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HRM Project

Analyzing Performance Appraisal System


“Vital to every operation is co-operation”. We really agree to this wonderful quotation put forth by Mr. Frank Tyger. This project was successful due to the co-operation extended by people who have truly contributed towards it. We gratefully acknowledge Prof. ______ who’s deep sharing and synergy has moved us many levels beyond our own thinking. We want to thank the management of various companies who gave us the permission to conduct research. We would also like to thank all the employees and HR executives who empowered us with valuable information. And finally to those whose lives and writings has come the wisdom of the ages. We have tried to learn from your legacy.


Appraisal is a continuous process and done annually as a formal exercise before completion of the financial year. Appraisal has tremendous motivational impact on people through meaningful feedback and is a powerful tool for recognition. This project explains performance appraisal system and tries to find out how efficiently Performance Appraisal is conducted. And if performance appraisal doesn’t meet its objective then, what are the factors causing failure.


TABLE OF CONTENTS Sr. No 1 2 3 4 5 6 7 Title Introduction Research & Survey Results Findings and Recommendations Conclusion Appendices Bibliography Page No 1 5 6 23 26 27 31 4|Page .

the job appraising performance against results is often carried out with the same objectivity. equipment and services. Performance includes those actions that are relevant to the organizational growth and can be measured in terms of each individual’s proficiency (level of contribution).2 What is Performance? Performance is synonymous with behaviour. namely people. Effectiveness Performance 5|Page .INTRODUCTION In the business world investment is made in machinery. 1.1. Performance Management includes the performance appraisal process which in turn helps identifying the training needs and provides a direction for career and succession planning. Quite naturally time and money is spent ensuring that they provide what their suppliers claim. Each individual has a role to play and management has to ensure that the individual’s objectives translate into overall corporate objectives of the company. When it comes to one of the most expensive resources companies invest in. it is what people actually do. In other words the performance is constantly appraised against the results expected.1 Understanding Performance Management PERFORMANCE MANAGEMENT CORPORATE GOALS DETERMINE INDIVIDUAL OBJECTIVES LINKED TO CORPORATE GOALS ENSURE RESPONSIBILITY AND ACCOUNTABILITY PERFORMANCE APPRAISAL PERFORMANCE LINKED INCREMENTS/ INCENTIVES/ REWARDS 1.

managing gender bias. Performance appraisal must be seen as an intrinsic part of a manager’s responsibility and not an unwelcome and time-consuming addition to them. aspirations and concerns. career planning. 1. and devising methods of employee satisfaction etc. employees 6|Page . Performance appraisal is a systematic means of ensuring that managers and their staff meet regularly to discuss post and present performance issues and to agree what future is appropriate on both sides.4 Why Performance Appraisal????? Today’s working climate demands a great deal of commitment and effort from employees.3 How is Performance managed? Good performance by the employees creates a culture of excellence. In these times of emphasis on “quality”. Fear of any kind from the minds of the employees should be removed so that they give best to their organization. 1. This enables the managers to take correct decisions and that too quickly. In normal circumstances. the efforts are to make to generate the individual’s aspirations with the objectives of the organization. It is an opportunity for employees to have significantly greater influence upon the quality of their working lives. there is a natural equation: better quality goods and services from employees who enjoy better quality “goods and services” from their employers. who in turn naturally expect a great deal more from their employers. Allow free flow of information. Organization has to clear the way of career advancements for talented and hardworking people. which are a part of it.refers to the evaluation of results of performance that is beyond the influence or control of the individual. The activity includes evaluation of jobs and people both. It is about improving performance and ultimate effectiveness. Communication network should be designed in such a way no one should be allowed to become a hurdle. This meeting should be based on clear and mutual understanding of the job in question and the standards and outcomes. potential. Performance appraisal is designed to maximize effectiveness by bringing participation to more individual level in that it provides a forum for consultation about standards of work. which benefits the organization in the long run.

For appraisal to be effective. Often the distinction between performance and appraising is not made. to ensure that previously agreed performance standards are actually being achieved on an ongoing basis 7|Page . that will lead to improved performance. which will contribute to the achievement of specific objectives  Monitoring performance in a cost –effective manner. It should also be understood that pushing a previously prepared report across and desk cursorily inviting comments. Assessment concerns itself only with the past and the present. which means producing results for the company. If every individual in the organization becomes more effective.  Identifying obstacles which are restricting performance  Agreeing a plan of action. The staff is being appraised when they are encouraged to look ahead to improve effectiveness. and expecting it to be neatly signed by the employee is not appraisal . each manager has to develop and apply the skills of appraisal These are:  Setting standards on the performance required.should be appraised by their immediate managers on one to one basis. THE APPRAISAL OF PERFORMANCE SHOULD BE GEARED TO:  Improving the ability of the jobholder. The task of reviewing situations and improving individual performance must therefore be a key task for all managers. redress weaknesses and examine how potentials and aspirations should match up. then the organization itself will become more effective. It is widely accepted that the most important factor in organization effectiveness is the effectiveness of the individuals who make up the organization. utilize strengths.this is merely a form filling exercise which achieves little in terms of giving staff any positive guidance and motivation.

but concerned with improving the performance of the company. Analyzing any differences between the actual performance and the required performance to establish the real cause of a shortfall rather than assume the fault to be in the jot holder. which will provide the performance. The benefits of appraisal in these terms are immediate and accrue to the appraising manager. not concerned simply with the regulation of rewards and the identification of potential. and to the company as a whole 8|Page .  Interviewing having a discussion with the jobholder to verify the true cause of a shortfall. required Appraisal can then become a way of life. the subordinate manager/employee. a developing a plan of action.

RESEARCH AND SURVEY: Statement of the Problem: Performance appraisal is a process of assessing. The respondents: The Managers & Employees of various organizations.2. The project is aimed at analyzing the performance appraisal in companies. A concise questionnaire was prepared keeping in mind the information specifications. summarizing and developing the work performance of an employee. IT & Telecom. the performance manager should make every effort to obtain as much objective information about the employee's performance as possible. The research instrument: Questionnaire. 9|Page . The primary data was collected with the help of survey information. Low performance can push the organization back in today’s tough competition scenario.  To find the expectation of appraiser and appraisee  To determine the satisfaction level of the appraisee  To reveal the various loopholes in the appraisal system if any  To find the consequences of an inappropriately conducted appraisal system Research Methodology: The data source: Primary as well as Secondary. Objective: The various objectives of our research are as follows:  To examine why an appraisal system is important. In order to be effective and constructive.  To study existing appraisal system in various organizations across sectors like BPO. The research approach: Survey Method.

3. Then scoring was given on the basis of ranks. 2. Expectations from Appraisal System : Respondents were asked to rank the various options according to their preference. Awareness about Responsibilities : 10 | P a g e . (Rank 1 being most preferred and rank 6 being least preferred). 1 mark was allotted to rank 1. 2 marks for rank 2 and so on. Particular Salary Administration and Benefits Determination of promotion or transfer Assistance in goal Guideline for training plan An insight into your strengths and weakness Decision to layoff Score 87 109 228 254 312 354 Overall Rank 1 2 3 4 5 6 From the above table it can be seen that employees expect “ Salary Administration and Benefits” to be the main reason for conducting a Performance Appraisal. “Decision to layoff” is of least importance as per the appraisee.RESULTS Findings from Appraisee Survey 1.

3. Satisfaction Level among appraise regarding Appraisal System : From graph it can be seen that majority of the respondents are satisfied with the appraisal system. Awareness about performance ratings : 11 | P a g e . which implies that the appraisers have efficiently communicated to the appraisees all the parameters that will be taken into account during appraisal. Only a meager 30% were dissatisfied with the Performance Appraisal programs. 4.From the graph it can be seen that majority of employees are aware about their responsibilities.

Alowing Self ratings : From graph it can be seen that majority of respondents want self rating to be a method of conducting the appraisals . 6. Chance to rate your own performance 12 | P a g e .This clearly shows that majority of the employees are not aware about the performance ratings that are taken into account while conducting a performance appraisal. 5.

Credibility of Appraiser 13 | P a g e .From the graph we can see that majority of the employees are not given a chance to rate their own performance in the organization. A very small percentage of the organisations conduct Performance Appraisals on a half yearly basis. Timing of Appraisals This shows that most of the organisations conduct their Performance Appraisal programs annually. 8. 7. The share of the quarterly and monthly appraisals are extremely minimal.

9. 14 | P a g e .This shows that according to the employees/appraisees the credibility of the appraiser is extremely important and it has an effect on the overall Performance appraisal program. Complaint channel for employees This shows that there is no proper complaint channel existing in the organisations for the employees who are dissatisfied with the performance appraisal system.

Standards communicated to employees From this it can be seen that there is a clear majority among the employees who say that the standards on the basis of which the performance appraisal is carried out is not communicated to the employees before hand. In very few organisations. Rating committees carry out the performance appraisals. Appraisals by subordinates and Self rating as a method of Performance Appraisal. None of the organisations use Peer Appraisals. 15 | P a g e . Performance Appraisal Almost all the Performance Appraisals are carried our by the Immediate Supervisor in these organisations.10. 11.

The remaining half are not clear about the objective for which the Performance Appraisal is carried out. Clear understanding of Appraisee’s job This shows that the performance Appraisal programs are successful in giving a clear understanding of the appraisee’s job to both appraiser and appraisee.12. 13. 16 | P a g e . Objectives of Appraisal System From the figure we can derive that the objective for conducting the Appraisal system is clear only to half of the employees.

Comments and suggestions to be considered Almost all the employees expect that their comments and suggestions should be taken into consideration while conducting the Performance Appraisal. 17 | P a g e . 15.14. Good communication between top management and business goals This shows that the appraisal systems do not provide a good communication flow of the top-management plans and business goals to the staff below.

Post Appraisal interview As per the response from the employees we can see that there is no interview conducted after the appraisal program for majority of the employees. Purpose of Appraisal Respondents were asked to rank the various options according to their preference.16. Findings from Appraiser Survey 1. Then scoring was 18 | P a g e . (Rank 1 being most preferred and rank 6 being least preferred).

Then the total score for each purpose was calculated and overall ranking was given. Support from subordinate 19 | P a g e . 2 marks for rank 2 and so on. 1 mark was allotted to rank 1. 3. Particular Determination of promotion or transfer Salary Administration and Benefits Decision to layoff Guideline for training plan Assistance in goal An insight into your strengths and weakness Score 24 27 42 69 72 81 Overall Rank 1 2 3 4 5 6 From table it can be seen that appraiser considers “ Determination of promotion or transfer” & “Salary administration and Benefits” as two important factors for conducting an Appraisal.done on basis of these ranks. Also most of the appraisers are satisfied with the appraisal system. from the graph it can be seen that majority of appraisers have rated 5. 2. Appraisal System In this question appraiser was asked to rate how helpful the appraisal system is.4 & 3 which implies that Performance Appraisal system is very helpful in Planning their work.

Performance Appraisal criteria 20 | P a g e . 5. Type of Appraisal System From results its clear that majority of companies prefer to use “360 degree feedback” system for Performance Appraisal. 4.This question was asked to find out how helpful appraisal system is in communicating the support that apprasier needs from appraisee. From results it is seen that the performance appraisal system is very helpful in communicating the support and help needed by the appraiser from the appraisee. it is more reliable and hence most preferred. As 360 degree feedback gives feedback of appraisee from everyone interacting with him.

From results we can see that Qualitative Process is considered as the most important criteria for which the Performance appraisal programs are carried out. Timing of Appraisals From graphs we can see that most of companies conduct appraisals on annual basis. which shows that companies consider Qualitiy of product & service and Customer satisfaction as most important factors. Some companies conduct quaterly also. 6. 7. Effect of poor Appraisal System 21 | P a g e .

8. 9. Insight to Apprasiee’s strength and weakness 22 | P a g e . To some extent employees dont coordinate with their team members. Communication between top management and staff All appraisers totally agree that performance appraisal helps in communicating the top management plans and business goals to staff at lower level.It can be seen from results that most of the employees get De-motivated because of a poorly conducted appraisal. Thus resulting in reduction of output.

Performance Appraisal system is designed by appraiser without consulting appraisee. 11.It is evident from the results that performance appraisal system doesn’t help the appraiser in understanding strength and weakness of apraisee. 10. Appraisee’s comment and suggestion From the results it can be seen that appraisee’s comments and suggestion are not taken into consideration before Performance Appraisal. Performance Appraisal 23 | P a g e .

Understanding of Apprasiee’s Job From this it is clearly seen that according to appraiser there is a clear and joint understanding of the appraisee’s job. 12. 13. Standards for Performance Appraisal 24 | P a g e .It is evident from the results that performance appraisal is conducted by the Immediate Supervisor in all the companies.

From results it is evident that Performance appraisal standards are very well communicated to Appraisee before the Appraisal is carried out. 15. Action after Performance Appraisal 25 | P a g e . 14. Self rating in Performance Appraisal From results it can be clearly seen that the Appraisee is not given a chance to rate his own performance.

FINDINGS AND RECOMMENDATIONS 26 | P a g e . 4.This shows that most of the companies act upon the results of their Performance Appraisal program.

Therefore the Performance appraisal program would be designed in such a way that the appraiser would be able to analyse the contribution of the employee to the orgaisation periodically and all the employees who have been performing well would be rewarded suitably either by an increase in the salary or a promotion. rather than the other person telling. he must first feel the need to do so. It is an established fact that change is faster when it is self initiated. From the survey results its evident that both the appraisee’s and appraisers expectation from Performance appraisal system are the same i. This can allow the employee to analyze ones own 27 | P a g e . “Determination of Promotion or Transfer” and “Salary Administration and Benefits”.  Analyzing ones own strengths and weaknesses is the best way of identifying the potentials available. From the responses of the appraiser we can also see that Self rating is not encouraged by the organisations. Reflection and review is a process that enables him to feel the need and improve more upon his strengths and weaknesses  Another point to be noticed is that even in the other forms of Performance Appraisal also the employees expect that they should be given a chance to rate their own performance.Thus performance appraisals can be used as a significant tool fo career lanning. If any employee has to improve or do better.e. At the end of the year of the appraisal period the appraisal process should begin with self-appraisal by every employee. This could therefore be an important factor which leads to dissatisfaction among the appraisees. To appraise ones own self on key performing targets and qualities. Self-appraisal is a tool to analyze oneself. the appraisee would go through a process of reflection and review. Through this the appraiser can also motivate the employees who felt that they had no growth in the organisation and serves the purpose of employee development. One of the most important findings was that almost all the employees wanted self-rating to be a part of performance appraisal program carried out by the organisation. Hence a single performance appraisal system can satisfy needs of both the Appraiser and appraisee.

This expectation is not fulfilled as the appraisers do not take their comments and suggestions into consideration. Therefore the appraisers should look into this matter and see to it that the goals and plans are communicated effectively.  As per the Appraiser. Along with this satisfactory working conditions and appropraite awards also play an important role.  The appraisees also expect that their comments and suggestions should be taken in to account while conducting the appraisals. They should be given a chance to convey their greviences to the top management. a poorly conducted appraisal system would lead to demotivation and ineffective teamwok which will result in inefficient functioning and low productivity in the organization. recogntion. Therefore. Therefore they should look into this matter before it leads to dissatisfaction among the employees. if at all they feel there is dissatisfaction among the appraisee’s they should motivate them. The appraisers on the other hand feel that the goals and plans have been clearly communicated to the appraisees. 28 | P a g e . invelvement.  The results also indicate that the there is no communication of top management plans and business goal to the appraisee.  The findings suggest that for success of Appraisal system the credibility of appraiser is of utmost importance. Communication is very essential for any system to function efficiently.performance which gives new insights on how one is performing and what are the critical points where he has to put his best and improve upon  The existence of a proper complain channel was also of utmost importance to the appraisees. Achievement. job satisfaction and development can motivate the employees to a large extent.

overcome his weak points. guide him to identify and develop his strong points. employees may not know how they are rated. maintain his morale. Proper communication of these ratings can help the employers achieve the level of acceptability and commitment which is required from the employ. The appraisal should also be followed up with a session of counseling which is often neglected in many organizations. Instead of secrecy there should be openess. Counseling involves helping an employee to identify his strengths and weaknesses to contribute to his growth and development. develop new capabilities to handle more responsibilities.  From the survey we can also derive that the appraisee’s expect a post appraisal interview to be conducted wherein they are given a proper feedback on their performance and they can also put forward their complaints if any. identify his training needs. Purpose is to help an employee improve his performance level.  Most of the employees were also not clear about the criteria on which ratings were given to each employee while conducting the performance appraisal. Because of lack of communication. The standards by which employees think they are being judged are sometimes different from those their superiors actually use. Also a majority of employees were satisfied with the current appraisal system although they requested for some changes. 29 | P a g e .

There should be adequate training to the evaluator that will go a long way in answering the quality of Performance Appraisal. A formal Performance review is important as it gives an opportunity to get an overall view of job performance and staff development. goal setting and Performance Appraisal assumes utmost importance. a Performance Appraisal is a very important tool used to influence employees. The implementation is the responsibility of each and every employee along with their supervisor.CONCLUSION With rewards being directly linked to achievement of objectives. 30 | P a g e . Good performance reviews therefore don’t just summarize the past they help determine future performance.5. In conclusion. The Performance Appraisal System has been professionally designed and it is monitored by HRD. It encourages systematic and regular jointstocking and planning for the future.

Do you think you should be given an opportunity to rate your own performance? a.6. Do you know what exactly is expected from you at work? a. No 3. What do you expect from a Performance appraisal : (Rank the options from 1 to 6. Yes b. Yes b. 1 being most preferred & 6 being least preferred) Detail Salary Administration and Benefits Determination of promotion or transfer Decision on layoff Assistance in goal Guideline for training Plan An insight into your strengths and weakness Rank 2. Are you satisfied with the appraisal system? 1 2 3 4 5 (1 = Least satisfied. Are you aware of performance ratings? a. No 5. No 31 | P a g e . 5 = Most satisfied) 4. Appendices Questions for Appraisee Name: ___________________________ Contact No: __________________________ 1. Yes b.

Quarterly c. Rating committees d. Are you given a chance to rate your own performance? a. No 11. Yes b. Is there a complaint channel for the employees who are dissatisfied with the performance appraisal system? a. Does the credibility of Appraiser affect the Performance Appraisal System? a. Monthly b. Self-rating 32 | P a g e . Yes b. Yes b. Peer appraisal c. Annual e. No 7. Timing of Appraisals a. No 9. Immediate supervisor b. Anytime 8.Who conducts the performance appraisal”? a.Are the standards on the basis of which the performance appraisal is carried out communicated to the employees before hand? a. Half Yearly d.6. No 10. Yes b.

e.Does the appraisal system provide a good communication between the top-management plans and business goals to staff below? a. Yes b.Do you want your comments and suggestions to be taken into consideration during appraisal? a. Yes for more project reports.blogspot. Purpose of Performance appraisal : (Rank the options from 1 to 6. No Visit hrmba. 1 being main purpose & 6 being last purpose) Detail Rank 33 | P a g e . Appraisal by subordinates 12. No 13.Are the objectives of appraisal system clear to you? a. No 16. Questions for Appraiser Name: ___________________________ Contact No: __________________________ 1. presentations notes etc. Yes b.Is there a post appraisal interview conducted? a. Yes b. Yes b. No 14. No 15.Is the performance Appraisal successful in giving a clear understanding of the appraisee’s job to both appraiser and appraise? a.

Sales price. Conduct /Trait) 34 | P a g e . Quantitative outcome criteria (Sales volume. Is the Performance Appraisal helping you to plan your work well? 1 2 3 4 5 (1 = Least helpful. Work attitude. Leadership. Which appraisal system is being employed in the company? a. Customer satisfaction) c. Balance scorecard 5. 5 = Most helpful) 3. Performance Appraisal criteria a. MBO c. Qualitative process criteria (Judgment. Qualitative process criteria (Quality of product or service. Quantitative process criteria (Efficiency. Yes b. 360 degree feedback e. a.Salary Administration and Benefits Retain performing employees Determination of promotion or transfer Decision on layoff Assistance in goal Guideline for training Plan 2. Does the system provide you a chance to communicate the support you need from your subordinate to perform the job well. No 4. Attendance) d. BARS d. Productivity. Goal accomplishment rate) b. Cost/expenses. Assessment centre b.

Yes b. Timing of Appraisals a. No 10. Annual e. No 9.6. Peer appraisal c. No 35 | P a g e . Retention c. Ineffective teamwork 8. Yes b. De-motivation b. What do you think is the effect of a poor appraisal system a.Who conducts the performance appraisal” a. Quarterly c. Monthly b. Immediate supervisor b. Does the appraisal system provide a good communication between the top-management plans and business goals to staff below? a. No 11. Appraisal by subordinates 12. Anytime 7. Rating committees d. Does it give insight to appraisee regarding his strength or weakness? a. Are employee’s comments and suggestions taken into consideration before the appraisal? a.Is the performance Appraisal successful in giving a clear understanding of the appraisee’s job to both appraiser and appraise? b. Half Yearly d. Yes b. Self-rating e. Yes b.

Bhatia Visit hrmba. Yes b.Do you give an opportunity to the appraisee to rate his own performance? a. presentations notes etc. for more project reports. Yes b. BIBLIOGRAPHY BOOKS  Organizational Behavior by Steve Robbins  The Art of HRD.Are the standards on the basis of which the performance appraisal is carried out communicated to the employees before hand? a. Concepts.blogspot. Volume 9 by Micheal Armstrong and Helen Murlis  Performance Management. 36 | P a g e . then mention the remedial measures taken? 7. No 16. No 14.If yes. Yes b.13. Practices and Strategies for Organisation success by S. Reward Management.Do you act upon the results of your performance appraisal? a. No 15.