Professional Documents
Culture Documents
1.
EXECUTIVE SUMMARY
2.
INTRODUCTION
3.
RESARCH METHODOLOGY
4.
COMPANY PROFILE
5.
DATA ANALYSIS & INTERPRETATION
6.
FINDINGS
7.
SUGGESTIONS AND CONCLUSIONS
8.
ANNEXURES
9.
BIOLIOGRAPHY
EXECUTIVE SUMMARY
The performance appraisal system ideally is an organisation designed programme involving both
the organisation and the personnel to improve the capability of both. The elements of
performance management include: purpose, content, method,appraiser, frequency, and feedback.
The appraisal process involves determining and communicating to an employee how he or she is
performing the job and establishing a plan of improvement. The information provided by
performance appraisal is useful in three major areas: compensation, placement, and training and
development. Appraisal helps to improve performance by identifying the strengths and
weaknesses; it helps to identify those with a potential for greater responsibility; and assists in
deciding on an equitable compensation system. The methods of performance appraisal include
rating scale, critical incident, ranking methods, and management by objectives. Several common
errors have been identified in performance appraisal. Leniency occurs when ratings are grouped
at the positive 7end instead of being spread throughout the performance scale. The central
tendency occurs when all or most employees are ranked in the middle of the rating scale. The
halo effect occurs when a manager allows his or her general impression of an employee to
influence judgment of each separate item in the performance appraisal. A sound appraisal system
involves assessing employee performance on a regular basis. Performance appraisal can be done
by superiors who rate subordinates, subordinates who rate their superiors, and self-appraisal. A
suitable performance appraisal system has to be designed keeping in view the culture and
requirements of an organisation.
TYPES OF PERFORMANCE APPRAISAL
There are two types of performance appraisal systems which are normally used in organisations:
close ended appraisal system,
open ended appraisal system.
Performance appraisal has always been a hot and challenging issue for the managers across the
world, HR managers as well as the line managers. These caselets discuss some of the common
issues in designing and implementing a performance appraisal system. One of the caselets
discusses not just performance appraisal, but the broader issue of performance management. The
method of appraising using the balanced scorecard approach has been discussed in the last
caselet.
INTRODUCTION
Performance appraisal is a systematic evaluation of present potential capabilities of personnel
and employees by their superiors, superiors superior or a professional from outside. It is a
process of estimating or judging the value, excellent qualities or status of a person or thing. It is a
process of collecting, analysing, and evaluating data relative to job behaviour and results of
individuals. The appraisal system is organised on the principle of goals and management by
objectives. Management decisions on performance utilise several integrated inputs: goals and
plans, job evaluation, performance evaluation, and individual history. It connotes a two-
dimensional concept - at one end of the continuum lies the goals set by the authority, and at the
other end, the performance achieved by the individual or any given group.
Performance appraisal can be either formal or informal. Usage of former systems schedule
regular sessions in which to discuss an employees performance. Informal appraisals are
unplanned, often just chance statements made in passing about an employees performance. Most
organisations use a formal appraisal system. Some organisations use more than one appraisal
system for different types of employees or for different appraisal purposes. Organisations need to
measure employee performance to determine whether acceptable standards of performance are
being maintained. The six primary criteria on which the value of performance may be assessed
are: quality, quantity, timelineness, cost effectiveness, need for supervision, and interpersonal
impact. If appraisals indicate that employees are not performing at acceptable levels, steps can be
taken to simplify jobs, train, and motivate workers, or dismiss them, depending upon the reasons
for poor performance.
The results of appraisal are normally used to:
(1) estimate the overall effectiveness of employees in performing their jobs,
(2) identify strengths and weaknesses in job knowledge and skills,
(3)determine whether a subordinates responsibilities can be expanded,
(4) identify future training and development needs,
(5) review progress toward goals and objectives,
(6) determine readiness for promotion, and
(7) motivate and guide growth and development.
OBJECTIVES OF PERFORMANCE APPRAISAL
Performance appraisal plans are designed to meet the needs of the organisation and the
individual. It is increasingly viewed as central to good human resource management. This is
highlighted in Cummings classification of performance appraisal objectives. According to
Cummings and Schwab (1973), the objectives of performance appraisal schemes can be
categorised as either evaluative or developmental. The evaluative purpose have a historical
dimension and are concerned primarily with looking back at how employees have actually
performed over a given time period, compared with required standards of performance.
The developmental performance appraisal is concerned, for example, with the identification of
employees training and development needs, and the setting of new targets.
The broad objectives of performance appraisal are:
1. To help the employee to overcome his weaknesses and improve his strengths so as to enable
him to achieve the desired _performance.
2. To generate adequate feedback and guidance from the immediate superior to an employee
working under him.
3. To contribute to the growth and development of an employee through helping him in realistic
goal setting.
4. To provide inputs to system of rewards (comprising salary increments, transfers, promotions,
demotions or _terminations) and salary administration.
5. To help in creating a desirable culture and tradition in the organisation.
6. To help the organisation to identify employees for the purpose of motivating, training and
developing them.
7. To generate significant, relevant, free, and valid _information about employees.
In short, the performance appraisal of an organisation provides systematic judgments to backup
wage and salary administration; suggests needed changes in ones behaviour, attitudes, skills, or
job knowledge; and uses it as a base for coaching and counseling the individual by his superior.
Appraising employee performance is, thus, useful for compensation, placement, and training and
development purposes.
USES OF PERFORMANCE APPRAISAL
The appraisal systems do not operate in isolation; they generate data that can contribute to other
HRM systems - for example to succession planning and manpower planning.Some of the
common uses of appraisals include:
Determining appropriate salary increases and bonuses for workers based on performance
measure.
Determining promotions or transfers depending on the demonstration of employee
strengths and weaknesses.
Determining training needs and evaluation techniques by identifying areas of
weaknesses.
Promoting effective communication within organisations through the interchange of
dialogue between supervisors and subordinates.
Motivating employees by showing them where they stand, and establishing a data bank
on appraisal for rendering assistance in personnel decisions.
Organisations use performance appraisals for three purposes: administrative, employee
development, and programme assessment. Programme appraisal commonly serve an
administrative purpose by providing employers with a rationale for making many personnel
decisions, such as decisions relating to pay increases, promotions, demotions, terminations and
transfers. Valid performance appraisal data are essential to demonstrate that decisions are based
on job related performance criteria. An employees performance is often evaluated relative to
other employees for administrative purposes, but may be assessed in relation to an absolute
standard of performance. Performance appraisal for employee development purposes provides
feedback on an employees performance. The intent of such appraisals is to guide and motivate
employees to improve their performance and potential for advancement in the organisation.
Appraisal data can also be used for employee development purposes in helping to identify
specific training needs of individuals. Programme assessment requires the collection and storage
of performance appraisal data for a number of uses. The records can show how effective
recruiting, selection, and placement have been in supplying a qualified workforce. Performance
measures can be used to validate selection procedures and can also be used asbefore and
after measures to determine the success of training and development programmes. In brief, the
various uses of performance appraisal can be classified into two broad categories. One category
concerns the obtaining of evaluation data on employees for decision-making for various
personnel actions such as pay increases, promotions, transfers, discharges, and for selection test
validation. The other main use is for employee development including performance improvement
training, coaching, and counseling.
PLANNING THE APPRAISAL
A meaningful performance appraisal is a two-way process that benefits both the employee and
the manager. For employees, appraisal is the time to find out how the manager thinks they are
performing in the job. For a manager, a formal appraisal interview is a good time to find out how
employees think they are performing on the job. The planning appraisal strategy has to be done:
Before the appraisal
1. Establish key task areas and performance goals.
2. Set performance goals for each key task area.
3. Get the facts.
4. Schedule each appraisal interview well in advance.
During the appraisal
1 Encourage two-way communication.
2. Discuss and agree on performance goals for the future.
3. Think about how you can help the employee to achieve more at work.
4. Record notes of the interview.
5. End the interview on an upbeat note.
After the appraisal
1. Prepare a formal record of the interview.
2. Monitor performance.
APPROACHES TO PERFORMANCE APPRAISAL
George Odiorne has identified four basic approaches to performance appraisal.
Personality-based systems: In such systems the appraisal form consists of a list of personality
traits that presumably are significant in the jobs of the individuals being appraised. Such traits as
initiative, drive, intelligence, ingenuity, creativity, loyalty and trustworthiness appear on most
such lists.
Generalised descriptive systems: Similar to personality-based systems, they differ in the type of
descriptive term used. Often they include qualities or actions of presumably good managers:
organises, plans, controls, motivates others, delegates, communicates, makes things happen,
and so on. Such a system, like the personality-based system, might be useful if meticulous care
were taken to define the meaning of each term in respect to actual results.
Behavioural descriptive systems: Such systems feature detailed job analysis and job descriptions,
including specific statements of the actual behaviour required from successful employees.
Results-centred systems: These appraisal systems (sometime called work-centred or job-centred
systems) are directly job related. They require that manager and subordinate sit down at the start
of each work evaluation period and determine the work to be done in all areas of responsibility
and functions, and the specific standards of performance to be used in each area.When
introducing performance appraisal a job description in the form of a questionnaire has to be
preferred. A typical questionnaire addressed to an individual would cover the following points:
What is your job title?
To whom are you responsible?
Who is responsible to you?
What is the main purpose of your job?
To achieve that purpose what are your main areas of responsibility?
What is the size of your job in such terms of output or sales targets, number of items
processed, number of people managed, number of customers? What targets or standards
of performance have been assigned for your job? Are there any other ways in which it
would be possible to measure the effectiveness with which you carry out your job?
Is there any other information you can provide about your job?
Meaning of Research:
Research means a search for knowledge. Sometimes, it may refer to scientific and
systematic search pertinent information on a specific topic. Intact researcher is an art of scientific
investigation. Redman and Moray define researcher as a systematic efforts to gain new
knowledge. Some consider researcher is a movement from the known to the unknown. It is
actually a voyage of discovery. According to Clifford woody, researcher compromise, define
and redefining problem, formulating hypothesis or suggested solution; collecting ,organizing and
evaluating data; making deduction and reaching conclusion; and at last carefully testing the
conclusion to determine whether they fit the formulating hypothesis.
SAMPLING UNIT:
The area, which is taken for study, is Ashok Leyland, Ennore, Chennai.
SAMPLE SIZE:
Convenience sampling has been used to collect the data from the respondents. Convenience
sampling technique is followed.Convenience sampling as the name implies is based on the
convenience of the researcher who is to select the sample. This type of sampling is also called
accidental sampling as the respondents in the sampling are included in it merely on account of
that being available on the spot where the survey is in process.
Thus the researcher may stand at a certain prominent point and interview all those or
selected people who pass through that place.
Period of study
The study was conducted for 1 month at Ashok Leyland, and data was collected from
(16.06.2009 to 15.07.2009).
STASTISTICAL TOOLS
Percentage method
Weighted average
PERCENTAGE METHOD
In this method frequency of the various criteria factors are tabulated and the
percentage for each value with respect to the total is found out. They are presented pictorially
by way of graphs in order to have better understanding.
Total Respondent
WEIGHTED AVERAGE METHOD
Under this method the relative importance of the different items is not the same. The
term weights stands for relative importance of the different items. The formula for calculating
the weighted arithmetic mean is
X = WF
Where,
F = Frequency or no of respondents
1.Time is important limitation due to the time constraints only few employees is taken for the
study.
Respondents were asked to rank the various options according to their preference. (Rank
1 being most preferred and rank 6 being least preferred). Then scoring was given on the
basis of ranks. 1 mark was allotted to rank 1, 2 marks for rank 2 and so on.
From the above table it can be seen that employees expect Salary Administration and
Benefits to be the main reason for conducting a Performance Appraisal. Decision to
layoff is of least importance as per the appraisee.
2. Awareness about Responsibilities :
Awareness about
No Responsibilities
14%
Yes
86%
From the graph it can be seen that majority of employees are aware about their
responsibilities, which implies that the appraisers have efficiently communicated to the
appraisees all the parameters that will be taken into account during appraisal.
3. Satisfaction Level among appraise regarding Appraisal System :
Satisfaction Level
5% 2%
Fully Dissatisfied
23% 28%
Partially Dissatisfied
Satisfied
42%
Partially satisfied
Fully satisfied
From graph it can be seen that majority of the respondents are satisfied with the appraisal
system. Only a meager 30% were dissatisfied with the Performance Appraisal programs.
4. Awareness about performance ratings :
No
66%
This clearly shows that majority of the employees are not aware about the performance
ratings that are taken into account while conducting a performance appraisal.
5. Alowing Self ratings :
No
Self Rating Should be allowed
8%
Yes
92%
From graph it can be seen that majority of respondents want self rating to be a method of
conducting the appraisals .
6. Chance to rate your own performance
Yes
23%
No
77%
From the graph we can see that majority of the employees are not given a chance to rate
their own performance in the organization.
7. Timing of Appraisals
Timing of Appraisal
2% 3%
11%
Monthly
Quaterly
This shows that most of the organisations conduct their Performance Appraisal programs
annually. A very small percentage of the organisations conduct Performance Appraisals
on a half yearly basis. The share of the quarterly and monthly appraisals are extremely
minimal.
8. Credibility of Appraiser
Credibility of Appraiser
37%
Yes
63%
No
This shows that according to the employees/appraisees the credibility of the appraiser is
extremely important and it has an effect on the overall Performance appraisal program.
9. Complaint channel for employees
27%
Yes
73% No
This shows that there is no proper complaint channel existing in the organisations for the
employees who are dissatisfied with the performance appraisal system.
10. Standards communicated to employees
Standards Communicated to
Employees
36%
Yes
64%
No
From this it can be seen that there is a clear majority among the employees who say that
the standards on the basis of which the performance appraisal is carried out is not
communicated to the employees before hand.
11. Performance Appraisal
Performance Appraisal
0%
9% 0% Immediate
0%
Supervisor
Peer appraisal
Self Rating
Almost all the Performance Appraisals are carried our by the Immediate Supervisor in
these organisations. In very few organisations, Rating committees carry out the
performance appraisals. None of the organisations use Peer Appraisals, Appraisals by
subordinates and Self rating as a method of Performance Appraisal.
12. Clear understanding of Appraisees job
Clear understanding of
Appraisee's Job
23%
Yes
77% No
This shows that the performance Appraisal programs are successful in giving a clear
understanding of the appraisees job to both appraiser and appraisee.
13. Objectives of Appraisal System
50% 50%
Yes
No
From the figure we can derive that the objective for conducting the Appraisal system is
clear only to half of the employees. The remaining half are not clear about the objective
for which the Performance Appraisal is carried out.
14. Good communication between top management and business goals
Good communication
between Top management
and Business goal
22%
Yes
78% No
This shows that the appraisal systems do not provide a good communication flow of the
top-management plans and business goals to the staff below.
15. Comments and suggestions to be considered
Yes
No
98%
Almost all the employees expect that their comments and suggestions should be taken
into consideration while conducting the Performance Appraisal.
16. Post Appraisal interview
30%
Yes
70% No
As per the response from the employees we can see that there is no interview conducted
after the appraisal program for majority of the employees.
Appraiser Survey
1. Purpose of Appraisal
Assistance in goal 72
Decision on layoff 42
Respondents were asked to rank the various options according to their preference. (Rank
1 being most preferred and rank 6 being least preferred). Then scoring was done on basis
of these ranks. 1 mark was allotted to rank 1, 2 marks for rank 2 and so on. Then the total
score for each purpose was calculated and overall ranking was given.
Particular Score Overall Rank
Determination of promotion or transfer 24 1
Salary Administration and Benefits 27 2
Decision to layoff 42 3
Guideline for training plan 69 4
Assistance in goal 72 5
An insight into your strengths and weakness 81 6
Appraisal System
0% 0%
13% 1
27%
2
3
60% 4
5
In this question appraiser was asked to rate how helpful the appraisal system is, from the
graph it can be seen that majority of appraisers have rated 5,4 & 3 which implies that
Performance Appraisal system is very helpful in Planning their work. Also most of the
appraisers are satisfied with the appraisal system.
3. Support from subordinate
Yes
No
100%
This question was asked to find out how helpful appraisal system is in communicating the
support that apprasier needs from appraisee. From results it is seen that the performance
appraisal system is very helpful in communicating the support and help needed by the
appraiser from the appraisee.
4. Type of Appraisal System
13%
MBO
73% BARS
360 degree
feedback
From results its clear that majority of companies prefer to use 360 degree feedback
system for Performance Appraisal. As 360 degree feedback gives feedback of appraisee
from everyone interacting with him, it is more reliable and hence most preferred.
5. Performance Appraisal criteria
Performance Appraisal
criteria
Quantitative
20% 20% outcome criteria
Qualitative process
criteria
60%
Quantitative
process criteria
From results we can see that Qualitative Process is considered as the most important
criteria for which the Performance appraisal programs are carried out, which shows that
companies consider Qualitiy of product & service and Customer satisfaction as most
important factors.
6. Timing of Appraisals
Timing of Appraisal
0%
0% 0%
13% Annual
Quaterly
Half Yearly
87% Monthly
Anytime
From graphs we can see that most of companies conduct appraisals on annual basis.
Some companies conduct quaterly also.
7. Effect of poor Appraisal System
It can be seen from results that most of the employees get De-motivated because of a
poorly conducted appraisal. To some extent employees dont coordinate with their team
members. Thus resulting in reduction of output.
8. Communication between top management and staff
Good Communication
between Top Management
and Staff
0%
Yes
100% No
All appraisers totally agree that performance appraisal helps in communicating the top
management plans and business goals to staff at lower level.
9. Insight to Apprasiees strength and weakness
33%
Yes
67%
No
It is evident from the results that performance appraisal system doesnt help the appraiser
in understanding strength and weakness of apraisee.
10. Appraisees comment and suggestion
Yes
87% No
From the results it can be seen that appraisees comments and suggestion are not taken
into consideration before Performance Appraisal. Performance Appraisal system is
designed by appraiser without consulting appraisee.
11. Performance Appraisal
Performance Appraisal
0%
0% Immediate
supervisor
Peer appraisal
Self-rating
It is evident from the results that performance appraisal is conducted by the Immediate
Supervisor in all the companies.
Understanding of Appraisee's
Job
0%
Yes
No
100%
From this it is clearly seen that according to appraiser there is a clear and joint
understanding of the appraisees job.
13. Standards for Performance Appraisal
Yes
87% No
From results it is evident that Performance appraisal standards are very well
communicated to Appraisee before the Appraisal is carried out.
14. Self rating in Performance Appraisal
Yes
No
100%
From results it can be clearly seen that the Appraisee is not given a chance to rate his own
performance.
\
15. Action after Performance Appraisal
Yes
No
100%
This shows that most of the companies act upon the results of their Performance Appraisal
program.
Findings
.has separate appraisal system for each level of employees. These appraisal
systems differ on the factors on which a person is rated and the nature of duties
handled by him.
it is seen that the employees are not satisfied with the way they are
appraised or they havent been appraised properly. For this matter, almost all the
companies have interview and discussion.
The frequency of appraisal in all organisations is yearly. Where appraisal is based on
Key Result Areas, a mid-term review is also undertaken. This data is then compiled
and the final appraisal is conducted at the end of the year.
In most of the cases the immediate supervisors is the appraiser but sometimes it is
also the HR department or the HOD.
All organizations have goal setting as part of appraisal. The performance is evaluated
against these targets.
On an average 85% of the employees in an organization are motivated by
performance appraisal.
.use the data that is maintained for every employee to compare the
performance over a period of time. Some companies also use this data for making
decision regarding job rotation, succession planning. Very few companies make use
of this data for retrenchment as proof of poor performance.
A good deal of respondents felt that appraisal is likely to be more successful when it
is linked with financial and semi-financial incentives like promotion, bonus,
increments. This increases the commitment from the parties concerned the appraisal
and the appraisee.
360o degree feedback system is not very popular in the Indian companies. Among the
companies under study, this system has been implemented in .. This system
can be adopted and is successful only in the presence of an open organisational
climate.
Most of the companies have a separate appraisal system for the new employees, who
are on probation. This basically to confirm them.
.. is satisfied with the current performance appraisal system and do not
require any changesthey would like to provide more training to appraisers,
weightage to few traits of employee need to be rewarded, if possible appraisal form
should be standardised.
In most of the organizations training is provided for the appraisal system one to two
weeks before the appraisal and also when new or revised Performance appraisal
system is introduced.
Performance appraisal is surly a good indicator (about 80%) for the training and
developmental need of the employees.
No monitoring is done to find out any loop holes in the performance appraisal system
and if it exists, it is on informal basis (feedback every year).
Awareness sessions about the performance appraisal (objectives and importance) are
conducted. It is normally done for new employees.
Conclusions and Suggestions
Performance appraisal should not be perceived just as a regular activity but its
importance should be recognized and communicated down the line to all the
employees.
There should be a review of job analysis, job design and work environment based on
the performance appraisal.
It should bring more clarity to the goal and vision of the organisation.
It should provide more empowerment to the employees.
New methods of appraisal should be adopted so that both appraiser and the appraisee
take interest in the appraisal process.
The employees who have excellent performance should be used as a mentor for other
employees which would motivate others to perform better.
Employees should be given feedback regarding their appraisal. This will help them to
improve on their weak areas.
Financial and non-financial incentives should be linked to the annual appraisal system
so that employees would be motivated to perform better.
New mechanisms should be evolved to educe the time factor involved in the
procedure of appraisal. Introducing online-appraisal can do this.
The frequency of training program for the appraiser should be increased and these
sessions should be made interactive.
The awareness sessions for the employees/appraisees should be made more
interactive and the views and opinion of the appraisees regarding appraisal should be
given due consideration.
Assistance should be sought from specialists for framing a proper appraisal system
that suits the organisation climate. Constant monitoring of the appraisal system
should be done through discussions, suggestions, interactions.
Combining the different methods of appraisal can minimize the element of biasness in
an appraisal. Like the Rating method combined with assessment center method would
give an evidence of poor/unfavorable or outstanding behaviour of the appraisee, if
any.
Use of modern appraisal techniques like 360o appraisal, assessment centers which are
more effective.
More transparency should be brought about in the appraisal system.
The appraisal system should cover all employees in the organisation both white collar
and blue-collar jobs.
Recognizing the good performers i.e., appraisees who have accomplished the targets
for the year can help in getting more commitment from the employees.
Information regarding the performance of the employees should be kept in proper
manner.
Some of the performance appraisals should be conducted by the top management so
that they can understand the employees and their needs, behaviour better and to find
out the loopholes.
Performance appraisal should be effectively link to the performance management
system of the organisation.
.still follow the traditional methods of appraisal that should be
transformed into the modern one.
Questions for Appraisee
(Rank the options from 1 to 6; 1 being most preferred & 6 being least
preferred)
Detail Rank
Decision on layoff
Assistance in goal
1 2 3 4 5
(1 = Least satisfied; 5 = Most satisfied)
7. Timing of Appraisals
a. Monthly
b. Quarterly
c. Half Yearly
d. Annual
e. Anytime
9. Is there a complaint channel for the employees who are dissatisfied with the
performance appraisal system?
a. Yes b. No
10. Are the standards on the basis of which the performance appraisal is carried
out communicated to the employees before hand?
a. Yes b. No
14. Does the appraisal system provide a good communication between the top-
management plans and business goals to staff below?
a. Yes b. No
15. Do you want your comments and suggestions to be taken into consideration
during appraisal?
a. Yes b. No
(Rank the options from 1 to 6; 1 being main purpose & 6 being last
purpose)
Detail Rank
Decision on layoff
Assistance in goal
3. Does the system provide you a chance to communicate the support you
need from your subordinate to perform the job well.
a. Yes b. No
4. Which appraisal system is being employed in the company?
a. Assessment centre
b. MBO
c. BARS
d. 360 degree feedback
e. Balance scorecard
5. Performance Appraisal criteria
a. Quantitative outcome criteria (Sales volume, Sales price, Productivity,
Goal accomplishment rate)
b. Qualitative process criteria (Quality of product or service, Customer
satisfaction)
c. Quantitative process criteria (Efficiency, Cost/expenses, Attendance)
d. Qualitative process criteria (Judgment, Work attitude, Leadership,
Conduct /Trait)
6. Timing of Appraisals
a. Monthly
b. Quarterly
c. Half Yearly
d. Annual
e. Anytime
a. De-motivation
b. Retention
c. Ineffective teamwork
8. Does the appraisal system provide a good communication between the top-
management plans and business goals to staff below?
a. Yes b. No
a. Yes b. No
13. Are the standards on the basis of which the performance appraisal is carried
out communicated to the employees before hand?
a. Yes b. No
14. Do you give an opportunity to the appraisee to rate his own performance?
a. Yes b. No
15. Do you act upon the results of your performance appraisal?
a. Yes b. No
16. If yes, then mention the remedial measures taken?
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