Impact of performance appraisal system on productivity of Employees of Sonalika.
SUBMITTED BY (Sunny kumar) 8NBJL011
SUBMITTED TO Mrs. Vibha
MANAGEMENT THESIS ON
Impact of performance appraisal system on productivity of employees of ITL.
By Sunny kumar 8nbjl011 Under the guidance of Ms. Vibha (Faculty Supervisor) A report submitted in partial fulfillment of the requirement of THE MBA PROGRAM
(The class of 2008-2010)
CHAPTER NO. 1. 2. 3. TOPIC ACHNOWLEDGEMENT EXECUTIVE SUMMARY INTRODUCTION TO THE PAGE NO. 4 5 6
4. 5. 6. 7.
INDUSTRY OBJECTIVE PERFORMANCE APPRAISAL METHODS PERFORMANCE APPRAISAL SYSTEM ON ITL RESEARCH METHODOLOGY SIGNIFICANCE OF STUDY DATA ANALYSIS LIMITATION INTERPERTATION FINDINGS RECOMMENDATIONS QUESTIONNAIRE BIBLIOGRAPHY
7 10 11-16 17-24
8. 9. 10. 11. 12. 13. 14. 15. 16.
25 26-28 29-33 34 35-46
Education becomes more meaningful when its theoretical aspects are combined with practical experience. This provides an opportunity to the students to improve their understanding of the studies. MBA is a course, which combines both its theory and application as its content of study in the field of management as a part of this course, every aspirant has to
In this project I am doing research on the basis of these variables like : The employees are satisfied with these appraisal. I am very thankful to my HR faculty Ms. In order to use the theoretical knowledge I have done Dissertation on the concept of Performance appraisal & its impact on the productivity of employees. The purpose of this Dissertation is to expose the students or management sciences to real business situation and to use theoretical knowledge into practical experience.
.submit a Dissertation.
My research is based on manufacturing company as I am taking these company to find out the impact of performance appraisal on productivity . Vibha. appraisal increase productivity or not.
After that my further plan is to visit their organization meeting employee.
Established in 1969. other products include of multi utility vehicles. An average growth of 30% makes it one of the fastest growing corporate in India. Group has strength of about 2000 employees & technocrats. filling questionnaire to find out the response of the employee about the performance appraisal. Sonalika is the one of the top 3 tractor manufacturing companies in India. engines and various farm equipments. Today the group stands tall with an approximate turnover of 3200 crores INR.For such I am collecting knowledge of company through internet and by visiting their company. It is also one of the few debt free companies. spread in acres. History reveals that innovation is the key to continue progress and when applied to technology that touches human life. With unique initiatives like the thought leadership
. located at Hoshiarpur and tax free zone at Amb in Himachal Pradesh. Till this time I framed questionnaire to do my research. Sonalika has state of manufacturing. hard earned. it can unfold a whole new economic phenomenon that has the power to change the world. Sonalika group from the very beginning has tried to understand customer need so that they get better value for their money.
The technology for painting. a business conglomerate having prime interest in agricultural & auto machinery goes back to nearly 5 decades. The corporate philosophy embedded in trust. Ford Farmers
The success saga of Sonalika group.
Sonalika is the fastest growing tractor company registering growth over growth since its inception has crossed 1.forum. quality and commitment has helped the group to carve out a niche for itself in the highly competitive world of machinery. is of the high Quality and they have a paint shop with world class quality standards.80 lakh merely in 10 years & has attained one of the positions in top three in India. No doubt that the Sonalika Products has created a niche for themselves not only in India but also in foreign market.
M&M-Punjab Tractors. which they use. it has been able to create a unique platform for learning through success stories of industry leaders. To maintain quality have any detect even at Micro level is been taken care of and rectified. Escorts.
Pic: (From left) Managing Director Mr.D.S. Mittal of Sonalika Group
To become the world’s leading company for agricultural machinery and a major player in automotive products and services. Deepak Mittal. Chairman L. Ensuring quality and quick responsiveness of customer services.
. Continuously maintaining competitive edge by developing innovative new products and services. To grow at faster rate through backward / forward integration and venturing into new opportunities. Mittal and ViceChairman A.
• • Tractor Division Engine Division
International Cars and Motors Ltd. • • Power train – 2L CRDFi Engine /Transmission and MUV manufacturing
. • Agricultural Machinery
International Tractors Limited.
1.We Are A Global Family With A Proud Heritage Passionately Committed To Development Of Agricultural Mechanization And Providing Personal Mobility For People Around The World. We anticipate consumer’s Need and Deliver outstanding Products and Services that Improve people’s lives. Group Companies:
Sonalika Agro Industries Corporation.
All this makes ITL
. ITL is manufacturing various tractors of Sonalika Brand between 30-90 HP range in 2WD and 4WD version.
• Non Banking Financing Company
2). History of the Group Companies
2. The tractors manufactured by ITL have secured a reputation of performance. 1995 for manufacturing of tractors and has since then built a distinct position for itself in the Tractor Industry. International Autotrac Finance Ltd. minimum fuel consumption and low emission. The installed capacity is about 80. 1) International Tractors Limited
International Tractors Limited was incorporated on October 17. quality and reliability in the market because of their maximum pulling power.000 tractors per annum.
farm machines & automobiles. Canada. The company has manufactured MUV with the name of Rhino RX & the same MUV boasts of rover engines.3) Sonalika Agro Industies Corporation
. L. UK. Zambia.one of the top 3 tractor manufacturer in India. Himachal Pradesh. Chairman. These tractors are also exported to various countries including South Africa. Managing Director. to manufacture multi-utility vehicles / sports utility vehicles. who is having a vast experience in manufacturing of tractors. The company is having its state-of-the-art production facility.
2. dust & pollution free environment. The company is in-process of developing its own common rail direct injection (CRDI) engines. Vice Chairman & Mr. The company has entered into technical collaboration agreement with mg rover of UK. Mr. The company is a ‘mother unit’ as its establishment shall attract many other ancillary & small units for meeting the raw material requirements yielding manifold employment avenues.
2.S. revenue & industrialization in the state. Zimbabwe. Mittal. Bangladesh. in Amb. Senegal. is a group company of the Rs 1200 Crores Sonalika group. ICML is a project of its kind and is the ‘pride of Himachal Pradesh’. Algeria. etc. with the technical know – how from MG Rover. The company is promoted by Mr. Mittal. Australia. Gana.2) International Cars and Motors Limited International Cars & Motors limited (ICML). Sri Lanka.D. Deepak Mittal. A. with centrally air-conditioned.
In the light of the company's mission. Current Status
2. Sonalika agro Industries Corporation. the company is supporting the farmers with world class farming equipment to ease the process of making the green revolution ii.
3). various kinds of threshers. which is not popular in India. a dream come true. Its parent company Sonalika group ranks among the largest tractor & farm equipment manufacturer in India. maize seller –cum-Dehuskers. IAFL provide finance to customers of international cars & motors limited in rural & semi.4) International Autotrac Finance Limited International Autotrac finance limited is a non banking finance company approved by RBI.urban areas across India through customer friendly schemes.Sonalika agro was established in 1971 to support the Indian farmers with mechanization technology to facilitate persistence of green revolution. highly qualified and experienced staff is working as a family in the manufacturing facility at Hoshiarpur (Punjab).fertilizers drills. potato planters. but also in various others countries across the globe. seed –cum. tractor/self driven straw reapers. Its product line includes combine harvesters. Sonalika agro is a pioneer in manufacturing tractors mounted combine harvester. the group’s maiden venture is one of the foremost farm equipments and implements manufacturing companies in India with 80% share in threshers alone. Today. etc.
• Tractor financing qualifies as priority sector lending. thereby translating the sales growth rates into the tractor financing business growth.
. Tractor demand is expected to maintain its momentum:
All India Tractor Sales
400 350 300
255 261 236 217 192 172 290 248 353
250 200 150 100 50
Fig-1: All India Tractor sales of International Tractors Ltd for the period of 1999-2007
Besides farming. • Almost all of the tractors sold in India are financed due to relatively low interest rates. the Indian tractor industry grew by 20. TAFE and Sonalika are the leading players • The Indian tractor industry has been growing at a healthy pace of 19.53lac Tractors. improvement in realizations and easy and cheaper availability of finance • M&M-Punjab Tractors.4% during FY07 on the back of higher demand growth. easy repayment norms and longer tenure of finance. rising infrastructure activities are enhancing the use of tractors for
construction materials transportation. Banks and NBFCs now have a greater focus on tractor financing due to reasonable ticket size and higher resale value. Escorts.• With net sales of 3.7% CAGR since FY03.
. L. son of Mr. Mittal holds the second highest position. Mittal.D. Mittal is the Managing Director. Deepak Mittal is the Executive Director holding the fourth highest position.4).R. L.S. brother of Mr. L. son of Mr.D. Ashok Kapoor is the Joint Chief Operating Officer who is also responsible for International tractors Ltd. Co-founder and Vice-Chairman. Mr. holds the highest position of the Sonalika Group. ITL Organization Structure
Fig-2: Hierarchy level at ITL
Mr. L. Yadav is the Chief Operating Officer who is responsible for International Tractors Ltd. A. Mr. Mr. Mr. Raman Mittal. Deepak Mittal.D. Founder and Chairman. International Autotrac Finance Ltd and Sonalika Agro Industies Corporation Mr.
Dr. S. Ms. Manika. Deputy Manager is responsible for the Performance Management process. Dutta. Gurvinder Singh. Human Resource Department and Personnel and Administration reports to both Chief Operating Officer and Joint Chief Operating Officer. Tina Ugale. Ms. Deputy Manager is responsible for the Training and Development of employees and college students working part-time or on training at ITL.5). Deputy Manager is responsible for the Recruitment and Selection process at International Tractors Limited.
. Human Resource Department Hierarchical structure
Fig-3: Hierarchy structure of Human Resource Department at ITL
Mr. Deputy General Manager.K.
“it is the process of evaluating the performance and qualifications of the employees in terms of job requirements. In some organizations it is measure of the result achieved & target accomplished whereas in others. trained and embarked on his duties.
. for administrative purposes such as placement. According to Michael Armstrong “Performance appraisal is a formal assessment & rating of individual by their managers at usually at annual review meeting. Over a period of time. it is time for performance appraisal.PERFORMANCE APPRAISAL
Performance appraisal can be defined as the process of evaluating the performance of an employee & communicating the result of the evaluation to him for the purpose of rewarding & developing the employee. What is performance appraisal? Why do companies need to take up this task? According to Carl Heyel. Performance appraisal is also termed as performance review.” Performance can be defined as the degree of accomplishment of tasks by an employee in his job. to provide financial rewards and other actions which require differential treatment among the members of a group as distinguished from actions affecting all members equally”. author/editor on management.
The concept of Performance Appraisal dates back to the First World War and was then called “Merit Rating Programmed”. Once an employee has been selected.
INTRODUCTION: CONCEPTUAL FRAMEWORK
I. this concept has been through an ocean of change. The areas of evaluation have also changed. annual review & annual appraisal. However most organizations use a combination of both efforts & results.
3. philosopher and teacher. selection and promotion. it is a measure of employee efforts & behavior.
4. a supervisor can steer them onto a path of greater productivity and optimized output. In the process management expects to reinforce the employee’s strengths. Long-term successful business owners view performance appraisal as a process of getting to know the people who work for them. one phase of the annual performance management cycle is performance appraisal. documenting the review.
Concept Of Performance Appraisal:
The concept of Performance Appraisal can be explained with the analogy illustrated below:
An integral part of performance management system:
Effective performance management requires a good deal of face-to-face supervisoremployee interaction.
III. observation and b.II.
It is composed of the following two processes both of which are qualitative subject to human bias – a. to raise performance standards year over year through honest and constructive feedback. and delivering the review verbally in a face-to-face meeting. It is the most significant and indispensable tool for an organization. By knowing the subordinates. identify improvement areas so that one can work on them and also set stretched goals for the coming year.
The parameters of performance are a combination of technical expertise and behavioral attributes. The latter scores a high degree of relevance with regard to potential appraisal. the process of reviewing employee performance vis-à-vis the set expectations in a realistic manner. which helps in taking important decisions for the development of an individual and the organization. It provides information.
. the immediate superior started appraising his subordinate’s performance and sending his confidential report to the department head. These were the periods when the employee was not included in his appraisal process. The
department head used to communicate his feedback and comments only to the immediate superior of the employee. Thus performance appraisal process has gone through the phase of non-transparency to transparency.→ The head of the key represents the uniqueness of the employee. Thus the feedback was kept confidential in nature. The self-appraisal is followed by a joint discussion with superior and then a decision is taken by the department head on his promotion. pay hike etc. the employee used to be appraised by his department head. → The ring represents the management’s requirement -the job content. promotion etc. The decisions used to be taken by his superiors relating to his pay hike. The feedback relating to his performance is directly given to the employee.
IV. No two employees are alike. As time passed by. → The shaft represents the communication between the employee and the company.
2) The current process of performance appraisal is much more open and gives some
scope for self-appraisal by the employee.
1) A few decades ago. the transmission of the task and the response from the performer. Thus the system was non-transparent.
4) Whether an organization accepts or not the usefulness of Performance Appraisal. they began to appreciate that managing had evolved into an art. They saw that “management by hunch” could not longer be tolerated.
What set’s the foundation of Performance Appraisal? The same has been covered in the following Chapter 2. They are doing so because Performance Appraisal. with a view to identifying weaknesses and strengths as well as opportunities for improvement and skills development.
. as generally used has been a static rating of an employee related almost entirely with the past. whether it adopts a formal appraisal system or not.3) In this transparency phase. lies at the heart of art of managing. and that measurements-no matter how vague – were essential for the future development of the art of managing. concerned almost entirely with the present and the future.
5) Managing is a dynamic process.
6) The need for measurements gave birth to several “systems” of managing which attempted to apply measurements of various sorts to the different aspects and elements of the manager’s job. as some managements were recognizing that “rating” by itself had very limited utility. The latter are doing the same to their own subordinates. top management is constantly appraising the performance of its subordinate managers in day-to-day interaction. a performance appraisal can be defined as a structured formal interaction between a subordinate and supervisor. A number of these systems leaned on the better Performance Appraisal methods for their measuring devices or at least for a starting point for measurement. in which the work performance of the subordinate is examined and discussed. whereas Performance Appraisal. these systems expanded or broadened the meaning of Performance Appraisal from a mere rating to include the whole concept of management with all its elements. In some instances. that usually takes the form of a periodic interview (annual or bi-annual). Recently. formal or informal.
teams and individuals are expected to achieve. departments. departmental and corporate objectives.
Job description concentrates more on the definition of tasks the jobholder has to accomplish. ultimately the mission of the organization. skills and competencies (training and personal development plans). Developmental objectives: It is concerned with what individual should do and learn to improve their performance and/or their knowledge.
II. Work or Operational Objectives: It refers to the results to be achieved or the contribution to be made to the accomplishment of team. ii.Chapter 2
FOUNDATIONS OF PERFORMANCE APPRAISAL
Performance Appraisal assesses how well people have been doing their jobs and what they must do to be better in their jobs. Following are the foundations in Performance Appraisal process:
I. which has to be accomplished. It deals with the content of the job and what they are expected to achieve in each aspect of their work. Objectives define what organizations. functions.
. It indicates how an individual’s job will contribute to the achievement of objectives of a team or a department and.
There are two types of objectives: i. It includes details of reporting relationship and normally covers the overall purpose of the job.
An objective describes something.
It is the behavior required of people to carry out their work satisfactorily. innovation. They govern the process aspects of job performance.
How it works?
THREE ESSENTIAL STEPS FOR EFFECTIVE PERFORMANCE APPRAISAL
The process of getting to know the people who work for the organization involves three essential steps viz. evaluation and review. organizations are setting out the core values that they think should govern the behavior of all their employees.
Successful training is the implementation of a system in which everyone in the workplace is geared towards improvement.
What are the essential steps that set the foundation for an effective Performance Appraisal? These steps have been covered in Chapter 3. Value statements may be prepared which define core values in areas such as care for customers. It involves a hands on approach in which the employee is encouraged to evaluate himself or herself under the guidance of the appraiser. excellence. concern for people. training. Competencies are what people bring to a job in the form of different types and levels of behavior.
Competencies refer to the behavioral dimensions of a role. competitiveness.
First. This not only empowers the employee. The supervisor should always supplement this with added insight. Initially the appraiser should walk the employee through the process. but also saves a lot of time and possible contention during the actual discussion.
III. Then the supervisor takes the employee down a point-by-point list of every aspect of the job.
How this entire interaction and review process is beneficial to the organization as a whole and what are the objectives of performance appraisal? These have been jotted down in the succeeding Chapter 4. This interactive approach is made complete with the leadership of the appraiser.
The best methods for employee evaluation are based on results and behavior. willingness to put in overtime and ability to work with others all contribute to overall productivity. In each case. again. most objective method of tackling the complex task of evaluation. the appraiser should give the employee a chance to review himself or herself. Review:
The review process should. The pace of work. The successful supervisor starts out with an overview of why the review session is needed. he or she also realizes that everyone else’s opinion matters just as much. When an employee knows that his or her opinion of other workers is taken into account. he or she can be rated by sheer worth as well as ranked against other employees. It uses a rating system to measure productivity within a given timescale. This not only empowers the employee and improves relations in the workplace. the entire appraisal process. A results-based approach to performance appraisal is by far the cleanest. the appraiser includes the employee in the appraisal process. Before sitting down together.
II. but it encourages higher productivity as well. While conducting performance appraisal based on employees’ characteristic traits is quite common. employ the techniques of interactivity.
. While praising and applying criticism. The study of behavior is closely tied to productivity. the results are often subjective and unsatisfactory. If an employee makes a certain number of sales in a certain week. the employee should be given a chance to describe his or her achievements and shortcomings. Carefully administering praise coupled with constructive criticism keeps the workforce on its toes. the supervisor maintains authority throughout the review and indeed.
•Identify the strengths and weaknesses of employees. •Assess the training and development needs of employees.
. •Set targets for future performance. • Determine whether human resource programs such. training and transfers have been effective or not. •Assessment of skills within an organization.OBJECTIVES AND BENEFITS
The objectives and benefits of Performance Appraisal system can be summarized as under:
Data relating to Performance Appraisal of employees are recorded. stored and used for several purposes like: •Let the employees know where they stand in so far as their performance is concerned and to assist them with constructive criticism and guidance for the purpose of their development. This can also have the effect of increasing the trust between the appraiser and appraise. •Effect promotions based on competence and performance. •Strengthen relationship between superior and subordinate. •Decide upon a pay raise (increments). as selection. but also improves understanding of personal goals and concerns.
•Improve communication as it not only provides a system for dialogue between the
superior and the subordinate.
The following are the benefits of a successful appraisal system:
1. For the Organization:
♦ Improved performance throughout the organization due to: Effective communication of organization’s objectives and values. Increased sense of cohesiveness and loyalty. Managers are better equipped to use their leadership skills and to develop their staff. Improved overview of tasks performed by each member of a group. Identification of ideas for improvement. Creation and maintenance of a culture of continuous improvement. Communication to people that they are valued. − − −
♦ ♦ ♦ ♦
2. For the appraiser:
♦ Opportunity to develop an overview of individual jobs. ♦ Opportunity to identify strengths and weaknesses of appraises. ♦ Increased job satisfaction. ♦ Opportunity to link team and individual objectives with department & organizational objectives. ♦ Opportunity to clarify expectations that the manager has from teams and individuals. ♦ Opportunity to re-prioritize targets ♦ Means of forming a more productive relationship with staff based on mutual trust and understanding. ♦ Due to all above Increased sense of personal value
For the appraise:
♦ Increased motivation and job satisfaction. ♦ Clear understanding of what is expected and what needs to be done to meet expectations. ♦ Opportunity to discuss aspirations and any guidance, support or training needed to fulfill these aspirations. ♦ Improved working relationships with the superior. ♦ Opportunity to overcome the weaknesses by way of counseling and guidance from the superior ♦ Increased sense of personal value as he too is involved in the appraisal process In line with the objectives of Performance Appraisal, to reap it’s benefits, this system has to be effective failing which it may mar the very purpose of performance appraisal.
How to make the appraisal process effective is what has been covered in the subsequent Chapter.
Chapter 5 Chapter 5
EFFECTIVE APPRAISAL PROCESS
When it comes to performance appraisal, managers and employees agree about one thing: They hate going through them. Employees, managers and HR experts agree that fear, guilt, responsibility and resentment are the real reasons why most employees dread the appraisal process. Besides some think that it is a ritual that is mandatory to follow.
An effective review process helps organizations in three areas: 1. evaluation and improving personnel selection and training systems; 2. preventing wrongful termination; and 3. increasing real employee diversity I. Good appraisals start with information from multiple sources, and they evaluate employees at all levels from top to bottom.
This system requires both the appraisee and appraiser to jointly assess the employee’s ability to complete the duties and achieve the goals set forth in the previous appraisal.
HR professionals should consider the following steps and make the appraisal process simple yet effective: • The performance Appraisal form should reflect the strategic objectives of the company. Many organizations use a form that contains several sections. • The results and impact section should address accomplishments related to job responsibilities, goals and projects. It is a review of past performance . • A skills and abilities section should discuss the ways those results were accomplished. By listing the core competencies for each job classification – and for the entire organization – this section can address the kinds of behavior that are critical for success.
Appraisal results, either directly or indirectly, determine reward outcomes. The better performing employees may get the majority of available merit pay increases, bonuses and promotions, while the poorer performers may require some form of counseling or in extreme cases no increases in pay. The assignment and justification of rewards and penalties through performance appraisal is a very uncertain and controversial matter and conveys both satisfaction as well as dissatisfaction with an employee’s job performance. Whatever is the case, organizations should foster a feeling that performance appraisals are positive opportunities that provide for overall development of the employee, in order to get the best out of the people and the process. Hence performance appraisals should be positive experiences and it should never be used to handle matters of discipline.
Performance review needs goals to be set first. Identification of Key Result Areas i.e. Goal Setting has been explained in the Chapter 6.
Realistic and Time-bound. Helps in salary review. managers should attempt to agree objectives with their staff rather than setting them themselves for the forthcoming period during appraisal discussion. Target setting is the first step in the appraisal process. and self-development. goals is one of the various parameters of performance evaluation. Encourages open communication concerning expected results and progress towards results.
The Purpose or Objective of Target Setting
• • • • • • Ensure that each individual is working towards clearly stated objectives that tie into the division goals.e.
I. Helps the individual know “How he/she is doing” compared to what his/her manager expects.e. Measurable.
The recent trend from a focus on traits or behavior to a results-oriented approach has seen the emergence of objectives setting as a key issue. These are also known as the Targets or Performance Indicators (PI). Achievable. Specific. SMART criteria for performance goals
. These objectives or targets should comply with the mnemonic SMART i.IDENTIFICATION OF KEY RESULT AREAS (KRAS) – GOAL SETTING
Setting of Key Result Areas i. Provides a sound basis to improve performance. However. based on which the employee is appraised. Encourages comparison on individual objectives to identify overlapping or omitted objectives.
A new/innovative result. data or observation when it is achieved? Does it specify-What? How much? How well?
SMART Performance Goals Achievable
. • • Will you know from information.
Does it specify
-Improved level of quality. result or behavior is to be achieved. or -An improved behavioral outcome? • Does it have a clearly stated singular result?
Includes measurable results or a description of the desired outcome.SMART Performance Goals Specific
States in clear terms what outcome. quantity. faster time line. time or use of resources .
. The short-term goal:
The short-term goals is the level of performance desired and perceived as being attainable with some effort within a period ranging from three months to one year.
2. short-term goals are re-evaluated based upon performance. the short-tem goal and the minimum or standard goal. Usually this level is significantly better than current performance. given time and resources
Are resources. At the end of that time. the long-term goals are the ultimate level of performance. • • • Time Bound There is a time limit or deadline by which the objective must be achieved and there may be a time frame to track phases of completion in an action plan. such as “zero defects” or “zero absenteeism”. Unlike the other two goals (described below). In some cases. the long-term goals can be dictated by management without regard to past performance or to whether the long-term goals is currently perceived as attainable. and requisite skills in place? Does it require a stretch of effort?
Realistic There is a clear tie to goals of the department.A realistic expectation.
1. authority level. the long-term goal. division etc. Type of Goals:
One may have to set multiple goals combining goals at different levels viz. • • When are the goals to be completed? Is there a timetable for milestones or checkpoints? Will it matter when it is done? Does the objective support relevant goals? Does it deal with a key aspect of the job?
II. The long-term goal:
The long-term goals are the level of performance sought over a period of one to two years.
expectation is that when the short-term goal is consistently being met. The Minimum or Standard goal:
The minimum or standard goal is the cut-off point for signaling the existence of or potential for a performance problem.
3. and They cannot be worse than the worst performance for any previous period.
3. Short-term goals are negotiated. and It must be better than the current average or typical performance. To aid goal setting the following steps may be adopted:
1. though should be stable over the
. • • • It must be less than or equal to the long-term goal It cannot be better than the best performance ever achieved. Like short-term goals. Consider the job on the following areas: -Routine responsibilities -Problem solving responsibilities -Innovative responsibilities -Development responsibilities
4. Usually employees and lower level managers recommend and develop short-term goals subject to approval by management. Locate key tasks in each of the above areas. minimum standards are set for a limited period but for longer duration – perhaps one to two years. Minimums/standards are negotiated like short-term goals and must conform to the following criteria: • • They must be less than or equal to current average/typical performance. it will be moved closer to the long-term goal. Targets.
Periodic Progress Review
The intent of this review is to provide a reconfirmation of direction to maintain commitment for the balance year.
should be flexible enough for revision when changes in priorities or responsibilities lead to the expectation of different results.
. Discuss performance skills. Decision on pay hike. Agree on the plan for corrective actions to be taken by both. the management style must encourage maximum individual contribution in co-operation with others.performance period. revise targets. praise achievements and identify causes of targets not being met. promotion and development is outcome of target achievement and the same has been detailed in following Chapter 7. Discuss targets. Key Steps to Goal Setting:
The appraiser should:
• • • •
In advance. Therefore. where necessary.
5. create a non-threatening climate and express confidence. review notes on employee’s performance. reinforce good performance and identify causes for skills not being met.
Joint Accountability: Management must recognize that most results are achieved through the corporate efforts of two or more people.
innovation. but also on the degree to which the behavior of individuals support corporate values in such areas as teamwork. Matching the Culture: Successful PRP schemes need to match the culture and core values of the organization. research initiatives. Before embarking on its introduction the following factors should be taken into account. customer services. This gives emergence to the concept of Performance Related Pay (PRP).
. productivity. contribution to organizational success and the levels of skill and competence achieved. etc. additional bonus or incentive and/or promotion. denying promotion etc. It is only by understanding and working with the culture that it is possible to develop schemes. or by way of not effecting any increase in pay. product and market development and generally increasing stakeholder value.
Balancing performance measures: The performance measures used as a basis for rating must include a balanced mix of both input factors (skills and competences) and output factors (performance and contribution). cost control.
Performance related pay is not an easy option.Chapter 7
Linking PRP to the Performance Management process: The focus when relating pay to performance needs to be one of the issues which emerge from the business planning process such as profitability. total quality management. The assessment upon which pay decisions are made should be based not only on performance in achieving objectives. PAY AND DEVELOPMENT
The outcome of the appraisal is either in the form of reward by way of increase in pay.
PRP arrangements should allow for some flexibility in the criteria for reward payment. and the method of
To avoid the danger of PRP focusing attention on short-term results at the expense of more important longer-term objectives.
2. long-term as well as short-term goals should be set wherever appropriate and short-term objectives should be discussed in their overall context. The importance of teamwork should be recognized in structuring the scheme and in defining critical success factors and performance indicators. Individuals should be aware that achieving their targets at the expense of others is not considered competent performance.
Teamwork: Poor PRP schemes can produce a lot of single-minded individuals.
2. The first step in the appraisal performance process is the determination of standard of performance based on the organizational objectives & job descriptions. In more recent concept like 360 degree feedback. Performance appraisal has to be a continuous process & feedback should be given to the employee at regular intervals. 4. his supplier. The employee himself is best equipped to evaluate his performance because he understands his strengths & weaknesses the best. The next step is the actual process of measurement. & even his subordinate play a role in assessing his performance. The next step is the very critical step & involves communicating the result of the appraisal to the employee concerned.
Involvement in the design process:
THE APPRAISAL PROCESS
1. The next step of performance appraisal is the measurement of employees performance against the pre-determined goal & standards.
SELF-APPRAISAL As has been discussed earlier self appraisal is the common practice today.
THE APPRAISER The appraiser is that person who access the performance of a person or an employee. the peer/colleagues of the employee.
.3. with the employee being given a role in evaluating their own performance. Once appraisal is finalized after discussing it with the employees. it have to be put effective use. his customer.
In service organization like banks & hotels customer feedback has become the most important tool in evaluating the employee’s performance
PEERS Peer evaluation is very sensitive area as it may lead to false & unhealthy appraisal because of competition among peers. The Indian culture does not encourage the idea of subordinate appraisal.
CUSTOMERS The performance of an employee has a direct & immediate impact on his customer either internal or external.
SUBORDINATES The concept of subordinate evaluating the performance of his supervisor yet to gain acceptance in most Indian companies. Hence the authority to evaluate the employees’ performance has traditionally been with the supervisor. The organization has to reach an advanced stage of development before it can handle peer appraisal.It is the responsibility of the supervisor to ensure that his subordinate perform their jobs well.
PERFORMANCE APPRAISAL METHODS
1. 12. Work standard approach. Forced choice rating method. 9. Essay appraisal. action plan & finally. 2. Ranking method. a definite time span to achieve the goals. Check list. Critical incidence method. 10. 360 degree performance appraisal. 3. 8. Team appraisal. Behavioral anchored rating scale. timely & constructive feedback. Point allocation method.
GRAPHIC RATING SCALE
.(BARS) 11. 6. Management by objective or goal setting. MBO is more commonly used for managers & professionals. 5. Graphic rating scale. 4. 13. 7. It is also called a goal setting approach. Balanced scorecard method.
MANAGEMENT BY OBJECTIVE (MBO)
The main aspect of MBO is clear & well defined goals.
the appraiser prepares a document describing the performance of the employees. These work standards can be set based on the average output of a typical employee in the organization or by bench marking against the work standard of a competitor in a similar business. where the goals are pre determined work standard.
In the essay appraisal method. the appraiser makes a note of all the critical incident that reflect the performance & behavior of the employee during the appraisal period.
CRITICAL INCIDENT METHOD
In this method of performance appraisal. These are recoded as & when they occur & can demonstrate either positive or negative traits or performance.
WORK STANDARD APPROACH
This method of appraisal is more suitable in a manufacturing scenario. They check their employees daily by using this method. job knowledge.This method of appraisal requires the rater to rate the employee on factors like quantity & quality of work. This method is also used for performance appraisal of employees. punctuality. attendance etc.
. Questions or guidelines are provider to the appraiser based on which analyses & describes the employees’ performance. dependability.
Once the employees’ attributes are ranked the human resource department applies the weights & arrives at a score which is the final appraisal score.
POINT ALLOCATION MATHOD
In this method of appraisal. based on their performance during the appraisal period. The first two methods are used when there are only a few employees to be ranked. Normally weights are attached to each of these questions based on which the final appraisal score of the employee is calculated. the appraiser has to allocate points to different members in his team.FORCED CHOICE RATING METHOD
In this method the appraiser is required to assign ranks to different attributes are all seemingly positive.
There are three commonly used methods of ranking namely alternation. a specific number of points which he has to distribute among his team members. whereas forced distribution method is used in large companies which have thousands of employees. He has at disposal .
BEHAVIOR ANCHORED RATING SYSTEM (BARS)
In this method the rater has to respond ‘yes’ or ‘no’ to a set of questions which assess the employee’s performance & behavior. but have different weights which are unknown to the appraiser. paired comparison & forced distribution.
PERFORMANCE APPRAISAL SYSTEM AT ITL
360 DEGREE PERFORMANCE APPRAISALS
A 360 degree appraisal system aims at a comprehensive & objective appraisal of employee performance. Some of the other methods like graphic rating scale & checklist also measure the behavior based on the assumption that desirable behavior result in effective performance. team appraisal has emerged as one of the best tool for the performance management. where team work is essential for any venture to succeed.
The balanced scorecard as a method of measuring performance channelizes the efforts of people to achieve organizational goals. The implementation of balanced scorecard involve formulating a strategy & deciding what each employee needs to do to achieve the objectives based on strategy. In the team appraisal method the individual team member evaluates their colleagues in the team & provides feedback. his internal external suppliers & his subordinates. In a 360 degree appraisal system the employees’ performance is evaluated by his supervisor. his internal external customers.BARS concentrates on the behavioral traits demonstrated by the employees instead of his actual performance.
In the new economy era. This system reduces the subjectivity of a traditional supervisor appraisal. his peers.
. The extent of development achieved by the employee during the period under review. attitudes and abilities. weaknesses. Evaluation of potentials for assuming higher responsibility. To provide an objective basis for determination of merit. both qualitative and quantitative. It is crucial for his or her career growth as it indicates the strengths. Evaluation of behavioral attributes. training needs.
The objectives of the performance appraisal system at ITL are:
• • • • To set norms and targets of work performance.Performance appraisal report is an index of an employee’s work performance over a given period of time. as well as.
The performance appraisal system seeks to evaluate:
The work performance of an employee on the present job in relation to the expected levels of performance. nature of job being performed and problems faced in work situation. to monitor the work progress of employees. To facilitate placement of employees in accordance with their suitability for different types of assignments. efficiency and suitability for the purpose of promotion. To identify areas requiring exposure for training and development.
PAR/ACR in respect of an employee is required to be assessed by levels indicated below:
By the reporting officer under whom employee is working.The appraisal covers:
Performance check after 3 month. The PAR’s in respect sections. a) Non Executives.
. b) Executives
The appraisal form PAR/ACR is filled in respect of all such employees who have served for a period of at least four months in the organization during the relevant year.
The PAR in respect of E-0 to E-6 level executives is being maintained in PAR
Region/Institute/Headquarters group wise in the concerned establishment section/PAR
departments at headquarters of R&P division. The reviewing officer will be of one grade above the grade of reviewing officer. All regular employees of the company.
The reporting officer for writing PAR of an employee of class III/IV and E-0 level
category will be the executive under whose control the employee is working. By the reviewing officer.
.e. The reviewing officer will be the officer to whom the executive reports for his day to day work. Deputy general manager and above will be submitted to concern functional Director for final review and acceptance. As
Regions/Institutes/Headquarters are maintained at Chairman-cum-managing Director’s office. Review of the PAR will be done by the executives to whom the reporting officer is responsible for his functions.
• The performance appraisal of the executive upto E-4 level i. Personal Data This includes personal details of the individual being appraised.e. II. • The performance appraisal reports of executives of E-6 level i. • The performance appraisal reports of executives of E-5 level i. chief manager and equivalent will be reviewed by the RD/ED/Nominee of the Director concerned. Accepting authority will be the executive higher than the reviewing officer at different levels depending upon the nature of the grades as per delegation of powers in PAR rules.
Performance Appraisal Format for Executives
I.e. manager and equivalent would be reviewed by the functional head/GM/CGM not less than E-7.
5-excellent) Potential is appraised on the basis of following traits: • • • • Result oriented approach Willingness to accept challenges Diligence and reliability Initiative
. Potential Appraisal Potential of the candidate is appraised on the scale of 1 to 5 keeping the existing role as well as future positions in perspective.
III. Scale 1 to 5 is given for (1-poor.
B. Performance Appraisal
Performance appraisal is done on the basis of Key Result Areas and a certain weightage is assigned to each. These achievements are then rated by the individual itself and the appraiser. A. Following are the Key Result Areas: Performance in respect to volume Quality of output 30 30 Timeliness of jobs completed 40
The total of the score gained by the individual is noted and termed as P. 2-fair. 4-very good. 3-good.In this section the appraisee is required to mention the tasks achieved in the appraisal period including enabling and constraining factors.
This weightages is as per the level.6 0.3 0.1 0.
.5 0.9 0.4 0. Work done for HINDI
D.8 0. Level E1 E2 E3 E4 E5 E6 0.7 0.5 0.• • • • • •
Professional competence Communication skills Commitment and dedication Personal conduct and discipline Leadership Inter personal relationship
Total of score gained by an individual in this section is again noted and termed as Q. Overall Grade Total score(S) is calculated as S=a*P+b*2*Q Where a & b are weightages for performance and potentials.4 a b 0.
V. Training Needs The appraise himself mentions the training requirements which are then remarked by the appraiser. Assessment by Reviewing Officer
B.The grading system A+ A AB+ B C D 95 and above 85 and above but less than 95 75 and above but less than 85 65 and above but less than 75 55 and above but less than 65 45 and above but less than 55 less than 45
IV. Assessment by accepting officer Final grade with score
There must be adequate explanation by the 1st and 2nd appraisers and the accepting authority for any grade assigned to the appraisee. In case this final rating is different from those of the 1st and 2nd appraiser. Communication to executive VIII. magazines. In the absence of adequate explanation the report will be considered incomplete and returned back to the appraisers for confirming to the directives contained in the instructions.
The approach used for the study was Survey Method. All the required information was collected from the in-house journals. will be the decisive grade of the appraisee executive. adequate justification must be mentioned by the accepting authority. Counseling
The final grade given by the accepting authority after detailed and due consideration to the rating by the 1st and 2nd appraisers. For this Literature and Diagnostic Survey were carried out: LITERATURE SURVEY Secondary sources were referred to get the basic culture and working pattern of ITL. DIAGNOSTIC SURVEY
. reference books.VII. manuals and the other related sources.
The methods used by the organization should be communicated to all the employees who come under its purview. HRD helps to enhance employee’s effectiveness and helps to achieve organizational goals. Now with the emergence of so-called “NEW ECONOMY”.
. Every organization nowadays is using various methods for appraising the performance of the employees so that the real potential of the human asset can be known and utilized in the proper way. In the emerging knowledge age.”
SIGNIFICANCE OF STUDY
Human Resource Development is the basis of success of any organization. They should be satisfied with the procedure and if they are not then it should be looked upon that what are the reasons behind it and what changes are to be brought about. Performance appraisal not only evaluates the work done by the employees but also tries to boost the morale and motivate them to do their best. the increasing role of knowledge in industry is becoming obvious. Any investment in introducing performance appraisal techniques is worth only when the above mentioned criterion is fulfilled.
“Performance Appraisal System on the productivity of employees of ITL . Without effective Training and Development no enterprise can claim to be giving due importance to HRD. Performance appraisal in the real sense can be carried out only when the employees are provided with the required amount of training.It was done with the help of a questionnaire to check the efficiency and effectiveness of the system. In the unfolding economic scenario it is increasingly being realized that employees are the most precious assets of any company. incessant learning by employees through effective Training and Development is going to be a key to survival and growth for organizations.
To do the better analysis these groups are further incised as Age • • • • Age less than 40 years Age between 40-50 years Age above 50 years Age not provided
. discipline.Performance appraisal has a very important aspect to it and that is development of the employees. and management level.
RESEARCH DESIGN The present investigation is descriptive type of study undertaken to estimate the effectiveness of the performance appraisal system of ITL. I have divided the whole sample into various groups on various criterions like age. experience. The present study identifies views of employees of different levels and disciplines.
.E2) Middle Management(E3 – E4) Senior Management(E5 and above)
Scope of the Study The scope of the study is limited to Jalandhar.• • • • •
Experience less than 10 years Experience between 10-20 years Experience between 20-25 years Experience between 25-30 years Experience more than 30 years
Discipline • • • • • Finance Geo Sciences HR Production Technical and Engineering
Managerial Level • • • Junior Management(E0 .
METHOD OF DATA COLLECTION
PRIMARY DATA The primary data to be selected was based upon the response of the respondents to the questionnaire designed.
. Second part consists of closed ended questions on the scale of 1 to 5. The questionnaire consists of closed ended questions. Third part comprised of questions to be answered in Yes or No.
Sample Size The sample size is 200.Population of the Study All those persons who are working in ITL are the population of this study. A part of Questionnaire was targeted to know the personal details of the respondents.
and the final data was analyzed systematically to achieve the desired result. journals and intra net.
Collected data glance at a
appraisal Motivate you Its beneficial for your future development your productivity increases after appraisal? After appraisal have your working hour increased? Performance appraisal is beneficial
. The statistical tool used is Chi-square test in this study. web sites.
Tools of Data Analysis
The collected data has been analyzed keeping in view the objectives of the study.SECONDARY DATA The secondary data was collected by referring through manuals.
for your future development?
official environment and working style affects your productivity or performance? you like to initiative in addition to assigned responsibilities only because of good appraisal system of the company? Performance appraisal system helps you to realize your strengths and weakness regarding your job profiles? Performance appraisal systems of the company motivate you to maintain long term relationship with the company? Your performance being checked regular by your superior? Are you satisfied with appraisal system or not?
Motivated Future Develop Increase productivity Work Hard Responsibilities Total
177 180 177 175 150 859
23 20 23 25 50 141
200 200 200 200 200 1000
8 171.059 2.2 5.2
O-E 5.38 0.39 0.2 -5.2 28.95 0.2 -8.2 -21.24 27.2 28.04 10.15 0.2 3.15 0.8 21.8 171.04 14.04 67.04 67.8 171.2 28.95 2.O(OBSERVED) E(EXPECTED) 177 180 177 175 150 23 20 23 25 50 171.2 28.24 27.8
(O-E)2 27.24 27.85 25.24 Total (CH1)
Degree of freedom = (row-1)(column-1) = (5-1)*(2-1) = 4*1 =4 Row = 5 Column = 2
.2 -3.8 -5.76 0.8 171.44 475.51 16.8 28.24 475.2 8.
Significance = 0.05 Table value = 14.
Due to time constraint and hectic schedule of ILT
employees some time I found
difficulty in interaction with employees.
Value is accepted.Productivity.square = 25.14
• Hypothesis There is a significant impact of performance appraisal system in ITL on the productivity of employees.9 Chi.
Sincerity of answering the questions can not be judged.22
.178 NO . The employees were busy in their work.
(Response in YES or NO only)
Q1. Many questions were responded as “Cannot Say” due to the subjectivity of the topic and some information was not revealed due to certain reasons like being confidential in nature. Time was the most relevant factor to make a handle to complete to proper and diagnostic survey. Organization being very large an effort was made to do the tasks effectively and efficiently but more detailed study could have done by having large sample size. Employees delayed in submitting the feedback form so it effected the time in compiling and analyzing data for findings and suggestions. Appraisal system motivates to you for work hard? Responses YES .
Q.2 your productivity increases after appraisal? Responses YES .178 NO .
. they said that appraisal system motivate to do work hard. And 11% employees are not favor of it.2 0%
Yes 11% No 0%
89% employee of sonalika are favors of motivation.
.86% NO .Q.3 After appraisal have your working hour increased?
Responses YES .
Praise is such a
Q. This thing may appear to be very small but the fact is that this thing helps an individual to give its best.13%
Yes No 0% 30% 0%
86% of the respondents responded as YES.87% NO .4 Performance appraisal is beneficial for your future development?
Responses YES . A small token of appreciation or just a pat on the back is enough to keep that individual motivated for the next week atleast.
But the thing is that the system of providing counseling in ITL is very rare phenomenon. Most of the respondents find appraisal counseling beneficial for the future developments. But here I disagree.Again the majority is in the favour of the statement.67% NO .
. No doubt they are beneficial for the future development. Not that I don’t consider that the counselings are beneficial. rather they should be. I have already mentioned that it is provided only and only if the appraisal result falls in extreme limits either very low or very high ratings.5 official environment and working style affects your productivity or performance? Responses YES .
Q.6 you like to initiative in addition to assigned responsibilities only because of good appraisal system of the company? Responses YES .63%
.37% NO .
72% NO .7 Performance appraisal system helps you to realize your strengths and weakness regarding your job profiles?
Responses YES . However 37% respondents says that they can respond to the feedback.Majority of the respondents don’t agree with the above statement. Q.28%
. According to them they are not provided with the opportunity to respond to the appraisal feedback.
Q.8 Performance appraisal systems of the company motivate you to maintain long term relationship with the company?
Responses YES NO -
Your performance being checked regular by your superior?
Responses YES NO -
.77% NO .10 Are you satisfied with appraisal system or not? Responses YES .
Performance Appraisal System in ILT is not transparent. Appraisers are usually unbiased.
• • •
. Employees are not able to know their actual position after the appraisal. The management is serious about the appraisal process.
The parameters used to appraise the potential are ample. The appraisers are generally aware about their subordinates and their talents and potential. The management helps provide an atmosphere where all are encouraged for comradeship and teamwork. employees are unable to identify the performance gaps in order to prepare for the future. Employees don’t have the opportunity to respond to the appraisal result. Superior helps them set and achieve meaningful goals. Relations with the superior affect the evaluation. Majority of people want that there should be some incentives based on performance. The system being not so transparent. There are fixed standards to evaluate the performance but those are not clear due to the subjectivity of the topic. Individual feedback is not provided. Raters know how to conduct the appraisal. Appraisal counseling is considered beneficial for future developments. Appreciation is provided for the good job done.• •
The appraisal process provides them an opportunity for development and growth. Employees are not provided with the genuine feedback. Management doesn’t bother much about the training requirements mentioned in the appraisal sheet. This makes the environment amiable and congenial. Greater weight age is given to the recent performances. Raters are not that much concerned about the varied needs of people at levels of experience and background. Performance appraisal sheet is lucid and easy to understand and fill. firm and positive manner. Superior-subordinate relations are good.
• • • • • • • • • • • • • • • • • •
. Employees are being rated on their knowledge and skills. Most of the raters have the ability to give constructive criticism in a friendly. Most of the employees want that 90o feedback system should be introduced.
For this the raters should always consider the performance as the only measure for the evaluation. So that they may be in a position to know where they stand exactly. On the basis of the analysis of responses and findings I have reached to some conclusions.
. Further they should be shown the appraisal result. So taking them into consideration few steps may be considered to strengthen the performance appraisal system. The genuine feedback should be provided to the employees. This can be achieved by creating awareness among the employees regarding each and every aspect of the appraisal process. They should be made aware about the standards and the criterions for evaluation. the PMS system is refined further. No doubt one should be in pleasing terms with the superior but that should not affect the evaluation at all.
The appraiser and appraisee should sit together and then the appraiser should rate the appraisee for his performance and should state the reason for the same. This is not good as this creates a sense of favoritism in the organization.RECOMMENDATIONS The performance appraisal system of ITL is of good quality. This will increase the level of transparency and the employee will feel satisfied as he will have an opportunity to respond at that very moment itself. With the introduction of new e-PAR system.
The system should be made more transparent. The general belief among employees is that the relations with the superior affect the evaluation process. So that they can identify their performance gaps and prepare accordingly for the future.
This thing creates a
sense of healthy competition among employees which boost up the growth of the individual as well as the organization. Management should take serious note of the training requirements shown by the individual in the appraisal sheet. Raters should consider the specific requirements of the people to do the job.
Some incentives should be introduced on the performances basis.
. Training plays a vital role in the development of an individual and helps improve the performance. They should set the goals as per the potential and caliber of the individual. For this individual feedback should be provided. They should help them out by providing necessary skill set to do the job more efficiently. Employees should have the opportunity to respond to the appraisal result. The raters should take note of the critical performance incidents of an individual so that
at the end of the year it should not be that only the recent performances are given more weight age.
you like to initiative in addition to assigned responsibilities only because of good appraisal system of the company? Yes No
Q.5 official environment and working style affects your productivity or performance? Yes No
Q.1 Appraisal system motivates to you for work hard? Yes No
Q.3 After appraisal have your working hour increased? Yes No
Q.2 your productivity increases after appraisal? Yes No
Q.4 Performance appraisal is beneficial for your future development? Yes No
. Work should be equally divided.Q.10
Are you satisfied with appraisal system or not? Yes No
1.9 Your performance being checked regular by your superior? Yes No
Performance appraisal system helps you to realize your strengths and weakness regarding your job profiles? Yes No
Performance appraisal systems of the company motivate you to maintain long term relationship with the company? Yes No
but if you will use promotion as a tool for promotion then it can also be helpful to motivate the Employees.
7. You should try to make more congenial and friendly relationship with your Employees. You keep watch on employees that what are their requirements and should provide them proper resources so that they can achieve their target without any excuse.
4.2. you should try to improve your supervision and should try to keep an eye on the employees that they properly completing their targets in time.com
. You should try to give more stress on training and development of your Employees.
3. You should try make your employees so much authorized that they can implement few of their innovative thoughts.
6. For promotion you use seniority principle. Try to reduce more paper work. so they never hesitate to share their views with you.
.sonalica.com/ Take Book from library(Quantitative Method.