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Executive Summary

IFFCO-Tokio General Insurance (ITGI) was incorporated on 4th December 2000 with a vision of being industry leader by building customer satisfaction through fairness, transparency, and quick response. It is a joint venture between the Indian Farmers Fertilizer Co-operative (IFFCO) and its associates and Tokio Marine and Nichido Fire Group, the largest listed insurance group in Japan. The study is divided into 2 parts .the first part mainly involves studying and analyzing the current performance appraisal system and identifying the gaps between the current state and the desired-in-state. The general methodology adopted for study was primarily collection of primary data; Survey based. Some secondary sources like company records, manuals, books, accounting and internet were also tapped. The second part involves designing a more effective performance appraisal system. The effort involved designing a guide book on performance appraisal, which throws light on the critical area of managing human performance. The scope of the project involved defining and designing performance appraisal system, devising feedback system, motivating and rewarding performance, employee career growth and development and studying the implications of an effective performance appraisal system on organization’s performance. Effectively managing performance appraisal has never been more critical then in today’s dynamic business environment. In order to drive increased productivity managers must consistently monitor team performance and provide meaningful feedback to their subordinates. Employees must be constantly aware of their progress as the expectations for their contributions evolve. Finally, visibility to employee accomplishments and areas of weaknesses should be used by managers to provide coaching and guidance to their subordinates. The reality is that without adequate performance appraisal tools, any and all of these requirements are difficult to fulfill. The performance appraisal application allows for an ongoing meaningful feedback mechanism between managers and their subordinates. It helps transform the often rushed and tedious once-a-year performance review into an ongoing performance appraisal process that ties employee performance to bottom line business results. Most importantly, the improved effectiveness of the overall process has been proven to increase employee morale and overall productivity.

OBJECTIVES OF THE STUDY

PRIMARY  To study the performance appraisal of employees SECONDARY

To study the purpose of performance appraisal

 To understand the opinion of employees towards performance appraisal  To identify the effect of performance appraisal on individual development.

CHAPTER- 1 INTRODUCTION COMPANY’S PROFILE
IFFCO TOKIO is one of the leading insurance companies of India. It offers products and services to the individuals to make their life simplified and easy. It was initiated in December 4, 2000, IFFCO-Tokio General Insurance (ITGI) Company is a cooperative undertaking by the Indian Farmers Fertilizer Co-operative (IFFCO) and its associate and Tokio Marine and Nichido Fire Group (the largest listed insurance group in Japan), to deal in the insurance sector of India. With a wide network of 51 'Strategic Business Units' and 110 offices all over India, the company serves its customers and potential customers, with an array of uniquely customized policies. It covers each stratum of the society, right from farmers to India's largest automobile manufacturers. It has its head office at Gurgaon, Haryana. It is counted amongst the three leading private insurance companies. Though the company started with a modest initial GWP (Gross Written Premium) of Rs. 2130 millions (in 2001-02), IFFCO-Tokio General Insurance Company today has progressed ahead to boasts of Rs 12350 Million as GWP (2007-08). It is also the only company to own its distribution channel called IFFCO-TOKIO Insurance Services Ltd (ITIS). Talking about ITIS, the company has a staff of over 1000 employees spread across 200 towns in India. It conducts various customer satisfaction surveys semi annually, to determine its operational efficiencies. It is the only insurance company that made profit for five consecutive years. Indian Farmers Fertilizers Co-operative Ltd. (IFFCO) is well known as a pioneer in large scale fertilizer manufacturing and is a leading fertilizer producer in the country. IFFCO has a membership of about 35,000 cooperatives at the State, District and Primary level spread in 22 States and 2 Union territories. The manufacturing plant at Kalol, Kandla, Phulpur and Aonla has been consistently operating at a capacity utilization of more than 100% for the past several years.

Vision: To be the industry leader by building customer satisfaction through fairness. these are the three words that describe our organization. corporate. industry. We bring you a wide range of general insurance products with the Flexibility to suit your requirements. Mission: To win the trust of individuals. Our strong parentage ensures uncompromised delivery to our customers at surprisingly fast response times. which is constantly reinforced by our outstanding performances in times of need. The company is rated AA (strong financial security characteristics) by the international rating agency Standard and Poor’s. It is a member of large and diversified Mitsubishi group comprising over 1500 companies. Quantity. cooperative and international investors in India. Product Philosophy The product development team at ITGI is constantly working to introduce products which are competent in meeting the customer needs. We believe that your trust in us is the most valued possession. being technology driven. cost conscious and price competitive. Flexibility. They emphasize on understanding the need from . trade. transparency an quick response. Integrity. the integrity of our teams and the Quality of service rendered to all our customers. providing innovative products and services to suit every customer’s need. It is ranked the world’s fifth largest insurance company. creating a niche in rural segment.The Tokio Marine and Fire Insurance Company Ltd has over hundred and twenty years of experience in general insurance business and is the largest and oldest general isurance company of Japan. commerce and to protect citizens. based on net premium. Tokio Marine has been continuously serving as one of the nationalized Indian insurance market.

Retail and Commercial Products & Services Commercial Line • • • • • • • • • • • Standard Fire & Special Perils Consequential Loss Contractors All Risk Contractors Plant & Machine Boiler & Pressure Plant Erection All Risks Industrial All Risks Machinery Breakdown Machinery Loss of Profit Product Liability Public Lia Industrial . etc. from farmers to some of India's largest automobile manufacturers. This company offers a wide range of products and policies.the market and offering the best possible products across the product lines. They are also making constant efforts to reach out the entire general insurance spectrum i. Barish Bima Yojana. Commercial Lines. They approach the market with products that have differentiated features / benefits / service offerings. The products can be categorized under three broad heads: Specialty. IFFCO Tokio offers a wide range of uniquely customized policies covering a wide range of customers. Retail lines and Specialty Lines.e. Innovations will keep on expanding to include customized offerings for various market segments and geographies. The endeavour is to spread the benefits of insurance to the masses through their specially designed insurance products like Sankat Haran Yojana. The company has made a genuine attempt to understand the rural and low-income segment of the Indian market. to tap the potential of this largely unexplored segment and make the benefits of insurance available to the masses.

• • • • • • • • Public Lia Non-Industrial Marine Cargo Electronic Equipment Bankers Blanket Burglary Insurance Fidelity Guarantee Money Insurance Workmen's Compensation Retail Line • • • • • • • • • • • Motor Private Car Motor Cycle/Scooter Home & Family Protector Trade Protector Industry Protector Office Professional Establishment Home Suvidha Individual Medishield Individual Personal Accident Group Personal Accident Critical Illness Policy Specialty Line • • • • • • • • Credit Insurance Multi Modal transport (MTO) Marine Hull & Machinery Jeweler’s Block Barish Bima Yojna (Weather Insurance) Sagar Bandhu Bima Policy Aviation Insurance Policy Errors and Omissions (Technology) Policy .

Chandigarh. Kochi. Khandwa. Delhi. Faridabad. Kolkata.Private Collectors Fine Art Insurance . Noida. Chennai. Udaipur. where it is located are Ahmadabad. Haldwani. Ludhiana.• • Fine Art Insurance . Hubli. Coimbatore. Indore. Agra.Art Dealers & Gallery Owners Operating offices of IFFCO TOKIO are spread all over the country. Nasik. Bellary. Akola. Mumbai. Pune. Jaipur. Bangalore. Faizabad. Maninagar. . Gurgaon. Bhuvaneshwar. Dehradun. Lucknow. . Gwalior. Belapur. Jalandhar. Some of the places. Madurai . Patiala. Nagpur. Varanasi. Vapi. Surat. Jabalpur. Aurangabad. Vadodara. Allahabad. Hyderabad. Bhopal.

it is necessary for management to know these differences so that the employees having better abilities may be rewarded and the wrong placements of employees may be rectified through transfers. The objective factor can be assessed accurately on the basis of records maintained by the Human resource or personnel Department. there is a great need to have suitable performance appraisal system to measure the relative merit of each employee. appraisal of these factors must be done to achieve the full appreciation of every employee merit. but there is no device to measure the subjective factor precisely. as for instant. Notwithstanding this. Therefore. The individual employee may also like to know the level of his performance in comparison to his fellow employees so that he may improve on it. attitude and personality. The basic purpose of performance appraisal is to facilitate orderly determination of an employee’s worth to the organization of which he is a part. Thus. attendance. a fair determination of the worth of an employee can take place only by appraising numerous factors some of which are highly subjective.CHAPTER-2 OVERWIEW OF PERFORMANCE APPRAISAL Since organizations exist to achieve goals. . the degree of success that individual employees have in reaching their individual goals is important in determining organizational effectiveness. There will be some differences in the quality and quantity of work done by different employees even on the same job. The assessment of how successful employees have been at meeting their individual goals. as for instant. People differ in their abilities and aptitudes. This leads us to the topic of performance appraisal. becomes a critical part of HRM. therefore. These differences are natural to a great extent and cannot be eliminated even by giving the same basic education and training to them. while others are highly subjective. However.

It is a continuous process to secure information necessary for making correct and objective decisions on employees. It employs various rating techniques for comparing individual employees in a work group.WHAT IS PERFORMANCE APPRAISAL? Performance appraisal goes by various names such as performance evaluation. etc. Performance appraisal is a formal programme in an organization. which is concerned with not only the contribution of the members who form part of the organization. which can meet requirements of the management to achieve the organizational goals. Supervisor or an independent appraiser may do rating. Thus. the individual’s immediate superior in the organization and whose performance is reviewed in turn by his superior does the evaluation. merit rating. progress rating. There are no two opinions about the necessity of performance appraisal. But in this chapter. .” performance appraisal includes all formal procedures used to evaluate personalities and contribution and potential of group members in a working organization. Performance appraisal is the systematic evaluation of the individual with respect to his performance on the job and his potential for development. in term of personal qualities or deficiencies and the requirements of their respective jobs. everyone in Performance appraisal employs rating techniques for comparing individual employees in the work group. To quote dale Yoder. we shall use the terms performance appraisal and merit rating to denote the appraisal of the performance of the employees of an organization. but aims at spotting the potential also. The satisfactory performance is only a part of the system as a whole and the management needs more information than mere performance ratings of the subordinates. in terms of personal qualities or deficiencies and the requirements of their respective jobs. merit evaluation. Generally.” The comparison of performance with job requirements helps in finding out the merit of individual employees in a week group. Performance appraisal means systematic evaluation of the personality and performance of each employee by his supervisor or some other person trained in the techniques of merit rating. Performance appraisal is concerned with determining the differences among the employees working in the organization.

layoffs. Such actions can be justified if they are based on performance appraisal. In some cases. A properly developed and administered performance appraisal system can aid in determining whether individuals should be considered for promotions. . demotions and discharges. A person performing the job well does not necessarily mean that he is fit for promotion. It is to the common interest of both the management and employees to promote employees onto position where they can most effectively utilize their abilities. and 2) Self-improvement 1) ADMINISTRATIVE OBJECTIVES a) Promotions This is the most important administrative use of performance appraisal. The system must rate the ratee for the present job and his potentialities for the higher job.Purpose of Performance Appraisal The objective of performance appraisal fall in two categories: 1) Administrative. it may be necessary to consider various types of personnel actions such as transfer. b) Transfers In an organization. such actions are called for because of unsatisfactory performance while in other cases it may be called for due to economic conditions over which the organization has no control because of changes in production process. It is mismanagement to promote employees into position where they cannot perform effectively at the time in question.

the wage increases are based on the performance appraisal reports. Various theories in human relationship are outcome of efforts to find out the cause and effect relationship between the personnel and their performance. or counseling. Performance appraisal can also help in spotting the talented employees so as to train and develop them to create an inventory of executive skills. Performance appraisal helps human resource development in a way. It can also provide the areas where the employees/executives could be further trained and positioned to meet retirement and expansion situations. appraisals and seniority are used in combination. discussions. e) Personnel Research Performance appraisal helps in research in the field of personnel management. A promotion minded individual could ask for the target programmes of a position he seeks and use the information given by performance appraisal to prepare him for the job and enhance his candidacy. thus pointing out general training deficiencies which presumably should be corrected by additional training. d) Training and Development An appropriate system of performance appraisal can be helpful in identifying the areas of skills or knowledge in which certain employees are not up to par.c) Wage and Salary Administration In some cases. 2) SELF IMPROVEMENT OBJECTIVES The performance appraisals bring out the deficiencies and shortcomings of the employees. . In some cases.

 Systematic appraisals will prevent grievances and develop confidence amongst the employees if they are convinced of the impartial basis of evaluation. leadership ability.Performance appraisal also helps to spot out a person’s ability to see an organization problem. which might be leveled by the trade union leaders.  Ratings can be used to evaluate the effectiveness of training programmes. incorporate new information as it arises and carry his plans through the results.  Performance rating helps in guiding and correction of employees.  The ability of the staff is recognized and can be adequately rewarded by giving them special increments. he can be recommended for promotion. he may be transferred to some other job. . are as under:  A good system of performance appraisal helps the supervisor to evaluate the performance of his employees systematically and periodically.  Performance appraisal can be used as a basis of sound personnel policy in relation to transfers and promotions. It highlights a sort of total managerial action in contrast to things they customarily factor out as conceptual entitiesthings such as planning function. translate his ideas into action. or financial knowledge. Why Performance Appraisal? The important reasons or benefits. The record of merit rating is available in permanent form to protect the management against subsequent charges of discrimination.  Performance appraisal provides an incentive to the employees to better their performance in a bid to improve their rating over others. The supervisor may use the results of rating for the purpose of constructively guiding employees in the efficient performance of work. Merit rating reveals weaknesses of employees and the training programmes can be modified accordingly. but if a person is not doing well in a job. It also helps to assign that work to individual for which they are best suited. which justify the existence of a system of performance appraisal in an enterprise. If the performance of an employee is better than others. devise ways of attracting it. The manager’s selection will often be improved by this emphasis on the whole managerial job.

They are:  Unstructured appraisal. They are based on traitoriented appraisal. Performance Appraisal has a beneficial effect on both the persons doing the appraisal and being appraised. judgment.  Graphic – rating scales.  Check – lists. 1) Traditional Methods Traditional methods are very old technique of performance appraisal.  Field review. The necessity of performance appraisal leads the appraiser to a thoughtful analysis of people rated and tends to make him more alive to opportunities and responsibilities in developing the subordinates. leadership.  Critical incidents. versatility. etc.  Forced distribution.  Employee ranking. There are seven traditional methods of appraisal. loyalty. Evaluation of employees is done on the basis of standards of personal traits or qualities such as attitudes. METHODS OF PERFORMANCE APPRAISAL THERE ARE VARIOUS METHODS OF MERIT RATING MAY CLASSIFIED INTO: 1) Traditional Methods and 2) Modern Methods. dependability. . The appraisal brings prominently to the attention of supervisors or executives the importance of knowing their subordinates as human being. knowledge of job. punctuality. initiative. The objective of appraisal is to derive the point to the appraisee without inviting his resentment or drawing back into the shell or taking defensive attitude.

personality traits. below average and poor. the best in placed first in the rank and the poorest occupies the last rank. 20% ‘below average’. The forced distribution system is devised to force the appraiser to fit the employees being appraised into predetermined ranges of scales.This method obviously eliminates the room for subjective judgment on the part of . All workers are judged on the same factors and they are rated on the overall basis with reference to their job performance instead of individual assessment of traits. It permits comparison of all employees in any single rating group regardless of type of work. They fail to evaluate the poor.outstanding. In this system. and so on.e. • Forced Distribution Method Some appraisers suffer from a constant error. However. It has an advantage over the paired comparison system in that two or more employees can be given equal ratings. the appraiser is required to write down his impression about the person being appraised in an unstructured way. Asking the appraiser to rank employees on certain desirable traits can reduce the subjective ness in this method. comments are required to be grouped under specific headings such as quality of job performance. 40% ‘average’. This system is based on the presumption that employees can be divided into five point’s scale of . in some organizations. average or poor.. average or excellent employees clearly. • Ranking Method Ranking is a simple process of placing in a rank according to their job performance. they either rate all workers as excellent. and development needs. above average. In this way. and 10% ‘poor’. the appraiser is asked to distribute the employees into these categories in such a way that about 10% of the men are in group ‘outstanding’. Subjectively of the appraiser may enter into his judgments. 20% ‘above average’.• Unstructured Appraisal Under this. reasons for specific job behaviors. The other difficulty with this method is that it does not indicate the degree of difference between the first man and the second man. The difficulty of this system is that the rater is ranked to consider a whole person. i. average. This system is highly subjective and has its merit in its simplicity and is still in use especially in the small firms.

However. There are two types: 1. Characteristics. The main drawback of this system is that the rater may be biased. There is an implication that a high score of one factor can compensate for a low score on another. However. cooperativeness. It permits the statistical tabulation of scores in terms of measures of central tendency. Since certain area of job performance cannot be objective measured. This system is easy to understand and administer. he is asked to give example of the ratee’s behavior that justifies the assigned rating. A supervisor may tend to rate him men high to avoid criticism from them. • Graphic Rating Scales Under this method. Contributions.supervisors. The objective of this technique is to spread out ratings in the form of a normal distribution. the rater is supplied with a printed form. The scores presumably reveal the merit or value of every individual. A supervisor may tend to rate his men high so that they may receive high share of pay raises in some cases. scales are established for a number of specific factors and qualities. such as quantity and quality of work. Frequently. one for each person to be rated. skew ness and dispersion. the rating tends to cluster on the high side under this system. attitude. etc. and 2. Graphic scales impose a heavy burden upon the supervisor. this method has certain serious drawbacks. Five degrees are established for each factor and general definitions appear at points along the scale. it is likely that graphic scales will continue to use a mixture of both characteristics and contributions. He must report and evaluate the performance of his subordinate on scales involving as many as five degrees on perhaps ten different factors. one means of ensuring that the rater has based his scoring upon substantial evidence is to leave space on the form after each factor and require him to explain the reason for his rating. such as initiative and dependability. It permits a ready comparison of scores among employees. . which is open to criticism. In effect. The selection of factors to be measured on the graphic rating scale is an important point under this system. The graphic rating method is easy to understand and easy to use. Generally. If a man scores for attendance.

a) Gives clear instructions to his subordinate. the following two pairs of statement from each pair that is represented by supervisor. . Weights are then assigned to the statements in accordance with the way they are ranked by the raters. the rating up to this level is gathered on the rating sheet. Then the weights are averaged and employee is evaluated. b) Forced Choice This method is used particularly with the objective of avoiding scope for personal prejudices. When this process is over. Statements are chosen of both the sides (favourable as well as unfavourable). rating is placed on separate cards. They rank the employee from poor to excellent. c) Makes promises that he knows he cannot keep. Then raters who actually observed the accomplishment of the work sort these cards. various statements are prepared in such a manner that they describe various types and levels of behavior for a particular job. The weighted check – the persons thoroughly acquainted with job and perfect at preparing and weighing statements should prepare list. and b) Forced choice. a) Weighted Check List: Under this method.• Check Lists It also consists of two techniques: a) Weighted check list. b) Can be dependent upon to complete any job assigned. At the time of rating the employees. the rater is forced to choose between descriptive statements of seemingly equal worth describing the person in question. For example. Under this method. the supervisor just collects and checks all the statements. After the weights and values are attached to the individual traits. Each statement is attached with a scale value. d) Shows favouritism to some employees.

It has been observed that most of the time the employees have neither positive nor negative incidents. which are considered to be an example of . The usual procedure in constructing the specimen checklist is to collect behaviour incidents from certain experts in this area. but he must select the one that is more descriptive. Only one of the statements in each pair is correct in identifying the better performances and this scoring key must be kept secret from raters. If the critical event does not happens’ it will be difficult to rate an employee. dependability. or effective job behaviour. which contains categories or characteristics under which various behaviours can be recorded. It represents an exceptional behaviour of an employee at work. equally divided between effective and ineffective specimens. which consists of a number of behaviour incidents. otherwise. The number of such performance behaviours ranges from 80 to 150 incidents. Became upset over work.The rater may feel that neither of the two statements in a pair is applicable. Resisted the implementation of change. In this way. Moreover. it may be difficult for a supervisor to decide what the critical or exceptional incident is. The main advantage of establishing this system of performance appraisal is that it has greater objectivity than most other methods. Suggested an improvement in the work method’ Tried to get a fellow worker to accept the management decision. productivity. Refused to help a fellow worker. Examples of such type of job requirements of worker a are judgment. which indicate ineffective or poor behaviour. To rectify this defect. . the supervisor may forget the incidents with his subordinates. accuracy of work. • Critical Incident Method A critical incident means a significant act by an employee exceeding or failing any of the requirements of his job. ineffective. Welcome new ideas.uncommonly. bias removed from the appraisal process. as for instance. These are recorded in a specially designed notebook. Gerald Whitlock designed a specimen checklist. Daily recording of these items seems to be essential because. This method requires every supervisor to record all such significant incidents in each employee’s behaviour. learning ability. which indicate effective or successful action and those. responsibility and initiative. This method suffers from the defect that outstanding incident happens so frequently that individual’s appraisal may not vary markedly between any two time periods.

Many supervisors tend to give an employee approximately the same rating on all factors. The supervisor is required to give his opinion about the progress of his subordinates. If he knows his job. promotion ability.The success of field review method depends upon the competence of the interviewer. The appraiser may not be able to judge the competence of the employees because of lack of training. the level of performance of each subordinate. there is no rating form with factors or degrees. The interviewer questions the supervisor about the requirements of each job in his unit and about the performance of each man in his job. It is the tendencies of many raters to let the rating they rating to one characteristic excessively influence their rating on all subsequent characteristics. The questions are asked and answered verbally. Because of the judgment role of the supervisors under the traditional system. He probes to find out only how a man is doing but also why he does that way and what can be done to improve or develop him. satisfactory and unsatisfactory. good points. but overall ratings are obtained. The workers are usually classified into three categories . The personal judgment is always subjected to personal bias or prejudice as well as pressure from certain other areas. he can contribute significantly to accurate appraisal. The error can be recognized quite easily on factors scales. The rating scale technique of performance appraisal is .outstanding. and the possible plans of action in cases requiring further consideration. an expert from the personnel department interviews the supervisors. which are discussed below:  Halo Error: This type of error occurs when the rater allows one aspect of a man’s character or performance to influence his entire evaluation.• Field Review Method Under this method. Criticism of Traditional Methods: The general criticism of traditional performance appraisal systems is that they are two subjective in nature because all of them are on personal judgment of the rater. his weaknesses. The expert questions the supervisor to obtain all the pertinent information on each employee and takes notes his notebook. Thus. outstanding ability. performance ratings are frequently subject to a number of errors and weaknesses.

They also . Lenient or easy raters assign consistently high values or scores to their subordinates and strict or harsh raters give consistently low ratings.  Miscellaneous Biases: In many cases.e..  Leniency or Strictness: Some supervisors have a tendency to be easy raters and others have a tendency to be harsh in their ratings. Because of these reasons. The rater knows that he has to appraise his subordinates at periodic intervals but if he is unfamiliar with some of the subordinates or does not have sufficient time to devote to the rating process. Both the trends can arise from varying standards of performance among supervisors and form different interpretations of what they observe in employee performance. average behavior is not checked. religion or nationality. So he may rate them ‘average’. the rater may give higher ratings because he thinks that it would look bad for him if employees in the other department received higher pay increases than his pay. all average to be a true rating. It is possible for this type of rating i. Supervisors will tend to rate their subordinates near the middle of the spectrum if their bosses put pressure on them to correct the worker’s average rates or to get rid of the subordinates. Some supervisors show bias against members of the opposite sex or of another caste. In this manner.  Central Tendency: This error occurs when the rater is in doubt about the subordinates or has inadequate information about them or is giving less attention and effort to the rating process. he can consider all of the men relative to a standard or to each other on each trait.  Recent Behavior Bias: Often some raters evaluate persons on the basis pf their performance in recent few weeks.particularly susceptible to the halo supervisor judge all of his subordinates on a single factor or trait before going to the next. but its probability is less than its frequency. he may play it safe by neither condemning nor praising. generally the raters are reluctant to rate people at the outer ends of the scale. Some employees being aware of this tendency show better results when they feel that they are being observed and the report of their performance is to be compiled soon.

The second is behaviorally anchored rating scale. Besides. • Management by objectives It was peter drucker who proposed goal setting approach to performance appraisal. the use of such trait ratings produced two main difficulties: a) The manager was uncomfortable about using them and resisted making appraisal. 3) He sits with his superior to discuss these targets and plans. a rater is influenced by organizational positions and may give higher ratings to those holdings the higher positions.give higher ratings to senior employees because they are too ready to admit that they have not improved under their leadership. Goal setting approach or “management by objectives” (MBO) is the same as behavioral approach to subordinate appraisal. which are used by the modern concerns. which represents result-oriented appraisal. The application of goal setting approach to performance appraisal involves the following steps: 1) The subordinate discusses his job descriptions with his superior and they agree on the contents of his job and the key results areas. Many a times. and a final set is worked out. 2) Modern methods There are two important methods of performance appraisal. He was concerned with the fact that most traditional appraisal systems involved rating of traits and personal qualities that he felt were highly unreliable. which is based on the behaviour of the subordinates. Under this approach. an employee is not appraised by his recognizable traits. 2) The subordinate prepares a list of reasonable objectives for the coming period of six to twelve months. which he called “management by objectives and self-control”. but by his performance with respect to agrees goals or objectives.. . b) It had a damaging effect on the motivation and development of the subordinates. The first is management by objectives. Douglas McGregor further strengthened this approach. USA. actually called “Work planning and review” in case of General Electric Co.

Behaviorally Anchored Rating Scales Behaviorally Anchored Rating Scales (BARS) are designed to identify the critical areas of performance for a job.  This approach mainly emphasizes counselling. It has led to greater satisfaction. It is doubtful if such a procedure can be applied for the blue colour workers. But.  This approach is appropriate for the appraisal of executives and supervisory personnel who can understand it in a better way. The goal setting approach has done away with the judgmental role of the superiors in the appraisal of their subordinates. and to describe the more effective and less effective job behavior for . in practice.  This approach is not easy to administer. The Goal setting approach suffers from the following limitations:  The subordinates can apply this approach only when the goal setting is possible. it will not be possible for the superior to have discussion with each and every subordinate for setting up mutually agreed goals. a vast majority of them do not want to take initiative in setting their own goals. greater comfort and less tension and hostility between the workers and the management. This approach has also got a built – in device of self – appraisal by the subordinates because they know their goals and the standards by which their performance will be measured. thought and the superior and the subordinate.4)Check – points are established for the evaluation of progress. and the ways of measuring progress are selected. greater agreement. It is argued that critical evaluation and modification to improve are incompatible. it is not possible to forge the critical aspect of performance appraisal. It is problem-solving approach rather than tell and sell approach. It emphasizes training and development of individuals. It involves considerable time. If the span of supervision is quite large. This approach is considerably superior to the traditional approach of performance appraisal. Operative workers cannot understand this approach and moreover. training and development. 5) The superior and the subordinate meet at the end of the period to discuss the result of the subordinate’s efforts to meet the targets mutually established.

it is essential to determine its objectives. it is a more reliable and valid method for performance appraisal. By anchoring the scales behaviorally. They argue that such a system differentiates among behavior. an approach that is more preferable is to establish. For effective rating of employees. However. the supervisor is in a position to compare the employee’s actual behavior with the behavior that has been previously determined to be more or less effective. The objective of the appraisal programme may be either to appraise the actual performance of individuals to higher jobs or both. halo effect. Not only are . performance appraisal programmes are associated with specific objectives like training and development. performance. and results.getting results. the BARS approach was expected to produce more valid and reliable results by reducing measurement errors (leniency. • Establishing Standards of Performance. it is necessary to establish standard on performance against which their performance should be compared. Performance is evaluated by asking the rater to record specific observable job behaviors of an employee and then to compare these observations with a “behaviorally anchored rating scale”. Proponents of BARS claim many advantages of this approach. As a result. which the employee can reasonably be expected to meet. Empirical studies of Behaviorally Anchored Rating Scales (BARS) have provided a fertile ground for study by both theorists and practitioners. transfer and promotion. in writing. definite standards of accomplishment. etc. and consequently is able to provide a basis for setting developmental goals for the employee.-specific and identifies observable measurable behavior.  • Designing an Appraisal Programme Determining the Objective of performance Appraisal Before any performance appraisal programme is initiated. etc. Such a method will take it possible for both supervisor and his subordinate to reach agreement on just what is expected in terms of performance. Sometimes. central tendency.). Because it is job. increase in pay. It should be noted that performance standards are relative to the group and the organization.

may create a sense of fear amongst the ratee’s. It is often assumed that qualified psychologists are more capable than laymen of making unbiased judgments since they receive training in the dynamics of the personality and also in the correct manner of making the judgment. their immediate superiors may offer their rating in conjunction with ratings.Whosoever the appraiser may be. That is why some organizations try to obtain two or more ratings on each employee. There are not spot appraisals. monthly. He is most familiar with the employee’s work and is in contact with him and so he is considered to be able to appraise him well. • Frequency of Appraisal The frequency of appraisal differs from organization and with the nature of duties performed. • Who is to do the Appraisal Generally. When this is done. Idea frequency is one. A well-adjusted person is less subject to projecting himself into other than a poorly adjusted person and. The expectation of management is also higher in some organizations than in others. and six monthly or yearly appraisals. the appraiser is the immediate superior of the man to be appraised. which may consist of a number of supervisors and specialists from personnel department and a representative of the worker. Some people feel that employee should be allowed to rate themselves. The possibility is the constitution of a rating committee. but the talents of manpower also varying from organization to organization. But again the difficulty may arise because the second rater may not have the necessary contact with the individual who is to be rated. which fits into the objectives of the older ones. quarterly. But most of the organizations conduct yearly or half – yearly appraisals because more frequent appraisals besides taking away time of the appraiser or raters. the subjectivity invariably steps in. But there are certain limitations of appraisal by one person. . The committee will rate each individual collectively. therefore he is able to judge them better.the needs of each organization different.

Designing of Form

This is an important step in performance appraisal to design the rating forms to be utilized in the programme. The forms should be related to job families such as clerical, mechanical, sales, technical and supervisory. All require a different evaluation form. Performance forms may be classified as those involving comparative ranking and others involving the comparison of each employee’s actual performance with predetermined standards. The first category of forms is designed to evaluate employee performance for the purpose of making wage adjustments, lay offs, promotions, etc. and second category of forms is used to improve the performance of workers on their present jobs.

Requirements of a Sound Performance Appraisal Programme

A sound system of performance appraisal must fulfill the following essentials: 1. The appraisal plan should be simple to operate and easy to understand. When the appraisal system is complicated, employees may not understand it fully and may look at the plan with suspicion. The plan should not be very time-consuming.

2. The performance appraisal system should be performance based, uniform and non – variable, fair, just and equitable. It should be ensured that the appraisers are honest, rational and objective in their approach, judgment and behavioral orientation.

3. The employees should be made aware of the performance in terms of goals, targets, behavior, etc. expected of them. A personal between the appraiser and the employee has to be developed to achieve mutual understanding of the criteria of evaluation.

4. The appraisal plan should be devised in consultation with the subordinates. This will increase their commitment to the plan and their understanding of expected performance.

5. The appraisal plan should take into account the appraisal practices prevailing in other units in the industry as well as the latest thinking on performance appraisal. It should fit in the structure and operations of the organization. 6. The top management must create a climate of reliable appraisal throughout the organization. Goal – orientation, open communications, mutual trust informal relationships, etc. are the basic elements of such a climate.

7. The appraisal plan should be designed to achieve specific objectives. The objectives of the appraisal programme may be to evaluate current performance on the job and to determine the potential for higher jobs. In some cases, performance appraisal is linked with specific objectives like pay raise, training, promotion, transfer, etc. The number of factors to be considered and the data to be collected should be tailormade to achieve the objective of the appraisal.

8. The appraisers should be selected and trained properly so that they have no personal bias and possess the necessary capabilities for objective evaluation of employees. In order to ensure objectivity in appraisal, more persons may rate an individual independently.

9. There should be provision of appeals against appraisals to ensure confidence of the employees and their associations or unions. The results of appraisal must be discussed with the rates so that they may get an opportunity to express their feelings on their progress reports.

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when and how. The main characteristic of this method is that the researcher has no control over the variables. Descriptive and quantitative research is adopted for this study. gathering explanation. Descriptive research describes data and characteristics about the population being studied. the procedure to be used must be carefully planned. Descriptive research answers the question who. Since the aim is to obtain complete and accurate information in the said studies.CHAPTER:3 RESEARCH MTHODOLOGY Research Design A Research design is the arrangement of conditions for collection and analysis of data in a manner that aims to combine relevance to the Research purpose with economy in procedure. The research design must make enough provision for protection against bias and must maximise reliability with due concern for the economical completion of the research study. Sampling Respondents were selected on the basis of simple random sampling. gaining insights. A total of 100 employees were selected on random basis and responses were collected from them. It must be able to define clearly what he wants to measure and must find adequate methods for measuring it along with a clearly cut definition of population he wants to study. The major purpose of descriptive research is description of the state of affairs as it exists at present. Quantitative research has a goal of formulating problems more precisely. . He can only report what has happened or what is happened. A descriptive research design is was used to study the sample and draw inference about the population. clarifying concepts. The random sampling technique is used to collect data for study. eliminating impractical ideas and forming hypothesis. where. The respondents belonged to Iffco-Tokio corporate office. In fact the Research design is the conceptual structure within which Research is conducted: it constitutes the blueprint for the collection measurement and analysis of data. what.

 Secondary data: Secondary data consists of information that already exists somewhere and was collected for another purpose. . Data Collection There are 2 kinds of data collection modes i. which may not be the same as the purpose of research. Secondary data used here was the Performa of performance appraisal used in IFFCO –TOKIO. All the questions were developed in order to know the degree of employees and to achieve the desired research objectives.Primary data is the data collected specially for a specific purpose. The methods used for its collection are personal discussion & questionnaire etc. The questionnaire has been included in appendix of this project report.  Primary data: . The method used in collecting primary data in my research was questionnaire.Tools A structured questionnaire comprising of close ended questions was designed. the answers given by the respondents were used to fill up the questionnaire. In this I asked a set of predetermined questions in a predefined order.e. primary data and secondary data.

it can be inferred that 60% of the respondents are male and 40% of the respondents are female.1) GENDER WISE CLASSIFICATION OF RESPONDENTS Gender Male Female Total Source: Primary Data No. .CHAPTER: 4 DATA ANALYSIS 4. of respondents 60 40 100 Percentage (%) 60 40 100 Female 40% Male Female Male 60% INTERPRETATION: From the above table.

2) AGE WISE CLASSIFICATION OF RESPONDENTS Age 20 – 25 Age 30– 35 Age 40 – 45 Age Above – 45 Age Total Source : Primary Data No. 25% of the respondents are in the age between 20 – 25 and 12% of the respondents are in the age above 45. it can be inferred that 33% of the respondents are in the age between 30 – 35. 30% of the respondents are in the age between 40 – 45.4. Of Respondents 25 33 30 12 100 Percentage (%) 25 33 30 12 100 Above – 45 Age 12% 20 – 25 Age 25% 20 – 25 Age 30– 35 Age 40 – 45 Age 30% 30– 35 Age 33% 40 – 45 Age Above – 45 Age INTERPRETATION: From the above table. .

18% of the respondents are having10 – 15 years of experience and no respondents have experience more than 15 years.3) EXPERIENCE WISE CLASSIFICATION OF RESPONDENTS Experience Below 5 Years 5-10Years 10 – 15 Years Above 15Years Total Sources: Primary Data No. 28% of the respondents have below 5 years of experience persons.4. it can be inferred that 54% of the respondents are having 5.10 years experience persons. Of Respondents 28 54 18 100 Percentage (%) 28 54 18 100% 10 – 15 Years 18% Below 5 Years 28% Below 5 Years 5-10Years 10 – 15 Years 5-10Years 54% INTERPRETATION: From the above table. .

it can be inferred that 100% of the respondents agree that performance appraisal is conducting once a year. Of Respondents 100 _ 100 Percentage (%) 100 100 1 100% INTERPRETATION: From the above table.4) FREQUENCY OF PERFORMANCE APPRAISAL Performance appraisal times Once year Twice a year No specific time Total Sources: Primary Data Once in a year No. .4.

it can be inferred that 100% of the respondent’s agree that the reason for conducting performance appraisal includes all the factors such as to identify motivating methods. Of Respondents 100 100 Percentage (%) 100 100 1 100% INTERPRETATION: From the above table. to decide monetary benefits and identify barriers for performance.5) REASON FOR CONDUTING PERFORMANCE APPRISAL Performance appraisal conducting To identify motivating methods To decide monetary benefits Identifying barriers of performance All of the above Total Sources: Primary Data All of the above No. .4.

Of Respondents 100 100 Percentage (%) 100 100 1 100% INTERPRETATION: From the above table.4. .6) WHO CONDUCTS PERFORMANCE APPRAISAL Who Performance appraisal conducts Superior Peers Everyone Outsider Total Sources: Primary Data Supervisor No. it can be inferred that for 100% of the respondents’ performance appraisal is conducted by supervisor.

Of Respondents 65 35 100 Percentage (%) 65 35 100 No 35% Yes No Yes 65% INTERPRETATION: From the above table. it can be inferred that 65% of respondents feel that reason for performance appraisal is discussed and 35% of the respondent’s feel that reason for conducting performance appraisal is not discussed. .7) ARE YOU INFORMED REASON FOR PERFORMANCE APPRAISAL Informed reason for Performance appraisal conducting Yes No Total Sources: Primary Data No.4.

4. Of Respondents employee performance Nil Once Twice Thrice Total Sources: Primary Data 20 60 20 100 Percentage (%) 20 60 20 100% 20% 20% Nil Once in a year Twice in a year 60% INTERPRETATION: From the above table. . 60% of the employees responded that to discuss their performance meeting is scheduled only once and 20 % employees responded that in order to discuss about their performance appraisal meeting is conducted twice a year.8) EMPLOYEE PERFORMANCE DISCUSSED Meetings of No. it can be inferred that 20 % employees said that no meetings are scheduled to discuss about their performance.

Of Respondents 100 100 Percentage (%) 100 100 1 1 100% INTERPRETATION: From the above table.9) OPINION AND SUGGESTIONS SHARED TO MANAGERS Opinion and suggestions Yes No Total Sources: Primary Data Yes No.4. . it can be inferred that 100% of the respondents share their opinion and suggestions to their managers.

10)TRAINING OF FILL UP PERFORMANCE APPRAISAL FORM Forms Yes No Total Sources: Primary Data No. it can be inferred that 100% of the respondents are given training to fill the appraisal form. Of Respondents 100 100 Percentage (%) 100 100% Yes 1 100% INTERPRETATION: From the above table.4. .

4. it can be inferred that 89% of the respondents says that feedback is provided whereas 11% feel that feedback is not provided. Of Respondents 89 11 100 Percentage (%) 89 11 100 No 11% Yes No Yes 89% INTERPRETATION: From the above table. .11) FEEDBACK PROVIDED FOR PERFORMANCE IMPROVEMENT Feedback Yes No Total Sources: Primary Data No.

. it can be inferred that 90% of the respondents feel performance appraisal is important and 10% of the respondents feel it is not important. Of Respondents 90 10 100 Percentage (%) 90 10 100 No 10% Yes No Yes 90% INTERPRETATION: From the above table.12) IMPORTANCE OF PERFORMANCE APPRAISAL Importance Yes No Total Sources: Primary Data No.4.

4. .13) SUPPORT OF TOP MANAGEMENT IN PERFORMANCE APPRAISAL Support Yes No Total Sources: Primary Data No. it can be inferred that 64% of the respondents feel top management is supportive towards performance appraisal and 36% feel top management is not supportive. of Respondents 64 36 100 Percentage (%) 64 36 100 No 36% Yes No Yes 64% INTERPRETATION: From the above table.

. Of Respondents 59 41 100 Percentage (%) 59 41 100 No 41% Yes No Yes 59% INTERPRETATION: From the above table. 41% feel that performance appraisal does not identifies employees potential for advancement.4.14) POTENTIAL IDENTIFIED BY PERFORMANCE APPRAISAL Effectiveness Yes No Total Sources: Primary Data No. it can be inferred that 59% of the respondents feel that most of the times potential of employee for advancement is identified.

15) PERFORMANCE APPRAISAL ENCOURAGES TO REACH GOAL Reaching your goals Yes No Total Sources: Primary Data No. it can be inferred that 67% of the respondents agree that performance appraisal encourages to reach goals. . Of Respondents 67 33 100 Percentage (%) 67 33 100 No 33% Yes No Yes 67% INTERPRETATION: From the above table.4.

Of Respondents 95 5 100 Percentage (%) 95 5 100 No 5% Yes No Yes 95% INTERPRETATION: From the above table.4. .16) APPRAISAL FEED BACK appraisal feed back Yes No Total Sources: Primary Data No. it can be inferred that 95% of the respondents feel they are given feedback.

46% of the respondents feel determined to perform better. Of Respondents 10 46 34 10 100 Percentage (%) 10 46 34 10 100 Do not want to contribute 10% Ready to learn 34% Discouraged 10% Discouraged determined to perform better Ready to learn Do not want to contribute determined to perform better 46% INTERPRETATION: From the above table.4. . it can be inferred that 10% of the respondents feel discouraged.17) ATTITUDE WHEN NEGATIVE POINTS ARE DISCUSSED Negative points discussed Discouraged determined to perform better Ready to learn Do not want to contribute Total Sources: Primary Data No. 10% of the respondents feel they do not want to contribute and 34% of the respondents feel they are ready to learn.

18) COMFORTABILITY IN DISCUSSING PROBLEMS Comfortability Yes No Total Sources: Primary Data No. .4. Of Respondents 25 75 100 Percentage (%) 25 75 100 Yes 25% Yes No No 75% INTERPRETATION: From the above table. it can be inferred that 25% of the respondents feel they are comfortable. and 75% of respondents feel they are not comfortable in discussing their problems with their superior.

CHAPTER-5 FINDINGS AND SUGGESTIONS FINDINGS  Majority (60%) of respondents are male.  89% respondents feel the superior provides informal feedbacks for performance improvement. .  All of the respondents have undergone performance appraisal program once in a year.  54% of the respondents have above 5 to 10 years of work experience.  20% respondents said that no meeting is scheduled for discussion of their performance appraisal.  For 100% of the respondents the performance appraisal is conducted by supervisor.  65% of the respondents feel that the reason for performance appraisal is informed to them.  All respondents have got the training to fill up the performance appraisal forms.  100% of the employees interpret the reason for conducting performance appraisal includes all the factors such as to identify motivating methods. to decide monetary benefits and identify barriers for performance. Most (60%) replied that twice in a year the meeting is scheduled for employees to discuss their performance.  All respondents mostly share their opinion and suggestions freely during the performance appraisal.  Majority (90%) of the respondents feel that performance appraisal is important to the organization.  Most of the respondents (33%) belong to the age group of 30 to35.

. Feedback on performance could be discussed through formal or informal meetings.  46% of the respondents are determined to perform better when negative points are discussed. 64% of the respondents feel that the top management is highly supportive towards the performance appraisal system.  be clarified.  67% of the respondents agree that performance appraisal system encourages to put more effort in reaching goals. encouraged and organisation.  appraisal system.  For such situations suggestion box can be implemented and frequently reviewed.  59% of the respondents agree that performance appraisal helps to identify employees’ potential for advancement rarely. SUGGESTIONS  Performance appraisal could be conducted by a person /organization outside the Objective of conducting the performance appraisal could be discussed and doubts can Performance appraisal could be updated regularly to match individual and Suggestion could be obtained from employees regarding framing the performance Employees’ suggestion during performance appraisal may not reach the top managers.  organisational goals.   monitored closely to make improvements. Employees having low performance could be called individually. Appropriate and experienced appraiser can be appointed for effective performance.  95% of respondents feel the feedback about the performance appraisal system is obtained.  This may enhance the involvement and performance of employees.

It could be carefully communicated by making high performers’ increase their target and low performers to build up their confidence. . Appraisal feedback is very important in any performance appraisal program.

It is also help the developing the strengths & weakness of the employees From the study it has been indentified that the performance appraisal is able to identify employees’ potential and find the motivating factors of employees. Suggestion form employees and experienced personnel can further enhance and make the performance appraisal an ideal evaluation system. The performance being measured against such factors as job knowledge. People having poor background are given training and provided with jobs. leadership abilities. . initiative. Performance appraisal can be conducted more effectively by using the right tools and properly reviewing and updating the performance appraisal program. health and the like. dependability. judgement. supervision. versatility. cooperation.CHAPTER-6 CONCLUSION Performance appraisal may be understood as the assessment of an individual’s performance in a systematic way. quality and quantity of output.

Bhatia. 2. 3. Research Methodology . Arora & S.2004. 2007. Deep & Deep Publications Pvt. Practices and Strategies for Organisation success by S. 2005. C. 2008. Publishers. Ltd.com www. Sultan Chand & Sons Publishers. Kothari..Methods & Techniques . By P.iffcotokio. Scitech Publication. K. 4. WEBSITE www.Arora New Delhi. Concepts. New Delhi. Statistical Methods for Management. New Age international (P) Ltd.in www.. Human Resource Management. Performance Management. Venkateswara Prasad.BIBLIOGRAPHY REFERENCES BOOKS 1.co.com . Second Edition.citehr. By S. Seetharaman & B.performance-appraisal.N.R.

How many times dose performance appraisal takes place in your organization? a) Once a year b) Twice a year c) No specific time 2. I would be grateful if you could spare some of your time to respond to the following questions. Gender : Male Female Age group 60 : 20 – 30 31 – 40 41 – 50 51 – Experience : Less than 3 years 9 – 15 Years 4-8 Years More than 15 Years Qualification : _____________________________ 1. What is the reason for conducting performance appraisal in your organization? a) To identify motivating methods b) To decide monetary benefits . Your response will be treated as confidential and would only be used for the purpose of study.APPENDIX Questionnaire Dear Respondent.

How many meetings are scheduled in a year to discuss employee performance? a) Nil b) Once c) Twice d) Thrice 6.c) Identifying barriers of performance d) All of the above 3. Do you feel that performance appraisal is important in an organization? a) Highly important b) Less important c) Not important d) No idea . Other than performance appraisal does your superior provide you with informal feedbacks for performance improvement? a) Frequently b) Occasionally c) Never 9. Do you share your opinion and suggestions freely to the managers during the appraisal program? a) Mostly b) Rarely c) Never 7. Are you given training of how to fill up performance appraisal forms? a) Yes b) No 8. Who conducts performance appraisal? a) Superior b) Peers c) Everyone d) Outsider 4. Are you informed the reason for conducting performance appraisal programs? a) Always b) Sometimes c) Never 5.

Sate your satisfaction through the performance appraisal program at the organization? a) Unsatisfactory c) Meets Expectations b) Needs Improvement d) Outstanding 13. Does top management support and encourage performance appraisal? a) Highly supportive b) Less supportive c) Not supportive 11.10. Do you feel that performance appraisal encourages you to put in more effort in reaching your goals? a) Strongly agree disagree b) Agree c) Neutral d) Disagree e) Strongly . Does performance appraisal identifies employee potential for advancement? a) Mostly b) Rarely c) Never 12.

How do you rate the Performance Appraisal System in your Organization? (On a scale of 1 to 5 with 1 being the lowest and 5 being the highest). How do you feel when negative points are discussed? a) Discouraged c) Ready to learn b) determined to perform better d) do not want to contribute 16.14. ___________________________________ . Do you obtain appraisal feedback? a) Frequently b) Occasionally c) Rarely d) Never 15. Do you feel comfortable in discussing your problems with your superior? a) Highly Comfortable d) Uncomfortable b) Comfortable e) Highly uncomfortable c) Neutral 17.