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An organization’s goals can be achieved only when people put in their best efforts. How to ascertain whether an employee has shown his or her best performance on a given job? The answer is performance appraisal. Employee assessment is one of the fundamental jobs of HRM. But not an easy one though. This chapter is devoted to a detailed discussion of the nature and process of conducting performance appraisal.

Meaning and Definition
PERFORMANCE APPRAISAL may be understood as the assessment of an individual's performance in a systematic way, the performance being measured against such factors as job knowledge, quality and quantity of output, initiative, leadership abilities, supervision, dependability, co-operation, judgement, versatility, health, and the like. Assessment should not be confined to past performance alone. Potentials of the employee for future performance must also be assessed. A formal definition of performance appraisal is: It is the systematic evaluation of the individual with respect to his or her performance on the job and his or her potential for development. The second definition includes employees’ behaviour as part of the assessment. Behaviour can be active or passive--do something or do nothing. Either way behaviour affects job results. The other terms used for performance appraisal arc: performance rating, employee assessment. Employees performance review, personnel appraisal, performance evaluation employee evaluation and (perhaps the oldest of the terms used) merit rating. In a formal sense, employee assessment is as old as, the concept of management and in an informal sense; it is probably as old as mankind. Nor performance appraisal is done in isolation.


It is linked to job analysis as shown in Fig.

Performance Job Analysis Standards
Performance Appraisal

Describes work personnel requirement of a particular job


Fig. Relationship of Performance Appraisal and Job Analysis

Translate job requirements Describes the I job-relevant into levels of acceptable strengths and or weaknesses of I' unacceptable each performance individual

Job analysis sets out requirements, which are translated into performance standards, which in turn from the basis for performance appraisal.


Data relating to performance assessment of Employees Arc Recorded, stored. and used for seven purposes. The main purposes of employee assessment are: 1. To effect promotions based on competence and performance. 2. To confirm the services of probationary employees upon their completing the probationary period satisfactorily. 3. To assess the training and development needs of employees. 4. To decide upon a pay raise where (as in the unorganized sector) regular pay scales have not been fixed. 5. To let the employees know where they stand insofar as their performance is concerned and to assist them with constructive criticism and guidance for the purpose of their development. 6. To improve communication. Performance appraisal provides a format for dialogue between the superior and the subordinate, and improves understanding of personal goals and concerns. This can also have the effect of increasing the trust between the rater and the ratee. 7. Finally, performance appraisal can be used to determine whether HR programmes such a selection, training, and transfers have been effective or not. Broadly, performance appraisal serves four objectivesi) ii) developmental uses, administrative uses/decisions, ANNASAHEB VARTAK COLLEGE -3-

and documentation purposes Table below outlines these and specific uses more clearly:- Multiple Purposes of Performance Assessment General Applications Developmental Uses Specific Purpose Identification of individual needs Performance feedback Determining transfers and job assignments Identification of individual strengths ad development needs Salary Promotion Administrative Uses/Decisions Retention or termination Recognition of individual performance Lay-offs Identification of poor performers HR planning Determining organization training needs Evaluation of organizational goal achievement Information for goal identification Evaluation of HR systems Reinforcement of organizational development needs Criteria for validation research Documentation for HR decisions Organizational Maintenance/ Objectives Documentation .iii) iv) organizational maintenance/objectives.

Specifically. listed above. Besides encouraging high levels of performance. What needs emphasis is that performance evaluation contributes to firm's competitive strength. performance appraisal helps an organization gain competitive edge in the following ways (see Fig below) Error: Reference source not found Fig: How Performance Appraisal can contribute to Firm's Competitive Advantage? Improving Performance An effective appraisal system can contribute to competitive advantage by improving employee job performance in two ways-by directing employee behaviour towards organizational goals. the evaluation system helps identify employees with potential. point out the purpose which such an exercise seeks to meet. as ANNASAHEB VARTAK COLLEGE -5- . reward performance equitably and determine employee's need for training.PERFORMANCE APPRAISAL Helping to meet legal requirements PERFORMANCE APPRAISAL AND COMPETITIVE ADVANTAGE The objectives of performance appraisal.

appraisal is a critical input in making decisions on such issues as pay raise. Dissatisfaction in the job sets in and one of the outcomes of job dissatisfaction is increased turnover. Minimizing Job Dissatisfaction and Turnover Employees tend to become emotional and frustrated if they perceive that the ratings they get are unfair and inaccurate. thus diverting its focus on non-productive areas. Right decision on each of these can contribute to competitive strength of an organization. discharges and completion of probationary periods. for example. is made on performance. as it happened to Williamson Magar. the promotee feels motivated to enhance his or her performance. An organization having satisfied and motivated employees will have an edge over its competitors. Fair and accurate appraisal results in high motivation and increased job satisfaction. Ensuring Legal Compliance Promotions made on factors other than performance might land up a firm in a legal battle. transfer. Such employees find that the efforts they had put in became futile and obviously get de-motivated. Consistency between Organizational Strategy and Behaviour . and by monitoring that behaviour to ensure that the goals are met. Making Correct Decisions As stated above. If promotion. training. promotion. Organizations can minimize costly performance-related litigation by using appraisal systems that give fair and accurate ratings.was done by the second beekeeper (see opening case).

employees will behave in ways that will help them in gaining rewards associated with service delivery. employees will strive for productivity. As employees want to be rewarded. but also a way of bringing to the fore any negative consequence of the strategy. From the strategic management point of view. prospectors and analyzers. Because of the emphasis ANNASAHEB VARTAK COLLEGE -7- . defenders have a narrow and relatively stable product-market domain. If the focus is on cost control. Besides encouraging high level of performance. Typically.PERFORMANCE APPRAISAL An organization needs a strategy consistent with the behaviour of its employees if it were to realize its goals. They devote primary attention to improving the efficiency of their existing operations.behaviour fit For example. Thus. If the focus is on rewarding productivity. For example. organizations can be grouped into three categories defenders. the evaluation system is useful in identifying employees with potential. And determining employees' needs for development. rewarding performance equitably. A truism of organizational life is that people engage themselves in behaviours that they perceive will be rewarded. The performance appraisal becomes not only a means of knowing if the employees' behaviour is consistent with the overall strategic focus. the performance appraisal system is an important organizational mechanism to elicit feedback on the consistency of the strategy-behaviour link. Performance appraisal has definite roles in all the three strategies. typical appraisal systems in most organizations have been focused on shortterm goals. Although these activities are clearly instrumental in achieving corporate plans and long-term growth. Because of this narrow focus. Structure or methods of operations. a single point productivity focus may include potential negative consequences such as decreased quality and co-operations. Organizational Strategy and Performance Appraisal The performance appraisal system serves many organizational objectives and goals. These are all the activities that should support the organization’s strategic orientation. employees will seek to control cost and thus be recognized and rewarded. if the focus is on service. these organizations seldom need to make major adjustments in their technology. they tend to occupy themselves more with those activities on which the organization emphasizes.

group and divisional levels. In general. 2. Organizations with an analyzer strategy operate in two types of product-.011building skills within the organization. Because of the emphasis on skills identification and acquisition of human resources from external sources. Finally. Whatever the category. these organizations regularly experiment with potential responses to new and emerging environmental trends. . prospectors often use the performance appraisal as a means of identifying staffing needs. analyzers use cost effective technologies for stable products and project or matrix technologies for new product. the focus is on division and corporate performance evaluation as they compare with other companies during the same evaluation period. these organizations attempt to identify both training as well as staffing needs. One domain is stable while the other is domains. successful analyzers have a tendency to examine current performance with past performance within the organization. Consistency between organizational strategy and job behaviour. successful defenders use performance appraisal for identifying training needs. Thus. Prospectors are often the harbingers of change. In addition. Performance appraisal is usually more behaviour oriented. and 3. The emphasis is on results. managers watch their competitors closely and rapidly adopt the ideas that appear promising. Consistency between organizational values and job behaviour. In their more innovative areas. Cross-sectional comparisons (comparisons among 'companies) may also occur. The appraisal systems are considered at the individual. Organizations with a prospector strategy continuously search for different product and market opportunities. a performance appraisal system has strategic importance to a firm in three ways: 1. Finally. Feedback mechanism. Analyzers tend to emphasize both skill building and skill i1cquisilion and employ extensive training programmes. as opposed to skills building with the organization.

Below is somewhat idea1ised. have less-effective appraisal system. Unfortunately. The process as shown in Fig. Many organizations make every effort to approximate the ideal process.PERFORMANCE APPRAISAL APPRAISAL PROCESS Figure below outlines the performance. many others fail to consider one or more of the steps and.appraisal process. resulting in first-rate appraisal systems. ANNASAHEB VARTAK COLLEGE -9- . Each step in the process is crucial and is arranged logically. therefore.

appraisal aims at improving the performance. . Towards this end. assessing training needs.Objectives of Establish job Appraisal Use appraisal data for appropriate purposes Performance interview Design an appraisal performance Expectation 1. Objectives of Appraisal Objectives of appraisal as stated above include effecting promotions and transfers. would assume systems orientations. awarding pay increases. Appraisal in future. Theses objectives are appropriate as long as the approach in appraisal is individual. instead of merely assessing it. The emphasis in all these is to correct problems. In the systems approach. In the systems approach. and the like. the objectives of appraisal stretch beyond the traditional ones. an appraisal system seeks to evaluate opportunity factors.

The following table displays some of the differences between the traditional approach and the systems-oriented one.11 - . everyone will benefit. These opportunity variables are more important than individual abilities in determining work performance. documentation Directional. ventilation and lightings.PERFORMANCE APPRAISAL Opportunity factors include the physical environment such as noise. the employee must believe that by working towards shared goals. In order to use a systems approach. Employees should not be encouraged to seek organizational reasons for his failures. coaching Frequent Low Group orientation ANNASAHEB VARTAK COLLEGE . available resources such as human and computer assistance and social processes such as leadership effectiveness. Not that the role of the individual is undermined. managers must learn to appreciate the impact that systems levels factors have on individual performance and subordinates must adjust to lack of competition among individuals. Thus. In the systems approach the emphasis is not on individual assessment and rewards or punishments. problem solving Facilitative. PERFORMANCE APPRAISAL SYSTEMS Traditional Guiding value Primary roles Leadership practices Appraisal frequency Degree of formality Reward practices Attribution to individual Control. not as an excuse to poor performance. evaluative Occasional High Individual orientation Systems Attribution to systems Development. But it is on how the work systems affect an individual’s performance. The identifications of systems obstacles should be used to facilitate development and motivation. The individual is responsible for a large percentage of his or her work performance. if a systems approach is going to be successful.

Formals versus informal appraisal 2. When to evaluate? 8. This includes informing the employee what is expected of him or her on the job. Normally. 3. Who are the raters? 4. Establish Job Expectations The second step in the appraisal process is to establish job expectations. What problems are encountered? 5.2. Design Appraisal Programme Designing an appraisal programme poses several questions which we need to answers. Whose performance is to be assessed? 3. They are: 1. What methods of appraisal are to be used? . How to solve the problems? 6. What should be evaluated? 7. a discussion is held with his or her superior to review the major duties contained in the job place of formal performance evaluation.

Formal appraisal usually occurs at specified time periods— once or twice year. or organizations. But the point to be remembered is that the performance of all employees must be rated. Any attempt to assess individual performance shall undermine group cohesiveness and tend to promote individualistic or even competitive orientation. ANNASAHEB VARTAK COLLEGE . Discussions can take place anywhere in the organizations. Informal appraisal should not take the Group cohesiveness refers to shared feeling among work-team members. For example. The difficulty in identifying individual contribution is also important to consider. Whose performance should be rated? To the question as to whose performance should be rated. Many organizations encourage a mixture of both formal and informal appraisal. There is cooperation and clear understanding to accomplish tasks which are interdependent. All must become raters. Formal appraisals are most often required by the organizations for the purposes of employee evaluation. the answer is obvious— employees.PERFORMANCE APPRAISAL 1. the informal appraisal is very helpful for more performance feedback. interdependent of tasks is so complete that it is difficult to identify who has contributed what. work group. Formal V/s informal appraisal: The first step in designing an appraisal programme is to decide whether the appraisal should be formal or informal. is it individual or teams? Specifically the rate may be defined as the individual. In some cases. But care needs to be taken to ensure that the discussion is held in private. ranging from the managers office to the canteen. The formal appraisal is most often used as primary evaluation. an informal appraisal may be in order to simply recognize this fact. However. if the employee has been consistently meeting or executing standards. It is also possible to define the rate at multiple levels. 1. Informal performance appraisal can occur whenever the superior feels the need for communication. There is no other choice but to view that task as a team effort.13 - . division.

specialist from the HR department. subordinates. under some condition. Who are Raters? Raters can be immediate supervisors. disseminate information. not by effective leadership. it may be desirable to appraise performance both at work-group level for merit-pay increases and at the individual level to assess training needs. c. and deal with employees on a fair basis. the superior authority may be undermined seriously. Relationships and the amount of personal contacts place peers in a better position . Peers. 2. Closeness of the working d. training and development of subordinate is am portent element in every mangers job. committees. Subordinate can assess the performance of their superiors. or a combination of several. reliability and initiative. the immediate superior may be the legal choice to conduct the performance evaluation. Description. But the problem with the subordinate evaluation is that supervisors tend to become popular. No one is familiar with the subordinate’s performance than his or her superior. Since appraisal programme are often clearly linked to training and development. a. Such facts include contribution skills. resolve intra-personal conflict. Peers are in better position to evaluate certain facts of job performance which the subordinates or supervisors cannot do. Two conditions necessitate a group level appraisal—group cohesiveness and difficulty in identifying individual performance. allocate resources. Immediate supervisor is the fit candidate to appraise the performance of his or her subordinate. but by mere gimmicks. Individual should not be expected to begin the job until they understand what is expected out of them. Finally. Another reason is that the superior has the responsibility of managing a particular unit. When the tasks of evaluating a subordinate is given to another person.For example. clients. delegate work. The use of this choice may be useful in assessing an employee ability to communicate. self appraisal. There are 3 reasons in support of this choice. b.

g. First developed at General Electric. Many employees use rating committees to evaluate employees. Clients may be members within the organization who have direct contact with the rate and make use of an output (goods or services) this employee provides. behavioral quirks. Clients. GE (India). In the 360 degree method. tempers and loyalty are evaluated by the people who are best placed to do it. These committees are often composed of the employee’s immediate supervisor and three or four other supervisors who come in contact with the employee. besides assessing performance. Reliance Industries. external to the organization can also offer similar kinds of information. The Arthur Anderson Survey 1997 reveals that 20% of the organization use 360 degree method. First there may be objectivity in rating as more than rater is involved in the assessment. There are several benefits in using multiple raters. Crompton Greaves. courtesy. subordinates and clients. values. Thermax and Thomas Cook are using the method with greater benefits. Further when reward allocation is based on peer evaluation.PERFORMANCE APPRAISAL to make accurate assessments. Interest. Other attributes of the assess—talents. US in 1992 the system has become popular in our country too.15 - . Furthermore where there are differences in the rater ought ratings ANNASAHEB VARTAK COLLEGE . series conflicts among co-workers may develop. This choice is welcome when an employee in the course of his or her job performs a variety of tasks in different environment. Animosity may result in distortion of evaluation. Finally join together to rate each other high. Where appraisal is made by the superior. with the employee when technical aspects of a job are being performed and another supervisor may deal with the same employee in situations where communications skills are crucial. 1supervisor may work g. f. Unfortunately friendship or e. Wipro. peers. ethical standards. Godrej Soaps. nothing prevents an organization from using this source. Infosys. dependability and innovativeness are but a few of the qualities for which clients can offer rating information. it is called the 360-degree system of appraisal. For e. Although clients are seldom used for rating employee performance.

The disadvantages of committee rating are that it diminishes the role of the immediate supervisor in the area of training and development. judgments and information processing and can seriously affect assessment result. h. the personal department or the HR department (following diagram). Managers are less defensive in self-evaluation than when supervisors tell them what they are. halo effect. In self –appraisal employee himself or herself evaluates his or her own performance. Self-appraisal is also more likely to be less biased and less in agreement with judgment of others. spill over effect and status effect. In practice a combination of methods is followed for employee. Self-appraisal is best suited where executive development is the main purpose of evaluation as the approach enablers’ managers to clearly assess their areas of differences. central tendency. Unfortunately selfappraisal falls short almost by any criterion. Ratings are lenient for the . Subjective assessments defeat the very purpose of performance appraisal. These errors occur in the rater’s observations.they usually stem from the fact that raters at different level in the organization often observe different facets of an employee performance-the appraisal to reflect these differences. perceptual set. performance dimension behavior. even that of peers who are more lenient than their superiors. 3. Leniency or SeverityLeniency or severity on the part of the rater makes the assessment subjective. Hewlett-Packard and Texas Instruments too ask their performance to prepare their own appraisal. For example evaluation by self may be followed by a superior. Problems of Rating: Performance appraisals are subject to a wide variety of inaccurate and biases referred to as rating errors. primary and recency effects. They tend to be more lenient compared to other sources of evaluation. Indian Telephone Industries has been following the self-appraisal system for executives in grade I to IV. On the positive side it may be stated that in self-appraisal there is an opportunity to participate in evaluation particularly if it is combine with goal setti9ng and this should be improve the mangers motivation. The most common rating errors are leniency or severity.

He or she may rate leniently because there exists. and I am meritorious”. WC according to a Severe rater WC according to a lenient rater True amount WC LOW Central tendency- written communication Skills (WC) HIGH This occurs when employees are incorrectly rated near the average or middle of the scale. He or she may be projecting He or she feels it necessary to always approve of others in order to gain approval for him or herself.17 - . • • • • • • • He or she may feel that anyone who could have been rated unfavorably has already been discharged from the organization He or she may feel that a derogatory rating will be revealed to the rate to the determinant of the relations between the rater and rate. He or she may be operating on the premise. He or she may rate leniently in order to win promotions for the subordinates and therefore indirectly increase his or her hold over them. ANNASAHEB VARTAK COLLEGE . a response set approve rather than disapprove. “whoever associates with me is meritorious therefore. in the culture.PERFORMANCE APPRAISAL following reasons. •The rater may feel that anyone under his or her jurisdictions who is rated unfavorably will reflect poorly on his or her own worthiness.

But in large companies errors of this type tend to obviate the value of evaluations. What is distinctive in the error of central tendency and the error of range restriction is a failure to note real performance differences. often in combination with leniency errors at very top. In small organization it is common to label all employees as an average. Obviously it’s become difficult to distinguish between excellent performance and poor performance. This safe-playing attitude stems from certain doubts and anxieties which the raters have while assessing the ratees. Halo ErrorIt takes place when one aspect of an individual performance influences the evaluation of the entire performance of the individual just as the assessment of the performance of a student in his . Close to error of central tendency is the problem of range restriction. For example the principal of a college while giving character certificates to the outgoing students describe the character of each student as satisfactory.The attitude of the rate is to play safe. Range restriction may involve clustering all employees around any point on a scale. either intentionally or due to insufficient attention. subordinates and trade union?” “If I rate him the way I think I should will be accused to being partial?” “How will my boss view the appraisal I make and how will that influences the way he appraises the man?” “What standards will my peers adopt to appreciate their subordinates? And in view of this am I likely to affect adversely the future of my subordinates?” Naturally the rates use such expressions as satisfactory and average to describe the performance of the rates. Such doubts and anxieties are: • • • • • • • • “Do I know the man sufficiently well to be able to give a fair assessment of him? “If I rate him the way I think I should what will be its influence on his relations with me and on his performance in the future? “If I rate him the way I think I should what will be its effect on my relations with the others subordinates?” “If I rate him the way I think I should what will be its effect on his relationship within the group or subordinates?” “Will I able to be objective in view of pressures from peers.

stereotyping and hostility. Rating employees separately can each of a number of performance and encouraging raters to guard against the halo effect are two ways to reduce halo effect. If the supervisors for example have a belief that employee hailing from 1 particular region is intelligent ANNASAHEB VARTAK COLLEGE . age. Excessively high or low scores are given only to certain individual or groups based on the rater’s attitude towards the rate. The rater must also be aware of tendency on the part of the rates to improve odds in their favors or suppress weak points during the rating period. Perceptual Set: This occurs when the rater’s assessment is influenced by previously held beliefs. Similarly an attractive or popular employee might be given a high overall rating. Rater effect: This includes favoritism. Primary and recency effects: The rater’s ratings are heavily influenced either by behavior exhibited by the rate during the early stage of the review period or by outcomes or behavior exhibited by the rate near the end of the review period (recency). One way of guarding against such an error is to ask rater to consider the composite performance of the ratee and not to be influenced by one incident or own achievement. not on actual outcomes or behavior. If the introductory paragraph is poorly written the chances of scoring high marks in that answer are diminished however good the subsequent portion of the essay may be in an organization a halo error occurs when an emplopuee who work late constantly might be rated high on productivity and quality of output as well as on motivation. race and friendship biases are example of this type of error. For example if a salesperson captures an important contract/ sales just before the completion of the appraisal the timing of the incident may inflate his or her standing even though the overall performance of the salesperson may not have been encouraging. Sex. Likewise a blunder committed just before the appraisal period may diminish chance of securing a favorable rating even if the performance is good.PERFORMANCE APPRAISAL or her examination being influence by the opening paragraph of every answer.19 - .

Barriers lie deep within the genetic and acquired make-up of all people concerned with performance appraisal. 4. The management of the plant adopted a freakish policy with regard to performance appraisal – 10 percent of all the employees were to be rated below average. Status effect: It refers to overrating of employee in higher-level jobs held in high esteem. A pulp making unit located at Harihae in Karnataka.2 Here is a bizarre case of performance appraisal. Performance Dimension order: Two or more dimensions on a performance instrument follows or closely follow each other and both describe or rotate to a similar quality. hired 40 engineers in 1994. The management did not want all the employees to be ranked high. Past ratings. psychological. as management trainees. Obviously they were toppers in their respective branches and institutions. . and underrating employees in lower-level-job or jobs held in low esteem. A wide variety of emotional. Exhibit 10. good or bad result for the period although the demonstrated behavior does not deserve the rating good or bad.and hard working his subsequent rating of an employee hailing from that region tends to be favorably high. intellectual and physical factors that at first glance may appear to be separate and irrelevant may combine in any numbers of ways during the appraisal process. notwithstanding their excellent performance. The rater rates first dimension accurately and then rates the second dimension similar to the first because of their proximity. If the dimension had been arranged in a significant different order the rating might have been different. It is not the rater’s errors alone that are barriers to accurate and valid measurement of employee performance. Spillover effect: This refers to allowing past performance appraisal ratings to unjustifiably influence current ratings. REC. and other prestigious institutions. The new hires were fresh from. Suratkal.

And it means that rater training. the trainer gives the correct rating and then illustrates the rating errors made. In effect. should also add real life problems such as the fact that union representatives will try to influence supervisors to rate everyone high. these 40 put in their papers even before their training period expired. the trainer might explain that halo error had occurred. If. to be effective. At Hewlett-Packard.. turnover rates. Solving Rater’s Problems The best way to overcome the problems is to provide training to the raters. including the extent which pay is related to performance ratings. This means that improving rating systems involves not just training the raters but remedying outside factors such ass union pressure. Ratings made by each participant are then placed on a flip chart and the various charts are explained. But training can help improve the appraisal system to the extent of distortion that occurs due to the rater’s error such as halo. union pressure. The raters rated all the 40 trainees below average. The rater has a checklist to obtain and review job-related information. raters are shown a video-tape of jobs being performed and are asked to rate the workers. several factors.g. Factors that help improve accuracy: 1. 3. Rating scores by raters of one group or organization are summarized and compared with ANNASAHEB VARTAK COLLEGE .PERFORMANCE APPRAISAL The axe fell on the trainees. The rater has documented the behaviors to improve the recall. leniency. For e. 5. central tendency and bias. From a practical point of view. on the other hand.21 - . In a typical training. 4. influencing the ratings they actually give. 5. Humiliated. The rater has observed and is familiar with behaviors to be appraised. 2. Typically. The rater is aware of personal biases and is willing to take action to minimize their effect. this might be explained as a leniency error. training of raters must help strengthen the factors that tend to improve accuracy of ratings and weaken those that lower the accuracy of the performance measurement. a trainee is rated on all criteria (such as quantity and quality) about the same. time constraints and the need to justify ratings may be more important than training. a trainer rated all video-taped workers very high. Not that training is a ‘cure-all’ for all the ills of appraisal systems. a 2 day training course is organized every year to prepare managers to handle appraisals better.

7. whether or not they are pertinent. Higher levels of management are held accountable for reviewing all ratings. The rater is unable to express him or herself honestly and unambiguously. Factors that may lower accuracy: 1. The rater focuses attention on performance-related behaviors over which the rater has better control than in other aspects of evaluation. when his or her ratings are reviewed by such authorities. and advise him or her about the future course of action the rate should take. 9. 5. Favorable or unfavorable rating. Performance factors are properly defined. What should be rated? One of the steps in designing an appraisal programme is to determine the evaluation criteria. processes and instruments fail to support the rater. it is the job of the rater to convince the ratee about the appraisal. 2. The rater’s own performance ratings are related to the quality of rating given and the performance of units. For many raters. 6. 6. Finally. The rater rates ratees only when administrative actions are contemplated. 8.those by other raters. The rater tends to recall more behaviours known to be of particular interest to higher level managers. 6. The rater has to rate employees on factors that are poorly defined. The rater tends to inflate ratings when the ratees receive scores and results of appraisals. especially when the appraisal is unfavorable to the rater. It is obvious that the criteria should be related to the job. the supervisor/rater must be trained to conduct the appraisal interview. . Appraisal systems. 3. 4. this is a difficult task.

human. Quality: The degree to which the result or process of carrying out an activity approaches perfection in terms of either conforming to some ideal way of performing the activity.PERFORMANCE APPRAISAL The six criteria for assessing performance are: 1. 5. 3. or fulfilling the activity’s intended purpose. There is also the need for ANNASAHEB VARTAK COLLEGE . 6. monetary. 2. Need for supervision: The degree to which a job performer can carry out a job function without either having to request supervisory assistance or requiring supervisory intervention to prevent an adverse outcome.23 - . Interpersonal impact: The degree to which as performer promotes feeling of self-esteem. expressed in monetary terms. Quantity: The amount produced. 4.g. goodwill and co-operation among co-workers and sub-ordinates. These criteria relate to past performance and behavior of an employee. number of units. technological and material) is maximized in the sense of getting the highest gain or reduction in loss from each unit or instance of use of a resource. at the earliest time desirable from the standpoints of both co-coordinating with the outputs of others and of maximizing the time available for other activities. or number of completed activity cycles. Timeliness: The degree to which an activity is completed or a result produced. Cost Effectiveness: The degree to which the use of the organization’s resources (e.

If performance levels do not improve. they might leave. Glaxo and P&G are a few of the companies which seek to top managerial potential. these employees are shifted to new locations to work and are closely monitored. as was pointed out earlier. The company asks such employees to improve their performance levels. Both are further subdivided into parameters – high and low – resulting in 4 quadrants of classification. They have to be kept engaged with complex assignments all the time and groomed to take up the top positions. Otherwise. Pfizer. Sandoz. Philips. The vertical axis measures potential while the horizontal.assessing. particularly when the employee is tipped for assuming greater responsibilities. particularly at the managerial level. Failure to improve would result in their planned separation. Error: Reference source not found The Philips Model Low PotentialLow Performance: these employees are categorized as question marks. At Philips a 2 by 2 matrix is used to assess performance and potential to perform. the potential of an employee for future performance. Mafatlal. actual performance. High PotentialHigh Performance: these are the star performers. Low PotentialHigh Performance: these are called as solid citizens and constitute 70 to 75 % of the total number of employees in any organization. They have skills but lack the potential to grow beyond their current job-profile. High PotentialLow Performance: these are the problem children. these employees are reclassified as question marks and the separation process initiated. Cadbury India. National Organic Chemical Industries. Appraisal of Potential at Philips More and more number of organizations are trying to assess potential of their employees. In order to help them improve their performance. The organization has to constantly recognize their limitations and take .

Timing of Evaluation: How often should an employee be assessed? The general trend is to evaluate once in 3 months. In order to assess employee potential. as subjective measures are dependent upon human judgments. operational effectiveness. halo and the like. Of late. good/adequate. However.need for supervision and interpersonal impact – are subjective. Objective measures are quantifiable and are therefore highly useful in measuring the performance of an employee. central tendency. This shift is from performance of the individual to the systems approach. it may be stated that the first 4 – quality. Newly hired employees are rated more frequently than the older ones. or six months. Frequent evaluation gives constant feedback to the rate. According to a survey conducted in 1997 by Arthur Anderson. Work performance of an individual depends on organizational factors in addition to his or her abilities. The system at Philips NV uses 4 broad attributes – conceptual effectiveness. and if relationships he/she has maintained with subordinates speak more reliably about the manager’s performance. the image about the bank he/she has created in the eyes of public. in the systems approach the emphasis is on improving one’s performance. Holland. timeliness and cost effectiveness – are objective in nature. thus enabling him or her to improve performance ANNASAHEB VARTAK COLLEGE . The focus in the systems approach is. As stated earlier. subjective measures must be based on a careful analysis of the behaviors viewed as necessary and important for job performance.25 - . weak and insufficient. there has been a shift in focus of appraisals. But performance of employees should not always be evaluated against the amount of deposits mobilized for his or her bank. To be useful. The effort put in by him/her. Here comes the relevance of the subjective criteria. Feedback in the latter is delayed and the advantage of timely remedial measures by the employee is lost. or once in a year. Each attribute has a 5-point grading scale – excellent. the contacts he/she has established. interpersonal effectiveness and achievement effectiveness and achievement motivation. Frequent assessment is better than phased evaluation. the entire organization. therefore. they are prone to the kinds of errors we noted earlier – leniency or severity. and the last 2 . 70 percent of the organizations conduct performance appraisal once a year.PERFORMANCE APPRAISAL care of their needs. quantity. Coming to the six criteria. very good. Philips has adopted the system that prevails at Philips NV.

METHODS OF APPRAISAL The last to be addressed in the process of designing an appraisal programme is to determine methods of evaluation. the typical rating-scale system consists of several numerical scales. The performance of trainees and probationers should be evaluated at the end of respective programmes. output. Broadly. each representing a job-related performance criterion such as dependability. all the approaches to appraisal can be identified into (i) past-oriented methods. initiative. Each of the methods discussed could be effective for some purposes. attendance. and then computes the employee’s total numerical score. for some organizations.if there is any deficiency. Each scale ranges from excellent to poor. and (ii) future-oriented methods. and the like. whereby so many points equal a rise of some percentage. The number of points scored may be linked to salary increases. please indicate on the rating Scale your evaluation of the employee named below: . The rater checks the appropriate performance level on each criterion. Each group has several techniques as shown in the figure below: Error: Reference source not found Past-Oriented Methods Rating Scales: This is the simplest and most popular technique for appraising employee performance. attitude. co-operation. None should be dismissed or accepted as appropriate except as they relate to the particular needs of the organization or of a particular type of employees. RATING SCALE Instructions: For the following performances factors. Numerous methods have been devised to measure the quantity and quality of employee’s job performance.

Dependability Initiative Overall Output Attendance Attitude Co-Operation ---------------------------------------------20. The rater’s biases are likely to influence evaluation. ANNASAHEB VARTAK COLLEGE . Nearly every type of job can be evaluated in a short time. 3.27 - . 5.PERFORMANCE APPRAISAL Employee’s Name: Rater’s Name Excellent 5 1. and the rater does not need any training to use the scale. numerical scoring gives an illusion of precision that is really unfounded. and the biases are particularly pronounced on subjective criteria such as co-operation. 4. Quality of Work -----Good 4 --------------------------------------------------Department Date. The disadvantages of this method are several. 2. relatively easy use and low cost. Acceptable 3 --------------------------------------------------Fair 2 ----------------------------------------Poor 1 ----------------------------------------- TOTAL + + TOTAL SCORE + + Rating scales offer the advantages of adaptability. attitude and initiative. 6. Furthermore.

A typical checklist is given in the table below.. When points are allotted to the checklist. and the use of improper weights by the HR department. Table: . 2. 3. 1. The disadvantages include susceptibility to rater’s biases (especially the halo effect). After ticking off against each item. Depending upon the number of ‘Yes’ the total score is arrived at. Another disadvantage of this approach is that it does not allow the rater to give up relative ratings. the technique becomes a weighted checklist. 7. 6. 8. QUESTIONS Is the employee really interested in the job? Does he or she possess adequate knowledge about the job Is his or her attendance satisfactory? Does he/she maintain his/her equipment in good condition? Does he/she co-operate with co-workers? Does he/she keep his/her temper? Does he/she obey orders? Does he/she observe safety precautions? YES NO - . ease of administration. The HR department assigns certain points to each ‘Yes’ ticked. use of personality criteria instead of performance criteria. misinterpretation of checklist items. The advantages of as checklist are economy. All that the rater (immediate superior) should is tick the ‘Yes’ column if the answer to the statement is positive and in column ‘No’ if the answer is negative. NO. 4.Checklist for Operators SR.Checklist: Under this method a checklist of statements on the traits of the employee and his or her job is prepared in 2 columns – viz. a ‘Yes’ column and a ‘No’ column. 5. limited training of rater. the rater forwards the list to the HR department. and standardization.

and unsatisfactory 10 %. good 20 %. the following distribution might be assumed to exist – excellent 10 %. Forced Distribution Method: One of the errors in rating is leniency – clustering a large number of employees around a high point on a rating scale. This approach is known as the forced choice method because the rater is forced to select statements. The forced distribution method seeks to overcome the problem by compelling the rater to distribute the ratees on all points on the rating scale. the rater is given a series of statements about an employee. The major weakness of the forced distribution method lies in the assumption that the employee performance levels always conform to a normal distribution. below average 20 %. Work is reliable_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ performance is a good example for 3. Actual assessment is done by the HR Department.29 - . the use of forced distribution approach would be unrealistic. Absents often_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ others usually tardy. and the rater indicates which statement is most or least descriptive of the employee. Learns fast _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ works hard 2. which are readymade. For example. The advantage of this method is the absence of personal bias in rating. as well as possibly destructive to the employee ANNASAHEB VARTAK COLLEGE . Does he/she complete what he/she commences? Does he/she evade responsibility? - Forced Choice Method: In this. Generally. The disadvantage is that the statements may not be properly framed – they may not be precisely descriptive of the ratee’s traits. it is assumed that employee performance levels conform to a bell shaped curve. In organizations that have done a good job of selecting and retaining only the good performers. These statements are arranged in blocks of 2 or more. average 40 %. Typical statements are : 1. 10.PERFORMANCE APPRAISAL 9. As in the checklist method. The method operates under an assumption that the employee performance level conforms to a normal statistical distribution. the rater is simply expected to select the statements that describe the rate.

the approach has descriptions in support of particular ratings of an employee. The supervisors as and when they occur record such incidents. as the rater resists from placing an employee in the lowest or in the highest group. One merit of this approach is that it seeks to eliminate the error of leniency. Difficulties also arise for the rater to explain to the rate why he or she has been placed in a particular group. The approach focuses on certain critical behaviors of an employee that make all the difference between effective and non-effective performance of a job. The error of central tendency may also occur. One of the advantages of the critical incidents methods is that the evaluation is based on actual job behavior. Supervise procurement of raw materials and inventory control Supervise machinery maintenance No shutdowns due to faulty machinery . in small groups or when group members are of high ability. It also reduces the personal CONTINUING DUTIES Schedule Production for Plant TARGETS Full Utilization of personnel and machinery in the plant. Giving job-related feedback to the ratee is also easy. Prevented a machine breakdown by discovering faulty part. Under – Ordered part “C” Instituted new preventive maintenance system for plant. the forced choice method is not acceptable to raters and ratees. increased machine utilization in plant by20% last month Let inventory storage costs rise 15% last month. Critical Incidents Method: The critical incidents method of employee assessment has generated a lot of interest these days. decreased late orders by 10% last month. However.morale. Further. order delivered on time Minimize inventory costs while keeping adequate supplies on hand CRITICAL INCIDENTS Instituted new production scheduling system. especially. Over – Ordered parts “A” and “B” by 20%.

They are more likely to be committed to the final product. All dimensions of performance to be evaluated are based on observable behaviors and are relevant to the job being evaluated since BARS are tailor-made for the job. Finally. The recording of incidents is a chore to the supervisor and may be put off an easily forgotten. supervisors agree. Areas of performance to be evaluated are identified and defined by people who will use the scales. They are said to be behaviorally anchored in that the scales represent a range of descriptive statements of behavior varying from the least to the most effective. A rater must indicate which behavior on each scale best describes an employee’s performance. The scales are anchored by descriptions of actual job behavior that.PERFORMANCE APPRAISAL biases. are rating scales whose scale points are determined by statements of effective and ineffective behaviors. Managers may unload a series of complaints about incidents during an annual performance review session. Negative incidents are generally more noticeable that positive ones. These include: 1. 2.31 - . Behaviorally Anchored Rating Scales: Behaviorally Anchored Scales. sometimes called behavioral expectation scales. More appropriately. represent specific levels of performance. 3. BARS were developed to provide results which subordinates could use to improve performance. Overly close supervision may result. 4. 2. The method however has significant limitations. The feedback may be too much at one time and thus appearing as a punishment to the rate. The result is a set of rating scales in which both dimensions and anchors are precisely defined. Since the raters who will actually use the scales are actively involved in the development process. the management should use incidents of poor performance as opportunities for immediate training and counseling. this approach can increase the chances that the subordinates will improve because they learn more precisely what is expected of them. 3. 4. if raters record incidents throughout the rating period. Behaviorally anchored rating scales (BARS) have the following features: 1. ANNASAHEB VARTAK COLLEGE .

An 'outsider' review dose not have the opportunity to observe employee behavior of performance over a period of time and in a variety of situations. The outsider reviews Employee records and holds interviews with the ratee and his or her superior. BARS help overcome rating errors. . assessor’s own department. Field reviews are also useful when comparable information is needed from employees in different units or locations.Superiors would feel comfortable to give feedback to the rates. But only in an artificially structured interview situation which extends over a very short period of time. 2. Unfortunately. Field Review Method This is an appraisal by someone outside the. this method too suffers from distortion inherent in most rating techniques. An "outsider" is usually not familiar with conditions in an employees’ work environment which may affect the employee's ability or motivation to perform. Further. This method is primarily used for making promotional decision at the managerial level. Usually someone from the corporate office or the HR department. Two disadvantage of this method are:1.

Raters. Even then. The test must he reliable and validated to be useful. Being independent of the work scene they normally have less bias for or against the ratee than docs the immediate supervisor. ANNASAHEB VARTAK COLLEGE . In order for the test to be job related. Performance Tests and Observations With limited number of jobs. Practicality may suffer if costs of test development or administration arc high.33 - . making field reviews normally receive training on how to conduct the interview and develop their writing skills. Even when a supervisor or others concerned supply biased information the rater may he able to pinpoint areas requiring training and development assistance.PERFORMANCE APPRAISAL Error: Reference source not found A BARS Scale for the Knowledge and Judgement Dimension of a Grocery Checker's Job. performance tests are apt to measure potential more than actual performance. The test may he of the paper-and-pencil variety or an actual demonstration of skills. employee assessment may be based upon a test of knowledge or skills. observations should he made under circumstances likely to be encountered.

(xii) Integrity. The strength of the essay method depends on the writing skills and analytical ability of the . Over Rating on a five-point scale was separately given (Outstanding. and (v)the training and the development assistance required by the employee. (xi) Judgement. etc. (vi) technical ability (job knowledge). (ii). Good. Called the Annual Confidential Report (ACR). Again with justification for rating as outstanding or poor. Very good. The approach had 14 items-(i) attendance. (ix) originality and resourcefulness. Memo served. Justification was required for outstanding or poor rating. (x) Areas of work that suits the person best. The AC'R was highly subjective. Fair and Poor). (ii) Selfexpression (written or oral). for example had followed this method for a long time.not ruled out. Although this method may be used independently. Ratings were easily manipulated because the evaluation was linked to promotion. (xiii) Responsibility and. Good. (iii) Ability to work with others. the head of the department and the CMD. Twelve of these were filled on a four-point grade scale (Excellent. Even ITI has discontinued ACR system for these reasons. (xiv) and defect-indebtedness. Recommendations for promotion were also given. Average. The system was highly secretive and confidential Feedback to the assessee was given only in case of an adverse entry.Confidential Records Confidential records arc maintained mostly in government Departments though its application in the industry . the promo ability of the employee (iii) the jobs that the employee is now able or qualified to perform (. The ACR contained recommendations and signature of the rater.iv) the strengths and weaknesses of the employee. ITI. (viii) Ability to reason. it is most frequently found in combination with others. Essay Method: In the essay method the rater must describe the employee within a number of broad categories such as (i) the rater's overall impression of the employee's performance. It is extremely useful in filing information gaps about the employees that often occur in the better structured checklist method. For integrity there were special instructions from the management. (iv) Leadership. Poor). (vii) Ability to understand new material. (v) Initiative.

All that the HR department knows is that A is better than B. The usual comparative forms used in this kind of evaluation are the ranking method and the paired comparison method. The essay method can consume much time because the rater must collect the information necessary to develop the essay and then he or she must write it The essay method also depends on the memory power of the rater. starting from the best to the worst. Thus. Performance of the employee is then evaluated based on the established relationship between the cost and the benefit. As these appraisals can result in a ranking from best to worst.PERFORMANCE APPRAISAL rater. The. promotions and organizational rewards. they are useful in deciding merit-pay increases. 'high quality' appraisal may provide little useful information about the performance of the rate. They become confused about what to say. However many raters do not have good writing skills. A relationship is established between the cost included in keeping the employee and the benefit the organization derives from him or her. the superior ranks his or her subordinates in the order of their merit. A problem with this method is that the rate may be rated on the quality of the appraisals that they give. Comparative appraisals are usually conducted by supervisors. 'how' and ANNASAHEB VARTAK COLLEGE . Cost Accounting Method: This method evaluates performance from the monetary returns the employee yields to his or her organization. Comparative Evaluation Approaches: These are a collection of different methods that compare one worker's performance with that of his/her co-workers. Ranking Method: In this. The quality standard for the appraisal may be unduly influenced by appearance rather than content.35 - .

The performance of A is first compared with the performance of B and a decision is made about whose performance is better. After the completion of comparison. The same procedure is repeated for other employees. nor answered. Then A is compared with C. This can be assessed by focusing on employee potential or setting future performance goals. No attempt is made to fractionalize what is being appraised into component elements. the number of comparisons will be 10(10-1)/2 = 45. This method is subject to the halo and recency effects. although rankings by two or more raters can be averaged to help reduce biases. D and E. Future-oriented Appraisals Is it not enough if only the past performance is assessed? How an employee can perform in the days to come is equally important. D and E in that order. If there are 10 employees. The number of comparisons may be calculated with the help of a formula which reads thus: N (N-1)/ 2 where N stands for the number of employees to be compared. and assessment centers. Paired-comparison Method: Under this method the appraiser compares each employee with every other employee one at a time. the results can be tabulated and a rank is created from the number of times each person is considered to be superior.'why' are not questioned. . psychological appraisals. B. The commonly used future-oriented techniques are MBO. Its advantages include ease of administration and explanation. C. For example there are five employees named A.

37 - . they know fairly well what there is to do. superiors and subordinates work together to establish goals.PERFORMANCE APPRAISAL MANAGEMENT BY OBJECTIVES It was Peter F. These goals can then be used to evaluate employee performance. as was conceived by Drucker. The MBO concept. what has been done. Four Steps in the MBO Process How MBO works can be described in four steps: The first step is to establish the goals each subordinate is to attain. Application of MBO in the field of performance appraisal is a recent thinking. ANNASAHEB VARTAK COLLEGE . In some organizations. Superiors establish goals for subordinates. In others. The second step involves setting the performance standard for the subordinates in a previously arranged time period. As subordinates perform. Drucker who first gave the concept of MBO to the world way back in 1954 when his The Practice of Management was first published. The goals typically refer to the desired outcome to be achieved. reflects a management philosophy which values and utilizes employee contributions. and what remains to be done.

Further. Jobs with little or no flexibility. At this point. The performance appraisal presently followed in L&T reflects the principles of MBO. The evaluator explores reasons for the goals that were not met and for the goals that were exceeded. psycho1ogical tests. the allocation of merit pay on a semi-annual or annual basis may encourage the setting up of goals with short time horizons to the disadvantage of important long-term goals. The psychologist then write an evaluation of the employee's intellectual. One comment made against the approach is that it is not applicable to all jobs in all organizations. emotional. subordinate and superior involvement in goal-setting may change.In the third step. the actual level of goal attainment is compared with the goals agreed upon. possibly new strategies for goals not previously attained. are not compatible with MBO. motivational and other-related characteristics that suggest individual potential and may predict future performance. Subordinates who successfully reach the established goals may be allowed to participate more in the goal setting process the next time. From these evaluations. Discussions with supervisors and a review' of other evaluations. The MBO process seems to be most useful with managerial personnel 'and employees who have a fairly wide range of flexibility and self-control in their jobs. Such as assembly-line work. The appraisal normally consists of in-depth interviews. The final step involves establishing new goals and. The evaluation by the psychologist may be for a specific job opening for which the person is being considered. Psychological Appraisals Large organization employs full-time industrial psychologists. This step helps determine possible training needs. when the result of an MBO system are to be used to allocate organizational rewards. When psychologists are used for evaluations. They assess an individual’s future potential and past performance. As with other approaches. MBO too has been criticized. It also alerts the superior to conditions in the organization that may affect a subordinate but over which the subordinate has no control. employees may be less likely to establish challenging goals-goals they are confident that they can accomplish. The process is repeated. Besides. An assembly-line worker usually has so little job flexibility that the performance standards and objectives are already determined. Placement and development decisions may . Or it may be a global assessment of his or her future potential.

and other similar activities which require the same attributes for successful performance. self – confidence. May have considerable potential within the organization. role paying. computer simulations. After recording their observations of ratee behaviors. The characteristics assessed in a typical assessment centre include assertiveness. Because this approach is slow and costly. creativity and mental alertness. Self-appraisal and peer evaluation are also thrown In for final rating. though there would be sizable number of trained observers and psychologists. Since the quality of the appraisal depends largely on the skills of the psychologists. administrative ability.PERFORMANCE APPRAISAL be made to shape the person's career. communicating ability. ASSESSMENT CENTRES Mainly used for executive hiring. First developed in the US and the UK in 1943. The principal idea is to evaluate managers over a period of time say one to three days. assessment centre are now "being used for evaluating executive or supervisory potential. persuasive ability. especially if cross-cultural differences exist. it is usually required for bright young members who. work groups (without leaders). some employees object to this type of evaluation. others think. the raters meet to discuss these observations. Assesses are requested to participate in in-basket exercises. planning and organizational ability. the assessment centre is gaining popularity in our country. Facher.39 - . energy level. Crompton greaves. It is a formidable list which is quite difficult to measure accurately over three days. HLL and Modi Xerox are using the technique with ANNASAHEB VARTAK COLLEGE . by observing (and later evaluating) their behaviour across a series of select exercises or work samples. An assessment centre is a central location where managers may come together to have their participation in job-related exercise evaluated by trained observers. sensitivity to the feelings of others. The decision regarding the performance of each assessee is based upon this discussion of observations. resistance to stress. as in the actual job. decision – making.

. • SHL.Birla Management Corporation had plans for a similar exercise to be held at Gyanodaya. the Aditya Birla learning centre. and so have the talent centric companies' like Wipro and Cognizant. • Consulting firm ECS (formerly known as Eicher Consulting Services) does a number of assessments in a month for a variety of clients like Tata Steel. ING Vysya and the host of BPO outfits. 20 star managers went through the exercise. • Santrupt Misra. a HR consulting firm has worked with over 100 companies conducting dose to 1. • Old timers like Tata have created their own assessment centers.results being highly positive. Misra first used the assessment centre concept four years ago on 150 middle and senior level managers. Director.Many Takers • Ranbaxy retained the services of a team of psychologists from the UKbased Kelly& King to take the executives (of Ranbaxy) through an assessment center. Assessment Centre .000 assessment centers.

effective only in large organizations. Employees who receive a poor report from the centre may react in negative ways. These managers are often supplemented by psychologists and HR specialists who run the centre and also make evaluations. and the possibility of overemphasizing the test performance. Solid performers in day-to-day operations feel suffocated in the simulated environment. Ideally. Other problems include-strong and unhealthy sense of competition among assesses.41 - . a good performer at one level may leave the organization in order to remove the bad assessment report from his or her work record. content validity. reliability. However. Hence this approach is cost . but the evaluators are often company managers who are assigned to the assessment centre for short durations. and predictive validity are said to be high in the assessment centres.PERFORMANCE APPRAISAL • ICICI Bank uses assessment centre as a recruitment and selection tool to find the best talent. Finally. The problem with the assessment centres is their cost Not only are the asses sees away from their jobs while the company pays for their travel and lodging. One of the most obvious is the examination-taking syndrome. a rejected employee would return to his or her former job. But a well-conducted assessment centre can and does achieve better forecasts of future performance and progress than other methods of appraisal. while GE India subsidiary GECIS has used it on 20% of it5 middle managers. Also. the ANNASAHEB VARTAK COLLEGE . Assessment -centre ratings seem to be strongly influenced by the participant's interpersonal skills. satisfied that he or she would not be promoted to a job he or she could not handle. Another drawback is its potential adverse effect on those not selected to participate in the exercise. such as personality of the candidates: Raters tend to evaluate the quality of the individual's social skills rather than the quality of the decisions he/she makes. The test also makes sure that the wrong people are not hired or promoted. Difficulty of conducting the test frequently. The approach also involves real hazards. Thus. Assessment-centre staff is often influenced by subjective element. a poor report can demoralize an employee who was once an asset.

customers. and self. the technique is called 360 degree appraisal. where multiple raters are involved in evaluating performance. It enables an employee to compare his or her perceptions about self with perceptions of others. Besides. multi-source feedback is highly useful. anyone who has useful information on how an employee does the job may be one of the appraisers. By design. the technique facilitates greater self-development of the employees. and team-building skills. In addition. the 360-degree appraisal is effective in identifying and measuring interpersonal skill. The 360-degree appraisal provides a broader perspective about an employee's performance. The 360 degree technique is understood as systematic collection of performance data on an individual or group.Assessment centre test clearly defines the criteria for selection and promotion. For one's development. In fact. peers. The technique is particularly helpful in assessing soft skills possessed by employees. It makes the employee feel much more accountable to his or her internal or external customers. . derived from a number of stakeholders--the stakeholders being the immediate supervisors. customer satisfaction. the 360-dcgree appraisal provides formalized communication links between an employee and his or her customers. team members. 360-DEGREE FEEDBACK As stated earlier.

Receiving feedback on performance from multiple sources can be intimidating.threatening environment by emphasizing the positive impact of the technique on an employee's performance and development. It is essential that the organization create a non . other elements that deserve assessment are job knowledge. supervision. designing questionnaires. Employee performance common to most jobs include the following elements: • Quantity of output • Quality of output • Timeliness of output • Presence at work • Cooperativeness In addition to these. Raters can have enormous problems separating honest observations from personal differences and biases. multiple raters are less adept at providing a balanced and objective feedback than the supervisors who are sought to be replaced. Assessment should also include one's potential to perform and not just actual performance. We revert to the moral of the story narrated in the beginning of this chapter. leadership abilities. These ANNASAHEB VARTAK COLLEGE . firms that use the technique take a long time on selecting the rater.43 - . versatility and health.PERFORMANCE APPRAISAL However. APPRAISE THE PERFORMANCE The next step in the appraisal process is to measure the performance. Performance measurement needs to be based on the benchmarks listed above. judgement. The moral taught us that we need to measure the performance and not mere activities. there are drawbacks associated with the 360-degree feedback. What then is performance? Performance is essentially what an employee does or does not do. and analyzing the data. In addition. Further.

the interviewer let assesses know how well they are doing and sells them on the merits of setting specific goals for improvement. performance interview has three goals: (i) to change behaviour of employees whose performance does not meet organizational requirements or their own personal goals. Mixed interview is a combination of . Not only are perceptions shared. Raters offer feedback to the ratees through several methods-tell and sell. Feedback is necessary to effect improvement in performance. The tell and listen interview provides the subordinates with chances to participate and establish a dialogue with their superiors. PERFORMANCE INTERVIEW Performance interview is another step in the appraisal process. also called directive interview. Its purpose is to communicate the rater's perceptions about the ratee's strength and weaknesses and let the subordinates respond to these perceptions. so that they will receive feedback about where they stand in the eyes of superior. tell and listen. In tell and sell. if needed. (ii) To maintain the behaviour of employees who perform in an acceptable manner and (iii) to recognize superior performance behaviours so that they will be continued. Specifically. but also solutions to problems are presented. Once appraisal has been made of employees. and sought. problem solving and mixed. the raters should discuss and review the performance with the ratees. The job of a professor needs to be assessed against parameters that are different to those used to evaluate the performance of a sales representative.benchmarks vary from job to job. discussed. especially when it is inadequate. In the problem -solving or participative interview. an active and open dialogue is established between the superior and the subordinate.

45 - .PERFORMANCE APPRAISAL tell and sell and problem solving interviews. witch-hunting and buck passing. Guidelines given in Table below will help make the interview successful. Because of the significance of appraisal interview. encouraging note ANNASAHEB VARTAK COLLEGE . set at ease • Start with something positive • Ask open – ended questions to encourage discussion • Listen • Manage eye contact and body language • Be specific • Rate behaviour. GUIDELINES FOR EFFECTIVE APPRAISAL INTERVIEW • Select a good time • Minimize interruptions • Welcome. the emphasis in the interview should be on counseling and development and not on criticism. not personality • Layout development plan • Encourage subordinate participation • Complete form • Set mutually agreeable goals for improvement • End in a positive. Whatever be the approach followed. every effort must be made to make it effective.

but also for the luxuries modern life has to offer. data and information outputs of a performance-appraisal programme . 4. But promotes physiological. emotional and psychological health. A sense of performance and stability through the continuing existence of the organization and the job. 5. Opportunities to interact with other people in a favorable working environment. 3. and make full use of their potential. grow. It may be recollected that the most significant rewards employers offer to employees are: 1. Money to purchase goods and services required not only for current and future survival. The opportunity to use innate and learned skills and talents in a productive manner that the individual and his or her managers and co-workers recognize as valuable.• Set time for any follow – up meetings USE OF APPRAISAL DATA The final step in the evaluation process is the use of evaluation data. The data and information generated through performance evaluation must be used by the HR department. 2. In one way or another. Opportunities to learn. 6. The opportunity to perform work assignments within an environment that not only protects.

4. with subordinates aimed at support and encouragement. the data and information will be useful in the following areas of HRM: I. Acts as a substitute for proper management. Getting leaders to function as colleagues rather than as judges. Grievance and discipline programmes EDWARD DEMING ON PERFORMANCE APPRAISAL Towards the end of this section. Subordinate performance to be assessed using statistical data.PERFORMANCE APPRAISAL can critically influence these coveted employer-employee reward opportunities. 2. transfer and lay-off decisions 5. 2. Remuneration administration 2. Three to four hours interview annually. Validation of selection programmes 3. Employee training and development programmes 4. and ANNASAHEB VARTAK COLLEGE . His alternatives to performance appraisal are: 1. and improved training and education after selection. Educating workers about their obligations.47 - . Promotion. 3. 5. and 5. Is inconsistent with team-work. it is worthwhile to note Edward Deming's views on performance evaluation. Meticulous selection of leaders. Is inherently unfair. Specifically. Rewards people for manipulating the system rather than improving it. because it: I. 4. Deming is opposed to employee assessment. Is often self-defeating. 3.

Popularly called empowered teams. A suitable device needs to be developed to assess the performance of empowered teams because more and more firms use such teams to enhance productivity. if one recalls. challenges confronting the system are mounting. these self-managed teams create special challenges for performance appraisal-empowered teams perform without supervisors. Historically.6. it is the supervisor who assesses the performance of his or her subordinates. Error: Reference source not found The Following table contains challenges of Performance Appraisal - Challenges of Appraisal: • Create a culture of excellence that inspires every employee to improve and lend himself or herself to be assessed • Align organizational objectives to individual aspirations . Accommodation to lone workers. individual and team performance. Another challenge is that both. Figure below contains a typical model of team appraisal. need to be measured. One serious challenge facing the performance appraisal system relates to assessment of self-managed teams. CHALLENGES OF PERFORMANCE APPRAISAL With the increased significance of performance appraisal.

49 - . ANNASAHEB VARTAK COLLEGE .PERFORMANCE APPRAISAL • Clear growth paths for talented individuals • Provide new challenges to rejuvenate careers that have reached the plateau stage • Forge a partnership with people for managing their careers • Empower employees to make decisions without the fear of failing • Embed teamwork in all operational processes • Debureaucratise the organization structure for ease of flow of information.


these recommendations are intended to be prescriptive measures that employers should take to develop fair and legally defensible performance appraisal systems.g. While obtained differences as a function of these variables are not necessarily illegal. three junior employees of Williamsons Magor were promoted superseding 15 of their senior workmen. There are several recommendations 10 assist employees in conducting fair performance appraisal and avoiding legal suits. and decisions based on those performance appraisals should he monitored for differences according o race. One such case goes back to 1980s. 1. sex. • All specific performance standards should be formally communicated to employees. An employee may seek the legal recourse to obtain relief from a discriminatory performance appraisal. are used to make many important HR decisions (e. training.PERFORMANCE APPRAISAL LEGAL ISSUES ASSOCIATED WITH PERFORMANCE APPRAISAL Performance appraisal data as stated earlier. transfer and termination). The 15 workmen challenged the promotion to the three workmen in the Supreme Court and the court upheld the contention of the petitioners on the ground that he said recommendations of departmental heads and authorities were arbitrary and could not be the main basis for effecting promotions. Religion or age of the employees. national origin. ANNASAHEB VARTAK COLLEGE . Legally Defensible Appraisal Procedures • • All personnel decisions should be based on a formal standardized performance appraisal system. Pay.51 - . The appraisal system is a common target of legal disputes by employees involving charges of unfairness and bias. Gleaned from case laws. In 1981. The basis for promotion was recommendations of the departmental heads and other authorities. promotion. Any performance appraisal process should be uniform for all employees within a job group.

Objectively verifiable performance data (e. • • Specific job-related performance dimensions should be used rather than global measures or single overall measures. 3. unbiased appraisals. All personnel decision-makers should be well informed of anti-discrimination laws.g.g. specific behavioural examples) for extreme ratings should he required and they must be consistent with the numerical .• • • • All employees should be able to review their appraisal results.g. Constraints on an employee's performance that are beyond the employee's control should be prevented from influencing the appraisal to ensure that the employee has an equal opportunity to achieve any given performance level. Appraisals based on traits should be avoided. productivity. sales. and to assist poor performers in making needed improvements) • Written documentation (e. They should be made aware of the fine distinctions between legal and illegal activities regarding decisions based on appraisals. The performance dimensions should be assigned weights to reflect their relative importance in calculating the composite performance score. There should be a formal appeal process for the rate to rebut rater judgments. performance appraisal and performance counseling to advise employees of performance deficit. Legally Defensible Documentation of Appraisal Results • A thoroughly written record of evidence leading to termination decisions should be maintained(e. All raters should be provided with written instructions and training on how to conduct appraisals properly to facilitate systematic. Legally Defensible Appraisal Content • • • • Any performance appraisal content should be based on a job analysis. 2. not ratings) should be used whenever possible.

PERFORMANCE APPRAISAL ratings. customers. and clients are possible sources. • Documentation requirements should he consistent among the raters. Legally Defensive Raters • The raters should be trained in how to use an appraisal system • The raters must have the opportunity to observe the ratee first hand or to review important ratee performance products • Use of more than rater is desirable in order to lessen the amount of influence of any one rater and to reduce the effects of biases. subordinates. ANNASAHEB VARTAK COLLEGE .53 - . Peers. 4.

Crossroads at Mumbai created a revolution pioneering the concept of shop pertainment in the country. It was an attempt to give the citizens of Mumbai a truly international shopping experience, a destination where the entire family can enjoy a day together shopping or browsing, eating and playing games in an unmatched ambience. Of the three ingredients, i.e. shopping, dining and entertainment, Shopping was the main ingredient. It had to be world class and had to incorporate global standards in terms of retail management, technology and design. Mrs. Urvi Piramal, Vice Chair person of Piramal Group, had a strong viewpoint on shopping- “True shopping is browsing, enjoying, indulging and making choices. It is an expression of lifestyle and makes an affirmative statement”. This was the thought, which translated into Pyramid, India's first Megastore for lifestyle products. Pyramid spreads across 3 levels in the mall and has over 30000 sqft of space in Crossroads. To a typical Mumbai Women, shopping normally meant endless rounds of bargaining, endless trips back and forth from store to store, pushy sales people and scarcely enough space to push their elbow. Pyramid Megastore broke all these conventional hassles of shopping for women. In terms of product offering, Pyramid has everything that a woman would want to buy and more less than one roof. It has the widest range ethnic wear, western wear, lingerie, nightwear, leather accessories, sunglasses, fine jewelry, and saris. The idea is to provide her with a complete basket of shopping. In a single visit she can choose to pick up apparels, go over to the footwear section to pick up complimenting footwear, browse for that matching leather bag, and end up her buying with some matching jewelry. No longer has she had to visit different shops at times in different location. To extend her shopping she can also look out for groceries and foodstuff from the Supermarket which is just a bridge away. Today's working women wants products, which are fashionable and yet affordable. All the products in Pyramid are showcased keeping in mind the price-conscious Indian buyer. Projecting a dynamic image for the youth, Pyramid reflects the latest trend in style and includes new range of clothing on an ongoing basis. The store targets the upwardly mobile women of today who lays emphasis on quality. She is

PERFORMANCE APPRAISAL particular about grooming standards and spends on keeping herself and her family well groomed. Dressing right is no longer a fashion statement. It is a revelation of her personality and that is lodged deep within her. A woman can express herself with a choice of apparels and accessories from Pyramid that essentially speaks for her. To keep her family well groomed too, the Indian woman need not go looking beyond. For the man or the big kid in her life, she can just climb up one floor and buy the exclusive shirt, the gorgeous ethnic suit, the top of the line blazer or just a beautiful tie to match. Not only does Pyramid offer the finest brands available in India, but it also offers a world-class ambience and service, with the widest choice. A woman can browse through the offerings to her hearts content without any pressure of buying through serene ambience in the classy glass and marble interiors designed by International architects. There is enough space for her to rest, take a break while shopping and then continue again. The staff at Pyramid is trained to be unobtrusive. They are there to help one make a choice or simply serve quietly and efficiently. With constant in-depth product raining, the Pyramid Staff offers service to all customers with a positive attitude, disposition and good communication skills translated into a motto, which reads “we believe in service, we do it with pride”.


Executive - Human Resource

Employee Value Proposition :

Since inception in 1999 we as an organization have been through various phases of business. We created a mark for ourselves in a the Organized retail sector and now are known as a retailing brand .The single most factor that will act as a catalyst to our growth are the “Human Resources”
To attract and retain the best people, we add value to the life of our employee at every instant. We are constantly designing, refining and implementing HR processes and activities which touch our employees. Our HR Proposition:

“WONDERFUL PLACE TO BE, AN EXCITING PLACE TO WORK” As far as the Human Resource Department of Pyramid Retail Limited is concerned, it consists of highly qualified people who have achieved their specialization in this very field. The organization Structure for Human Resource development and Personnel

Department is as follows: Error: Reference source not found

Coming back to the topic. according to him. METHODS USED AT PIRAMYD The 2 methods are ‘The Grading Method’ & ‘The Graphic Rating Scale Method’.R. When asked about the need for the H.PERFORMANCE APPRAISAL I met Mr. In order to that it was necessary for the sales staff to be more effective and hence to achieve this very target they need good people with good inter personal communication skills. Paresh Patel who is one of the executives from the H. it needed its employees to speak and interact with the customer in an efficient manner in order to know the requirements and then suggest the merchandises accordingly. The grades may be like A (for outstanding). And this can be done only when an effective H. The grades are related to qualities of employees and grades are given to such qualities. good knowledge and a sound sense of humor.R. Department in a firm. Before going ahead let’s understand the above 2 methods in brief as to what they are all about:1. it was identified by our project group that they used a combination of 2 different methods. the supervisors and the sub-ordinates. The qualities may be like job knowledge. a number of grades or classes are first established and carefully defined. judgement. they considered only 3 which are the colleagues. he explained that as Pyramid Retail Limited is a company dealing with its customers directly and there is a direct interaction with the customer in the service industry. The rater judges the performance of an employee and puts him under a suitable category.57 - . The Grading Method: In the grading method. The rater evaluates the performance of an individual employee against these standards and places him in one of these grades. Out of the pre-decided and the pre-defined methods & techniques for performance appraisal. leadership. co-operative attitude and so on. D (for fair) and E (for poor). ANNASAHEB VARTAK COLLEGE . Department.R. Department is in place. out of the 6 factors involved in the 360 degree appraisal system. This method is simple and quick but the rating of employees may not be accurate particularly when the rater has to complete the rating of large number of employees within a short period. B (for very good). C (for Good).

The rater has merely to check on the scale where he thinks the employee belongs. four to twelve factors are selected. etc. dependability. Disadvantages of Graphic rating Scale Method: . Here. Some of these factors are quantity of output. The following table gives us an idea about the Graphic Rating Scale Method. quality of output.2. c) It is economical and ensures uniformity in the assessment of employees. integrity. these factors and their degrees are marked on a graph paper provided in the appraisal form. Graphic rating Scale Method: This is one of the oldest and the most widely used methods of performance appraisal. initiative. depending upon the category to which the employee belongs. Comparison among the employees is easy as the details are clearly noted on the paper by the rater. b) It is also not a time-consuming method. Quantity of Quality Factors/Considerations à Excellent Very Good Good Average Below Average  Output   Output of Integrity Initiative Advantages of Graphic rating Scale Method: a) It is simple to understand and easy to operate.

it takes nearly 2 months for the H. if he has to make appraisal of large number of ratees. Department complete the whole process of performance and potential appraisal of all the employees right from the Store Manger to the Trainee Sales Associate of the firm. b) The rater may be biased.Trainee Sales Associates PERFORMANCE APPRAISAL a) It puts heavy pressure on the rater as he has to consider four to twelve different factors with five degrees for each factor. After discussing Junior about what the Associates two different methods mean we now see how Pyramid Retail Sales Limited (PRL) actually implements these 2 methods in their organization.59 - . Any positive or negative feedback from an individual’s colleague. It is therefore. The foremost condition of the performance appraisal of an employee in PRL is that he / she should have completed at least a year in the organization.. The appraisals take place in the months of April . not possible to guarantee the accuracy of the rater’s decision. According to Mr. Paresh Patel. c) The rater has to do a lot of paper work in the graphic rating scale method. On the basis of the above 3 grades.g. all the employees are divided and placed among the above slots. supervisor or subordinate sees him / her in the respective column. very good and good). d) Accurate rating may not be done as there is a very thin gap between two considerations (e. He may do marking mechanically.R. And also there are no performance appraisals for Part-timers in PRL. There are 3 grades designed for the employees of PRL which are A – OUTSTANDING B – AVERAGE / GOOD C – ADEQUATE.May and the results are announced through a meeting which sees the attendance of the Manager – Human Resources as well as the Store Manager of that particular branch store. The Organization Structure for Pyramid’s Operations Department Error: Reference source not found ANNASAHEB VARTAK COLLEGE .

They are not given any sort of incentives or increments for that particular year and also are allowed to leave PRL at their request without any further hesitation. 3. Although.From the above given grades. Amrapali Shahdeo – Executive (Human Resources). for the apex achievers apart from the rise in the post in the organization. This meeting takes place at least a week before the original appraisal period starts. 450/. employees also take it very seriously and do their work seriously before and after appraisals. which all the employees on the lower or the higher post have to attend and it is mandatory for all.750/. they are awarded with an increment of their monthly salaries. only the individuals obtaining the topmost grade i. by terming them as the ‘Adequate’ people in the firm. the A grade gets a rise in the post or only those individuals can climb the ladder of this organization structure. these employees are only given a nominal increment of Rs.e. before the appraisal period. Mr. The employees are asked to be prepared for any sort of situations during the appraisals. The process of appraisal is as follows: First of all. However. The appraisals in Pyramid Megastore are conducted by 2 Executives – Human Resources. there is a meeting held. On the other hand.e. Paresh Patel – Executive (Human Resources). Ms. the Average grade. Whereas there is bad news for the employees at the bottom level. The 3 – man Committee for the current year’s appraisal process consisted of : 1. Mr. alternatively. 2. These 2 executives are a part of the 3 – man committee formed for the purpose of appraisals. most number of employees settle in the second grade i. In this very week all the employees are informed individually about the date of his / her performance appraisal and hence his / her attendance on that very appraisal day becomes compulsory. As an important step of their career. On a day nearly 4-5 employees are their monthly salaries. . Bosco Menezes – Store Manager.

1. 6 which means that his section is always clean and there is no dust in his section. 1. The chart showing the different aspects of the Job Responsibility in PRL and their weightage is given below: Sr.e. whereas 6 is the highest grade. The employee is actually given a questionnaire which contains approx.61 - . where an employee has to rate himself from 1 – 6. 30 questions. 3. if a question is.PERFORMANCE APPRAISAL The employees are called for the appraisals along with their managers for his / her appraisal. 4. Each aspect under this job responsibility is given a different weightage. There is an argument between the floor manager and the employee. 6. On these questions the employee has to award the points to himself. The questions in the questionnaire are based on the following important aspects of his Job Responsibility in Pyramid Retail Limited. the same report is given to his superior in this case the Floor Manager. No. if the floor manager feels that the employee has overrated himself in any of the questions. and if the employee awards himself full points i. his floor manager may argue in the point and interfere that his section is not always ANNASAHEB VARTAK COLLEGE . 5. Argument Starts: After the employee rates himself in the questionnaire on the above mentioned aspects from 1 – 6. “ How Clean Do I Keep My Section?”. Aspects of Job Responsibility Target Cover Customer Focus Visual Merchandising & House Keeping Discipline & Attendance Honesty & Integrity Other Factors Weightage Given 35 % 15 % 15 % 10 % 10 % 15 % 2. where 1 is the lowest point. Self – Evaluation: This is the first step in the appraisal process at PRL. 2. for instance.

3. He is also asked about the ultimate post that he would strive for in this particular organization and the ways of achieving it. any further developments he would suggest towards the betterment of his own section. about the fabric knowledge. And it is observed that the employees take full advantage of this liberty at PRL. 4. “I Agree”. The positive response is given good points. the employees are judged on the following basis or distribution and cut-off percentages which are stated below: Percentage cut-off 90 % and Above 80 % . The employee is also enquired about his mobility to move to any other branch of Pyramid Megastore at any point of time. The best suggestions are also given bonus points. Job Related Questions: The employees are then asked the questions relating to their jobs. then the employee mat argue on that point or even go ahead without having any sort of arguments by saying the words. if he is found capable and his means and ways to reach that position effective enough then he is given good ratings which fall under the Other Factors category in the above table. The Results: The employees are rated accordingly from the questionnaires. for instance. any extra knowledge that the employee shares while selling the merchandises to the customers. the out comes of the arguments are also given significance and lastly the abilities of the employee judged on the basis of the Job Related Questions.clean and he has found bits of paper on the floor of his section several number of times.90 % 80 % and Below Rating Outstanding Good Adequate . At this stage the employee has full liberty to argue and repeatedly try and prove his point without affecting or losing any points on it. or the store. brand.


as a person in order to come true to these standards of the appraisal committee is very difficult as we inquired with a few of the sales staff deployed on the different levels of Pyramid Megastore. .And accordingly the increments are given in the salaries of the employees at PRL. personally I feel that the performance appraisal standards at PRL are quite dicey and difficult as well. The response to the appraisal techniques had many people saying that they found in difficult to make it to the top 2 levels of repute and most of them landed up in the 3rd category which is of a bit embarrassing position.

It gives accurate information about employees work. In fact.PERFORMANCE APPRAISAL CONCLUSION PERFORMANCE APPRAISAL means the systematic evaluation of the individual with respect to his performance on the job and his or her potential for development. A good performance appraisal result high performance of an organization. In addition. such appraisal is more important in the case of supervisor and managers. Performance Appraisal is best way to appraise worker or employer performance. performance appraisal is useful for guiding the employees for selfimprovement and self-development. It also helps to lay down policies and improve employees performance. ANNASAHEB VARTAK COLLEGE .65 - .

What are the different methods used in process of performance . Name of the person who meet. ----------------------------------------------------------------------------------------------------------------------------------------------------4. ----------------------------------------------------------------------------------------------------------------------------------------------------2. Designation. ------------------------------------------------------------------------------------------------------------------------------------------------------3. Name of the store.Annexure 1. What is the need of HR Department? ----------------------------------------------------------------------------------------------------------------------------------------------------5. What is the organization structure of HR department? ----------------------------------------------------------------------------------------------------------------------------------------------------- 6.

What is the performance appraisal process followed in your organization? ----------------------------------------------------------------------------------------------------------------------------------------------------11. Who are the ratees? ----------------------------------------------------------------------------------------------------------------------------------------------------9. Who are the raters? --------------------------------------------------------------------------------------------------------------------------------------------------8. How many performance appraisal programmes are conducted in a year? ----------------------------------------------------------------------------------------------------------------------------------------------------- ANNASAHEB VARTAK COLLEGE .67 - .PERFORMANCE APPRAISAL appraisal ? --------------------------------------------------------------------------------------------------------------------------------------------------------7. What is the time duration required for the whole process of performance appraisal? ----------------------------------------------------------------------------------------------------------------------------------------------------10.

B.Bibliography Books referred: 1) Human resource . _ Dr.workforce. Mamoria. Websites: 1) www.utah. _ 3) 2) 2) Personal management. C.Ashmasthapa.