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The performance appraisal system ideally is an organisation designed programme involving both the organisation and the personnel to improve the capability of both. The elements of performance management include: purpose, content, method,appraiser, frequency, and feedback. The appraisal process involves determining and communicating to an employee how he or she is performing the job and establishing a plan of improvement. The information provided by performance appraisal is useful in three major areas: compensation, placement, and training and development. Appraisal helps to improve performance by identifying the strengths and weaknesses; it helps to identify those with a potential for greater responsibility; and assists in deciding on an equitable compensation system. The methods of performance appraisal include rating scale, critical incident, ranking methods, and management by objectives. Several common errors have been identified in performance appraisal. Leniency occurs when ratings are grouped at the positive 7end instead of being spread throughout the performance scale. The central tendency occurs when all or most employees are ranked in the middle of the rating scale. The halo effect occurs when a manager allows his or her general impression of an employee to influence judgment of each separate item in the performance appraisal. A sound appraisal system involves assessing employee performance on a regular basis. Performance appraisal can be done by superiors who rate subordinates, subordinates who rate their superiors, and self-appraisal. A suitable performance appraisal system has to be designed keeping in view the culture and requirements of an organisation. TYPES OF PERFORMANCE APPRAISAL There are two types of performance appraisal systems which are normally used in organisations: close ended appraisal system, open ended appraisal system. Performance appraisal has always been a hot and challenging issue for the managers across the world, HR managers as well as the line managers. These caselets discuss some of the common issues in designing and implementing a performance appraisal system. One of the caselets discusses not just performance appraisal, but the broader issue of performance management. The method of appraising using the balanced scorecard approach has been discussed in the last caselet.

Performance appraisal is a systematic evaluation of present potential capabilities of personnel and employees by their superiors, superiors superior or a professional from outside. It is a process of estimating or judging the value, excellent qualities or status of a person or thing. It is a process of collecting, analysing, and evaluating data relative to job behaviour and results of individuals. The appraisal system is organised on the principle of goals and management by objectives. Management decisions on performance utilise several integrated inputs: goals and plans, job evaluation, performance evaluation, and individual history. It connotes a twodimensional concept - at one end of the continuum lies the goals set by the authority, and at the other end, the performance achieved by the individual or any given group. Performance appraisal can be either formal or informal. Usage of former systems schedule regular sessions in which to discuss an employees performance. Informal appraisals are unplanned, often just chance statements made in passing about an employees performance. Most organisations use a formal appraisal system. Some organisations use more than one appraisal system for different types of employees or for different appraisal purposes. Organisations need to measure employee performance to determine whether acceptable standards of performance are being maintained. The six primary criteria on which the value of performance may be assessed are: quality, quantity, timelineness, cost effectiveness, need for supervision, and interpersonal impact. If appraisals indicate that employees are not performing at acceptable levels, steps can be taken to simplify jobs, train, and motivate workers, or dismiss them, depending upon the reasons for poor performance. The results of appraisal are normally used to: (1) estimate the overall effectiveness of employees in performing their jobs, (2) identify strengths and weaknesses in job knowledge and skills, (3)determine whether a subordinates responsibilities can be expanded, (4) identify future training and development needs, (5) review progress toward goals and objectives, (6) determine readiness for promotion, and (7) motivate and guide growth and development.

OBJECTIVES OF PERFORMANCE APPRAISAL Performance appraisal plans are designed to meet the needs of the organisation and the individual. It is increasingly viewed as central to good human resource management. This is highlighted in Cummings classification of performance appraisal objectives. According to Cummings and Schwab (1973), the objectives of performance appraisal schemes can be categorised as either evaluative or developmental. The evaluative purpose have a historical dimension and are concerned primarily with looking back at how employees have actually performed over a given time period, compared with required standards of performance. The developmental performance appraisal is concerned, for example, with the identification of employees training and development needs, and the setting of new targets. The broad objectives of performance appraisal are: 1. To help the employee to overcome his weaknesses and improve his strengths so as to enable him to achieve the desired _performance. 2. To generate adequate feedback and guidance from the immediate superior to an employee working under him. 3. To contribute to the growth and development of an employee through helping him in realistic goal setting. 4. To provide inputs to system of rewards (comprising salary increments, transfers, promotions, demotions or _terminations) and salary administration. 5. To help in creating a desirable culture and tradition in the organisation. 6. To help the organisation to identify employees for the purpose of motivating, training and developing them. 7. To generate significant, relevant, free, and valid _information about employees. In short, the performance appraisal of an organisation provides systematic judgments to backup wage and salary administration; suggests needed changes in ones behaviour, attitudes, skills, or job knowledge; and uses it as a base for coaching and counseling the individual by his superior. Appraising employee performance is, thus, useful for compensation, placement, and training and development purposes.

USES OF PERFORMANCE APPRAISAL The appraisal systems do not operate in isolation; they generate data that can contribute to other HRM systems - for example to succession planning and manpower planning.Some of the common uses of appraisals include: Determining appropriate salary increases and bonuses for workers based on performance measure. Determining promotions or transfers depending on the demonstration of employee strengths and weaknesses. Determining training needs and evaluation techniques by identifying areas of weaknesses. Promoting effective communication within organisations through the interchange of dialogue between supervisors and subordinates. Motivating employees by showing them where they stand, and establishing a data bank on appraisal for rendering assistance in personnel decisions. Organisations use performance appraisals for three purposes: administrative, employee development, and programme assessment. Programme appraisal commonly serve an administrative purpose by providing employers with a rationale for making many personnel decisions, such as decisions relating to pay increases, promotions, demotions, terminations and transfers. Valid performance appraisal data are essential to demonstrate that decisions are based on job related performance criteria. An employees performance is often evaluated relative to other employees for administrative purposes, but may be assessed in relation to an absolute standard of performance. Performance appraisal for employee development purposes provides feedback on an employees performance. The intent of such appraisals is to guide and motivate employees to improve their performance and potential for advancement in the organisation. Appraisal data can also be used for employee development purposes in helping to identify specific training needs of individuals. Programme assessment requires the collection and storage of performance appraisal data for a number of uses. The records can show how effective recruiting, selection, and placement have been in supplying a qualified workforce. Performance measures can be used to validate selection procedures and can also be used asbefore and after measures to determine the success of training and development programmes. In brief, the various uses of performance appraisal can be classified into two broad categories. One category

concerns the obtaining of evaluation data on employees for decision-making for various personnel actions such as pay increases, promotions, transfers, discharges, and for selection test validation. The other main use is for employee development including performance improvement training, coaching, and counseling. PLANNING THE APPRAISAL A meaningful performance appraisal is a two-way process that benefits both the employee and the manager. For employees, appraisal is the time to find out how the manager thinks they are performing in the job. For a manager, a formal appraisal interview is a good time to find out how employees think they are performing on the job. The planning appraisal strategy has to be done: Before the appraisal 1. Establish key task areas and performance goals. 2. Set performance goals for each key task area. 3. Get the facts. 4. Schedule each appraisal interview well in advance. During the appraisal 1 Encourage two-way communication. 2. Discuss and agree on performance goals for the future. 3. Think about how you can help the employee to achieve more at work. 4. Record notes of the interview. 5. End the interview on an upbeat note. After the appraisal 1. Prepare a formal record of the interview. 2. Monitor performance. APPROACHES TO PERFORMANCE APPRAISAL George Odiorne has identified four basic approaches to performance appraisal. Personality-based systems: In such systems the appraisal form consists of a list of personality traits that presumably are significant in the jobs of the individuals being appraised. Such traits as initiative, drive, intelligence, ingenuity, creativity, loyalty and trustworthiness appear on most such lists. Generalised descriptive systems: Similar to personality-based systems, they differ in the type of descriptive term used. Often they include qualities or actions of presumably good managers:

organises, plans, controls, motivates others, delegates, communicates, makes things happen, and so on. Such a system, like the personality-based system, might be useful if meticulous care were taken to define the meaning of each term in respect to actual results. Behavioural descriptive systems: Such systems feature detailed job analysis and job descriptions, including specific statements of the actual behaviour required from successful employees. Results-centred systems: These appraisal systems (sometime called work-centred or job-centred systems) are directly job related. They require that manager and subordinate sit down at the start of each work evaluation period and determine the work to be done in all areas of responsibility and functions, and the specific standards of performance to be used in each area.When introducing performance appraisal a job description in the form of a questionnaire has to be preferred. A typical questionnaire addressed to an individual would cover the following points: What is your job title? To whom are you responsible? Who is responsible to you? What is the main purpose of your job? To achieve that purpose what are your main areas of responsibility? What is the size of your job in such terms of output or sales targets, number of items processed, number of people managed, number of customers? What targets or standards of performance have been assigned for your job? Are there any other ways in which it would be possible to measure the effectiveness with which you carry out your job? Is there any other information you can provide about your job?

COMPONENTS OF PERFORMANCE APPRAISAL The components that should be used in a performance appraisal system flow directly from the specific objectives of appraisal. The following components are being used in a number of Indian organisations. 1. Key Performance Areas (KPAs) / Key Result Areas (KRAs) 2. Tasks/targets/objectives; attributes/qualities/traits 3. Self appraisal 4. Performance analysis 5. Performance ratings

6. Performance review, discussion or counseling 7. Identification of training / development needs 8. Ratings / assessment by appraiser 9. Assessment / review by reviewing authority 10. Potential appraisal. TYPES OF PERFORMANCE APPRAISAL There are two types of performance appraisal systems which are normally used in organisations: close ended appraisal system, open ended appraisal system. In the close ended appraisal system, commonly used in government organisations and public enterprises, a confidential report is submitted on the performance of the employee. Only where an adverse assessment is made against an individual, the concerned individual is informed about the same. The main shortcoming of this system is that an individual is not informed about his/her inherent strengths and weaknesses and, therefore, is not given an opportunity to respond to the assessment made on him/her. The employees are, therefore, in a constant dilemma as to how their performance is viewed by the management. In the open ended appraisal system, unlike in the close ended system, the performance of the individual is discussed with him, and he is ranked in a five or ten point rating scale. The company uses this tool primarily for rewarding a good performer or for other considerations like promotions. The main weakness of this system is that all the employees are ranked in a particular scale, and whereas the good performers are rewarded, there is no concerted effort to motivate the average performers in performing better. Another weakness of the grading system is that the appraisal may turn out to be more subjective in nature due to insufficient data maintained on the individual. This system also leads to unnecessary comparisons made on different individuals performing similar jobs. Performance appraisal can be a closed affair, where the appraises do not get any chance to know or see how they have been evaluated; or it can be completely open, where the appraises have the opportunity of discussing with their superiors during the evaluation exercise.

STEPS IN THE APPRAISAL PROGRAMME As in other personnel programmes, performance appraisal forms a line responsibility to be accomplished with advice and help of the personnel department. Indeed, the appraisal programme is likely to be an utter failure if it lacks the support of top management; if superiors are not adequately trained, or have no trust in its value; if the results of appraisal are not discussed with the subordinates; and if the appraisal is not used to serve the purposes it is meant. Pigors and Myers suggest several steps to develop and administer the programme effectively. 1. The personnel department may attempt to obtain as much as possible the agreement of line management in respect of the needs and objective of the programme. A choice has to be made among different kinds of appraisal methods judiciously. 2. The personnel department has to examine the plans of other organisations as well as the relevant literature in the field to formulate the most suitable plan for the appraisal programme. 3. Attempts should be made to obtain the co-operation of supervisors in devising the appraisal form and discuss with them the different factors to be incorporated, weights and points to be given to each factor, and description or instructions to be indicated on the form. 4. The personnel or industrial relations manager tends to explain the purpose and nature of the programme to all the superiors and subordinates to be involved and affected by it. Care should be taken to take into confidence the representatives of the union, if it exists in the company. 5. Attempt is to be made to provide intensive training to all the supervisors with a view to obtaining unbiased and uniform appraisal of their subordinates. 6. Care may be taken to acquire line and staff co-ordination and mutual checking of appraisals with a view to achieving intra and inter-departmental consistency and uniformity. 7. There should be an arrangement for periodic discussion of the appraisal by the superior with each of the subordinates where attempts may be made to stress good points, indicate difficulties, and encourage improved performance. Explicitly, in this context, the discussion should be in the form of a progress review and every opportunity should be given to the subordinate to express himself, if he feels that the appraisal has been biased and that it should be otherwise. 8. As soon as the appraisal has been duly discussed, attempts may be made to recommend for salary increases or promotion, if these decisions seem plausible in the light of appraisals.

9. There should be provision for challenge and review of appraisals, if the employees or their union representatives are dissatisfied with the personnel decisions which the management has taken on the basis of these appraisals. These steps, if followed carefully, are likely to help the superiors to evaluate their subordinates effectively.

METHODS OF PERFORMANCE APPRAISAL Strauss and Sayles have classified performance appraisal into three groups: traditional performance rating, newer-rating method, and result-oriented appraisal. A brief description of each is as follows: (a) Traditional Performance Rating: Traditional rating involves a completion of a form by the immediate supervisor of the individual who is being evaluated. In some cases, attempts are made to accomplish the rating by a committee consisting of the immediate supervisor, the supervisors superior and one or two more officers of the company who are familiar with the rates. Although ratings by the committee bring several viewpoints together and overcome the superiors bias, if any, they are highly time-consuming. The conventional rating scale form incorporates several factors, such as, job knowledge, judgment, organising ability, dependability, creativity, dealing with people, delegation, and leadership. The rating is assigned by putting a tick mark horizontally. Frequently, descriptive phrases are given in the form to guide the rater while evaluating the rates. This method is very simple to understand and easy to apply. On the basis of ratings on specific factors, it is possible to identify areas in which the individual requires further development. The ratings on specific factors can be summated to obtain a composite performance score. The merit-rating scales are frequently criticised from the standpoints of clarity in standards, differing perceptions, excessive leniency or strictness, the central tendency, the halo effect, and the impact of an individuals job. The basic criticism of the traditional performance rating is concerned with its emphasis on personality traits instead of job performance. Such rating is highly subjective in the absence of objective standards.Other criticisms of traditional performance rating relates to: First, there is a divergence of opinion among raters as to what is meant by such standards as unsatisfactory, good and so on. Second, there may be divergent perceptions and accordingly, different standards of judgments

among the raters. Third, the raters may be susceptible to excessive leniency or strictness error. Fourth, there is an error of central tendency involving a cluster of ratings near the middle of the scale. Fifth, there is a chance of the occurrence of a halo effect. Sixth, there is a tendency on the part of the raters to assign high ratings to individuals holding high paid jobs. (b) Newer Rating Methods: Because of several inadequacies in the traditional rating scale, attempts have been made to devise new procedures which are less susceptible to the above weaknesses. Among these are included rank order, paired comparison, forced distribution forced choice, critical incident and field review. These methods are discussed below: (i) The Rank-order Procedure: It is effective where ten or lesser number of individuals are to be evaluated. According to this procedure, each individual is assigned such ranks as first, second, third and so on. If the evaluation process involves several traits, the ranking is made separately for each trait. Although this method is simple to understand and easy to apply, this technique becomes cumbersome and difficult when a large number of employees are to be evaluated in the organisation. (ii) Paired-comparison System\: Under this, each individual is compared with every other individual. The appraiser is required to put a tick-mark against the name of the individual whom he considers better on the trait in question. The final ranking is determined by the number of times he is judged better than the other. This method becomes complicated when the number of individuals for evaluation is large. (iii) The Forced Distribution Procedure: It is a form of comparative evaluation in which an evaluator rates subordinates according to a specified distribution. Here judgments are made on a relative basis, i.e., a person is assessed relative to his performance in the group he works. This procedure can be used for numerous traits if required by evaluating the individuals separately on each trait. The forced distribution method is primarily used to eliminate rating errors such as leniency and central tendency. (iv) The Forced Choice Technique: It forces the rater to select from a series of several statements or traits, the one which best fits the individual and one which least fits, and each of these statements is assigned a score. Since the appraiser does not know the score value of statements, this method prevents the rater from deliberately checking only the most favourable trait. Moreover, the appraiser is unable to introduce personal bias into the evaluation process because he does not know which of the statements is indicative of effective performance. This enhances

the overall objectivity of this procedure. However, it is a costly technique and also difficult for many raters to understand. (v) The Critical Incident Method: This technique of performance appraisal was developed by Flanagan and Burns. Under this procedure, attempts are made to devise for each job a list of critical job requirements. Superiors are trained to be on the lookout for critical incidents on the part of the subordinates in accomplishing the job requirements. The superiors enlist the incidents as they happen and in the process, tend to build up a record of each subordinate with debit on the minus side and credit on the plus side. The merit of this procedure is that all evaluations are based on objective evidence instead of subjective rating. (vii) The Field Review: It is an appraisal by someone outside the employees own department, usually someone from the corporate office or from the employees own human resource department. The field review process involves review of employee records, and interviews with the employee, and sometimes with the employees superior. Field review as an appraisal method is used primarily in making promotion decisions at the managerial level. Field reviews are also useful when comparable information is needed from employees in the different units or locations. (c) Results-Oriented Appraisal: The results-oriented appraisals are based on the concrete performance targets which are usually established by superior and subordinates jointly. This procedure has been known as Management by Objectives (MBO). MBO: The definition of MBO, as expressed by its foremost proponent, Dr. George S. Odiorne, is: Management by objectives is a process whereby the superior and subordinate managers of an organisation jointly identify its common goals, define each individuals major areas of responsibility in terms of the results expected of him, and use these measures as guides for operating the unit and assessing the contribution of each of its members. Much of the initial impetus for MBO was provided by eter Drucker (1954) and by Douglas McGregor (1960). Drucker first described management by objectives in 1954 in the Practice of Management. Drucker pointed the importance of managers having clear objectives that support the purposes of those in higher positions in the organisation. McGregor argues that by establishing performance goals for employees after reaching agreement with superiors, the problems of appraisal of performance are minimised. MBO in essence involves the setting out clearly defined goals of an employee in agreement with his superior. Carroll and Tosi (1973), in an extensive account of MBO, note its following characteristics:

1. The establishment of organisational goals. 2. The setting of individual objectives in relation to organisational goals. 3. A periodic review of performance as it relates to organisational goals. 4. Effective goal-setting and planning by top management. 5. Organisational commitment. 6. Mutual goal-setting. 7. Frequent individual performance reviews. 8. Some freedom in developing means of achieving objectives. MBO is, thus, a method of mutual goal-setting, measuring progress towards the goals, taking action to assure goal attainment, feedback, and participation. It is a resultoriented philosophy, enabling an employee to measure progress toward a goal which Performance and Potential Appraisal the employee often has helped to set. In the goal-setting phase of MBO, a superior and subordinate discuss job performance problems and a goal is agreed upon. Along with mutual goal-setting, a major component of MBO is the performance review session between the superior and subordinate, which takes place regularly to evaluate progress towards specified goals. The key features of management by objectives are as under: 1. Superior and subordinate get together and jointly agree upon the list the principal duties and areas of responsibility of _the individuals job. 2. The subordinate sets his own short-term performance goals or targets in cooperation with his superior. 3. They agree upon criteria for measuring and evaluating performance. 4. From time to time, as decided upon, the superior and subordinate get together to evaluate progress towards the agreed-upon goals. At those meetings, new or modified goals _are set for the ensuing period. 5. The superior plays a supportive role. He tries, on a day-to-day basis, to help the subordinate achieve the agreed upon _goals. He counsels and coaches. 6. In the appraisal process, the superior plays less of the _role of a judge and more of the role of one who helps the _subordinate attain the organization goals or targets. 7. The process focuses upon results accomplished and not upon personal traits. There are four main steps in MBO: 1. Define the job. Review, with the subordinates, his or her key responsibilities and duties.

2. Define expected results (set objectives). Here specify in measurable terms what the person is expected to achieve. 3. Measure the results. Compare actual goals achieved with expected results. 4. Provide feedback, appraise. Hold periodic performance review meetings with subordinates to discuss and evaluate the _latters progress in achieving expected results. MBO as a mutual goal setting exercise is most appropriate for technical,professional, supervisory, and executive personnel. In these positions, there is generally enough latitude and room for discretion to make it possible for the person to participate in setting his work goals, tackle new projects, and discover new ways to solve problems. This method is generally not applied for lower categories of workers because their jobs are usually too restricted in scope. There is little discretionary opportunity for them to shape their jobs.MBO may be viewed as a system of management rather than an appraisal method. A successful installation of MBO requires written mission statements that are prepared at the highest levels of top management. Mission statements provide the coherence in which top-down and bottom-up goal setting appear sensible and compatible. MBO can be applied successfully to an organisation that has sufficient autonomy, personnel, budget allocation, and policy integrity. Managers are expected to perform so that goals are attained by the organisation. Too often MBO is installed top-down in a dictatorial manner with a little or no accompanying training. If properly implemented, it serves as a powerful and useful tool for the success of managerial performance. MBO is a tool that is inextricably connected with team building so that the work commitment of team members can be increased and their desire to excel in performance can be inspired. It is important to have effective team work among a group of managers or a group of subordinates. The group of employees or subordinates must be looked upon as a team that needs to be brought together. Goals should be set by manager-subordinate pairs, and also by teams. The basic superior subordinate relationship in an organisation is in no way undermined in this concept of team goal setting. Lines of responsibility, authority, and accountability remain clear. MBO has many benefits, since it: 1. Provides a way for measuring objectively the performance of subordinates. 2. Co-ordinates individual performance with company goals. 3. Clarifies the job to be done and defines expectations of job accomplishment. 4. Improves superior-subordinate relationships through a dialogue that takes place regularly.

5. Fosters increased competence, personal growth, and opportunity for career development 6. Aids in an effective overall planning system. 7. Supplies a basis for more equitable salary determination, especially incentive bonuses. 8. Develops factual data for promotion criteria. 9. Stimulates self-motivation, self-discipline and self-control. 10. Serves as a device for integration of many management functions. MBO has certain potential problems, such as: 1. It often lacks the support and commitment of top management. 2. Its objectives are often difficult to establish. 3. Its implementation can create excessive paperwork if it is not closely monitored. 4. It concentrates too much on the short run at the expense of long-range planning. 5. It may lead to excessive time consuming. Traditionally, in most performance evaluations a supervisor evaluates the performance of subordinate. Recently, a new approach has been enunciated by the western management gurus, which is known as 360 degree appraisal - a performance management in which people receive performance feedback from those on all sides of them in the organisation - their boss, their colleagues and peers, and their own subordinates, and internal and external customers. The list can grow to include vendors and consultants, human resource professionals, suppliers and business associates, even friends and spouses. The 360 degree feedback refers to the practice of using multiple raters often including self-ratings in the assessment of individuals. Thus, the feedback comes from all around. It is also a move towards participation and openness. Many American companies are now using this 360 degree feedback. Companies that practice 360 degree appraisals include Motorola, Semco Brazil, British Petroleum, British Airways, Central Televisions, and so on. Barring a few multinational companies, in India this system of appraisal is uncommon. This form of performance evaluation can be very beneficial to managers because it typically gives them a much wider range of performance-related feedback than a traditional evaluation. That is, rather than focusing narrowly on objective performance, such as sales increase or productivity gains, 360 degree often focuses on such things as interpersonal relations and style. Of course, to benefit from 360 degree feedback, a manager must have thick skin. The manager is likely to hear some personal comments on sensitive topics, which may be threatening. Thus, a

360 degree feedback system must be carefully managed so that its focus remains on constructive rather than destructive criticism. Balance Score Card: The Balance Score Card (BSC) creates a template for measurement of organisational performance as well as individual performance. It is a measurement based management system, which enables organisations to clarify vision and strategy before initiating action. It is also a monitoring system that integrates all employees at all levels in all departments towards a common goal. BSC translates strategy into performance measures and targets, thus making it operational and highly effective. It helps cascade corporate level measures to lower level so that the employees can see what they must do well to improve organizational Effectiveness and helps focus the entire organisation on what must be done to create breakthrough performance. BSC was introduced in 1992 by Dr. Robert Kaplan and David Nortan and has been successfully adopted by numerous companies worldwide. Assessment Centre Experts from various departments are brought together to evaluate individuals or groups specially their potentials for promotions.

PERFORMANCE APPRAISAL ASSESSMENT The quality of an appraiser is much more crucial than the appraisal methods. It is desirable to make the immediate superior a party to the appraisal programme. The assessment can be accomplished by an individual or by a combination of the immediate superior, other managers acquainted with the assessees work, a higher level manager, a personnel officer, the assessee himself, and the assessees subordinates. Training of appraisers has been largely stressed as a measure to improve performance appraisals. Appraisers can be trained with a view to improving their ability to evaluate subordinates and discuss evaluations with them effectively. The following questions can provide an assessment of performance appraisal system: 1. What purposes does the organisation want its performance appraisal system to serve? 2. Do the appraisal forms really get the information to serve the purposes? 3. Are the appraisal forms designed to minimise errors and ensure consistency? 4. Do the processes of the appraisal serve the purpose of effective communication between the appraiser and the _appraisee? 5. Are supervisors rewarded for correctly evaluating and developing their employees? 6. Are the evaluation and developmental components separated?

7. Are superiors relatively free from task interference in doing performance appraisal? 8. Are the appraisals being implemented correctly? The following questions serve as guidelines for assessing the end-product of performance appraisal: 1. Did the appraisal session motivate the subordinate? 2. Did the appraisal build a better relationship between the supervisor and the subordinate? 3. Did the subordinate come out with a clear idea of where he or she stands? 4. Did the superior arrive at a fairer assessment of the subordinate? 5. Did the superior learn something new about the subordinate? 6. Did the subordinate learn something new about the superior and pressures he or she faces? 7. Does the subordinate have a clear idea of what corrective actions to be taken to improve his/her own performance? PERFORMANCE APPRAISAL IN PRACTICE Traditionally appraisals are carried out by the supervisors of the employees. Some companies do follow self appraisal and compare the same with the traditional appraisal of the supervisors. A new approach has been recently enunciated by the western management gurus, which is known as 360 degree appraisal whereby appraisals are required to be carried out not only by the supervisors, but also by those supervised (subordinates) and peers. This approach also needs a relook in the context of leadership concepts being practiced universally. If one requires to be appraised on how well he performs the leadership role, the appraisal should originate from the followers (bottom to top approach) and not from their supervisors alone. While the supervisors can appraise, on the performance standards, goals, targets, achievements, the leadership attributes need to be appraised only by those being supervised. This argument is quite valid for higher level executives including CEOs. Therefore, all the three approaches, topbottom, bottom-top and peer level appraisal will be very relevant. Perhaps, appropriate weightage is required to be assigned for appraisals being carried out in the 360 degree system, which is yet to take off seriously in many organisations. It is quite disappointing to note that appraisals are not being carried out with the due importance and seriousness they deserve though the systems provide scope for periodic and timely appraisals. Normally appraisals are being carried out once a year or at the most twice a year as per the existing practice. Many organisations do follow monthly and quarterly appraisals for

management trainees till they are confirmed, and follow the by-annual or annual appraisal system thereafter.Appraisal is a continuous process, to be scientifically carried out day in day out, if one has to seriously carry out appraisals.

CONCERNS AND ISSUES IN APPRAISAL 1. Identifying job responsibilities and duties and performance dimensions, standards and goals. 2. Prioritizing and weighing performance dimensions and performance goals. 3. Determining appropriate methods for appraising performance. 4. Developing suitable appraisal instruments and scoring devices. 5. Establishing procedures that enhance fair and just appraisals of all employees. 6. Providing performance feedback to all employees. 7. Relating observed and identified performance to the rewards provided by organisation. 8. Designing, monitoring and auditing processes to ensure proper operation of the system and to identify areas of weakness. 9. Granting employees opportunities for appeal whenever and wherever such action is appropriate. 10. Training of employees in all phases of the appraisal system. The basic issues addressed by performance appraisal are: What to appraise? How to appraise fairly and objectively? How to communicate the appraisal and turn the total process into a motivator? How the performance appraisal results can be put to good use? How to implement the performance appraisal system smoothly?



Research means a search for knowledge. Sometimes, it may refer to scientific and systematic search pertinent information on a specific topic. Intact researcher is an art of scientific investigation. Redman and Moray define researcher as a systematic efforts to gain new knowledge. Some consider researcher is a movement from the known to the unknown. It is actually a voyage of discovery. According to Clifford woody, researcher compromise, define and redefining problem, formulating hypothesis or suggested solution; collecting ,organizing and evaluating data; making deduction and reaching conclusion; and at last carefully testing the conclusion to determine whether they fit the formulating hypothesis. Researcher 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, comparison and experiment. In short, the study of knowledge through objective and systematic method consisting of enunciating the problem, formulating the hypothesis collecting the facts or data, analyzing the facts and researching certain conclusion either in the form of solution towards the concerned problem or in certain generalist for some theoretical formulations.

The area, which is taken for study, is Ashok Leyland, Ennore, Chennai.


Employees TOTAL

50 50

The sample size taken for the project is 50.

Convenience sampling has been used to collect the data from the respondents. Convenience sampling technique is followed.Convenience sampling as the name implies is based on the convenience of the researcher who is to select the sample. This type of sampling is also called accidental sampling as the respondents in the sampling are included in it merely on account of that being available on the spot where the survey is in process. Thus the researcher may stand at a certain prominent point and interview all those or selected people who pass through that place.

Period of study
The study was conducted for 1 month at Ashok Leyland, and data was collected from (16.06.2009 to 15.07.2009).

The statistical tools used for analysis are:

Percentage method Weighted average

In this method frequency of the various criteria factors are tabulated and the percentage for each value with respect to the total is found out. They are presented pictorially by way of graphs in order to have better understanding. The formula is = No of Respondents Total Respondent


Under this method the relative importance of the different items is not the same. The term weights stands for relative importance of the different items. The formula for calculating the weighted arithmetic mean is X = WF F Where, X F = = weighted arithmetic mean Frequency or no of respondents


1.Time is important limitation due to the time constraints only few employees is taken for the
study. 2. The study is limited to the employees deployed in ashok leyland. 3. The study process often overlooked by management so redtapism involvement could manipulated desired result.


1. Expectations from Appraisal System :

Respondents were asked to rank the various options according to their preference. (Rank 1 being most preferred and rank 6 being least preferred). Then scoring was given on the basis of ranks. 1 mark was allotted to rank 1, 2 marks for rank 2 and so on.

Particular Salary Administration and Benefits Determination of promotion or transfer Assistance in goal Guideline for training plan An insight into your strengths and weakness Decision to layoff

Score 87 109 228 254 312 354

Overall Rank 1 2 3 4 5 6

From the above table it can be seen that employees expect Salary Administration and Benefits to be the main reason for conducting a Performance Appraisal. Decision to layoff is of least importance as per the appraisee.

2. Awareness about Responsibilities :

No 14%

Awareness about Responsibilities

Yes 86%

From the graph it can be seen that majority of employees are aware about their responsibilities, which implies that the appraisers have efficiently communicated to the appraisees all the parameters that will be taken into account during appraisal.

3. Satisfaction Level among appraise regarding Appraisal System :

Satisfaction Level
5% 2% 23% 28% Fully Dissatisfied Partially Dissatisfied Satisfied 42% Partially satisfied Fully satisfied

From graph it can be seen that majority of the respondents are satisfied with the appraisal system. Only a meager 30% were dissatisfied with the Performance Appraisal programs.

4. Awareness about performance ratings :

Awarness about Performance Rating

Yes 34% No 66%

This clearly shows that majority of the employees are not aware about the performance ratings that are taken into account while conducting a performance appraisal.

5. Alowing Self ratings :

No 8%

Self Rating Should be allowed

Yes 92%

From graph it can be seen that majority of respondents want self rating to be a method of conducting the appraisals .

6. Chance to rate your own performance

Rate your own performance

Yes 23% No 77%

From the graph we can see that majority of the employees are not given a chance to rate their own performance in the organization.

7. Timing of Appraisals

Timing of Appraisal
2% 3% 11% Monthly Quaterly 84% Half Yearly Annual

This shows that most of the organisations conduct their Performance Appraisal programs annually. A very small percentage of the organisations conduct Performance Appraisals on a half yearly basis. The share of the quarterly and monthly appraisals are extremely minimal.

8. Credibility of Appraiser

Credibility of Appraiser
37% Yes 63% No

This shows that according to the employees/appraisees the credibility of the appraiser is extremely important and it has an effect on the overall Performance appraisal program.

9. Complaint channel for employees

Complaint Channel for employees

27% Yes 73% No

This shows that there is no proper complaint channel existing in the organisations for the employees who are dissatisfied with the performance appraisal system.

10. Standards communicated to employees

Standards Communicated to Employees

36% Yes 64% No

From this it can be seen that there is a clear majority among the employees who say that the standards on the basis of which the performance appraisal is carried out is not communicated to the employees before hand.

11. Performance Appraisal

Performance Appraisal
0% 0% 9% 0% Immediate Supervisor Peer appraisal 91% Rating committee Self Rating

Almost all the Performance Appraisals are carried our by the Immediate Supervisor in these organisations. In very few organisations, Rating committees carry out the performance appraisals. None of the organisations use Peer Appraisals, Appraisals by subordinates and Self rating as a method of Performance Appraisal.

12. Clear understanding of Appraisees job

Clear understanding of Appraisee's Job

23% Yes 77% No

This shows that the performance Appraisal programs are successful in giving a clear understanding of the appraisees job to both appraiser and appraisee.

13. Objectives of Appraisal System

Objective of Appraisal System


50% Yes No

From the figure we can derive that the objective for conducting the Appraisal system is clear only to half of the employees. The remaining half are not clear about the objective for which the Performance Appraisal is carried out.

14. Good communication between top management and business goals

Good communication between Top management and Business goal

22% Yes 78% No

This shows that the appraisal systems do not provide a good communication flow of the top-management plans and business goals to the staff below.

15. Comments and suggestions to be considered

Comments and suggestion to be considered


Yes 98% No

Almost all the employees expect that their comments and suggestions should be taken into consideration while conducting the Performance Appraisal.

16. Post Appraisal interview

Post Appraisal Interview

30% Yes 70% No

As per the response from the employees we can see that there is no interview conducted after the appraisal program for majority of the employees.

Appraiser Survey
1. Purpose of Appraisal

Purpose of Appraisal System

Score An insight into your strengths and weakness Guideline for training Plan Assistance in goal Decision on layoff Determination of promotion or transfer Salary Administration and Benefits 24 27 42 69 72 81

Respondents were asked to rank the various options according to their preference. (Rank 1 being most preferred and rank 6 being least preferred). Then scoring was done on basis of these ranks. 1 mark was allotted to rank 1, 2 marks for rank 2 and so on. Then the total score for each purpose was calculated and overall ranking was given. Particular Determination of promotion or transfer Salary Administration and Benefits Decision to layoff Guideline for training plan Assistance in goal An insight into your strengths and weakness Score 24 27 42 69 72 81 Overall Rank 1 2 3 4 5 6

From table it can be seen that appraiser considers Determination of promotion or transfer & Salary administration and Benefits as two important factors for conducting an Appraisal.

2. Appraisal System

Appraisal System
0% 0% 13% 27% 1 2 3 60% 4 5

In this question appraiser was asked to rate how helpful the appraisal system is, from the graph it can be seen that majority of appraisers have rated 5,4 & 3 which implies that Performance Appraisal system is very helpful in Planning their work. Also most of the appraisers are satisfied with the appraisal system.

3. Support from subordinate

Support from Subordinate


Yes No 100%

This question was asked to find out how helpful appraisal system is in communicating the support that apprasier needs from appraisee. From results it is seen that the performance appraisal system is very helpful in communicating the support and help needed by the appraiser from the appraisee.

4. Type of Appraisal System

Type of Appraisal System

0% 0% 14% 13% Assessment centre MBO BARS 360 degree feedback


From results its clear that majority of companies prefer to use 360 degree feedback system for Performance Appraisal. As 360 degree feedback gives feedback of appraisee from everyone interacting with him, it is more reliable and hence most preferred.

5. Performance Appraisal criteria

Performance Appraisal criteria

20% 20% Quantitative outcome criteria Qualitative process criteria Quantitative process criteria


From results we can see that Qualitative Process is considered as the most important criteria for which the Performance appraisal programs are carried out, which shows that companies consider Qualitiy of product & service and Customer satisfaction as most important factors.

6. Timing of Appraisals

Timing of Appraisal
0% 0% 0% 13% Annual Quaterly Half Yearly 87% Monthly Anytime

From graphs we can see that most of companies conduct appraisals on annual basis. Some companies conduct quaterly also.

7. Effect of poor Appraisal System

Effect of Poor Appraisal System

27% 0% 73% Ineffective teamwork De-motivation Retention

It can be seen from results that most of the employees get De-motivated because of a poorly conducted appraisal. To some extent employees dont coordinate with their team members. Thus resulting in reduction of output.

8. Communication between top management and staff

Good Communication between Top Management and Staff

0% Yes 100% No

All appraisers totally agree that performance appraisal helps in communicating the top management plans and business goals to staff at lower level.

9. Insight to Apprasiees strength and weakness

Insight into Appraisee's Strength and weakness

33% Yes 67% No

It is evident from the results that performance appraisal system doesnt help the appraiser in understanding strength and weakness of apraisee.

10. Appraisees comment and suggestion

Appraisee's comment & suggestion


Yes 87% No

From the results it can be seen that appraisees comments and suggestion are not taken into consideration before Performance Appraisal. Performance Appraisal system is designed by appraiser without consulting appraisee.

11. Performance Appraisal

Performance Appraisal
0% 0% Immediate supervisor Peer appraisal Rating committees Self-rating


It is evident from the results that performance appraisal is conducted by the Immediate Supervisor in all the companies.

12. Understanding of Apprasiees Job

Understanding of Appraisee's Job


Yes 100% No

From this it is clearly seen that according to appraiser there is a clear and joint understanding of the appraisees job.

13. Standards for Performance Appraisal

Standards for Performance Appraisal


Yes 87% No

From results it is evident that Performance appraisal standards are very well communicated to Appraisee before the Appraisal is carried out.

14. Self rating in Performance Appraisal

Self Rating in Performance Appraisal


Yes 100% No

From results it can be clearly seen that the Appraisee is not given a chance to rate his own performance.

15. Action after Performance Appraisal

Action after Performance Appraisal


Yes 100% No

This shows that most of the companies act upon the results of their Performance Appraisal program.

.has separate appraisal system for each level of employees. These appraisal systems differ on the factors on which a person is rated and the nature of duties handled by him. it is seen that the employees are not satisfied with the way they are appraised or they havent been appraised properly. For this matter, almost all the companies have interview and discussion. The frequency of appraisal in all organisations is yearly. Where appraisal is based on Key Result Areas, a mid-term review is also undertaken. This data is then compiled and the final appraisal is conducted at the end of the year. In most of the cases the immediate supervisors is the appraiser but sometimes it is also the HR department or the HOD. All organizations have goal setting as part of appraisal. The performance is evaluated against these targets. On an average 85% of the employees in an organization are motivated by performance appraisal. .use the data that is maintained for every employee to compare the performance over a period of time. Some companies also use this data for making decision regarding job rotation, succession planning. Very few companies make use of this data for retrenchment as proof of poor performance. A good deal of respondents felt that appraisal is likely to be more successful when it is linked with financial and semi-financial incentives like promotion, bonus, increments. This increases the commitment from the parties concerned the appraisal and the appraisee. 360o degree feedback system is not very popular in the Indian companies. Among the companies under study, this system has been implemented in .. This system can be adopted and is successful only in the presence of an open organisational climate. Most of the companies have a separate appraisal system for the new employees, who are on probation. This basically to confirm them.

.. is satisfied with the current performance appraisal system and do not require any changesthey would like to provide more training to appraisers, weightage to few traits of employee need to be rewarded, if possible appraisal form should be standardised. In most of the organizations training is provided for the appraisal system one to two weeks before the appraisal and also when new or revised Performance appraisal system is introduced. Performance appraisal is surly a good indicator (about 80%) for the training and developmental need of the employees. No monitoring is done to find out any loop holes in the performance appraisal system and if it exists, it is on informal basis (feedback every year). Awareness sessions about the performance appraisal (objectives and importance) are conducted. It is normally done for new employees.

Conclusions and Suggestions

Performance appraisal should not be perceived just as a regular activity but its importance should be recognized and communicated down the line to all the employees. There should be a review of job analysis, job design and work environment based on the performance appraisal. It should bring more clarity to the goal and vision of the organisation. It should provide more empowerment to the employees. New methods of appraisal should be adopted so that both appraiser and the appraisee take interest in the appraisal process. The employees who have excellent performance should be used as a mentor for other employees which would motivate others to perform better. Employees should be given feedback regarding their appraisal. This will help them to improve on their weak areas. Financial and non-financial incentives should be linked to the annual appraisal system so that employees would be motivated to perform better. New mechanisms should be evolved to educe the time factor involved in the procedure of appraisal. Introducing online-appraisal can do this. The frequency of training program for the appraiser should be increased and these sessions should be made interactive. The awareness sessions for the employees/appraisees should be made more interactive and the views and opinion of the appraisees regarding appraisal should be given due consideration. Assistance should be sought from specialists for framing a proper appraisal system that suits the organisation climate. Constant monitoring of the appraisal system should be done through discussions, suggestions, interactions. Combining the different methods of appraisal can minimize the element of biasness in an appraisal. Like the Rating method combined with assessment center method would give an evidence of poor/unfavorable or outstanding behaviour of the appraisee, if any.

Use of modern appraisal techniques like 360o appraisal, assessment centers which are more effective. More transparency should be brought about in the appraisal system. The appraisal system should cover all employees in the organisation both white collar and blue-collar jobs. Recognizing the good performers i.e., appraisees who have accomplished the targets for the year can help in getting more commitment from the employees. Information regarding the performance of the employees should be kept in proper manner. Some of the performance appraisals should be conducted by the top management so that they can understand the employees and their needs, behaviour better and to find out the loopholes. Performance appraisal should be effectively link to the performance management system of the organisation. .still follow the traditional methods of appraisal that should be transformed into the modern one.

Questions for Appraisee

Name: ___________________________ Contact No: __________________________

1. What do you expect from a Performance appraisal :

(Rank the options from 1 to 6; 1 being most preferred & 6 being least preferred)
Detail Salary Administration and Benefits Determination of promotion or transfer Decision on layoff Assistance in goal Guideline for training Plan An insight into your strengths and weakness Rank

2. Do you know what exactly is expected from you at work? a. Yes b. No 3. Are you satisfied with the appraisal system?

1 2 3 4 5 (1 = Least satisfied; 5 = Most satisfied)

4. Are you aware of performance ratings? a. Yes b. No 5. Do you think you should be given an opportunity to rate your own performance? a. Yes b. No 6. Are you given a chance to rate your own performance? a. Yes b. No

7. Timing of Appraisals a. Monthly

b. c. d. e.

Quarterly Half Yearly Annual Anytime

8. Does the credibility of Appraiser affect the Performance Appraisal System? a. Yes b. No 9. Is there a complaint channel for the employees who are dissatisfied with the performance appraisal system? a. Yes b. No 10. Are the standards on the basis of which the performance appraisal is carried out communicated to the employees before hand? a. Yes b. No 11. Who conducts the performance appraisal? a. Immediate supervisor b. Peer appraisal c. Rating committees d. Self-rating e. Appraisal by subordinates 12. Is the performance Appraisal successful in giving a clear understanding of the appraisees job to both appraiser and appraise? a. Yes b. No 13. Are the objectives of appraisal system clear to you? a. Yes b. No 14. Does the appraisal system provide a good communication between the topmanagement plans and business goals to staff below? a. Yes b. No 15. Do you want your comments and suggestions to be taken into consideration during appraisal? a. Yes b. No 16. Is there a post appraisal interview conducted? a. Yes b. No

Questions for Appraiser Name: ___________________________ Contact No: __________________________

1. Purpose of Performance appraisal :

(Rank the options from 1 to 6; 1 being main purpose & 6 being last purpose)
Detail Salary Administration and Benefits Retain performing employees Determination of promotion or transfer Decision on layoff Assistance in goal Guideline for training Plan 2. Is the Performance Appraisal helping you to plan your work well? Rank

1 2 3 4 5 (1 = Least helpful; 5 = Most helpful)

3. Does the system provide you a chance to communicate the support you

need from your subordinate to perform the job well.

a. Yes b. No 4. Which appraisal system is being employed in the company? a. Assessment centre b. MBO c. BARS d. 360 degree feedback e. Balance scorecard 5. Performance Appraisal criteria a. Quantitative outcome criteria (Sales volume, Sales price, Productivity, Goal accomplishment rate) b. Qualitative process criteria (Quality of product or service, Customer satisfaction) c. Quantitative process criteria (Efficiency, Cost/expenses, Attendance) d. Qualitative process criteria (Judgment, Work attitude, Leadership, Conduct /Trait)

6. Timing of Appraisals a. Monthly b. Quarterly c. Half Yearly d. Annual e. Anytime 7. What do you think is the effect of a poor appraisal system

a. De-motivation b. Retention c. Ineffective teamwork

8. Does the appraisal system provide a good communication between the topmanagement plans and business goals to staff below? a. Yes b. No 9. Does it give insight to appraisee regarding his strength or weakness? a. Yes b. No

10. Are employees comments and suggestions taken into consideration

before the appraisal?

a. Yes b. No

11. Who conducts the performance appraisal a. Immediate supervisor b. Peer appraisal c. Rating committees d. Self-rating e. Appraisal by subordinates 12. Is the performance Appraisal successful in giving a clear understanding of the appraisees job to both appraiser and appraise? b. Yes b. No 13. Are the standards on the basis of which the performance appraisal is carried out communicated to the employees before hand? a. Yes b. No 14. Do you give an opportunity to the appraisee to rate his own performance? a. Yes b. No 15. Do you act upon the results of your performance appraisal? a. Yes b. No

16. If yes, then mention the remedial measures taken?

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