Professional Documents
Culture Documents
Performance Appraisals
Performance Appraisals
Project Synopsis
A STUDY ON
DIFFERENT APPROACHES OF
PERFORMANCE APPRAISALS:
A SPECIFIC STUDY IN
SOFTWARE INDUSTRY
2. EXECUTIVE SUMMARY
To address the above a study was conducted to study the different approaches of appraisals
adopted by software companies. A sample of 30 software companies was taken. A structure
questionnaire was administered to HR managers/ executives of different companies to elicit the
information.
Major findings of the study include the most common type of appraisal is the open system followed
by MBO, a few companies followed 360 feedback while most of the companies are planning to
implement this powerful new model for employee assessment and performance improvement. The
positive areas/benefits of the appraisal system followed included training and development inputs,
career planning, and objective I setting etc.
PERFORMANCE APPRAISALS AND EVALUATION OF EMPLOYEE SATISFACTION
The criteria or measures to evaluate an employee in most of the companies are technical
competence, performance, achievement vs. objectives, key result areas set at the beginning of a
specific period, forming result oriented areas, leadership skills, team work, attitude are behavior
oriented areas compensation increase is related to performance and depended on the performance
code/rating give. Target is set for employee being appraised for a period of 6 months; checklist for
carrying out appraisals and carrier planning is followed.
360° feedback process gives an all round perspective restricting the inconsistency factor that exist in
traditional appraisal system. Organizations remove layers of management, flatten their structure, and
begin using self-directed terms; the, only practical option for performance feedback is from multiple
sources. As organization changes their culture to align with their vision and values, 360° feedbacks
becomes an ideal choice to communicate the new competencies required by the new values.
The research intends to study the different approaches of appraisals adopted by software Companies
and employee attitude, employee Satisfaction and industrial morale. It also analyses the most
commonly occurring errors within performance appraisal methods and to understand the level of
effectiveness of 360º appraisal in the industry
This study is conducted with respect to understanding the different appraisal systems
conducted in the software industry and their effects thereafter in the same. Due to time and resource
constraints, the study was restricted to the software industry in Delhi Region .
Purpose
PERFORMANCE APPRAISALS AND EVALUATION OF EMPLOYEE SATISFACTION
The literature review section examines the importance of search studies, company data or
industry reports that serve as a foundation for the setup of study. The research dimension of the
related literature and the relevant information begins from an explanatory perspective, approaching
towards specific studies which do related to the judge the limitations and informational gaps in data
from the secondary sources.
This analysis may reveal conclusions from past studies to realize the reliability of the
secondary sources and their credibility. This in turn enables one to rely on a comprehensive review
for the study.
Almost all software companies responding do have formal appraisal programs. About 93% of
smaller organizations (those with fewer than 500 employees) have such programs. About 97%
of large organizations have them.
Rating scales are by far the most widely used appraisal technique. About 62% of small organization
use rating scales, 20% use essays, and about 19% use MBO. Among the large organizations, 51%
use rating scales, just over 23% use essays and about 17% use MBO.
However, those using ratings as the main appraisal technique typically also require narrative
comments to justify rating and to describe employee strengths and weakness and document
development plans. Those using essays as the main appraisal technique usually require an overall
quantitative performance rating to facilitate employee comparisons for compensation decisions.
The employee’s immediate supervisor makes Ninety two percent of appraisals. These appraisals are
in turn reviewed by the appraiser’s supervisor in 74% of the responding organizations. Only about
7% of the organizations use self-appraisal in any part of the overall appraisal process. Virtually all
employees (99%) are informed of the results of their appraisals. Overall about 77% are given a
chance to respond with written comments on their appraisals. In 69% of companies, appraisals are
done annually.
The review of literature does scrutinize the important research studies. The primary sources
that provide relevant information are the best form to retrieve data from the research. The primary
sources were encouraged with the help of distribution of questioners as well as conducting personal
interviews. With this the data received enables the researcher to accurately arrive at the problem of
the study and the consecutively solutions to the same. The secondary sources were also relied on
for additional information. It includes company journal, newsletters, records, manuals etc.
CONCLUSION
Performance management lays an evaluative and developmental dimension to its makeup, and is
crucial in both linking rewards to performance and providing a platform for the development of
employees. Over concentration on the assessment of performance can work to the detriment of
effort aimed at establishing the development needs of the individual in an open and honest way. The
manager, as an appraiser, may encounter difficulties in reconciling the roles of 'judge' and 'mentor'.
Managers need to develop the skills of coping with such tensions in their roles. In some
organizations, this problem is solved by having different managers carrying out performance and
development appraisals. Appraisal provides the context in which mangers can seek to ensure that
there is acceptable congruency between the objectives of the individual and those of the
organization.
4. RESEARCH METHODOLOGY
TYPE OF RESEARCH
The research design comprise of the plan and structure of investigation conceived so as to
arrive at the responses to the research queries. It there by addresses the aims and objectives of the
study, both descriptively and analytically.
SAMPLING TECHNIQUE
The sampling technique adopted for the study is non-probability Random sampling technique
according to the convenience of the researcher.
A questionnaire was administered to HR managers / executives of different software companies to
obtain data for the purpose of analysis.
SAMPLE SIZE
Data is collected using a sample of 30 software companies.
SAMPLE DESCRIPTION
PERFORMANCE APPRAISALS AND EVALUATION OF EMPLOYEE SATISFACTION
The sample mainly consists of data from the primary sources that are utilized for the
purpose of this study. This is done by means of administrating questioners to human
resource managers / executives in different software companies in the city of Bangalore.
Secondary data like company journals, newsletters, records etc. were also relied on for
retrieving further information.
INSTRUMENTATION TECHNIQUE
Both secondary and primary sources of data are utilized for the purpose of this study.
Primary data is collected by means of administering a questionnaire to the Human Resource
Managers / Executives in different software companies. Secondary data is collected from
various records, manuals and other sources of the HR Department.
The null hypothesis asserts that there are no significant differences between the statistics and
the population parameters and whatever observes difference is there merely due to
fluctuations in sampling from the sample population. Null hypothesis is usually denoted by
the symbol, Ho. Any hypothesis that contradicts the Ho (null hypothesis) is called an
alternative hypothesis and is denoted by symbol H1. The technique used to test the
hypothesis is Test for proportion.
Suppose the population of an attribute in a population is now known, we want to test whether
the proportion is a given value P. The null hypothesis is Ho : p = P. The alternative
hypothesis is H1: p P.
The large random sample of size n from the population, let x units possess the attribute.
Then the sample proportion is p = x/n.
p-P
And so, Z =
PQ
n
Therefore, the test statistics is | Z | = P = assumed level of effectiveness
Q = 1-P
p = level of effectiveness of sample
n = sample size
For the sample, if | Z | cal > k, Ho is rejected .On the other hand, if | Z | cal < Ho is accepted.
For the data analysis, and the subsequent interpretation the researcher has adopted advanced
version of MS-EXCEL 2000. This application software has facilitated the researcher to
construct the frequency table, various kinds of graphs and to find out the average responses
from the sample. By this automated data analysis it has minimized the researcher’s time
constraint and reduced human errors and also accurate outlay of information.
PERFORMANCE APPRAISALS AND EVALUATION OF EMPLOYEE SATISFACTION
5. QUESTIONNAIRE
There were two questionnaire were designed. First has been designed to assess the job
satisfaction level and morale of the employees in the organization. Second was designed for
the HR of the specific software companies.
Please assess the extent to which each statement describes you and your organization using the
following five point rating scale; encircle the most appropriate rating.
2. Disagree (D)
3. Indifferent (I)
4. Agree (A)
S.NO SD D I A SA
:
A. TASK SIGNIFICANCE
B. TASK IDENTITY
PERFORMANCE APPRAISALS AND EVALUATION OF EMPLOYEE SATISFACTION
C. SKILL VARIETY
D. AUTONOMY
E. INTEREST IN WORK
S.NO SD D I A SA
:
B. FEEDBACK
D. SECURITY
F. GRIEVANCE HANDLING
H. COMMUNICATION SYSTEM
I. REWARD
4. Cohesiveness
5. Teamwork
6. Culture
S.NO SD D I A SA
A. SUPERVISION
B. WORKING GROUPS
39. The people I work with are very friendly and supportive of 1 2 3 4 5
one another.
S.NO SD D I A SA
:
40. I don’t care about rank and job titles; its what I am doing is 1 2 3 4 5
important.
2. Working hours
4. Provision of food
5. Transportation
S.NO SD D I A SA
S.NO SD D I A SA
:
49. I think I can proudly tell the name of the organization I work 1 2 3 4 5
for.
QUESTIONNAIRE FOR HR
Designation:
Yes No
Scoring Comments
Both
If scoring is it
Alpha Numeric
Both
Yes No
Written Oral
Detailed Summarized
8. Do you share both positive and negative feedback with appraise in the same meeting?
Yes No
Yes No
Yes No
Yes No
11. Does the appraiser set targets for an employee being appraised?
Yes No
PERFORMANCE APPRAISALS AND EVALUATION OF EMPLOYEE SATISFACTION
6 Months 12 Months
Yes No
Yes No
14. What would be the level of effectiveness of 360 score when implemented as a form of appraisal?
6. CHAPTERISATION SCHEME
Introduction
Research design
Company profile
Approaches of performance appraisal
Findings, suggestions and conclusions
Bibliography and Annexure
6.1. Introduction
This chapter would provide a short introduction of what is Performance Appraisal and the
Background of the research and what would be divided on 3 basic chapters as mentioned below.
This chapter will have an elaborate description of Information Technology and ERP systems. ERP
which is one of the latest developments in software for business enterprise wide Resources Planning
(ERP) System is an integrated business management system
PERFORMANCE APPRAISALS AND EVALUATION OF EMPLOYEE SATISFACTION
The research intends to study the different approaches of appraisals adopted by software
Companies.
Analysis of data was done with the purpose of summarizing the collected data and organizing these
in such a manner that they answer the research questions. Percentage analysis was used for analysis
PERFORMANCE APPRAISALS AND EVALUATION OF EMPLOYEE SATISFACTION
of data and the results have been presented by way of pie charts, bar charts, with the help of SPSS
package
6.5. Conclusion
At the end of the project report we can mention why an organization would and should use
an Effective Performance Appraisals techniques and its key benefits.
6.6.3 Questionnaire
Human Resources
8. Guides Resume
As per the guidelines please find below the resume of Mr. Rajiv Malhotra who has guided and helped
me design the below project. He also assisted me run this project within our organization and
assisted to go get the data from the other software companies in delhi and NCR region, without his
approval and help this would not have been possible.
Objective
To specialize in organization level Human Resource Planning and Development. To keep developing
HR skills and be a part of a dynamic team and help the organization grow, by suggesting and
implementing innovative HR policies and initiatives.
Academic profile
Master of Personnel Management & Industrial Relations (MPM&IR), 2 Years Full Time
Post Graduate Course from Jiwaji University, Gwalior (1999)
Higher Diploma in Software Engineering (HDSE) from Aptech. (MS -DOS, Windows
95/98/NT, MS- Office, C, C++, Oracle, D2k, Networking, SSAD, Internet Browsers) (1999)
B.Com from Jiwaji University, Gwalior (1997)
Pursuing Diploma in Training & Development from ISTD, Delhi (Final Semester)
Work Experience
August 2006 to Till Date : Intersoft Data Labs Pvt. Ltd., Gurgaon
Manager-HR
Handling a team of seven HR professionals and overseeing all HR activities of the organization
including recruitment, people practices, employee satisfaction, performance management,
organizational development, audits (BS7799, ISO27001, CMMi) and compensation management
etc.
Key Responsibilities
Performance Management
o Ensuring a fair and transparent process of appraisal through feedback sessions with employees
and Human resource presence (where necessary).
o Managing the overall Appraisal process – Policy Formulation & Clarification, communication /
rollouts, coaching employees / managers in writing effective appraisals, Data Validation, Goal
Setting, Self Appraisal, Appraiser evaluation, Reviewer evaluation, identifying development
plans for employees conducting ensuring the appraisal process is closed with the time line.
o Performance Normalization meetings, Post-Appraisal data mapping, analysis and finalization of
rewards.
August 2005 to August 2006 : Fidelity National Information Services (Earlier know as
Second Foundation India Private Limited), Chandigarh
Assistant Manager-HR
Company Profile
Fidelity National Information Services (Earlier know as Second Foundation India Private
Limited), a leading provider of global software services, specializes in Business
Intelligence, Software Security and Web Services solutions. It houses more than
650 employees.
PERFORMANCE APPRAISALS AND EVALUATION OF EMPLOYEE SATISFACTION
Job Responsibilities
Performance Management
o Assisted in review and implementation of effective performance appraisal uniformly all across the
organization.
o Defining various roles within the organization as well as skill required at each level. (Job and Role
Descriptions). Defining the organization structure and career progression path.
o Manage Goal Setting Exercise.
OD Initiatives
o Facilitating healthy organizational culture by promoting open house discussions, suggestion
schemes, E-Sat (ESS), Intranet etc.
o Employee Engagement activities like Open House, Monthly Events, Employee Events,
Celebrations, Yoga Classes, Grievance Handling etc
o Manage exit formalities. Conduct exit interviews, analysis and finalize F&F settlement. Actively
participated in Implementation of Quality System for successful certification of ISO:
9001:2000.
Trainings
o Organizing training programmes for existing employees and freshers hired through campus & off-
campus.
o Organising Induction trainings for new hires.
o Identification of behavioral and technical training needs.
o Generating feedback from the trainees with regard to the benefits drawn from the training.
Compensation Management
o To gather and update information about the compensation/salary, employee welfare and
incentive schemes with respect to competitor’s vis-à-vis market intelligence.
o Improve communication of policies and benefits through Benefits campaigns; Policy clarification
sessions for the HR and Resourcing team; Timely response to queries on policies and
benefits.
o Conduct Salary benchmarking exercises.
o Active interaction with Resourcing team for taking inputs on market trends and equip them with
recruitment guidelines.
Compliance
o Shops and Establishment
o PF Compliance
o Payroll
o Contractual staff
o Mediclaim Insurance
PERFORMANCE APPRAISALS AND EVALUATION OF EMPLOYEE SATISFACTION
August 2004 to August 2005 : National Dairy Development Board (NDDB), Anand
(Gujarat)
Deputy Manager-HR
Company Profile
The NDDB is a Public Financial Institute and was created to promote, finance and support
producer-owned and controlled organizations. Fundamental to NDDB's efforts are cooperative
principles and the Anand Pattern of Cooperation. It houses more than 1500 employees.
Job Responsibilities
Performance Management
o Process the Appraisals of the employees, Initiation appraisal forms and follow-up for timely
receipt of the same.
o Assisted in Six Monthly & Annual Performance Feedback.
Operations
o Responsible for personnel functions like joining, LTA, Separation, Full & Final Settlement, etc,
Formulation of Organization Structure.
o Employee grievance handling. Issuance of Various Certificates i.e. NOC for Passport, NOC for
Visa, Verification, Residence Proof, Service Certificates etc.
o Periodic Voluntary Medical Check-up (PVMC), Permission for Higher Studies, Training/Visits
Abroad. Proposals to MD for approval for various other purposes.
o Implementing formal system of Internal Communication- Interaction meeting with Unions,
Other participative Forums.
o Welfare activities for employees and their family members.
o Liaisoning with All Department Heads regarding HR related matters.
Job Responsibilities
Performance Appraisal
o To organize Appraisals as per the policy and to Ensure Appraisals are done and are in order.
o Performance evaluation and compilation and finalization of rewards.
o Issue promotion / increment letter as applicable.
Payroll Management
o Responsible for preparing Salary statement every month with all necessary deduction and timely
o disbursement.
o Providing salary statement and monthly report to accounts department on a monthly basis.
Operations
o Attendance & Leave Management, Full & Final preparation, Exit Interviews, Employees
Communication, Employees Database Management etc.
o Introduced Suggestion Box and Movement Register in the organization.
o Drafting of Offer Letters, Appointment Letters, and Experience Letter, Relieving Letter, Increment
Letter, and Salary Certificate etc.
o Issue of Warning Letters, Maintaining Discipline Maintenance of harmonious Relation.
o Design and regularly updating the HR manual.
o Organizing employees get-togethers and parties to celebrate the special occasions.
o Induction Trainings, Training to Resource Executives.
o Ensure compliances w.r.t. PF, Gratuity, Shops & Establishment Act, etc.
o General administration activities-Telephone/Fax, Library Management, Hotel & Travel
Arrangement, etc.
Personal Details
It is well to remember that IT is one more tool in hands of a management to get things
better and faster.
Example of IT application, ERP which is one of the latest developments in software for
business enterprise wide Resources Planning (ERP) System is an integrated business
management system which covers some important aspects of business such as logistics,
production, finance, accounts, human resources, planning, materials and warehouse
management. Right from the receipt of an inventory, an ERP system tracks materials, capacity
and labor resources. Thus an ERP system package claims to aid a business to manage it
activates dynamic and integrated manner.
But it is equally important to understand and appreciate the flip side of such
sophisticated IT packages like ERP. First of all the people ho handle such a package must be
qualified and must posses relevant work experience in the functional module, which a person
wants to get trained.
An organization, which wishes to work with ERP, must have already had experience
with proper working IT infrastructure. There should be enough number of terminals for
concerned people to key in data or run a query.
One of the toughest things to overcome is the attitude of the people for adapting to a
change. Thus ushering in a new "IT culture" remains one of the greatest challenges for any
management interested in adapting IT as a tool in as many functions of the organization as
possible.
PERFORMANCE APPRAISALS AND EVALUATION OF EMPLOYEE SATISFACTION
The vital role of IT is to support a management and not control it. Thus the IT most
understands their role vis-à-vis decision-making. Just because a sophisticated IT package has
been installed in an organization cannot guarantee success .If for example, a vendor is
supplying poor quality supplies consistently, the information system will tell the
management of such a fact faster. But now it is up to the management to initiate corrective
measures- visit vendor to assist him to come up to standard, develop alternate vendor or
import.
In the enthusiasm to appear very modern and up-to date a management may go in for
IT package when the ground reality within the organization is not conductive to such a
drastic change. On the other hand a few well-tried techniques do wonders for an
organization. For example, an organization's urgent need may be to change existing
technology to an upgraded one. An ERP package obviously, won't tell the management to do
just that. Also, a few time -honored principles like "do it right at the first time" must be
followed in an organization with or without a sophisticated IT tools.
A responsible management will put the IT in its place to serve the overall business
interests.
This study is conducted with respect to understanding the different appraisal systems
conducted in the software industry and their effects thereafter in the same. Due to time and
resource constraints, the study was restricted to the software industry in Bangalore City.
Purpose
The literature review section examines the importance of search studies, company
data or industry reports that serve as a foundation for the setup of study. The research
dimension of the related literature and the relevant information begins from an explanatory
perspective, approaching towards specific studies which do related to the judge the
limitations and informational gaps in data from the secondary sources.
This analysis may reveal conclusions from past studies to realize the reliability of the
secondary sources and their credibility. This in turn enables one to rely on a comprehensive
review for the study.
Rating scales are by far the most widely used appraisal technique. About
62% of small organization use rating scales, 20% use essays, and about 19%
use MBO. Among the large organizations, 51% use rating scales, just over
23% use essays and about 17% use MBO.
However, those using ratings as the main appraisal technique typically also
require narrative comments to justify rating and to describe employee strengths and
weakness and document development plans. Those using essays as the main appraisal
PERFORMANCE APPRAISALS AND EVALUATION OF EMPLOYEE SATISFACTION
The review of literature does scrutinize the important research studies. The primary
sources that provide relevant information are the best form to retrieve data from the research.
The primary sources were encouraged with the help of distribution of questioners as well as
conducting personal interviews. With this the data received enables the researcher to
accurately arrive at the problem of the study and the consecutively solutions to the same.
The secondary sources were also relied on for additional information. It includes company
journal, newsletters, records, manuals etc.
Conclusion
Performance Appraisal
the techniques discussed in this chapter and it will be subsequently related to targets or plans.
In this way the subordinate receives feedback on his or her progress.
Measuring Performance
The annual performance appraisal system tends to serve only a little purpose: salary
administration, training and succession planning. But this is not the sole objective of
performance appraisal. These objectives will only dilute and weaken the clarity and validity
of any appraisal system. Most organization ties the formal appraisal system directly to salary
increase, which decrease their validity.
PERFORMANCE APPRAISALS AND EVALUATION OF EMPLOYEE SATISFACTION
Most personnel departments have a very narrow outlook to appraisals. The general
view is to receive the appraisal forms at a date (which usually is the deadline), issue
instructions regarding increments and promotions, receive the data regarding the same and
they issue letters to the concerned employee informing of their salary increase. The appraisal
process gets polluted as the appraiser and appraise have at the back of their minds promotion
and salary increase, rather than performance plans and participative reviews. This dilutes the
objectives of appraisal to great extent. In fact, if organizations create, a culture of continuous
feedback on the performance they would be making the appraisal system more relevant.
Several organizations have already started delinking performance appraisal from salary
increase.
If performance appraisal should not directly be linked to salary increase the question
then arises, what should the objectives of performance appraisals be that could be
realistically achieved?
Some suggestions:
To do joint goal setting, and link the goals to the organizational objectives
To provide role clarity by defining Key Result areas for Accounting.
To establish a level of performance in the current job and seek ways of improving
it.
To identify potential for development and to support the total process of planning
To increase communication between the appraiser and the appraise.
To identify factors that facilitate performance and other factors that hinder
performance.
To help the employees identify and recognize their own strengths and
weaknesses. To make them assess their own competencies and how the same can
be multiplied and improved.
To generate data about the employee for various decisions like transfers, rewards,
job-rotation, etc.
PERFORMANCE APPRAISALS AND EVALUATION OF EMPLOYEE SATISFACTION
Managers should develop part ownership in the employee's future. Any good
appraisal system should focus on developmental appraisal. Developmental appraisal mean
that an organization needs to develop not just isolated performance appraisal tool/system, but
the total frame work for the individuals development, improvement in job and level of
competence and preparing employees for future jobs. Thus, appraisal of people, which is a
part of the total HRD system, lies to be linked to long-term development activity and carrier
planning.
Organizations have to show vision for the future. Vision, strategies and objectives
will give rise to individual objectives and performance standards. The immediate rewards
and recognition do not lead to enduring performance and upgrading of competence and
therefore are not real motivators. The appraisal as a tool not only gives the individual and the
organization the idea of where the individual stands in terms of his skills, competencies and
abilities, but also monitors the process of growth and development, together with the inputs
that are required to develop a high level of competence by individuals.
Subordinates need feedback more often on their performance. The best way to do it is
to let them appraise their own performance.
PERFORMANCE APPRAISALS AND EVALUATION OF EMPLOYEE SATISFACTION
Self-appraisal would -
1) Motivate the employee to take more responsibility for his/her own performance.
2) Focus on the job behavior only.
3) Reduce ambiguity in performance and focus on change in job behavior.
When subordinates undertake self-appraisal, they analyze their job duties and how
key issues in a job they handle. Each individual may rate himself or herself.
Self-appraisal may focus on cost control, communication, planning, training, delegation and
decision-making. After self-appraisal, the subordinate discusses the ratings with his/her
direct report or superior to get a feed back on performance. Both then come to an agreement
in areas of convergence and draw a job improvement plan.
Checklist
Under this method, a checklist of statements on the traits of the employee and his
or her job is prepared in two columns – viz., a ‘Yes’ column and a ‘No’ column. All
that the rater should do is to tick the ‘Yes’ column if the statement is positive and in
column ‘No’ if the answer is negative. After ticking off against each item, the rater
forwards the list to the HR department where the actual assessment of the employee
takes place. In other words, the rater only does the reporting, while actual evaluation
is done by the HR department. The HR department assigns certain points to each
‘Yes’ ticked. Depending on the number of ‘Yes’ the total score is arrived at. When
points are allotted to the checklist, the technique becomes a weighed checklist.
overcome the problem by compelling the rater to distribute the rates on all points on
the rating scale.
The method operates under an assumption that the employee performance level
conforms to a normal statistical distribution. Generally, it is assumed that employee
performance levels conform to a bell – shaped curve. For example, the following
distribution might be assumed to exist - excellent 10%, good 20%, average 40%
below average 20% and unsatisfactory 10%.
The major weakness of the forced distribution method lies in the assumption that
employee performance levels always conform to a normal (or some other)
distribution. In organizations that have done a good job of selecting and retaining
only the good performers, the use of forced distribution approach would be
unrealistic as well as possibly destructive to the employee morale. One merit of this
approach is that it seeks to eliminate the error of leniency. This technique is however
not acceptable by most of the rates and rates.
Essay Method
Here, the rater must describe the employee within a number of broad categories
such as.
1. The raters overall impression of the employee’s performance.
2. The promotability of the employee
3. The jobs that the employee is now qualified or capable to perform
4. The strengths and weakness of the employee
5. The training and development assistance required by the employee.
The second step involves setting the performance standard for the subordinates in
a previously arranged time period. As subordinates perform, they know fairly well
what there is to do, what has been done and what remains to be done.
PERFORMANCE APPRAISALS AND EVALUATION OF EMPLOYEE SATISFACTION
The third step, the actual level of goal attainment is compared with the goals
agreed upon. The evaluator explores reasons for the goals that were not met and for
the goals that were exceeded. This step helps determine possible training needs. It
also alerts the superior to conditions in the organization that may affect a subordinate
but over which the subordinate has no control.
The final step involves establishing new goals and possibly, new strategies for
goals not previously attained.
Psychological Appraisals
Large organizations employ full time industrial psychologists. When
psychologists are used for evaluations, they assess an individual’s future potential
and not past performance. The appraisal normally consists of in-depth interviews,
psychological tests, discussions with superiors and a review of other evaluations.
The psychologist then writes an evaluation of the employee’s intellectual, emotional,
motivational and other related characteristics that suggest individual potential and my
predict future performance. The evaluation by the psychologist may be for a specific
job opening for which the person is being considered, or it may be a global
assessment for his or her future potential. From these evaluations, placement and
development decisions may be made to shape the person’s career.
The data is usually fed back in the form of ratings against various performance
dimensions. 360° feedback is also referred to as multi-source assessment or multi-rater
feedback.
1. The Questionnaire
360° feedback processes usually obtain data from questionnaires, which measure
from different perspectives the behaviors of individuals against a list of competencies.
The competence model may be developed within the organization or the competency
headings may be provided by the supplier of the questionnaire. The dimensions may
broadly refer to leadership, management and approaches to work.
2. Ratings
Ratings are given by the generators of the feedback on a scale against each
heading. This may refer both to importance and performance, as in the questionnaire,
which asks those completing it to rate the importance of each item on a scale of 1 (not
important) to 6 (essential) and performance on a scale of 1 (weak in this area) to 6
(outstanding).
3. Data Processing
Questionnaires are normally processed with the help of software developed
within the organization or, most commonly, provided by external suppliers. This enables
the data collection and analysis to be completed swiftly, with the minimum of effort and
in a way that facilitates graphical as well as numerical presentation.
PERFORMANCE APPRAISALS AND EVALUATION OF EMPLOYEE SATISFACTION
4. Feedback
The feedback is often anonymous and may be presented to the individual (most
commonly) to the individual’s manager (less common) or to both the individual and the
manager. Some organizations do not arrange for feedback to be anonymous. Whether or
not feedback is anonymous depends on the organization’s culture – the more open the
culture, the more likely is the source of feedback to be revealed.
5. Action
The action generated by the feedback will depend on the purposes of the process,
i.e. development, appraisal or pay. If the purpose is primarily developmental, the action
may be left to individuals as part of their personal development plans, but the planning
process may be shared between individuals and their managers if they both have access
to the information. Even if the data only goes to the individual, it can be discussed in a
performance review meeting so that joint plans can be made, and there is much to be said
for adopting this approach.
PERFORMANCE APPRAISALS AND EVALUATION OF EMPLOYEE SATISFACTION
Individuals get a broader perspective of how they are perceived by others than
previously possible.
Increased awareness of and relevance of competencies
Increased awareness by senior management that they too have development
needs.
More reliable feedback to senior managers about their performance.
Gaining acceptance of the principle of multiple stakeholders as a measure of
performance.
Encouraging more open feedback – new insights.
Reinforcing the desired competencies of the business.
Provided a clearer picture to senior management of individual’s real worth
(although there tended to be some ‘halo’ – effect syndromes).
Clarified to employee’s critical performance aspects.
Opens up feedback and gives people a more rounded view of performance than
they had previously.
Identifying key development areas for the individual, a department and the
organization as a whole.
Identify strengths that can be used to the best advantage of the business.
A rounded view of an individuals / teams / the organization performance and
what its strength and weakness are
It has raised the self awareness of people managers of how they personally
impact upon others – positively and negatively
It is supporting a climate of continuous improvement
It is starting to improve the climate / morale, as measured through out employee
opinion survey
Focused agenda for development. Forced line managers to discuss development
issues.
Perception of feedback as more valid and objective, leading to acceptance of
results and actions required.
These can all be minimized if not avoided completely by careful design, communication,
training and follow-up.
APPRAISAL ERRORS
None of the methods for appraising performance is absolutely valid or reliable;
each method has its own strengths and weakness. Let us try to understand the most
commonly occurring errors within performance appraisal methods.
2. Error of Leniency:
This is caused by the tendency of the lenient rater to put most of the rates on the
higher side of the scale, while a tough rater places them on the lower side of the scale.
3. Halo Effect:
In other words, it is tendency to allow the assessment on one trait to influence
assessment on others. This usually arises when traits are unfamiliar, ill – defined and
involved personal reactions.
4. Error in Unreliability:
This error occurs when there is the existence of inconsistency in the evaluations
of a group of employees by two / more appraisers.
5. Personal Bias:
This error occurs when there exists a close relationship between the appraiser and
the appraise. This tends to influence the evaluation. The scores could be on the higher
when there would be a bias on the side of the appraiser. Therefore, the scores given
could tend to be higher then what the appraise deserves. This would give the appraise an
undue advantage for the appraise during the times of promotions, pay rise etc. the same
could happen vice versa too if an appraiser does not share a good relationship with the
appraise, he could tend to give absolutely low scores for the appraise.
5. No Consultation
PERFORMANCE APPRAISALS AND EVALUATION OF EMPLOYEE SATISFACTION
There would tend to be an error in the scores if the appraiser just goes on giving
scores without discussing with the appraise. If the appraise would not be given his say in
the matter, the score will not reflect the actual capability of the appraise.
7. Status Effect:
It refers to over rating of employed in higher level job or jobs held in high
esteem, and under rating employees in lower level job at job held in low esteem.
Type of Research
The research design comprise of the plan and structure of investigation conceived so
as to arrive at the responses to the research queries. It there by addresses the aims and
objectives of the study, both descriptively and analytically.
Sampling Technique
The sampling technique adopted for the study is non-probability Random sampling
technique according to the convenience of the researcher.
A questionnaire was administered to HR managers / executives of different software
companies to obtain data for the purpose of analysis.
PERFORMANCE APPRAISALS AND EVALUATION OF EMPLOYEE SATISFACTION
Sample Size
Data is collected using a sample of 30 software companies.
Sample Description
The sample mainly consists of data from the primary sources that are utilized for the
purpose of this study. This is done by means of administrating questioners to human
resource managers / executives in different software companies in the city of Bangalore.
Secondary data like company journals, newsletters, records etc. were also relied on for
retrieving further information.
Instrumentation Technique
Questionnaire and structure disguised questions.
The null hypothesis asserts that there are no significant differences between the
statistics and the population parameters and whatever observes difference is there merely due
to fluctuations in sampling from the sample population. Null hypothesis is usually denoted
by the symbol, Ho. Any hypothesis that contradicts the Ho (null hypothesis) is called an
alternative hypothesis and is denoted by symbol H1. The technique used to test the
hypothesis is Test for proportion.
PERFORMANCE APPRAISALS AND EVALUATION OF EMPLOYEE SATISFACTION
The large random sample of size n from the population, let x units possess the
attribute. Then the sample proportion is p = x/n.
p-P
And so, Z =
PQ
n
Therefore, the test statistics is | Z | = P = assumed level of effectiveness
Q = 1-P
p = level of effectiveness of sample
n = sample size
For the sample, if | Z | cal > k, Ho is rejected .On the other hand, if | Z | cal < Ho is accepted.
For the data analysis, and the subsequent interpretation the researcher has adopted
advanced version of MS-EXCEL 2000. This application software has facilitated the
researcher to construct the frequency table, various kinds of graphs and to find out the
average responses from the sample. By this automated data analysis it has minimized the
researcher’s time constraint and reduced human errors and also accurate outlay of
information.
SOFTWARE INDUSTRY
PERFORMANCE APPRAISALS AND EVALUATION OF EMPLOYEE SATISFACTION
The Indian IT-ITES industry is broadly categorized into IT services and software,
ITES-BPO and Hardware segments.
The earnings from IT-ITES exports was US$ 13.3 billion (61.9 percent of total
industry revenues) in 2004-05 and is expected to touch US$ 17.9 billion (63.7
percent) in 2005-06. Key drivers of growth include the growing adoption of IT
outsourcing and the rapid expansion in the scale and breadth of ITES-BPO offerings
by Indian vendors.
o During 2005-06, software and services, and ITES-BPO would continue to
remain the key contributors to India’s IT-ITES export revenues, with a share
of 67.8 percent and 28.4 percent, respectively. While contribution of hardware
exports would be around 3.7 percent, the situation is expected to change in the
medium term, with this segment receiving a boost owing to market
conditions.
o Overall pricing levels in IT services stabilized at US$ 55-60 per hour for
onsite services and between US$ 18-24 per hour for offshore services.
o Indian IT-ITES vendors successfully executed the offshore delivery model to
achieve sustained growth in service exports and established India as the most
preferred offshore destination for global sourcing of services.
Indian IT-ITES vendors successfully executed the offshore delivery model to achieve
sustained growth in service exports and established India as the most preferred
offshore destination for global sourcing of services.
The domestic IT-ITES market witnessed a revival during 2004-05, with revenues
reaching US$ 8.2 billion (a growth of 30 percent over previous year). The segment is
expected to touch revenues of around US$ 10.2 billion during 2004-05, at a CAGR of
19.2 percent for the 2004-05 periods. Hardware and IT services accounted for around
PERFORMANCE APPRAISALS AND EVALUATION OF EMPLOYEE SATISFACTION
90 percent of the domestic IT-ITES revenues during 2004-05 and this market share is
not likely to change in 2004-05.
o The BFSI (Banking, Financial services, Insurance), Government and telecom
segments remained the key revenue drivers for the domestic IT-ITES market.
Two more companies within the IT-ITES domain joined the billion-dollar club,
which now includes the HCL Group, Infosys, TCS and Wipro.
During 2004-05, the Indian IT software and services segment added 98,000 jobs and
the ITES-BPO sector added about 73,500 jobs. A total of 203,5000 new jobs are
likely to be created by the IT-ITES sector in the current fiscal.
Indian IT-ITES vendors focused on improving productivity and utilization and moved
up the value chain. While IT service companies included new service lines such as
package software implementation, systems integration, R&D engineering and remote
network management to their portfolio of offerings, ITES-BPO companies began
more complex services such as financial research and analytics, actuarial modeling,
corporate and business research.
The Indian IT-ITES players expanded their focus from the Fortune 500 companies to
address the needs of Global 2000 corporations.
A large part of India's success in the software sector is due to the crucial role played
by the State of Karnataka in promoting and providing a boost to IT. Karnataka has emerged
as the computer capital and center of high-tech industries, especially software. Bangalore has
for long been known as India's answer to Silicon Valley, and this is the city where most large
software companies have set up shop and operate out of state-of-the-art facilities. This is the
reason why it is fast becoming the "Technopolis" of India. The Government of Karnataka has
also been extremely positive about the software and services marketplace and has helped
PERFORMANCE APPRAISALS AND EVALUATION OF EMPLOYEE SATISFACTION
create the relevant telecom and policy infrastructure conducive to the growth of this sector.
The dynamic industrial policy declared in 1996, with comprehensive packages of incentives
and concessions, has ensured a productive ground for various industries. The hardware and
software industries have now brought about a revolution of sorts under these schemes.
Various institutions and computer training centers have contributed to the large number of
trained and talented professionals.
The City of Bangalore has positioned itself to help market the software industry. This
is also why Bangalore has been playing host to international-class conferences, workshops
and exhibitions devoted to the software cause. The city has the highest number of
engineering colleges in the world, almost 50 percent of the world's SEI CMM Level 5
companies; COPC/ISO recognized Customer Interaction Centers, and over 103 R&D
Institutions. It is, in fact, home to GE's biggest R&D Center outside the U.S.-the Jack Welch
Technology Center, which hires over 200 PhDs/scientists every month! To top it all,
Bangalore has just been ranked the fourth best "Global hub of technological innovation" by
none other than the United Nations.
Bangalore's strengths in the software market also lie in its pursuit of new
opportunities. In fact, two key segments that are expected to open up over the next few years
for India are e-commerce and remote processing. Opportunities in e-commerce software
solutions are emerging as a major area of growth in the Indian IT software and services
industry. A recent study undertaken by The Boston Consulting Group for NASSCOM clearly
stated that India could earn revenues of US$9 billion from e-business solutions by 2005.
.
The data was processed after collection and analyzed for the purpose. The data was
Analysis of data was done with the purpose of summarizing the collected data and
organizing these in such a manner that they answer the research questions. Percentage
PERFORMANCE APPRAISALS AND EVALUATION OF EMPLOYEE SATISFACTION
analysis was used for analysis of data and the results have been presented by way of pie
After analysis, the phase of interpretation starts. This is done by drawing inferences
from analyzed data. After interpretations, a report was prepared on the basis of inferences.
PERFORMANCE APPRAISALS AND EVALUATION OF EMPLOYEE SATISFACTION
Above 1000
Upto 100
100 - 1000
PERFORMANCE APPRAISALS AND EVALUATION OF EMPLOYEE SATISFACTION
Graph 4.2 Indicates the type of appraisal system adopted by the software companies
10 Point scale
4.Point scale
3.point Scale
5 Point Scale
36Feed Back
Manager,Supervisor,A
MBO
open system
Self appraisal
Graph 4.3Indicates how often appraisals are carried out by the companies
Frequency of Appraisal
Others
Quarterly
Annually
Half Yearly
Graph 4.4
Quality of Output
Performance
Attandence
Technical Competence
customer Focus
Total 30 100.0
Scoring
Both
Comments
Both
Numeric
Interpretation
The above table indicates that 86.67% of the employees appraised received feedback and
13.33% employees did not receive feedback.
PERFORMANCE APPRAISALS AND EVALUATION OF EMPLOYEE SATISFACTION
No
Yes
16.67%, detailed 23.33% and summarized being 10%. Almost all the companies that were
sampled followed a combination of more than one type of feedback.
Manger Assessed
Self-Assessed Written
Summarized
Detailed
Oral
Graph 4.9 whether the negative and positive feedback is shared with the appraise in the same
meeting.
PERFORMANCE APPRAISALS AND EVALUATION OF EMPLOYEE SATISFACTION
No
Yes
PERFORMANCE APPRAISALS AND EVALUATION OF EMPLOYEE SATISFACTION
Graph 4.10 whether the self-assessment of employee is followed in the company or not.
Self-Assessment
No
Yes
PERFORMANCE APPRAISALS AND EVALUATION OF EMPLOYEE SATISFACTION
Missing
Yes
No
PERFORMANCE APPRAISALS AND EVALUATION OF EMPLOYEE SATISFACTION
No
Yes
No
Yes
Interpretation
From the above table, half (15) of the companies, the appraiser sets targets for an
employee being appraised for a period of 12 months (50%), in other companies the
targets are set for 6 months (20%), 3-6 (20%) and 3 months (10%).
Graph 4.14 If the appraiser sets targets, for what period the targets are set.
Missing 3 Months
3 - 6 Months
6 Months
12 Months
Interpretation
PERFORMANCE APPRAISALS AND EVALUATION OF EMPLOYEE SATISFACTION
The above table indicates that 76.67% of the companies (23) have a checklist for
carrying out appraisals while 23.33% said no. Some companies have a performance
appraisal handbook, which gives the details. One of the companies has an IT Tool as
checklist.
Graph 4.15 Do the companies have a checklist for carrying out appraisal
No
Yes
The above table indicates that out of 30 companies 19 companies feel that career
planning place an important role in Performance Appraisal (63.33%) and rest of the 11
companies do not agree with this (36.36%).
Graph 4.16 Effectiveness of 360 degree appraisals.
No
Yes
0
Graph 4.17 The level of effectiveness of 360 score when implemented as a
form of appraisal.
20% - 35%
35% - 50%
Above 50%
Interpretation
From the above table it can be inferred that the criteria used to evaluate an employee for a
Small Company is performance (100%) but for a Medium Company it is
performance(18.8%),customer focus(37.5%), technical competence(25%) and
attendance(18.8%). And finally for a Large Company the criteria include target Vs.
achievement(40%),Key Result Areas(20%), quality of output(20%) and 3Point scheme(20%)
Appraisal Frequency
Quarterly Half Annually Others Total
Yearly
Manager 11 11
Supervisor
Appraiser (100) (100)
Self-Appraisal 3 3 6
(100) (100)
360 Feedback 2 2
(100) (100)
5Point 1 1
Scale
(100) (100)
3Point Scale 1 1
PERFORMANCE APPRAISALS AND EVALUATION OF EMPLOYEE SATISFACTION
(100) (100)
4point 1 1
Scale
(100)
(100)
Total 14 6 4 5 30
Feedback
Companies Written Oral Detailed Summarized Self- Manager Total
Assessed assessed
9 9
Small
(100)
(100)
Medium 7 5 3 1 16
Interpretation
PERFORMANCE APPRAISALS AND EVALUATION OF EMPLOYEE SATISFACTION
This table indicates how feedback is obtained from the employee, ie., Oral(23.3%),
Written(30%), Detailed(16.7%), Summarized(10%), Self-Assessed(10%), Manager
Assessed(10%) which holds good for Small, Medium and Large Companies.
PERFORMANCE APPRAISALS AND EVALUATION OF EMPLOYEE SATISFACTION
Interpretation
This table shows how effective and feasible the 360Degree Appraisal format applies to the
Companies broken up into segments of : less than 20%, in between 20%-35%, 35%-50%,
Above 50%
PERFORMANCE APPRAISALS AND EVALUATION OF EMPLOYEE SATISFACTION
√ PQ
n
p= X /N = 21 / 30
X= number of respondents saying the effectiveness of 3600 appraisals is more than or equal
to 50%
n = total number of respondents ie; 30
P = assumed level of effectiveness i.e., 0.50
Q = 1-P
Q = 1 - 0 .50 = 0.50
Z= 0.7 – 0.5
√ 0.5 * 0.5
30
Z = 2.191
Calculated Value |Z| cal: 2.191
PERFORMANCE APPRAISALS AND EVALUATION OF EMPLOYEE SATISFACTION
Inference
Since the |Z| cal > Z tab, the researcher has to reject Null hypothesis at 5% level of
significance and the researcher can conclude that the level of effectiveness of 3600 appraisal
is more than or equal to 50% (H1).
PERFORMANCE APPRAISALS AND EVALUATION OF EMPLOYEE SATISFACTION
5.1FINDINGS
The following findings have been derived from the study conducted. The most
common appraiser is the manager/supervisor/appraiser. The self-appraisal of an employee is
emphasized. Most of the companies followed a combination of self-appraisal and manager
assessment.
There is benefit of the objective setting for next six months. A clear distinction
between performers and non-performers is possible. Appraisal on performance as well as
values makes it a positive area where it makes it punctual and efficient. All variables are
easily quantified into a meaningful exercise and objective with work behavior, helping
qualitative contribution in building culture.
Majority of the companies obtain feedback on the person being appraised. Manager
gives the feedback in most cases while peer and mixed is used in few cases. 360° feedback is
followed in a lesser percentage of companies. Reverse appraisal, slab-not time based is
prevalent in a few companies.
Feedback is given in the written form, manager assessed and self-assessed in most
cases while summarized in few cases. There is a combination of the type of feedback given
to the employers. Both positive and negative feedbacks are shared in the same meeting with
appraise. Almost all companies follow a self-assessment of an employer, which is integrated,
into the appraisal system followed. In majority of the companies, the appraisal by the
manager and self-sources are protected, the manager assessment in a few companies the
sources are protected.
The appraiser sets targets for the employee being appraised for a period of six
months, 12 months and three months being lease. Targets are tracked by constant monitoring,
appraisal at the end of the project, input form customer, six months reviews, weekly reports,
by revenues and assignments.
The benefits of 360° feedback are that it gives an all round perspective restricting the
inconsistency factors that exists in traditional appraisal system. Evaluation and feedback is
more comprehensive and complete. It removes a lot off friction down the line improving
boss-subordinate relation. The limitations because of 360° feedback is not directly
appreciated and not well taken in application-oriented areas. Most companies’ have not
implemented the system as it consumes more time.
PERFORMANCE APPRAISALS AND EVALUATION OF EMPLOYEE SATISFACTION
The 3600 feedback is an appropriate system to use as it helps the appraise to know the
areas to be focused for development. An appropriate system should be an open system,
system that link reward / recognition and pay for performance. It should provide for two-way
feedback, reduce subjectivity judgment factor.
Most of the software companies are in the verge of implementing 3600 feedback
processes in the near future.
5.2 RECOMMENDATIONS
Appraisal systems are a very effective means to realize the growth of a company and its
employees. Hence, it is considered to be important for the development of the industry.
From the appraisal systems, the 3600 are the most preferred by a majority of them.
5.3 CONCLUSION
The major implications are to know the different appraisal systems adopted in the
software industry and its level of effectiveness when implemented in the various
organizations. From the research, certain suggestions could be arrived at with the help of
available and relevant data. This in turn could enable one to understand the growth and
development of a company and that of its employees.
The common type of appraisal system is the open system and the management by
objectives; some of the companies followed the 360-feedback process. The point-based
system of appraisal is also very popular among the software companies, with the 5-point
scale being widely used. One of the companies followed personal interaction evaluation
personal business commitment program. None of the companies followed one single system
PERFORMANCE APPRAISALS AND EVALUATION OF EMPLOYEE SATISFACTION
of appraisal. Performance appraisal is followed in most of the companies annually and half
yearly while a less percentage follows the quarterly system.
Monappa Arun and Mizra S. Saiyadin. Personnel Management, TATA McGraw Hill, 1997.
Edwards, R.Mark. 360Degree Feedback: The powerful new model for Employee
Assessment and Performance management.US Publication, 1996.
QUESTIONNAIRE
PERFORMANCE APPRAISALS AND EVALUATION OF EMPLOYEE SATISFACTION
I am a final year MBA student of Kristu Jayanti College Bangalore, conducting a research on
Appraisal Systems. This project is in partial fulfillment of my MBA program. Your
participation ill be greatly appreciated in this research effort; the responses will be kept
confidential and only be used in an aggregate manner.
Yes No
8. Do you share both positive and negative feedback with appraise in the same meeting?
Yes No
11. Does the appraiser set targets for an employee being appraised?
Yes No
14. What would be the level of effectiveness of 360 score when implemented as a form of
appraisal?