Performance apprisal

Table of Contents

CHAPTER DESCRIPTION PAGE NOS.

1.EXECUTIVE SUMMARY

2.INTRODUCTION

3.RESARCH METHODOLOGY

4.COMPANY PROFILE

5.DATA ANALYSIS & INTERPRETATION

6.FINDINGS

7.SUGGESTIONS AND CONCLUSIONS

8.ANNEXURES

9.BIOLIOGRAPHY

EXECUTIVE SUMMARY

The performance appraisal system ideally is an organisation designed programme involving both

the organisation and the personnel to improve the capability of both. The elements of

performance management include: purpose, content, method,appraiser, frequency, and feedback.

The appraisal process involves determining and communicating to an employee how he or she is

performing the job and establishing a plan of improvement. The information provided by

performance appraisal is useful in three major areas: compensation, placement, and training and

development. Appraisal helps to improve performance by identifying the strengths and

weaknesses; it helps to identify those with a potential for greater responsibility; and assists in

deciding on an equitable compensation system. The methods of performance appraisal include

rating scale, critical incident, ranking methods, and management by objectives. Several common

errors have been identified in performance appraisal. Leniency occurs when ratings are grouped

at the positive 7end instead of being spread throughout the performance scale. The central

tendency occurs when all or most employees are ranked in the middle of the rating scale. The

halo effect occurs when a manager allows his or her general impression of an employee to

influence judgment of each separate item in the performance appraisal. A sound appraisal system

involves assessing employee performance on a regular basis. Performance appraisal can be done

by superiors who rate subordinates, subordinates who rate their superiors, and self-appraisal. A

suitable performance appraisal system has to be designed keeping in view the culture and

requirements of an organisation.

TYPES OF PERFORMANCE APPRAISAL

There are two types of performance appraisal systems which are normally used in organisations:

close ended appraisal system,

open ended appraisal system.

Performance appraisal has always been a hot and challenging issue for the managers across the

world, HR managers as well as the line managers. These caselets discuss some of the common

issues in designing and implementing a performance appraisal system. One of the caselets

discusses not just performance appraisal, but the broader issue of performance management. The

method of appraising using the balanced scorecard approach has been discussed in the last

caselet.

INTRODUCTION

Performance appraisal is a systematic evaluation of present potential capabilities of personnel

and employees by their superiors, superior’s superior or a professional from outside. It is a

process of estimating or judging the value, excellent qualities or status of a person or thing. It is a

process of collecting, analysing, and evaluating data relative to job behaviour and results of

individuals. The appraisal system is organised on the principle of goals and management by

objectives. Management decisions on performance utilise several integrated inputs: goals and

plans, job evaluation, performance evaluation, and individual history. It connotes a two-

dimensional concept - at one end of the continuum lies the goals set by the authority, and at the

other end, the performance achieved by the individual or any given group.

Performance appraisal can be either formal or informal. Usage of former systems schedule

regular sessions in which to discuss an employee’s performance. Informal appraisals are

unplanned, often just chance statements made in passing about an employee’s performance. Most

organisations use a formal appraisal system. Some organisations use more than one appraisal

system for different types of employees or for different appraisal purposes. Organisations need to

measure employee performance to determine whether acceptable standards of performance are

being maintained. The six primary criteria on which the value of performance may be assessed

are: quality, quantity, timelineness, cost effectiveness, need for supervision, and interpersonal

impact. If appraisals indicate that employees are not performing at acceptable levels, steps can be

taken to simplify jobs, train, and motivate workers, or dismiss them, depending upon the reasons

for poor performance.

The results of appraisal are normally used to:

(1) estimate the overall effectiveness of employees in performing their jobs,

(2) identify strengths and weaknesses in job knowledge and skills,

(3)determine whether a subordinate’s responsibilities can be expanded,

(4) identify future training and development needs,

(5) review progress toward goals and objectives,

(6) determine readiness for promotion, and

(7) motivate and guide growth and development.

OBJECTIVES OF PERFORMANCE APPRAISAL

Performance appraisal plans are designed to meet the needs of the organisation and the

individual. It is increasingly viewed as central to good human resource management. This is

highlighted in Cumming’s classification of performance appraisal objectives. According to

Cummings and Schwab (1973), the objectives of performance appraisal schemes can be

categorised as either evaluative or developmental. The evaluative purpose have a historical

dimension and are concerned primarily with looking back at how employees have actually

performed over a given time period, compared with required standards of performance.

The developmental performance appraisal is concerned, for example, with the identification of

employees’ training and development needs, and the setting of new targets.

The broad objectives of performance appraisal are:

1. To help the employee to overcome his weaknesses and improve his strengths so as to enable

him to achieve the desired _performance.

2. To generate adequate feedback and guidance from the immediate superior to an employee

working under him.

3. To contribute to the growth and development of an employee through helping him in realistic

goal setting.

4. To provide inputs to system of rewards (comprising salary increments, transfers, promotions,

demotions or _terminations) and salary administration.

5. To help in creating a desirable culture and tradition in the organisation.

6. To help the organisation to identify employees for the purpose of motivating, training and

developing them.

7. To generate significant, relevant, free, and valid _information about employees.

In short, the performance appraisal of an organisation provides systematic judgments to backup

wage and salary administration; suggests needed changes in one’s behaviour, attitudes, skills, or

job knowledge; and uses it as a base for coaching and counseling the individual by his superior.

Appraising employee performance is, thus, useful for compensation, placement, and training and

development purposes.

USES OF PERFORMANCE APPRAISAL

The appraisal systems do not operate in isolation; they generate data that can contribute to other

HRM systems - for example to succession planning and manpower planning.Some of the

common uses of appraisals include:

Determining appropriate salary increases and bonuses for workers based on performance

measure.

Determining promotions or transfers depending on the demonstration of employee

strengths and weaknesses.

Determining training needs and evaluation techniques by identifying areas of

weaknesses.

Promoting effective communication within organisations through the interchange of

dialogue between supervisors and subordinates.

Motivating employees by showing them where they stand, and establishing a data bank

on appraisal for rendering assistance in personnel decisions.

Organisations use performance appraisals for three purposes: administrative, employee

development, and programme assessment. Programme appraisal commonly serve an

administrative purpose by providing employers with a rationale for making many personnel

decisions, such as decisions relating to pay increases, promotions, demotions, terminations and

transfers. Valid performance appraisal data are essential to demonstrate that decisions are based

on job related performance criteria. An employee’s performance is often evaluated relative to

other employees for administrative purposes, but may be assessed in relation to an absolute

standard of performance. Performance appraisal for employee development purposes provides

feedback on an employee’s performance. The intent of such appraisals is to guide and motivate

employees to improve their performance and potential for advancement in the organisation.

Appraisal data can also be used for employee development purposes in helping to identify

specific training needs of individuals. Programme assessment requires the collection and storage

of performance appraisal data for a number of uses. The records can show how effective

recruiting, selection, and placement have been in supplying a qualified workforce. Performance

measures can be used to validate selection procedures and can also be used as”before” and

“after” measures to determine the success of training and development programmes. In brief, the

various uses of performance appraisal can be classified into two broad categories. One category

concerns the obtaining of evaluation data on employees for decision-making for various

personnel actions such as pay increases, promotions, transfers, discharges, and for selection test

validation. The other main use is for employee development including performance improvement

training, coaching, and counseling.

PLANNING THE APPRAISAL

A meaningful performance appraisal is a two-way process that benefits both the employee and

the manager. For employees, appraisal is the time to find out how the manager thinks they are

performing in the job. For a manager, a formal appraisal interview is a good time to find out how

employees think they are performing on the job. The planning appraisal strategy has to be done:

Before the appraisal

1. Establish key task areas and performance goals.

2. Set performance goals for each key task area.

3. Get the facts.

4. Schedule each appraisal interview well in advance.

During the appraisal

1 Encourage two-way communication.

2. Discuss and agree on performance goals for the future.

3. Think about how you can help the employee to achieve more at work.

4. Record notes of the interview.

5. End the interview on an upbeat note.

After the appraisal

1. Prepare a formal record of the interview.

2. Monitor performance.

APPROACHES TO PERFORMANCE APPRAISAL

George Odiorne has identified four basic approaches to performance appraisal.

Personality-based systems: In such systems the appraisal form consists of a list of personality

traits that presumably are significant in the jobs of the individuals being appraised. Such traits as

initiative, drive, intelligence, ingenuity, creativity, loyalty and trustworthiness appear on most

such lists.

Generalised descriptive systems: Similar to personality-based systems, they differ in the type of

descriptive term used. Often they include qualities or actions of presumably good managers:

“organises, plans, controls, motivates others, delegates, communicates, makes things happen,”

and so on. Such a system, like the personality-based system, might be useful if meticulous care

were taken to define the meaning of each term in respect to actual results.

Behavioural descriptive systems: Such systems feature detailed job analysis and job descriptions,

including specific statements of the actual behaviour required from successful employees.

Results-centred systems: These appraisal systems (sometime called work-centred or job-centred

systems) are directly job related. They require that manager and subordinate sit down at the start

of each work evaluation period and determine the work to be done in all areas of responsibility

and functions, and the specific standards of performance to be used in each area.When

introducing performance appraisal a job description in the form of a questionnaire has to be

preferred. A typical questionnaire addressed to an individual would cover the following points:

What is your job title?

To whom are you responsible?

Who is responsible to you?

What is the main purpose of your job?

To achieve that purpose what are your main areas of responsibility?

What is the size of your job in such terms of output or sales targets, number of items

processed, number of people managed, number of customers? What targets or standards

of performance have been assigned for your job? Are there any other ways in which it

would be possible to measure the effectiveness with which you carry out your job?

Is there any other information you can provide about your job?

COMPONENTS OF PERFORMANCE APPRAISAL

The components that should be used in a performance appraisal system flow directly from the

specific objectives of appraisal. The following components are being used in a number of Indian

organisations.

1. Key Performance Areas (KPAs) / Key Result Areas (KRAs)

2. Tasks/targets/objectives; attributes/qualities/traits

3. Self appraisal

4. Performance analysis

5. Performance ratings

6. Performance review, discussion or counseling

7. Identification of training / development needs

8. Ratings / assessment by appraiser

9. Assessment / review by reviewing authority

10. Potential appraisal.

TYPES OF PERFORMANCE APPRAISAL

There are two types of performance appraisal systems which are normally used in organisations:

close ended appraisal system,

open ended appraisal system.

In the close ended appraisal system, commonly used in government organisations and public

enterprises, a confidential report is submitted on the performance of the employee. Only where

an adverse assessment is made against an individual, the concerned individual is informed about

the same. The main shortcoming of this system is that an individual is not informed about his/her

inherent strengths and weaknesses and, therefore, is not given an opportunity to respond to the

assessment made on him/her. The employees are, therefore, in a constant dilemma as to how

their performance is viewed by the management. In the open ended appraisal system, unlike in

the close ended system, the performance of the individual is discussed with him, and he is ranked

in a five or ten point rating scale. The company uses this tool primarily for rewarding a good

performer or for other considerations like promotions. The main weakness of this system is that

all the employees are ranked in a particular scale, and whereas the good performers are

rewarded, there is no concerted effort to motivate the average performers in performing better.

Another weakness of the grading system is that the appraisal may turn out to be more subjective

in nature due to insufficient data maintained on the individual. This system also leads to

unnecessary comparisons made on different individuals performing similar jobs. Performance

appraisal can be a closed affair, where the appraises do not get any chance to know or see how

they have been evaluated; or it can be completely open, where the appraises have the opportunity

of discussing with their superiors during the evaluation exercise.

STEPS IN THE APPRAISAL PROGRAMME

As in other personnel programmes, performance appraisal forms a line responsibility to be

accomplished with advice and help of the personnel department. Indeed, the appraisal

programme is likely to be an utter failure if it lacks the support of top management; if superiors

are not adequately trained, or have no trust in its value; if the results of appraisal are not

discussed with the subordinates; and if the appraisal is not used to serve the purposes it is meant.

Pigors and Myers suggest several steps to develop and administer the programme effectively.

1. The personnel department may attempt to obtain as much as possible the agreement of line

management in respect of the needs and objective of the programme. A choice has to be made

among different kinds of appraisal methods judiciously.

2. The personnel department has to examine the plans of other organisations as well as the

relevant literature in the field to formulate the most suitable plan for the appraisal programme.

3. Attempts should be made to obtain the co-operation of supervisors in devising the appraisal

form and discuss with them the different factors to be incorporated, weights and points to be

given to each factor, and description or instructions to be indicated on the form.

4. The personnel or industrial relations manager tends to explain the purpose and nature of the

programme to all the superiors and subordinates to be involved and affected by it. Care should be

taken to take into confidence the representatives of the union, if it exists in the company.

5. Attempt is to be made to provide intensive training to all the supervisors with a view to

obtaining unbiased and uniform appraisal of their subordinates.

6. Care may be taken to acquire line and staff co-ordination and mutual checking of appraisals

with a view to achieving intra and inter-departmental consistency and uniformity.

7. There should be an arrangement for periodic discussion of the appraisal by the superior with

each of the subordinates where attempts may be made to stress good points, indicate difficulties,

and encourage improved performance.

Explicitly, in this context, the discussion should be in the form of a progress review and every

opportunity should be given to the subordinate to express himself, if he feels that the appraisal

has been biased and that it should be otherwise.

8. As soon as the appraisal has been duly discussed, attempts may be made to recommend for

salary increases or promotion, if these decisions seem plausible in the light of appraisals.

9. There should be provision for challenge and review of appraisals, if the employees or their

union representatives are dissatisfied with the personnel decisions which the management has

taken on the basis of these appraisals.

These steps, if followed carefully, are likely to help the superiors to evaluate their subordinates

effectively.

METHODS OF PERFORMANCE APPRAISAL

Strauss and Sayles have classified performance appraisal into three groups: traditional

performance rating, newer-rating method, and result-oriented appraisal. A brief description of

each is as follows:

(a) Traditional Performance Rating: Traditional rating involves a completion of a form by the

immediate supervisor of the individual who is being evaluated. In some cases, attempts are made

to accomplish the rating by a committee consisting of the immediate supervisor, the supervisor’s

superior and one or two more officers of the company who are familiar with the rates. Although

ratings by the committee bring several viewpoints together and overcome the superior’s bias, if

any, they are highly time-consuming. The conventional rating scale form incorporates several

factors, such as, job knowledge, judgment, organising ability, dependability, creativity, dealing

with people, delegation, and leadership. The rating is assigned by putting a tick mark

horizontally. Frequently, descriptive phrases are given in the form to guide the rater while

evaluating the rates. This method is very simple to understand and easy to apply. On the basis of

ratings on specific factors, it is possible to identify areas in which the individual requires further

development. The ratings on specific factors can be summated to obtain a composite

performance score. The merit-rating scales are frequently criticised from the standpoints of

clarity in standards, differing perceptions, excessive leniency or strictness, the central tendency,

the halo effect, and the impact of an individual’s job. The basic criticism of the traditional

performance rating is concerned with its emphasis on personality traits instead of job

performance. Such rating is highly subjective in the absence of objective standards.Other

criticisms of traditional performance rating relates to: First, there is a divergence of opinion

among raters as to what is meant by such standards as “unsatisfactory”, “good” and so on.

Second, there may be divergent perceptions and accordingly, different standards of judgments

among the raters. Third, the raters may be susceptible to excessive leniency or strictness error.

Fourth, there is an error of central tendency involving a cluster of ratings near the middle of the

scale. Fifth, there is a chance of the occurrence of a halo effect. Sixth, there is a tendency on the

part of the raters to assign high ratings to individuals holding high paid jobs.

(b) Newer Rating Methods: Because of several inadequacies in the traditional rating scale,

attempts have been made to devise new procedures which are less susceptible to the above

weaknesses. Among these are included rank order, paired comparison, forced distribution forced

choice, critical incident and field review. These methods are discussed below:

(i) The Rank-order Procedure: It is effective where ten or lesser number of individuals are to be

evaluated. According to this procedure, each individual is assigned such ranks as first, second,

third and so on. If the evaluation process involves several traits, the ranking is made separately

for each trait. Although this method is simple to understand and easy to apply, this technique

becomes cumbersome and difficult when a large number of employees are to be evaluated in the

organisation.

(ii) Paired-comparison System\: Under this, each individual is compared with every other

individual. The appraiser is required to put a tick-mark against the name of the individual whom

he considers better on the trait in question. The final ranking is determined by the number of

times he is judged better than the other. This method becomes complicated when the number of

individuals for evaluation is large.

(iii) The Forced Distribution Procedure: It is a form of comparative evaluation in which an

evaluator rates subordinates according to a specified distribution. Here judgments are made on a

relative basis, i.e., a person is assessed relative to his performance in the group he works. This

procedure can be used for numerous traits if required by evaluating the individuals separately on

each trait. The forced distribution method is primarily used to eliminate rating errors such as

leniency and central tendency.

(iv) The Forced Choice Technique: It forces the rater to select from a series of several statements

or traits, the one which best fits the individual and one which least fits, and each of these

statements is assigned a score. Since the appraiser does not know the score value of statements,

this method prevents the rater from deliberately checking only the most favourable trait.

Moreover, the appraiser is unable to introduce personal bias into the evaluation process because

he does not know which of the statements is indicative of effective performance. This enhances

the overall objectivity of this procedure. However, it is a costly technique and also difficult for

many raters to understand.

(v) The Critical Incident Method: This technique of performance appraisal was developed by

Flanagan and Burns. Under this procedure, attempts are made to devise for each job a list of

critical job requirements. Superiors are trained to be on the lookout for critical incidents on the

part of the subordinates in accomplishing the job requirements. The superiors enlist the incidents

as they happen and in the process, tend to build up a record of each subordinate with debit on the

minus side and credit on the plus side. The merit of this procedure is that all evaluations are

based on objective evidence instead of subjective rating.

(vii) The Field Review: It is an appraisal by someone outside the employee’s own department,

usually someone from the corporate office or from the employee’s own human resource

department. The field review process involves review of employee records, and interviews with

the employee, and sometimes with the employee’s superior. Field review as an appraisal method

is used primarily in making promotion decisions at the managerial level. Field reviews are also

useful when comparable information is needed from employees in the different units or

locations.

(c) Results-Oriented Appraisal: The results-oriented appraisals are based on the concrete

performance targets which are usually established by superior and subordinates jointly. This

procedure has been known as Management by Objectives (MBO). MBO: The definition of

MBO, as expressed by its foremost proponent, Dr. George S. Odiorne, is: “Management by

objectives is a process whereby the superior and subordinate managers of an organisation jointly

identify its common goals, define each individual’s major areas of responsibility in terms of the

results expected of him, and use these measures as guides for operating the unit and assessing the

contribution of each of its members.” Much of the initial impetus for MBO was provided by eter

Drucker (1954) and by Douglas McGregor (1960). Drucker first described management by

objectives in 1954 in the Practice of Management. Drucker pointed the importance of managers

having clear objectives that support the purposes of those in higher positions in the organisation.

McGregor argues that by establishing performance goals for employees after reaching agreement

with superiors, the problems of appraisal of performance are minimised. MBO in essence

involves the setting out clearly defined goals of an employee in agreement with his superior.

Carroll and Tosi (1973), in an extensive account of MBO, note its following characteristics:

1. The establishment of organisational goals.

2. The setting of individual objectives in relation to organisational goals.

3. A periodic review of performance as it relates to organisational goals.

4. Effective goal-setting and planning by top management.

5. Organisational commitment.

6. Mutual goal-setting.

7. Frequent individual performance reviews.

8. Some freedom in developing means of achieving objectives.

MBO is, thus, a method of mutual goal-setting, measuring progress towards the goals, taking

action to assure goal attainment, feedback, and participation. It is a resultoriented philosophy,

enabling an employee to measure progress toward a goal which Performance and Potential

Appraisal the employee often has helped to set. In the goal-setting phase of MBO, a superior

and subordinate discuss job performance problems and a goal is agreed upon. Along with mutual

goal-setting, a major component of MBO is the performance review session between the superior

and subordinate, which takes place regularly to evaluate progress towards specified goals. The

key features of management by objectives are as under:

1. Superior and subordinate get together and jointly agree upon the list the principal duties and

areas of responsibility of _the individual’s job.

2. The subordinate sets his own short-term performance goals or targets in cooperation with his

superior.

3. They agree upon criteria for measuring and evaluating performance.

4. From time to time, as decided upon, the superior and subordinate get

together to evaluate progress towards the agreed-upon goals. At those meetings, new or modified

goals _are set for the ensuing period.

5. The superior plays a supportive role. He tries, on a day-to-day basis, to help the subordinate

achieve the agreed upon _goals. He counsels and coaches.

6. In the appraisal process, the superior plays less of the _role of a judge and more of the role of

one who helps the _subordinate attain the organization goals or targets.

7. The process focuses upon results accomplished and not upon personal traits.

There are four main steps in MBO:

1. Define the job. Review, with the subordinates, his or her key responsibilities and duties.

2. Define expected results (set objectives). Here specify in measurable terms what the person is

expected to achieve.

3. Measure the results. Compare actual goals achieved with expected results.

4. Provide feedback, appraise. Hold periodic performance review meetings with subordinates to

discuss and evaluate the _latter’s progress in achieving expected results.

MBO as a mutual goal setting exercise is most appropriate for technical,professional,

supervisory, and executive personnel. In these positions, there is generally enough latitude and

room for discretion to make it possible for the person to participate in setting his work goals,

tackle new projects, and discover new ways to solve problems. This method is generally not

applied for lower categories of workers because their jobs are usually too restricted in scope.

There is little discretionary opportunity for them to shape their jobs.MBO may be viewed as a

system of management rather than an appraisal method. A successful installation of MBO

requires written mission statements that are prepared at the highest levels of top management.

Mission statements provide the coherence in which top-down and bottom-up goal setting appear

sensible and compatible. MBO can be applied successfully to an organisation that has sufficient

autonomy, personnel, budget allocation, and policy integrity. Managers are expected to perform

so that goals are attained by the organisation. Too often MBO is installed top-down in a

dictatorial manner with a little or no accompanying training. If properly implemented, it serves

as a powerful and useful tool for the success of managerial performance. MBO is a tool that is

inextricably connected with team building so that the work commitment of team members can be

increased and their desire to excel in performance can be inspired. It is important to have

effective team work among a group of managers or a group of subordinates. The group of

employees or subordinates must be looked upon as a team that needs to be brought together.

Goals should be set by manager-subordinate pairs, and also by teams. The basic superior

subordinate relationship in an organisation is in no way undermined in this concept of team goal

setting. Lines of responsibility, authority, and accountability remain clear. MBO has many

benefits, since it:

1. Provides a way for measuring objectively the performance of subordinates.

2. Co-ordinates individual performance with company goals.

3. Clarifies the job to be done and defines expectations of job accomplishment.

4. Improves superior-subordinate relationships through a dialogue that takes place regularly.

5. Fosters increased competence, personal growth, and opportunity for career development

6. Aids in an effective overall planning system.

7. Supplies a basis for more equitable salary determination, especially incentive bonuses.

8. Develops factual data for promotion criteria.

9. Stimulates self-motivation, self-discipline and self-control.

10. Serves as a device for integration of many management functions.

MBO has certain potential problems, such as:

1. It often lacks the support and commitment of top management.

2. Its objectives are often difficult to establish.

3. Its implementation can create excessive paperwork if it is not closely monitored.

4. It concentrates too much on the short run at the expense of long-range planning.

5. It may lead to excessive time consuming.

Traditionally, in most performance evaluations a supervisor evaluates the performance of

subordinate. Recently, a new approach has been enunciated by the western management gurus,

which is known as 360 degree appraisal - a performance management in which people receive

performance feedback from those on all sides of them in the organisation - their boss, their

colleagues and peers, and their own subordinates, and internal and external customers. The list

can grow to include vendors and consultants, human resource professionals, suppliers and

business associates, even friends and spouses. The 360 degree feedback refers to the practice of

using multiple raters often including self-ratings in the assessment of individuals. Thus, the

feedback comes from all around. It is also a move towards participation and openness. Many

American companies are now using this 360 degree feedback. Companies that practice 360

degree appraisals include Motorola, Semco Brazil, British Petroleum, British Airways, Central

Televisions, and so on. Barring a few multinational companies, in India this system of appraisal

is uncommon.

This form of performance evaluation can be very beneficial to managers because it typically

gives them a much wider range of performance-related feedback than a traditional evaluation.

That is, rather than focusing narrowly on objective performance, such as sales increase or

productivity gains, 360 degree often focuses on such things as interpersonal relations and style.

Of course, to benefit from 360 degree feedback, a manager must have thick skin. The manager is

likely to hear some personal comments on sensitive topics, which may be threatening. Thus, a

360 degree feedback system must be carefully managed so that its focus remains on constructive

rather than destructive criticism.

Balance Score Card: The Balance Score Card (BSC) creates a template for measurement of

organisational performance as well as individual performance. It is a measurement based

management system, which enables organisations to clarify vision and strategy before initiating

action. It is also a monitoring system that integrates all employees at all levels in all departments

towards a common goal. BSC translates strategy into performance measures and targets, thus

making it operational and highly effective. It helps cascade corporate level measures to lower

level so that the employees can see what they must do well to improve organizational

Effectiveness and helps focus the entire organisation on what must be done to create

breakthrough performance. BSC was introduced in 1992 by Dr. Robert Kaplan and David Nortan

and has been successfully adopted by numerous companies worldwide. Assessment Centre

Experts from various departments are brought together to evaluate individuals or groups

specially their potentials for promotions.

PERFORMANCE APPRAISAL ASSESSMENT

The quality of an appraiser is much more crucial than the appraisal methods. It is desirable to

make the immediate superior a party to the appraisal programme. The assessment can be

accomplished by an individual or by a combination of the immediate superior, other managers

acquainted with the assessee’s work, a higher level manager, a personnel officer, the assessee

himself, and the assessee’s subordinates. Training of appraisers has been largely stressed as a

measure to improve performance appraisals. Appraisers can be trained with a view to improving

their ability to evaluate subordinates and discuss evaluations with them effectively.

The following questions can provide an assessment of performance appraisal system:

1. What purposes does the organisation want its performance appraisal system to serve?

2. Do the appraisal forms really get the information to serve the purposes?

3. Are the appraisal forms designed to minimise errors and ensure consistency?

4. Do the processes of the appraisal serve the purpose of effective communication between the

appraiser and the _appraisee?

5. Are supervisors rewarded for correctly evaluating and developing their employees?

6. Are the evaluation and developmental components separated?

7. Are superiors relatively free from task interference in doing performance appraisal?

8. Are the appraisals being implemented correctly?

The following questions serve as guidelines for assessing the end-product of performance

appraisal:

1. Did the appraisal session motivate the subordinate?

2. Did the appraisal build a better relationship between the supervisor and the subordinate?

3. Did the subordinate come out with a clear idea of where he or she stands?

4. Did the superior arrive at a fairer assessment of the subordinate?

5. Did the superior learn something new about the subordinate?

6. Did the subordinate learn something new about the superior and pressures he or she faces?

7. Does the subordinate have a clear idea of what corrective actions to be taken to improve

his/her own performance?

PERFORMANCE APPRAISAL IN PRACTICE

Traditionally appraisals are carried out by the supervisors of the employees. Some companies do

follow self appraisal and compare the same with the traditional appraisal of the supervisors. A

new approach has been recently enunciated by the western management gurus, which is known

as 360 degree appraisal whereby appraisals are required to be carried out not only by the

supervisors, but also by those supervised (subordinates) and peers. This approach also needs a re-

look in the context of leadership concepts being practiced universally. If one requires to be

appraised on how well he performs the leadership role, the appraisal should originate from the

followers (bottom to top approach) and not from their supervisors alone.

While the supervisors can appraise, on the performance standards, goals, targets, achievements,

the leadership attributes need to be appraised only by those being supervised. This argument is

quite valid for higher level executives including CEOs. Therefore, all the three approaches, top-

bottom, bottom-top and peer level appraisal will be very relevant. Perhaps, appropriate

weightage is required to be assigned for appraisals being carried out in the 360 degree system,

which is yet to take off seriously in many organisations.

It is quite disappointing to note that appraisals are not being carried out with the due importance

and seriousness they deserve though the systems provide scope for periodic and timely

appraisals. Normally appraisals are being carried out once a year or at the most twice a year as

per the existing practice. Many organisations do follow monthly and quarterly appraisals for

management trainees till they are confirmed, and follow the by-annual or annual appraisal

system thereafter.Appraisal is a continuous process, to be scientifically carried out day in day

out, if one has to seriously carry out appraisals.

CONCERNS AND ISSUES IN APPRAISAL

1. Identifying job responsibilities and duties and performance dimensions,

standards and goals.

2. Prioritizing and weighing performance dimensions and performance goals.

3. Determining appropriate methods for appraising performance.

4. Developing suitable appraisal instruments and scoring devices.

5. Establishing procedures that enhance fair and just appraisals of all

employees.

6. Providing performance feedback to all employees.

7. Relating observed and identified performance to the rewards provided by

organisation.

8. Designing, monitoring and auditing processes to ensure proper operation of

the system and to identify areas of weakness.

9. Granting employees opportunities for appeal whenever and wherever such

action is appropriate.

10. Training of employees in all phases of the appraisal system.

The basic issues addressed by performance appraisal are:

What to appraise?

How to appraise fairly and objectively?

How to communicate the appraisal and turn the total process into a motivator?

How the performance appraisal results can be put to good use?

How to implement the performance appraisal system smoothly?

COMPANY PROFILE

RESEARCH METHODOLOGY

Meaning of Research:

“Research means a search for knowledge”. Sometimes, it may refer to scientific and

systematic search pertinent information on a specific topic. Intact researcher is an art of scientific

investigation. Redman and Moray define researcher as a “systematic efforts to gain new

knowledge”. Some consider researcher is a movement from the known to the unknown. It is

actually a voyage of discovery. According to Clifford woody, researcher compromise,” define

and redefining problem, formulating hypothesis or suggested solution; collecting ,organizing and

evaluating data; making deduction and reaching conclusion; and at last carefully testing the

conclusion to determine whether they fit the formulating hypothesis”.

Researcher is thus an original contribution to the existing stock of knowledge making

for its advancement. It is the pursuit of truth with the help of study, observation, comparison and

experiment. In short, the study of knowledge through objective and systematic method consisting

of enunciating the problem, formulating the hypothesis collecting the facts or data, analyzing the

facts and researching certain conclusion either in the form of solution towards the concerned

problem or in certain generalist for some theoretical formulations.

SAMPLING UNIT:

The area, which is taken for study, is Ashok Leyland, Ennore, Chennai.

SAMPLE SIZE:

DESIGNATION SAMPLE SIZEEmployees 50

TOTAL 50

The sample size taken for the project is 50.

SAMPLING PROCEDURE

Convenience sampling has been used to collect the data from the respondents. Convenience

sampling technique is followed.Convenience sampling as the name implies is based on the

convenience of the researcher who is to select the sample. This type of sampling is also called

accidental sampling as the respondents in the sampling are included in it merely on account of

that being available on the spot where the survey is in process.

Thus the researcher may stand at a certain prominent point and interview all those or

selected people who pass through that place.

Period of study

The study was conducted for 1 month at Ashok Leyland, and data was collected from

(16.06.2009 to 15.07.2009).

STASTISTICAL TOOLS

The statistical tools used for analysis are:

Percentage method

Weighted average

PERCENTAGE METHOD

In this method frequency of the various criteria factors are tabulated and the

percentage for each value with respect to the total is found out. They are presented pictorially

by way of graphs in order to have better understanding.

The formula is = No of Respondents

Total Respondent

WEIGHTED AVERAGE METHOD

Under this method the relative importance of the different items is not the same. The

term weights stands for relative importance of the different items. The formula for calculating

the weighted arithmetic mean is

X = ∑WF

∑F

Where,

X = weighted arithmetic mean

F = Frequency or no of respondents

LIMITATIONS OF THE STUDY

1.Time is important limitation due to the time constraints only few employees is taken for the

study.

2. The study is limited to the employees deployed in ashok leyland.

3. The study process often overlooked by management so redtapism involvement could

manipulated desired result.

DATA ANALYSIS AND INTERPRETATION

Appraisee Survey

1. Expectations from Appraisal System :

Respondents were asked to rank the various options according to their preference. (Rank

1 being most preferred and rank 6 being least preferred). Then scoring was given on the

basis of ranks. 1 mark was allotted to rank 1, 2 marks for rank 2 and so on.

Particular Score Overall Rank

Salary Administration and Benefits 87 1

Determination of promotion or transfer 109 2

Assistance in goal 228 3

Guideline for training plan 254 4

An insight into your strengths and weakness 312 5

Decision to layoff 354 6

From the above table it can be seen that employees expect “Salary Administration and

Benefits” to be the main reason for conducting a Performance Appraisal. “Decision to

layoff” is of least importance as per the appraisee.

2. Awareness about Responsibilities :

Yes86%

No14%

Awareness about Responsibilities

From the graph it can be seen that majority of employees are aware about their

responsibilities, which implies that the appraisers have efficiently communicated to the

appraisees all the parameters that will be taken into account during appraisal.

3. Satisfaction Level among appraise regarding Appraisal System :

2%28%

42%

23% 5%

Satisfaction Level

Fully DissatisfiedPartially DissatisfiedSatisfiedPartially satisfiedFully satisfied

From graph it can be seen that majority of the respondents are satisfied with the appraisal

system. Only a meager 30% were dissatisfied with the Performance Appraisal programs.

4. Awareness about performance ratings :

Yes34%

No66%

Awarness about Performance Rating

This clearly shows that majority of the employees are not aware about the performance

ratings that are taken into account while conducting a performance appraisal.

5. Alowing Self ratings :

Yes92%

No8%

Self Rating Should be allowed

From graph it can be seen that majority of respondents want self rating to be a method of

conducting the appraisals .

6. Chance to rate your own performance

Yes23%

No77%

Rate your own performance

From the graph we can see that majority of the employees are not given a chance to rate

their own performance in the organization.

7. Timing of Appraisals

2% 3% 11%

84%

Timing of Appraisal

MonthlyQuaterlyHalf YearlyAnnual

This shows that most of the organisations conduct their Performance Appraisal programs

annually. A very small percentage of the organisations conduct Performance Appraisals

on a half yearly basis. The share of the quarterly and monthly appraisals are extremely

minimal.

8. Credibility of Appraiser

38%

63%

Credibility of Appraiser

YesNo

This shows that according to the employees/appraisees the credibility of the appraiser is

extremely important and it has an effect on the overall Performance appraisal program.

9. Complaint channel for employees

27%

73%

Complaint Channel for employees

YesNo

This shows that there is no proper complaint channel existing in the organisations for the

employees who are dissatisfied with the performance appraisal system.

10. Standards communicated to employees

36%

64%

Standards Communicated to Employees

YesNo

From this it can be seen that there is a clear majority among the employees who say that

the standards on the basis of which the performance appraisal is carried out is not

communicated to the employees before hand.

11. Performance Appraisal

91%

9%

Performance Appraisal

Immediate SupervisorPeer appraisalRating committeeSelf RatingAppraisal by subordinates

Almost all the Performance Appraisals are carried our by the Immediate Supervisor in

these organisations. In very few organisations, Rating committees carry out the

performance appraisals. None of the organisations use Peer Appraisals, Appraisals by

subordinates and Self rating as a method of Performance Appraisal.

12. Clear understanding of Appraisee’s job

77%

23%

Clear understanding of Appraisee's Job

YesNo

This shows that the performance Appraisal programs are successful in giving a clear

understanding of the appraisee’s job to both appraiser and appraisee.

13. Objectives of Appraisal System

50%50%

Objective of Appraisal System

YesNo

From the figure we can derive that the objective for conducting the Appraisal system is

clear only to half of the employees. The remaining half are not clear about the objective

for which the Performance Appraisal is carried out.

14. Good communication between top management and business goals

22%

78%

Good communication between Top man-agement and Business goal

YesNo

This shows that the appraisal systems do not provide a good communication flow of the

top-management plans and business goals to the staff below.

15. Comments and suggestions to be considered

98%

2%

Comments and suggestion to be considered

YesNo

Almost all the employees expect that their comments and suggestions should be taken

into consideration while conducting the Performance Appraisal.

16. Post Appraisal interview

30%

70%

Post Appraisal Interview

YesNo

As per the response from the employees we can see that there is no interview conducted

after the appraisal program for majority of the employees.

Appraiser Survey

1. Purpose of Appraisal

Salary Administration and Benefits

Determination of promotion or transfer

Decision on layoff

Assistance in goal

Guideline for training Plan

An insight into your strengths and weakness

27

24

42

72

69

81

Purpose of Appraisal SystemScore

Respondents were asked to rank the various options according to their preference. (Rank

1 being most preferred and rank 6 being least preferred). Then scoring was done on basis

of these ranks. 1 mark was allotted to rank 1, 2 marks for rank 2 and so on. Then the total

score for each purpose was calculated and overall ranking was given.

Particular Score Overall Rank

Determination of promotion or transfer 24 1

Salary Administration and Benefits 27 2

Decision to layoff 42 3

Guideline for training plan 69 4

Assistance in goal 72 5

An insight into your strengths and weakness 81 6

From table it can be seen that appraiser considers “Determination of promotion or

transfer” & “Salary administration and Benefits” as two important factors for conducting

an Appraisal.

2. Appraisal System

27%

60%

13%

Appraisal System

12345

In this question appraiser was asked to rate how helpful the appraisal system is, from the

graph it can be seen that majority of appraisers have rated 5,4 & 3 which implies that

Performance Appraisal system is very helpful in Planning their work. Also most of the

appraisers are satisfied with the appraisal system.

3. Support from subordinate

100%

Support from Subordinate

YesNo

This question was asked to find out how helpful appraisal system is in communicating the

support that apprasier needs from appraisee. From results it is seen that the performance

appraisal system is very helpful in communicating the support and help needed by the

appraiser from the appraisee.

4. Type of Appraisal System

13%

13%

73%

Type of Appraisal System

Assessment centreMBOBARS360 degree feedbackBalance scorecard

From results its clear that majority of companies prefer to use “360 degree feedback”

system for Performance Appraisal. As 360 degree feedback gives feedback of appraisee

from everyone interacting with him, it is more reliable and hence most preferred.

5. Performance Appraisal criteria

20%

60%

20%

Performance Appraisal criteria

Quantitative outcome criteriaQualitative process criteriaQuantitative process criteria

From results we can see that Qualitative Process is considered as the most important

criteria for which the Performance appraisal programs are carried out, which shows that

companies consider Qualitiy of product & service and Customer satisfaction as most

important factors.


87%

13%

Timing of Appraisal

AnnualQuaterlyHalf YearlyMonthlyAnytime

From graphs we can see that most of companies conduct appraisals on annual basis.

Some companies conduct quaterly also.

7. Effect of poor Appraisal System

73%

27%

Effect of Poor Appraisal System

De-motivationRetentionIneffective teamwork

It can be seen from results that most of the employees get De-motivated because of a

poorly conducted appraisal. To some extent employees dont coordinate with their team

members. Thus resulting in reduction of output.

8. Communication between top management and staff

100%

Good Communication between Top Man-agement and Staff

YesNo

All appraisers totally agree that performance appraisal helps in communicating the top

management plans and business goals to staff at lower level.

9. Insight to Apprasiee’s strength and weakness

33%

67%

Insight into Appraisee's Strength and weakness

YesNo

It is evident from the results that performance appraisal system doesn’t help the appraiser

in understanding strength and weakness of apraisee.

10. Appraisee’s comment and suggestion

13%

87%

Appraisee's comment & suggestion

YesNo

From the results it can be seen that appraisee’s comments and suggestion are not taken

into consideration before Performance Appraisal. Performance Appraisal system is

designed by appraiser without consulting appraisee.

11. Performance Appraisal

100%

Performance Appraisal

Immediate supervisorPeer appraisalRating committeesSelf-ratingAppraisal by subordinates

It is evident from the results that performance appraisal is conducted by the Immediate

Supervisor in all the companies.

12. Understanding of Apprasiee’s Job

100%

Understanding of Appraisee's Job

YesNo

From this it is clearly seen that according to appraiser there is a clear and joint

understanding of the appraisee’s job.

13. Standards for Performance Appraisal

87%

13%

Standards for Performance Appraisal

YesNo

From results it is evident that Performance appraisal standards are very well

communicated to Appraisee before the Appraisal is carried out.

14. Self rating in Performance Appraisal

100%

Self Rating in Performance Appraisal

YesNo

From results it can be clearly seen that the Appraisee is not given a chance to rate his own

performance.

\

15. Action after Performance Appraisal

100%

Action after Performance Appraisal

YesNo

This shows that most of the companies act upon the results of their Performance Appraisal

program.

Findings

………….has separate appraisal system for each level of employees. These appraisal

systems differ on the factors on which a person is rated and the nature of duties

handled by him.

…………it is seen that the employees are not satisfied with the way they are

appraised or they haven’t been appraised properly. For this matter, almost all the

companies have interview and discussion.

The frequency of appraisal in all organisations is yearly. Where appraisal is based on

Key Result Areas, a mid-term review is also undertaken. This data is then compiled

and the final appraisal is conducted at the end of the year.

In most of the cases the immediate supervisors is the appraiser but sometimes it is

also the HR department or the HOD.

All organizations have goal setting as part of appraisal. The performance is evaluated

against these targets.

On an average 85% of the employees in an organization are motivated by

performance appraisal.

…………….use the data that is maintained for every employee to compare the

performance over a period of time. Some companies also use this data for making

decision regarding job rotation, succession planning. Very few companies make use

of this data for retrenchment as proof of poor performance.

A good deal of respondents felt that appraisal is likely to be more successful when it

is linked with financial and semi-financial incentives like promotion, bonus,

increments. This increases the commitment from the parties concerned the appraisal

and the appraisee.

360o degree feedback system is not very popular in the Indian companies. Among the

companies under study, this system has been implemented in ………….. This system

can be adopted and is successful only in the presence of an open organisational

climate.

Most of the companies have a separate appraisal system for the new employees, who

are on probation. This basically to confirm them.

………….. is satisfied with the current performance appraisal system and do not

require any changes…………they would like to provide more training to appraisers,

weightage to few traits of employee need to be rewarded, if possible appraisal form

should be standardised.

In most of the organizations training is provided for the appraisal system one to two

weeks before the appraisal and also when new or revised Performance appraisal

system is introduced.

Performance appraisal is surly a good indicator (about 80%) for the training and

developmental need of the employees.

No monitoring is done to find out any loop holes in the performance appraisal system

and if it exists, it is on informal basis (feedback every year).

Awareness sessions about the performance appraisal (objectives and importance) are

conducted. It is normally done for new employees.

Conclusions and Suggestions

Performance appraisal should not be perceived just as a regular activity but its

importance should be recognized and communicated down the line to all the

employees.

There should be a review of job analysis, job design and work environment based on

the performance appraisal.

It should bring more clarity to the goal and vision of the organisation.

It should provide more empowerment to the employees.

New methods of appraisal should be adopted so that both appraiser and the appraisee

take interest in the appraisal process.

The employees who have excellent performance should be used as a mentor for other

employees which would motivate others to perform better.

Employees should be given feedback regarding their appraisal. This will help them to

improve on their weak areas.

Financial and non-financial incentives should be linked to the annual appraisal system

so that employees would be motivated to perform better.

New mechanisms should be evolved to educe the time factor involved in the

procedure of appraisal. Introducing online-appraisal can do this.

The frequency of training program for the appraiser should be increased and these

sessions should be made interactive.

The awareness sessions for the employees/appraisees should be made more

interactive and the views and opinion of the appraisees regarding appraisal should be

given due consideration.

Assistance should be sought from specialists for framing a proper appraisal system

that suits the organisation climate. Constant monitoring of the appraisal system

should be done through discussions, suggestions, interactions.

Combining the different methods of appraisal can minimize the element of biasness in

an appraisal. Like the Rating method combined with assessment center method would

give an evidence of poor/unfavorable or outstanding behaviour of the appraisee, if

any.

Use of modern appraisal techniques like 360o appraisal, assessment centers which are

more effective.

More transparency should be brought about in the appraisal system.

The appraisal system should cover all employees in the organisation both white collar

and blue-collar jobs.

Recognizing the good performers i.e., appraisees who have accomplished the targets

for the year can help in getting more commitment from the employees.

Information regarding the performance of the employees should be kept in proper

manner.

Some of the performance appraisals should be conducted by the top management so

that they can understand the employees and their needs, behaviour better and to find

out the loopholes.

Performance appraisal should be effectively link to the performance management

system of the organisation.

…………….still follow the traditional methods of appraisal that should be

transformed into the modern one.

Questions for Appraisee

Name: ___________________________ Contact No: __________________________

1. What do you expect from a Performance appraisal :

(Rank the options from 1 to 6; 1 being most preferred & 6 being least preferred)

Detail Rank



Decision on layoff

Assistance in goal


An insight into your strengths and weakness

2. Do you know what exactly is expected from you at work?a. Yes b. No

3. Are you satisfied with the appraisal system?

1 2 3 4 5(1 = Least satisfied; 5 = Most satisfied)

4. Are you aware of performance ratings?a. Yes b. No

5. Do you think you should be given an opportunity to rate your own performance?

a. Yes b. No

6. Are you given a chance to rate your own performance?a. Yes b. No


a. Monthlyb. Quarterlyc. Half Yearlyd. Annuale. Anytime

8. Does the credibility of Appraiser affect the Performance Appraisal System?a. Yes b. No

9. Is there a complaint channel for the employees who are dissatisfied with the performance appraisal system?

a. Yes b. No

10.Are the standards on the basis of which the performance appraisal is carried out communicated to the employees before hand?

a. Yes b. No

11.Who conducts the performance appraisal”?a. Immediate supervisorb. Peer appraisalc. Rating committeesd. Self-ratinge. Appraisal by subordinates

12.Is the performance Appraisal successful in giving a clear understanding of the appraisee’s job to both appraiser and appraise?

a. Yes b. No

13.Are the objectives of appraisal system clear to you?a. Yes b. No

14.Does the appraisal system provide a good communication between the top-management plans and business goals to staff below?

a. Yes b. No

15.Do you want your comments and suggestions to be taken into consideration during appraisal?

a. Yes b. No

16.Is there a post appraisal interview conducted?a. Yes b. No

Questions for Appraiser

Name: ___________________________ Contact No: __________________________

1. Purpose of Performance appraisal :

(Rank the options from 1 to 6; 1 being main purpose & 6 being last purpose)

Detail Rank


Retain performing employees


Decision on layoff

Assistance in goal


2. Is the Performance Appraisal helping you to plan your work well?1 2 3 4 5(1 = Least helpful; 5 = Most helpful)

3. Does the system provide you a chance to communicate the support you need from your subordinate to perform the job well.

a. Yes b. No4. Which appraisal system is being employed in the company?

a. Assessment centreb. MBOc. BARSd. 360 degree feedbacke. Balance scorecard

5. Performance Appraisal criteria a. Quantitative outcome criteria (Sales volume, Sales price, Productivity,

Goal accomplishment rate)b. Qualitative process criteria (Quality of product or service, Customer

satisfaction)c. Quantitative process criteria (Efficiency, Cost/expenses, Attendance)d. Qualitative process criteria (Judgment, Work attitude, Leadership,

Conduct /Trait)

6. Timing of Appraisalsa. Monthlyb. Quarterlyc. Half Yearlyd. Annuale. Anytime

7. What do you think is the effect of a poor appraisal systema. De-motivationb. Retentionc. Ineffective teamwork

8. Does the appraisal system provide a good communication between the top-management plans and business goals to staff below?

a. Yes b. No

9. Does it give insight to appraisee regarding his strength or weakness?a. Yes b. No

10.Are employee’s comments and suggestions taken into consideration before the appraisal?

a. Yes b. No

11.Who conducts the performance appraisal”a. Immediate supervisorb. Peer appraisalc. Rating committeesd. Self-ratinge. Appraisal by subordinates

12.Is the performance Appraisal successful in giving a clear understanding of the appraisee’s job to both appraiser and appraise?

b. Yes b. No

13.Are the standards on the basis of which the performance appraisal is carried out communicated to the employees before hand?

a. Yes b. No

14.Do you give an opportunity to the appraisee to rate his own performance?a. Yes b. No

15.Do you act upon the results of your performance appraisal?a. Yes b. No

16. If yes, then mention the remedial measures taken?

BOOKS

Human resource management – Aswathappa

Human resource management – V. S. Rao

Human resource management – Gary dessler

Personnel management - C.B.mamoria

Evaluating management training and development - B.R.virmani premila seth

Strategic human resource management – Srinivas.R.Kandula

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