A study on Performance Appraisal System towards employees in APSFC | Performance Appraisal | Banks

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1 INTRODUCTION
Performance management is an on-going, continuous process of communicating and clarifying job responsibilities, priorities and performance expectations in order to ensure mutual understanding between supervisor and employee. It is a philosophy which values and encourages employee development through a style of management which provides frequent feedback and fosters teamwork. It emphasizes communication and focuses on adding value to the organization by promoting improved job performance and encouraging skill development. Performance Management involves clarifying the job duties, defining performance standards, and documenting, evaluating and discussing performance with each employee.

1.2 PURPOSE OF THE PERFORMANCE APPRAISAL
Performance appraisal aims at attaining the different purposes. They are: • • • • • • • • To create and maintain a satisfactory level of performance. To contribute to the employee growth and development through training, self and management development programs. To help the superiors to have a proper understanding about their subordinates. To guide the job changes with the help to continuous ranking. To facilitate fair and equitable compensation based on performance. To facilitate for testing and validating selection tests, interview techniques through comparing their scores with performance appraisal ranks. To provide information for making decisions regarding lay off, retrenchment etc. To ensure organizational effectiveness, through correcting employee for standard and improved performance, and suggesting the change in employee behaviour.

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1.3 OBJECTIVES OF THE STUDY
The following are the objectives of the study • • • • To study the type of performance appraisal system at APSFC. To analyze opinion of employees about Performance Appraisal system. To offer suitable suggestion about Performance Appraisal. To find 360 degree appraisal system can implemented at APSFC

1.4 HYPOTHESIS
• The commitment to the performance appraisal system in public organizations in India is very low. Low commitment and lack of accountability are the major reasons for the low institutionalization of the performance appraisal processes in government organizations.

Performance appraisal in Government Organizations is not directly linked to rewards, training or promotions due to which the approach towards the whole process remains unprofessional. There is a lack of the appropriate atmosphere and professional approach towards the performance appraisal system and the objective of the whole exercise is defeated. • The most common method of Performance appraisal that is used in most of the government organizations is confidential report (popularly known as CR) written by the superior of the employees.

The following are the major discrepancies found in the performance appraisal processes being followed at the government organizations. Most of the indicators used for measuring the performance of the employees are not quantifiable in nature, making it difficult to measure the performance. • • Due to the lack of accountability and job security, most government employees have a laissez-faire attitude towards their work. Most of the objectives in government organizations are unchallenging, unrealistic and not timely reviewed and updated.

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• • •

It is difficult to measure the average performance of the government employees. There is often a lot of bias and subjectivity involved in the ratings given by the superiors. Lack of complete information on appraisal forms due to expertise and relevant training; often, the appraisals are not conducted on a regular basis.

In government organizations, team appraisal is often not possible. • Other HR decisions like rewards, training or promotions are not directly linked to the results of the performance appraisal process.

1.5 SCOPE OF RESEARCH
A sample of 30 respondents were selected at random from different department Personnel Department, Vigilance Department, Marketing Department, Finance Department, , Project Departments and Training and Development Department, of employees from the executives were sort for their opinions on the existing appraisal system.

1.6 RESERCH METHODOLOGY:
1.6.1 SOURCES OF INFORMATION: The study is based on both primary and secondary data.

Primary Data: The primary data was collected from the employees of the organization that mainly relate to the opinions of respondents regarding various aspects of performance appraisal.

Secondary Data: The sources of secondary data pertaining to the study have been collected from Annual Reports of the organization, books and website.

Sample Size: The sample size of the research is 30 associates.

Survey: For the purpose of collecting primary data from employees, questionnaires have been designed and administered to the respondents. The questionnaires have been designed and

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administered to the respondents. Out of total 30 employees were taken as sample random basis from all the departments.

1.6.2 TOOLS & TECHNIQUES OF ANALYSIS:

Percentage Analysis: Research technique used for data analysis is percentage analysis. Simple mathematical and statistical tools were used to analyse the data collected. Pie charts are used to explain the results. Questionnaire: The questionnaire was personally administrated with respondent in APSFC it took nearly 30 minutes for each respondent to fill the questionnaire. The responses was given by the respondents were tabulated and a score sheet is prepared.

1.7 LIMITATIONS
The study is how ever subjected to certain limitation. • The time is a major limitation. The whole study was conducted within a period

of 2 months. • The study does not cover the entire executive fraternity and the officials at the

rank of Directors and Chairman and Managing Director. The study confers itself only to executives ranking from Assistant Managers to General Managers. • Study is quality perspective has only been qualitative the information gathered

in this regard is mostly through information discussion. • Only the existing system has been studied and no attempt has been made to

identify and complete new and dynamic performance system due to this constraints.

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1.8 THEORETICAL FRAMEWORK OF PERFORMANCE APPRAISAL
1.8.1 PERFORMANCE APPRAISAL SYSTEM – A THEORETICAL FRAMEWORK: Performance appraisal is the process of obtaining, analysing and recording information about the relative worth of an employee. The focus of the performance appraisal is measuring and improving the actual performance of the employee and also the future potential of the employee. Its aim is to measure what an employee does. It is a powerful tool to calibrate, refine and reward the performance of the employee. It helps to analyse his achievements and evaluate his contribution towards the achievements of the overall organizational goals. By focusing the attention on performance, performance appraisal goes to the heart of personnel management and reflects the management's interest in the progress of the employees. DEFINITION: According to A.B.FLIPO PAS means “A prominent personality in the field of Human resources, "performance appraisal is the systematic, periodic and an impartial rating of an employee’s excellence in the matters pertaining to his present job and his potential for a better job”. Performance appraisal is a systematic way of reviewing and assessing the performance of an employee during a given period of time and planning for his future. 1.8.2 OBJECTIVES OF PERFORMANCE APPRAISAL:
   

To review the performance of the employees over a given period of time. To judge the gap between the actual and the desired performance. To help the management in exercising organizational control. Helps to strengthen the relationship and communication between superior – subordinates and management – employees.

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To diagnose the strengths and weaknesses of the individuals so as to identify the training and development needs of the future.

  

To provide feedback to the employees regarding their past performance. Provide information to assist in the other personal decisions in the organization. Provide clarity of the expectations and responsibilities of the functions to be performed by the employees.

To judge the effectiveness of the other human resource functions of the organization such as recruitment, selection, training and development.

To reduce the grievances of the employees.

1.8.3 MEASURING AN EMPLOYEE’S PERFORMANCE: The most difficult part of the performance appraisal process is to accurately and objectively measure the employee performance. Measuring the performance covers the evaluation of the main tasks completed and the accomplishments of the employee in a given time period in comparison with the goals set at the beginning of the period. Measuring also encompasses the quality of the accomplishments, the compliance with the desired standards, the costs involved and the time taken in achieving the results. Measuring employee performance is the basis of the Performance appraisal processes and performance management. Accurate and efficient performance measurement not only forms the basis of an accurate performance review but also gives way to judging and measuring employee potential. For the purpose of measuring employee performance, different input forms can be used for taking the feedback from the various sources like the superior, peers, customers, vendors and the employee himself. All the perspectives thus received should be combined in the appropriate manner and to get an overall, complete view of the employees’ performance. Observation can also be exercised by the superior to obtain information. Some suggestions and tips for measuring employee performance are:

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Clearly define and develop the employee plans of action (performance) with their role, duties and responsibilities.

Organizational outcomes or the achievement of organizational goals should also be kept in mind.

 

Focus on accomplishments and results rather than on activities. Also take note of the skills, knowledge and competencies and behaviours of the employees that help the organization to achieve its goals.

If possible, collect the feedback about the performance of the employees through multipoint feedback and self-assessments.

Financial measures like the return on investment, the market share, the profit generated by the performance of the team should also be considered.

For an organization to be an effective organization and to achieve its goals, it is very important to monitor or measure its’ and its employee performance on a regular basis. Effective monitoring and measuring also includes providing timely feedback and reviews to employees for their work and performance according to the pre-determined goals and standards and solving the problems faced. Timely recognition of the accomplishments also motivates the employees and help to improve the performance. Measuring the performance of the employees based only on one or some factors can provide with inaccurate results and leave a bad impression on the employees as well as the organization. For example: By measuring only the activities in employee’s performance, an organization might rate most of its employees as outstanding, even when the organization as a whole might have failed to meet its goals and objectives. Therefore, a balanced set of measures (commonly known as balanced scorecard) should be used for measuring the performance of the employee.

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1.8.4 PROCESS OF PERFORMANCE APPRAISAL

Establishing performance standards: The first step in the process of performance appraisal is the setting up of the standards which will be used to as the base to compare the actual performance of the employees. This step requires setting the criteria to judge the performance of the employees as successful or unsuccessful and the degrees of their contribution to the organizational goals and objectives. The standards set should be clear, easily understandable and in measurable terms. In case the performance of the employee cannot be measured, great care should be taken to describe the standards.

Communicating the standards: Once set, it is the responsibility of the management to communicate the standards to all the employees of the organization. The employees should be informed and the standards should be clearly explained to them. This will help them to understand their roles and to know what exactly is expected from them. The standards should also be communicated to the appraisers or the evaluators and if required, the standards can also be modified at this stage itself according to the relevant feedback from the employees or the evaluators.

Measuring the actual performance: The most difficult part of the Performance appraisal process is measuring the actual performance of the employees that is the work done by the employees during the specified period of time. It is a continuous process which involves monitoring the performance throughout the year. This stage requires the careful selection of the appropriate techniques of measurement, taking care that personal bias does not affect the outcome of the process and providing assistance rather than interfering in an employees work

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Comparing the actual with the desired performance:

The actual performance is compared with the desired or the standard performance. The comparison tells the deviations in the performance of the employees from the standards set. The result can show the actual performance being more than the desired performance or, the actual performance being less than the desired performance depicting a negative deviation in the organizational performance. It includes recalling, evaluating and analysis of data related to the employees’ performance.

Discussing results: The result of the appraisal is communicated and discussed with the employees on one-to-one basis. The focus of this discussion is on communication and listening. The results, the problems and the possible solutions are discussed with the aim of problem solving and reaching consensus. The feedback should be given with a positive attitude as this can have an effect on the

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employees’ future performance. The purpose of the meeting should be to solve the problems faced and motivate the employees to perform better. Decision making: The last step of the process is to take decisions which can be taken either to improve the performance of the employees, take the required corrective actions, or the related HR decisions like rewards, promotions, demotions, transfers etc. 1.8.5 METHODS OF PERFORMANCE APPRAISAL The performance appraisal methods may be classified into three categories, as shown in Figure below.

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Figure: Performance Appraisal Methods 1.8.5.1. Traditional Methods of Performance Appraisal:

Essay appraisal method:

This traditional form of appraisal, also known as "Free Form method" involves a description of the performance of an employee by his superior. The description is an evaluation of the performance of any individual based on the facts and often includes examples and evidences to support the information. A major drawback of the method is the inseparability of the bias of the evaluator.

Straight ranking method: This is one of the oldest and simplest techniques of performance appraisal. In this method, the appraiser ranks the employees from the best to the poorest on the basis of their overall performance. It is quite useful for a comparative evaluation.

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Paired comparison: A better technique of comparison than the straight ranking method, this method compares each employee with all others in the group, one at a time. After all the comparisons on the basis of the overall comparisons, the employees are given the final rankings.

Critical incidents methods: In this method of Performance appraisal, the evaluator rates the employee on the basis of critical events and how the employee behaved during those incidents. It includes both negative and positive points. The drawback of this method is that the supervisor has to note down the critical incidents and the employee behaviour as and when they occur.

Field review: In this method, a senior member of the HR department or a training officer discusses and interviews the supervisors to evaluate and rate their respective subordinates. A major drawback of this method is that it is a very time consuming method. But this method helps to reduce the superiors’ personal bias.

Checklist method: The ratter is given a checklist of the descriptions of the behaviour of the employees on job. The checklist contains a list of statements on the basis of which the ratter describes the on the job performance of the employees Graphic rating scale: In this method, an employee’s quality and quantity of work is assessed in a graphic scale indicating different degrees of a particular trait. The factors taken into consideration include both the personal characteristics and characteristics related to the on the job performance of the

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employees. For example a trait like Job Knowledge may be judged on the range of average, above average, outstanding or unsatisfactory. Forced distribution: To eliminate the element of bias from the ratter’s ratings, the evaluator is asked to distribute the employees in some fixed categories of ratings like on a normal distribution curve. The ratter chooses the appropriate fit for the categories on his own discretion.

1.8.5.2 Modern Methods of Performance Appraisal

Assessment centres: An assessment centre typically involves the use of methods like social/informal events, tests and exercises, assignments being given to a group of employees to assess their competencies to take higher responsibilities in the future. Generally, employees are given an assignment similar to the job they would be expected to perform if promoted. The trained evaluators observe and evaluate employees as they perform the assigned jobs and are evaluated on job related characteristics.

The major competencies that are judged in assessment centres are interpersonal skills, intellectual capability, planning and organizing capabilities, motivation, career orientation etc. assessment canters are also an effective way to determine the training and development needs of the targeted employees.

Behaviourally anchored rating scales:

Behaviourally Anchored Rating Scales (BARS) is a relatively new technique which combines the graphic rating scale and critical incidents method. It consists of predetermined critical areas of job performance or sets of behavioural statements describing important job performance qualities as good or bad (for e.g. the qualities like inter personal relationships, adaptability and reliability, job knowledge etc.). These statements are developed from critical incidents.

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In this method, an employee’s actual job behaviour is judged against the desired behaviour by recording and comparing the behaviour with BARS. Developing and practicing BARS requires expert knowledge.

Human resource accounting method: Human resources are valuable assets for every organization. Human resource accounting method tries to find the relative worth of these assets in the terms of money. In this method the Performance appraisal of the employees is judged in terms of cost and contribution of the employees. The cost of employees include all the expenses incurred on them like their compensation, recruitment and selection costs, induction and training costs etc. whereas their contribution includes the total value added (in monetary terms). The difference between the cost and the contribution will be the performance of the employees. Ideally, the contribution of the employees should be greater than the cost incurred on them.

360-Degree-Performance-Appraisals: 360 degree feedback, also known as 'multi-ratter feedback', is the most comprehensive appraisal where the feedback about the employees’ performance comes from all the sources that come in contact with the employee on his job. 360 degree respondents for an employee can be his/her peers, managers (i.e. superior), subordinates, team members, customers, suppliers/ vendors - anyone who comes into contact with the employee and can provide valuable insights and information or feedback regarding the "on-the-job" performance of the employee. 360 degree appraisal has six integral components       Self Superior’s Subordinate’s Peer Customers and Team members

Self-appraisal gives a chance to the employee to look at his/her strengths and weaknesses, his achievements, and judge his own performance. Superior’s appraisal forms the traditional part of
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the 360 degree performance appraisal where the employees’ responsibilities and actual performance is rated by the superior. Figure 1.4- 360 degree appraisal integral components

Subordinates appraisal gives a chance to judge the employee on the parameters like communication and motivating abilities, superior’s ability to delegate the work, leadership Qualities etc. Also known as internal customers, the correct feedback given by peers can help to find employees’ abilities to work in a team, co-operation and sensitivity towards others. Self-assessment is an indispensable part of 360 degree appraisals and therefore 360 degree Performance appraisal have high employee involvement and also have the strongest impact on behaviour and performance. It provides a "360-degree review" of the employees’ performance and is considered to be one of the most credible performance appraisal methods. 360 degree performance appraisal is also a powerful developmental tool because when conducted at regular intervals (say yearly) it helps to keep a track of the changes others’ perceptions about the employees. A 360 degree appraisal is generally found more suitable for the managers as it helps to assess their leadership and managing styles. This technique is being effectively used across the globe for performance appraisals. Some of the organizations following it are Wipro, Infosys, and Reliance Industries etc.

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Management by Objectives: The concept of ‘Management by Objectives’ (MBO) was first given by Peter Ducker in 1954. It can be defined as a process whereby the employees and the superiors come together to identify common goals, the employees set their goals to be achieved, the standards to be taken as the criteria for measurement of their performance and contribution and deciding the course of action to be followed. The essence of MBO is participative goal setting, choosing course of actions and decision making. An important part of the MBO is the measurement and the comparison of the employee’s actual performance with the standards set. Ideally, when employees th emselves have been involved with the goal setting and the choosing the course of action to be followed by them, they are more likely to fulfil their responsibilities.

Balanced score card: To evaluate the organizational and employee performance in Performance appraisal management processes, the conventional approach measures the performance only on a few parameters like the action processes, results achieved or the financial measures etc. The Balanced scorecard – an approach given by Kaplan and Norton provides a framework of various measures to ensure the complete and balanced view of the performance of the employees. Balanced scorecard focuses on the measures that drive performance. The balanced scorecard provides a list of measures that balance the organizations internal and process measures with results, achievements and financial measures. To evaluate the organizational and employee performance in Performance appraisal management processes, the conventional approach measures the performance only on a few parameters like the action processes, results achieved or the financial measures etc. The Balanced scorecard – an approach given by Kaplan and Norton provides a framework of various measures to ensure the complete and balanced view of the performance of the employees. Balanced scorecard focuses on the measures that drive performance.

The balanced scorecard provides a list of measures that balance the organizations internal and process measures with results, achievements and financial measures.
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The two basic features of the balanced scorecard are:
 

A balanced set of measures based on. the four perspectives of balanced scorecard Linking the measures to Employee Performance

The four Perspectives recommended by Kaplan and Norton for the managers to collect information are: a) The financial measures – The financial measures include the results like profits, increase in the market share, return on investments and other economic measures as a result of the actions taken. b) The customers’ measures - These measures help to get on customer satisfaction, the customer’s perspective about the organization, customer loyalty, acquiring new customers. The data can be collected from the frequency and number of customer complaints, the time taken to deliver the products and services, improvement in quality etc. c) The internal business measures – These are the measures related to the organization’s internal processes which help to achieve the customer satisfaction. It includes the infrastructure, the long term and short term goals and objectives, organizational processes and procedures, systems and the human resources. d) The innovation and learning perspective - The innovation and learning measures cover the organization’s ability to learn, innovate and improve. They can be judged by employee skills matrix, key competencies, value added and the revenue per employee. Graphic rating scale: Perhaps the most commonly used method of performance evaluation is the graphic rating scale. Of course, it is also one of the oldest methods of evaluation in use. Under this method, a printed form, as shown below, is used to evaluate the performance of an employee. A variety of traits
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may be used in these types of rating devices, the most common being the quantity and quality of work. Table: Typical Graphic Rating Scale Employee Name................... Job title................. Department......................... Data.................................. Rate...............

Quantity of work: Unsatisfactory Volume under of work normal

Fair

Satisfactory

Good

Outstanding

working conditions Quality Neatness, thoroughness accuracy of and work of work:

Knowledge of job A clear understanding of the factors

connected with the job Attitude: enthusiasm cooperativeness the job Dependability: Conscientious, thorough, reliable, Exhibits and on

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accurate, with respect to attendance, reliefs, lunch breaks, etc. Cooperation: Willingness and

ability to work with others to produce

desired goals.

From the graphic rating scales, excerpts can be obtained about the performance standards of employees. For instance, if the employee has serious gaps in technical-professional knowledge (knows only rudimentary phases of job); lacks the knowledge to bring about an increase in productivity; is reluctant to make decisions on his own (on even when he makes decisions they are unreliable and substandard); declines to accept responsibility; fails to plan ahead effectively; wastes and misuses resources; etc., then it can safely be inferred that the standards of the performance of the employee are dismal and disappointing. The rating scale is the most common method of evaluation of an employee’s performance today. One positive point in favour of the rating scale is that it is easy to understand, easy to use and permits a statistical tabulation of scores of employees. When ratings are objective in nature they can be effectively used as evaluators. The graphic rating scale may however suffer from a long standing disadvantage, i.e., it may be arbitrary and the rating may be subjective. Another pitfall is that each characteristic is equally important in evaluation of the employee’s performance and so on.

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2.1 INTRODUCTION
A Central Industrial Finance corporation was set up under the industrial Finance corporations Act, 1948 in order to provide medium and long term credit to industrial undertakings which fall outside normal activities of commercial banks. The State governments expressed their desire that similar corporations be set up in states to supplement the work of the Industrial financial corporation. State governments also expressed that the State corporations be established under a special statue in order to make it possible to incorporate in the constitutions necessary provisions in regard to majority control by the government, guaranteed by the State government in regard to the payment principal. In order to implement the views Expressed by the State governments the State Financial Corporation bill was introduced in the Parliament.

2.2 STATEMENT OF OBJECTS AND REASONS
In order to provide medium and long term credit to industrial undertaking, which fall outside the normal activities of commercial banks, a central industrial finance corporation was set up under the industrial Finance Corporations act, 1948. The state governments wished that similar corporations should be set up in their states to supplement the work of industrial financial corporation. The intention is that the State corporations will confine to financing medium and small scale industrial and will , as far as possible consider only such access which are outside the preview of industrial fiancé corporation . The main features of the State financial Corporations Act 1951: I. The bill provides that the state government may, by notification in the official gazette, establish a financial corporation for the state. II. The share capital shall be fixed by the State government but shall not exceed Rs/2c r o r e s . T h e issue of the shares to the public will be limited to 25 per cent of the

share capital and the rest will be held by the State Governments, The Reserve Bank, Scheduled Banks, Insurance Companies, Investment Trusts, Co- operative banks and other financial institutions.

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III.

Shares of the corporation will be guaranteed by the State government as to the re – payment of principal and the payment of a minimum dividend to be prescribed in consultation with the central government.

IV.

The corporation will be authorized to issue bonds and debentures for amounts which together with the contingent liabilities of the corporations shall not exceed five – times the amount of the paid – up share capital and the reserve fund of the corporations. These bonds and debentures will be guaranteed as to payment of the principal and payment of interest at such rate as may be fixed by the State government.

V.

The corporation may accept deposits from the public repayable after not less than five years, subject to the maximum not exceeding the paid up capital.

VI.

The corporation will be managed by a board consisting of a majority of Directors nominated by the State governments, The Reserve banks and the industrial Finance Corporation of India.

VII.

The corporation will be authorized to make long term loans to industrial concerns witch are repayable within a period not exceeding 25 years. The Corporation will be further authorized to underwrite the issue of stocks, shares, bonds or debentures by industrial concerns, subject to the provision that the corporation will be required to dispose of and shares etc. Acquired by it in fulfillment its underwriting liability within a period of 7 years. Until a reserve fund is created equal to the paid – up share capital of the Corporation and until the State Governments has been repaid all amounts paid by them, if any, in fulfillment of the guarantee liability, the rate of dividend shall not exceed the rate guaranteed by the state government. Under no circumstances shall the dividend exceed 5 percent p.a. and surplus profits will be re – payable to the State governments.

VIII.

IX.

The corporation will have special privileges in the matter of enforcement of its claims against borrowers.

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2.3 FINANCIAL RESOURCES OF THE SFC’S
The SFC’s mobilize their financial resources from the following sources 1. Their own Share capital 2. Income from investment and repayment of loans 3. Sale of bonds 4. Loans from the IDBI ( To some extent ) 5. Borrowings from the Reserve Bank of India 6. Deposits from the Public 7. Loans from State Governments. In the act Financial corporations are Financial corporations established under section 3 and includes a Joint Financial Corporation established under section 3 A of the Sate financial Corporations Act of 1951. The act applies to all i. “ Industrial Concern “ means any concern engaged or to be engaged in a) The manufacturing, preservation or processing of goods. b) The mining or development of mines c) The hotel industry d) The transport of passengers or goods by road or by water or by air ( or ropeway or lift ) e) The generation or distribution of electricity or any other form of power , f) The maintenance, repair, testing or servicing of machinery of any description or vehicles or vessels or motor boats or trailers or tractors. g) Assembling , repairing or packaging and article with the aid of machinery or power h) The setting up or development of an industrial area industrial estate i) Fishing or providing shore facilities for fishing or maintenance thereof j) Providing weight bridge facilities k) Providing engineering, technical, financial, management, marketing or other services or facilities for industry. l) Providing medical, health or other allied services.

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m) Providing software or hardware services relating to information technology ,telecommunication or electronics including satellite linkage n) Setting up or development of tourism related facilities including amusement parks , conventions centers , restaurants travel and transport , tourist services agencies and guidance counseling services to tourists o) Construction p) Development , maintenance and construction of roads q) Providing commercial complex facilities and community centers including conference halls r) Floriculture s) Tissue culture, fish culture , poultry farming , breeding and hatcheries t) Service industry, such as altering. ornamentation , polishing , finishing ,oiling , washing , cleaning or otherwise treating or adapting and article or substance with a view to its use , sale transport , delivery or disposal . u) Research and development of any concept , technology , design process or product , whether in relation to any of the matters aforesaid including any activities approved by the Small Industries Bank State Financial Corporations also include industries which specialize in “ processing goods “which includes any art or process for producing , preparing or making an article by subjecting any material to manual , mechanical , chemical , electrical or any other like operation .

2.4 BROAD FUNCTIONS OF STATE FINANCIAL CORPORATIONS
 Project advisory and Finance AS a catalyst in small scale industrial growth the SFC’s provide the following services: a) Investment appraisal  Project conceptualization and related services, including guidance in relation to selection of projects, preparation of feasibility studies, capital structuring, techno – economic feasibility, financial engineering, project management design etc.
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 Credit Syndication including assistance in legal documentation etc.  Documentation of various project documents  Placement of debt – equity including design of the structure of instruments, placement of instruments with financial institutions, bank etc.  Assist in organizational structural changes like : 1) Analysis of operational performance 2) Study of existing organizational structure 3) Study of the existing statures and rules and regulations 4) Market analysis with respect to products 5) Review of domestic and international scenario 6) Valuation of fixed assets and inventory 7) Advising on formation of new entity 8) Preparation of relevant agreements / legal documents.  Industry Research / Information Services A dedicated research team looking at both macros – level issues as well as sector – specific, industry research. The expertise of the professional research team and a large diversified data base enables SFC to provide erudite research reports to the corporate world.  Legal Advisory Services A full – fledged legal cell, comprising of experienced professional with expertise in handling cases of diverse nature, offer legal help services. The services rendered by this unit comprise investigations and preparations of title reports, besides advisory services in respect of matters under dispute where an independent consultant view is required.

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2.5 SPECIFIC FUNCTIONS OF SFC’S
The SFC’s Provide the following types of assistance to industrial units in their respective states:  The SFC’s while giving loans to industrial units see to it that loans are secured by a PLEDGE, MORTAGAGE, HYPOTHECATION of movable and immovable property or other tangible assets or guarantee by the state government or scheduled commercial bank , they also accept personal pledge by the entrepreneur . SFC’s do not give loans on the basis of second mortgage.  Grant loans or advances to industrial concern repayable within a period not exceeding 20 years.  Providing guarantee for loans raised by industrial units from commercial banks and state cooperative banks.  Providing guarantee for deferred payments in cases where industrial units have purchased capital goods on a deferred payment basis.  To underwrite the issue of shares, bonds and debentures of industrial concerns.  To subscribe to shares, bonds and debentures of industrial concerns.  Guarantee loans raised by industrial concerns which are re- payable within a period not exceeding 20 years and which are floated in the public market  SFC’s grant loans to industrial units for the purchase of fixed capital assets like land, machinery. In some exceptional cases, some SFC’s also provide loans for workingcapital requirements in combination with loans for fixed capital.  SFC’s provide loans in foreign currency for the import of machinery and technical know – how, under the IDA (International development association) and World Bank tie up.  SFC’s however are prohibited from subscribing directly to the shares or stock of any company having limited liability except for underwriting purposes and granting any loans or advance on the security of its own shares .

Reason behind introducing investment for small scale industries: State financial corporations have not been able to become popular due to poor implementation and poor investments that they have undertaken.as they invest in small scale industries the

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returns will be lower as gestation period for small scale industries is very long. Losses are bound occur but as a business and financial organization the government and the state must find ways of minimizing their losses and earning a moderate profit which can be recycled back to promote SFC’s . Business decisions must be taken with a purely business perspective in mind and political, emotional factors should not play the major factors while making business decisions. As only then can there and will there a difference between what is viable and what is not. SFC’s - Contributory to development of small scale industries in the Indian economy: There are at present 18State financial Corporations and almost every state has a financial corporation of its own. During 2011-2012 SFC’s had sanctioned loans aggregating to 2800 crores and disbursed Rs 1368.82 crores. Their assistance in the form of loans has declined subsequently due to the existence of a large amount of Non – Performing assets. Over 70 per cent of the total assistance sanctioned and disbursed by all SFC’s is provided to small scale industries. Attempts are now being made to strengthen the role of SFC’s as regional development banks. The SFC’s sanctioned seed capital assistance under the seed capital schemes introduced and operated by IDBI. This assistance is available to promoters of small business units. Since June 1989, SFC’s have also been implementing special schemes of seed capital assistance to women entrepreneurs. Assistance is extended in the form of loan or grant or a combination of both to voluntary agencies working for women in decentralized industries.

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2.6

PROBLEMS

OF

STATE

FINANCIAL

CORPORATION’S

1. No Independent Organization All SFCs are dependent upon the state government rules and regulations. SFCI Act 1951 is showed just in books. But SFCs’ problem is that these institutions all decision are dependent on political environment of state. Due to this, loan is not available on the time for right person.

2. Corruption Like other government office in India, we can also find the evil of corruption in state financial corporation. Hoarding of wealth and money, SFCs’ officer aim has become to earn by good or bad way. That is the main problem that these institutions have no transparency like banks.

3. Effect of World Bank and WTO Policies All most all SFCs in India are tie up with World Bank and WTO agreement. Due to this, these institutions’ decisions are affected with World Bank and WTO policies. World Bank can easily give pressure for accepting his policies. It may also affect Indian small scale industry adversely.

4. Low Return from Investment in Small scale Industry It is said that state financial corporation has given 70 per cent loan to small scale industry. So, its return on investment is very low on loan to SSI.

5. Long Gestation Period SFCs have also one problem, which we can say in the form of long gestation period. Small scale businessmen do not repay their loan on the time and large number of loan has been converted into bad debt. So, SFCs are suffering losses from many years.

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2.7 PROSPECTS OF STATE FINANCIAL CORPORATIONS
1. Special Help to Women Entrepreneurs Many state financial corporations like Delhi SFC have state new scheme for helping women who want to open their new business in India. This is good prospect of State financial corporation for development of women.

2. Highest loan provider for small scale industry It is also achievement of SFCs that these institutions have provided more than Rs. 6300 crore to small scale industry in 2010.

3. Industrial research Since establishing SFCI in 1951, SFCs are working for the last 62 years in India. So, these financial institutions have huge industrial information and these institutions are also busy for collecting industrial information. A new businessman can start their industrial research by contacting these institutions if he wants to open a new business.

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3.1. INTRODUCTION TO APSFC
Andhra Pradesh State Financial Corporation [APSFC] is a term lending Institution established in 1956 for promoting small and medium scale industries in Andhra Pradesh under the provisions of the State Financial Corporation Act, 1951. The Corporation came into existence on 01-11-1956 by merger of Andhra State Financial Corporation and Hyderabad State Financial Corporation. The corporation has launched many entrepreneur-friendly schemes to provide term loans, working capital loans, and special and seed capital assistance to suit the needs of various categories of entrepreneurs. The Corporation has completed five decades of tiny, small and medium scale sector units and contributing to the balanced regional development of the state. APSFC’s plan is its own streak of “entrepreneurship” to innovate and to experiment. Encouraging entrepreneurship was its genetic disposition. Perceiving opportunities and helping entrepreneurs is to seize them was second nature. Playing the role of coach, mentor and catalyst with the consummate ease and grace, it has guided many first generation entrepreneurs to achieve success in their first forays APSFC believes that “when preparation meets opportunities, success flows”. This is the key to fostering good entrepreneurship APSFC had an uncanny knack of picking up and honouring entrepreneurs with promise by giving “Parisharmik Vijetha Awards”. Their performance confirmed our faith and trust in their abilities APSFC swells with pride when its entrepreneurs, who start small grow fast and become big & emerge as global players who are doing India proud and many more upcoming corporate.

3.2. BASIC INFORMATION
Company Name Business Type Product/Service (We Sell) Address : Andhra Pradesh State Financial Corporation [APSFC] : Financial services : Term Lon’s : Andhra Pradesh State Financial Corporation 5-9-194, PB No: 165 Chirag Ali Lane, Hyderabad

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3.3. ORGANIZATIONAL STRUCTURE
a) Chairman b) Managing Director c) Executive Director d) Chief General Managers e) General Managers f) Assistant General Managers g) Senior Managers h) Managers i) Deputy Managers j) Assistant Managers

3.4. PRODUCTS (FUND BASED ACTIVITIES)
Andhra Pradesh State Financial Corporation (APSFC) extends financial assistance for setting up industrial units in small &medium scale, service enterprises in the state of Andhra Pradesh. The Corporation extends finance basically through two products the Term loans and the Working Capital term Loans. Term loan: The Corporation extends financial assistance up to Rs 500 Lakhs per project normally for acquiring fixed assets viz., Land, Building and Machinery through Term Loan. In extremely deserving cases the corporation extends financial assistance up to Rs2000 lakhs. The Corporation is having an understanding (MOU) with SIDBI and five Leading Nationalized Commercial Banks and for bigger projects it extends need based finance through consortium finance with MOU Banks and Institutions. The loan period normally ranges from 5 to 8 years. Working capital term loan: The Corporation extends financial assistance up to a maximum of Rs 500 lakhs for working capital through this product for existing units with good working results. The loan period normally ranges from 1 to 5 years. The Corporation in consortium with Lending Commercial Banks, with which it having a MOU, extends higher working capital loans to deserving units.
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3.5. LEAD POSITION:
With an improved performance in FY 2012 the corporation has turned a new leaf in its history, in the process scripted yet another success story and has continued its brilliant march. As a result Corporation is likely to retain its NUMERO UNO position amongst its peers in the country for the 11th year in a row. HIGHLIGHTS OF PERFORMANCE DURING 2011-2012:  The sanctions stood at Rs 1368.82 crore as against Rs 1386.38 c recorded in FY 2011.  The disbursements increased to Rs 936.89 c from Rs 904.64 c in FY 2011, registered growth of 3.56 per cent.  The principle collections have gone up to Rs636.14 c from Rest 614.48 c in previous year.  The interest climbed to Rest 330.33 c from Rs 289.90c during FY 2011, growth of 14.74 per cent.  The operating profit registered a Y-o-Y growth of 11.81 per cent and stood at Rs 112.12 c.

3.6. OBJECTIVES
    To industrialize the state through balanced regional development and dispersal of industries. To support promotion and development of small and medium scale industries and service sector units by extending need based credit to them. Nurtures entrepreneurship and encourages first generation entrepreneurs. To act as a catalyst for generation of employment.

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3.7. MILESTONE ACHIEVEMENTS OF APSFC
         

So far sanctioned 8,695 crore for 90,100 units in Andhra Pradesh as on 31/03/2011. Disbursed 6,022 crores to 69,973 units - 70 percent to Tiny/SSI sector as on 31/03/2011. Recovered Rs 6,695 crores including interest since inception till 31/03/2011. Established unblemished repayment track record since inception. Has consistent record of earning operating profit throughout its history. Created total investment of around 18,511 crores. Generated direct and indirect employment to about 10.69 lakh persons. Channeled a significant share of assistance of around 70 percent to tiny and small scale industries. Industrialized backward areas by extending 50 percent of its assistance to industries coming up in notified backward areas. Enjoying 60 percent of the market share in term lending in promoting First Generation Entrepreneurs in Andhra Pradesh.

3.8. FUNCTIONS & DUTIES
The APSFC subject to the provisions of SFC’S Act 1951may carry on and transact any of the following kinds of business viz. 1. Guaranteeing, on such terms and conditions as may be agreed upon – i. Loans raised by industrial concerns which are repayable within a period not exceeding twenty years, and are floated in the public market; ii. Loans raised by industrial concerns from scheduled banks or State co-operative banks or other financial institutions;  Guaranteeing, on such terms and conditions as may be agreed upon, deferred payments due from any industrial concern in connection with its purchase of capital goods within India;
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  

Underwriting of the issue of stock, shares, bonds or debentures by industrial concerns; Transferring for consideration any instruments relating to loans and advances granted by its to industrial concerns; Acting as agent of the Central Government or the State Government or the Development Bank or the Small Industries Bank or the IFCI Limited formed and registered under the Companies Act, 1956, or any other financial institution notified in this behalf by the Central Government in respect of any matter connected with, or arising out of, the grant of loans or advances any matter connected with, or arising out of, the grant of loans or advances to an industrial concern, or subscription to debentures of an industrial concern or relating to the business of the Development Bank, Small Industries bank, IFCI Limited or financial institution;

 

Subscribing to, or purchasing of, the stock, shares, bonds or debentures of an industrial concern or any other concern; Retaining as part of its assets any stock, shares, bonds or debentures which it may acquire by subscription or in fulfillment of its underwriting liabilities and disposing of the stock, shares, bonds or debentures so acquired;

Granting loans or advances to, or subscribing to debentures of, an industrial concern, repayable within a period not exceeding twenty years from the date on which they are granted or subscribed

Accepting or discounting promissory notes and bills of exchange made, drawn, accepted or endorsed by industrial concerns or by any person selling capital goods manufactured by one industrial concern to another industrial concern;

Undertaking research and surveys for evaluating or dealing with marketing or investments or undertaking and carrying on techno-economic studies or other activities in connection with the development of any industry;

  

Providing technical and administrative assistance to any industrial concern or any person for the promotion, management or expansion of any industry. Planning and assisting in the promotion and development of industries. Providing consultancy and merchant banking services.
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     

Acting as trustee for the holders of debentures or other securities. Leasing, sub-leasing or giving on hire purchase of industrial plant, equipment, machinery or any other asset factor Providing export related credit and services Undertaking money market relative activities Setting up of mutual funds and undertaking assets management activity; Promoting, forming or conducting or assisting in the promotion, formation, or conduct of companies, subsidiaries, societies, trusts or such other associations of persons as it may deem fit;

 

Opening or confirming or endorsing letters of credit and negotiating or collecting bills and other documents drawn there under; Doing such other business as the Small Industries Bank may authorize, and or generally the doing of such acts and things as may be incidental to or consequential upon, the exercise of its powers or the discharge of its duties under this Act.

2. The Financial Corporation may receive, in consideration of any of the services mentioned in sub-s. (1), such commission, brokerage, interest, remuneration or fees as may be agreed up on.

3.9. LOOKING AHEAD
Moving away from the conventional approach of lending, the Corporation will concentrate on building relationship based service to its customers, in order to meet their rising expectations and provide quick and qualitative service to them. During the year 2010-11, the Corporation will focus on improving quality and volume growth of its loan assets, while keeping customer satisfaction as its utmost priority. The Corporation plans to capture the business from several industries coming up in various SEZs, industrial parks and new sea ports in the state. Besides, the Corporation, being aware of the hectic industrial activities in the border districts of neighbouring states, will focus on the credit needs of the industries coming up there. The carbon financing through CDM projects, another

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emerging areas, promises new opportunities for accretion of new customers. Against this back drop, the Corporation has set higher business targets for the year 2011-12.

3.10 BOARD OF DIRECTORS
Chairman Managing Director Director Director Director : Sri T.S.Appa Rao, IAS : Sri T.Satyanarayana Rao, IAS : Smt.Bhama Krishnamurthy : Sri S.Mallikarjun : Sri Amitabha Guha

3.11 HR MANAGEMENT
The Corporation reviews human resource policy every year and makes suitable improvements/modifications as per changing requirements. Further, the Corporation has put in place a well-structured incentive scheme and promotional policy to motivate the employees. With a view to reward the employees, during the year, the Corporation has considered promotions to eighty four officers/employees. The Corporation is endowed with a blend of professionals from various disciplines consisting of Engineers, Chartered Accountants, Cost Accountants, Legal and Management professionals. As on 31.03.2012, the total staff strength stood at 466 (including sub-staff). The Corporation, with a view to hone the skills, sponsored fifty two officers for twenty one external training programmes in the institutes of national repute. The Corporation sponsored eight senior officers to international summits/ forums like India-Japan Global Partnership Summit and employee Benefit Conference-2011. The Corporation also conducted nine in-house training programmes for its employees, wherein one hundred and fifty one employees have participated. The Corporation continued to provide a platform to aspiring MBA graduates enabling them to gain practical inputs drawn from empirical knowledge of the senior employees. In FY 2012 thirty two MBA students have completed their project work in diverse subjects’ viz., Project finance, Risk Management, Funds Management, ALM etc.

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3.13. PERFORMANCE APPRAISAL AT APSFC
When to appraise: Performance appraisal across all levels at APSFC is conducted twice in a year. The Human resource department sends the appraisal forms to the concerned departments after duly fitting in the staff details. Who Should Appraise: The immediate superior of the employee not below the Assistant Manager cadre shall be the Reporting Officer. In case the employee is directly working under the supervision of any officer higher. Procedure: The Human Resource department prepares appraisal forms for each and every category of employee and at the start of the appraisal period; it sends these forms to the concerned departments after filling in the necessary details of the employee to be appraised which is called ‘background information’. The staff should have worked at least for a period of 6 months to be appraised by an officer. In case the appraise reports to more than one reporting officer in an appraisal year, on transfer, promotion etc. The personnel department would forward the appraisal forms to Reporting officers concerned for the period, the appraise reports to them. The assessment an employee is primarily governed under a 2 – tier system that is assessment by the Reporting Officer as well as by the Reviewing officer, where the assessment is subject to concurrence of the Consenting Authority, which will be final. The assessment done on the basis of certain attributes / factors which help in defining the job requirements of a particulars job. Usually a 4- point scale or a 10 – point scale for each factor is used for rating. Once the reporting officer gives his rating and comments if any, the same shall be put to the reviewing officer who after careful scrutiny of the appraisal will pass his remarks.

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After the reviewing officer’s comments are given and duly signed by him. He can advise the reporting officer to discuss the appraisal with the employee or, in certain cases, may decide to discuss the appraisal with the employee himself but in the presence of the Reporting officer. The reporting officer after rating the employee on various attributes will give his remarks, which are communicated, to the reviewing officer. Later these are discussed with the employee to know his reaction. After the discussion with the employee, the reporting officers give his final remarks and his suggestions for improvement of the employee performance. The reviewing officer for further comments later scrutinizes these. The complete appraisal report is then sent back to the personnel department in a confidential cover. The personnel department will then check the appraisal report for irregularities and any adverse entries against any of the employee made by the reporting officer will be communicated to the employee in a covering letter asking him/her to improve and a copy of the small will be placed in his / her personal life. Objective of performance appraisal system: • To appraise the individual’s performance on the work assigned to him and qualities

he is expected to show on the job in performing his tasks as expected by the organization through his supervising officers and to assess the potential for higher responsibilities. • The generate inputs for promotions, confirmations, placements, training and

personnel and developmental decisions in respect of the individual so appraised. • To assess the professional, managerial, behaviour and other training and

development needs and provide information to the personnel/HRD department for the development decisions. Guide Lines for Appraisers: • The employee should be appraised for his present position. • Judgment should be based on the entire review period & not on isolated incidents. • Snap judgments should be avoided.
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• Each factor under considerations should be appraised independently without being influenced by other factors. • It is advisable that the individual being assessed should compare with other of the same rank employed on more or less similar work. • Over – rating as well as under – rating diminishes the value of the assessment. • Reason for given rating of the attribute should be well substantiated.

3.14 ABOUT THE FORMS
3.14.1 CONTENT OF THE FORM Background information of the employee to be filled in by the Personnel department which contains • • • • • • • • Name Designation Date of joining Department Employee number Special assignment Qualification & Commendation Punishments & warnings awarded during the year (with reasons)

Attributes For Performance / Potential Assessment For Officers: • • • • • • • Professional knowledge and application Capacity to achieve results Dependability Judgment and decision making Communication skills (written or oral) Leadership Planning and organizing ability
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• • •

Co-operation and team spirit Adaptability Personality

For Technical / Non-Technical Staff (common attributes):        

Job knowledge : knowledge and understanding of job assigned Quality of work: Thoroughness and accuracy of work done without mistakes, neatness and present ability should be considered. Quality of work: Amount of out vis-à-vis the time taken Initiative: Self – staring ability, resourcefulness and the ability to inspire confidence should be considered. Conduct: Ability to get on with other fellow employees. Regularity: Punctuality and regularity of attendance. Leadership: Ability to get work done by subordinates giving them clear guidance. Cost consciousness: Ability of foresee the resource requirement for any task and complete assignments with minimum waste.

For Technical Staff only: • Safety consciousness: Habits and work practices in respect of personal safety and

safety of fellow employees. • Care of tool and equipment: Manner in which tool and equipment handling is done

ensuring better tool life and less maintenance and damage. For Non- Technical Staff only: Dealing with others: Ability to appreciate others points of view and approach in dealing with customer’s suppliers or any other outsiders in conformity with organizational requirements.
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3.14.2 RATING OF ATTRIBUTES The common factors and the ratings under which the appraisal are made are as follows: Quantity of output:  Extent of target fulfillment and completion of assigned tasks. Rating Reason: 15-13 despite high 15-13 12-10 9-7 6-4 Degree of difficulty of task. Fulfilment of all tasks / targets despite constraints Tasks assigned generally met with moderate efforts Output below target / expectation despite lack of constraints Moderate effort. 3-1 Output far below expectation Target / tasks not fulfilled Low effort Output of work exceptionally high and above expectations/ tasks assigned

Quality of output:  General excellence of output, the extent of work free from errors. RATING 15-13 conditions. 12-10 9-7 6-4 3-1 Does a through and accurate job Generally produces work of acceptable quality Work barely up to the mark Works consistently below required standards.
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REASONS Excellence quality of output accurate in work under all

Cost control:  Awareness of cost aspects in the job. Optimum utilization of available resources and reduction of wastes. RATING 10-9 8-7 6-5 4-3 2-1 Job knowledge and skills:  Knowledge pertaining to the area of work and related areas. RATING 10-9 8-7 6-5 4-3 2-1 REASON Excellent ability to anticipate future work needs ahead of time Good knowledge of the own jib and related areas Knowledge adequate in own area Knowledge inadequate in own and related areas. Poor knowledge, no motivation to learn. REASON Always makes optimum utilization of resources All assigned tasks completed within the specific cost parameters Generally keeps within cost parameters and time schedules Conscious of the need to effect economy and manager time Wasteful in work Lacks desire to complete assignments in time.

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Discipline:  Adherence to company policies and rules RATING 10-9 8-7 6-5 4-3 2-1 REASON Exemplary behaviour and conduct Good behaviours and conduct Discipline is generally good Conduct and discipline within manageable limit Low in discipline

Initiative:  Ability to be self-reliant and move forward on a task without outside direction. RATING 10-9 8-7 6-5 4-3 2-1 REASON Totally self-reliant A self-starter Good initiative Generally shows good initiative Needs guidance, instructions and follow-up Always requires to be told

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Communication:  Skills and desire to share available information with all concerned. RATING 10-9 8-7 6-5 4-3 2-1 REASON Excellent clarity of thought and expression Shares information with all concerned Has moderate skill and desire to share information Only believes in downward communication Lacks both the skill and the will to communicate

Management of human resources:  Effective control and utilization of sub ordinates, ensuring discipline, integrating employees into teams and motivating them for higher levels of performance. RATING 5 4 3 2 1 REASON Excellent Control over and utilization of people Good utilization of people Plays basically a controlling functions Has little control Has no control over his / her people

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Table 4.1: Employee’s opinion on the types of Performance Appraisal system existing in the Organization. S.No. 1 2 3 4 5 Source: Survey Analysis Employee's opinion on the types of Performance Appraisal system existing in the Organization
confidential self-appraisal Both not aware

Responses of Respondents Confidential Self-Appraisal Both Not Aware Total

No of Respondents 2 8 16 4 30

Percentage 07 27 53 13 100

13%

7% 27%

53%

ANALYSIS The above table indicates that 7 per cent of the respondents are using Confidential Appraisal, 27 per cent of the respondents are using Self Appraisal, 53 per cent of the respondents are using both Confidential Appraisal &Self Appraisal in their organization, 13 per cent of the respondents are not aware about which Appraisal system is being followed in the organization.

INTERPRETATION: More than half of the respondents said that APSFC follows both Confidential and Self Appraisal.

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Table 4.2: Employee’s opinion on need for performance appraisal in the organization.

S.No. 1 2 3 4 5

Responses of Respondents Strongly Agree Agree Appraisal Neither Agree nor disagree Disagree Total

No of Respondents 21 9 16 4 30

Percentage 70 30 53 13 100

Source: Survey Analysis

Employee's opinion on need for performance appraisal in the organization.
Strongly Agree Agree Neither Agree nor Disagree Disagree

0% 0%

30% 70%

ANALYSIS: The above table reveals the opinion of respondents on the necessity of performance appraisal in the organization. It shows that 70 per cent of the respondents strongly agreeing that Performance Appraisal is necessary to be carried towards an employee In the Organization, and 30 per cent of the respondents agreeing that Performance Appraisal is necessary to be carried towards an employee In the Organization.

INTERPRETATION: A large proportion of respondents agreed the necessity of performance appraisal in the organization.

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Table 4.3: Employee opinion on the purposes of Performance Appraisal system in the organization. S.No. 1 2 3 4 5 6 7 Source: Survey Analysis Responses of Respondents An insight into your strengths and weakness Guideline for training and plan Assistance in goal Decision on layoff Determination of promotion or transfer Salary administration and Benefits Total No of Respondents 18 02 00 04 06 0 30 Percentage 60 7 00 13 20 00 100

Employee's opinion on the purposes of Performance Appraisal system in 0 the organization
An insight into your strengths and weakness 20 Guideline for training and plan Assistance in goal 13

60
0 7

Decision on layoff Determination of promotion or transfer Salary administration and Benefits

ANALYSIS: The above table describes the respondent’s opinion on the purposes of Performance Appraisal system in the organization. It shows 60 per cent of the respondents felt that the purpose of Appraisal System is for “An insight into your strengths and weakness”, 7 per cent of the respondents say Appraisal System is for “Guideline for training and plan”, 13 per cent feel Appraisal System is for “Decision on layoff”, and 20 per cent of the respondents say Appraisal System is for “Salary administration and Benefits”.

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INTERPRETATION: More than half of the respondents think “An insight into your strengths and weakness” is the criteria for performance appraisal, in the organization. Table 4.4: Employee’s opinion on considering their feedback before appraisal No of Respondents 18 12 30

S.No. 1 2 3

Responses of Respondents Yes No Total

Percentage 60 40 100

Source: Survey Analysis Employee’s opinion on considering their feedback before appraisal

40 Yes No 60

ANALYSIS: The above table shows the opinion of employee’s on taking the comments and suggestions before the appraisal. It shows that 60 per cent of the respondents say that Employee’s comments and suggestions are taken into consideration before the appraisal in the Organization, and 40 per cent of the respondents say that Employee’s comments and suggestions are not taken into consideration before the appraisal in the Organization. INTERPRETATION: More than half of the respondents saying that organization consider their comments and suggestions before the appraisal.
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Table 4.5: Employee’s opinion on the existence of Performance Appraisal system in the Organization. S.No. 1 2 3 4 5 Source: Survey Analysis Responses of Respondents Strongly Agree Agree Appraisal Neither Agree nor disagree Disagree Total No of Respondents 15 14 01 00 30 per centage 50 47 03 00 100

ANALYSIS: The above table shows data of respondent’s opinion on “performance appraisal system will help them in improving their effectiveness”. And the feedback shows that 50 per cent of the Employee’s opinion on the existence of Performance Appraisal system in the Organization
0 3 Strongly Agree Agree 50 47 Neither Agree nor dsagree Disagree

respondents strongly agree that performance appraisal system will help the employees in improving their effectiveness, 47 per cent of the respondents agree that performance appraisal system will help them in improving their effectiveness employees, and 3per cent of the respondents are neutral. INTERPRETATION: All the respondents agree with the statement “performance appraisal system will help them in improving their effectiveness”.

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Table 4.6: Employee’s opinion on whether performance appraisal is beneficial to the organization and individual development. S.No. 1 2 3 4 5 Source: Survey Analysis Employee’s opinion on whether performance appraisal is beneficial to the organization and individual development
10 0 33 Strongly Agree Agree Neither Agree nor dsagree Disagree 57

Responses of Respondents Strongly Agree Agree Appraisal Neither Agree nor disagree Disagree Total

No of Respondents 10 17 03 00 30

Percentage 33 57 10 00 100

ANALYSIS: The above table reveals that Employee’s opinion on performance appraisal is beneficiary in organization development and in individual development. It shows that 33 per cent of the respondents strongly agree that the performance Appraisal is beneficial for Organization Development as well as for Individual Development, 57 per cent of the respondents agree that the performance Appraisal is beneficial for Organization Development as well as for Individual Development, and 10 per cent of the respondents are neutral. INTERPRETATION: About half of the respondents agreed that performance appraisal is beneficial in organization and individual development.

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Table 4.7: Employee opinion on periodic performance reviews for the work done No of Respondents 26 04 30

Responses of Respondents Yes No Total Source: Survey Analysis

Percentage 87 13 100

Employee opinion on periodic performance reviews for the work done
13

Yes No

87

ANALYSIS: The above table shows the data of employee opinion on periodic performance reviews for the work done. It shows that 87per cent of the respondents say that there are periodic performance reviews for the work done, and 13 per cent of the respondents say that there are no periodic performance reviews for the work done.

INTERPRITATION: More than half of the respondents said that they have periodic performance reviews for their work done.

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Table 4.8: Employee’s opinion on training sessions for fresher S.No. 1 2 3 4 5 Source: Survey Analysis Responses of Respondents Excellent Good Average Poor Total No of Respondents 2 22 3 3 30 Percentage 7 73 10 10 100

Employee’s opinion on training sessions for fresher
10 10 Excellent Good Averaage 7

Poor
73

ANALYSIS: The above table describes the employee opinion on training session for fresher. Table shows that 7 per cent of the respondents think that training session for fresher is excellent, 73 per cent of the respondents thought it is good, 10 per cent of the respondents thought its average, and 10 per cent of the respondents thought it is poor.

INTERPRETATION: More than half of the respondents think that APSFC is providing good training for fresher.

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Table 4.9: Employee’s opinion on how well performance appraisal is helping them in planning their work well No of Respondents 3 00 15 04 08 30

S.No. 1 2 3 4 5 6

Responses of Respondents Strongly Agree Agree Appraisal Neither Agree nor disagree Disagree Strongly Disagree Total

Percentage 10 00 50 13 27 100

Source: Survey Analysis Employee’s opinion on how well performance appraisal is helping them in planning their work well
10 27 0 Strongly Agree

Agree Appraisal
Neither Agree nor disagree Disagree 13 50 Strongly Disagree

ANALYSIS: The above table describes the employee’s opinion on how well performance appraisal is helping them in planning their work well. The table shows that 10 per cent of the respondents strongly agree that Performance Appraisal helps them to plan their work well, 50 per cent of the respondents agree with the statement. 13 per cent of the respondents disagree with statement, and 27 per cent of the respondents strongly disagree with statement.

INTERPRITATION: Most of the respondents think that performance appraisal is not helping them in planning their work well.

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Table 4.10: Employee’s opinion on awareness of performance appraisal ratings No of Respondents 21 09 30

S.No. 1 2 3

Responses of Respondents Yes No Total

Percentage 70 30 100

Source: Survey Analysis Employee’s opinion on awareness of performance appraisal ratings

30

Yes No 70

ANALYSIS: The table shows the employee’s opinion on awareness of performance appraisal ratings. Table shows that 70 per cent of respondents are aware of performance ratings by appraiser, and 30 per cent of respondents are not aware.

INTERPRETATION: Most of the respondents know about the ratings of performance appraisal.

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Table 4.11: Employee’s feedback on period of their appraisal S.No. 1 2 3 4 5 6 Source: Survey Analysis Employee’s feedback on period of their appraisal
0 7 3 Monthly Half-yearly quarterly annually any time 90

Responses of Respondents Monthly Half Yearly Quarterly Annually Anytime Total

No of Respondents 00 00 03 27 2 30

Percentage 00 00 3 90 7 100

ANALYSIS: The table shows the data about the opinion of employee’s on period of appraisal. It shows that 3 per cent of respondents think performance appraisal is carried out quarterly, 90 per cent of respondents think performance appraisal is carried out annually, and 7 per cent of respondents think performance appraisal carried out at any time.

INTERPRETATION: Most of the respondents think organization conducts appraisal once a year i.e. annually.

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Table 4.12: Employee’s opinion on does the credibility of appraiser affect the performance Appraisal System S.No. 1 2 3 4 Source: Survey Analysis Employee’s opinion on does the credibility of appraiser affect the performance Appraisal System
0 23 Greater Extent Lesser Extent Nothing 77

Responses of Respondents Greater Extent Lesser Extent Nothing Total

No of Respondents 23 7 00 30

Percentage 77 23 00 100

ANALYSIS: The above describes the employee opinion on does the credibility of appraiser affect the performance Appraisal System. The table shows that 77 per cent of the respondents accepts that the credibility of Appraiser affect the performance Appraisal System at greater extent, and 23 per cent of the respondents accepts that the credibility of Appraiser affect the performance Appraisal System at lesser extent.

INTERPRETATION: Most of the respondents agree that the credibility of appraiser affect the performance appraisal.

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Table 4.13: Employee’s opinion on necessity of incentives for improving the performance of employees S.No. 1 2 3 4 5 6 Source: Survey Analysis Employee’s opinion on necessity of incentives for improving the performance of employees
10 7 Strongly Agree Agree Neither Agree nor Disagree Strongly Disagree 43

Responses of Respondents Strongly Agree Agree Appraisal Neither Agree nor disagree Disagree Strongly Disagree Total

No of Respondents 12 13 02 03 00 30

Percentage 40 43 07 10 00 100

40

ANALYSIS: The above table consists the date about Employee’s opinion on necessity of incentives for improving the performance of employees. It shows that 40 per cent of the respondents strongly agreed that incentives are necessary for improving the performance of employees, 43 per cent of the respondents agreed that incentives are necessary for improving the performance of employees, 7 per cent of the respondents are neutral and 10 per cent of the respondents think that the incentives are not necessary for improving the performance of employees.

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INTERPRETATION: Most of respondents think that incentives are necessary for improving the performance of employees. Table 4.14: Employee’s opinion on necessity of introducing scheme other than that of existing incentives being paid S.No. 1 2 3 4 5 6 Source: Survey Analysis Employee’s opinion on necessity of introducing scheme other than that of existing incentives being paid Responses of Respondents Strongly Agree Agree Appraisal Neither Agree nor disagree Disagree Strongly Disagree Total No of Respondents 03 08 05 12 02 30 Percentage 10 26 17 40 07 100

7

10 26

Strongly Agree Agree

40

Neither Agree nor Disagree Disagree

17

Strongly Disagree

ANALYSIS: The table shows the data about the employee opinion on necessity of introducing scheme other than that of existing incentives being paid. It shows that 10 per cent of the respondents strongly agree that there is a necessity of introducing new incentive scheme, 26 per cent of the respondents agree that there is a necessity of introducing new incentive scheme, 17 per cent of the respondents are neutral, 40 per cent of the respondents think that there is no necessity for introducing new incentive scheme, and 7 per cent of the respondents strongly disagree with the statement.
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INTERPRETATION: Most of the respondents by compared to others said that there is a necessity of introducing scheme other than that of existing incentives being paid. Table 4.15: Employee’s opinion on getting feedback on their performance appraisal S.No. 1 2 3 Source: Survey Analysis Employee’s opinion on getting feedback on their performance appraisal Responses of Respondents Yes No Total No of Respondents 12 18 30 Percentage 40 60 100

40 Yes No 60

ANALYSIS: The table is about opinion of employee’s on getting feedback on their performance appraisal. It shows that 40 per cent of the respondents think that they are getting performance feedback on their performance appraisal and 60 per cent of the respondents think that they are not getting their performance feedback.

INTERPRETATION: Above half of the people said that they are not getting feedback on their performance appraisal.

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Table 4.16: Employee’s opinion on feedback given by superior in helping them to achieve their Organizational goals

S.No. 1 2 3

Responses of Respondents Yes No Total

No of Respondents 22 08 30

Percentage 73 27 100

Source: Survey Analysis Employee’s opinion on feedback given by superior in helping them to achieve their Organizational goals

27 Yes No 73

ANALYSIS: The table is about the opinion of employees on feedback given by their superior help them in achieving Organizational goals. It shows that 73 per cent of the respondents said that the feedback given by their superior is helping them in achieving Organizational goals and 27 per cent of the respondents said that feedback given by superior is not helping them.

INTERPRETATION: More than half of the respondents said that the feedback given by their superior helps them in achieving Organizational goals.

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Table 4.17: Employee’s opinion on Satisfaction levels of employee with the presentappraisal system in the organization. S.No. 1 2 3 4 5 Source: Survey Analysis Responses of Respondents Extremely satisfied Satisfied Neither satisfied nor dissatisfied Dissatisfied Total No of Respondents 14 17 01 02 30 Percentage 47 57 03 7 100

Employee’s opinion on Satisfaction levels of employee with the present appraisal system in the organization
3
7 47 43 Extreemly Satisfied Satisfied Neither Satisfied nor Dissatisfied Dissatisfied

ANALYSIS: The table consist the data of employee’s opinion on Satisfaction levels of employee with the present appraisal system in the organization. It shows that 47 per cent of the respondents are extremely satisfied with the appraisal system being used in the organization, 43 per cent of the respondents are satisfied with the appraisal system being used in the organization, 3 per cent of the respondents are neither satisfied nor dissatisfied with the appraisal system being used in the organization, and 7 per cent of the respondents are dis satisfied with the appraisal system being used in the organization.

INTERPRETATION: Most of the people comparing with other respondents said satisfaction levels of employee with the appraisal system being used in the organization.
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Table 4.18: Employee’s opinion on alternate appraisal system need to be followed in place of the present system S.No. 1 2 3 4 5 6 Source: Survey Analysis Employee’s opinion on alternate appraisal system need to be followed in place of the present system
10

Responses of Respondents Strongly Agree Agree Appraisal Neither Agree nor disagree Disagree Strongly Disagree Total

No of Respondents 02 14 03 08 03 30

Percentage 6 47 10 27 10 100

6

Strongly Agree Agree

27

Neither Agree nor Disagree

47
10

Disagree
Strongly Disagree

ANALYSIS: The table describes employee’s opinion on alternate appraisal system need to be followed in place of the present system. The table shows that 6 per cent of the respondents strongly agree that other appraisal system other than that is followed should be introduced, 47 per cent of the respondents agree that any other appraisal system other than that is followed in your organization should be introduced, 27 per cent of the respondents are neutral and 10 per cent of the respondents disagree.

INTERPRETATION: Most of respondents by comparing with other respondent said any other appraisal system other than that is followed in your organization should be introduced.

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5.1 FINDINGS
1. More than half of the respondents said that APSFC follows both Confidential and Self Appraisal. (53%) 2. A large proportion of respondents agreed about the necessity of performance appraisal in the organization. (70%) 3. More than half of the respondents think “An insight into your strengths and weakness” is the criteria of performance appraisal, in the organization. (60%) 4. More than half of the respondents felt that organization consider their comments and suggestions before the appraisal. (60%) 5. Majority of the respondents agree with the statement “performance appraisal system will help them in improving their effectiveness”. (97%) 6. About half of the respondents agreed that performance appraisal is beneficial in organization and individual development. (90%) 7. Majority of the respondents said that they have periodic performance reviews for their work done. (87%) 8. A huge number of respondents think that APSFC is providing good training for fresher. (73%) 9. Half of the respondents think that performance appraisal is not helping them in planning their work well. (50%) 10. Most of the respondents know about the ratings of performance appraisal. (70%) 11. Majority of the respondents know that the organization conducts appraisal once a year i.e. annually. (90%) 12. About 70 per cent of the respondents agree that the credibility of appraiser affect the performance appraisal. (77%) 13. Most of respondents think that incentives are necessary for improving the performance of employees. (83%) 14. Most of the respondents felt that there is a necessity of introducing scheme other than that of existing incentives being paid. (50%) 15. Above half of the people said that they are not getting feedback on their performance appraisal. (60%)
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16. More than half of the respondents said that the feedback given by their superior helps them in achieving Organizational goals. (73%) 17. Majority of the people are satisfied with the appraisal system being used in the organization. (90%) 18. Half of respondents felt that other appraisal system other than that is followed in the organization should be introduced. (51%)

5.2 SUGGESTIONS:
1. It is suggested that concerned superior of any employee should give performance feedback to them. 2. New incentives schemes other than that of existing incentives being paid should be introduced. 3. Most of the employees have suggested that courses/training should meet their expectations/need/preferences 4. Most of the employees have agreed that incentives are necessary for improving the performance. 5. Employees should get involved in the performance appraisal process and self-evaluation of employees should be there. 6. An appreciation for good performance and proper guidance for improvement is a must. 7. Peers, Subordinates, and customers should be included in Appraisal system 8. Regular feedback to employees is required that guides and encourages them in their growth and career progression 9. Interview of the appraiser, and appraise, has to be done, in order to avoid any kind of bias in the organization. 10. Key performance areas (KPAs) have to be considered, while appraising the employee makes him more involved in his work. 11. It is advisable to have two appraisers for the appraising of employee. 12. The strengths and weaknesses of the appraises have to be communicated to them, and proper counseling should be given 13. Factor to be included into the present criteria for performance evaluation:

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        

Quality assignment of the work done Disciplinary / Administrative lapses. Extraordinary occurrences Problem solving skills Productivity of work-output Attitude towards work Behavior and health Efficiency Capability to take up higher responsibility

5.3 CONCLUSION
Performance Appraisal system is very important to assess training needs to effect promotions, and to give pay increase. There are two methods in performance Appraisal system, those are modern and tradition method.

Appraisal of performance proceeds in a set of pattern, the step involved are defining appraisal objectives, establishing job expectations, designing the appraisal programmes conduction performance interview, and using appraisal data for different HR activities. With the above finding the APSFC can undergoes 360 degree Appraisal system with maximum respondents of the employees are willing for the best appraisal system which can give them better working environment in the environment, with better skill development, promotion, etc.

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BIBLOGRAPHY

TEXT BOOKS: T.V.Rao (1999), Appraising and Developing Managerial Performance, Excel Books, New Delhi. P.Subba Rao, Essentials of Human Resource Management, Himalaya Publishing House. V.S.P.Rao & T.S.Narayana Rao, Management, Premier Book Company.

JOURNALS: Company Annual Report Magazines

WEBSITES: Google.com Apsfc.com

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QUESTIONNAIRE

A survey on performance Appraisal System at ANDHRA PRADESH STATE FINANCE CORPORATION

1. What type of Appraisal System Organization follows? a) Confidential-Appraisal b) Self-Appraisal c) Both d) Other 2. Is Performance Appraisal necessary to be carried towards an employee in an organization? a) Strongly agree b) Agree c) Neither agree nor disagree d) Disagree e) Strongly disagree

3. Purpose of appraisal system a) An insight into your strengths and weakness b) Guideline for training and plan c) Assistance in goal d) Decision on layoff e) Determination of promotion or transfer f) Salary administration and Benefits 4. Are employee’s comments and suggestions taken into consideration before the appraisal? a) Yes b) No

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5. Do you feel that performance appraisal system will help you in improving the effectiveness of employees? a) Strongly agree b) Agree c) Neither agree nor disagree d) Disagree e) Strongly disagree

6. Do you think performance Appraisal is beneficial for Organization Development as well as Individual Development? a) Strongly agree b) Agree c) Neither agree nor disagree d) Disagree e) Strongly disagree

7. Are there any periodic performance reviews for the work done? a) Yes b) No 8. How do you feel about the training session for fresher? a) Excellent b) Good c) Average d) Poor

9. The Performance Appraisal helping you to plan your work well? a) Strongly agree b) Agree c) Neither agree nor disagree d) Disagree e) Strongly disagree
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10. Are you aware of performance ratings? a) Yes b) No

11. How often is Performance Appraisal carried out? a) Monthly b) Half Yearly c) Quarterly d) Annually

12. Does the credibility of Appraiser affect the performance Appraisal System? a) Greater Extent b)Lesser Extent c) Nothing

13. Are incentives necessary for improving the performance of employees? a) Strongly agree b) Agree c) Neither agree nor disagree d) Disagree e) Strongly disagree

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14. Is there any necessity of introducing scheme other than that of existing incentives being paid? a) Strongly agree b) Agree c) Neither agree nor disagree d) Disagree e) Strongly disagree

15. Do you get a performance feedback on your performance appraisal?

a) Yes b) No

16. Does the feedback given by superior help you in achieving Organizational goals? a) Yes b) No

17. Satisfaction levels of employee with the appraisal system being used in the organization a) Yes b) No

18. Do you feel that any other appraisal system other than that is followed in your organization shall be introduced? a) Yes b) No

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