Performance Appraisal at The Corporate Level

A DISSERTATION PROJECT
On
A
STUDY ON PERFORMANCE APPRAISAL SYSTEM IN A CORPORATE LEVEL
Submitted in partial fulfillment of the requirement for MBA Degree of Bangalore University
BY
ASSER NASHIKAKU
Register Number
04XQCM6008 Under the guidance of Prof. NANDINI VYDYANATHAN
M.P.Birla Institute of Management Associate Bharatiya Vidya Bhavan Bangalore-560001 2004-2006
M.P.BIRLA INSTITUTE.OF MANAGEMENT
DECLARATION
I hereby declare that the report titled A STUDY
ON PERFORMANCE APPRAISAL SYSTEM IN A CORPORATE LEVEL is prepared under the
guidance of PROF. NANDINI VYDYANATHAN in partial fulfillment of MBA degree of Bangalore University, and is my original work. This project does not form a part of any report submitted for degree or diploma of Bangalore University or any other university.
PLACE: BANGALORE DATE: ASSER NASHIKAKU
PRINCIPALS CERTIFICATE
This is to certify that MR.ASSER NASHIKAKU, bearing registrationNo:04XQCM6008 has done a project and has prepared a report A STUDY ON
PERFORMANCE
APPRAISAL SYSTEM IN A
under the guidance of
CORPORATE LEVEL
PROF.NANDINI VYDYANATHAN, M. P. Birla Institute of Management, Bangalore. This has not formed a basis for the award of any degree/diploma for any other university.
PLACE: BANGALORE DATE
DR.NAGESH.S.MALLAVALLI PRINCIPAL MPBIM,BANGALORE
GUIDES CERTIFICATE
I hereby declare that the research work embodied in this dissertation entitled A STUDY ON
PERFORMANCE
APPRAISAL SYSTEM IN A
CORPORATE LEVEL Has been undertaken and

completed by MR.ASSER NASHIKAKU under my guidance and supervision.
I also certify that he has fulfilled all the requirements under the covenant governing the submission of dissertation to the Bangalore
University for the award of MBA Degree.
PLACE: BANGALORE DATE:
PROF.NANDINI VYDYANATHAN MPBIM, BANGALORE
ACKNOWLEDGEMENT
I wish to record my deep sense of gratitude and profound thanks to our faculty Guide PROF.NANDINI VYDYANATHAN, for her invaluable guidance throughout the course of this project for providing me with the necessary facts and data relevant to this study and who have been a constant source of encouragement for me and have been instrumental in bringing about the successful completion of this project.
I am thankful to all the members of the staff of M.P.BIRLA.INSTITUTE OF MANAGEMENT for their help and suggestions in conducting this study successfully.
PLACE: BANGALORE DATE:
ASSER NASHIKAKU
ABSTRACT
Performance appraisal should be a two way approach, both from the supervisor and subordinate. The study presents a review of the performance appraisal process in relation to performance and feedback at Hewlett Packard. The purpose of PA is to help the employee perform better, accomplish more and be motivated to work towards making an organization more effective. The performance appraisal is the evaluation of on employee job performance in order to determine the degree to which the employee is performing effectively. Performance appraisal should be designed to show more precisely how well workers are doing their jobs.
The Performance Appraisal System needs to be very transparent and helpful both to the employees and to the organization. The need is to get a feedback from appraisers and appraisee working in the organization, about the current state of the PAS. Only after analyzing the current state of PAS, the human resource managers can go to the next step of improvements in PAS. A survey is therefore required.
The type of research chosen is quantitative in nature. The research is undertaken to ascertain the views / opinions of the Raters and Ratees working with the company and to suggest appropriate modifications about the existing PAS Structured questionnaire has been prepared and discussed personally with the respondents.
The sample size will be restricted to 100 employees and 20 employers chosen by applying stratified random method.
Findings of the research are:
1.
The employees are aware of the present Performance appraisal System followed in the company. This is evident from the responses collected from the raters as well as the ratees. 85% of the ratees agreed.
2.
Raters spend considerable amount of time in giving the rate a feedback about the performance.
3.
The general awareness about the traits / attributes is good. 70% of the employees also felt that the traits / attributes are sufficient.
4.
Respondents feel that the training program strongly helps in enhancing job knowledge and individual skill.
5.
The ratees have a good knowledge about who their respective Reporting and the Reviewing officers are of the respondents knew the rating office.
The researcher would like to recommend the following:
1)
The performance appraisal should begin by concentrating on what employees have done well.
2)
The Reporting officer must focus on employees key effective areas where he should show results.
3)
The Reporting / Reviewing officer must establish objectives in terms of an employees performance (Both short term and long term) which in a way will after the total organizational plan.
INTRODUCTION
IT INDUSTRY Over the last decade, India has developed into a major and credible information technology (IT) outsourcing centre. In India, the software boom started somewhere in the late 1990s. Most of the Indian software companies at that moment offered only limited software services such as the banking and the engineering software.
Information Technology (IT) knowledge based industry, has the tremendous potential of becoming an engine of accelerated economic growth, productivity improvement for all sectors of the economy and means of efficient governance.
The IT software and service industry has been categorized into three broad sectors:
Software Product and Technology Services. IT Services and IT Enabled Services
It enhances access to information, protects consumers, provides access to government services, makes skill formation and training more effective, improves delivery health services and promotes transparency. It provides tremendous employment potential and linkages between government and the people both at the rural and urban level. Investment in knowledge based industries will determine the level of the countrys dominant position in the world economy in the next two decades.
The IT sector is one of the fastest growing segments of Indian Industry, growing from Rs.13,200 million in1992-93 to Rs.80,884 million in 2001-02. Sixty percent (Rs.48,134 million in 2001-02) is accounted for by software and the remaining 40 percent (Rs.32,570 million) by hardware. IT is an area where the country has a competitive
edge and can establish global dominance. Advancements in IT have a profound impact on the economy and the quality of human life.
The ITES sector in India has emerged as a key engine of growth for the Indian IT Industry and the technology led services industry. This sector has grown from Rs.2 400 million in 1999 2000 to Rs.4,100 million in 2000 2001, providing employment to 70,000 people.
The major users of IT services are the government, financial services and banking, manufacturing and retail and distribution. New areas likely to emerge are communication, healthcare and utilities, as these will increasingly be deregulated. However, IT services essentially require high quality man power, state of the art, skills, world-class telecom and IT knowledge based environment.
Status of IT Software Industry in India and Global
The Indian IT software and service industry has emerged as one of the fastest growing sectors in the Indian economy, with a growth rate exceeding 50 percent in export and 40 percent in the total IT industry over the last five years.
Software Product and Technology Services provide a high growth opportunity for the Indian Software Industry.
Indian companies have a market potential of software product development, such as enterprise software (e-business solution, ERP, e-corporate governance), consumer software (personal productivity tools) and embedded software.
Indian companies have developed a number of highly acclaimed and popular packages, such as HR management and business accounting by TCS, banking automation packages by Infosys, ERP tools by RANCO etc.
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The total global software and IT services market is estimated to be about $ 1.2 trillion of which Indias share is 2 percent. The Indian software industry is under threat from emerging competitors.
US technology firms are rapidly shifting back office functions to India. Foreign firms are eagerly waiting to set up centers to process financial claims, payroll data, and building customer support desk.
The overall success of the IT industry in India has shown spill over effects to other industries in the country. The Indian economy has grown at an average rate of 6.0% a year during the last five years (11). In India, the success of software industry can be attributed to the excellent team work between the Government and the industry. Government of India, considering the performance of the Indian software industry, has extended all support, including fiscal benefits, availability of high speed data communications and infrastructure and has ensured almost red tape free system.
1.1
Problem Statement This project aims to study the performance appraisal system (by considering
certain important dimensions) followed by Hewlett Packard.
The study aims to highlight the significance of such performance appraisal system in the corporate context. Thus the study tries to establish the link between performance appraisal system and organizational effectiveness.
1.2
Background of the study There is a need for companies to look much more closely at their performance
management and appraisal systems, since many are not only useless, but can actually harm productivity and the relationships between employees and mangers. Some of the most innovative work in developing new approaches to performance management is being done these days by organizations in the public sector.
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1.3
Justification and Significance Performance appraisal system is an important part of any organization. If forms
the backbone for assessing the employees performance. Since it is done on various dimensions, becomes the core principle in any organization. Therefore a study of the same is extremely important in todays organizational context.
1.4 1. 2.
Research Objectives To study performance appraisal system in Hewlett Packard. To highlight the significance of performance appraisal system in the Hewlett Packard and establish the link between performance appraisal system and organizational effectiveness.
1.5
Hypothesis H0 performance appraisal system is not important in any organizational context. H1 performance appraisal system is extremely important in any organizational context.
1.6
Theoretical frame work Human Resource Management is a management function that helps managers to Recruit, Select, Train and Develop members for an organization. HRM is concerned with the peoples dimension in organizations.
HRM is a series of integrated decisions that form the employment relationship; their quality contributes to the ability of the organizations and the employees to achieve their objective. HRM is concerned with the people dimension in management. Since every organization is made up of people, acquiring their services, developing their skills, motivating them to higher levels of performance and ensuring that they continue to maintain their commitment to the organizational objectives. This is true, regardless of the type of organization government, business, education, health, recreation or social action.
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Thus, HRM refers to set of programmes; functions and activities designed and carried out in order to maximize both employee as well as organizational effectiveness.
Performance Appraisal and its importance
Introduction An organizations goals can be achieved only when people put in their best efforts. How to ascertain whether an employee has shown his or her best Performance on a given job? The answer is Performance appraisal. Employee assessment is one of the fundamental jobs of HRM, but not an easy one though.
Appraising the performance of individuals, groups and organizations is a common practice of all societies. While in some instances these appraisal processes are structured and formally sanctioned, in other instances they are an informal and integral part of daily activities. In social interactions, performance is conducted in a systematic and planned manner to achieve widespread popularity in recent years.
In simple terms, performance appraisal may be understood as the assessment of an individuals performance being measured against such factors as job knowledge, quality and quantity of output, initiative, leadership abilities, supervision, dependability, co-operation, judgement, versatility, health and the like. Assessment should not be confined to past performance alone. Potentials of the employee for future performance must also be assessed.
A formal definition of performance appraisal is:
It is the systematic evaluation of the individual with respect to his/her Performance on the job and his/her potential for development
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A more comprehensive definition is:
Performance appraisal is a formal, structured system of measuring and evaluating an employees job related behaviours and outcomes to discover how and why the employee is presently performing on the job and how the employee can perform more effectively in the future so that the employee, organization and society all benefit
The second definition includes employees behaviour as part of the assessment. Behaviour can be active or passive - do something or do nothing. Either way, behaviour affects job results.
The other terms used for performance appraisal are:
Performance Rating Employee assessment Employee Performance Review Personnel Appraisal Performance Evaluation Employee Evaluation Merit Rating
In a formal sense, employee assessment is as old as mankind.
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Some of the important features of performance appraisal are:
Performance appraisals the systematic description of an employees job relevant strengths and weaknesses.
The basic purpose is to find out how well the employees are performing the job and establish a plan of improvement.
Appraisals are arranged periodically according to a definite plan. Performance appraisal is not job evaluation. It refers to how well some one is doing the assigned job.
Performance appraisal is a continuous process if every large scale organization.
Need for Performance Appraisal
Provide information about the performance ranks basing on which decision regarding salary fixation, confirmation, promotion, transfer and demotion are taken.
Provide feedback information about the level of achievement and behaviour of subordinate. This information helps to review the performance of the subordinate, rectifying performance deficiencies and to set new standards of work, if necessary.
Provide information which helps to counsel the subordinate. Provide information to diagnose deficiency in employee regarding skill, knowledge, performance appraisal determine training and developmental needs and to prescribe the means for employee growth provides information for correcting placement.
To prevent grievances and in disciplinary activities.
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Objectives of Performance Appraisal
Data relating to performance assessment of employees are recorded, stored and used for several purposes. The main purposes of employee assessments are:
To effect promotions based on competence and performance.
To confirm the services of probationary employees upon their completing the probationary period satisfactorily.
To assess the training and developmental needs of employees.
To decide upon a pay raise where (as in the unorganized sector) regular pay scales have not been fixed.
To let the employees know where they stand in so far as their performance is concerned and to assist them with constructive criticism and guidance for the purpose of their development.
To improve communication. Performance appraisal provides a format for dialogue between the Superior and the subordinate and improves understanding of personal goals and concerns.
Finally, performance appraisal can be used to determine whether HR programmes such as selection, training and transfers have been effective or not.
Broadly, performance appraisal serves four objectives.
1.
Developmental Uses
Identification of Individuals Need
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Performance Feedback Determining Transfers and Job Assignment Identification of Individual Strengths.
2.
Administrative Uses / Decisions
Salary Promotion Retention or Termination Recognition of Individual Performance Lay-Offs Identification of Poor Performance
3.
Organizational Maintenance / Objectives
HR Planning Determining organization training needs Information for goal identification Evaluation of HR System Reinforcement of organizational development needs
4.
Documentation Purpose
Criteria for Validation Research Documentation for HR Decisions Helping to meet requirements
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Appraisal Process
The following diagram outlines the performance appraisal process. Each step in the process is crucial and is arranged logically.
Objectives of Performance
Establish Job Expectations
Design and Appraisal Programme
Appraise Performance
Performance Interview
Use Appraisal data for Appropriate purposes
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Objectives of Appraisal
Objectives of appraisal, as stated above, include effecting promotions and transfers, assessing training needs, awarding pay increases and the like. The emphasis on all these is to correct the problems. These objectives are appropriate as long as the approach in appraisal is individual. Appraisal, in future would assume systems orientation. In systems approach, the objectives of appraisal stretch beyond the traditional ones.
Establish Job Expectations The second step in the appraisal process is to establish job expectations. This includes informing the employee what is expected of him or her on the job.
Design Appraisal Programme Designing an appraisal programme poses several questions, which need answers. They are:
Formal Versus Informal Appraisal Whose Performance is to be assessed? Who are the raters? What problems are encountered? How to solve the problems? What should be evaluated? When to evaluate? What methods of appraisal are to be used?
Formal versus Informal Appraisal Formal Appraisals usually occur at specified time periods once or twice a year. Formal appraisals are most often required by the organization for the purpose of employee evaluation.
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Informal Performance Appraisal can occur whenever the supervisor feels the needs for communication.
Many organizations encourage a mixture of both formal and informal appraisals. The formal appraisal is most often used as primary evaluation. However, the informal appraisal is very helpful for more performance feedback. Informal appraisals should not take place of formal performance evaluation.
Whose Performance should be rated? To the question as to whose performance should be rated, the answer is Obvious employees. When we say employees, is it individuals or teams? Specifically, the rate may be defined as the individual, work group, division or organization. It is also possible to define the ratee at multiple levels. For example, under some conditions, it may be desirable to appraise Performance both at the work group level for merit pay increases and at the individual level to assess training needs.
Who are raters? Raters can be immediate supervisors, specialists from the HR department, department, subordinates, peers, committees, clients, self appraisals or a combination of several.
Problems of rating Performance appraisals are subject to a wide variety of in accuracies and biases referred to as rating errors. These errors occur in the raters observations, judgement and information processing and can seriously affect assessment results. The most common rating errors are Leniency or Severity Central Tendency Halo Effect Rater Effect Primacy and Recency Effects Perceptual Set
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Performance Dimension Behaviour Spill Over Effect Status Effect
Solving Raters Problems
The best way to over come these problems is to providing training to the raters. From a practical point of view, several factors, including the extent to which pay is related to performance ratings, union pressure, turn over rates, time constraints and the need to justify ratings may be more important than training, influencing the ratings that raters actually give.
This means that improving rating systems involves not just training the raters but rectifying outside factors such as union pressure. And it means that a rater training, to be effective, should also address real life problems such as the fact that union representatives will try to influence supervisors to rate everyone high.
Training helps to improve the appraisal system by overcoming distortion that occurs due to the raters errors such as halo, leniency, central tendency and bias. Training of raters must help strengthen the factors that tend to improve accuracy of ratings and weaken those that lower the accuracy of the performance measurement.
One of the steps in designing an appraisal programme is to determine the evaluation criteria. It is obvious that the criteria should be related to the job.
The six criteria for assessing performance are:
Quality Quantity Timeliness Cost effectiveness
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Need for supervision Interpersonal impact
These criteria relate to past performance and behaviour of an employee. The first four quality, quantity, timeliness and cost effectiveness are objective in nature. The last two need for supervision and interpersonal impact are subjective. Objective measures are quantifiable and are therefore highly useful in measuring the performance of an employee. But performance of employees should not always be evaluated against quantifiable measures. Subjective measures are dependent upon human judgement. They are prone to different kind of errors stated earlier such as leniency or severity, central tendency, halo and the like. To be useful, subjective measures must be based on a careful analysis of the behaviour viewed as necessary and important for effective job performance.
Timing of Evaluation How often should an employee be assessed? The general trend is to evaluate once in three months, or six months, or once in a year. 70% of the organizations conduct performance appraisal once a year, according to a survey conducted in 1997 by Arthur Anderson. Newly hired employees are rated more frequently than the older ones. Frequent assessment is better than phased evaluation. Feedback in the latter is delayed and the advantage of timely remedial measures by the employee is lost. Further evaluation gives constant feedback to the ratee, thus enabling him/her to improve performance if there is any deficiency. The performance of trainees and probationers should be evaluated at the end of respective programmes.
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Methods of Appraisals The last to be addressed in the process of designing an appraisal programme is to determine method(s) of evaluation. Numerous methods have been devised to measure the quantity and quality of employees job performance. Each of the methods discussed could be effective for some purposes, for some organizations. None should be dismissed or accepted as appropriate except as they relate to particular type of employees. Broadly all approaches can be classified into
Past oriented methods and Future oriented methods
Each group has several techniques. Some of them are explained in the following section.
Part Oriented Methods
1.
Graphic Rating Scale
The term used to define the oldest and most widely used performance appraisal method. The evaluators are given a graph and asked to rate the employees on each of the characteristics. The number of characteristics can vary from one to one hundred. The rating can be a matrix of boxes for the evaluator to check off or a bar graph where the evaluator checks off a location relative to the evaluators rating.
2.
Check Lists
The term used to define a set of adjectives or descriptive statements. If the rater believes the employee possessed a trait listed, the rater checks the item; if not, the rater leaves the item bank. Rating score from the checklist equals the number of checks.
3.
Weighed Check Lists
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The term used to described a performance appraisal method where supervisors or personnel specialists familiar with the jobs being evaluated prepared a large list of descriptive statements about effective and ineffective behaviour on jobs.
4.
Forced Choice Method
This appraisal method has been developed to prevent evaluators from rating employees to high. Using this method, the evaluator has to select from a set of descriptive statements, statements that apply to the employee. The statements are weighted and summed to at, effectiveness index.
5.
Forced Distribution
The term used to describe an appraisal system similar to grading on a curve. The evaluators are asked to rate employees in some fixed distribution of categories. One way to do this is to type the name of each employee on a card and ask the evaluators to sort the cards into piles corresponding to rating.
6.
Critical Incident Technique
The term used to describe a method of performance appraisal that makes lists of statements of very effective and very ineffective behaviour for employees. The lists are combined into categories, which vary with the job. Once the categories are developed and statements of effective and ineffective behaviour provided, the evaluator prepares a log for each employee. During the evaluation period, the evaluator records examples of critical behaviours in each of the categories, and the log is used to evaluate the employee at the end of the evaluation period.
7.
Behavioral Anchored Rating Scales
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The term used to describe a performance rating that focuses on specific behaviours or sets as indicators of effective or ineffective performance, rather than on broadly stated adjectives such as average, above average, or below average. Other variations are:
Behavioral observation scales. Behavioral Expectations Scales Numerically anchored rating scales
8.
Ranking The term ranking has been used to describe an alternative method of
performance appraisal where the supervisor has been asked to order his or her employees in terms of performance from highest to lowest.
9.1
Paired Comparison The term used to describe an appraisal method for ranking employees. First, the
names of the employees to be evaluated are placed on separate sheets in a predetermined order, so that each person is compared with all other employees to be evaluated. The evaluator then checks the person he or she feels has been the better of the two on the criterion for each comparison. Typically the criterion is the employees over all ability to do the present job. The number of times a person is preferred is tallied, and the tally developed is an index of the number of preference compared to the number being evaluated.
10.
Narrative or Essay Evaluation This appraisal method asks the evaluator to describe strengths and weaknesses
of an employees behaviour. Some companies still use this method exclusively, whereas in others, the method has been combined with the graphic rating scale.
Future Oriented Methods 1. Management by Objectives
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The management by objectives performance appraisal method has the supervisor and employee get together to set objectives in quantifiable terms. The appraisal method is worked to eliminate communication problems by the establishment of regular meetings, emphasizing results and by being an ongoing process where new objectives have been established and old objectives are modified as necessary in light of changed conditions.
2.
Psychological Appraisals Psychologists are used for evaluations; they assess an individuals future
potential and not past performance. The appraisal normally consists of in depth interview psychological tests, discussions with supervisors and a review of other evaluations. The psychologists then writes an evaluation of the employees intellectual, emotional, motivational and other related characteristics that suggest individual potential and may predict future performance.
3.
Performance Interview Performance Interview is another step in the appraisal process. Once the
appraisal has been made of employees, the raters should discuss and review the performance with the ratees, so that they will receive feedback about where they stand in the eyes of the superiors. Feedback is necessary to effect improvement in performance, especially when it is adequate.
Specifically Performance Interview has three goals
To change behaviour of employees whose performance does not meet organizational requirements or their own personal goals.
To maintain the behaviour of employees who perform in an acceptable manner and
To recognize superior performance behaviour so that they will be continued.
Use of Appraisal Data
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The final step in the evaluation process is the use of evaluation data. The HR department must use the data and information generated through performance evaluation. In one way or the other, data and information outputs of a performance appraisal programme can critically influence employer employee reward opportunities.
Specifically the data and information will be useful in the following areas of HRM.
Remuneration administration Validation of selection programmes. Employee training and development programmes Promotion, transfer and lay-off decision Grievance and discipline programmes HR Planning
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1.
Hewlett Packard A brief company profile
HP is founded in 1939 and its first product is the resistance capacitance audio oscillator (HP 200A), an electronic instrument used to test sound equipment. Over the next decade, test and measurement products from HP win excellent acceptance among engineers and scientists.
Corporate Objectives Customer loyalty To provide products, services and solutions of the highest quality and deliver more value to customer that earns their respect and loyalty.
Profit To achieve sufficient profit to finance the company growth, create value to shareholders and provide the resource needed to achieves corporate objectives.
Market Leadership To grow by continually providing useful and significant products and services and solutions to markets and expand into new areas that build on competencies, technologies and customer interest.
Growth To view change in markets as an opportunity to grow to use profits and the ability to develop and produce innovative products, services, and solutions that satisfy emerging customer needs.
Employee commitment To help the employees share the company is success that they make possible to provide people with employment opportunities based on performance.
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Leadership Capabilities: To develop at every level employees who are accountable for achieving business results and exemplifying the corporate value.
Global citizenship: Good citizenship is good business, societal responsibility by being an economic intellectual and social asset to each country and community in which we do business.
Vision and Strategy: HP believes diversity as a key driver to success. Putting all our differences to work across the world is continuous journey fueled by personal leadership from everyone in the company. HP aspiration is that the behaviors and actions that support diversity and inclusion a conscious part of how its business is throughout the world. Diversity and inclusion are an intrinsic part of HP nature and key to fulfilling our vision for HP; to be a winning e- company with a shining soul. Products: Servers Storage Software Networking Printing & Multi Function Desktops and Workstations Notebooks and Table PCs Monitors and Projections Fax, Copiers and Scanners
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3.1 Purpose of the Review of Literature The purpose of literature review is to identify the problem statement, understand the secondary data that has been gathered in the field of study and make new findings on the problem statement.
1.
Author : Barr, 1993 Website : performanceappraisal1101/litreview.htm Purpose : To highlight the importance of recognizing and maintaining strong relationship between training and performance evaluation
Both the supervisor and employee should recognize that a strong relationship exists between training and performance evaluation. Each employee should be allowed to participate in periodic sessions to review performance and clarify expectations. Both the supervisor and the employee should recognize these sessions as constructive occasions for two way communication. Sessions should be scheduled ahead of time in a comfortable setting and should include opportunities for self assessment as well as supervisor feedback. These sessions will be particularly important for new employees who will benefit from early identification of performance problems.
Once these observations have been shared, the supervisor and employee should develop a mutual understanding about areas for improvement, problems that need to be corrected and additional responsibilities that might be undertaken. When the goals are identified, a plan for their achievement should be developed. The plan may call for resources or support from other staff members in order to meet desired outcomes.
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In some cases, the plan might involve additional training. The supervisor should keep in contact with the employee to assure the training experiences are producing desired impact.
3.2 Methodology The study is done using survey method to find importance of strong relationship between training and performance evaluation.
3.3 Conclusions The supervisor should keep in contact with the employee to ensure that the training experiences are producing the desired impact.
2.
Author : London, 2003 Website : performanceappraisal1101/litreview.htm Purpose : To study the importance of understanding the nature of the job for a supervisor Once the supervisor understands the nature of the job and the sources of information, the information needs to be collected in a systematic way, provided as feedback and integrated into the organizations performance management process for use in making compensation, job placement and training decisions and assignments.
The model discussed is an example of a performance appraisal system that can be applied to top level, middle level and lower level employees. Employees feel that they are taken seriously as individuals and that the supervisor is truly concerned about their needs and goals.
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Methodology The study is done using survey method to find how important it is to a supervisor in understanding the nature of the job.
Conclusions The model discussed is an example of a performance appraisal system that can be applied to top level, middle level and lower level employees.
4.4 Benefits to a researcher from review:
The literature gives an insight into the importance of the performance appraisal system in an organization.
It has helped me to formulate the problem statement. It has helped me to formulate the objectives of the study. It has also served as a secondary data.
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4.1
Hypothesis H0 Performance Appraisal System is not important in any organizational context. H1 Performance Appraisal System is extremely important in any organizational context.
4.2
Type of Research The research is primarily quantitative in nature. The study is based on data collected through structure questionnaire from the respondents and interviews conducted with the respondents.
4.3
Sampling Technique The research technique used is Stratified Random Method.
4.4
Type of Data Data is the fact of an event. Data is the base for every research work. The data is mainly classified into two groups.
1)
Primary Data Thrust has been on collection of primary data. Structured questionnaire has been used and discussed personally with the respondents to get their responses.
2)
Secondary Data Books, Journals, websites etc. have been consulted for obtaining related information and also for cross checking of primary data.
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4.5
Research Techniques Structured Questionnaire Personal Interviews Statistical Tools Tables / Chart.
4.6
Population 200
4.7
Sample Size 120 Employees (Ratees) - 100 Employers (Raters) - 20
4.8
Sampling Profile Educated Earning Good Income Good Lifestyle
4.9
Scope and Limitations of the Research The study is constrained only to performance appraisal system. Analysis of primary data is done on the assumption that the answers given by the respondents are true and correct. Time and Resource Constraints.
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Questionnaire 1 (To the Ratees)
Q1.
Are you aware of performance appraisal system followed in your Company?
Table No.1 Showing the response towards the Awareness of the Performance Appraisal System
Particulars Yes No
No. of Respondents 85 15
% of Respondents 85 15
Graph No.1 showing the response towards the Awareness of the Performance Appraisal System
No. of Respondents
15% Yes No 85%
Source: Field Investigation
Inference: The company follows a strict policy about the appraisal
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Q2.
In the performance appraisal system self appraisal forms a part. Do you think
it is relevant?
Table No.2 showing the response about the Validity of Self Appraisal
Particulars Yes No
Graph No.2 showing Response towards Importance of Self Appraisal
20% Yes No 80%
Inference: The self appraisal is relevant as part of Performance Appraisal.
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Q3.
Are you aware of the different / attributes according to which you are rated?
Table No.3 showing the response about the Knowledge of Traits / Attributes
Particulars Yes No
Graph No.3 showing Response towards Awareness about different traits
30% Yes No 70%
Inference: The management effectively informs the appraisee about the traits contained in the appraisal formats.
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Q4.
The performance appraisal system helps in
Table No.4 showing the response of Performance Appraisal according to the Employees perspective
Particulars Promotions Salary Retention / Termination Recognition of Individual Performance Identification of Poor Performers
No. of Respondents 60 32 10 49 25
Graph No.4 showing Response towards Application of Performance Appraisal
Promotions
25
Salary
60
Retention, Termination
49
Recognition of Individual Performance
10
32
Identification of Poor Performers
Inference: The Performance appraisal influences promotions and also aids in recognition of individual performances.
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Q5.
The performance appraisal system has two pars i.e. Self appraisal followed by the evaluation of Reporting and Reviewing Officers.
Do you think the evaluation should also be done by
Table No.5 showing the response towards evaluation by
Particulars Peers Sub-ordinates Client or Outsiders Not required
No. of Respondents 50 25 12 13
% of Respondents 50 25 12 13
Graph No.5 showing Response towards Evaluation also being done by
60 No. of Respondents 50 40 30 20 10 0 Peers Subordinates Client or Outsiders Not required
Responses Given
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Inference: Strong preference to be evaluated by peers.
Q6.
Help and guidance provided to you by your reporting / reviewing Officers is
Table No.6 showing the response towards the sufficiency of help and guidance provided by Reporting / Reviewing Officers
Particulars Highly Sufficient Sufficient Insufficient Highly Insufficient
Graph No.6 Showing Response towards sufficiency of Help and Guidance provide by Reporting / Reviewing Officers
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Highly Insufficient Insufficient Sufficient Highly Sufficient 0 10 20 30 40 50 60
Inference: There is an indication that the management spends considerable time on providing help and guidance to the employees.
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Q7.
The close relationship between your performance appraisal rating and corresponding monetary reward is
Table No.7 showing the response to the extent of closeness between Performance Appraisal rating and the corresponding monetary benefits
Particulars Highly Co-related Co-related Not related Dont know
Graph No.7 Showing Relation between PA and Pay
6 11 42
Highly Co-related Co-related Not related
41
Dont know
Inference: There is a high close relation between performance appraisal and pay.
46
Q8.
The degree of Mutual Understanding in your work relationships with your
supervisor is
Table No.8 showing the response towards the degree of mutual understanding in work relationships with the employees superior
Particulars Very High Quite High Rather High Rather Low Quite Low Very Low
No. of Respondents 20 35 25 13 6 1
Graph No.8 Showing Response towards Degree of Mutual Understanding
Very Low Response Given Quite Low Rather Low Rather High Quite High Very High 0 10 20 30 40
No. of Respondents
47
Inference: The degree of mutual understanding in work relationships with the employees superior is high. This implies that Rater Bias is not prevalent in the company.
Q9. Key:
The training needs identified through the performance appraisal
a: Formulated into a training programme. b: Not considered for training. C: Dont know
Table No.9 showing the response towards the Training needs identified through the Performance Appraisal
Particulars a b c
No. of Respondents 60 23 17
% of Respondents 60 23 17
Graph No.9 showing Response towards Training needs Identification
48
70 60 No. of Respondents 50 40 30 20 10 0 a b Responses Given c
Source: Field Investigation Inference: The management is effective in recognizing the training needs and then incorporating the needs into an appropriate training programme.
Q10. The Training Programme conducted Key: a: Strongly helps in enhancing Job knowledge and individual skill. b: Helps in overcoming the shortcomings identified in an employee. c: Doesnt help in any way.
Table No.10 showing the response towards the type of the training programme conducted in the company
Particulars a b c
49
Graph No.10 showing Response towards Effectiveness of Training Programme
60 50 40
No. of Respondent
30 20 10 0 a b
Response (Refer Keys)
Inference: The training program strongly helps in enhancing job knowledge and individual skill.
Q11. How frequently do you think can Performance Appraisal be done?
Table No.11 showing response towards how frequently performance appraisal can be done.
Particulars 1 Year 6 Months 3 Months Each Month
50
Graph No.11 showing Response towards Frequency in Performance Appraisal
45 40 No. of Respondents 35 30 25 20 15 10 5 0 1 Year 6 Months 3 Months Each Month
Response Given
Inference: Many employees prefer annual performance appraisal system.
Q12. What is your overall feeling about the Performance Appraisal System?
Key: a) Highly relevant in the present economic scenario and provides an opportunity for growth. b) Not of much value as it does not help in any enhancement in performance. c) Is of no significance in the present scenario not growth oriented. d) Highly irrelevant, does not help the individual or the company.
Table No.12 showing the response towards the overall feelings about the Performance Appraisal System
51
Particulars A B C D
Graph No.12 showing Response towards overall feeling of Performance Appraisal
80 60
No. of Respondents
40 20 0 A B C D
Response given (Rater keys)
Inference: The Performance appraisal is highly relevant in the present scenario as well as provides an opportunity for growth.
52
Questionnaire 2 (To the Raters)
Q1.
How often your employees performance is appraised?
Table No.1 showing the response towards the conduction of the rate of Performance Appraisal
Particulars Yearly
No. of Respondents 20
% of Respondents 100
Graph No.1 - showing Response towards rate of Performance Appraisal
20 18 16 14 12 No. of 10 Respondents 8 6 4 2 0 1 Response Given
Inference: The raters are well aware of the appraisal system followed in the company.
53
Q2.
Do you think that the level of interpersonal relationships with the appraisers influence Performance Appraisal Process? If yes, to what extent?
Table No.2 Table showing the response towards the level of interpersonal relationships with the appraisee
Particulars
Extent To a very large extent To certain extent
Yes
No
Graph No.2 showing Response towards Level of Interpersonal Relationship affecting the appraisal
50 40 30 No of Respondee 20 10 0 Yes Response Given No
Inference: The level of interpersonal relationship influences the rating of the employees to a certain extent.
54
Q3.
After the Performance Appraisal and feedback, do the employees get counseling and training, if needed to improve their performance in future?
Table No.3 Table showing the response about the employees getting counseling and training (if needed) after the performance appraisal and feedback
Particulars Yes No
Table No.3 Showing the response about the employees getting feedback after the appraisal process.
Inference: The responses were very good, indicating 100% of respondents agreeing to the fact that the employees are given counseling and training.
55
Q4.
Do you normally avoid criticizing the appraisee?
Table No.4 showing the response towards the avoidance of criticism.
Particulars Yes No
Table No.4 showing the response avoidance of criticism
35%
65%
Inference: The rates give importance not only to the performance appraisal system, but also to individual employee growth.
56
Q5.
Which one of the following techniques of evaluation do you use?
Table No.5 Showing the response about the techniques of evaluation used by the raters
Particulars Graphic rating Scale Critical Incident Technique Bars Paired Comparison MBO If any other
% of Respondents 15 0 30 0 40 10
Graph No.5 Showing Response towards the technique appraisal system followed in the Company
40 35 30 25 No. of 20 Respondents 15 10 5 0 Graphic rating Scale Bars MBO
Response Given
Source: Field Investigation Inference: MBO and BARS are preferred techniques of evaluation.
57
Q6.
Do you encounter the following problems while doing evaluation?
Table No.6 Showing the response towards the problems while doing evaluation
Particulars A B C D E F
% of Respondents 5 0 20 0 75 0
Keys: a) Problems with standards of evaluation b) Halo Effect c) Leniency or harshness d) Central tendency errors e) Recency of events errors f) Personal bias (stereo typing) Graph No.6 Showing Response towards problems while doing evaluation
80 70 Response Given 60 50 40 30 20 10 0 A B C D E F No. of Respondents
58
Inference: The raters agree that Recency of events errors does affect the evaluation procedure.
Q7.
Do you conduct feedback interviews with your employees soon after the
evaluation?
Table No.7 showing the response towards conducting a feedback interview with rate soon after the evaluation
Particulars Yes No
Graph No.7 Showing Response towards conducting a feedback interview soon after evaluation
20%
Yes No
80%
59
Inference: Feedback is provided to the employees to improve upon their performance.
Q8.
Which one of the following you advocate for evaluation?
Table No.8 showing the response towards the rater advocating a method for evaluation
Particulars A B C D E
No. of Respondents 2 3 2 6 7
% of Respondents 10 15 10 30 35
Keys: a) Rating by a committee of several supervisors. b) Rating by the employees peers (co-workers) c) Rating by employees sub-ordinates. d) Self-evaluation by the Employees e) 360 Degree evaluation
60
Graph No.8 Showing Advocate for Evaluation
35 35 30 25 20 15 10 5 0 A B C D E 10 15 10 30
Inference: The rates favor rating by the employees peers (co-workers). A majority of them would like to adopt 360 degree appraisal.
61
62
LIST OF FINDINGS
1.
The employees are aware of the present Performance appraisal System followed in the company. This is evident from the responses collected from the raters as well as the ratees. 85% of the rates agreed.
2.
Raters spend considerable amount of time in giving the feedback to the ratees about the performance.
3.
80% of the employees are satisfied with the self appraisal process being followed in the company.
4.
The general awareness about the traits / attributes is good. 70% of the employees also felt that the traits / attributes are sufficient.
5.
60% of the respondents agree that performance appraisal system helps in promotions. The first preference is given to promotions.
6.
The rates have a good knowledge about who their respective Reporting and the Reviewing officers are of the respondents knew the rating officers.
7.
85% of the ratees are satisfied with the person who appraises them. This shows that company has good appraisers.
8.
85% of the respondents agree that the help and guidance provided is sufficient indicating that the management spends considerable time on providing employees with help and guidance.
9.
The extent of effort from the management in discovering employees potential for higher responsibility through Performance Appraisal is high.
63
10.
The employees view the training program conducted to develop managerial skills as important. From the ratees point, the possibility of an unbiased assessment is high. This implies that there is no bias during the evaluation.
11.
Respondents feel that the training program strongly helps in enhancing job knowledge and individual skill.
12.
75% of the employees feel that the Performance Appraisal is highly relevant in the present scenario as well as provides an opportunity for growth.
13.
All the raters are agreed on the frequency of the appraisal. It can be concluded that organizations conduct appraisal system once in a year.
14.
Raters feel that the level of inter personal relationship influences the rating of the employees to a certain extent.
15.
Management is responsive in designing a counseling / training program that will foster the growth of an employees performance.
16.
65% of the raters are of the opinion that criticism is necessary. This shows that the raters give importance not only to the performance appraisal system, but also to individual employee growth.
17.
100% of the respondents feel that some rater problems do exist.
18.
Feedback is provided to the employees to improve upon their performance.
19.
50% of the raters prefer MBO (management by objectives) as one of the important techniques of evaluation.
64
65
Performance appraisal system in the corporate context today seems to be highly satisfactory. Most of the employees are satisfied with the existing system.
Performance appraisal system is found to be highly significant in the corporate context. The researcher is able to establish link between Performance Appraisal System and organizational effectiveness.
Hypothesis testing
H0 Performance appraisal system is not important in any organizational context.
H1 Performance appraisal system is extremely important in any Organizational context.
The level of significance was calculated based on additional calculations. It is found that
H1 stands ACCEPTED
H0 stands REJECTED
66
67
Recommendation
1.
Performance appraisal should start with validation, people need positive feed back and validation on a regular basis.
2.
Used a negotiated performance appraisal, by putting more responsibility to the worker for the performance appraisal.
3.
An effective negotiation technique, where an employee to be appraised are asked to bring list to the performance appraisal interview consisting of:-
3.1 3.2 3.3
Areas where the employee thinks they performs extremely well. Areas where worked has shown recent improvement. Areas where the employee feels weak
is recommended.
4.
The major objective of PA should be to improve performance and solve problems rather than promotion and salary increment.
5.
Performance
appraisal
should
lead
to
development
activities.
68
Significance of Performance Appraisal System in Hewlett Packard
Questionnaire # 1 (To the Ratees) Dear Employee, I ASSER NASHIKAKU, Student of MBA from MP Birla Institute of Management, Bangalore would like to ask a few questions as part of my MBA Project. I request you to kindly answer them honestly and accurately.
I assure you that the information given by you will be kept extremely confidential.
Thanking you in advance for your co-operation.
Employee Details a) b) c) d) Name Age Total number of years of experience Designation held in the company
For the questions that follow, please tick whichever option you think is applicable.
Q1.
Are you aware of Performance Appraisal System followed in your company? Yes No
Q2.
Does the management spend considerable amount of time and attention for the performance appraisal process? Considerable time Not much of time Dont know
Q3.
In the performance appraisal system self appraisal forms a part. Do you think it is relevant? Yes No
69
Q4.
Are you aware of the different traits / attributes according to which you are rated? Yes No
Q5.
The traits / attributes contained in the performance appraisal system are sufficient. Sufficient, not sufficient, many more traits could be added
Q6.
If no what other traits / attributes do you think should be included? Please specify -
Q7.
The performance appraisal system help in a) b) c) d) e) Promotions Salary Retention / Termination Recognition of individuals Performance Identification of Poor Performance
Q8.
The Performance Appraisal System has two parts i.e. Self Appraisal followed by the evaluation of Reporting and Reviewing Officers. Do you think the evaluation should also be done by : a) b) c) d) Your peers Your subordinates Client or outsiders Not required
Q9.
Are you satisfied with the person who appraises you? Yes No
70
Q10.
Is the content of the performance appraisal system relevant? Yes No
Q11.
Help and guidance provided to you by your reporting / reviewing officers is Highly Sufficient Sufficient Insufficient Highly Insufficient
Q12.
The discussion of Performance with that of the Reporting Officer provides you
with a platform, where by you can discuss your ratings without fear / inhibitions. Strongly Agree Agree Disagree Strongly Disagree
Q13.
The development of new or better managerial qualities and skills through the training programme, identified through performance appraisal are Significantly Important Important Not so Important Not at all
Q14.
The close relationship between your performance appraisal rating and corresponding monetary reward is Highly co-related Co-related Not related Dont know
From Questions 15 to 18, Rate as follows
6-Very High 5-Quite High 4-Rather High
3-Rather Low 2-Quite Low 1-Very Low
Q15.
The degree of Mutual Understanding in your work relationships with your supervisor
Q16.
Do you think there is no partiality when you are rated
71
Q17.
The extent of effort in discovering your potential for higher responsibility through your appraisal is
Q18.
The extent of action taken by the company to assist you in fulfilling the potentials discovered in you isQ19. The training needs identified through the performance appraisal: a) b) c) Are formulated into a training programme Not considered for training Dont know
Q20.
The training programme conducted a) b) c) Strongly helps in enhancing your job knowledge and individual skill. Helps in overcoming the shortcomings identified in you. Does not help in any way.
Q21.
How Frequently do you think can Performance Appraisal be done? 1 Year 6 Months 3 Months Each Month
Q22.
What is your overall feeling about the Performance Appraisal System?
a)
Highly relevant in the present economic scenario and provides an opportunity for growth.
b)
Not of much value as it does not help in any enhancement in performance.
c) d)
Is of no significance in the present scenario not growth oriented. Highly relevant, does not help the individual or the company.
Thank You Very Much !!!
72
Significance of Performance Appraisal System in Hewlett Packard
Questionnaire # 2 (To the Raters) Dear Rater, I ASSER NASHIKAKU, Student of MBA from MP Birla Institute of Management, Bangalore would like to ask a few questions as part of my MBA Project. I request you to kindly answer them honestly and accurately. I assure you that the information given by you will be kept extremely confidential. Thanking you in advance for your co-operation.
Rater D4tails a) b) c) d) Name Age Total number of years of experience Designation held in the company
Please mention answers in two or three lines in specific
1.
How often your employees performance is appraised?
2.
Do your employees get self appraised?
3.
Do you think that the level of interpersonal relationships with the appraisee influences Performance Appraisal process? If so, to what extent?
4.
After the appraisal do the employees get feedback?
5.
After the Performance Appraisal and feedback, do the employees get counseling and training, if needed to improve their performance in future?
73
6.
Is Performance appraised by one appraiser or reviewed / appraised by more than one appraiser?
7.
Do you normally avoid criticizing the appraisee?
8.
Is importance given to the employees behaviour rather than for his or her personal characteristics?
9.
Do you try to fully understood employees job duties and responsibilities?
10.
Does the company set policies from time to time concerning who should evaluate when and how often?
11.
Which one of the following techniques of evaluation do you use? a) b) c) d) e) f) Graphic Rating Scale Critical Incident Technique Behaviorally anchored scale Paired comparison method Management by objectives If any other, please specify
12.
Do you encounter the following problems while doing evaluation? a) b) c) d) e) f) Problems with standards of evaluation Halo effect Leniency or harshness Central tendency errors Recency of events errors Personal bias (stereo typing)
13.
Do you conduct feedback interviews with your employees soon after the evaluation?
74
14.
Are your employees satisfied with your evaluation? If so, to what extent?
15.
Which one of the following you advocate for evaluation?
a) b) c) d) e)
Rating by a committee of several supervisors. Rating by the employees peers (co-workers) Rating by employees subordinates. Self-evaluation by the employees 360 Degree Evaluation
Thank You Very Much !!!
75

Performance Appraisal at The Corporate Level

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Performance Appraisal at The Corporate Level

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A DISSERTATION PROJECT

STUDY ON PERFORMANCE APPRAISAL SYSTEM IN A CORPORATE LEVEL

04XQCM6008 Under the guidance of Prof. NANDINI VYDYANATHAN

M.P.Birla Institute of Management Associate Bharatiya Vidya Bhavan Bangalore-560001 2004-2006

M.P.BIRLA INSTITUTE.OF MANAGEMENT

I hereby declare that the report titled A STUDY

ON PERFORMANCE APPRAISAL SYSTEM IN A CORPORATE LEVEL is prepared under the

PLACE: BANGALORE DATE: ASSER NASHIKAKU

M.P.BIRLA INSTITUTE.OF MANAGEMENT

PLACE: BANGALORE DATE

DR.NAGESH.S.MALLAVALLI PRINCIPAL MPBIM,BANGALORE

M.P.BIRLA INSTITUTE.OF MANAGEMENT

CORPORATE LEVEL Has been undertaken and

University for the award of MBA Degree.

PLACE: BANGALORE DATE:

PROF.NANDINI VYDYANATHAN MPBIM, BANGALORE

M.P.BIRLA INSTITUTE.OF MANAGEMENT

PLACE: BANGALORE DATE:

M.P.BIRLA INSTITUTE.OF MANAGEMENT

Findings of the research are:

M.P.BIRLA INSTITUTE.OF MANAGEMENT

The researcher would like to recommend the following:

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M.P.BIRLA INSTITUTE.OF MANAGEMENT

Software Product and Technology Services. IT Services and IT Enabled Services

M.P.BIRLA INSTITUTE.OF MANAGEMENT

Status of IT Software Industry in India and Global

M.P.BIRLA INSTITUTE.OF MANAGEMENT

certain important dimensions) followed by Hewlett Packard.

M.P.BIRLA INSTITUTE.OF MANAGEMENT

M.P.BIRLA INSTITUTE.OF MANAGEMENT

Performance Appraisal and its importance

A formal definition of performance appraisal is:

M.P.BIRLA INSTITUTE.OF MANAGEMENT

A more comprehensive definition is:

The other terms used for performance appraisal are:

In a formal sense, employee assessment is as old as mankind.

M.P.BIRLA INSTITUTE.OF MANAGEMENT

Some of the important features of performance appraisal are:

Performance appraisal is a continuous process if every large scale organization.

Need for Performance Appraisal

To prevent grievances and in disciplinary activities.

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Objectives of Performance Appraisal

To effect promotions based on competence and performance.

To assess the training and developmental needs of employees.

Broadly, performance appraisal serves four objectives.

Identification of Individuals Need

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Administrative Uses / Decisions

Organizational Maintenance / Objectives

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Establish Job Expectations

Design and Appraisal Programme

Use Appraisal data for Appropriate purposes

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Performance Dimension Behaviour Spill Over Effect Status Effect

Solving Raters Problems

The six criteria for assessing performance are:

Quality Quantity Timeliness Cost effectiveness

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