HUMAN RESOURCE MANAGEMENT

A PROJECT REPORT
SUBMITTED IN PARTIAL FULFILLMENT OF THE REQIREMENTS FOR THE AWARD OF THE M.COM DEGREE OF

MASTER IN COMMERCE
(MANAGEMENT)

SUBMITTED TO UNIVERSITY OF MUMBAI, LALA LAJPATRAI COLLEGE, MAHALAXMI, MUMBAI

SUBMITTED BY SAMIR PARIKH ROLL NO. 639

SUPERVISED BY Prof. Neelam Arora

OCTOBER 2013

HUMAN RESOURCE MANAGEMENT

A PROJECT REPORT
SUBMITTED IN PARTIAL FULFILLMENT OF THE REQIREMENTS FOR THE AWARD OF THE M.COM DEGREE OF

MASTER IN COMMERCE
(MANAGEMENT)

SUBMITTED TO UNIVERSITY OF MUMBAI, LALA LAJPATRAI COLLEGE, MAHALAXMI, MUMBAI

SUBMITTED BY SAMIR PARIKH ROLL NO. 639

SUPERVISED BY Prof. Neelam Arora

OCTOBER 2013

AKNOWLEDGEMENT
I would like to place on record my deep sense of gratitude to Prof. Neelam Arora, for her generous guidance, help and useful suggestions. I express my sincere gratitude to Prof. Neelam Arora, for her stimulating guidance, continuous encouragement and supervision throughout the course of present work. I also wish to extend my thanks to Prof. Neelam Arora and other colleagues for attending my seminars and for their insightful comments and constructive suggestions to improve the quality of this project work. I am extremely thankful to the Principal , for

providing me with infrastructural facilities to work in, without which this work would not have been possible.

SIGNATURE OF STUDENT

CERTIFICATE
I hereby certify that the work which is being presented in the M.Com Internal Project Report entitled Performance Appraisal & Case Study, in partial fulfillment of the requirements for the award of the Master of Commerce in Management and submitted to the Lala Lajpatrai College of Commerce and Economics, Mahalaxmi, Mumbai 400034 is an authentic record of my own work carried out under the supervision of Prof. Neelam Arora. The matter presented in this Project Report has not been submitted by me for the award of any other degree elsewhere.

SIGNATURE OF STUDENT:

SIGNATURE OF SUPERVISOR:

INTERNAL EXAMINER:

EXTERNAL EXAMINER:

COLLEGE STAMP:

PRINCIPAL

TABLE OF CONTENTS

CHAPTER 1 : Introduction

CHAPTER 2: Literature Survey

CHAPTER 3: Present Work

CHAPTER 4: Result & Discussion

CHAPTER 5: Conclusion

CASE STUDY ON UNION BANK OF INDIA.

REFERENCES

1.INTRODUCTION Performance appraisal refers to the process of evaluating the performance of an employee and communicating the results of evaluation to him for the purpose of rewarding or developing the employee. Performance appraisal could be informal and formal. Informal performance appraisal is a continuous process of feeding back information to the subordinates about how well they are doing their work in the organization. The informal appraisal is conducted on a day to day basis. For example, the managers spontaneously mention that a piece of work was well performed or poorly performed. Because of the close connection between the behavior and feedback on it, informal appraisal quickly encourages desire performance and discourages undesirable performance before it become permanently ingrained. Therefore, informal appraisal must not be perceived merely as a casual occurrence but as an important activity, an integral part of the organizations culture. The formal appraisal occurs usually annually on a formalized basis and involves appraise and appraiser in finding out the following questions: What performance was set out to be achieved during the period? Has it been achieved? What has been the short fall and constraints? What are we going to do now? How we will know that we have done it? What assistance can be expected to improve performance? And What rewards and opportunities are likely to follow from the performance appraisal?

When the employees have this type of information, they know what the organization expects from them, what assistance is available, and what can they expect when the

required level of performance is achieved. This will increase employee acceptance of the appraisal process and result in the trust that the employee has in the organization. An environment that affords an opportunity for further growth while minimizing stressful situations will certainly enhance appraisal acceptance. Establishing this type of environment goes far beyond the performance appraisal process. Every aspect of managing people and their work relates to the improvement of their quality-of-worklife. Performance appraisal is an integral part of a trusting, healthy, and happy work environment that goes a long way in promoting the same. Performance appraisal has been used for basically three purpose - remedial, maintenance, and development. A performance appraisal needs to cover all these three purpose with the same focus. If any purpose predominates, the system will become out of balance. For instance, if remedial purpose is foremost, then the performance appraisal may become a disciplinary tool, a form of a charge sheet, a tool of power instead of instrument of evaluation. If maintenance is the main objective, then the process may become a short, skimped and per functionary ritual. If there is too much emphasis on development, then the focus falls on the future assignment rather than the current job.

OBJECTIVES OF PERFORMANCE APPRAISAL objectives 1 Setting target and goal as performance standards

Remarks

Evaluating employee performance

Identifying training and development needs

Rewarding performance

Improving performance

Performance standard and specific goal are set at the beginning of the appraisal period. These targets motivate the employee to perform better. The evaluation of employee performance helps understand the strength and weaknesses of the employee. This evaluation also helps to determine the achievement of preset goal and targets. An employees area of weakness is also the areas for improvement or development. These are the shortcomings in the individuals performance, which need to improvement upon. Rewarding a good performer and punishing a bad one encourages employees to perform better. As has been stated in the reinforcement theory, behavior is a function of its consequences. Once the strength and weaknesses are identified, the employee can be encouraged to overcome his weaknesses and leverage his strengths to optimize his performance.

PROCESS OF PERFORMANCE APPRAISAL Performance appraisal comprises the following steps: Select performance factors (base on job description) to be evaluated and set the standards to be achieved. Set the performance review period Measure actual performance Compare performance with the set standards and rate it with a suitable scale Communicate the rating to the appraisee Use the performance appraisal for the desired purpose.

PERFORMANCE APPRAISAL METHODS The different methods of performance appraisal could be classified into five categories: Rating by superiors: - In this system, supervisors appraise the performance of subordinates without involving the latter. This method is commonly used in government organizations. However, it suffers from the prejudiced approach and the ability of the superiors. The validity of the system can be improved by basing it on performance. The various methods which are used under this system are: Ranking methods- order of rating from best to worst Paired comparison method- comparing rates to one another Graphic rating scales- standardized, quantitative rating MBO- measuring performance against results Critical incident method- evaluation based on key incidents Force distribution method- one to one comparison

Feedback on appraisal information: - In this system, the appraisee is informed about his strong and weak points, and afforded an opportunity to defend himself in terms of constraints or weaknesses. This system leads to greater satisfaction and higher work performance due to participative approach. Meyer suggested that the goal of the appraisal should be to improve the future performance of subordinates and, therefore, suggested that performance appraisal should be made a continuous process rather than once-a-year Field review technique: - In this technique, the appraiser goes to the field and obtains the information about work performance of the employee by way of questioning the said individual, his peer group, and the superiors. The information received about how he is performing helps the appraiser in defining the profile of the employee. Rating by self and peer group: - In this method, the employee appraisal is done independently at three levels- employee, peer group, and the superior. HRD department analyzes these appraisal reports and draws a profile based on common aspects. 360 degree performance appraisal: - This system aims at a comprehensive and objective appraisal of employee performance. In a 360 degree appraisal system, the employees performance is evaluated by his supervisor, his peers, his internal/external customers his internal/external suppliers and subordinates. This system reduces the subjectivity of a traditional supervisor appraisal. It is also more comprehensive because the feedback is given by the peers, customers, suppliers and subordinates of the employee, who are more directly affected by his behavior and performance, apart from the boss. BENEFITS OF PERFORMANCE APPRAISAL Performance appraisal is a formal exercise carried out for all executives and workers/staff with respect to their contributions made towards the growth of the organization. The aim is to measure the overall performance of the employee over a period of time, usually one year by his immediate supervisor so as to provide a

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feedback to the employees and aid the management. Performance appraisal does not merely measure the performance of the people but has many other benefits. The benefits of a successful appraisal system can be summed up as follows: (a) For the appraise Better understanding of his role in the organization what is expected and what need to be done to meet those expectations Clear understanding of his strength and weaknesses so as to develop himself into a better performer in future Increase motivation, job satisfaction and self-esteem Opportunity to discuss work problems and how they can be overcome Improved working relationships with the superiors

(b) for the management Identification of performers and non-performers and their development towards better performance. Opportunities to prepare employees for assuming higher responsibilities. Opportunities to improve communication between the employees and the management Identification of training and development needs Generation of ideas for improvements

(c) For the organization Improved performance throughout the organization

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Creation of culture of continuous improvement and success Conveyance of message that people are valued

The above benefits will be realized only if performance appraisal is considered as a process of management. PITFALLS IN PERFORMANCE APPRAISAL Performance appraisal helps management to collect data on human resources and use it for enhancing responsiveness of the organization. Since performance appraisal is done by people who have emotions, there will always be some subjectivity. Being subjective in nature, there are certain pitfalls which need to be guarded against. Some of the common pitfalls encountered in performance appraisal are the following: Halo effect: - the appraiser allows a single characteristic of the appraisee to dominate his judgment of the employee performance. This can result in either a positive report or a negative report on the performance of the employee. Leniency effect: -this refers to the situation where the appraiser tends to give high ratings and only positive feedback to the appraisee, irrespective of his actual performance. The main reason for leniency could be the appraisers desire to maintain a cordial relationship with appraise. Stringency effect: - this is just opposite of the leniency effect. An appraiser, who feels that the rule and standards of the organization are not strict enough, tries to be very strict in rating his appraises. This might lead to dissatisfaction among his appraises as they will feel that the evaluation is biased and unfair. Recency effect: - this occurs when the recent performance of the appraisee dominates the appraisal. The appraiser tends to get influenced by the performance of the employee over the last 2-3 months of the appraisal period as it is still fresh in his memory. This is due to recency effect.

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Primary effect: - the performance of the appraisee at the beginning of the appraisal period dominates the evaluation. The appraiser tends to be influenced by the behavior or outcomes exhibited in the early stages of the appraisal period and this lea to a distorted evaluation.

Central tendency effect: - central tendency is the tendency of the appraiser to rate most of the appraisees in the middle of the performance scale. This appraiser gives neither high nor low ratings and tends to gives ratings in the middle of the scale to all the appraisees. This is one of the most common errors in employee performance rating.

Culture: - in some cases, the culture of the organization or the country can influence the appraiser to rate the appraisee in a particular way. For examples, in India context, a young appraiser who has to evaluate the performance of his elder colleague may tend to give him higher ratings than his performance warrants. In this case, the Indian culture which advocates respect for elders subconsciously influences the young appraiser.

Stereotyping: -stereotyping is a potential error in personality analysis that can distort performance appraisal. It involving judging someone based on the group he belongs to and

the appraisers perception of the group. For example, an appraiser who believes that women good managers would tend to rate his female appraisees better than his male appraisees.

Perceptual set: - this is the tendency of the appraisers to have an exception of the performance level, which might distort the perception and judgment of actual performance.

Fundamental attribution error: - an employees performance might have been affected due to some external factors outside his control. The appraiser might

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however underestimate the influence of the external factors and overestimate the influence of internal factors while judging the behavior/performance of the employee.

Many other behavioral and perception error distort the appraisal system and reduce its effectiveness. If these errors are taken care of in a suitable and well-executed appraisal system, it can add immense value to the organization. Performance appraisal measures the qualitative and quantitative aspects of job performance. An appraisal evaluates not only the employees performance but also his potential for development. The primary objectives of an appraisal are to assess past performance, to identify training needs, to set and agree on future objectives and standards, and to facilitate the achievement of these goals.

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INTRODUCTION TO COMPANY

Once a Year Overview Union Bank of India was inaugurated by the Father of the Nation, Mahatama Gandhi, on November 11, 1919. Started as a limited company with its registered office at 7, Marzban Road, Mumbai, it was one of the few Financial Commercial banks in India. Until 1947, UBI had only 4 branches - 3 in Mumbai and 1 in Saurashtra, all concentrated in key trade centres. Catering to all the sectors of the society, be it agriculture, industry, trade and commerce, services or infrastructure, the bank has also played a major role in rendering services to the financial needs of every section. Apart from this, the bank also extended financial support to educational, housing and trade sector.

Union Bank of India undertook the task of establishment of village knowledge centers and self-employment training centers. It was in 1975, that the Union Bank of India was nationalized. It was, then, that it merged with the Belgaum Bank, a private sector bank. Another merger was on cards in 1985, this time with the Miraj State Bank. Union Bank is a Public Sector Unit with 55.43% Share Capital held by the Government of India. The Bank came out with its Initial Public Offer (IPO) in August 20, 2002 and Follow on Public Offer in February 2006. Presently 44.57 % of Share Capital is presently held by institutions, individuals and others. Branch Network At the time Nationalization i.e. June 1969, it had 240 branches. Since then, the branch network had grown substantially across the country with presence in 28 states, including union territories. As on 31st March 2004, Bank has network 2020 branches 794 Rural, 457 Semi-urban, 426 Urban and 343 Metropolitan branches. Tech-Savvy With the age of global banking, Union Bank of India also changed its style, boasting of urbanized and computerized core banking systems. A front runner among public sector banks in modern-day banking, it has all the facilities that a modern bank should have internet banking and centrally computerized branches. UBI was one of the pioneer

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public sector banks, which launched Core Banking Solution in 2002. As of September 2005, more than 670 branches/extension counters of Bank are networked under Core Banking Solution. The Bank has launched multiple Electronic Delivery Channels and has installed nearly 423 networked ATMs. Recent Development Union Bank of India (UBI) has informed the Bombay Stock Exchange (BSE) that the bank intends to raise additional funds up to Rs 400 crore in one or more tranches by issue of bonds on private placement basis for its Tier II capital requirement to shore up the capital to risk assets ratio subject approvals from the Ministry of Finance and Reserve Bank of India. Exact amount to be raised, coupon and tenor of bonds will be decided at the time of placement.

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A Case on PERFORMANCE APPRAISAL AT UNION BANK OF INDIA The Performance Appraisal method followed in Union Bank of India is Self Appraisal System. Self appraisal is an important part of the Performance appraisal process. Self appraisal system is undertaken at officer level (for non-operational and operational assignments) in Union Bank of India every year on 31st March, where the employee himself gives the feedback or his views and highlights regarding his performance.The Appraisee highlight his best performances and also lists the areas where he feels he is not upto the mark. The Appraisee is also asked to highlight problems he faced and opportunities for which he is required to improve his performance. He is also asked to mention any outstanding performance hes done outside the bank but for the bank.Based on this form he rates himself on various parameters. This is done by filling Performance Appraisal Form (Highlights of Performance Appraisal Form is given ahead.)

After completion of this, the Appraiser (generally the immediate superior of the appraisee) comments on the Key Responsibility Areas, i.e., analyzing various business dimensions related to financial aspects and it also includes qualitative aspects of business such as attitude, customer service, etc. There is certain difference in business dimensions and managerial dimensions expected differently from non-operational and operational assignments. And then accordingly the Appraiser rates him. If there is any deviation in the scores the Appraiser gives reasons for the same. The final appraisal is done by the Reviewing Authority (generally superior or immediate superior to the Appraiser), which includes remarks and comments on the appraisal done. He also rates the Appraisee and provides the reasons for any deviation in the score. The overall assessment of performance is done for Operational and Non-operational assignments. This performance is done on the basis of marks. The assessment is done by both appraiser and reviewing authority. From the above scores given by the appraiser and reviewing authority for various attributes, Performance is rated on the scale of :

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Outstanding Good Average Below Average

(80 100) (60 - 79 ) (40 59) (Below 40)

After the information so obtained from the assessment of performance, the bank is able to provide training needs and is able to find out the potentiality of the employees.

HIGHLIGHTS OF ANNUAL PERFORMANCE APPRAISAL FORM BIO DATA: (A)Personal Data (B)Previous Assignments (C)Training Programmes Attended (Seminars/Workshops to be excluded) SELF APPRAISAL (By appraisee): (A)Highlights of my performance during the year are as under (B)Areas in which I feel I have not done well as under (C)Constraints faced (D)What according to me would enable me to perform better (E)Any outstanding performance outside the Bank (Assigned by the Bank)

KEY RESPONSIBILITY AREAS :

(A)For non-operational assignments (B)For operational assignments QUALITATIVE ASPECTS OF BUSINESS (by appraiser):

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For non-operational assignments:

(A) House Keeping (B) Inspection & Audit (C) Customer Service (D) Submission of Periodical Returns (E) Recovery Performance (F) Aptitude for Poverty Alleviation Programmes

For operational assignments: (A) Job Knowledge (B) Leadership (C) Decision Making (D) Administrative Skill (E) Public Relations/Marketing Skills (F) Integrity and Honesty

Cont

OVERALL ASSESSMENT OF PERFORMANCE

Name of the Officer: ___________________________________________________

FOR OPERATIONAL ASSIGNMENTS:

TOTAL ATTRIBUTES

BY APPRAISER

BY REVIEWING AUTHORITY

Business Dimensions Qualitative Aspects of Business

30 20

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Managerial Dimensions Outstanding Performance TOTAL(100 MARKS)

40 10 100

NON-OPERATIONAL ASSIGNMENTS:

TOTAL ATTRIBUTES

BY APPRAISER

BY REVIEWING AUTHORITY

Key

Responsibility

Areas 50

Managerial Dimensions Outstanding Performance TOTAL(100 MARKS) (80 100) (60 - 79 ) (40 59) (Below 40)

40 10 100

Outstanding Good Average Below Average

COMMENTS BY APPRAISER AND REVIEWING AUTHORITY:

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FINDINGS AND ANALYSIS The Appraisal is undertaken every year on regular basis.

The appraisal system followed is at officer level,i.e. for non-operational assignments and for operational assignments, i.e. apart from few criterias they are rated differently for different attributes depending on their job profile. At clerical level the superiors prepare Confidential Report and there is no part taken by the employees at this level.

The whole Performance Appraisal System is Designed in such a way that the appraisee can be evaluated on their Key Responsibilities Areas like - Quantity of work, Meeting job requirements on a timely basis, Quality of work, Effectiveness & Accuracy, Knowledge of job etc. and Managerial Attributes like - Team Spirit, Decision Making Ability, Attendance, reliability and dependability, Planning and organizational effectiveness, Initiative and creativity etc.

Apart from this the appraiser comments on Conceptual abilities, Flexibility of mind, Emotional Strength, Responsiveness to corporate concerns, Willingness to assume Responsibilities, Creativity & Innovativeness, Communication Skills.

It is observed that the review done by the Reviewing Committee gets delayed sometimes.

The appraisal is undertaken not mainly for deciding an increment but the main objective behind this is to evaluate the annual performance of the employee so that training can be provided and bank is able to find out the potentiality of the employees and also to maintain the records for the same for future reference so that it can be used for promoting the employee in future.

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In the whole appraisal system, often superiors assume the role of judges. In contrast the aim is to develop employees; managers need to be counselors, helpers and teachers.

The employees showed eagerness to learn from their mistakes which they hoped to rectify and perform better.

Employees were hopeful that after the performance appraisal is over, they will be properly rewarded for their work and that it was a way to ensure that their efforts dont go unnoticed.

Although the employees believe that performance appraisals are for their betterment, in the beginning they had doubts in their minds about the issue of bias being a factor in the process of evaluation.

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RECOMMENDATIONS

The Performance Appraisal System is Designed in such a way that the employees can highlight their achievements and mention constraints but apart from this target should be set as goals such that people strive to attain goals to satisfy their emotions & desire.

Also the appraiser and the reviewer comments on various attributes of appraisee but there is no proper face-to-face feedback given to employees wherein the appraisee can personally discuss the problems faced by him and some solution can be arrived at.

Also major feedback is given by work itself, a personal feedback along with positive acknowledge would be welcomed by employees.

There can be sometimes some dissatisfaction on the part of the employee as the comments and review given by the superiors can be biased so care should be taken to avoid such an instance.

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CONCLUSION

From the above study we can conclude that maximum employees in the agency see that the performance appraisal is a positive step taken by the organization to help them to improve their own performance. Employees feel highly responsible towards the job due to the freedom given for planning & completing their own objective, they will feel even more responsible and involved if the changes in their work (changes by client) are given taking their opinion.

Thus it can be concluded that Performance Appraisal is one of the best methods to not only evaluate employees performance but also to motivate him and enhance his skills by providing him with proper training by knowing the constraints he faces at his work.

Hence, Performance Appraisal is a very positive step taken by any organization to grow and also improve human resource quality.

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REFRENCES

Reference Books: K Aswathappa - Human Resource and Personnel Management by Tata McGraw Hill Publishing Company Limited, New Delhi, Third Edition. K Aswathappa - Organizational Behaviour.

Website: www.unionbankofindia.com

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