her jurisdiction who is
rated unfavorably will reflect poorly on his or her own worthiness.
b) He/She may feel that a derogatory rating will be revealed to the rate to
detriment the relations between the rater and the ratee.
c) He/She may rate leniently in order to win promotions for the
subordinates and therefore, indirectly increase his/her hold over him.
2. Central tendency: - This occurs when employees are incorrectly rated near the
average or middle of the scale. The attitude of the rater is to play safe. This safe
playing attitude stems from certain doubts and anxieties, which the raters have been
assessing the rates.
3. Halo error: - A halo error takes place when one aspect of an individual's
performance influences the evaluation of the entire performance of the individual. The
halo error occurs when an employee who works late constantly might be rated high on
productivity and quality of output as well ax on motivation. Similarly, an attractive or
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popular personality might be given a high overall rating. Rating employees separately
on each of the performance measures and encouraging raters to guard against the halo
effect are the two ways to reduce the halo effect.
4. Rater effect: -This includes favoritism, stereotyping, and hostility. Extensively
high or low score are given only to certain individuals or groups based on the rater's
attitude towards them and not on actual outcomes or behaviors; sex, age, race and
friendship biases are examples of this type of error.
5. Primacy and Regency effects: - The rater's rating is heavily influenced either by
behavior exhibited by the ratee during his early stage of the review period (primacy)
or by the outcomes, or behavior exhibited by the ratee near the end of the review
period (regency). For example, if a salesperson captures an important contract/sale
just before the completion of the appraisal, the timing of the incident may inflate his
or her standing, even though the overall performance of the sales person may not have
been encouraging. One way of guarding against such an error is to ask the rater to
consider the composite performance of the rate and not to be influenced by one
incident or an achievement.
6. Performance dimension order: - Two or more dimensions on a performance
instrument follow each other and both describe or rotate to a similar quality. The rater
rates the first dimensions accurately and then rates the second dimension to the first
because of the proximity. If the dimensions had been arranged in a significantly
different order, the ratings might have been different.
7. Spillover effect: - This refers lo allowing past performance appraisal rating lo
unjustifiably influence current ratings. Past ratings, good or bad, result in similar
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rating for current period although the demonstrated behavior docs not deserve the
rating, good or bad.
8. Personal Prejudice: If the rater dislikes any employee or any group, he may rate
them at the lower end, which may distort the rating purpose and affect the career of
these employees.
Other factors that are considered as problems are
Failure of the superiors in conducting performance appraisal and post
performance appraisal interview.
Most part of the appraisal is based on subjectivity.
Less reliability and validity of the performance appraisal techniques.
Negative ratings affect interpersonal relations and industrial relations system.
Influence of external environmental factors and uncontrollable internal factors.
Feedback and post appraisal interview may have a setback on production.
Management emphasizes on punishment rather than development of an
employee in performance appraisal.
Some ratings particularly about the potential appraisal are purely based on
guess work.
The other problems of performance appraisal reported by various studies are:
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The quality and reliability of research study is dependent on the information collected
in a scientific and methodological manner. Scientific planning of designing of
research method is a blue print for any research study. Therefore, proper time and
attention should be given in designing the plan of research. While proper definition of
problem tells the researcher where he has to go, proper design tells him how he should
go. Selection of methodology for a particular project is made easy by sorting out a
number of alternative approaches, each of them having its own advantage and
disadvantages. Efficient design is that which ensure that the relevant data are
collected accurately.
The researcher has to think about what procedure and techniques should be adopted in
the study. He should arrive at the final choice by seeing that the methodology chosen
for project is indeed the best one, when compared with others.
RESEARCH DESIGN:
Research design is the first and foremost step in methodology adopted and
undertaking research study. It is overall plan for the collection and analysis of data in
the research project. Thus it is an organized, systematic approach to be the
formulation, implementation and control of research project.
In fact a well planned and well balanced research design guards against collection of
irrelevant data and achieves the result in the best possible way.
SAMPLE DESIGN:-
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The universe of study being large, researcher has to resort to sampling method of data
collection. On the basis of a section of the universe selected in a prescribed manner
one is able to deduce for the universe. For the sample results to be applicable on the
universe, sample should be adequately chosen so to make it representative and
reliable.
SAMPLING PLAN:
Sample Size = 50 Employees
Sample Area = Max Life Insurance
Duration = Two (2) Months.
DATA COLLECTION METHOD:
Data are the bricks with which the researcher has to make a house. While the quality
of research findings depends on data, the adequacy of appropriate data in turn depends
upon proper method of data collection. A number of methods are at the disposal of the
researcher of which one has to select the most appropriate one for visualizing the
research objective. Thus he has to see that the method adopted is compatible with the
resources and research study.
a) Primary Data: Data which are collected fresh and for the first time and thushappens to be original in character. Primary data are gathered for specific
purpose.
b) Secondary Data: Data that collected from primary data i.e., they are alreadyexit some where. For the purpose of our study we collected both the data.
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DATA COLLECTION:
Data Sour ces:
(i) Secondary Data through Internet
(ii) Primary Data through Questionnaire
(iii) Contact Method
(iv) Personal Interaction
DATA PRESENTATION AND ANALYSIS:
1. Bar graphs
2. Pie Diagrams
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2. Seniors satisfied by subordinates performance
Table-2
S. No View Percentage
1. Yes 85%
2. No 15%
Interpretation
After analyzing the data, the results shows that 85% of the senior production officers
feel that their seniors are satisfied with their performance and 15% cant say. This
analysis shows there is lack of appraisal by the immediate seniors.
1
85%
2
15%
0% 0%Satisfied with Subordinate performance
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3. Satisfied with their own Performance
Table-3
S. No View Percentage
1. Yes 85%
2. No 15%
Interpretation
After analyzing the data, the results shows that 85% of the seniorproduction officers
are satisfied with their own performance and 15% are not satisfied with their own
performance. This implies that satisfaction level has to be increased among senior
production Officers.
1
85%
2
15%
0% 0%
Satisfied with their own performance
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4. Performance appraisal improves performance
Table-4
S. No View Percentage
1. Yes 98%
2. No 2%
Interpretation
After analyzing the data, the results shows that98% of the senior production officers
feels that performance appraisal do helps in performing better and rest 2% was not
satisfied with them. Through this we come to know that process of performance
appraisal is coming out to be positive and it should be continued.
0
20
40
60
80
100
12
Improves Performance
Improves Performance
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6. Adequate and fair chance provided to defend against adverse
entries in your appraisal
Table-6
S. No View Percentage
1. Yes 67%
2. No 33%
Interpretation
After analyzing the data, the results show that 67% of the senior production officers
feel that they are provided with a chance to defend them against adverse entries in
their appraisal whereas 33% denies it. This shows that there is lack of chances
provided to defend against adverse entries in appraisal.
Defend against adverse entries
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7. Reason for bad performance
Table-7
Personal 16%
Officials 16%
Others 16%
No bad performance 52%
0%
10%
20%
30%
40%
50%
60%
Personal Officials Others No bad
performance
In percentage
In percentage
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Interpretation
After analyzing the data, the results shows that 16% of senior production officers
performed bad due to personal reasons, 16% of senior production officers due to
official reasons, 16% of senior production officers due to other reasons and no bad
performance from the rest of the 52% of senior production officers.
This shows that there are some reasons, which are required to be rectified to improve
performance.
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8. Awareness about performance appraisal system.
Table-8
S. No View Percentage
1. Yes 67%
2. No 13%
Interpretation
After analyzing the data, the results shows that 67% of the senior production officers
are fully aware of the appraisal system and rest 33% are unaware of this system.This
shows that awareness about the performance appraisal system is to be increased.
FINDINGS & SUGGESTION
Awareness of appraisal system
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