STEEL AUTHORITY OF INDIA LTD

Project Report

on

Performance Appraisal System of

SAIL Employees

Prepared By :-

ACKNOWLEDGEMENT

We would like to thank Prof. Mukul Mitra for giving us the

project which has helped us enhance our knowledge in the internal

working environment of a company . We would also thank him for

giving his valuable time and patience which has made this project

successful.

EXECUTIVE SUMMARY

The history of performance appraisal is quite brief. Its roots in the early 20th century can be traced to Taylor's pioneering Time and Motion studies. But this is not very helpful, for the same may be said about almost everything in the field of modern human resources management. As a distinct and formal management procedure used in the evaluation of work performance, appraisal really dates from the time of the Second World War - not more than 60 years ago.

In many organizations - but not all - appraisal results are used, either directly or directly, to help determine reward outcomes. That is, the appraisal results are used to identify the better performing employees who should get the majority of available merit pay increases, bonuses and promotions.

By the same token, appraisal results are used to identify the poorer performers who may require some form of counseling, or in extreme cases, demotion, dismissal or decreases in pay. (Organizations need to be aware of laws in their country that might restrict their capacity to dismiss employees or decrease pay.)

The purpose of this study has been to determine whether the performance appraisal was used for employee development and whether the appraisal was emphasized as an important part of the performance appraisal process. Also whether the performance appraisal helps in increasing company’s profitability.

Our study suggested that the performance appraisal has helped in increasing the profitability of SAIL which was clearly shown by their performance on BSE Sensex. Certain loop holes has been determined and suggestions were made.

INTRODUCTION

Almost every organization in one way or another goes through a periodic ritual, formally or informally, known as performance appraisal. Performance appraisal has been called many things. The formal performance appraisal has been called a tool of management, a control process, an activity and a critical element in human resources allocation. Uses for performance appraisal have included equal employment opportunity considerations, promotions, transfer and salary increases. Primarily performance appraisal has been considered an overall system for controlling an organization. Performance appraisal has also been called an audit function of an organization regarding the performance of individuals, groups and entire divisions.

Performance appraisal may be defined as a structured formal interaction between a subordinate and supervisor, that usually takes the form of a periodic interview (annual or semi-annual), in which the work performance of the subordinate is examined and discussed, with a view to identifying weaknesses and strengths as well as opportunities for improvement and skills development.

Almost every organization in one way or another goes through a periodic ritual, formally or informally, known as performance appraisal. Performance appraisal has been called many things. The formal performance appraisal has been called a tool of management, a control process, an activity and a critical element in human resources allocation. Uses for performance appraisal have included equal employment opportunity considerations, promotions, transfer and salary increases. Primarily performance appraisal has been considered an overall system for controlling an organization. Performance appraisal has also been called an audit function of an organization regarding the performance of individuals, groups and entire divisions.

OBJECTIVES OF PERFORMANCE APPRAISAL

Employees would like to know from a performance appraisal system:

· concrete and tangible particulars about their work; and

· assessment of their performance.

This would include how they:

· did;

· could do better in future;

· could obtain a larger share of rewards; and

· could achieve their life goals through their position.

Therefore an employee would desire that the appraisal system should aim at:

· their personal development;

· their work satisfaction; and

· their involvement in the organization.

From the point of view of the organization, performance appraisal serves the purpose of:

· providing information about human resources and their development;

· measuring the efficiency with which human resources are being used and improved ;

· providing compensation packages to employees; and

· maintaining organizational control.

Performance appraisal should also aim at the mutual goals of the employees and the organization. This is essential because employees can develop only when the organization’s interests are fulfilled. The organization’s main resources are its employees, and their interest cannot be neglected. Mutual goals simultaneously provide for growth and development of the organization as well as of the human resources. They increase harmony and enhance effectiveness of human resources in the organization.

SCOPE OF PERFORMANCE APPRAISAL

To help each employee understand more about their role and become clear about their functions;

to be instrumental in helping employees to better understand their strengths and weaknesses with respect to their role and functions in the organization;

to help in identifying the developmental needs of employees, given their role and function;

to increase mutuality between employees and their supervisors so that every employee feels happy to work with their supervisor and thereby contributes their maximum to the organization;

to act as a mechanism for increasing communication between employees and their supervisors. In this way, each employee gets to know the expectations of their superior, and each superior also gets to know the difficulties of their subordinates and can try to solve them. Together, they can thus better accomplish their tasks;

to provide an opportunity to each employee for self-reflection and individual goal-setting, so that individually planned and monitored development takes place;

to help employees internalize the culture, norms and values of the organization, thus developing an identity and commitment throughout the organization;

to help prepare employees for higher responsibilities in the future by continuously reinforcing the development of the behavior and qualities required for higher-level positions in the organization;

to be instrumental in creating a positive and healthy climate in the organization that drives employees to give their best while enjoying doing so; and

to assist in a variety of personnel decisions by periodically generating data regarding each employee.

ERRORS OCCURREDIN

PERFORMANCE APPRAISAL

One of the biggest problems with performance appraisal is the fact that most people are not accurate raters of others’ performance . When an employee’s performance rating does not reflect their true or actual performance , we say a rater error has occurred . The most common rater errors are:-

Halo / Horn Effect Central Tendency Recency Leniency Bias

ERROR DEFINITION EXAMPLE

Halo/horns effect

Inappropriate generalizations from one aspect of an individual’sperformance to all areas of thatperson’s performance

Manoj’s outstanding writing ability caused his supervisor to rate him highly in unrelated areas where his performance was actually mediocre.

Central tendencyThe inclination to rate people in the middle scale even when theirperformance clearly warrants asubstantially higher or lower rating

Because Rahul had a concern that he would not be able to deal with confrontation during an appraisal session, he ratedall of his employees as“Meets Expectations.”

Recency effect

The tendency of minor events that have happened recently to have more influence on the rating than major events of many months ago

Sudha kept no records ofcritical incidents. When shebegan writing the appraisals for her employees she discovered that she could only recall examples of either positive or negative performance forthe last two months.

Attribution bias

The tendency to attribute performance failings to factorsunder the control of the individualand performance successes toexternal causes

Reema , attributes the successes of her work group to the quality of her leadership and the failingsto their bad attitudes and inherent laziness.

METHODOLOGY

Basically there are two types of performance appraisal done on the basis of post of the SAIL’s employee. They are:

1. Executive performance appraisal system2. Non-executive performance appraisal system

EXECUTIVE PERFORMANCE APPRAISAL SYSTEM

This system is for performance appraisal for executives of the level E-0 to E-4 . The various steps involved are:

A) Self Appraisal Performance Review & Planning

I. Appraisee write his view over the actual achievement for the Key performance area / Task and Target assigned to him for the year.

II. Comments on fulfillment of KPA / Task and Target are written by the Reporting Officer , taking account of time frame also.

III. Special Jobs other than tasks given and normal routine work are written by appraisee.

B) Performance Review Discussion

I. Both appraisee and reporting officer sit together.II. Comment over Strengths and weaknesses and areas for development are written

which is undersigned by both .III. Appraisee can help the reporting officer by giving examples which shows his

strength or weakness. He also tell what training he want to undergo .

C) Performance Assessment

I. Rating between 1 to5 are given to the appraisee by the Reporting Officer and Reviewing Officer individually on the basis of Performance Factors and Potential Factors.

Performance Factors :Quantity of output Quality of output Cost control Job Knowledge and Skill Team spirit and Lateral Coordination Discipline Development & Quality of assessing subordinates

Special Relevant factor

Potential Factors : Communication Initiative Commitment and sense of Responsibility Problem Analysis and Decision making Planning and Organizing Management of Human resources

II. Different weightage are given to each factorIII. Final scores are calculated by multiplying rating and weightage .By adding

these Total Factor Score is calculated.IV. Comments on Overall Performance And Potential are written by both

Reporting and Reviewing Officers individually.

D) Suggestions for Job Rotation and Job Enrichment

I. Both reporting and reviewing officers write their suggestions whether the appraisee should be transferred to other department. Either a good employee is transferred so that he can acquire knowledge of all the departments, or a worst performing employee is transferred so as to improve his performance.

II. In some exceptional case Head of department give his comments on overall performance & potential of the employee.

E) Final Assessment

I. Total Factor Score by both Reporting and Reviewing officers is written and average is calculated.

II. Final Grading between O / A / B / C is given .III. If Final Grade is C , indicate whether to promote or not to promote the appraisee.IV. If not to promote give reasons.V. Meeting with non-promotable appraisee.

NON-EXECUTIVE PERFORMANCE APPRAISAL SYSTEM

I. Rating are given by both Reporting and Reviewing officers on the basis of performance of the appraisee depending upon factors: Performance on the Job Job Knowledge & skill Multi-skill Utilization Conduct & behavior

Punctuality & availability on job Innovativeness Cost & Quality Consciousness

Initiative & Capacity to assume higher responsibility

Housekeeping & safety consciousness

II. Weightage are given to various factors .

III. Scores out of 100 are calculated by multiplying rating with weightage .

IV. O / A / B / C / C- Grades are given according to scores and attendance of the appraisee.

V. If grade is C- , then appraisee is interviewed by the Head of Department.

METHODS OF PEFORMANCE APPRAISAL

Ranking. - The term ranking has been used to describe an alternative method of performance appraisal where the supervisor has been asked to order his or her employees in terms of performance from highest to lowest.

Forced Choice Method. - This appraisal method has been developed to prevent evaluators from rating employees to high. Using this method, the evaluator has to select from a set of descriptive statements, statements that apply to the employee. The statements have been weighted and summed to at, effectiveness index.

Forced Distribution. - The term used to describe an appraisal system similar to grading on a curve. The evaluator had been asked to rate employees in some fixed distribution of categories. One way to do this has been to type the name of each employee on a card and ask the evaluators to sort the cards into piles corresponding to rating.

Paired Comparison. - The term used to describe an appraisal method for ranking employees. First, the names of the employees to be evaluated have been placed on separate sheets in a pre-determined order, so that each person has been compared with all

other employees to be evaluated. The evaluator then checks the person he or she felt had been the better of the two on the criterion for each comparison. Typically the criterion has been the employees over all ability to do the present job. The number of times a person has been preferred is tallied, and the tally developed is an index of the number of preferences compared to the number being evaluated.

Graphic Rating Scale. - The term used to define the oldest and most widely used performance appraisal method. The evaluators are given a graph and asked to rate the employees on each of the characteristics. The number of characteristics can vary from one to one hundred. The rating can be a matrix of boxes for the evaluator to check off or a bar graph where the evaluator checked off a location relative to the evaluators rating.

Checklists. - The term used to define a set of adjectives or descriptive statements. If the rater believed the employee possessed a trait listed, the rater checked the item; if not, the rater left the item blank. rating score from the checklist equaled the number of checks.

Behavioral Anchored Rating Scales. - The term used to describe a performance rating that focused on specific behaviors or sets as indicators of effective or ineffective performance, rather than on broadly stated adjectives such as "average, above average, or below average". Other variations were:

Behavioral observation scales Behavioral expectations scales Numerically anchored rating scales

Critical Incident Technique. - The term used to describe a method of performance appraisal that made lists of statements of very effective and very ineffective behavior for employees. The lists have been combined into categories, which vary with the job. Once the categories had been developed and statements of effective and ineffective behavior had been provided, the evaluator prepared a log for each employee. During the evaluation period, the evaluator recorded examples of critical behaviors in each of the categories, and the log has been use to evaluate the employee at the end of the evaluation period.

Management by Objectives. - The management by objectives performance appraisal method has the supervisor and employee get together to set objectives in quantifiable terms. The appraisal method has worked to eliminate communication problems by the establishment of regular meetings, emphasizing results, and by being an ongoing process where new objectives have been established and old objectives had been modified as necessary in light of changed conditions.

DATA ANALYSIS

SAIL wins 'India's Employers of Choice Award-2007' in the Public Sector

SAIL's Q4 net profit Rs.1902 crore – up 72%

President Kalam presents prestigious Corporate Social Responsibility

award to SAIL

SAIL has been a pioneer in promulgating a firm policy

on safety in the workplace.

SAIL has been an active participant in the National RCH programme

across all since 1995. All SAIL hospitals have participated in the National

RCH program.

In all SAIL Plants, Mahila Samities have been formed since inception.

The members of the Samities are spouses of the employees. Spouses of

MDs, EDs etc are also a member of Mahila Samities . A lot of work is

being done for the society by these Samities.

All these facts shows that SAIL is constantly increasing and

becoming famous in public sector .This implies employees are working

efficiently which is possible when employees are happy with company’s

performance appraisal system.

OBSERVATIONS

In the present performance appraisal system of SAIL we found the

following loop holes:

If the appraisee has good terms with the reviewing officer and does not

have a smooth relationship with the reporting officer , in such case the

reporting officer is sometimes forced by the reviewing officer to give

better score to the appraisee.

RECOMMENDATIONS

The reporting officer should keep the performance data of each

subordinate.

The reporting officer should give monthly feedback to the

subordinates regarding their performances and thereby giving suggestions

to improve.

BIBLIOGRAPHY

Websites :- www.sailindia.co.in

www.wikipedia.org

www.performance-appraisal.com/intro.htm

www.telecollege.dcccd.edu/contents/evaluate.htm

Books :-

i. Personnel – Human Resource Mgmt

By David A Decenzo

ii. Human Resource Mgmt

By Gary Dessler