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A Project Report

On Performance Appraisal System In Yamaha Motors India Ltd.

In the partial fulfillment for the degree of

Bachelor of Business Administration 2007-2008

Under the guidance of:

Mrs. Preeti Bajaj Birla Institute of Management And Technology, Noida

Submitted By:
Rohit Narain Roll No. BBA/6082/05

Birla Institute of Management and Technology


DECLARATION CERTIFICATE This is to certify that the project presented in the project entitled Study on Performance appraisal in YAMAHA INDIA LIMITED,SURAJPUR in partial fulfillment of the requirement for the award of degree BACHELORS IN BUSINESS ADMINISTATION, in Human Resource of BIRLA INSTIUTE OF TECHNOLOGY, MESRA, RANCHI, is an authenticated work carried out by me. It is understood that by this approval, the undersigned do not necessarily endorse any conclusion drawn or opinion expresses therein, but approve the project for the purpose for which it is submitted. To the best of my knowledge, the content of this project does not form a basis for the award of any previous degree to any one else.


CERTIFICATE OF APPROVAL (Mentor) This is to certify that Rohit Narain Roll No (BBA-6082/05) has successfully completed his summer training Project under the able guidance of lecturer Mrs. Preeti Bajaj of Birla Institute of Technology Extension Centre, Noida. The foregoing project entitled, Performance appraisal system of YAMAHA MOTORS INDIA LTD, SURAJPUR near NOIDA is hereby approved as a creditable study the topic and has been presented in a satisfactory manner to warrant its acceptance as pre-requisites for which it was submitted. This Project has been checked thoroughly by the HR Head of YAMAHA,SURAJPUR and the undersigned to minimize discrepancies, however is Subject to Approval. Any errors found later will be given due consideration and efforts will be made to rectify the same.

Lecturer Mrs Preeti Bajaj (Project Mentor)

ACKNOWLEDGEMENT The entire project from the very idea of it to the reality would not have been possible without the guidance and support of many people. I would therefore like to take the golden opportunity of expressing my sincere gratitude to all those people who helped me throughout the project.

I express my sincere gratitude to the management of Yamaha Motors Ltd., from where I have been able to collect data for my project. I am thankful to all my faculties of my Institute to encourage me and provide timely guidance and help in completion of the project. I am especially thankful to my guide Mrs. Preeti Bajaj (BBA Faculty),Mr. Gaurav bajaj ,Mrs Veera Saharia for their support and guidance regarding the project. Finally I would extend my profound gratitude to all the employees of YMIL for patiently filling up the questionnaire without which the study was not possible.

Rohit Narain


The importance of personnel management is being increasingly realized in industrial and industrial organization both In India and abroad. This realization has come about because of increasing complexity of the task of managers and administrators. So far the personnel function was confined to recruitment, salary administration and industrial relations. It was regarded as necessary evil. However, organizations today have realized the human resources as most valuable than any other resource and therefore proper maintenance and development is needed of them. Management can tremendously help the organizations to maximize the utilization of other resources.

One step forward in this direction is the proper maintenance of performance appraisal system in an organization. Performance appraisal is a step where management finds out how effective it has been hiring and placing an employee. The appraisal plans serves as a basis for

counseling the employees about their strengths and weaknesses, for improving the productivity, efficiency and for enhancing employee relations through development of mutual confidence among them.

The basic need of the study is to analyze how far the performance appraisal in the organization has been successful in the assessing the effectiveness and efficiency of the employees and to what extend it has helped in linking professionalism and commitment to the organization. With this objective the research is undertaken.

Rohit Narain

1. Executive Summary 2. Company Profile

3. A Journey from YMEL to YMIPL 4. Yamahas Philosophy 5. Mission of the Company 6. Wage and Salary Administration 7. Environment Policy 8. Functions of HR Department 9. Objective and Scope of the Study 10.Research Methodology 11.Introduction to Performance Appraisal 12.Study of the Appraisal system in the organization 13.Analysis of data and conclusion 14.Major Findings 15.Recommendation 16.Bibliography



Yamaha Motors Escorts Ltd. was a joint venture company formed by the alliance of Escorts Ltd. And Yamaha. The flagship company of Rs. 3600 crore Escorts group as the major plant in the engineering industry in India including two wheeler business and Yamaha Motors Corporation, Japan. 26,400 crore global giant in the two wheelers with 60 facilities in 45 countries. The company started operating in 1985 as Escorts Ltd. (Yamaha Motor Cylinder) its first product on the roads. In 1996 it became a joint venture with the equal share of 50:50 with Escorts Group, India and YMC, Japan and 24%stakes to YMC Japan and the joint venture again changed to one-sided domination and the name of the company became Yamaha Motors Escorts Ltd. Though not as ISO 9000 Company has kept and sustained very good quality standards in its working and products. The company became cent percent Japanese on 1st August 2001 and the name finally changed to Yamaha Motor India Pvt. Ltd.


Important facts about Surajpur and Faridabad plant: 1. Surajpur plant was established in 1985.

Faridabad plant was established in 1965. The turnover of Surajpur plant is around 702 crores as compared to 208 in Faridabad plant. The volume of motorcycles procured in number is 2,11,913 in the Surajpur plant in the year ending 31st Dec. 2001 and in the Faridabad plant it was 77,200. Manpower in Surajpur plant as compared to 1946 in Faridabad plant. The average age of employees in Surajpur plant is 35 where as 45 years in years in the Faridabad plant. There are about 750 machines used in Surajpur plant where as 600 in Faridabad plant. Total area in Surajpur is 3,51,385 sq. meters in Faridabad it is 1,21,674 sq. meters.The building area of Surajpur is 54,815 sq. meters where as at Faridabad plant it is 50,678 sq. meters.



Chief profitable condition in mid-term plan. No further investments in mid-term. Continuous improvement in daily production (quality distribution and the cost) . Motivated and charged up employees.

The strength of YMIL lies in being a customer driven company. The countrys largest network of nearly 10,958 dealers in two wheeler industry starting with RX-100, RXG, RZ-135, YBX-125, YD-125, YD110 (Crux) it came up with a recently launched model Enticer.


YAMAHAS PHILOSOPHY YMIPL is committed to creating a higher level of customer satisfaction using our ingenuity and enthusiasm to enrich peoples life.

What is KANDO? Kando is a Japanese word for simultaneous feelings of deep satisfaction and intense excitement that we experience when we encounter something of exceptional value. At Yamaha Motors we believe that the products and the services that surpass customers expectations can generalize Kando. Yet for all the emotional elevation Kando provides, the feeling can be short lived, and people may be touched only for a moment. Therefore our challenge is to make sure that all our products and services genuinely thrill, impress and touch customers at the first time and every time. We strive to achieve our corporate mission by adhering to these principles. We must remain keenly aware of customer evolving needs company provided them quality products and services of exceptional value that surpass their expectations. We can and will earn a fair profit by putting forth a superior effort to satisfy our customers.

As a good corporate citizen the company act in a worldwide perspective and in accordance with global standards. They are planning to work locally to better the social environment and think globally in helping and preserve the natural environment.


YAMAHAS MISSION The more hearts you reach the more hearts you touch. YMIPL is anew company serving the customer needs by following the corporate mission of Yamaha Motors of creating Kando a Japanese word that means touching peoples hearts.

YMIPL is committed to make products as per the customers requirements and achieve customer satisfaction. To fulfill the customers in Indian market YMI plans to produce new models in the coming years

Wages and salary administration of YMIL At YMIL there are two types of employees: 1. The hourly rated workers (HRWs) 2. The monthly rated employees (MREs)

The HRWs are further divided into: (A) Direct HRWs


(B) Indirect HRWs The wages and salaries of the employees depend on the basic salary given to them. Salaries are given on the basis of grade of the employee. The following are the different grades and the salaries of the employees at the company:

Environment policy

Protection of the environment is an essential part of the companys policy. In line with YMIL guiding principles, they will continue to integrate environmental protection systematically into their operations. Their aim is to protect the environment in which we live in to optimally utilize the scarce resources.

Environmental guidelines of the YMIL Strengthening environmental awareness Preventive action by organizational management


Dialogue with the public Systematic documentation Environmental friendly technology use Systematic environmental production reduce risk Regular checkups and monitoring Information to the customers External companies committed to our environmental policy

Functions of HR Department

The various functions performed by the HR department of YMCL at Surajpur are as follows:

1.Manpower Planning

It is one of the most important functions of the HR department in any organization. Human resource or the manpower planning is the process


by which management determines how an organization should move from current manpower position to the desired one. It analyzes the present as well as the future vacancies in the organization that may result from transfers, retirements, promotions, and sickness levels, leave of absence or due to some other reason in the various departments of the organization. At YMIL manpower planning is carried out with the job analysis that is the process by which pertinent information obtained about a job. 2. Recruitment and Employment

It is another operative function of personnel department and carried out by external as well as internal sources. The internal sources means searching for the right candidate within the organization who is upgraded and promoted. The external sources are those who are the new entrants to the labour force . The process of employment starts with job advertisement, it involves three stages that are, recruitment, selection and placement.


3. Inductions and Orientation It means introduction of an employee to the organization and the job by giving him proper and all possible information regarding the organizations policies and culture and about his work. The program (orientation program) is carried out by personnel department. Here the new entrants are sent to every department to introduce themselves to the staff, to get them accustomed to the work environment and providing him an insight of how work is done in the organization New entrants are informed about the following: Performance appraisal in the organization Confirmation/ increment/ promotion Maintenance of personal files of the employees Data bank of all employees Company policies related to the HR



.4. Industrial Relations The functions of IR is carried out through the following way in YMIL: Labour laws and industrial registers as well as statutory registers are maintained in the organization according to the law. Liaison with labour department and the other civic authorities are maintained so as to carry out the different functions relating to industrial peace. Submission of returns under various labour laws. Implementation of Standing Orders and Contract Act. Formation of various statutory committee such as: *Workmen Committee

4. Training and Development: It is complex process and is concerned with increasing the capabilities of individuals and groups so that they can contribute effectively to the attainment of organizational goals. The terms training development and education training are the processes of learning a sequence of programmed behaviour. Is an application of knowledge, which gives people an


awareness of rules and procedures to guide their behaviour and to improve their performance on their current job. Development is the related process, which also brings about growth of personality, help individual to progress towards maturity and actualisation of his potential capacities. Training and development is carried out after assessing the training needs of an employee. It is carried out by conducting in the company training programs and by coordinating the training of various categories of trainees with the help of various respective shops in charge. Evolution of this training program is done so as to make sure that the trainee has improved.

5. Personal Research: This is conducted by personnel department, which conducts study and survey on: Employment Turnover (Exit Interview) Absenteeism Wage Survey Personnel Budget: the personnel department that takes into account all the costs, expenses and profits to be generated in the year, prepares this budget.

Compiling Skill Inventory The personnel department looks out the following functions: 1. 1.Canteen 2. Safety 3. Negotiations with union 4. Disciplinary Proceedings 5. Attending Conciliations/ Labour Court 6. Grievance Handling/ Counseling 7. Conducting workmen classes The welfare activities carried out by the personnel department of YMIPL are: Canteen The canteen is run on the contractual basis under the supervision of personnel and administration department of the company. The canteen has the capacity to accommodate 2000 people at time. The meal, which is served in the canteen, is at a very subsidized rate and of good quality. To maintain euphoric environment, it has an air condition and a music system.


Uniform The company has made a provision of distributing three pairs of uniform and two pairs of shoes along with one pullover every year. Medical Facilities The company gives free medical facilities to all its employees. It has a dispensary within the premises of the company. The dispensary has all the basic emergency equipment, medicine and oxygen facility with four beds capacity dorm. There are two doctors and four experienced male compounders who are always present during the working hours. Incase of serious illness, there is an ambulance that can take the patient to one of the best hospitals located in nearby regions. Cultural Activities The company conducts following activities for the entertainment of its employees: Sports tournaments Cultural programs Family picnics Tours and camps


Other Welfare Activities 1. The other welfare activities include the following: 2. Fair price shops 3. Rest rooms 4. Welfare fund scholarship 5. And few other welfare activities Transport Facility The office of the company provides transport facility to all its employees for coming and going to or from the company. The office manages buses that are on contractual basis. It makes sure that the buses operate at the right time to and from the company and also welcome suggestions and the complaints regarding the buses. This facility is provided to all employees at subsidized rates. Security The security department of the company is responsible for the following functions: Security of factory / elimination of leakage and theft. Intelligence report internal / external.

Fire fighting- upkeep or training. Statutory license for chemical store / explosive equipment. Records of gate meeting and analysis. Records of visitors. Records of incoming and outgoing material. The employees on the punch card system shall punch their cards for marking attendance and shall punch out at the close of shift during the lunch break if going out. All the workmen shall be at their workstations at the timings notified and commence their work within the commencement of shift timings. The following records are to be maintained by the personnel department: Leave Records Overtime Records Salary and Wages Data Out Pass Records Control and Exit of Manpower


Horticulture Industrial relations, safety and Health The senior manager, industrial relation, safety and health occupy a very crucial position in the company. His function starts from supervisors of safety heads of man and material to the provision of various accessories and their maintenance. Some of his important functions are: Pollution Controls and Checks Safety heads Sale of Scrap In case of an accident in the plant, finding of exact reasons and contacting the different authorities and taking the decisions. Regular medical examination of workers working in hazardous processes. Time Office Time office is an office under personnel department and the main function of it is to mark the attendance of the workers to make the records for their leave, absenteeism, and overtime etc.


Other Functions There is a function for the provision of daily worksheet. In this, department head or supervisor sends out the worksheet to the time office indicating the number of workers and the number of hours. It acts as cross check instrument that verifies the attendance and to avoid any manipulations or mistakes. The other job of the timekeeper is the allocation of casuals. After making the attendance, he counts the number of employees absent and then the absenteeism report is prepared by the time office in charge who then sends it to all the departmental heads and the industrial engineering casuals. This department requires authorization from department head. The timekeeper also gives advance payment forms for employees to the employees. Sometimes the personnel department may ask him to prepare some statements. He has to do some monthly and weekly jobs. Weekly Jobs Weekly report of attendance for the personnel and factory manager. Notice for working Sundays and weekly offs and posting of these in the booking sheets.

Maintain and check the leave records of all the employees. Prepare weekly incentive sheets and allowance sheet. Monthly Jobs Collecting of total working hours of each and every employee and to prepare wage slips for the workers to receive the wages. Prepare monthly leave records. Statement for casual workers indicating name, no. of days he worked and the department. Preparing the attendance register for the next month for all types of employees. Complete the PF for casual workers. The payment made by contractors to the labour under the supervision of the timekeeper and he puts his seals and signs on such statements.

Casual Leave


Intended for urgent work or unforeseen circumstances. It is of seven working days. Sick Leave A medical certificate issued by a registered doctor must support application of sick leave. It can be entitled for a maximum period of seven days. Earned Leave It can be availed to a minimum of three days at a time to a total of twenty-one days in a calendar year. House Loan: Eligibility: Minimum five years of continuous service in the company. Scholarship Scheme: It is applicable to the employees up to the grade of M8. It is to recognize and subsidize the cost of education of children of all regular employees. Provident Fund Scheme: Provident Fundable Salary = Basic Salary + Special Allowance


Pension Scheme: It is a part of PF Act. The rate of contribution towards employees pension scheme is 8.33% of the pay that is diverted from ID employees share of PF. Pension able salary is the average of monthly salaries for 12 months proceeding the date of exit. Pension able service is a service rendered by the workers for which the contributions have been received in employees pension scheme.


Scope and Objective of study


OBJECTIVES OF THE STUDY To critically analyze the performance appraisal system in Yamaha Motors India Pvt. Ltd.

To gain familiarity with the organizations environment and the work culture existing in the organization.

The purpose of the study is to evaluate the impact of performance appraisal system carried out in the organization.

It is to view that how the present appraisal system has contributed towards the efficiency and effectiveness of the employees in the organization.

The objective of the study is also to feel the pulse of the employees views and their suggestions.




RESEARCH METHODOLOGY Research in common parlance refers to research for knowledge or it can be defined as a research methodology is a way to systematically solve the research problem. It may be understood as a science of studying how research is done scientifically. In this we study various steps that are generally adopted by a researcher in studying research problem along with the logic behind them.

In fact, research is an art of investigation. It is academic activity and as such the term should be used in a technical sense.

It comprises defining and redefining problems, formulating hypothesis or suggested solutions; collecting, organizing and evaluating data; making deductions and reaching conclusions either in the form of solutions towards the concerned problem or in certain generalizations for some theoretical formulation.


Research, is thus, an original contribution to the existing stock of knowledge making for its advancement. It is the pursuit of truth with the help of study, observation, comparisons and experiment.

It refers to the systematic method consisting of enunciating the problem, formulating a hypothesis, collecting the facts of data, analyzing the facts and reaching certain conclusions either in the form of solutions towards the concerned problem or in certain generalizations for some theoretical formulation. The purpose of research is to discover answers to questions through the application of scientific procedures. The main aim of research is to find out which is hidden and which has not been discovered yet.

Research also defines as the manipulations of things, concepts or symbols for the purpose of generalizing to extend, correct or verify knowledge.

It is necessary for the researcher to know not only the research methods/techniques but also the methodology. Researchers not only

need to know how to develop certain indices or tests, how to calculate mean, the median, or the standard deviation or chi-square, how to apply particular research techniques, but they also need to know which of these methods or techniques, are relevant and which are not, and what would they mean and indicate and why.

Researcher also needs to understand the assumptions underlying various techniques and they need to know the criteria by which they can decide that certain techniques and procedures will be applicable to certain problems and others will be not. All this means that it is necessary for the researcher to design methodology for the problem as the same may differ from the problem to problem.

In research, scientist has to expose the research decisions to evaluation before they are implemented. Need to specify very clearly and precisely what decisions is selected and why it is selected so that others can evaluate them also.


Form above, Research Methodology has many dimensions and research methods do constitute a part of the research methodology. It is wider than that of research methods.

Thus, when we talk of research methodology we not only talk of the methods but also consider the logic behind the methods we use in the context of our research study and explain why we are using a particular method or technique and why we are not using others so that research results are capable of being evaluated either by the researcher or by the others

A research methodology concerning a research problem or study includes: A research study undertaken. Definition of research problem (how). Formulation of hypothesis development (in what way and how). Data collection (what data). Adoption of particular method (what method).


Particular technique of analyzing data that is used in research (why). Interpretation and recommendation given for the research problem.

RESEARCH DESIGN DESCRIPTIVE These are studies concerned with describing the characteristics of a particular individual or a group. It helps a researcher to define clearly what, he/she wants to measure and must find adequate methods for measuring it along with a clear of definition of population under study. It helps in defining the objectives to ensure that the data collection is relevant. SAMPLE DESIGN It is definite plan for obtaining a sample from a given sample. It refers to the technique the researcher would adopt in selecting an item from the sample.


While developing a sample design, the researcher must pay attention to the universe, sample design, place boundary, and time boundary. METHODLOGY The methodology includes personal interaction with workers through questionnaire, interviewing and observation. A sample questionnaire was drawn up detailing about the survey that was carried out in Yamaha, Surajpur of convenience and correction were incorporated in the questionnaire wherever required. SELECTION OF SAMPLE SIZE AND COMPOSITION The profile of the respondents was based on the age group, tenure of the job, job experiences, challenges faced and job satisfaction, etc. DATA COLLECTION It is one of the methodologies of conducting research. It can be described as a collection of data, which is nothing but the raw material for analysis, which when processed, generates useful information to take corrective decisions.Our database constitutes of primary data, which are collected afresh, and for the first time and thus happens to be original in character.


TOOLS FOR DATA COLLECTION The study based on information and feedback given by the respondents. This is done with the getting information from the documents and files, feedback asked along with the questionnaire, personal interaction. The primary preparation is from the different books. Questionnaire Questionnaire: It is one of the important sources of collecting information. A list of questionnaire prepared for the specific subject as the name indicates there is a set of selected questions whose answer the investigator seeks from respondents in order to get knowledge about the matter. Structured questionnaire is prepared with the data concerns and guidance of the management of company. The questionnaire was used for different category mentioned. RESEARCH METHODOLOGY Keeping the objective of the study in mind carries out the research. For the purpose of the study data was collected from: 1. Primary Source 2. Secondary Source


Primary Source includes personal interviews and filling up of questionnaire by the employees of the company. Secondary source of data was collected through previous years research files and employees handbook and companys annual reports. Sample Size: The sample size was 50 employees of Surajpur plant of the company, most of the workers and few supervisors.


The methodology includes personal interaction with workers through questionnaire, interviewing and observation. A sample questionnaire was drawn to achieve the objective and the workers were asked to fill it.


It is definite plan for obtaining a sample from a given sample. It refers to the technique the researcher would adopt in selecting an item from the sample. While developing a sample design, the researcher must pay attention to the universe, sample design, place boundary, and time boundary. Type of Universe: set of objects: - finite Sample: workers of YAMAHA INDIA PVT LTD,Surajpur near Noida Sample Size: The total of sample size covered is 50

Sampling Method Convenience & Random Sampling (Survey Sampling)

METHODS OF DATA PROCESSING AND TOOLS & TECHNIQUES ANALYSIS The entire data was fed in the Excel sheet and the statistics was calculated. Simple statistics like Tally Method, Counting, Tabulations and graphs are used. Data Analysis is done using Graphical Representation on Percentage basis. ANALYSIS AND INTERPRETATION OF THE DATA

The analysis of data requires a number of closely related operations such as establishment of categories. The application of these categories to raw data through coding, tabulations and then drawing statistical inferences. One should always try to classify data into some purposeful and usable categories. EXECUTION OF THE PROJECT Execution of the project is a very important step in the research process. The researcher of the project should see that his project is executed in a systematic manner and in time, for example if there is a survey to be conducted by means of a structured questionnaire data can be readily machine processed and more important data should be properly coded. If the data is to be collected through interviews, then proper arrangements should be made for proper selection and training of the interviewers Analysis of data basically requires, coding, editing and tabulation of the data collected.


CODING Coding operation usually involves the transformation of data into various symbols that can be tabulated and counted. EDITING Editing is a procedure that improves the quality of a data for coding. TABULATION Tabulation is a part of technical procedure wherein; the classified data are put in form of tables. Analysis work is generally based on computation of various percentages and coefficients by applying various well-defined statistical formulae.




An Introduction to Performance Appraisal


History of Performance Appraisal System Employee appraisal techniques are said to have used for the first time during the first world war, when at the instance of Walter Dill Scott, the US army adopted the man to man rating system for evaluation of military personnel. During 1920-30 period, relational wage structures for hourly paid workers was adopted in industrial units. Under this system, the policy of giving grades wage increments on the basis of merit was accepted. These early employed plans were called Merit rating programs which continued to be so called up to mid-50s. By then most of these plans were of the rating scale type, where emphasis was given to factors, degrees and points. In the early 50s however, attention begin to be devoted to performance appraisal of technical, professional and managerial personnel. Since then, as a result of the experiments and a great deal of study, the philosophy of performance appraisal has undergone a tremendous change. Consequently the change has also taken place in the terminology used. Now the older phrase Merit rating is largely restricted to the rating of hourly paid employees and is frequently used in developing criteria for salary administration, promotions, transfers, etc. the later phrase Personnel Appraisal place


emphasis on the development of the individual as and widely used to evaluate, technical, professional and managerial personnel. Important features of Performance Appraisal: It is a systematic description of an employees job relevant strengths and weaknesses. It helps in determining how well an employee is performing the job and establishes a plan for improvement. Appraisals are arranged periodically according to a definite plan. It is a continuous process in every large-scale organization. Need of Performance Appraisal It is to provide information about the performance ranks on the basis of which decisions regarding salary fixations, confirmation, promotion, transfers and demotions are taken. It provides information about the level of achievement and

behaviour of subordinates. This information helps to review the performance of subordinates, rectifying performance deficiencies and to set new standards of work if necessary. It provides information that helps to counsel the subordinates.


It also provides information to diagnose deficiency in employee regarding skills, knowledge and determining the training needs. It is to prevent grievances and in disciplinary activities

Contents of Performance Appraisal Every organization has to decide upon the content to be appraised before program is approved. Generally the content to be appraised is determined on the basis of the job analysis. Certain contents to be appraised in a job are as mentioned below:

Regularity of attendance Self expression- written and oral Ability to work with others Leadership styles and abilities Initiative Technical skills Technical ability/knowledge Ability to grasp new things


Ability to reason Originality and resourcefulness Creative skills Area of interest Area of suitability Judgment skills Integrity Capability for assuming responsibility Level of acceptance by subordinates Honesty and sincerity Thoroughness in job and organizational knowledge Knowledge of systems and procedures Quality of suggestions offered for improvement



TRADITIONAL METHODS Graphic rating scales

MODERN METHODS Behaviourally anchored rating scales (BARS)

Ranking method Paired comparison method Forced distribution method Management by objectives Checklist method: Simple and weighted Incident method Essay or free from appraisal Group appraisal Confidential reports

Assessment center Human resource accounting Management by objectives (MBO) Psychological appraisal


Limitations of an Appraisal System The major problems in the Appraisal system are: The Halo effect The Halo effect is a tendency to lead the assessment of individual onetrait influences the evaluation of that person on the other specific traits. There is this effect in appraisal when the appraiser assigns the same rating to all traits regardless of an employees actual performance on the traits. Leniency or strictness tendency or constant errors Every evaluator has his own value system that acts as a standard against which he makes appraisals. The leniency bias crops when to be liberal in their ratings by assigning high rates considerably. Such ratings do not serve any purpose. Central tendency problem It is the most commonly found error. It assigns average rating to all employees with a view to avoid commitment when the rater is in doubt or has inadequate information or lack of knowledge about the behaviour of the employee.


Similarity errors This type of error occurs when evaluators rates other people in the same way he perceives himself. For e.g. the evaluator who perceives himself as aggressive may evaluate others by looking for aggressiveness. Those who show this characteristic may be benefited while other may suffer. Personal prejudice If the evaluator likes or dislikes any employee or a group then he may rate him rate him accordingly and therefore the purpose of appraisal wont be achieved.



PERFORMANCE AND POTENTIAL DEVELOPMENT SYSTEM (PPDS PHILOSOPHY) PPDS is based on the following philosophy and premises. Performance appraisal is the most crucial element of the overall process of performance planning both at organizational level and at level i.e. between the appraiser and appraisee. Achievement of results by itself is only half the picture unless the appraisal is benched marked against the appraisees contribution to the company. The process of achieving results is as important as the achievements themselves to keep in focus both the short term and the long term costs and benefits. Unleashing the human potential in any collaborative endeavour rests on the process of opening opportunities, providing challenges, involvement, continuing feedback and guidance. This, however, must be in

conjunction with the assumption of responsibility for development and growth by the individual himself. PERFORMANCE REVIEW AND POTENTIAL ASSESSMENT 1. All confirmed their designated appraiser as at the end of the financial year would appraise employees. 2.Where an employee has worked under two or more officers in any financial year, the last officer subject to the minimum services under the appraiser being three months will do the appraisal. Otherwise, the previous reporting officer will do the appraisal. Where the previous reporting officer has left the service of the company and the appraisee-appraiser relationship is less than three months, the appraisal will be done jointly by the current reporting officer and his superior. Performance review is a joint process between the appraisee and the appraiser. This joint process will also focus on the emerging training needs and development plans. PERFORMANCE COUNSELING In the above context, the role of performance feedback and counseling is the most crucial component of the appraisal process in enhancing the effectiveness of the total exercise for triggering higher levels of


performance. It is therefore envisaged that the performance reviewed will not be complete until and unless counseling has taken place. The appraiser and appraisee may record their reaction to the counseling process, if they wish so. PERFORMANCE OBJECTIVES The climate of sharing arrived in performance counseling will be used for at least tentatively identifying the, next years performance objectives, these objectives however may be revisited and fine tuned in case of delayed finalisation business plans or any other factor subsequently necessitates so. This must be followed by at least one midyear review. To distinguish performance objectives from the various activities being carried out by an individual during the course of his work, it is necessary that these objectives be restricted to a maximum of five. To assist managers, a sample list of indicators on the basis of which these objectives should be firmed up in various functions is being enclosed in Annexure. This list is only illustrative and not exhaustive. Nor is it applicable everywhere. Identification of objectives for each position will take in to account the specific nature of the job,


performance expectations and so on. Care must be taken to include atleast one performance objective should focus on some innovative effort, for e.g. modifying the system/ process and the like. PERFORMANCE RATING Performance rating will be done on the following scale: VERY GOOD-A The employee has far exceeded acceptable levels of performance with excellence and creativity. His contribution to the company far exceeds targets / expectations and such an employee is a very valuable asset to the company. GOOD B The employee generally exceeds the acceptable levels of performance. His contribution generally exceeds targets/ expectations. Such an employee contributes substantially to the company. ACCEPTABLE B The employee meets acceptable levels of performance. His contributions meet expectations but needs occasional guidance/follow up. Such an employee contributes reasonably to the company.


BARELY ACCEPTABLE - C+ The employee needs urgent improvements to achieve acceptable levels of performance. Work is often accomplished by unduly relying upon others to solve problems and requires considerable guidance, supervision and follows up. NOT ACCEPTABLE C The employee slips despite guidance and follow up. He is clearly a burden on the company in the sense that his contribution does not justify his cost to the company. POTENTIAL ASSESSMENT Potential assessment will be based on certain key competencies relevant to the appraisees present job and the likely higher responsibilities he may occupy. These competencies are as follows. Even though all competencies may not be relevant for all positions/functions and wherever the appraiser is that any particular competency is not relevant, he may choose not to appraise on the same. The appraiser may also add any other relevant competencies not listed. The appraiser should rate appraisee in terms of high/medium /low and should also give specific reasons for such ratings.


Potential assessment can be made through the listed points: Achievement Orientation Leadership /man-management ability Decisiveness Developing others Team work and networking Optimism Pro-action / initiative Listening skills Presentation skills Striving for learning Analytical Ability Customer orientation


SAMPLE INDICATORS FOR DEVELOPING PERFORMANCE OBJECTIVES Marketing Sales quantity Extra/ shortfall in contribution. Revenue realization in average no. of days. Hit rate (conversion of prospects into orders) Territory / channel development. Services: Customer complain satisfaction ratio. Response time. Return ratio of defects rectified in field. Service camps Mechanical training Production


Quantity Rejection quantity / cost percentage. Manpower utilization per equipment /product. Material utilization. Delivery schedules. First time pass rate. HR/ IR: Response time for services /facilities rendered. Man hour lost due to unrest /work stoppage. Labour cost Absenteeism/ discipline/ turnover. Statutory compliances. Finance: Response time and error rate in services rendered. Statutory compliances. Accounts closing schedule.


Budget formulation / adherence. Timely MIS Funds management- cost of procurement, funds availability. Tax saving and planning Audit checks /compliances R & D: No. of ideas generated /converted based on feedback /own ideas. Value engineering saving made. Prototype /product development Patents applied. Documentation Quality: Quality cost including manpower. Defect rate in passed quality Warranty cost Gauges /instruments calibration


New system / process development for better quality Turn out rate for incoming quality inspection. Maintenance: Machine down time percentage. Average turnout time. Adherence to schedule. Defect rate attributable to poor maintenance. Maintenance cost including spares inventory. Legal: Percentage cases lost. No. of litigations pending Legal payouts Process improvement / monitoring for reducing the above. Security: Response time Theft / pilferage control


Intelligence sources developed Gate movement control Night round frequency

Secretarial: Response time error rate in typing / word processing, filling, telecommunication, information retrieval etc. New software packages learnt. Percentage rate of independent correspondence. Executive time management. General: Cost reduction percentage. Succession schedule.
Saving process improvements / innovation.


Analysis of Data

ANALYSIS OF DATA AND FINDINGS OF THE STUDY A survey was conducted among a sample size of 50 workers. The objective of the study was to highlight the performance appraisal system of the company and the feedback of the employees regarding it. The findings of the survey are as follows:

Ques.-1 Are you aware of the performance appraisal system being carried out by the company? Analysis: The survey brought into light that the awareness level of the


employees towards the appraisal policy was low:


aware not aware



According to you, which is the most important factor among

the following in the performance appraisal system? Analysis: 40% agreed on productivity 30% believed quality of the output 20% believed attendance


10% punctuality



20% 10%

quality attendance punctuality output

Ques.-3 Are the attitudinal factors desire to learn new techniques, skills and practices, cooperation with others, contribution of new ideas, saving consciousness; mentioned in your format sufficient for judging your performance ? Analysis:





0% 10% 20% 30% 40% 50% 60% 70% 80%

Ques-4. Do you think the performance appraisal system adopted is biased in any way ? Analysis: 90% disagreed 10% agreed


agreed disagreed

10% 90%

Ques.-5 If you were being positively appraised, which recommendation do you personally identify with? Analysis: The following diagrams elucidate, which recommendation the employees have identified:


promotion special increment annual increment

30% 60%


Ques.-6 with you? Analysis:

Is the performance appraisal sheet shown to you or discussed

35% say it is shown 65% say it is not shown


70% 60% 50% 40% 30% 20% 10% 0%

65% 35%


not shown


Do you think performance appraisal should have negative

recommendation, if yes then which one of the following:

Analysis: 50% of the workers were in favour and 50% were against it: 50% say increment should be stopped and the rest 50% say it

should not be .

50% 40% 30% 20% 10% 0%






In your opinion your performance should be appraised after

how much time? Analysis: Nearly most of the workers in favour of quarterly appraisal in the organization.


Ques.-9 Analysis:

Are you satisfied with your performance appraisal?

Most of the workers were found dissatisfied with their appraisals.


satisfied dissatisfied
0% 10% 20% 30% 40% 50% 60%





While conducting the studies over this topic certain assumptions were there: The data collected from secondary sources such as annual reports of the company are correct and reliable.


The data collected through conducting of structured personal interviews and questionnaires is reliable because whole of the analysis and interpretations are drawn from them. No manipulations are done on the part of respondents while filling up of schedules.




RECOMMENDATIONS After analyzing the collected data, the following recommendations were made to improve the present performance review scenario in the organization. The performance appraisal system should be more performance oriented. Quarterly assessment of individuals should be done instead of yearly. Individual should be informed about the actual criteria on the basis of which his work potential assessed. The appraisal system should provide two-way communication between the assessor and the assessee. The salary structure of the employees should be revised timely as per the performance s. It should be more transparent in its working. Efforts should be made to reduce the chances of biasness. An employees appraisal should be discussed with him in order to remove his weaknesses.

The HR policies should be clear to all employees i.e. the policies could be more result oriented in approach. There should be uniformity of appraisal process in all departments. The employees interest should be taken in account while allocating the work department to him. Data and information, which an employee enters in the appraisal form, should be correct and authentic. Employee should take the entire discussion of feedback session positively and look at the opportunity to improve. Prior to feedback and counseling session the manager should remember that the performance appraisal is the most important thing for the employee. Appraisal system also gives the manager an opportunity to get a constructive feedback of their own performances from their team members. The managers should not delay the discussions as it may lose value. The results of the performance rather than the personality traits should be given due weight.


The existence of an atmosphere of confidence and trust should prevail between the supervisor and employee.

The supervisor should analyze the weaknesses and strengths of an employee and advice him to take corrective measures. The appraisal program should be less time consuming and costly. It should be used as a motivational tool.




BIBLIOGRAPHY Aswathappa, Human Resource and Personnel Management. EYMIL Report Magazines. Flippo B.Edwin, Personnel Management. Hand Book of Managers, Escorts Motors India Ltd. Mamoria C.B., Personnel Management.Flippo B.Edwin, Personnel Management Rao P.Subba, Essentials of Human Resource Management and Industrial Relations. REFERENCE BOOKS: Kothari C.R ; Research Methodology; New Age International (P) Ltd ; New Delhi ; 2005 WEBSITES REFERRED

SEARCH ENGINES The above references taken are the key source of information that helped me during the completion of this project report. THANK YOU !!!



QUESTIONNAIRE Q-1 Are you aware of the performance appraisal system being carried out by the company? Yes No

Q-2 According to you, which is the most important factor among the following in the performance appraisal system? Productivity/Output Punctuality Attendance Quality of output

Q-3 Are the attitudinal factors desire to learn new techniques, skills and practices, cooperation with others, contribution of new ideas, saving consciousness; mentioned in your format sufficient for judging your performance ? Yes No (if no than what other factors are


to be included please mention)

Q-4 Do you think the performance appraisal system adopted is biased in any way ? Yes No

Q-5 If you were being positively appraised, which recommendation do you personally identify with? Special Increment Annual Increment Promotion

Q-6 Is the performance appraisal sheet shown to you or discussed with you? Yes No


Q-7 Do you think performance appraisal should have negative recommendation, if yes then which one of the following: Yes No Increment being stopped Promotion being stopped Demotion Transfer Separation

Q-8 In your opinion your performance should be reviewed: Quarterly Half-yearly Annually

Q-9 Are you Satisfied with your performance appraisal? Satisfied Dissatisfied