Winter Training Report On

ROLE OF PERFORMANCE APPRAISAL ON STEEL INDUSTRY
Submitted to

Mr. T. P. Singh Project Supervisor
By

Vaidehi Singh Roll No 0708170115 MBA IV Semester
To

U P TECHNICAL UNIVERSITY

DEPARTMENT OF MANAGEMENT STUDIES INSTITUTE OF FOREIGN TRADE AND MANAGEMENT LODHIPUR RAJPUT, DELHI ROAD, MORADABAD (UP) ROLE OF PERFORMANCE APPRAISAL ON STEEL INDUSTRY

BY Vaidehi Singh MBA IV SEMESTER SUBMITTED TO DEPARTMENT OF MANAGEMENT STUDIES IN THE PARTIAL FULFILLMENT OF THE REQUIREMENT FOR THE DEGREE OF MASTER OF BUSINESS ADMINISTRATION AT THE INSTITUTE OF FOREIGN TRADE AND MANAGEMENT JANUARY 2009
The author hereby grants I.F.T.M permission to reproduce and to distribute publicly, paper and electronic copies of the project in whole or part.

Signature of student: __________________________________________________________________ Department of Management Studies March 2009

Certified by: ___________________________________________________________________________ Mr. T. P. Singh Project supervisor

Accepted by: __________________________________________________________________________ Dr. (Mrs.) Manjula Jain Professor and Head Department of Management Studies

ACKNOWLEDGEMENT

This project has been made possible through the direct and indirect co-operation of various people for whom I wish to express my appreciation and gratitude. In the preparation of this project report I have received help and encouragement from different sources.

I express my sincere gratitude to Dr. Manjula Jain (Professor and Head of the dept. of Management Studies); I convey my regards to my Project Guide Mr. T. P. Singh for his untiring support and encouragement.

I am also very thankful to all the faculty members of I.F.T.M. for providing me with their invaluable suggestions and moral support to complete my report in expected format. A special thanks to my parents who encourage me a lot during my project session.

I once again thanks to all those who extended their support and co-operation in bringing out this project work successfully.

VAIDEHI SINGH

PREFACE
The history of performance appraisal is quite brief. Its roots in the early 20th century can be traced to Taylor's pioneering Time and Motion studies. But this is not very helpful, for the same may be said about almost everything in the field of modern human resources management. As a distinct and formal management procedure used in the evaluation of work performance, appraisal really dates from the time of the Second World War - not more than 60 years ago. In many organizations - but not all - appraisal results are used, either directly or directly, to help determine reward outcomes. That is, the appraisal results are used to identify the better performing employees who should get the majority of available merit pay increases, bonuses and promotions. The purpose of this study has been to determine whether the performance appraisal was used for employee development and whether the appraisal was emphasized as an important part of the performance appraisal process in steel industry. Also whether the performance appraisal helps in increasing industry’s profitability.

Our study suggested that the performance appraisal has helped in increasing the profitability of industry. Certain loop holes has been determined and suggestions were made.

Chapter no. Title Acknowledgment Preface List of Table List of figures 1. Introduction 2. 27 3. 29 4. Research Methodology 5. Literature Review 6. Findings and Analysis 7. Conclusions 8. Suggestions and Recommendation 9. Limitations Bibliography

Page no. III IV VI VII 6 Scope and Importance

Objective

31 34 54 64 69 71 74

INTRODUCTION
Almost every organization in one way or another goes through a periodic ritual, formally or informally, known as performance appraisal. Performance appraisal has been called many things. The formal performance appraisal has been called a tool of management, a control process, an activity and a critical element in human resources allocation. Uses for performance appraisal have included equal employment opportunity considerations, promotions, transfer and salary increases. Primarily performance appraisal has been considered an overall system for controlling an organization. Performance appraisal has also been called an audit function of an organization regarding the performance of individuals, groups and entire divisions. Performance appraisal may be defined as a structured formal interaction between a subordinate and supervisor, that usually takes the form of a periodic interview (annual or semi-annual), in which the work performance of the subordinate is examined and discussed, with a view to identifying weaknesses and strengths as well as opportunities for improvement and skills development. Almost every organization in one way or another goes through a periodic ritual, formally or informally, known as performance appraisal. Performance appraisal has been called many things. The formal performance appraisal has been called a tool of management, a control process, an activity and a critical element in human resources allocation.

And since people differ in their abilities and aptitudes. These differences are natural to a great extent and cannot be eliminated even by giving the same basic education and training to them. There will be some differences in the quality and quantity of work done by different employees even on the same job. Thus, there is a great need to have suitable performance appraisal system to measure the relative merit of each employee. The basic purpose of performance appraisal is to facilitate orderly determination of an employee’s worth to the organization of which he is a part. However, a fair determination of the worth of an employee can take place only by appraising numerous factors some of which are highly subjective, as for instant, attendance, while others are highly subjective, as for instant, attitude and personality. The objective factor can be assessed accurately on the basis of records maintained by the Human resource or personnel Department, but there is no device to measure the subjective factor precisely. Notwithstanding this, appraisal of these factors must be done to achieve the full appreciation of every employee merit. Therefore, it can be said that, performance appraisal means systematic evaluation of the personality and performance of each employee by his supervisor or some other person trained in the techniques of merit rating. It employs various rating techniques for comparing individual employees in a work group, in term of personal qualities or deficiencies and the requirements of their respective jobs. To quote dale Yoder,” performance appraisal includes all formal procedures used to evaluate personalities and contribution and potential of group members in a working organization. It is a continuous process to secure information necessary for making correct and objective decisions on employees.” The comparison of performance with job

requirements helps in finding out the merit of individual employees in a week group. Supervisor or an independent appraiser may do rating. Performance appraisal is a formal program in an organization, which is concerned with not only the contribution of the members who form part of the organization, but aims at spotting the potential also. The satisfactory performance is only a part of the system as a whole and the management needs more information than mere performance ratings of the subordinates. There are no two opinions about the necessity of performance appraisal, which can meet requirements of the management to achieve the organizational goals. Performance appraisal is the systematic evaluation of the individual with respect to his performance on the job and his potential for development. Performance appraisal is concerned with determining the differences among the employees working in the organization. Generally, the individual’s immediate superior in the organization and whose performance is reviewed in turn by his superior does the evaluation. Thus, everyone in Performance appraisal employs rating techniques for comparing individual employees in the work group, in terms of personal qualities or deficiencies and the requirements of their respective jobs. More Abruptly it can be said that, Performance management can be defined as a strategic and integrated approach to delivering sustained success to organizations by improving the performance of the human capital and by developing the capabilities of teams and individuals within that organization (Armstrong and Baron, 2000). The process of performance management therefore focuses not only with ‘WHAT’ is produced but, also ‘HOW’ it is produced. It seeks to ensure that what has been produced is in line with

the organization’s needs and these products have been produced in line with the organization’s way of doing things. Performance management can be achieved through many different ways. These include performance appraisal system and coaching. Performance appraisal system can be described as a fairly old system of measuring employees’ performance that has been in use in many organizations. However, Performance appraisal has not brought in the amount of positive results that was expected of it. Armstrong and Mulis (1994:86) quoted one manager describing performance appraisal as “a dishonest annual ritual”. The question that arises then is: “If Managers (the custodians of the system) do not have confidence in their own system, what more employees (who happen to be victims of the system)?” The meaning of the word “appraisal” is “to fix a price or value for something”. This is used in finance in terms such as project appraisal or financial appraisal where a value is attached to a project. Similarly performance appraisal is a process in which one values the employee contribution and worth to the organization. Performance appraisal can be defined as a system of measuring employee’s performance relative to the assigned or agreed objectives. The process starts with the supervisor and or with the subordinate agreeing on specific objectives that need to be met on an agreed time period. The objectives that are used in the Performance appraisal stem from the main organizational objectives that are reduced to Departmental goals and now to individual goals.

The performance appraisal system has to be transparent and the employee should be taken into full confidence. In many cases employees themselves are given a chance to conduct a self-appraisal. Performance appraisal is a case of joint problem solving by the organization and the employee. However the organization must also take care of future potential and not get bogged down by current performance. Normally the immediate supervisor does the appraisal. Some organizations also have a peer group performance appraisal where colleagues rate the performance. The HR person must also ensure that line managers are properly trained for carrying out the appraisal including interviewing techniques and on how to give feedback. The managers must also be trained to look at the cases objectively outside of their personal opinion of the candidate. Therefore at end it would be right to say that, Performance appraisal is the process of obtaining, analyzing and recording information about the relative worth of an employee. The focus of the performance appraisal is measuring and improving the actual performance of the employee and also the future potential of the employee. Its aim is to measure what an employee does.

According to Flippo, a prominent personality in the field of Human resources, "performance appraisal is the systematic, periodic and an impartial rating of an employee’s excellence in the matters pertaining to his present job and his potential for a

better job." Performance appraisal is a systematic way of reviewing and assessing the performance of an employee during a given period of time and planning for his future. It is a powerful tool to calibrate, refine and reward the performance of the employee. It helps to analyze his achievements and evaluate his contribution towards the achievements of the overall organizational goals. Organizations exists to achieve goals. Goals are only met when individual employees efforts matches with policy of the organization and thus bringing out success and effectiveness. The assessment of how unsuccessful employees have been at meeting their individual goals therefore becomes a critical part of HRM and here comes Performance Appraisal System. Performance Appraisal is an important component of the information and control system. In today’s flexible organizations, performance evaluations provide an effective way for managers to clarify performance goals and standards to enhance future individual performance. Thus, the purpose of performance appraisal is to improve the organization’s performance through the enhanced performance of individuals. The performance appraisal system:  Is an organizational necessity.  Is based on well defined objective criteria.  Is based on careful job analysis.  Uses only job related criteria.  Is supported by adequate studies.

 Is applied by trained qualified raters.  Is applied objectively throughout the organization.  Can be shown non discriminatory as defined by law. By focusing the attention on performance, performance appraisal goes to the heart of personnel management and reflects the management's interest in the progress of the employees.

OBJECTIVE OF PERFORMANCE APPRAISAL
There are mainly two purposes for which performance appraisal is used by an organization: (1) To improve the work performance of employees by helping them realize and use their full potential in carrying out the firm’s missions; and (2) To provide information to employees for use in making work related decisions, More specifically, appraisals serve the following purposes. 1) Appraisals generate information to support administrative decisions. Promotions transfers and reassignments, demotions and termination’s are action based at least in part on performance. 2) Appraisals provide feedback to employees and thereby serve as vehicle for personal or career development because feedback provides: • Reassurance that they are contributing and doing the right thing

• • •

Awareness of the impact on the desired results A measure of the adequacy of performance (quality, quantity, speed etc.) Recognition of the importance and value of their performance.

3) Once the development needs of employees are identified appraisals can help establish objectives for training programmes. Thus evaluations provide a basis for changing performance plans, including objectives and standards of behaviors as business plans and conditions change. 4) As a result of proper specifications of performance levels, appraisals can help diagnose organizational problems. They do so by identifying training needs and the knowledge, abilities, and other characteristics to consider in hiring, and they also provide a basis for distinguishing between, effective and ineffective performers. 5) Appraisals are used as criteria in test evaluations. The rationale for differential treatment of employees needs to be consistent with company’s values, philosophy and strategy. It also needs to be balanced with the desire for collaboration, rather than competition and conflict, sought in TQM.

PERFORMANCE APPRAISAL - PROCESS MAP

METHODS OF PERFORMANCE APPRAISAL
Currently most of the companies are using one of the following Performance Appraisal Methods:

1). 360 Degree Appraisal Method 2). Rating Scale Method 3). Management by Objective Method Under the 360 Degree appraisal method the employee is rated from all angles i.e., by the superiors, subordinates, peers, suppliers, distributors, customers and clients. Under the Management by Objective method the employee goals are set mutually by the employee's and the management. And the employees are rated based on the accomplishment of these goals. Under the Rating Scale method each employee trait or characteristic is rated on a scale that usually has several points ranging from "poor" to "excellent" (or some similar arrangement).The traits assessed on these scales include employee attributes such as work quality, cooperation, initiative, punctuality and technical competence, etc. The selected traits should be in some way relevant to the appraisee's job.

360º APPRAISAL AND FEEDBACK
The 360 degree appraisal involves rating of an employee or manager by everyone above, alongside and below him. Corporates are using this tool to find out truths about their managers. Although deployed mostly as a fact-finding technique, 360 º appraisals are also used to design promotion and reward system in the organization.

Concept of 360º Appraisal According to Milliman and others, “360-degree appraisal is the process of systematically gathering data on a person’s skills, abilities and behaviors from a variety of sources –the

manager, peers, subordinates and even customers and clients”. Thus, appraisal of an employee is done by his superior, his peers, his subordinates and clients or outsiders with whom he interacts in the course of his job performance. In 360-degree appraisal, besides appraising the performance of the assesses, his other attributes such as talents, behavior, values, and technical capabilities are also appraised. Besides the employee himself, superior, subordinates and peers play an important role in the appraisal. Structured questionnaires are used to collect responses about the employee from his superiors, peers and subordinates. Several parameters relating to performance and behavior are used in the questionnaires. Each manager is assessed by a minimum of fifteen colleagues, at least two of them being his bosses, four of them peer, and six of them subordinates. Even the important customers or clients of the firm may also be requested to give their assessment of the concerned employee. The responses are presented collectively to the assesses in the form of charts and graphs. Comments and interpretations are presented later. Counseling sessions are arranged with the employee to remove the weaknesses identified in the 360 degree assessment.

Merits of 360º Appraisal The merits of 360º appraisal are as under:

(i)

The 360 degree appraisal leads to greater self-awareness of those appraised. It reveals strengths and weaknesses in their working styles.

(ii)

The gap between self assessment and the views of one’s colleagues of peer group in reduced.

(iii)

It facilitates empowerment of subordinates who get a say in the appraisal of their bosses.

(iv) (v)

Inflexible managers are forced to initiate self-change. Facts about organizational culture and ambience are brought to light by the multiple appraisals.

Limitations of 360º Appraisal The system of 360º appraisal suffers from the following limitations: (i) (ii) The 360 degree appraisal system ignores performance in terms of goals. The candidate being appraised may not accept negative feedback from the subordinates and peers. He might feel humiliated. (iii) (iv) (v) Responses from colleagues often tend to be biased. Linking rewards to findings under 360 degree appraisal can prove to be unfair. The subordinates and peers might not be fully competent in appraisal.

Guidelines for Better Use of 360º Appraisal

The use of multisource appraisal can be effective if the following guidelines are followed: (i) Involve people. Ask them who should serve as raters, and give them an opportunity to review and interpret the results. This will strengthen their commitment to both the overall process and the specific decisions. (ii) Ensure that relevant data are being collected. Focus on behaviors and outcomes that raters are capable of observing and are competent to evaluate. (iii) Ensure that no single rater can dramatically affect the outcome. Use a

large enough sample or eliminate the highest and lowest scores to ensure that no one rater can skew the data. (iv)Train raters in what and how to observe. The better people understand what they look for and how to record”critical incidents” (specific things the person said and did that can be used as examples to support their ratings, and better the quality of the information that will be collected. (v) Ask raters to support their evaluations. Whenever possible, raters should discuss their observations and evaluations with other raters. These discussions should trigger thoughts and combat selective memory. Raters should also be required to provide a rationale for their rating to other raters. This would prevent people from using the process to act on personal grudges. (vi)Move slowly and start small. Any organization considering using 360 º feedbacks in the appraisal process should begin by using it for development purpose only and then gradually to make it a part of appraisal system. Even then, the focus should be on the goal-setting portion of the appraisal. People need to get

comfortable with the idea of multisource feedback as a development tool before they can accept it as part of the formal performance management process. A lot of organizations seem to be hurrying to integrate 360º feedback into the human resource management system. Multisource feedback really does have the potential to enhance human resource management system. However, 360º feedback won’t fix a system that does not work. (vii) Develop a culture that supports open feedback. Not surprisingly, 360º

feedback works best in companies where the environment is participatory rather than authoritarian, where giving and receiving feedback are the norm and are seen as valuable sources of information. If the current system (where only the supervisor does the appraisal) is not working due to lack of straight talk and hesitancy to give direct feedback, it is essential to introduce openness in the organization. (viii) Clear and agreed on performance measures and behaviors. When 360º

feedback is used for development only, the organization may be able to settle the list of behaviors and skills that have reasonable face validity and general support: “coaching” or “team building”, for instance. However, when the feedback is being used to determine performance ratings, the result and behavior for which people are held accountable must be clear, unambiguous and specific. (ix)The users must support the system and be willing to invest the time required to make it work. The introduction of 360º feedback makes an already timeintensive appraisal process even more demanding. It means more data to collect and more information to process for the additional feedback.

(x) Sound feedback process. While the way the data are collected and presented are always important, two aspects of sound 360º feedback procedure are particularly relevant when the data are used for appraisal purpose: the validity and reliability of the practices for which people will be measured and the confidentiality of the raters.

Elements of 360º Appraisal Program

The elements of 360º appraisal program are as follows: (i) Appraisal by Superior/ Boss. This is the most important element of the 360 degree appraisal. Here the focus is to provide constructive feedback on employee’s performance and his development needs. It is the responsibility of the superior to ensure that employee sets goals not only in the area of business performance but also in the areas that are vital to the organization. These are called corporate thrust areas and may include relationship management, safety and quality development. If the working style of the employee is a concern area and needs improvement for enhancing effectiveness then goal may be set for “style of functioning” such as, from short-term to long-term orientation. It is expected of the superior to put career aspirations of the employee in proper perspective. Firstly, superior must communicate to the employee in a clear way what the organization plans for the employee. Secondly, if the employee has unrealistic aspirations, then also it is superior’s responsibility to share with the employee the realistic picture given his/ her strengths, development areas, experience, qualifications,

and the organization’s ability to provide growth. This is how the superior’s appraisal has a very significant role to play. (ii) Appraisal by the Peer Group. The peers play an important role in the life of an employee in the organization. The can also provide a deep insight into the personality make up, attitude and style of working of the employee. For better results, it is essential to select the right peers for the purpose of appraisal. They must include peers both from within the department as well as from the other departments, which are directly connected with the working of employee’s department. The concept of internal customers comes handy here. Three to five internal customers should normally be chosen for peer appraisal. In order to achieve the purpose of 360º appraisal, the peer group appraisal must strive to get the feedback on (a) employee’s working style, (b) sensitivity towards others, (c) spirit of co-operation and collaboration, and (d) ability to work as a team member. (iii) Appraisal by the Subordinates. Another distinctive feature of 360º

appraisal is the role of subordinates in appraisal. It signifies two things. Firstly, it is a clear expression from the organization that it encourages openness and that feedback is a two-way process. Secondly, it is a systemic recognition of the fact that an employee’s subordinates do play a vital role in his appraisal. Thus, the purpose of subordinate’s appraisal is to get first hand assessment of how the subordinates perceive their superior to be in terms of: (a) delegation of authority, (b) guiding and training of subordinate, (c) motivation of subordinates, (d) team building, etc.

Upward appraisal provides an opportunity to the subordinates to give feedback to their superior on the kind of things they would like him/ her to continue doing (status quo), things they would like him/ her to stop doing (areas for corrective action), things they would like him/ her to start doing (areas for new initiatives). (iv)Self Appraisal. Any program of 360º appraisal would not be complete without self appraisal by the employee whose performance is being appraised. Self appraisal facilitates the employee to identify his/ her strengths and weaknesses and provides an opportunity to assess the performance. In a well established system, employees use the self appraisal very effectively and organizations also find that employees often are their own strongest critics and display very high degree of objectivity. Self appraisal also provides an opportunity to the employee to express his career moves for the future. However, this is only for gathering information and that under the given organizational constraints, it may not be possible to provide the career progression desired by the employee. Nevertheless, it is in the organization’s interest to at least know on a first hand basis the aspirations of its employees.

EVOLUTION OF PERFORMANCE APPRAISALS IN INDIA
First Phase of Performance appraisals began in the early sixties were prepared in the form of Annual Confidential Reports (ACR0, also known as Employee Service Records (ESR) in some organizations. Negative remarks in the ACT or ESR were considered damaging for career growth. It was thus important to keep the boss in good humor so that the ACR or ESR did not get spoiled. The ESR was largely trait based and the traits used were sincerity, punctuality, dynamism, job-knowledge, loyalty, initiative, leadership etc. The ACR and it was this strict confidentiality that was supposed to serve as the motivating force for them. This may be considered as Phase 1 of the performance appraisal systems in India. In the Second Phase that spanned late sixties and early seventies, the main change was in communication of adverse remarks to the employees. It was felt that unless this system of communicating to the employees in writing any quality or trait on which they got a rating of 33 per cent or less. Even though the communication was sent to the employer by the personnel department or the establishment section in a routine manner, the employees took it very seriously because it required office played a key role in moderating the assessment, and he normally had all the powers to overrule the ratings of the reporting officer of the employee. In the Third Phase of appraisals, the employee was given a scope to state his own accomplishments in the confidential report form. The term annual confidential report was

replaced during this period by Performance Appraisal. The appraisal process began at the end of the year with a statement by the appraise about his significant accomplishments during that year. Some organizations later turned this “opportunity given to the appraisee to express his significant achievements as self-appraisal”. However, this term was a misnomer as there was no scope for the appraisee to appraise himself. A few organizations subsequently developed this part of the appraisal by adding other questions about difficulties faced, plans for improvement next year etc. Everything else remained the same. The formats became a little more elaborate and in few cases, the appraisal included the details of the actual work done, largest achieved etc. The confidentiality, however, was maintained as before. In most cases, there was no communication to the appraisee about the performance assessment. In a few of them, a column of training needs was introduced. The appraisals continued to be control oriented and not developmental. It was really in the he Fourth Phase that the system of performance appraisals underwent a quantum leap. This phase began in the mid-seventies and in a way was initiated in India by Larsen & Turbo Limited, followed by the State Bank of India , Bharat Earth Movers and few other organizations. This phase witnessed a shift from control to development, appraisal to analysis, strong links to training, confidentiality to openness and traits to quantifiable tasks and targets. The movement towards open and development oriented appraisal systems was initiated by L&T when it adopted a system making appraisal more performance based, participative (dialogic and interactive), open and developmental. It required the employee and his reporting officer to plan the performance (the term key performance areas or KPAs was introduced) or the appraisee in the beginning of the year, review it after six

months with the boss, analyze the factors affecting performance, discuss developmental needs, have performance counseling and share the ratings with the appraisee. The system required active participation of the appraisee and was intended to be a performance planning, performance reviewing. And performance developing system. In the late seventies and early eighties, most organizations wee fascinated by this open and development oriented system. Some of them even started new HRD departments by appointing HRD managers having the skills to design, monitor and implement the system. While a few organizations switched over to this system, it took about 10 years of experience to fully understand its intricacies and dynamics. The change process was slow largely because the employees were not used to the openness introduced by the new system, the HRD managers did not have enough skill base to monitor it, and the top management lacked patience and perspective about its potential advantages. Several organizations could not get out of the mindset created by earlier confidential report system. They continued to use it for promotions, which were considered as the most important indicators of development. It is only by the mid eighties that organizations started setting down and feeling comfortable with the open appraisal systems. Phase Fifth has started only in last three years with organizations showing some maturity and growth in terms of their understanding of appraisals. This phase is characterized by a movement towards development in spirit and form. This is symbolized by the substitution of the term performance appraisal by performance review system, performance development system, performance analysis and development to rewards and from comparative assessment to assessment in relation to plans. There is a movement from rewards and controls to culture building and development and the new phase also

indicates a shift towards appraisal by multiple sources rather than by only the reporting officer.

SCOPE AND IMPORTANCE OF THE STUDY

 To help in understanding more about role of performance appraisal and become clear about their functions;

 To help in understanding functions of performance appraisal in terms of employee’s strengths and weakness with respect to their performance in the organization;

 To understand how it helps in identifying the developmental needs of employees, given their role and function;

 To analyze it’s impact on industrial relationships;

 To find out what tools it implies for bridging the communication gap between employees and their supervisors.

 To study it’s role in creating a positive and healthy climate in the industry; and

 To understand it’s decision making power regarding employees.

OBJECTIVE OF THE STUDY
1. To examine why an appraisal system is important. 2. To study the effectiveness of the existing performance appraisal system in a particular industry. 3. On the basis of what industry increase salary and provide training to its employees. And what is basis of promotion in industry. 4. To understand more and more about role of employee and become clear about his functions. 5. To understand employee’s own strengths and weaknesses with respect to his role and functions. 6. To analyze the role played by performance appraisal system in increasing the mutuality between employee and his superiors. 7. What opportunities are provided by the performance appraisal system to the employees for self reflection and individual goal setting.

RESEARCH METHODOLOGY
The formidable problem that follows the task of defining the research problem is the preparation the design of the research project, popularly known as the “research design”. Decisions regarding what, where, when, how much, by what means concerning an inquiry or a research study constitute a research design. “A research design is the arrangement of conditions for collection and analysis data in a manner that aims to combine relevance to the research purpose with economy in procedure.” In fact, the research design is the conceptual structure within which research is conducted; it constitutes the blueprint for the collection, measurement and analysis of data. As such the design includes outline of what the researcher will do from writing the hypothesis and its operational implications the final analysis of data. Therefore, this study outline following designing decisions:(i) What is the study about? The study comprises critical analysis of various functions, methods and scope of performance appraisal in different companies prevailing in steel industry.

(ii) Why is the study being made?

The main purpose of study is to help in understanding various functions, role and importance of performance appraisal system and identify the developmental needs of employees in steel industry. It also focus on the impact of performance appraisal system on industrial relations and help in finding out various tools for bridging the communication gap between employees and supervisors. (iii) What type of data is required? Data comprising the impact of performance appraisal system on steel industry is required for the study. Therefore, journal articles and news article from leading business magazines and news papers did the needful.

(iv) Where can the required data be found? Since data is secondary therefore most of the review was done with help of internet, journals, newspaper articles and various books . (v) What periods of time will the study include? This study is the result of 2 – 3 months of research.

(vi) What techniques of data collection will be used? To accomplish the objectives of the study secondary data is used.

(vii) How will the data be analyzed? Data is analyzed on the basis of journal, newspaper articles and the core knowledge gained on performance appraisal system from few books and steel industry. A complete review has been done on role of performance appraisal system on steel industry and its

impact in gaining competitive advantages. Therefore, for this purpose role of performance appraisal has been studied in few companies prevailing in the steel industry.

(vii) In what style will the report be prepared? Report is distributed in Chapters completing all the requirements of the research.

LITERATURE REVIEW
Performance appraisal is a process of assessing, summarizing and developing the work performance of an employee. In order to be effective and constructive, the performance manager should make every effort to obtain as much objective information about the employee's performance as possible. Low performance can push the organization back in today’s tough competition scenario. The project is aimed at analyzing the performance appraisal and it’s role in steel industry. Therefore, to start with this critical analysis it is important to know about steel industry at it’s contribution in economy.

INTRODUCTION OF STEEL INDUSTRY Steel is crucial to the development of any modern economy and is considered to be the backbone of human civilisation. The level of per capita consumption of steel is treated as an important index of the level of socioeconomic development and living standards of the people in any country. It is a product of a large and technologically complex industry having strong forward and backward linkages in terms of material flows and income generation. Steel industry was in the vanguard in the liberalisation of the industrial Sector and has made rapid strides since then. The new Greenfield plants represent the latest in

technology. Output has increased, the industry has moved up in the value chain and exports have risen consequent to a greater integration with the global economy. The new plants have also brought about a greater regional dispersion easing the domestic supply position notably in the western region. At the same time, the domestic steel industry faces new challenges. Some of these relate to the trade barriers in developed markets and certain structural problems of the domestic industry notably due to the high cost of Commission of new projects. The domestic demand too has not improved to significant levels. The litmus test of the steel industry will be to surmount these difficulties and remain globally competitive.

CONTRIBUTION OF COUNTRIES TO GLOBAL STEEL INDUSTRY The countries like China, Japan, India and South Korea are in the top of the above in steel production in Asian countries. China accounts for one third of total production i.e. 419m ton, Japan accounts for 9% i.e. 118 m ton, India accounts for 53m ton and South Korea is accounted for 49m ton, which all totally becomes more than 50% of global production. Apart from this USA, BRAZIL, UK accounts for the major chunk of the whole growth. Country Wise Crude Steel Production COUNTRY China Japan United States Russia South Korea Germany Brazil India CRUDE STEEL PRODUCTION (mtpa) 272.5 112.7 98.9 65.6 47.5 46.4 32.9 32.6

Italy

28.8

STEEL INDUSTRY IN INDIA Steel has been the key material with which the world has reached to a developed position. All the engineering machines, mechanical tools and most importantly building and construction structures like bars, rods, channels, wires, angles etc are made of steel for its feature being hard and adaptable. Earlier when the alloy of steel was not discovered, iron was used for the said purposes but iron is usually prone to rust and is not so strong. Steel is a highly wanted alloy over the world. All the countries need steel for the infrastructural development and overall growth. Steel has a variety of grades i.e. above 2000 but is mainly categorized in divisions – steel flat and steel long, depending on the shape of steel manufactured. Steel flat includes steel products in flat, plate, sheet or strip shapes. The plate shaped steel products are usually 10 to 200 mm and thin rolled strip products are of

1 to 10 mm in dimension. Steel flat is mostly used in construction, shipbuilding, pipes and boiler applications. Steel long Category includes steel products in long, bar or rod shape like reinforced rods made of sponge iron. The steel long products are required to produce concrete, blocks, bars, tools, gears and engineering products. After independence, successive governments placed great emphasis on the development of an Indian steel industry. In Financial Year 1991, the six major plants, of which five were in the public sector, produced 10 million tons. The rest of India steel production, 4.7 million tons, came from 180 small plants, almost all of which were in the private sector. India's Steel production more than doubled during the 1980s but still did not meet the demand in the mid-1990s, the government was seeking private-sector investment in new steel plants. Production was projected to increase substantially as the result of plans to set up a 1 million ton steel plant and three pig-iron plants totalling 600,000 tons capacity in West Bengal, with Chinese technical assistance and financial investment. The commissioning of Tata Iron & Steel Company's production unit at Jamshedpur, Bihar in 1911-12 heralded the beginning of modern steel industry in India. At the time of Independence in 1947 India's steel production was only 1.25 Mt of crude steel. Following independence and the commencement of five year plans, the Government of India decided to set up four integrated steel plants at Rourkela, Durgapur, Bhilai and Bokaro. The Bokaro plant was commissioned in 1972. The most recent addition is a 3 Mt integrated steel plant with modern technology at Visakhapatnam. Steel Authority of India (SAIL) accounts for over 40% of India's crude steel production. SAIL comprises of nine plants, including five integrated and four special steel plants. Of these one was nationalized and two were

acquired; several were set up in collaboration with foreign companies. SAIL also owns mines and subsidiary companies.

MAJOR PLAYERS OF STEEL IN INDIA PUBLIC SECTOR 1. STEEL AUTHORITY OF INDIA LIMITED (SAIL) Steel Authority of India Limited (SAIL) is a company registered under the Indian Companies Act, 1956 and is an enterprise of the Government of India. It has five integrated steel plants at Bhilai (Chattisgarh), Rourkela (Orissa), Durgapur (West Bengal), Bokaro (Jharkhand) and Burnpur (West Bengal). SAIL has three special and alloy steel plants viz. Alloy Steels Plant at Durgapur (West Bengal), Salem Steel Plant at Salem (Tamilnadu) and Visvesvaraya Iron & Steel Plant at Bhadravati (Karnataka). In addition, a Ferro Alloy producing plant Maharashtra Elektrosmelt Ltd. At Chandrapur, is a subsidiary of SAIL. SAIL has Research & Development Centre for Iron & Steel (RDCIS), Centre for Engineering & Technology (CET), SAIL Safety Organisation (SSO) and Management Training Institute (MTI) all located at Ranchi; Central Coal Supply Organisation (CCSO) at Dhanbad; Raw Materials Division (RMD), Environment Management Division (EMD) and Growth Division (GD) at Kolkata. The Central Marketing Organisation (CMO), with its head quarters at Kolkata, coordinates the country-wide marketing and distribution network. 2. RASHTRIYA ISPAT NIGAM LTD. (RINL) RINL, the corporate entity of Visakhapatnmam Steel Plant (VSP) is the first shore based integrated steel plant located at Visakhapatnam in Andhra Pradesh. The plant was

commissioned in August 1992 with a capacity to produce 3 million tonne per annum (mtpa) of liquid steel. The plant has been built to match international standards in design and engineering with state-of- the- art technology incorporating extensive energy saving and pollution control measures. Right from the year of its integrated operation, VSP established its presence both in the domestic and international markets with its superior quality of products. The company has been awarded all the three International standards certificates, namely, ISO 9001:2000, ISO 14001: 1996 and OHSAS 18001: 1999. RINL was accorded the prestigious ‘Mini Ratna’ status by the Ministry of Steel, Govt. of India in the year 2006 and the company is gearing up to complete the ambitious expansion works to increase the capacity to 6.3 mtpa by 2009. RINL has prepared a road map to expand the plant’s capacity up to 16 mtpa in phases. 3. HINDUSTAN STEELWORKS CONSTRUCTION LTD.(HSCL) HSCL was incorporated in June 1964 with the primary objective of creating in the Public Sector an organization capable of undertaking complete construction of modern integrated Steel Plants. HSCL had done the construction work of Bokaro Steel Plant, Vizag Steel Plant and Salem Steel Plant from the inception till commissioning and was associated with the expansion and modernisation of Bhilai Steel Plant, Durgapur Steel Plant, IISCO (Burnpur) and also Bhadravati Steel Plant. With the tapering of construction activities in Steel Plants, the company intensified its activities in other sectors like Power, Coal, Oil and Gas. Besides this, HSCL diversified in Infrastructure Sectors like Roads/Highways, Bridges, Dams, Underground Communication and Transport system and Industrial and Township Complexes involving high degree of planning, coordination

and modern sophisticated techniques. The company has developed its expertise in the areas of Piling, Soil investigation, Massive foundation work, High rise structures, Structural fabrication and Erection, Refractory, Technological structures and Pipelines, Equipment erection, Instrumentation including testing and commissioning. The company has also specialised in carrying out Capital repairs and Rebuilding work including hot repairs of Coke Ovens and Blast Furnaces and other allied areas of Integrated Steel Plants.

4. MECON LTD. MECON is one of the leading multi-disciplinary design, engineering, consultancy and contracting organization in the field of iron & steel, chemicals, refineries & petrochemicals, power, roads & highways, railways, water management, ports & harbours, gas & oil, pipelines, non ferrous, mining, general engineering, environmental engineering and other related/ diversified areas with extensive overseas experience. MECON, an ISO: 9001- 2000 accredited company, registered with World Bank (WB), Asian Development Bank (ADB), European Bank for Reconstruction and Development (EBRD), African Development Bank (AFDB), and United Nations Industrial Development Organisation (UNIDO), has wide exposure and infrastructure for carrying out engineering, consultancy and project management services for mega projects encompassing architecture & town planning, civil works, structural works, electric, air conditioning & refrigeration, instrumentation, utilities, material handling & storage, computerization etc. MECON has collaboration agreements with leading firms from the USA, Germany, France, Italy, Russia, etc. in various fields. The authorized share capital

of the company is Rs. 10,400 lakh (previous year Rs. 4,100 lakh) against which the paid up capital is Rs. 10,313.84 lakh (previous year Rs. 4,013.84 lakh). All the shares are held by the Government of India.

PRIVATE SECTOR The private sector of the Steel Industry is currently playing an important and dominant role in production and growth of steel industry in the country. Private sector steel players have contributed nearly 67% of total steel production of 38.08 million tonnes to the country during the period April-December, 2007. The private sector units consist of both major steel producers on one hand and relatively smaller and medium units such as Sponge iron plants, Mini Blast Furnace units, Electric Arc Furnaces, Induction Furnaces, Rerolling Mills, Cold-rolling Mills and Coating units on the other. They not only play an important role in production of primary and secondary steel, but also contribute substantial value addition in terms of quality, innovation and cost effective. 1. TATA STEEL LTD. Tata Steel has an integrated steel plant, with an annual crude steel making capacity of 5 million tonnes located at Jamshedpur, Jharkhand. Tata Steel has completed the first six months of fiscal 2007-08 with impressive increase in its hot metal production. The hot metal production at 2.76 million tonnes is 4.6%more compared to the corresponding period of the previous year. The crude steel production during the period was 2.43 million tonnes which is marginally lower than the production of 2.45 million tonnes last year. The saleable steel production was at a lower level during the period April September, 2007 (2.34 million tonnes) compared to the corresponding period of last year

(2.36 million tonnes). Tata Steel is continuing with its programme of expansion of steel making capacity by 1.8 million tonnes to reach a rated capacity of 6.8 million tonnes. The Project is reported to be moving ahead of schedule and is likely to be commissioned by May 2008 against the original schedule of June 2008. The Company has planned to take the capacity to 10 million tonnes by the fiscal year 2010. Tata Steel’s Greenfield projects in Orissa and Chattisgarh are progressing on schedule with placement of equipment order for Kalinganagar Project in Orissa and commencement of the land acquisition process. Jharkhand Project is awaiting announcement of Relief & Rehabilitation policy of the State Government. 2. ESSAR STEEL LTD. (ESL) Essar Steel Holdings Ltd. (ESHL) is a global producer of steel with a footprint covering India, Canada, USA, the Middle East and Asia. It is a fully integrated flat carbon steel manufacturer—from iron ore to ready-to-market products. ESHL has a current global capacity of 8 million tonnes per annum (MTPA). With its aggressive expansion plans in India and other parts of Asia and North America, its capacity is likely to go up to 25 MTPA by 2012. Its products find wide acceptance in highly discerning consumer sectors, such as automotive, white goods, construction, engineering and shipbuilding. Essar Steel Ltd., the Indian Company of Essar Steel Holdings Limited, is the largest steel producer in western India, with a current capacity of 4.6 MTPA at Hazira, Gujarat, and plans to increase this to 8.5 MTPA. The Indian operations also include an 8 MTPA beneficiation plant at Bailadilla, Chattisgarh which has world’s largest slurry pipeline of 267 km to transport beneficiated Iron Slurry to the pellet plant, and an 8 MTPA pellet complex at

Visakhapatnam. The Essar Steel Complex at Hazira in Gujarat, India, houses the world’s largest gas-based single location sponge iron plant, with a capacity of 4.6 MTPA. The complex also houses the steel plant and the 1.4 MTPA cold rolling complex. The steel complex has a complete infrastructure setup, including a captive port, lime plant and oxygen plant. Essar Steel produces highly customized valueadded products catering to a variety of product segments and is India’s largest exporter of flat products, selling close to half of its production to the highly demanding US and European markets, and to the growing markets of South East Asia and the Middle East. The company’s products conform to quality specifications of international quality certification agencies, like ABS, API, TUV Rhine Land and Lloyd’s Register. Essar Steel is the first Indian steel company to receive an ISO 9001 and ISO 14001 certification for environment management practices. Essar Steel utilizes Hot Briquetted Iron-Direct Reduced Iron (HBIDRI) technology supplied by Midrex Technology, USA along with four 150 tonnes DC electric arc furnaces imported from Clecim, France. The Hazira unit of Essar Steel is equipped with 5.5 million tonnes per annum (MTPA) hot briquetted iron plant, 4.6 MTPA electric are furnace, 4.6 MTPA continuous caster, 3.6 MTPA hot strip mill and 1.4 MTPA Cold Rolling Mill. During the year 2007-08, Essar was awarded costs ISO/TS 16949 and OHSAS 18000 certification. 3. JINDAL STEEL & POWER LTD. (JSPL) Jindal Steel & Power Limited is one of the fast growing major steel units in the country. The Raigarh plant of JSPL has a present capacity of 1.37 million tonne per annum (MTPA) sponge iron plant, 2.40 MTPA Steel Melting Shop (SMS), 1.0 MTPA plant

Mill, 2.30 sinter plant, 0.8 MTPA coke oven and a 330 Mega Watt captive power plant. During the year 2006-07, the company produced 1.19 million tonnes of sponge iron, 0.8 million tonnes of various steel products, 0.57 million tones of hot metal and 0.21 million tonnes of rolled products. The performance of JSPL during April-October 2007-08 was 0.68 million tonnes of sponge iron, 0.72 million tonnes of steel products (slabs/blooms/billets/rounds), 0.68 million tones of hot metal, 0.27 million tonnes of rolled products and 0.11 million tonnes of plates. MARKET SHARE OF LEADING PLAYERS IN IRON AND STEEL INDUSTRY COMPANY SAIL TISCO RNIL ESSAR, ISPAT, JSWL OTHERS TOTAL PRODUCTION OF STEEL (IN MILLION TONNES) 13.5 5.2 3.5 8.4 14.5 45.1 MARKET SHARE (IN PERCENTAGE TERMS) 32 % 11 % 8% 19 % 30 % 100 %

Therefore, it can rightly be concluded that the liberalization of industrial policy and other initiatives taken by the Government have given a definite impetus for entry, participation and growth of both private and public sector in the steel industry.

TRENDS IN PERFORMANCE APPRAISAL SYSTEM
Performance appraisal in its traditional from known as ACR-Annual Confidential Report is often misused than used. Performance appraisal has now been recognized as a HRD function. In the last decade many organizations have reviewed and changed their managerial appraisal systems.

1)

There is a trend away from the composite appraisals with multiple objectives (e.g. performance planning, development rewards and promotions)to separate systems for different systems for different clusters of objectives.

2) 3)

There is a move away from isolated appraisal system to the business linked one . There is shift away from closed confidential type to open dialogue and discussions based system.

4)

There is a movement quantitative (pseudo objective) to qualitative (interactive, improvement and process oriented) system.

5)

There is a movement away from boss assessed feedback to 360-degrees feedback involving customers, peers, team members, subordinates etc. in addition to supervisors.

6) 7) 8) 9)

There is also a trend away from elaborate systems to simple ones. There is a shift from standard systems to flexible and group specific ones. There is a movement from result oriented systems to process oriented system. There is a movement from the assessment of individual performance to the development of team performance.

10) There is also a movement from complacency to experimentation through continuous research change.

Performance appraisal refers to the assessment of an employee’s actual performance, behavior on jobs, and his or her potential for future performance. Appraisal has several objectives but the main purposes are to assess training needs, to effect promotions, and to give pay increases. Appraisal of performance proceeds in a set pattern. The steps involved are –defining appraisal objectives, establishing job expectations, designing the appraisal programme, conducting performance interview, and using appraisal data for different HR activities. Two important contemporary techniques of performance appraisal include 360º appraisal and goal setting approach to appraisal also known as ‘Managing by Objectives’. However, performance appraisal system also serves to be the backbone of any industry in the corporate world and since the project report focuses on the role played by performance appraisal in industrial establishment so review of research is done by also analyzing following secondary data. The data source: Secondary Data. The research approach: Survey Method. The research instrument: Journals , Books , Newspaper Articles.

JOURNAL ARTICLES
1. Title :- “A New Framework for Selection of the Best Performance Appraisal Method” Author :- Mostafa Jafari , Atieh Bourouni , Roozbeh Hesam Amiri. Abstract :- Performance appraisal is one of the most important processes in human resource management, because it has a great effect on both the financial and program components of any organization. There is a variety of methods for the appraisal of employees' performance. Obviously, no method can claim that it has an integrated approach in performance appraisal. Therefore, human resource managers should select an appraisal method which is most efficient in their organizations. In this paper, we propose a framework for the selection of appraisal methods and compare some performance appraisal methods in order to facilitate the selection process for organizations. The value of this framework is that, with use of it, organisations can evaluate their performance appraisal method with respect to the key features of it before implementing any method as well as expending extra costs. This framework is theoretical in nature, and is build based on a review of related literature.

2. Title:-“Function of performance appraisal in career development” Authors :- Baldwin, Jennifer Abstract :- The design of a performance appraisal system may be considered an unusual topic in the field of career development. However, it is considered most relevant in the current employment climate for graduates given the repeated emphasis on career development at various stages of the employment process. There has been a growing

emphasis since the mid-1970s on employees' needs rather than just organizational needs, and a recognition of the strategic value of employees being developed to their best potential. Organizations have become increasingly aware that the effective development of their employees' skills and knowledge has benefits for the whole organization. Career development (or employee or professional development) is a thread that runs through each stage of this discussion of the design of a performance appraisal system. This issue of career development may also be observed in promotional brochures and information sessions given by recruiters of graduates of tertiary institutions. Much is made of training and development opportunities as organizations seek to attract the brightest and best graduates to their graduate management trainee programs. Performance appraisal can be a crucial factor in the setting of career goals and the perception of job satisfaction leading to increased motivation and productivity.

3

Title:-“ Innovative human resource management and corporate performance

in the context of economic liberalization in India” Authors :- Ashok Som Abstract :- The Indian economy was forced to adopt a structural adjustment programme at the beginning of 1991. The structural adjustment programme or liberalization initiated the process of the opening up of an otherwise closed economy of India. Liberalization created a hypercompetitive environment and to respond to this turbulence, Indian organizations adopted innovative changes in their HRM practices. Current research shows that HRM practices are important for enhanced corporate performance but little has been reported on the effect of HRM practices and corporate

performance in the context of economic liberalization of India. This study tries to understand the role of innovative HRM practices and specifically questions how HRM practices, such as the role of HR department, recruitment, retraining and redeployment, performance appraisal and compensation, enhance corporate performance during the change process. A multiple-respondent survey of 69 Indian organizations was undertaken to study the impact of innovative HRM practices on firm performance. The survey found that the innovative recruitment and compensation practices have a positive significant relationship with firm performance. It was observed that recruitment, the role of the HR department and compensation practices seem to be significantly changing within the Indian firms in the context of India’s economic liberalization. The synergy between innovative HRM practices was not significant in enhancing corporate performance during the liberalization process.

4

Title:-“ The Effects of Human Resource Management Practices on Productivity: A Study of Steel Finishing Lines”

Authors :- Casey Ichniowisky , Kathryn Shaw and Giovanna Prenushi Abstract :- This study investigate the productivity effects of innovative employment practices using data from a sample of 36 homogeneous steel production lines owned by 17 companies. The productivity regressions demonstrate that lines using a set of innovative work practices, which include incentive pay, teams, jlexible job assignments, employment security, and training, achieve substantially higher levels of productivity than do lines with the more traditional approach, which includes

narrow job de$nitions, strict work rules, and hourly pay with close supervision. Our results are consistent with recent theoretical models which stress the importance of complementarities among work practices.

NEWSPAPER ARTICLES
 SAIL steels spot in global league with record profit run 8 Oct 2009, 0224 hrs IST, Subhash Narayan, ET Bureau NEW DELHI: The global economic slowdown has brought the best from state-owned steel maker SAIL as the company has become the most profitable steel company globally beating steel biggies such as Arcelor Mittal, Posco, Bao Steel, Nippon in the half yearly profits. The company has reported net profit of $ 71 million in the January-June period of 2009 bucking the trend where most global steel companies have made losses. Only Korean steel maker has come closer to match SAIL reporting a net profit of $ 565 million in the first half current calendar year. “SAIL’s performance during the first half of 2009 has been best in the world steel industry because of a series of steps that the company took in response to the economic downturn. Not only did the company improve performance on techno-economic parameters, it lay thrust on value added products and cost efficiency. The efforts have been aided, by consistent growth in domestic steel demand,” SAIL chairman S K Roongta told ET. Being a zero debt company, SAIL has also been able to reduce its interest cost substantially. It has also rationalised manpower reducing its workforce by 7,500 people in

2008-09 and another 6000-7000 people would reduce in 2009-10. The performance of SAIL mirrors the improved showing given by other domestic steel companies. Steel demand in the country has grown month-month in the current financial year and is projected to grow by 10% for the full year. Even World Steel Association (World steel) has forecast that while the global steel consumption this year is set to fall by around 15% to 1,019 million tones, use of steel in India would grow by about 2%. In terms of profit during the January-June period, POSCO is the only international company coming closer to SAIL. ArcelorMittal has reported net loss of $1855 million during the period while Nippon has reported a loss of $1043 million, Severstal a loss of $944 million, US Steel loss of $831 million, Bao Steel a profit of $98 million. Another Indian steel company, Tata Steel has emerged as the third most profitable company during the period, reporting a profit of $458 million. The profitability is only for its domestic operations not including the operations of Corus. The comparison has been make using the average of dollar rates prevailing during the first half of 2009. “Europe and America may take another couple of years to recover fully after which we may see a rise in demand there. Till that time only Indian and Chinese companies are expected fare well,” said an analyst.  Steel Import Strengthen 70% in Nov. (Source-economic times 13th December) India’s steel imports jumped more than 70% to 1.4 mn tonnes last month against 8 lakh tonne in the same month a year ago. The sharp rise in imports was due to low-priced shipments coming from China, Thailand and Ukraine into India at $450-500 per tonne,

25% cheaper than the international price, then ruling at $600-700 per tonne. The steel ministry’s Joint Planning Committee that collects data on iron and steel on a monthly basis shows that steel imports dipped 10.7% to 5.25 million tonnes in April-October against 5.88 million tonnes in the corresponding period a year ago. Availability of lowpriced imports from some countries resulted in huge imports in November. This happened when domestic steel makers were cutting production due to lower demand. Last month, the government imposed 5% import duty on steel products to protect domestic industry against cheap imports. But steel producers feel the move is insufficient to bring down imports as china as withdrawn export tax on some steel products to get rid of surplus stock. The government has also initiated investigation into dumping From China but steel firms feel it’s a lengthy process and will take at least 8-9 months to compel

FINDINGS AND ANALYSIS
The main objective of this study is to analyse the role of performance appraisal and system implementation in Steel Industry. Since the research is empirical in nature that’s why following aspects of various organization structure and design of particular industry have been covered. ORGANIZATION STRUCTURE AND DESIGN Jindal brothers Jindal Brothers is a young, dynamic organization and is going strong on the stock market. 1- The company is well aware of the dynamic environment of software, it is operating and in order to keep it with the pace of the environment it believes in constant up gradation of courses. Organization structure and design of the company is such that it supports this change. 2- Jindal Brothers has a matrix kind of a structure wherein it takes the form of combination of structures. Matrix structures are adopted became there is more than one factor around which the structure can be built. 3- This matrix structure at Jindal Brothers improves the quality of decision-making where interest conflicts arise and direct contacts replaces bureaucracy 4- . This increases the motivation of the managers and development of wider involvement in strategies. Although at times the company faces high risk of dilution of priorities became e people do not know who is responsible for what.

5- An organization is a network of authority, responsibility and relationships. Different organization structure consists of different type of relationships.

Performance Appraisal at Jindal Brothers
While on the job, performance reviews of every employee are done every quarter. The reviews are done with a view to helping the individual excel at his/her workplace. In case there are any training requirements, these are noted and acted upon in the coming quarter. Also, the goals and objectives for the employee are re-visited for The performance appraisal mechanism is carried out at Jindal Brothers for promotional purposes. These are done so as to motivate the employee and improve his performance level. The method is as follows: a) Establishment of performance standards with the employees b) The goals are set mutually as per measurable standards. c) The actual performance is hence measured. d) After measuring of the actual performance, the same is compared with the standards set e) The appraisal is then discussed with the employees. f) And finally, if need arises corrective action is initiated. For this purpose the corrective action is actually identified through brainstorming exercises initiated by the departmental heads at all the Jindal Brothers. It is then measured as a tool to evaluate the past performances of the employees. Some of the methods used at Jindal Brothers are:

1. Key Performance Index 2. 360 Degree Feedback 3. Paired Comparisons 4. Behaviorally Anchored Rating Scale 1. KPI-Key Performance Index It is based on the performance level of the employee generally classified on the basis of: • • • • Targets achieved Ratings through students’ feedback forms Punctuality and regularity Day to day performance

This is given after every module at the centers. Thus we can observe that the appraisal system is not a biased one but based on performance and productivity basis. All the respective heads of the employee together with the senior persons at the center brainstorm and then give the promotion.

2. 360 Degree Feedback This feedback system involves the participation of: • • Coworkers Subordinates – 40% - 20%

Superior

- 40%

Thus the feedback given by these members at Jindal Brothers is considered under a holistic view and then the employee is given a performance appraisal. This evaluation method involves 40% feedback from the coworkers which says that the employee should not only maintain good rapport with the senior or junior but majorly with the coworkers also. 3. Paired Comparisons The evaluator compares all possible pairs of subordinates on their overall ability to do the job. Due to the subjectivity of evaluating overall performance some managers me e a number of different job related dimensions when comparing. 4. Behaviorally Anchored Rating Scale (BARS) It is a sophisticated method of evaluating the employee based on the employee behavior. It is a numerical scale that is anchored by the seniors of the organization at various centers. This is highly confidential and the information is sent in sealed envelopes and opened only at the time of the final evaluation. There is no further discussion regarding this scaling, thus it is not given enough weightage.

Steel Authority of India Ltd
Basically there are two types of performance appraisal done on the basis of post of the SAIL’s employee. They are: 1. Executive performance appraisal system 2. Non-executive performance appraisal system

Executive Performance Appraisal System :This system is for performance appraisal for executives of the level E-0 to E-4 . The various steps involved are: A) Self Appraisal Performance Review & Planning : I. Appraisee write his view over the actual achievement for the Key performance area / Task and Target assigned to him for the year. II. Comments on fulfillment of KPA / Task and Target are written by the Reporting Officer , taking account of time frame also. III. Special Jobs other than tasks given and normal routine work are written by appraisee. B) Performance Review Discussion : I. Both appraisee and reporting officer sit together. II. Comment over Strengths and weaknesses and areas for development are written which is undersigned by both . III. Appraisee can help the reporting officer by giving examples which shows his strength or weakness. He also tell what training he want to undergo .

C)

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

Quality of output Cost control Job Knowledge and Skill Team spirit and Lateral Coordination Discipline Development & Quality of assessing subordinates Special Relevant factor Potential Factors : Communication Initiative Commitment and sense of Responsibility Problem Analysis and Decision making Planning and Organizing Management of Human resources II. Different weightage are given to each factor III. Final scores are calculated by multiplying rating and weightage .By adding these Total Factor Score is calculated. IV. Comments on Overall Performance And Potential are written by both Reporting and Reviewing Officers individually. D) Suggestions for Job Rotation and Job Enrichment I. Both reporting and reviewing officers write their suggestions whether the appraisee should be transferred to other department. Either a good employee is

transferred so that he can acquire knowledge of all the departments, or a worst performing employee is transferred so as to improve his performance. II. In some exceptional case Head of department give his comments on overall performance & potential of the employee. E) Final Assessment I. Total Factor Score by both Reporting and Reviewing officers is written and average is calculated. II. Final Grading between O / A / B / C is given . III. If Final Grade is C , indicate whether to promote or not to promote the appraisee. IV. If not to promote give reasons. V. Meeting with non-promotable appraisee. VI. Non Executive Performance Appraisal System I. Rating are given by both Reporting and Reviewing officers on the basis of performance of the appraisee depending upon factors: Performance on the Job Job Knowledge & skill Multi-skill Utilization Conduct & behavior Punctuality & availability on job Innovativeness Cost & Quality Consciousness

Initiative & Capacity to assume higher responsibility Housekeeping & safety consciousness II. Weightage are given to various factors . III. Scores out of 100 are calculated by multiplying rating with weightage . IV. O / A / B / C / C- Grades are given according to scores and attendance of the appraisee. V. If grade is C- , then appraisee is interviewed by the Head of Department.

Key Observation (s) at SAIL
In the present performance appraisal system of SAIL we found the following loop holes: If the appraisee has good terms with the reviewing officer and does not have a smooth relationship with the reporting officer, in such case the reporting officer is sometimes forced by the reviewing officer to give better score to the appraisee.

SURVEY FINDINGS

In this section, basic data for the number companies constituting steel in industry is presented on various attributes of performance appraisal. Frequency and frequency percent scores were computed for each company and thus it enlighten the following points : Promotions were and known to most of the top and senior management while middle and lower management were a bit not clear about it. This could be

attributed to the fact that senior and top management were more involved in decision making and policy formulation than are the middle and lower management.

 At the lower levels of the organization, performance can be quantified, and the managers are made accountable at the higher echelons the tasks are too complex and therefore cannot be assessed on the basis of quantified performance

 Most of the managers feel that the mechanism for potential appraisal is not adequate.

 The industry believed that self appraisal is the best for managers and above.

 To improve interpersonal communication and behavior assessment by peers and subordinates is essential.  The performance of the employees is not regularly monitor and the required feedback is provided to the subordinates from time to time. The appraisals are conducted at fixed intervals. The industry believes in using appraisal for rewarding and increments.

 It would not be wrong to say that interpersonal relations and personal biases (i.e. liking and disliking) influence the appraisals in the industry.

CONCLUSIONS
1. This industry proves that a major amount of work towards developing an effective and efficient performance appraisal system has not been accomplished to the fullest. 2. It seems that the industry is genuinely interested in improving the efficiency and utility of performance appraisal system to succeed in today’s dynamic environment; 3. Systems of innovative HRM practices have large effects on production workers' performance, while changes in individual employment practices have little or no effect. Outward Orientation Performance Appraisal System The appraisal system should be more sensitive and responsive to current competitive environment. This is possible through making the industry : • Quality conscious in products and services to match international standards. • • • • Customer oriented (internally as well as externally) Cost effective Technology oriented Focused towards collaboration and teamwork

• • •

People oriented

Focused towards performance standards Focused towards values and culture that would help unbottle hidden talent.

In achieving the above, the PA system have a catalytic role to play.

PERIODIC PERFORMANCE REVIEW AND PLANNING: There should be some aspect in the PA forms, which deals with the effect of Internal Influences, organizational influences and external influences on performance of employee to make the PA system more sensitive to changes.  Increase awareness of company goals in order to integrate company and individual expectations.  Conducting training workshops for appraisers to remove biases and errors in appraisal.  Increasing transparency and open communication and minimizing confidentiality in performance review discussions. The work done towards modifying and developing performance appraisal systems, time to time should be continued. Integrating TQM into Performance Appraisal • Individual rewards should be declined with the PA system. The focus should shift

to team rewards. To recognize individual excellence, the team rewards. To recognize individual excellence, the team should recommend rewards to tone up motivation levels in the entire team. • • Continuous feedback and transparency in every system Focus on customer delight, both internal and external

Linkage with Rewards

Good performers should be recognized and rewarded, whereas weak performers need to be encouraged to become better performers. PA systems when liked with individual rewards and promotions create more problems than they help in motivating people. They encourage fewer employees and discourage more. They do not develop the team spirit but rather enhance interpersonal comparisons and power politics. The focus should be shifted from rewarding the performance of few to development of performance of many. However there is also a need for recognition and rewarding good work. Alternative systems of rewarding with multiple reward/recognition mechanism are needed. But these systems should be separated from other systems (like career planning). Role of HRD • HRD should develop relevant competencies and work through empowering the

line managers. • • Development of subordinates and teams should be key function of line managers. HRD should facilitate the development of behavioral, managerial and technical

(multi functional) competencies in line managers. • “Role analysis” should find a place in Steel Industry. “Role directories should be

published with key functions for each role.

IMPLICATION OF THE PROJECT In a simple way performance appraisal is meant to be an exercise to value a estimate what a person has done and how has he done. The nature of Performance appraisal and its effectiveness depends a great deal on how human resources in the industry are viewed and treated. People are to be treated as resources of the industry. Unlike the other resources, the human resources have the capability of expanding to unlimited extents with proper investment in human capabilities.

Therefore, an organization interested in developing the capabilities of its employees, should understand the nature and capabilities required to perform different functions as well as the dynamics underlying the development of these capabilities in an organizational content. These capabilities can be considered to fall under four categories. They are:(i) Technical capabilities (ii) Managerial capabilities (iii) Behavioral (human) capabilities (iv) Conceptual capabilities The extents to which the various capabilities are required for the performance of the job differ from level to level in the organizational hierarchy.

RECOMMENDATIONS
1. The economic indicators are all favorable for Growth, temporally slump is ephemeral. 2. Indian steel industry exudes optimism , thus, more stress relieving packages should be offered to the mentally stressed staff. 3. Investment in infrastructure is crucial to step up demand for steel , therefore, in this respect the HR Dept should attempt to obtain the maximum agreement of Managers in respect of needs and objectives and purpose of the systems. 4. New technologies to use indigenous natural resources would have to be developed thorough expert person performing their roles efficiently in personnel management. 5. The industry should try to avoid employee resistance, which is associated with change worlds true change follows instance. This for all kinds of systems be it Performance Appraisal. 6. Overtime should be taken care of at time of performance appraisal, which would motivate the employees to perform better for longer hours. 7. Performance appraisal should be after at proper span of time .

LIMITATIONS
The project report carries with it few limitations, on which the accuracy of the text written will depend. This study is cross-sectional and data were collected over two time periods but are still perceptive. Cross-sectional data might create problems with respect to causality.

 The first and foremost limitation is regarding the sources of information. The information contained has been obtained from sources believed to be reliable and in good faith, but which may not be verified independently.

 Using several statistical tools derives the estimates. Hence the findings obviously carry all the limitations of the statistical tools used.

 Same sets of data from different sources are different. Since not all the data are available from a single source, an attempt has been made to standardize the data wherever required, which is essential to maintain uniformity through out the project.

 Many of the US studies have used multiple criteria for performance, although it is not sure how well those would transfer to the Asian context. Not using multiple performance measures may create further limitation in the study.

 The data set is restricted to observations on one very specific type of manufacturing production process. This narrow focus eliminates many sources of heterogeneity that confound productivity comparisons in more aggregate data and in more heterogeneous samples. Finally, this study did not find evidence of the configuration argument and did not test the contingency argument, but could find evidence in the universalistic or the best practice perspective. One way of explaining this might be that due to the turbulent and hypercompetitive environment, firms are primarily supportive of innovative, adaptive nature of high-involvement work systems. In other words, there may be some restriction in range with regard to organizational environments that somehow undercut this study’s ability to provide a full test of the contingency perspective.

BOOK
1. Kothari,C.R.,Methods and Techniques,New Delhi,New Age International Pvt, Ltd., 2005

WEBSITES
1. www.google.com

2. www.scribd.com 3. www.wikipedia.org 4. www.sailindia.co.in 5. www.performance-appraisal.com/intro.html

JOURNALS
1. A New Framework for Selection of the Best Performance Appraisal Method 2. Function of performance appraisal in career development 3. Innovative human resource management and corporate performance in the context of economic liberalization in India. 4. The Effects of Human Resource Management Practices on Productivity: A Study of Steel Finishing Lines

NEWS ARTICLES
1. SAIL steels spot in global league with record profit run 2. Steel Import Strengthen 70% in Nov.

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