STEEL AUTHORITY OF INDIA LTD

Project Report

on

Performance Appraisal System of

SAIL Employees

Submitted To :- Dr. Mridula Mishra

Prepared By :-
Prashant Priyadarshi
Roll no- 17
Section- Q1808
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EXECUTIVE SUMMARY
T he hi story o f per for man ce ap praisal i s qu ite brief. Its root s i n th e early
2 0 th centu ry can be traced to T aylor's p ion eering T ime a nd Moti on
stu dies. Bu t this i s not v ery h elp fu l, for the same may b e said abou t
a lmost ev er yt hin g in th e fiel d o f mo der n hu man resou rces management.
As a disti nct and for mal management pro cedu re u sed in th e ev alu ation o f
work per forman ce, ap praisal really dates fr o m the ti me of the S econ d
World War - n ot mor e tha n 6 0 years ago.

In man y or ganizatio ns - bu t n ot all - appraisal resu lts are u sed, eit her
directly or directly, t o hel p d eter min e reward ou tco mes. T hat is, th e
a ppraisal resu lts are u sed to id enti fy th e bett er per formi ng emp loyees who
sh ou ld g et th e majorit y o f available merit pay i ncr eases, b onu ses an d
promotio n s.

By th e same tok en, ap praisal resu lts are u sed t o id enti fy the po orer
per for mer s who may requ ire so me form o f cou n selin g, or in extreme
ca ses, d emotio n, di smi ssal or d ecr eases i n pay. (Organi zation s need t o b e
a ware o f la ws in t heir cou ntr y that mig ht r estri ct t heir capacit y to di smi ss
em plo yees or d ecrease pay.)

T he pu rpo se o f thi s stu dy has b een to det er min e wh eth er th e p erforman ce

a ppraisal was u sed for empl oy ee d ev el op ment and wh eth er th e appraisal
wa s emphasi zed as a n imp ortant part of t he p er for mance appraisal
process. Also whet her t he p er for mance ap praisal h elp s i n incr easi ng
co mpan y’s pro fitabilit y.

Ou r stu dy su g gest e d t hat the per forman ce ap praisal ha s hel ped in

increa sin g th e pro fitability o f S AIL which was cl early sho wn by th eir
per for mance o n BSE Sen sex. Certain lo op h oles has been d et ermin ed and
su gg esti on s were made.

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3|Page
INTRODUCTION
Al mo st ev ery organ izatio n i n on e way or an oth er g oes thr ou gh a p erio dic
ritu al, formally or i n for mally, k no wn a s p erforman ce appraisal.
Per for mance appraisal ha s been called many t hin gs. The for mal
per for mance appraisal ha s been called a to ol o f manag ement , a control
process, an activit y and a critical element in hu man resou rc e s allocation.
Uses for p er for mance ap praisal have in clu ded equ al empl oy ment
opp ortu nity co n sid eration s, pro moti on s, tran sfer an d salary incr eases.
Primarily p er for mance ap praisal has been con sid ered an ov erall sy st em for
contr ollin g an organizatio n. Per forman ce apprai sal has also been called an
a u dit fu ncti on o f an or ganizatio n r egardin g t he per fo rmance o f
indivi du als, gr ou ps an d entire di visi on s.

Per for mance appraisal may b e d efi ned as a stru ctu red formal interactio n
bet ween a su bordi nate and su per visor, that u su ally tak es the for m o f a
perio dic int ervi ew (annu al or semi -an nu al), in whi ch the work
per for mance o f t he su b ordi nate i s examin ed and di scu ssed , wit h a vi ew t o
iden tifyin g weak nesses and strength s as well a s opp ort u nities for
impro v ement an d sk ills devel op ment.

Al mo st ev ery organ izatio n i n on e way or an oth er g oes thr ou gh a p erio dic

ritu al, formally or i n for mally, k no wn a s p erforman ce appraisal.
Per for mance appraisal ha s been called many t hin gs. The for mal
per for mance appraisal ha s been called a to ol o f manag ement , a control
process, an activit y and a critical element in hu man resou rces allocation.
Uses for p er for mance ap praisal have in clu ded equ al empl oy ment
opp ortu nity co n sid eration s, pro moti on s, tran sfer an d salary incr eases.
Primarily p er for mance ap praisal has been con sid ered an ov erall sy st em for
contr ollin g an organizatio n. Per forman ce apprai sal has also been called an
a u dit fu ncti on o f an or ganizatio n r egardin g t he per fo rmance o f
indivi du als, gr ou ps an d entire di visi on s.

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OBJECTIVES OF PERFORMANCE APPRAISAL

Employees would like to know from a performance appraisal system:

I. concrete and tangible particulars about their work; and

II. assessment of their performance.

This would include how they:

I. did;
II. could do better in future;
III. could obtain a larger share of rewards; and
IV. could achieve their life goals through their position.

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

I. their personal development;

II. their work satisfaction; and
III. their involvement in the organization.

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

I. providing information about human resources and their development;

II. measuring the efficiency with which human resources are being used and
improved ;
III. providing compensation packages to employees; and
IV. maintaining organizational control.

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

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 SCOPE OF PERFORMANCE APPRAISAL
I. To help each employee understand more about their role and become clear about
their functions;

II. to be instrumental in helping employees to better understand their strengths and

weaknesses with respect to their role and functions in the organization;

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

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

V. to act as a mechanism for increasing communication between employees and their

supervisors. In this way, each employee gets to know the expectations of their
superior, and each superior also gets to know the difficulties of their subordinates
and can try to solve them. Together, they can thus better accomplish their tasks;

VI. to provide an opportunity to each employee for self-reflection and individual

goal-setting, so that individually planned and monitored development takes place;

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

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

IX. to be instrumental in creating a positive and healthy climate in the organization

that drives employees to give their best while enjoying doing so; and

X. to assist in a variety of personnel decisions by periodically generating data

regarding each employee.

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 ERRORS OCCURRED
IN
PERFORMANCE APPRAISAL

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

 Halo / Horn Effect

 Central Tendency
 Recency
 Leniency
 Bias

ERROR DEFINITION EXAMPLE

Manoj’s outstanding writing
Inappropriate generalizations from
ability caused his supervisor to
one aspect of an individual’s
Halo/horns effect rate him highly in unrelated
performance to all areas of that
areas where his performance was
person’s performance
actually mediocre.

Because Rahul had a concern

The inclination to rate people in
Central tendency the middle scale even when their
performance clearly warrants a
substantially higher or lower rating
that he would not be able to deal
with confrontation during an
appraisal session, he rated
all of his employees as
“Meets Expectations.”

Sudha kept no records of

The tendency of minor events that
have happened recently to have
Recency effect
more influence on the rating than
major events of many months ago
critical incidents. When she
began writing the appraisals for
her employees she discovered
that she could only recall
examples of either positive or
negative performance for
the last two months.

The tendency to attribute Reema , attributes the successes

performance failings to factors of her work group to the quality
Attribution bias under the control of the individual of her leadership and the failings
and performance successes to to their bad attitudes and
external causes inherent laziness.

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METHODOLOGY

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

1. Executive performance appraisal 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

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 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.

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 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:
II. Performance on the Job
III. Job Knowledge & skill
IV. Multi-skill Utilization
V. Conduct & behavior
VI. Punctuality & availability on job
VII. Innovativeness
VIII. Cost & Quality Consciousness
IX. Initiative & Capacity to assume higher
responsibility
X. Housekeeping & safety consciousness

XI. Weightage are given to various factors .

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

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

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

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 METHODS OF PEFORMANCE
APPRAISAL

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

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

Forced Distribution. - The term used to describe an appraisal system similar to grading
on a curve. The evaluator had been asked to rate employees in some fixed distribution of

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categories. One way to do this has been to type the name of each employee on a card and
ask the evaluators to sort the cards into piles corresponding to rating.

Paired Comparison. - The term used to describe an appraisal method for ranking
employees. First, the names of the employees to be evaluated have been placed on
separate sheets in a pre-determined order, so that each person has been compared with all
other employees to be evaluated. The evaluator then checks the person he or she felt had
been the better of the two on the criterion for each comparison. Typically the criterion has
been the employees over all ability to do the present job. The number of times a person
has been preferred is tallied, and the tally developed is an index of the number of
preferences compared to the number being evaluated.

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

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

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

Behavioral observation scales

Behavioral expectations scales
Numerically anchored rating scales

Critical Incident Technique. - The term used to describe a method of performance

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

Management by Objectives. - The management by objectives performance appraisal

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

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 DATA ANALYSIS

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 SAIL wi ns 'I ndia's E mploy er s o f C hoi ce Award -2 0 0 7 ' in the Pu blic Sector
 SAIL 's Q4 net pro fit R s.1 9 0 2 crore – u p 7 2 %
 Pre sid ent Kalam pr esents presti giou s C orp orate S ocial Respo nsibility
a ward to S AIL
 SAIL has been a pi on eer i n pr omu lgatin g a firm poli cy
 on safety i n th e work place.
 SAIL has been an a ctiv e partici pant in th e National RCH pro gr amme
a cross all sin ce 1 9 9 5 . All SAIL ho spitals have participat ed i n t he National
RCH program.
 In all SAIL Pl ant s, Mahila Sa mities have been formed si nce in cepti on.
T he member s o f t he Samiti es are spou ses o f th e empl oy ees. Sp ou ses o f
MDs, ED s etc are al so a memb er o f Mahila Samiti es . A lot o f work is
bein g d on e for t he soci ety by t hese Sa mities.

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All th ese fact s sho ws that S AIL i s con stantly i ncr easi ng an d beco mi ng
fa mou s in pu blic sect or .T his i mpli es empl oy ees are work ing effi ci ently
whi ch is po ssibl e wh en empl oy ees are happ y with co mpany’ s p erforman ce
a ppraisal syst em.

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 OBSERVATIONS
In th e present per forman ce apprai sal sy stem o f S AIL we fou nd th e
foll o win g lo op hol es:
If th e ap praise e has go od ter ms wit h th e revi ewin g o ffi cer a nd do es n ot
ha ve a smo oth r elation ship wit h th e r ep orting o ffi cer , in su ch case t he
reporti ng o fficer i s so metimes for ced b y t he r evi ewin g o ffi cer t o giv e
bett er scor e to th e appraisee.

RECOMMENDATIONS

 T he rep ortin g o ffi cer sh ou ld k eep t he p er for mance data o f each

su bordi nate.

 T he rep orting o fficer shou ld giv e mo nthl y feed back to the

su bordi nates rega rdin g th eir p er for mances and t her eb y gi vin g su gg esti on s
to impro ve.

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References :-
Websites links:-
www.sailindia.co.in
www.wi kipedia.org
www.performance-appraisal.com/intro.htm
www.telecollege.dcccd.edu/contents/evaluate.htm

Books :-
i. Personnel – Human Resource Mgmt
By David A Decenzo
ii. Human Resource Mgmt
By Gary Dessler

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