Chapter 1

Introduction to
Performance
Appraisal

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INTRODUCTION

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.

The human inclination to judge can create serious motivational, ethical and legal
problems in the workplace. Without a structured appraisal system, there is little chance of
ensuring that the judgements made will be lawful, fair, defensible and accurate.

Performance appraisal systems began as simple methods of income justification. That is,
appraisal was used to decide whether or not the salary or wage of an individual employee
was justified.

The process was firmly linked to material outcomes. If an employee's performance was
found to be less than ideal, a cut in pay would follow. On the other hand, if their
performance was better than the supervisor expected, a pay rise was in order.

Little consideration, if any, was given to the developmental possibilities of appraisal. It

was felt that a cut in pay, or a rise, should provide the only required impetus for an
employee to either improve or continue to perform well. Sometimes this basic system
succeeded in getting the results that were intended; but more often than not, it failed.

For example, early motivational researchers were aware that different people with
roughly equal work abilities could be paid the same amount of money and yet have quite
different levels of motivation and performance.

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These observations were confirmed in empirical studies. Pay rates were important, yes;
but they were not the only element that had an impact on employee performance. It was
found that other issues, such as morale and self-esteem, could also have a major
influence.

As a result, the traditional emphasis on reward outcomes was progressively rejected. In

the 1950s in the United States, the potential usefulness of appraisal as tool for motivation
and development was gradually recognized. The general model of performance appraisal,
as it is known today, began from that time.

Modern Appraisal

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.

In many organizations - but not all - appraisal results are used, either directly or
indirectly, 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).

Whether this is an appropriate use of performance appraisal - the assignment and

justification of rewards and penalties - is a very uncertain and contentious matter.

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Performance Appraisal

Performance appraisal (PA) is one of the important components in the rational and
systemic process of human resource management. The information obtained through
performance appraisal provides foundations for recruiting and selecting new hires,
training and development of existing staff, and motivating and maintaining a quality
work force by adequately and properly rewarding their performance. Without a reliable
performance appraisal system, a human resource management system falls apart,
resulting in the total waste of the valuable human assets a company has.

There are two primary purposes of performance appraisal: evaluative and developmental.
The evaluative purpose is intended to inform people of their performance standing. The
collected performance data are frequently used to reward high performance and to punish
poor performance. The developmental purpose is intended to identify problems in
employees performing the assigned task. The collected performance data are used to
provide necessary skill training or professional development.

The purpose of performance appraisal must be clearly communicated both to raters and
ratees, because their reactions to the appraisal process are significantly different
depending on the intended purpose. Failure to inform about the purpose or misleading
information about the purpose may result in inaccurate and biased appraisal reports.

Critical Criteria of Developing a PA system

In order for performance appraisal information to be useful, the PA system must be able
to consistently produce reliable and valid results. Measurement items in the performance
appraisal system must be designed in such a way that the results of rating are consistent
regardless of the raters and the timing of the assessment.

Another critical criterion in developing a PA system is the validity of the measurements.

It is important to make sure that the appraisal items are really measuring the intended
performance or target behavior. If they are not, the PA system encourages the wrong kind
of work behaviors and produces unintended, frequently negative, organizational

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outcomes. For instance, if the number of traffic violation tickets issued is an item in
performance appraisal of police officers, it encourages them to sit on a corner of a street
and pull over as many

violators as possible during heavy traffic hours. The true purpose of a police force, which
is public safety, may become secondary to issuing a large number of tickets for many
officers.

Basis of Evaluation
The first important step in developing a PA system is to determine which aspects of
performance to evaluate. The most frequently used appraisal criteria are traits,
behaviours, and task outcomes.

Traits. Many employees are assessed according to their traits, such as personality,
aptitudes, attitudes, skills, and abilities. Traits are relatively easy to assess once a rater
gets to know ratees. But traits are not always directly related to job per formance. Trait-
based assessment lacks validity and thus frequently raises legal questions.

Behaviors. For many jobs, performance is so broadly defined or so conceptual in nature

— such as ensuring public safety in the police de partment—that it is hard to come up
with reliable performance measures. In such cases, desirable behaviors can be identified
and assessed in the belief that such behaviors lead to successful performance. Such
behavior-focused assessment encourages employees to adopt desirable behavioral
patterns in the workplace.

Task outcomes. When information about task outcomes is readily available, it is the
most appropriate factor to use in evaluating performance. When an organization has a
clear and measurable goal as in the case of a sales force, this approach is recommended.
However, it has its own pitfalls. There is a problem if employee behaviors are not directly
related to the task out-come. Too narrow a focus on measuring out-come only sometimes
results in unintended negative consequences. When sales staff narrowly focuses on target
sales figures to increase their performance measure, for example, they are encouraged to
help a few large-volume customers and to ignore many smaller buyers. This may result in
poor customer service on the floor.

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Evaluation is done by

The most common raters of performance are employees' immediate supervisors, who are
usually in the best position to know and observe the employees' job performance. They
are also responsible for employees' work. Their evaluation is a powerful tool in
motivating employees to achieve successful and timely completion of tasks. However, as
a result of working together over a long time with the same employees, the immediate
supervisor may build up a fixed impression about each employee and use it every time he
or she has to evaluate performance.

Some companies find that subordinates are in an excellent position to observe and
evaluate their managers' performance, especially when it comes to measuring effective
management of their department. While there is merit in asking subordinates to evaluate
how they are managed, such evaluation may turn into a popularity contest. Accurate and
objective assessment may not be obtained if employees are fearful of possible retaliation
from their supervisors. Anonymity of the evaluators is key to the successful use of
subordinates for objective evaluation.

Other raters who are frequently used in some companies include peers, customers, and
the employees themselves. Peer evaluation is particularly useful when teamwork and
collegiality are important to successful task performance. Peer pressure is sometimes a
powerful motivator in encouraging teamwork among members. Customer satisfaction is
vital to a company's success and can be used in performance appraisal. Many companies
systematically collect performance information from customers, typically through
anonymous surveys and interviews. Self-assessment is also a useful means, especially
when the performance appraisal is intended to identify the training and development
needs of potential employees.

Each of these raters contributes to assessing certain aspects of performance. Since job
performance is multidimensional in nature, it is important to use different raters or a
combination of multiple raters depending on the goal of a performance appraisal system.
This multirater evaluation, or so-called 360-degree feedback system, is becoming

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increasingly popular among many American corporations, including General Electric,
AT&T, Warner Lambert, and Mobi

Figure1.1 Process of performance appraisal

Establishing performance standards: Appraisal systems require performance

standards, which serve as a benchmark against which performance is measured. To be
useful, standards should relate to the desired results of each job. Performance standards
must be clear to both the appraiser and the appraisee. These standards should be set after
thorough analysis of job. goals must be written down. They must be measurable within
certain time and cost consideration. for example, the regional sales officer may be
asked :The sales of color television sets in ghaziabad must increase by 1000 per month in
the next 6 months and the budget toward promotion expenses would Rs.5000 per month.

Criteria for identifying and writing good performance goals

i. What is the task to be accomplished?

ii. What will it look like when it is accomplished?

iii. When it must be accomplished?

iv. What are the cost considerations?

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Communicate the standards: performance appraisal includes at least two parties; the
appraiser who does the appraisal and the appraisee whose performance is being
evaluated. Both are expected to do certain things. The appraiser should prepare job
description clearly; help the appraisee set his goals and targets; analyse results
objectively; offer coaching and guidance to the appraisee whenever required and reward
good results. the appraisee should be very clear about what he is doing and why he is
doing it. For this purpose performance standards must be communicated to appraisee and
their reactions should be noted down right away. If necessary these standards must be
revised or modified.

Measure actual performance: After the performance standards are set and accepted ,the
next step is to measure actual performance. This require the use of dependable
performance measures, the ratings used to evaluate performance. performance measures
to be helpful must be easy to use, reliable, and report on the critical behaviours that
determines performance. four common sources of information which are generally used
by managers regarding how to measure actual performance are observation, statistical
reports, oral reports and written reports. performance measures may be objective or
subjective. objective performance measures are indications of job performance that can
be verified by others and are usually quantitative. objective criteria include quality of
production, degree of training needs and accidents in a given period, absenteeism, length
of service etc. subjective performance measures are ratings that are based on the personal
standards or opinions of those doing the evaluation, and are not verifiable by others.
subjective criteria include rating by superiors, overall goals, and socio-cultural values of
the environment. it should be noted here that objective criteria can be laid down while
evaluating lower level jobs which are specific and defined clearly. this is not the case
with middle level positions that are complex and vague.

Compare actual performance with standards and discuss the appraisal: Actual
performance may be better than expected and sometimes it may go off the track.
whatever be the consequences there is a way to communicate and discuss the final
outcome. the assessment of another person’s contribution and ability is not an easy task.

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It has serious emotional overtones as it effects the self esteem of the appraisee. any
appraisal based on subjective criteria is likely to be questioned by the appraisee and leave
him quite dejected and unhappy when the appraisal turns out to be negative.

Taking corrective action ,if necessary: Corrective action is of two types: one puts out
the fires immediately, while other destroys the root of the problem permanently.
immediate action sets things right and get things back on track whereas the basic
corrective action gets to the source of deviations and seeks to adjust the difference
permanently. basic corrective steps seeks to find out how and why performance deviates.

Basic Purposes

Effective performance appraisal systems contain two basic systems operating in

conjunction: an evaluation system and a feedback system.
The main aim of the evaluation system is to identify the performance gap (if any). This
gap is the shortfall that occurs when performance does not meet the standard set by the
organization as acceptable.
The main aim of the feedback system is to inform the employee about the quality of his
or her performance. (However, the information flow is not exclusively one way. The
appraisers also receives feedback from the employee about job problems, etc.)

One of the best ways to appreciate the purposes of performance appraisal is to look at it
from the different viewpoints of the main stakeholders: the employee and the
organization.

Employee Viewpoint
From the employee viewpoint, the purpose of performance appraisal is four-fold:
(1) Tell me what you want me to do
(2) Tell me how well I have done it
(3) Help me improve my performance
(4) Reward me for doing well.

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Organizational Viewpoint

From the organization's viewpoint, one of the most important reasons for having a system
of performance appraisal is to establish and uphold the principle of accountability.
For decades it has been known to researchers that one of the chief causes of
organizational failure is "non-alignment of responsibility and accountability." Non-
alignment occurs where employees are given responsibilities and duties, but are not held
accountable for the way in which those responsibilities and duties are performed. What
typically happens is that several individuals or work units appear to have overlapping
roles. The overlap allows - indeed actively encourages - each individual or business unit
to "pass the buck" to the others. Ultimately, in the severely non-aligned system, no one is
accountable for anything. In this event, the principle of accountability breaks down
completely. Organizational failure is the only possible outcome.
In cases where the non-alignment is not so severe, the organization may continue to
function, albeit inefficiently. Like a poorly made or badly tuned engine, the non-aligned
organization may run, but it will be sluggish, costly and unreliable. One of the principal
aims of performance appraisal is to make people accountable. The objective is to align
responsibility and accountability at every organizational level.

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 Chapter 2
METHODS OF
PERFORMANCE
APPRASIAL

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METHODS OF PERFORMANCE APPRAISAL

1. Results Method Management By Objectives (MBO)

The use of management objectives was first widely advocated in the 1950s by the noted
management theorist Peter Drucker.

MBO (management by objectives) methods of performance appraisal are results-oriented.

That is, they seek to measure employee performance by examining the extent to which
predetermined work objectives have been met.

Once an objective is agreed, the employee is usually expected to self-audit; that is, to
identify the skills needed to achieve the objective. Typically they do not rely on others to
locate and specify their strengths and weaknesses. They are expected to monitor their
own development and progress.

Advantages

The MBO approach overcomes some of the problems that arise as a result of assuming
that the employee traits needed for job success can be reliably identified and measured.

• 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.
• MBO advocates claim that the performance of employees cannot be
broken up into so many constituent parts - as one might take apart an
engine to study it. But put all the parts together and the performance may
be directly observed and measured.

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Disadvantages
MBO methods of performance appraisal can give employees a satisfying sense of
autonomy and achievement. But on the downside, they 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.
• One of the strengths of the MBO method is the clarity of purpose that
flows from a set of well-articulated objectives. But this can be a source of
weakness also. It has become very apparent that the modern organization
must be flexible to survive. Objectives, by their very nature, tend to
impose a certain rigidity.
• Of course, the obvious answer is to make the objectives more fluid and
yielding. But the penalty for fluidity is loss of clarity. Variable objectives
may cause employee confusion. It is also possible that fluid objectives
may be distorted to disguise or justify failures in performance.

2. Critical Incident Technique:

Under this method, the manager prepares lists of statements of very effective and
ineffective behaviour of an employee. These critical incidents or events represent the
outstanding or poor behaviour of employees on the job. The manager maintains logs on
each employee, whereby he periodically records critical incidents of the workers
behaviour. At the end of the rating period, these recorded critical incidents are used in the
evaluation of the workers’ performance. An example of a good critical incident of a sales
assistant is the following:

This method provides an objective basis for conducting a thorough discussion of an

employee’s performance. This method avoids recency bias (most recent incidents get too
much emphasis). This method suffers however from the following limitations:

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  Negative incidents may be more noticeable than positive incidents.
 The supervisors have a tendency to unload a series of complaints about incidents
during an annual performance review session.
 It results in very close supervision which may not be liked by the employee.
 The recording of incidents may be a chore for the manager concerned, who may
be too busy or forget to do it.
Most frequently, the critical incidents technique of evaluation is applied to evaluate the
performance of superiors rather than of peers of subordinates.

3. Graphic Rating Scale:

Perhaps the most commonly used method of performance evaluation is the graphic rating
scale. Of course, it is also one of the oldest methods of evaluation in use. Under this
method, a printed form, as shown below, is used to evaluate the performance of an
employee. A variety of traits may be used in these types of rating devices, the most
common being the quantity and quality of work. The rating scales can also be adapted by
including traits that the company considers important for effectiveness on the job. A
model of a graphic rating scale is given below.

Table: Typical Graphic Rating Scale

Employee Name................... Job title.................
Department......................... Rate...............
Data..................................

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 Table 1.1 Graphic Rating Scale
Quantity of work: Volume Unsatisfactory Fair Satisfactory Good Outstanding
of work under normal
working conditions
Quality of work: Neatness,
thoroughness and accuracy
of work Knowledge of job
A clear understanding of the
factors connected with the
job
Attitude: Exhibits
enthusiasm and
cooperativeness on the job
Dependability:
Conscientious, thorough,
reliable, accurate, with
respect to attendance,
reliefs, lunch breaks, etc.
Cooperation: Willingness
and ability to work with
others to produce desired
goals.

The rating scale is the most common method of evaluation of an employee’s performance
today. One positive point in favour of the rating scale is that it is easy to understand, easy
to use and permits a statistical tabulation of scores of employees. When ratings are
objective in nature they can be effectively used as evaluators. The graphic rating scale
may however suffer from a long standing disadvantage, i.e., it may be arbitrary and the
rating may be subjective. Another pitfall is that each characteristic is equally important in
evaluation of the employee’s performance and so on.

4. 360 degree performance appraisal

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In human resources, 360-degree feedback, also known as 'multi-rater feedback', 'multi
source feedback', or 'multi source assessment', is employee development feedback that
comes from all around the employee. "360" refers to the 360 degrees in a circle.

The feedback would come from subordinates, peers, and managers in the organizational
hierarchy, as well as self-assessment, and in some cases external sources such as
customers and suppliers or other interested stakeholders. It may be contrasted with
upward feedback, where managers are given feedback by their direct reports, or a
traditional performance appraisal, where the employees are most often reviewed only by
their manager.

The results from 360-degree feedback are often used by the person receiving the
feedback to plan their training and development. The results are also used by some
organizations for making promotional or pay decisions, which are sometimes called
"360-degree review."

Benefits

• Individuals get a broader perspective of how they are perceived by others than
previously possible.
• Increased awareness of and relevance of competencies.
• Gaining acceptance of the principle of multiple stakeholders as a measure of
performance.
• Encouraging more open feedback — new insights. .
• Provided a clearer picture to senior management of individual’s real worth
• Opens up feedback and gives people a more rounded view of performance than they
had previously.
• Identifying key development areas for the individual, a department and the
organization as a whole.
• Identifying strengths that can be used to the best advantage of the business.
• A rounded view of the individual’s/ team’s/ organization’s performance and what the
strengths and weaknesses are.

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• Raised the self-awareness of people managers of how they personally impact upon
others — positively and negatively.
• Supporting a climate of continuous improvement.

4. BEHAVIORAL OBSERVATION SCALE

A QUALITATIVE based performance appraisal (PA) method has been developed to

handle this problem, called Behavioral Observation Scale (BOS). The rationale is simple.
Good behavior will produce good performance, bad behavior will be a distortion. This
method is applicable for production-employees performance, too.

The key factor of measurement in this method is determining the behaviors in workplace
that related to the success or the failure, partially or generally, to the jobs.

There are some consideration in making an effective BOS:

1. The behaviors on the job must be JOB EVALUATION based analysis.
2. Critical Incident Technique (CIT) should be performed to minimize the bias of
performance measurement

Benefits of Appraisal

Perhaps the most significant benefit of appraisal is that, in the rush and bustle of daily
working life, it offers a rare chance for a supervisor and subordinate to have "time out"
for a one-on-one discussion of important work issues that might not otherwise be
addressed. Almost universally, where performance appraisal is conducted properly, both
supervisors and subordinates have reported the experience as beneficial and positive.
Appraisal offers a valuable opportunity to focus on work activities and goals, to identify
and correct existing problems, and to encourage better future performance. Thus the
performance of the whole organization is enhanced.

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For many employees, an "official" appraisal interview may be the only time they get to
have exclusive, uninterrupted access to their supervisor. Said one employee of a large
organization after his first formal performance appraisal, "In twenty years of work, that's
the first time anyone has ever bothered to sit down and tell me how I'm doing."
The value of this intense and purposeful interaction between a supervisors and
subordinate should not be underestimated.

Motivation and Satisfaction

Performance appraisal can have a profound effect on levels of employee motivation and
satisfaction - for better as well as for worse. Performance appraisal provides employees
with recognition for their work efforts. The power of social recognition as an incentive
has been long noted. In fact, there is evidence that human beings will even prefer
negative recognition in preference to no recognition at all.
If nothing else, the existence of an appraisal program indicates to an employee that the
organization is genuinely interested in their individual performance and development.
This alone can have a positive influence on the individual's sense of worth, commitment
and belonging. The strength and prevalence of this natural human desire for individual
recognition should not be overlooked. Absenteeism and turnover rates in some
organizations might be greatly reduced if more attention were paid to it. Regular
performance appraisal, at least, is a good start.

Training and Development

Performance appraisal offers an excellent opportunity - perhaps the best that will ever
occur - for a supervisor and subordinate to recognize and agree upon individual training
and development needs.During the discussion of an employee's work performance, the
presence or absence of work skills can become very obvious - even to those who
habitually reject the idea of training for them!
Performance appraisal can make the need for training more pressing and relevant by
linking it clearly to performance outcomes and future career aspirations.
From the point of view of the organization as a whole, consolidated appraisal data can
form a picture of the overall demand for training. This data may be analysed by variables

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such as sex, department, etc. In this respect, performance appraisal can provide a regular
and efficient training needs audit for the entire organization.

Recruitment and Induction

Appraisal data can be used to monitor the success of the organization's recruitment and
induction practices. For example, how well are the employees performing who were hired
in the past two years? Appraisal data can also be used to monitor the effectiveness of
changes in recruitment strategies. By following the yearly data related to new hires (and
given sufficient numbers on which to base the analysis) it is possible to assess whether
the general quality of the workforce is improving, staying steady, or declining.

Employee Evaluation
Though often understated or even denied, evaluation is a legitimate and major objective
of performance appraisal. But the need to evaluate (i.e., to judge) is also an ongoing
source of tension, since evaluative and developmental priorities appear to frequently
clash. Yet at its most basic level, performance appraisal is the process of examining and
evaluating the performance of an individual.
Though organizations have a clear right - some would say a duty - to conduct such
evaluations of performance, many still recoil from the idea. To them, the explicit process
of judgement can be dehumanizing and demoralizing and a source of anxiety and distress
to employees. It is been said by some that appraisal cannot serve the needs of evaluation
and development at the same time; it must be one or the other.But there may be an
acceptable middle ground, where the need to evaluate employees objectively, and the
need to encourage and develop them, can be balanced.

Common Mistakes
Where performance appraisal fails to work as well as it should, lack of support from the
top levels of management is often cited as a major contributing reason.
Opposition may be based on political motives, or more simply, on ignorance or disbelief
in the effectiveness of the appraisal process.

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It is crucial that top management believe in the value of appraisal and express their
visible commitment to it. Top managers are powerful role models for other managers and
employees. Those attempting to introduce performance appraisal, or even to reform an
existing system, must be acutely aware of the importance of political issues and
symbolism in the success of such projects.

Fear of Failure
There is a stubborn suspicion among many appraisers that a poor appraisal result tends to
reflect badly upon them also, since they are usually the employee's supervisor. Many
appraisers have a vested interest in making their subordinates "look good" on paper.
When this problem exists (and it can be found in many organizations), it may point to a
problem in the organization culture. The cause may be a culture that is intolerant of
failure. In other words, appraisers may fear the possibility of repercussions - both for
themselves and the appraisee.

Judgement Aversion
Many people have a natural reluctance to "play judge" and create a permanent record
which may affect an employee's future career. This is the case especially where there may
be a need to make negative appraisal remarks.
Training in the techniques of constructive evaluation (such as self-auditing) may help.
Appraisers need to recognize that problems left unchecked could ultimately cause more
harm to an employee's career than early detection and correction.
Organizations might consider the confidential archiving of appraisal records more than,
say, three years old.

Feedback-Seeking
It occurs where a poor performing employee regularly seeks informal praise from his or
her supervisor at inappropriate moments. Often the feedback-seeker will get the praise
they want, since they choose the time and place to ask for it. In effect, they "ambush" the
supervisor by seeking feedback at moments when the supervisor is unable or unprepared

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to give them a full and proper answer, or in settings that are inappropriate for a frank
assessment.

Appraiser Preparation
The bane of any performance appraisal system is the appraiser who wants to "play it by
ear". Such attitudes should be actively discouraged by stressing the importance and
technical challenge of good performance appraisal. Perhaps drawing their attention to the
contents of this web site, for example, may help them to see the critical issues that must
be considered.

Employee Participation
Employees should participate with their supervisors in the creation of their own
performance goals and development plans. Mutual agreement is a key to success. A plan
wherein the employee feels some degree of ownership is more likely to be accepted than
one that is imposed. This does not mean that employees do not desire guidance from their
supervisor; indeed they very much do.

Performance Management
One of the most common mistakes in the practice of performance appraisal is to perceive
appraisal as an isolated event rather than an ongoing process. Employees generally
require more feedback, and more frequently, than can be provided in an annual appraisal.
While it may not be necessary to conduct full appraisal sessions more than once or twice
a year, performance management should be viewed as an ongoing process.
Frequent mini-appraisals and feedback sessions will help ensure that employees receive
the ongoing guidance, support and encouragement they need.
Of course many supervisors complain they don't have the time to provide this sort of
ongoing feedback. This is hardly likely. What supervisors really mean when they say this
is that the supervision and development of subordinates is not as high a priority as certain
other tasks.

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 Chapter 3
Review of Literature

22
REVIEW OF LITERATURE

Gross et al (1993) in her study concludes with a brief discussion of the importance of a
well-prepared staff to the library and delineates the essentialness of the performance
appraisal conference in a constructive library setting.

Roberts (1995) in his study has concluded that the relationship between developmental
performance appraisal systems and the generation of effective information for personnel
decision making based upon a sample of 240 municipal government personnel lists. The
results indicate that high quality performance appraisal information is associated with
developmental systems and an emphasis on procedural fairness.

Roberts (1996) in his study has concluded that the development, implementation and
evaluation of a successful performance appraisal system for probationary police officers
for a medium sized (330,000) Mid-Atlantic city. The case study summarizes the factors
that contributed to the system’s effectiveness. These factors include significant user
participation in the system’s development; thorough rater training; a clear articulation of
the system’s rationale, goals, and objectives; a rating format that is compatible with the
organization’s culture and congruent with the objectives of appraisal system.

Leon et al (1997) in his study has concluded that performance appraisal is crucial to
effective human resource management, but there is evidence that current processes are
not very effective. This study reports on experience with a relatively new appraisal
system in the operations office of a large federal agency. The method, multi-source
assessment (MSA, or “3600 Feedback’) utilizes ratings from peers, direct reports, the
supervisor, and the employee Comparison of survey results from before and after
implementation of MSA found significant improvement in employee perceptions of the
fairness and effectiveness of appraisals, particularly among protected classes. The
implications of these findings and suggestions for future research are discussed.

23
Rasch et al (2004) in their study has concluded that many colleges use some form of an
employee performance appraisal process. Yet, despite prevalent use, the performance
appraisal process is facing growing criticism. Critics of performance appraisals question
the validity of the process in general. Followers of W. Edwards Deming view the
performance appraisal process as divisive within the organization, and thus
counterproductive to organizational development. They state that the use of ratings in an
employee performance appraisal establishes arbitrary divisions among employees.
Furthermore, they contend that intrinsic rewards are far more effective as a motivator of
employees.

Williams et al (2004) in their study have concluded that performance appraisal research
over the last 10 years has begun to examine of the effects of the social context on the
appraisal process. Drawing from previous theoretical work, we developed a model of this
process and conducted a systematic review of the relevant research. This review of over
300 articles suggests that as a field we have become much more cognizant of the
importance of the social context within which the performance appraisal process
operates. First, research has broadened the traditional conceptualization of performance
appraisal effectiveness to include and emphasize rate reactions. Second, the influence that
the feedback environment or feedback culture has on performance appraisal outcomes is
an especially recent focus that seems to have both theoretical and applied implications.
Finally, there appears to be a reasonably large set of distal variables such as technology,
HR strategies, and economic conditions that are potentially important for understabding
the appraisal process, but which have received very little research attention. We believe
that the focus of recent performance appraisal research has widespread implications
ranging from theory development and enhancement to practical application.

Guidice (2007) in his study has concluded that audience characteristics influence rating
quality, as raters accountable to higher status or mixed-status audiences provided more
accurate ratings, whereas those accountable to a lower status audience provided more
inflated ratings. Participant note taking also mediated the relationship between
accountability to higher status or mixed-status audiences and rating accuracy.

24
Theresa et al (2008) in his study has concluded that the key components and outcomes of
a performance appraisal tool designed to measure and support the development of
registered nurses. The tool is organized by the domains of nursing and based on the
novice-to-expert framework. Core competency statements reflect required nursing
behaviors. Skill acquisitions level descriptors support identification of individual’s level
of practice. Self-evaluation, developmental goals, and specific evaluator feedback help
registered nurses focus their development.

25
 Chapter 4
Need, Scope and
Objectives
Of the Research

NEED, SCOPE & OBJECTIVES

26
NEED OF THE STUDY

In recent years the performance appraisal studies have been done in various
organizations, Banks but no one has conducted study to check the performance appraisal
system prevailing in the Management Institutes. So the need of present study is to have
the knowledge about the performance appraisal systems followed in the Management
Institutes.

SCOPE OF THE STUDY

To study the Performance Appraisal systems in various Management Institutes.The

institutes that are taken into study are GNA-IMT, LPU, Apeejay institute of management.

OBJECTIVES OF THE STUDY

1. To study awareness levels of performance appraisal system of employees working in

various Management Institutes.
2. To study methods frequently used in Institutes to appraise the employees.
3. To get an insight into the relative importance of performance appraisal to employers
and employees.
4. To study the benefits of performance appraisal to employers and employees.
5. To compare the performance appraisal systems in various Institutes and list the best
practices followed to appraise the employees.

27
Chapter 5
Research
Methodology

28
RESEARCH METHODOLOGY
Research methodology is a way to systematically solve the research problem. The
research methodology includes the various methods and techniques for conducting a
research. Research is thus an original contribution to the existing stock of knowledge
making for its advancement. The purpose of research is to discover the answers to the
questions through the application of scientific procedures.

Defining the Research Problem and Objectives

It is said, “A problem well defined is half solved”. The first step in research
methodology is to define the problem and deciding the research objective.

Research Design
Research Design is a blueprint or framework for conducting the marketing research
project. It specifies the details of the procedures necessary for obtaining the information
needed to structure and solve marketing research problem.

Sampling design
Sampling can be defined as the section of some part of an aggregate or totality on the
basis of which judgment or an inference about aggregate or totality is made. The steps
involved in sampling design are as follows:

Sampling unit
Sampling frame is the representation of the elements of the target population. Sampling
unit of present study is the employees of various management institutes in Jalandhar.

Sampling size
Sampling size is the total no. of units which are covered in the study. The sample size of
present study is 50.

29
Sampling Technique
Sampling Technique used in present study is Non-Probabilistic Convenient Sampling. It
is that type of sampling where the researcher selects the sample according to his or her
convenience.

Data Collection and Analysis

Source of data
Source of present research is both primary and secondary data. Primary data is obtained
from respondents with the help of widely used and well-known method of survey,
through a well-structured questionnaire. And the secondary data is collected from the
internet, magazines, journals and news papers.

Data can be collected in two ways

Primary data: Primary data are those, which are collected a fresh and for the first time
and thus happen to be original in character. It is the backbone of any study.
For the fulfillment of this project the primary data was collected through surveys done
personally.

Secondary data: Secondary data are those which have already been collected by
someone else and which have already been passed through the statistical process. In this
case one is not confronted with the problems that are usually associated with the
collection of original data. Secondary data either be published data or unpublished data.

LIMITATIONS OF THE STUDY

1. Limited scope
The sample size in relation to total population is small and hence cannot be the basis of
generalization
2. Existence of biases
While filling the questionnaire, personal biases of respondents might affect the responses
3. Hard enough to fetch the information

30
Respondents are sometimes unwilling and hesitant in replying to answers
4. Results may be inaccurate
The accuracy of the results is also limited to reliability of methods of investigation,
measurements and analysis of data

5.Lesser reliability
There is possibility of questions being misunderstood by a few respondents due to
variation in academic studies of the respondents.

Chapter 6

31
 Data Analysis and
Interpretation
Statement 1: The objective of Performance Appraisal in various institutes .
Table no. 6.1:
Showing the objectives of Performance Appraisal in various institutes
S. No. Particulars Number of Percentage of
Responses Responses
1. To make decisions regarding salary 15 30%
increase.
2. To identify training & development 10 20%
needs of employees.
3. To make decisions regarding 12 24%
transfers & promotions.
4. To facilitate communication 13 26%
between superior & his
subordinates.
Total 50 100%
Figure no. 6.1:
Showing the objectives of Performance Appraisal in various institutes

30

25
20
15 objective of performance
10 appraisal

5
0
1 2 3 4

Analysis & Interpretation:

From Responses of the employees of various management institutes, it is found that 20%
of the employees feel that the objective to conduct performance appraisal is to identify
training & development needs of employees, 26% feel that the objective is to facilitate

32
communication between superior & his subordinates, 24% employees feel that the
objective is To make decisions regarding transfers & promotions.

From the collected data and graph it is clear that out of the employees surveyed most of
the employees feel that the objective to conduct performance appraisal is to make
decisions regarding salary increase.

Statement 2: Frequency of Performance Appraisal

Table 6.2:
Frequency of Performance Appraisal
S. No. Particulars Number of Percentage of
Responses Responses
1. Monthly 5 10%
2. Quarterly 5 10%
3. Half Yearly 20 40%
4. Yearly 20 40%
Total 50 100%

Figure6.2:
Frequency of Performance Appraisal

40
35
30
25
20 frequency of performance
15 appraisal
10
5
0
monthly quarterly half yearly yearly

Analysis & Interpretation:

33
From Responses of the employees of various management institutes, we find that 40%
of the Institutes conduct Performance Appraisal half yearly and 10% of the institutes
conduct performance appraisal monthly.

From the collected data and graph it is clear that most of the institutes conduct
Performance Appraisal Half yearly and only few institutes conduct Appraisal yearly,

Statement 3: By whom performance appraisal is done

Table no. 6.3:
Conduction of Appraisal
S. No. Particulars Number of Percentage of
responses Responses
1. Immediate Supervisor 25 50%
2. HR Department 10 20%
3. HOD 9 18%
4. Rating Committee 6 12%
Total 50 100%

Figure no. 6.3:

Conduction of Appraisal

50

40

30

20 conduction of appraisal
10

0
imm ediate hr hod rating
supervisor departm ant com mittee

Analysis & Interpretation:

From Responses of the employees of various management institutes, we find that 50% of
the Appraisals are done by immediate superior, 18% of the Appraisals are done by HOD.

34
From the collected data and graph it is clear that most of the appraisals are done by
immediate superiors and few of the appraisals are done by rating committee of the
institutes.

Statement 4: Method of Performance Appraisal

Table no. 6.4:
Method of Performance Appraisal
S. No. Particulars Number of Percentage
Responses of Responses
1. Rating Method 10 20%
2. MBO 0 0%
3. Interview or 12 24%
Discussion
4. 360 Degree Appraisal 10 20%
5. Confidential Method 12 24%
6. Checklist Method 6 12%
Total 50 100%

Figure no. 6.4:

Method of Performance Appraisal

30
20
10 Method of PA

0 Method of PA
1 2 3 4 5 6

35
Analysis & Interpretation:

From the collected data and graph it is clear that most of the Institutes use confidential
method and rating method and interview method to appraise the employees and none of
the institutes use MBO.

Statement 5: Basis of Appraisal

Table no. 6.5:
Basis of appraisal
S. No. Particulars Number of Percentage of
Responses Responses
1. Traits 15 30%
3. Job Behaviour 10 20%
4. A combination of these 25 50%
Total 50 100%

Figure no. 6.5:

Showing the basis of appraisal

50

40
30

20 basis of appraisal
10

0
trait job behavior com bination
of thes e

Analysis & Interpretation:

From Responses of the employees of various management institutes, we find that
30 on the basis of Traits, 50% of the institutes Appraise employees on the basis of
combination of traits, job behavior.
From the collected data and graph it is clear that most of the Institutes appraise the
employees on the basis of combination of traits, job behavior.

36
Statement 6: To know whether Performance Appraisal Sheets are kept in record
and are used for further reference in the organization
Table no. 6.6:
Showing whether Performance Appraisal Sheets are kept in record
S. No. Particulars Number of Percentage of
Responses Responses
1. Yes 35 70%
2. No 0 0%
3. Can’t say 15 30%
Total 50 100%

Figure no. 6.6:

Showing whether Performance Appraisal Sheets are kept in record

70
60
50
40
30 Record Keeping
20
10
0
Yes No Can't Say

Analysis & Interpretation:

From Responses of the employees of various management institutes, we find that
70% of the employees feel that the performance appraisal sheets are kept in record and
30% of the employees do not know whether the sheets are kept in records or not.

From the collected data and graph it is clear that most of the Institutes keep Performance
Appraisal sheets in record.

37
Statement 7: The appraisal is discussed with employees on
Table 6.7:
Showing the discussion of appraisal with the employees
S. No. Particulars Number of Percentage of
Responses Responses
1. One to one Basis 40 80%
2. Group Basis 0 0%
3. Meetings 10 20%
4. Not Discussed 0 0%
Total 50 100%

Figure 6.7:
Showing the discussion of appraisal with the employees

80
70
60
50
40 Discussion of aapraisal
30 with employees
20
10
0
One to One Group Meeting Not
discussed

Analysis & Interpretation:

From responses of the employees of various management institutes, we find that 80% of
the Institutes discuss the Appraisal with their employees on one to one Basis.

From the collected data and graph it is clear that almost all the Institutes discuss the
Appraisal with employees on one to one basis.

38
Statement 8: To know the benefit of Performance Appraisal to employees
Table no. 6.8:
Showing the benefit of Performance Appraisal to employees
S. No. Particulars Number of Percentage of
Responses Responses
1. Enhances morale 5 10%
2. Helps in identifying weakness 20 40%
3. Source of motivation 15 30%
4. Helps in self development 10 20%
Total 50 100%

Figure no. 6.8:

Showing the benefit of Performance Appraisal to employees

40
35
30
25
20
15 Benefit of PA to em ployees
10
5
0
Enhance Morale Identify Motivation Self-
w eakness developm ent

Analysis & Interpretation:

From responses of the employees of various management institutes 40% of the
employees find that it helps in identifying weaknesses , 10% find that it enhances their
Morale, 30% find it as a source of motivation.
From the collected data and graph it is clear that majority of the employees feel that
performance appraisal helps in identifying weaknesses, some of the employees feel that it
enhances their Morale.

39
Statement 9: To know the benefit of Performance Appraisal to employers
Table no. 6.9:
Showing the benefit of Performance Appraisal to employers
S. No. Particulars Number of Percentage of
Responses Responses
1. To improve the company’s 10 20%
productivity
2 To identify what is required to 25 50%
perform a job (goals and
responsibilities of the job)
3. To assess an employee’s 9 18%
performance against these
goals
4. To work to improve the employee’s 6 12%
performance
Total 50 100%

Figure no. 6.9:

Showing the benefit of Performance Appraisal to employers

50

40

30

Benefit of PA to Employer
20

10

0
1 2 3 4

Analysis & Interpretation:

From the collected data and graph it is clear that majority of the
employers find the benefit of performance appraisal is to improve personnel decisions
regarding promotion, Job changes, and termination. Some of them find that it helps in
identifying what is required to perform a job, to improve the employee’s performance.

40
Statement 10: Are your personnel being regularly trained to fulfill the objectives of
the organization in changing situation.

Table no. 6.10:

Training to personnel

S. No. Particulars Number of Percentage of

Responses Responses
1. Yes 30 60%

2. No 5 10%

3. Can't say 15 30%

Total 50 100%

Figure no.5.10

Analysis & interpretation:

Majority of the employees feel that they are being trained to fulfill objectives of their
organization.

41
Chapter 7
Findings of the
study

42
FINDINGS OF THE STUDY

1. Majority of the employees feel that the objective to conduct performance appraisal is
to identify training & development needs of employees

2.Majority of the institutes conduct Performance Appraisal Half-yearly.

3.The appraisals in the Institutes aredone majorly by Immediate superior and few of the
appraisals are done by HOD of the institutes.

4.Institutes majorly use Confidential method, interview method and checklist method
to conduct performance appraisal.

5.Almost all the Institutes appraise their employees on the basis of combination of
traits, job behavior.

6.Most of the Institutes keep Performance Appraisal sheets in record.

7.Almost all the Institutes discuss the Appraisal with employees on one to one basis.

8.Majority of the employees feel that performance appraisal helps in identifying their
weaknesses and some says it enhances their Morale.

9.Majority of the employers find the benefit of performance appraisal is to improve

personnel decisions regarding promotion, Job changes, and termination, to improve
the employee’s performance.

43
 Chapter 8
Conclusion and
Recommendations

44
CONCLUSION

With rewards directly linked to achievement of objectives, goal setting & performance
appraisal assumes utmost importance. Performance appraisal (PA) is one of the important
components in the rational and systemic process of human resource management. The
information obtained through performance appraisal provides foundations for recruiting
and selecting new hires, training and development of existing staff, and motivating and
maintaining a quality work force by adequately and properly rewarding their
performance. Without a reliable performance appraisal system, a human resource
management system falls apart, resulting in the total waste of the valuable human assets a
company has.

A formal performance review is important as it gives an opportunity to get an overall

view of job performance & staff development. Good performance reviews therefore don't
just summarize the past they help identifying the future performance.

45
 RECOMMENDATIONS

• The purpose of performance appraisal should be properly communicated to the

rater and the ratee.
• Equal opportunities should be provided to all the employees to grow. There
should be no biasness among them.
• Proper and timely feedback should be given to the employees so that they can
understand what is actually expected from them and will give better results.
• The appraiser should avoid halo affect while doing the appraisal.
• The performance appraisal system should be such that it will help the employees
in knowing their weaknesses and help them to adapt themselves according to the
changing environment.
• Performance Appraisal sheets should be kept in record for future use.
• The methods like MBO and 360 degree Appraisal should be used to appraise the
employees.

46
References

1.http://www.scribd.com/doc/22450531/Performance-Appraisal

2. en.wikipedia.org/wiki/Performance_appraisal

3. http://appraisals.naukrihub.com/

4. www.managementparadise.com/.../11491-methods-performance-appraisal.html

5. www.articlesbase.com › ... › Human Resources

6. "Hunam Resource Management" Kalyani Publishers

47
Annexure

48
QUESTIONNAIRE
This survey is conducted to check the Performance Appraisal system in various
Management Institutes. As an employee of Management Institute, we need your valuable
feedback. It takes approximately 10 minutes to complete the questionnaire. Please
cooperate.

Personal Information:
Name _______________________________________
Designation _______________________________________

1. What is the objective of Performance Appraisal in your institute?

a) To make decisions regarding salary increase.
b) To identify training & development needs of employees.
c) To make decisions regarding transfers & promotions.
d) To facilitate communication between superior & his subordinates.
e) Any other (Please specify)
________________________________________________________
________________________________________________________

2. How frequently is Performance Appraisal done in the institute?

a) Monthly b) Quarterly
c) Half Yearly d) Yearly

3. By whom performance appraisal is done?

a) Immediate Supervisor b) HR Department
c) HOD d) Rating Committee
e) Any other (Please specify)
________________________________________________________

49
4. Which method is followed for appraising?
a) Rating Method b) MBO
c) Interview or Discussion d) 360 Degree Appraisal
e) Confidential Method f) Checklist Method
g) Any other (Please Specify)
____________________________________________________________

5. On what basis employees are appraised?

a) Traits
b) Job Behaviour
c) A combination of these

6. Performance Appraisal Sheets are kept in record and are used for further reference
in the organization?
a) Yes b) No
c) Can’t say

7. How The appraisal is discussed with employees?

a) One to one Basis b) Group Basis
c) Meetings d) Not Discussed

8. How out of the following have employees being benefited from Performance
Appraisal?
a) Enhances morale
b) Helps in identifying weakness
c) Source of motivation
d) Helps in self development

50
9. How out of the following have organisation being benefited from Performance
Appraisal?
a) To improve the company’s productivity.
b) To identify what is required to perform a job
(goals and responsibilities of the job)
c) To assess an employee’s performance against these goals
d) To work to improve the employee’s performance

10. Are your personnel being regularly trained to fulfill the objectives of the organization
in changing situation?

a) Yes b) No
c) Can't say

51