A

PROJECT REPORT ON
PERFORMANCE MANAGEMENT
(SUBMITTED IN THE PARTIAL FULFILLMENT FOR THE
DEGREE OF BACHELOR OF BUSINESS ADMINISTRATION)

Submitted By:
Adesh Kumar
BBA III Year
University Roll No-5170960001

Himachal Pradesh University, Shimla

Thakur Jagdev Chand Memorial Govt. Degree College
Sujanpur Tihra, (H.P.)

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 DECLARTION
I hereby declare that the entire work embodied in the project
report entitled PERFORMANCE MANAGEMENT hasbeen carried out
by me under the supervision and guidance of Mrs. Aarti Thakur in
the partial fulfillment for the degree of BBA (BACHELOR OF
BUSINESS ADMINISTRATION). I further declare that I am solely
responsible for omission and error if any.

Adesh Kumar
BBA III Year
5170960001

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 Certificate
This is to certified that project entitled
“PERFORMANCE MANAGEMENT”
is an academic work done by Mr. Adesh Kumar submitted in the
partial fulfillment of requirement for the award of the Degree
BBA (Bachelor of Business Administration) from
Thakur Jagdev Chand Memorial Govt. Degree College,
Sujanpur Tihra, H.P. (H P U Shimla)
It has been completed under the Guidance of
Ms. Rubi Rajput (Faculty Guide).

Ms. Rubi Rajput Mr. Adesh Kumar

(Faculty Teacher)
BBA III Year
TJCM Govt. College
Sujanpur Tihra (H.P.) 5170960001

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 ACKNOWLEDGEMENT
Primarily I would thank God for being able to complete this project with
success. Then I would like to thank Mrs. Aarti Thakur, Mrs. Rubi Rana
and Mrs. Himani Sood , whose valuable guidance has been the ones that
helped me patch this project and make it full proof success their
suggestions and their instructions has served as the major contributor
towards the completion of the project.
Then I would like to thank my parents and friends who have helped me
with their valuable suggestions and guidance has been helpful in various
phases of the completion of the project.
Last but not the least, I would like to thank my classmates who have
helped me a lot.

Adesh Kumar
BBA III Year
5170960001

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 EXECUTIVE SUMMARY
Managing human resources in today’s dynamic environment is
becoming more and more complex as well as important. Recognition of
people as a valuable resource in the organization has led to increase
trends in employee maintenance, job security, etc. My research project
deals with Performance Management. In this project report, I have
studied about the performance of the employees.

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 INDEX

INTRODUCTION 07
PERFORMANCE MANAGEMENT 08
PERFORMANCE APPRAISAL 12
REWARD SYSTEM AND PERFORMANCE MANAGEMENT 21
INTERNATIONAL ASPECTS OF PERFORMAMCE MANAGEMENT 26
ETHICS IN PERFORMANCE MANAGEMENT 28
CONCLUSION 32
QUESTIONNAIRE 34
BIBLIOGRAPHY 36

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PERFORMANCE
MANAGEMENT

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 INTRODUCTION TO HUMAN RESOURCE MANAGEMENT

Human resource management (HRM or HR) is the strategic approach to

the effective management of people in a company or organization such
that they help their business gain a competitive advantage. It is designed
to maximize employee performance in service of an employer's strategic
objectives.

NEED OF HUMAN RESOURCE MANAGEMENT

1. Improvement in industrial relation

2. Organizational communication
3. Coping with the environmentalchanges
4. Role clarity
5. Facilitates changes

SCOPE/ AREAS OF HUMAN RESOURCE MANAGEMENT

1. Human resource planning

2. Recruitment and selection
3. Training and development
4. Organizational development
5. Career development
6. Job design

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WHAT IS PERFORMANCEMANAGEMENT
Performance management is a continuous process of identifying,
measuring, and developing the performance of individuals and teams
and aligning performance with the strategic goals of the organization.

OBJECTIVES OF PERFORMANCE MANAGEMENT

1. Engaging employees
2. Decision making
3. Knowledge & skills development
4. Transparent communication
5. Improves organizational performance

PRINCIPLES OFPERFORMANCE MANAGEMENT

1. Be honest and open

2. Good relationship
3. Make goals interesting & challenging
4. Give praise
5. Employee recognition
6. Motivate
7. Regular feedback

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 PROCESS OF PERFORMANCEMANAGEMENT

PLANNIN
G

CAREER
DEVELOPME ASSESSME
NT
NT

RECOGNITI
ON

1. PLANNING:
Planning means thinking in advance about the performance required
from the employee. The planning stage of the performance
management process is meant to set achievement goals for the
employee and discuss the expected level of performance for the job.

2. ASSESSMENT:
Assessment include a review of the previous years’ evaluation and an
assessment of skills. The assessment is an annual evaluation of the
employees’ performance. It requires feedback from co-workers and
clients and observations by management.

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3. Recognition:
The third step of performance management process is about recognizing
the employee’s accomplishments as well as any areas that need
improvement. During this process, the manager and the employee
should discuss ways to make improvements.

4. CAREER DEVELOPMENT:
This phase of the process is to promote and encourage future
improvements and development of the employee. It should meet the
needs of the business or organization, enhance the strengths of the
employee and work to eliminate areas of weakness. This process
requires both on the job and off the job training.

DISADVANTAGES OF POOR PERFORMANCE

MANAGEMENT:

1. Employee morale may drop

2. Employee become demotivated
3. Resources- including time and money are wasted
4. legal risk increases
5. creates communication gaps

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 CHALLENGES OF PERFORMANCE MANAGEMENT

1. Need competencies in a performance management system:

Competence is necessary in the performance management system to
ensure smooth implementation of the system.

2. Need to align employees with organizational objectivesand

strategy:
The performance management system must be integrated with the
strategic planning and human resource management system as well as
with the organizational culture, structure and all other major
organizational systems and processes.

3. Leadership and Managementcommitment:

The leadership and management challenge have a huge impact on
integrating and aligning a management system. The commitment and
understanding of leadership and management of the requirements for
achieving a workable performance system is critical to performance
success.

4. MANAGING OF THE PERFORMANCE SYSTEM:

Managing a performance system in an organization requires a
disciplined framework. It requires the organization to work off one
master plan broken down into relevant parts and areas of responsibility.

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PERFORMANCE APPRAISAL

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ROLE OF PEFORMANCE APPRAISAL IN PERFORMANCE
MANAGEMENT
Performance appraisal is the most important constituent of
performance management. Performance appraisal is how you evaluate
the progress being made by assessing or measuring the employee’s
actual performance on a regular basis over time.

PERFORMANCE APPRAISAL:
A performance appraisal is a regular review of an employee’s job
performance and overall contribution to a company. It is also known as
annual review. It evaluates an employee’s skills, achievements and
growth or lack thereof.

CHARACTERISTICS:
1. Systematic process
2. Description of an employees
3. Continuous process
4. Human oriented
5. Formal and Informal
6. Employee development
7. Motivation
8. Maintaining cordial relationship.

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PROCESS OF PERFORMANCE APPRAISAL:

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1. SETTING PERFORMANCE STANDARDS:
Job description may be used to set up goals and targets and standards of
performance. While evaluating performance it should be ensured that
the standard is reliable, sensitive, relevant, and practical.

2. COMMUNICATING THE STANDARDS:

The performance standards set in the first step should be
communicated to the employees, so that the employees know what is
expected from them.

3. MEASURING PERFORMANCE:
The next step in the process of performance appraisal is to measure
the actual performance of the employees at work
.
4. COMPARING THE ACTUAL WITH STANDARDS:
The actual performance of the employees is compared with the fixed
standard. Comparison reveals deviations in the performance of the
employees.

5. DISCUSSING THE APPRAISAL:

Periodically, the assessment reports are discussed with the concerned
employer, for helping the employees to improve their performance

6. TAKING CORRECTIVE ACTION: Performance appraisal process is

useful only if corrective action is taken based on the reports.
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LIMITATIONS:
1. Errors in rating
2. Lack of reliability
3. Negative approach
4. Time consuming
5. Lack of knowledge

METHODS OF PERFORMANCE APPRAISAL:

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TRADITIONAL METHODS:
Traditional methods are also known as trait methods. Trait approaches
to performance appraisal are designed to measure the extend to which
an employee possesses certain characteristics such as dependability,
creativity, initiative, and leadership that are viewed as important and
desirable for the job and the organization in general. Some of these
methods are as follows:

1. Ranking Method:
It is the oldest and simplest method of performance appraisal in
which employees is compared with all others for the purpose of placing
order of worth. The employees are ranked from highest to the lowest.

2. Paired comparison:
In this method, each employee is compared with other employees on
one on one basis, usually based on one trait only. The rater is provided
with a bunch of slips each coining pair of names, the rater puts a tick
mark against the employees whom he insiders the better of the two.

3. Grading Method:
In this method, certain categories of worth are established in advance
and carefully defined. There can be three categories established for
employees: outstanding, satisfactory and unsatisfactory. There can be
more three grades. Employees performance is compared with grade
definitions.

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4. Forced distribution Method:
This method was evolved by Tiffin to eliminate the central tendency
of rating most of the employees at a higher end of the scale. The
method assumes that employees’ performance level confirms to a
normal statistical distribution i.e. 10,20,40,20 and 10 per cent. This is
useful for rating many employees’ job performance and promo ability.

5. Check-list Method:
The basic purpose of utilizing check-list method is to ease the
evaluation burden upon the rater. In this method, a series of statements
i.e., questions with their answer in yes or no are prepared by the H.R
department. The checklist is, then, presented to the rater to tick
appropriate answers relevant to the appraisee.

6. Essay method:
In this method, the rater writes a narrative description on an
employee’s strengths, weaknesses, past performance, potential, and
suggestions for improvements. Its positive point is that it is simple in
use.

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MODERN METHODS:
These are as follows:

1. Management by objectives:
It was first popularized by Peter Drucker in his 1954 book The Practice
of Management. Management by objectives (MBO) is a strategic
management model that aims to improve the performance of an
organization by clearly defining objectives that are agreed to by both
management and employees. According to the theory, having a say in
goal setting and action plans encourages participation and commitment
among employees, as well as aligning objectives across the organization.

2. 360- Degree appraisal:

A 360-degree appraisal is a type of employee performance review in
which subordinates, co-workers, and managers all anonymously rate the
employee. This information is then incorporated into that person's
performance review.

3. Cost accounting method:

Cost accounting method of performance appraisal is the process of
evaluating monetary benefits yield to the organization from the job
performance of an employee. In other words, this method is used to

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analyze the cost of keeping the employee and the benefits the company
derives from his/her presence or absence.

4. Assessment Centers:
An assessment center 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.

5. Behaviorally anchored rating scales (BARS):

Behaviorally anchored rating scales (BARS) are scales used to rate
performance of the employees. It is an appraisal method that aims to
combine the benefits of narratives, critical incidents, and quantified
ratings by anchoring a quantified scale with specific narrative examples
of good, moderate, and poor performance.

DEVELOPING AN EFFECTIVE PERFORMANCE APPRAISAL PROGRAMME

 Mutual trust and confidence

 Reliability
 Specific objectives
 Standardization
 Training of the appraiser
 Feedback
 Individual differences
 Review andappeal
 Job relatedness
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REWARD SYSTEM IN
PERFORMANCE
MANAGEMENT

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ROLE OF REWARD SYSTEM IN PERFORMANCE MANAGEMENT:
Today organizations are showing a high degree of commitment towards
reinforcement of reward practices which are aligned with other HR
practices and the goals of the organization for attracting, retaining and
motivating employees. Efficient reward practices help in attracting result
driven professionals who can thrive and succeed in performance-based
environments. Hence, it is a crucial motivator and may contribute
towards the enhancement of the productivity of the employees if
implemented properly.

OBJECTIVES OF REWARD MANAGEMENT:

 It aims to develop skills and personality of employees by which

they can earn better and attractive compensation
 It aims to improve the quality of services as rendered by
employees
 It aims to motivate employees towards higher work performance
 It aims to make better employer employee relations
 It aims to provide employees social recognition and status
 It aims to reinforce desirable and applicable employee behavior

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 COMPONENTS OF REWARD SYSTEM:

 FINANCIAL REWARDS:
Employees receive financial payment from employers in the form of a
salary or commission. This payment is expected as a result of the work
the individual was hired to complete. In addition to regular
compensation, financial rewards are monetary incentives that an
employee earns as a result of good performance. These rewards are
aligned with organizational goals. When an employee helps an
organization in the achievement of its goals, a reward often follows. All
financial rewards are extrinsic. Extrinsic motivation is based on tangible
rewards, such as pay raises, bonuses, and paid time off.

 NON-FINANCIAL REWARDS:

Non-monetary recognition can be very motivating, helping to

build feelings of confidence and satisfaction. Rewards as an
incentive to motivate and influence employee performance,
as well as to meet the financial and productivity objectives of
the company. Companies with excellent non- financial
rewards can attract, motivate and retain talented people.

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RELATIONSHIP OF PERFORMANCE MANAGEMENT
AND REWARD SYSTEM:
In any organization the main purpose behind rewarding employees is to
motivate them, retaining them to the company and reducing the
turnover costing. Employees are the most important valuable possession
of the company and it is very important to continuously encourage them
for their contribution to the organization. These reward systems are
mainly been introduced into the company’s environment to give a
recognition and encouragement to the committed employee of the
company for his extraordinary performance in the company by this
Staffs understand what they are expected to do.
A healthy pay for performance strategy should incorporate the following
components as is provided in the table given below:

CATEGORY PERFORMANCE BASIS FOR REWARDS

MEASURES
Corporate leaders BSC, shareholders Employee stock
return and EVA ownership and profit
sharing
Business unit leaders Profitability of the Results Sharing
unit
Functional leaders Level of contribution Milestone awards
towards the corporate
goals
General Employees Specific KRS’s Profit/ gain sharing,
achieved measured bonuses
periodically

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BENEFITS OF PERFORMANCE BASED REWARDS:

 Clearer goal alignment

 Focused development
 Career planning
 Increased employee engagement
 Increased motivation
 Improved retention
 Greater cost savings

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INTERNATIONAL ASPECTS
OF PERFORMANCE
MANAGEMENT

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INTERNATIONAL ASPECTS OF PERFORMANCE MANAGEMENT:
International performance management is the evaluation of an
individual who works in a foreign subsidiary on a temporary basis to
transfer knowledge or develop global leadership skills. At its best,
international performance management should feed into the global
goals of the business.

CHALLENGES OF INTERNATIONAL PERFORMANCE

MANAGEMENT:
 Environmental variations
 Uniformity of data of performance
 Standard format versus customized format
 Time and distance variations
 Varied levels of maturity
 Rater’s competence
 Rater bias

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ETHICS IN PERFORMANCE
MANAGEMENT

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ETHICS IN PERFORMANCEMANAGEMENT:
Ethics plays a vital role in effective performance management system. It
should be the cornerstone of performance management. The overall
objective of high ethical performance management should be to provide
an honest assessment of the performance and mutually develop a plan
to improve the ratee's effectiveness. Ethics is the backbone of an
organization and all its activities Ethical performance management is
defined as the 'process of planning, managing, appraising, and
monitoring employee performance based on the principles of fairness,
objectivity, transparency and good corporate governance.

OBJECTIVE OF ETHICAL PERFORMANCE MANAGEMENT:

The overall objective of high ethical performance management should
be to provide an honest assessment of the performance and mutually
develop a plan to improve the ratee's effectiveness Every employee
desire to be such himself and to work for an organization that is fair and
ethical in its practices.

PRINCIPLES OF ETHICAL PERFORMANCE MANAGEMENT:

 Transparency
 Mutual respect
 Fair procedures
 Employee development
 Employee empowerment
 Congenial work environment
 Integration between diverse and changing external and internal
stakeholders

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FEATURES OF ETHICAL PERFORMANCE MANAGEMENT:
THESE ARE AS FOLLOWS:
 Clarity of organizational goals
 Evaluation
 Cooperation but not control
 Self-management teams
 Leadership development
 System offeedback

ETHICAL ISSUES IN PERFORMANCE MANAGEMENT:

There is nothing kind of law which supports an organization to comment
on the performance of its members, just as no law requires a company
to produce annual budgets or provide good customer service If a
company decided to have a performance appraisal system,

The system must follow the all necessarylaws. In the eyes of the law, a
performance appraisal is a kind of employment test for the employee. It
is thus compiled in such a manner that like that of other standards of
the employment process

The legal terms and requirements for performance appraisal systems

are similar to any other selection-based tests.

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But there are several other kinds of ethical issues related to
performance appraisal system which majorly or majorly can impact on
organization directly or indirectly in the short or long run.

The performance Appraisals must not be used to discriminate

employees on the premise of race, religion, age, sex, inability, conjugal
status, pregnancy, or sexual inclination.

All appraisal records should be kept and maintained by the organization,

especially in case of poor performance. The records will be helping to
handle any legal issues in respect of poor performer. Likewise, employee
believes that they have been dealt with unfairly, they may have rights to
instigate legal action years later, in such case, the records retention
would help to protect employer.
The performance appraisal system should not mealy used for
promotion, transfer, increment, demotion etc. rather this tool should be
used to optimize the performance of an employee and plan his career
and learning prospects for future performance and growth.
Performance appraisal results will be as fair, accurate and supported by
all evidence
Appraisals should avoid inflammatory and emotive harass, improper
language.
Appraisal results should be treated as private and confidential
information. Record storage should be secure and controlled

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CONCLUSION

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 CONCLUSION ANDSUGGESTIONS
After analyzing the data, it was observed that the performance
management is an effective tool in an organization. It is a continuous
process. Performance management help individuals to develop, improve
organizational performance and feed into business planning.
Performance management enable management in monitoring of
standards, agreeing expectations and objectives and delegation of
responsibilities and tasks.
FINDINGS: -
 The very important concept of performance management is
marked throughout the organization; people have accepted it and
understood its importance to the organization.
 It is a very crucial for the success of the organization.
 Without performance management the employees will not be able
to achieve their career and organizational goals.

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 QUESTIONNAIRE

Q1. Do you think Performance Management System is crucial in

the organization?
a. Yes
b. No

Q2. Do you think all the factors facilitating and hindering

performance are taken into consideration while appraising the
performance?
a. Yes
b. No

Q3. Goals set for Performance Evaluation are mutually decided

goals?
a. Yes
b. No

Q4. Do you think Performance Management System helps people

set and achieve meaningful goals?
a. Yes
b. No

Q5. Does performance of employees improve due to current

Performance Management System?
a. Yes
b. No

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Q6. Do the PMS implemented in the organization create a
participative environment?
a. Yes
b. No

Q7. Does the promotions are strictly based on Performance

Management System?
a. Yes
b. No

Q8. Do you think your leadership and interpersonal skills are

developed due to Performance Management System?
a. Yes
b. No

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 BIBLIOGRAPHY
The content for this project report has been taken from the following
sources:
Site referred: -

 www.Wikipedia.org
 www.scribd.com
 www.hrguide.com
 www.toppr.com
 www.quora.com

Book referred: -
 Performance and Compensation Management
By: - Meenu Gupta and Harsimran Kaur

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THANK YOU

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