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CHAPTER 1: PERFORMANCE APPRAISAL

(1) According to Edwin Flippo, "Performance Appraisal is the systematic, periodic and impartial rating of an employee's excellence, in matters pertaining to his present job and his potential for a better job." (2) According to Dale Beach, "Performance Appraisal is the systematic evaluation of the individual with regards to his or her performance on the job and his potential for development."

A performance appraisal is a systematic and periodic process that assesses an individual employees job performance and productivity in relation to certain pre-established criteria and organizational objectives. To collect performance appraisal data, there are three main methods: objective production, personnel, and judgmental evaluation. Judgmental evaluations are the most commonly used with a large variety of evaluation methods. A performance appraisal is typically conducted annually. The interview could function as providing feedback to employees, counselling and developing employees, and conveying and discussing compensation, job status, or disciplinary decisions. Performance appraisal is often included in performance management systems. Performance management systems are employed to manage and align" all of an organization's resources in order to achieve highest possible performance. How performance is managed in an organization determines to a large extent the success or failure of the organization. Therefore, improving performance appraisal for everyone should be among the highest priorities of contemporary organizations.

Some applications of performance appraisal are performance improvement, promotions, termination, test validation, and more. While there are many potential benefits of performance appraisal, there are also some potential drawbacks. However, performance appraisal may result in legal issues if not executed appropriately as many employees tend to be unsatisfied with the performance appraisal process.

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1.1 NATURE OF PERFORMANCE APPRAISAL

In simple terms, performance appraisal maybe understood as the assessment of an individuals performance in a systematic way, the performance being measured against such factors as job knowledge, quality and quantity of output, initiative, leadership abilities, supervision, dependability, co-operation, versatility, judgement, health and the like. Assessment should not be confined to past performance alone. Potentials of the employee for future performance must also be assessed.

The other terms used for performance appraisal are: performance rating, employee assessment, employee performance review, personnel appraisal, performance evaluation, employee evaluation and (perhaps, the oldest of the terms used) merit rating. In a formal sense, employee assessment is as old as the concept of management, and, in an informal sense, it is probably as old as the mankind. Nor performance appraisal is done in isolation. It is linked to job analysis as shown in Fig 2. Job analysis sets out requirements, which are translated into performance standards, which in turn form the basis for performance appraisal.

Performance management refers to the entire process of appraising performances, giving feedback to the employees, and offering rewards or punishments to them.

Job Analysis

Performance standards

Performance Appraisal

Describes work and personnel requirement of a particular job

Translate job requirements into levels of acceptable or unacceptable performance

Describes the jobrelevant strengths and weaknesses of each individual

Fig. 2 Relationship of Performance Appraisal and Job Analysis

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1.2 REASONS / NEED FOR APPRAISING PERFORMANCE

Data relating to performance assessment of the employees are recorded, stored, and used for several purposes. The main purposes of performance appraisal are as follows:

To effect promotions based on competence and performance.

To provide information about the performance ranks basing on which decision regarding salary fixation, confirmation, promotion, transfer and demotion are taken.

To provide feedback information about the level of achievement and behavior of subordinate. This information helps to review the performance of the subordinate, rectifying performance deficiencies and to set new standards of work, if necessary.

To confirm the services of the probationary employees upon their completing the probationary period satisfactorily.

To provide information that helps to counsel the subordinate.

To provide information to diagnose deficiency in employee regarding skill, knowledge, determine training and development needs and to prescribe the means for employee growth provides information for correcting placement.

To prevent grievances and in disciplinary activities.

To let the employees know where they stand insofar as their performance is concerned and to assist them with constructive criticism and guidance for the purpose of their development.

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To improve communication. Performance appraisal provides a format for dialogue between the superior and the subordinate, and improves understanding of the personal goals and concerns. This can also have the effect of increasing the trust between the rater and the rate.

Goal setting and desired performance reinforcement: organizations find it efficient to match individual workers goals and performance with organizational goals. Performance appraisals provide room for discussion in the collaboration of these individual and organizational goals. Collaboration can also be advantageous by resulting in employee acceptance and satisfaction of appraisal results.

Broadly, performance appraisal serves four objectives (i) developmental uses, (ii) administrative uses/decisions, (iii) organizational maintenance/objectives, and

(iv)documentation purposes. The Table 1 below outlines these uses more clearly.

General Applications Developmental Uses

Specific Purpose Identification of individual needs Performance feedback Determining transfers and job assignments Identification of individual strengths and

developmental needs Administrative Uses/Decisions Salary Promotion Retention or termination Recognition of individual performance Lay-offs Identification of poor performers Organizational Maintenance/Objectives HR planning Determining organizational training needs Evaluation of organizational goal achievement Information for goal identification Evaluation of HR systems Reinforcement of organizational development
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needs

Documentation

Criteria for validation research Documentation for HR decisions Helping to meet legal requirements

Table 1: Need of Performance Appraisal

According to a recent survey, the percentage of organisations (out of the total organisations surveyed i.e. 50 using performance appraisal for the various purposes are as shown in Fig 3:

Fig. 3 Various purposes of Performance Appraisal

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1.3 POTENTIAL COMPLICATIONS OF PERFORMANCE APPRAISAL

Despite all the potential advantages of formal performance appraisals, there are also potential drawbacks. It has been noted that determining the relationship between individual job performance and organizational performance can be a difficult task. Complications stemming from these issues are:

Detrimental to quality improvement: it has been proposed that the use of performance appraisal systems in organizations adversely affect organizations pursuits of quality performance. It is believed by some scholars and practitioners that the use of performance appraisals is more than unnecessary if there is total quality management.

Negative perceptions: Quite often, individuals have negative perceptions of performance appraisals. Receiving and/or the anticipation of receiving a performance appraisal can be uncomfortable and distressful and potentially cause tension between supervisors and subordinates.

Errors: performance appraisals should provide accurate and relevant ratings of an employees performance as compared to pre-established criteria (i.e. organizational expectations). Nevertheless, supervisors will sometimes rate employees more favourably than that of their true performance in order to please the employees and avoid conflict.

Legal issues: when performance appraisals are not carried out appropriately, legal issues could result that place the organization at risk. Performance appraisals are used in organizational disciplinary programs as well as for promotional decisions within the organization. The improper application and utilization of performance appraisals can affect employees negatively and lead to legal action against the organization.

Performance goals: performance goals and performance appraisal systems are often used in association. Negative outcomes concerning the organizations can result when goals are overly challenging or overemphasized to the extent of effecting ethnics, legal requirements, or quality. Moreover, challenging performance goals can impede on employees abilities to acquire necessary knowledge and skills.

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1.4 PROCESS OF PERFORMANCE APPRAISAL There are different processes of performance appraisal that differ from organization to organization and from books to books. Each step in the performance appraisal process is crucial and is arranges logically. The process is somewhat idealistic in nature. Many organizations make every effort to approximate the ideal process, resulting in first-rate appraisal systems. Unfortunately, many others fail to consider one or more of the steps and, therefore, have less-effective appraisal system. Fig 4 below outlines the performance appraisal process.

Objectives of Performance Appraisal

Establish Job Expectations

Design an Appraisal Programme

Appraise Performance

Performance Management

Performance Interview

Archive Appraisal Data

Use Appraisal Data for Appropriate Purposes

Fig. 4: The Performance Appraisal Process


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1) Objectives of Appraisal

Objectives of appraisal include effective promotions and transfers, assessing training needs, awarding pay increases, and the like. The emphasis in 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 the systems approach, the objectives of appraisal stretch beyond the traditional ones.

In the systems approach, appraisal aims at improving the performance, instead of merely assessing it. Towards this end, appraisal system seeks to evaluate opportunity factors. Opportunity factors include the physical environment such as noise, ventilation and lightings, available resources such as human and computer assistance; and the social processes such as leadership effectiveness. These opportunity variables are more important than individual abilities in determining work performance.

In the systems approach, the emphasis is not on individual assessment and rewards or punishments. But it is on how the work system affects an individuals performance. Thus, if a systems approach is going to be successful, the employee must believe that by working toward shared goals, everyone will benefit.

Laying down the objectives of performance appraisal will give more clarity and help the organization to work faster. These objectives serve as a guideline for the HR manager and helps in the effective and efficient working of the function.

2) Establish Job Expectation

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. Normally, discussion is held with his or her superior to review the major duties contained in the job description. Individuals should not be expected to begin the job until they understand what is expected of them.
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3) Design Appraisal Program

Designing an appraisal programme poses several questions which need answers. They are:

i. ii. iii. iv. v. vi. vii. viii.

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?

The entire designing of the programme is covered in detail later. Designing the appraisal programme is the most important aspect and needs a lot of strategic planning.

4) Appraise the Performance

The next step in the appraisal process is to measure the performance. We need to measure the performance and not mere activities. What then is performance? Performance is essentially what an employee does or does not do. Employee performance common to most jobs include the following elements: o Quantity of output o Quality of output o Timeliness of output o Presence at work o Cooperativeness

In addition to these, other elements that deserve assessment are job knowledge, leadership capabilities, judgement, supervision, versatility and health. Assessment should also include ones potential to perform and not just actual performance. Performance measurement needs to be based on the benchmarks listed above. These benchmark vary from job to job.
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5) Performance Interview

Performance interview is another step in the appraisal process. Once 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 superior. Feedback is necessary to effect improvement in performance, especially when it is inadequate. Specifically, performance interview has three goals: i. To change behaviour of employees whose performance does not meet organizational requirements or their own personal goals ii. iii. To maintain the behaviour of employees who perform in an acceptable manner To recognize the superior performance behaviour so that they will be continued.

Whatever be the approach followed, the emphasis in the interview should be on counseling and development and not on criticism, witch-hunting and buck passing. Because of the significance of appraisal interview, every effort must be made to make it effective. Guidelines given in Table 2 will help make the interview successful.

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Table 2: Effective Guidelines to make an interview successful

6) Archiving Performance Data

Organizations need to archive or store the appraisal data so that at any point in future, the information can be retrieved and used. For example, if an employee has been told that he or she was not promoted because of below average performance and he or she would be considered favourably for a jump in status and remuneration provided the performance improves. The HR manager should have those details to convince the employee concerned when he or she joins issue with the management with the matters relating to promotion. Other issues such as pay hike, confirmation of probationary services, affirmative actions and the like deserve reference to the past information. Archiving appraisal data is not just desirable but essential too.

7) Use of Appraisal Data

The final step in the evaluation process is the use of evaluation data. The data and information generated through performance evaluation must be used by the HR department. It may be recollected that the most significant rewards employers offer to employees are:

i.

The opportunity to use innate and learned skills and talents in a productive manner that the individual and his or her managers and co-workers recognize as valuable.

ii. iii. iv.

Opportunities to interact with other people in a favourable working environment. Opportunities to learn, grow, and make full use of their potential. A sense of performance stability through the continuing existence of the organization and the job.

In one way or another, data and information outputs of a performance appraisal programme can critically influence these coveted employer-employee reward opportunities. Specifically, the data and information will be useful in the following areas of HRM: i. ii. iii. Remuneration administration Validation of selection programme Employee training and development programme

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iv. v. vi.

Promotion, transfer and lay-off decisions Grievance and discipline programmes HR planning

1.5 WHOSE PERFORMANCE SHOULD BE RATED? The obvious answer to this question is employees. When we say employees, is it individuals or teams? Specifically, the ratee may be defined as the individual, work group division or organization. It is possible to define the rate at multiple levels. Two conditions necessitate a group-level appraisal group cohesiveness and difficulty in identifying individual performance. Group cohesiveness refers to the shared feeling among work-team members. There is co-operation and clear understanding to accomplish tasks which are independent. Any attempt to assess individual performance shall undermine group cohesiveness and tend to promote individualistic or even competitive orientation. The difficulty in identifying the individual contribution is also important to consider. In some cases, interdependence of tasks is so complete that it is difficult to identify who has contributed what. There is no other choice but to view that task as a team effort. But, the main point is that, all the employees must be rated. All the employees in the organization must become ratees.

1.6 PROBLEMS OF PERFORMANCE APPRAISAL

Performance appraisals are subject to a wide variety of inaccuracy 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 stated in Fig 7 below.

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Liniency or Severity Central Tendency Halo Error Rater Effect Primacy and Recency Effects Perpectual Set Performance Dimension Order Spillover Effect Status Effect

Fig. 7: Rating Errors in Performance Appraisal

Rater Effect Rater effect includes favouritism, stereotyping, and hostility. Excessively high or low scores are given only to certain individuals or groups based on the raters attitude towards the ratee, not on actual outcomes or behaviour. Sex, age, race and friendship biases are examples of this type of error.

Primacy and Recency Effect The raters ratings are heavily influenced either by behaviour exhibited by the ratee during the early stages of the review period (primacy) or by outcomes, or behaviour exhibited by the ratee near the end of the review period (recency). For example, if a salesperson captures an important contract/sale just before the completion of the appraisal, the timing of the incident may inflate his or her standing, even though the overall performance of the sales-person may not have been encouraging. Likewise, a

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blunder committed just before the appraisal period may diminish chances of securing a favourable rating, even if the overall performance is good.

One way of guarding against such an error is to ask the rater to consider the composite performance of the ratee and not to be influenced by one incident or one achievement. The rater must also be aware of the tendency on the part of the ratees to improve odds in their favour or suppress weak points during the rating period.

Perceptual Set This occurs when the raters assessment6 is influenced by previously held beliefs. If the supervisor, for example, has a belief that employees hailing from one particular region are intelligent and hardworking, his subsequent rating of an employee hailing from that region tends to be favourably high.

Performance Dimension Order Two or more dimensions on a performance instrument follow or closely follow each other and both describe or rotate to a similar quality. The rater rates the first dimension accurately and then rates the second dimension similar to the first because of their proximity. If the dimensions had been arranged in a significantly different order, the ratings might have been different.

Spillover Effect This refers to allowing past performance appraisal ratings to unjustifiably influence current ratings. Past ratings, good or bad, result in similar rating for the current period although the demonstrated behaviour does not deserve the rating, good or bad.

Status Effect It refers to overrating of employees in higher-level job or jobs held in high esteem, and underrating employees in lower-level job or jobs held in low esteem. It is not the raters errors alone that are barriers to accurate and valid measurement of employee performance. Barriers lie deep within the genetic and acquired makeup of all people concerned with performance appraisal. A wide variety of emotional,

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psychological, intellectual and physical factors that, at the first glance, may appear to be separate and irrelevant may combine in any number of ways during the appraisal process to completely neutralize or nullify any programme designed to measure employee performance.

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CHAPTER 2 : TRADITIONAL METHODS OF PERFORMANCE APPRAISAL

The process of designing an appraisal programme is to determine methods 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 the particular needs of the organization or of a particular type of employees. Broadly, all the approaches can be classified into (i) Traditional methods (Past-oriented) (ii) Modern methods (Future-oriented). Each group has several techniques.

2.1 Traditional Methods This classification contains a number of techniques: 1. Rating Scale 2. Checklist 3. Force Choice Method 4. Critical Incidents Method 5. Performance Test & Observation 6. Essay Method 7. Cost Accounting Method 8. Ranking Method 9. Forced Distribution Method 10. Group Appraisal 11. Nomination 12. Work Sample Tests 13. Result-Oriented Performance Appraisal System 14. Annual Confidential Reports

Graphic Rating Scale

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This is the simplest and most popular technique for appraising employee performance. The typical rating-scale system consists of several numerical scales, each representing a job-related performance criterion such as dependability, initiative, output, attendance, attitude, cooperation, and the like. Each scale ranges from excellent to poor. The rater checks the appropriate performance level on each criterion, and then computes the employees total numerical score. The number of points scored may be linked to salary increases, whereby so many points equal a rise of some percentage.

Fig. 8: Rating Scale A major problem with graphic rating scales is that words likeexcellent, poor and the like are general and do not convey the degree of merit relating to each specific factor with respect to an employee. The following should be kept in mind for selecting traits for merit rating regardless of the method that is adopted: 1. Traits should be observable, that is, can the rater actually observe this trait in action? 2. Universality of the trait under consideration is important, meaning, is it a relevant characteristic in relation to the job under study? 3. The trait under question should clearly be distinguishable as something different from another trait with a different name. Advantages (i) It is less subjective as it considers a number of different traits rather than a subjective whole. (ii) Traits are defined and uncertainty is minimised.
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(iii) It also shows the degree to which each desired trait is present; is therefore precise. Disadvantages It is difficult to: (i) Decide on relative weights of different traits; (ii) Validate the opinions arrived at; and (iii) Ensure uniformity in trait articulation and consistency in rating, as they are likely to differ with raters.

Example:Performance Trait Attitude Knowledge of Work Managerial Skills Team Work Honesty Regularity Accountability Interpersonal relationships Creativity Discipline 5 5 4 4 3 3 2 2 1 1 Excellent Good 5 5 5 5 5 5 5 5 4 4 4 4 4 4 4 4 Average Fair 3 3 3 3 3 3 3 3 2 2 2 2 2 2 2 2 Poor 1 1 1 1 1 1 1 1

Table 4 : Rating Scale Method

Checklist Under this method, a checklist of statements on the traits of the employee and his job is prepared in two columns a Yes and a No. All that the rater should do is tick the Yes column if the answer to the statement is positive and in column No if the answer is negative. A typical checklist is given in Fig 10. After ticking off against each item, the rater forwards the list to the HR department where the actual assessment of the employee takes place. In other words, the rater only does the reporting, while actual evaluation is done by the HR department. The HR department

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assigns certain points to each Yes ticked. Depending on the number of Yes the total score is arrived at.

Fig. 9 Checklist for Operators

Forced Choice Method In this, the rater is given a series of statements about an employee. These statements are arranger in blocks of two or more, and the rater indicates which statement is most or least descriptive of the employee. Typical statements are:

1. Learns faster ------------------------------- works hard 2. Work is reliable --------------------------- performance is a good example for 3. Absents often ------------------------------ others usually tardy In the checklist method, the rater is simply expected to select the statements that describe the ratee. Actual assessment is done by the HR department. Since the rater is forced to choose one of the readymade statements, this method is called as forced choice method. The rater is asked to select one statement out of two or four which in his opinion is most characteristic of the employee and another which is least, or both. In effect, the forced choice system is an attempt to devise an objective method of arriving at the same answers that the top management would reach after a protracted and complicated process. To serve a practical example; the subordinate A. Commands respect by his most characteristic actions B. Is cool headed C. Is indifferent least characteristic (optional rating?) D. Is overbearing
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Two of these are favorable and the other two, unfavorable. One of the two favorable terms checked as most characteristic gives plus credit whereas the other gives no or negative credit. However, articulation of these characteristics and the determination of the scoring key (most, least) are crucial in a just rating by this method.

Critical Incidents Method

The critical incidents method of employee assessment has generated a lot of interest these days. The approach focuses on certain critical behaviors of an employee that make all the difference between effective and non-effective performance of a job. Such incidents are recorded by the superiors as and when they occur. Table 3 below is an example of critical incidents of a plant manager. One of the advantages of the critical incidents method is that the evaluation is based on actual job behaviour. Further, the approach has descriptions is support of particular ratings of an employee. Giving job-related feedback to the ratee is also easy. It also reduces the recency bias, if raters record incidents throughout the rating period. This method involves keeping a record of exceptionally good or bad incidents in the employees work life with respect to the period under review. Such good or bad incidents can be examined to rate the fortitude and practical skills of employees. Bad incidents do not mean low ranking. It is how the particular employee rises up to the challenge and works his way through difficulty that is considered. Continuing Duties Targets utilization Critical Incidents of Instituted new production scheduling and system; decreased late orders by 10% month; increased machine

Schedule production for Full plant

personnel

machinery in the plant; last order delivered on time Supervise procurement Minimize while

utilization in plant by 20% last month.

inventory Let inventory storage costs rise 15% keeping last month; over-ordered parts A and

of raw materials and costs inventory control

adequate supplies on B by 20%; under-ordered part C hand by 30%. new system preventative for plant;

Supervise maintenance

machinery No shutdowns dye to Instituted faulty machinery maintenance

prevented a machine breakdown by discovering faulty part.

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Table 3: Critical Incidents for an Assistant Plant Manager

Performance Tests And Observations With a limited number of jobs, employee assessment may be based upon a test of knowledge or skills. The test may be of the paper-and-pencil variety or an actual demonstration of skills. The test must be reliable and validated to be useful. Even then, performance tests are apt to measure potential more actual performance. In order for the test to be job related, observations should be made under circumstances likely to be encountered. Practically may suffer if costs of test development or administration are high.

Essay Method In the essay method, the rater must describe the employee within a number of broad categories, such as (i) overall impression of employees performance (ii) promotability of employee (iii) jobs that the employee is now or qualified to perform (iv) strengths and weaknesses of employees (v) training and development assistance required by the employee. Although, this method may be used independently, it is most frequently found in combination with others. It is extremely useful in filing information gaps about the employees that often occur in the better structured checklist method.

Cost Accounting Method This method evaluates performance from the monetary returns to the employee yields to his company. A relationship is established between the cost included in keeping the employee and the benefit the firm derives from him or her., performance of the employee is then evaluated based on the established relationship between the cost and the benefit. Cost accounting method of evaluation has vast potential as increasingly firms are converting their training departments into profit centres. Profit-centre concept demands cost-benefit analysis.

Ranking Method

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In this method, the superior ranks his subordinates in the order of their merit, starting from the best to the worst. All that HR department knows is that A is better than B. the how and why is neither questioned nor answered. No attempt is made to fractionalize what is being appraised to component elements. This method is subject to the halo and recency effects, although rankings by two or more raters can be averaged to help reduce biases. Persons of similar cadre are ranked in the order of merit, for example, if there are eight lecturers in a college, they could be ranked, 1, 2, 3 It entails simple ordering which gets difficult when twenty or more cases are involved. One of the techniques of ranking used is paired comparison. In this method, the rater compares each employee with every other in the group. Final ranking is based on the number of times the employee is judged better than the others. The rater must make n (n-1)/2 judgments where n is the number of men to be ranked. The method is not suitable where the group is large because number of judgments required, become unmanageable. Forced Distribution Method In this system, a five-point scale of job performance is used. On one end of the scale are the best job performance and the other, poor job performance. Fixed percentage of employees is allocated to the best, middle bracket and worst ends of the scale. The supervisor is asked to allocate approximately ten percent of his men to the best end of the scale, twenty percent to the next category, forty percent to the middle category, twenty per cent to the bracket next to the low end and ten per cent to the low bracket. The supervisors opinion is taken as the final word. Despite subjectivity the method is relied upon for assessment of employee performance.

Group Appraisal The appraiser group consists of three to four persons including the immediate supervisor who give their opinions collectively. Assistance from others also could be taken to cover aspects of employee performance and personality which may not have been noted by the immediate supervisors. For just assessment, members approached for appraisal must be people who have some contact with the subject. These members can be managers at high levels or colleagues or subordinates. It is apprehended that colleagues, if associated can work as either rivals or personal friends, which would create biases in judgment. There can also be cliques of informal groups based on

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mutual benefit ties! As far as subordinates are concerned, they might not perceive the issue correctly and judge the person from their own narrow standpoints. They might also avoid airing views against the supervisor for fear of reprisals. Group appraisals therefore are advised to be used with caution. As practical concern it is better to involve superiors rather than colleagues or subordinates in group appraisals.

Nomination By this method, appraisers are asked to identify exceptionally good and exceptionally poor performers in the organisation. The latter group is singled out for correctives. Both groups are studied for academic knowledge about organisational climate and specific drivers of efficiency. Academic inquiry into poor performance is also necessary.

Work Sample Tests In this method, workers are administered work sample tests which form the basis of their assessment which they are evaluated. It provides important practical inputs for training and employee development programmes.

Result-Oriented Performance Appraisal System This technique evaluates the extent of attainment of targets in the context of overall objectives to ascertain the merit of personnel. Value addition on the part of an individual employee is considered which is attempted to be quantified.

Annual Confidential Reports (ACR) Confidential records are maintained mostly in government departments, though its application in the industry is not ruled out. A typical Confidential Report shall have 14 items (i) attendance (ii) self-expression (written or oral) (iii) ability to work with others (iv) leadership (v) initiative (vi)technical ability (job knowledge) (vii) ability to understand new material (viii) ability to reason (ix) originality and resourcefulness (x) areas of work that suits the person best (xi) judgement (xii) integrity (xiii) responsibility (xiv) indebtness, memo served etc. twelve of these may be filled on a four-point grade scale (Excellent, Good, Fair and Poor). For integrity, there shall be special instructions form the management. Justification is required for outstanding or

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poor rating. Overall rating on a five-point scale may be separately given (Outstanding, Very good, Good, Average, Poor) again with justification for rating as outstanding or poor. As the name suggests, confidential records are highly secretive. In most government departments and public enterprises in India, performance appraisal is done through Annual Confidential Reports (ACRs). Format of these reports differs from organisation to organisation and also with levels as per specific requirement(s) articulated. Casual attitude is alleged on the part of superiors writing remarks for subordinates. There is strong opinion in favour of confidential reports incorporating modern techniques of rating. Confidential report is written for a year and relates to performance, ability and character of the person, for that specific period. The essential features of confidential reports of officers under the administrative control of the government are as follows: (i) Annual confidential remarks are recorded to judge the performance and efficiency of officers in public services. (ii) The objective of maintenance of character reports is to put an officer on the desired path by pointing out defects. (iii) Adverse entries should be communicated in time to enable him to rectify the defect. (iv) From December 4, 1946 until April 20, 1966, the practice of communicating both remediable and irremediable defects was followed. Since 1966, irremediable defects concerning integrity and morality are not being communicated as per express governmental directive to that effect. (v) Confidential character roll recorded by reporting officers is to be countersigned by the superior authority. (vi) Countersigning authority may take a view different from that of the reporting officer in which case the view of the former shall prevail. (vii) Until the countersigning authority gives his remarks, the character roll is not considered complete and is not to be acted on. (viii) Time schedules have been prescribed for recording remarks atdifferent levels and their submission to the government for maintenance of confidential character roll. (ix) Representations against adverse remarks are not ordinarily entertainedas the very purpose of such communication is to apprise the officer of his failings in order that he rectifies them for his own benefit. Such communication should not be regarded as a matter of argument or controversy.
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(x) In rare cases, however, where the remark is concerning specific acts or is the result of an error on the part of the reporting officer, representation lies creating Scales Method is commonly used method for assessing the performance of the employees and well-known traditional method of performance appraisal of employees. Many corporations and companies example in the country India, telecommunications company like Airtel and US IT companies like Dell Corporation are using this method for evaluating the employees and subsequently take decisions on concerned employee.

Depending upon the job of employee under this method of appraisal traits like attitude, performance, regularity, accountability and sincerity etc., are rated with scale from 1 to 10. 1 indicates negative feedback and 10 indicates positive feedback as shown below.

Attitude of employee towards his superiors, colleagues and customers

10 Excellent

Extremely poor

Regularity in the job

10 outstanding

Extremely poor

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2.2 Modern Methods

Management By Objectives (MBO) It was Peter F. Drucker who first gave the concept of MBO to the world way back in 1954 when his The Practice of Management was first published. The MBO concept, as well conceived by Drucker, reflects a management philosophy which values and utilizes employee contributions. Application of MBO in the field of performance appraisal is a recent thinking.

As with other approaches, MBO too has been criticized. One comment made against the approach is that it is not applicable to all jobs in all organizations. Jobs with little or no flexibility, such as assembly-line work, as not compatible with MBO. An assembly-line worker usually has so little job flexibility that the performance standards and objectives are already determined. The MBO process seems to be most useful with managerial personnel and employees who have a fairly wide range of flexibility and self-control in their jobs. Besides, when the results of an MBO system are to be sued to allocate organizational rewards, employees may be less likely to establish challenging goals goals they are confident that they can accomplish. Further, the allocation of merit pay on a semi-annual or annual basis may encourage the setting up of goals with short term horizons to the disadvantage of important longterm goals.

Psychological Appraisal Large organizations employ full time industrial psychologists. When psychologists are used for evaluations, they assess an individuals future potential and not past performance. The appraisal normally consists of in-depth interviews, 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. The evaluation by the psychologist may be for a specific job opening for which the person is being considered, or it may be a global assessment of his future potential. Form these evaluations, placement and

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development decisions may be made to shape the persons career. Because this approach is slow and costly, it is usually required for bright young members who, others think, may have considerable potential within the organization. Since the quality of the appraisal depends largely on the skills of the psychologists, some employees object to this type of evaluation, especially if cross-cultural differences exist.

Assessment Centres An assessment centre is a central location where managers may come together to have their participation in job-related exercises evaluated by trained observers.

Mainly used for executive hiring, assessment centres are now being used for evaluating executive or supervisory potential. An assessment centre is a central location where managers may come together to have their participation in job-related exercises evaluated by trained observers. The principle idea is to evaluate managers over a period of time, say one to three days, by observing (and later evaluating) their behaviour across a series of select exercises or work samples. Assessees are requested to participate in in-basket exercises, work groups (without leaders), computer simulations, role paying, and other similar activities which require the same attributes for successful performance, as in the actual job. After recording their observations of ratee behaviours, the raters meet to discuss these observations. The decision regarding the performance of each assesse is based upon this discussion of observations. Selfappraisal and peer evaluation are also thrown in for final rating.

The characteristics assessed in a typical assessment centre include assertiveness, persuasive ability, communicating ability, planning and organizational ability, selfconfidence, resistance to stress, energy level, decision;-making, sensitivity to the feelings of others, administrative ability, creativity and mental alertness. It is a formidable list which is quiet difficult to measure accurately over three days, through there would be sizeable number of trained observers and psychologists.

First developed in the US and UK in 1943, the assessment centre is gaining popularity in our country. Crompton Greaves, Eicher, HUL and Modi Xerox are using the technique with results being highly positive.
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360-Degree Feedback Where multiple raters are involved in evaluating the performance, the technique is called 360-Degree appraisal. The 360-Degree technique is understood as a systematic collection of performance data on an individual or group, derived from a number of stakeholders the stakeholders being the immediate supervisors, team members, customers, peers and self. In fact, anyone who has useful information on how an employee does the job may ve one of the appraisors. The 360-Degree appraisal provides a broader perspective about an employees performance. In addition, the technique facilitates greater self-development of the employees. For ones development, multi-source feedback is highly useful. It enables an employee to compare his perceptions about self with perceptions of others. Besides, the 360-Degree appraisal provides formalized communication links between an employee and his customers. The technique is particularly helpful in assessing soft skills possessed by employees. By design, the 360-Degree appraisal is effective in identifying and measuring interpersonal skills, customer satisfaction and team building skills.

However, there are drawbacks associated with the 360-Degree appraisal feedback. Receiving feedback on performance for multiple sources can be intimidating. It is essential that the organization create a non-threatening environment by emphasizing the positive impact of the technique on an employees performance and development.

Pitfalls notwithstanding, more and more number of firms are using 360-Degree appraisal technique to assess the performance of their employees.

2.3 Evaluation of Traditional Methods: Perceived faults of traditional methods are as follows: Performance is not evaluated in terms of its impact on organisational objectives, goals and targets. It focuses attention on the personality of the subject rather than

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organisational results or the purpose of his joining the organisation. Appraisal goals are found to lack in reliability, verifiability, validity, and are most often, subjective. Besides, raters also (allegedly) display biases. Both the appraiser and the subject consider it an unpleasant exercise as no performance appraisal system can be claimed to be perfectly free of biases or prejudices. Annual performance review leaves people bitter, dejected, depressed and in despair for months. Most administrators do not possess knowledge of the art and science of performance appraisal which results in adoption of different criteria of assessment for one employee by different administrators. Appraisals are not always utilised to educate employees with regard to expected behaviour. Counseling the employee to influence his behaviour in the desired way should be the prime objective of performance appraisal. Traditional performance appraisal techniques do not stress effective communication between the appraiser and subject as a necessary and desirable condition or even as a prerequisite. Information flow, top to bottom, is crucial as personnel are desired to know the criteria by which their performance is being assessed. The following are other criticisms of performance appraisal: (a) Appraisal process often gets confrontational as employees and supervisors work as two opposing poles of organisational effort; reconciliation may not always be possible. The appraisal process gets emotional in case participants sense adverse entries or anticipate confrontation. There may be outbursts of temper or even sarcasm which leaves parties hurt and resentful. (b) Appraisal process is often judgmental. This causes conflict because the manager is required to act in a dual capacity, as judge and counselor which he may not be trained or experienced to be just to. (c) The appraisal process gets ambiguous as managers do not fully appreciate their responsibility and also lack the psychological insight and interactive skills needed to appraise successfully.

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CHAPTER 3 : CASE STUDIES


3.1 Case Study 1 G.P. Joshi wrote for Times of India on 19th January, 1983

Motivating the Efficient Performance Appraisal in Government The government is the biggest employer in the country. Its success ultimately depends upon how well or how badly its employees perform on their jobs. But does the existing system of performance appraisal enable the government to identify the strengths and weakness of its employees and to take corrective action by way of promoting the strengths and removing the shortcomings. The answer is a definite no. The system is not designed to improve the performance of the employees. It is used mainly as a means to discipline employees or as a source of collecting information required for certain administrative purpose, like taking decisions on promotion. Most flaws in the existing system of performance evaluation in the government originate from a lack of clarity about basic objectives. If one picks up any annual confidential report (ACR) form in use in a government department, one will notice a preponderance of personality-oriented traits like bearing, zeal, keenness, liveliness, loyalty, personality, patience, sobriety, resourcefulness, tact, temperament etc. The job centered traits are either conspicuous by their absence or their number is insignificant. Considerable scope is left for the element of subjectivity to creep; into the appraisal report. Take, for instance, loyalty. The assessment of such a trait may be coloured by the meaning that the reporting officer attaches to this term. In case his interpretation emphasises the personal loyalty of the employee towards him, it may result in his giving high grading to yes men in the department and low grading to those who are not loyal or dependable in that sense of the term.

Relevance Lacking In a study entitled performance appraisal in the police, done by the bureau of police research and development in 1977, the traits figuring in the ACR forms of inspectors and subinspectors which were in use in 26 states and Union territories were analysed. The study revealed that out of 79 traits which were being evaluated, only 11 could be regarded as

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directly related to the police work! Out of 24 ACR forms analysed in the study, as many as eight did not contain even a single trait which had any direct relevance to police work. It was noticed that either the same form which had been prescribed by the state governments for all government servants was being used by the police department, or the performance of all nongazetted ranks in the police was being assessed on the basis of one form. The ACR forms designed for higher ranks are no better. For instance, it is astounding to note that the annual performance of the all-India service officers, irrespective of ranks or posts, is assessed on the basis of an identical form which contains merely three columns: state of health; general assessment and integrity. To equate the performance factors relevant to a job in the police with those of a job in some other government department- like health, education or forests- or not to make any distinction between the requirements of jobs at junior levels with those at seat junior levels with those at senior levels with the same department is surely illogical, if not absurd. The technique which is used in government departments is close to what is known as the graphic rating scale method. At the end of every year, a confidential report form containing a list of personality of behavioural traits is presented to the rater, who is required to indicate the degree of the trait possessed by the employee by using pre-determined phrases or adjectives like out-standing, very good, good, satisfactory, poor, above average, average. The use of these summary expressions restricts the scope of the appraising officer to bring out the realities of employee performance. The ACR form prescribed for all-India services does not require the appraising officers to use such expressions, but in their cases the entire evaluation is done under one broad heading of general assessment. When the grading is done on the basis of overall impression, it has a greater risk of being coloured by subjective considerations than the specific factors of traitsbound appraisal. It also does not provide a complete picture of the strengths and weakness of officer in respect of specific factors relevant to his job.

Overall Grading This summary overall grading is done in government departments for determining the promotional potential of the employee, but the degree of fitness for promotion is invariably considered again by departmental promotion committees. Besides being superfluous, this practice of doing overall grading misses one important point: no employee is either completely outstanding or absolutely poor in respect of all the performance factors relevance to his job; even if it were possible to grade some employees as outstanding and some as
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poor, it would be extremely difficult to grade the performance two extremes. The distinguishing of those who fall in between these line between outstanding and very good or between above average and average, for instance, is too thin to be drawn or distinguished clearly. Considerable research has been done in the field of management to improve the traditional methods of appraisal in order to reduce the element of subjectivity. Not much use has been made by government departments of such research results. On a recommendation made by the administrative reforms commission many years ago, the government had introduced a method known as self-appraisal method. The method requires the employee to appraise his own performance, which is supplemented by a rating done by the supervisor. There are some obvious advantages of this method, but it is being used only in the cases of a few ranks. The method has not been adopted in the cases of all-India service officers. At present, the evaluation report is written at the end of the calendar or financial year. Since no record is kept about the performance of the employee, the reporting officer is forced to evaluate either on the basis of his overall impression about the employees general performance or to fall back upon his memory. Two most common errors resulting from this practice are halo error, which arises when all the traits are assessed on the basis of an overall impression, and the error of over-weighting which arises when the rater is unduly influenced by events nearer the end of the rating period. Research says that it is possible to reduce the chances of some of these errors affecting evaluation reports provided effective use is made of another method-known as the critical incidents methods. This method requires the evaluation to be done on the basis of objective data about the performance of an employee collected in systematic and regular manner. A running record of specific, critical incidents indicating the employees good or poor performance is kept as they observed continuously throughout the year. It is only the observed performance which is required to be recorded and not the judgment or opinion of the rater about any particular trait.

Subjectivity Reduced The record can also be utilized periodically for the purpose of counselling subordinate officers about their performance and problems. The success of the method depends on the closeness and quality of supervision that is exercised and on a faithful and immediate recording of incidents as they are observed. Besides serving as an aide memoire to the reporting officer at the time of writing the appraisal report, the use of this method reduces the
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element of subjectivity by forcing the appraiser to base his report on recorded facts relating to performance rather than on subjective opinion about the quality of character traits. A cardinal principle on which the modern approach to performance evaluation is based is that the results of appraisal must be intimated to the employee. If the objective of the system is to motivate the employees to improve their performance and to develop their growth potential, then it is necessary that they must be fully informed about the way their performance has been appraised by their superiors. It is not as if the importance of feeding back to the subordinates the appraisal information is not recognised by the government departments. The system, as it exists, does recognise the need to communicate to them this information, but only in so far as it relates to the negative aspects of their performance. In other words, only that part of the report remains unknown to the subordinate which contains commendatory remarks about his behaviour and performance. In case the entire report does not contain any adverse entry, the employee remains completely in the dark about how he has measured upto the standards of the job or to the expectations of his senior officers. What is not recognised in following this system is that the knowledge on the part of the subordinate that his good work has been appreciated by his seniors works as a highly motivational influence on him. The system as it exists does more harm than good. While a good ACR does not motivate the subordinate to do better (as it remains unknown), a single bad entry in the ACR develops in him a feeling of grievance. The subordinate starts imputing motives to the reporting officer in his representation. This results in vitiating the atmosphere and in damaging inter-personal relationships. Any attempt to improve the exiting system of performance evaluation in the government must start by redefining its basic objective. In so far as the operational philosophy of the system is concerned, it must not be merely reward and punishment. It should rather be aimed to improve the performance of employees.

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3.2 Case Study 2: Written by Sylvia Vorhauser-Smith for Forbes Magazine on 16th December,2012 Three Reasons Performance Management will Change in 2013 Is there any organizational practice more broken than performance management? Not if you concur with Marc Effron & Miriam Ort who state perhaps no talent management process is more important or more reviled than performance management. In fact, it draws universal agreement on several fronts:

everyone hates it employees and managers alike nobody does it well its a skill that seemingly fails to be acquired despite exhaustive training efforts, and

it fails the test of construct validity it doesnt do what it was designed to do, i.e. increase performance Traditional performance management programs have become organization wallpaper. They exist in the background with little or no expectations for impact. Yet despite its poor popularity, the concept of performance (at an individual and organizational level) is critical to business success. It cant just be ignored. Why is it so broken? In a large survey conducted by WorldatWork, 58% of organizations rated their performance management systems as C Grade or below. That gets a giggle. The performance management process itself gets subjected to its own methods of setting criteria and rating performance against them and fails. I believe there are three reasons almost all current performance management systems are broken: 1 2 3 People have changed Technology has changed Peoples relationship with their technology has changed

Repairing the damage? In order to compete in todays market, companies must move to adopt a much more agile performance management approach.

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People HAVE CHANGED Employee expectations have changed. Its not just Gen Y employees everywhere and of every generation expect more. More involvement, more accountability, and more transparency. When it comes to managing their performance, employees have shifted from being passive recipients to active agents. Not satisfied with a one-way download of performance feedback, employees want to participate in the performance data collection process. And they liken the annual event of a performance review to arriving at the pearly gates on Judgment Day. Managers have changed too. Command and control is no longer cutting it managers are expected to guide and coach, provide balanced constructive feedback and inspire, rather than enforce, performance. Add to that what science is now telling us about what really drives human motivation. Like, goal pursuit motivates performance much more than goal achievement, peak performance is best achieved in states of flow, and multi-tasking only dilutes performance on all tasks undertaken concurrently. Key Changes for High Performance? Paradigm shift. What used to work no longer does. Managers need to: 1) be real communicate openly and often. 2) set stretch goals and inspire individuals to work to their potential. 3) get out of the way trust their teams and empower employees with accountability. Technology HAS CHANGED Were reaching a tipping point for technology in the talent management arena. It began with simple automation: take the paper processes and put them on a computer. Fine, but that left us with so many spreadsheets, Word templates, proprietary systems and disconnected point solutions that we were drowning in complexity and data overload. It also highlighted that many of the processes we were automating actually needed to be revised, simplified or eliminated altogether.

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Baffled by the complexity we created, focus in recent years has been on process simplification, user-friendliness and redirecting attention to what actually matters. A good step forward, but we still suffer from too much data, too little meaningful information. The big data & analytics movement has now really raised the bar not just in terms of what data can be gathered, aggregated and analyzed but also how it is filtered and presented to audiences to provide immediate management insights. Activity lists are being replaced by composite dashboards, lengthy reports by simple performance heat maps yes, pictures, literally replacing thousands of words. Key Change for High Performance? A shift in focus from process to outcomes. Burn the forms. With technology finally up to the task of producing meaningful information, managers can turn their attention to driving performance outcomes rather than being bogged down in laborious processes. The relationship between people and their technology On demand. Ubiquitous. Better, faster, cheaper. Its really not so long ago that your only likely encounter with a computer was when you went to work, laptops were expensive and rare, and mobile devices were pagers and Walkmans. Today, can you even imagine getting past 10:00 a.m. without having accessed a myriad of your online applications? We work online, shop online, socialize online, we are connected 24/7 online. Enterprise technologies are not far behind. Perhaps you are still in a workplace that restricts or bans social media, but they are in decline. Perhaps your organization refuses cloud-based applications for privacy or security reasons, but they are in decline. The fact is: organizations that try to block out the world simply ostracize themselves. And they are in decline. Key Change for High Performance? An agile, social and mobile work environment. You will set dynamic goals and adjust them in response to change; your manager will provide just-in-time coaching wherever you are; skills and knowledge you need will be recommended and streamed to you; your performance
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journal will continuously capture and cluster feedback, ideas and suggestions from your peers and customers; your formal annual performance review will be permanently deleted from your calendarand you will finally be in a position to manage your own career.

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SUMMARY & CONCLUSION


After doing the required research for the project on Traditional Methods of performance Appraisal, I can conclude that these methods are now outdates and very time consuming. Partiality is rampant in these methods which wont give the right and required feedback to the employees. The shift from performance appraisal to performance management is much needed in the current job environment since it will help the employees actually work on what theyre lacking with the corrective workshops and seminars.

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RECOMMENDATION
Performance appraisal system followed in public services in India is based on the limiting idea of efficiency. Unless integrity is rated negative, this parameter does not matter in the process of promotion. In the prevalent climate, it has to be recognised that integrity is as much, if not more, relevant to public service efficiency. If we consider probity and integrity in public service as national assets, an integrity rating like of unquestionable integrity has to be given due weight for promotion. By doing so, we would place equal emphasis on both efficiency and integrity. Mere absence of negative rating does not imply ethical behaviour. In the prevailing climate, integrity is as tangible a value added as efficiency and should be given due count. It need not be asserted that the present crisis in public personnel administration is due to lack of integrity. Integrity is built into the idea of effectiveness. Integrity needs to be studied academically; all its dimensions need to be brought out and the same incorporated as a positive virtue in performance appraisal charts. Responsibility and responsiveness may be tangible suggestions. Hence, the first priority of public personnel administration is to improve ethical standards with a view to rooting out corruption.

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BIBLIOGRAPHY
Websites:www.businessballs.com wwwe.wikipedia.com http://www.forbes.com/sites/sylviavorhausersmith/2012/12/16/the-new-face-of-performancemanagement-trading-annual-reviews-for-agile-management/ http://www.whatishumanresource.com/traditional-methods-of-performance-appraisal www.timesofindia.com

Book:Human Resource Management K Aswathappa

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