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Declaration

I hereby declare that the project entitled Performance


Appraisal ,submitted as part of PG Diploma Course of HRDP,
is my original work and to the best of my knowledge , it contains
no material previously published by another person nor material
which has been accepted for the award of any other degree of the
University, except where due acknowledgement has been made in
the text.

Payal

___________

_________

Student # 6

Signature

Date

Certified by:
Deepti(Mrs.)

___________

_________

Signature

Date

Acknowledgement
I would like to extend a special thank you to Mrs. Deepti who
guided me throughout the making and completion of this report.
Its because of her continuous guidance and efforts only that today
my report could be completed.
I am also very appreciative to the Google website and the BING
website, the most widely used search engines that was kind enough
to provide me with the information and the photographs for this
text.
Lastly, I would like to thank the Almighty God for everything. This

report would never have been a success without his blessings.


I sincerely hope that the
readers

find

my

report

interesting, informative and


enjoyable to read.

Index
S. No.
1
2
3
4
5
6
7

Topic
Objective of the Study
Methodology
History of Performance Appraisal
PMS in different enterprises
Findings
Recommendations
Snapshot of PA system in Public

Page No.
5
6
7
21
37
40
Sector 42

companies
Snapshot of PA system in Private Sector 43

9
10
11

companies
Conclusion
Questionnaire
Bibliography

44
45
51

Objective

o To understand the essence of performance appraisal system as a


whole.
o To

understand

the

various

aspects

and

components

of

performance system.
o To see how these components of the performance appraisal
system work in Indian Enterprises.
o To understand the various mechanics at work, which are
important in introducing a new system, and changes that
accompany it, as well as the mechanics adopted to cope up with
the changes.
o To understand the importance of organizational background in
implementing a performance appraisal system.
o To draw lessons from the experience of the project so that the
knowledge gained can be applied effectively and constructively in
the future.

Methodology

In order to understand the companys vision, mission, future goals,


started the project by assimilating the important literature of these
companies; it is required to study the nature of job of various
professionals.
Took appointment with the HR department and sought important
information from them regarding the PMS being followed there.
Prepared a questionnaire and got it filled by the HR professionals who
are responsible for the Performance Appraisal.
In order to understand the working of all the jobs and the skills
required completing them, studied the job profile and job specifications
of various designations of the employees. Also went through HR
manual to understand the practical application part of Performance
Appraisal in these organisations.
Selected certain variables and tried to compare these organizations
based on them.
Since public and private sector have more or less different ways of
modus operandi therefore both types of companies are compared
separately.
In addition to this the academic research done pertaining to this
subject is also taken into consideration.

Variables Selected for comparison are:


1. Performance Dimension
2. Approach
3. Feedback
4. Assessment Process
5. Intended Uses of Performance Appraisal
6. Scale

History of Performance appraisal


The history of performance appraisal is quite brief. Its roots in the
early 20th century can be traced to Taylors pioneering Time & Motion
studies. But this is not very helpful, for the same may be said about
almost

everything

in

the

field

of

modern

human

resource

management.
As a distinct and formal management procedure used in the evaluation
of work performance, appraisal really dates from the time of the
Second World War- not more than 60 years.
The process was firmly linked to material outcomes. If an employees
performance was found to be less than ideal, a cut in pay would follow.
On the other hand, if the performance was better than the supervisors
expectation, a pay rise was in order.
Little consideration, if any, was given to the developmental possibilities
of appraisal. If was felt than a cut in pay, or a rise, should provide the
only required impetus for an employee to either improve or continue to
perform well. Sometimes this basic system succeeded in getting the
results that were intended; but more often than not, it failed. As a
result, the traditional emphasis on reward outcomes was progressively
rejected.
Modern Appraisal
Performance

appraisal may be defined as a structured formal

interaction between a subordinate and supervisor, that usually takes


the form of a periodic interview in which the work performance of the
opportunities for improvement and skills development.
In many organizations- but not all- appraisal results are used, either
directly or indirectly, to help determine reward outcomes. That is, the

appraisal results are used to identify the better performing employees


who should get the majority of available merit pay increases, bonuses
and promotions.
By the same token, appraisal results are used to identify the poorer
performers who may require some forms of counseling, or in extreme
cases, demotion, dismissal or decreases in pay.
What is Performance Appraisal?
The performance appraisal is a communication tool designed to assess
each individuals contribution to the organization. The appraisal
provides a way to measure skills and accomplishments with reasonable
accuracy and uniformity. It provides a way to help identify obstacles to
top performance. It should help identify areas for professional growth.
It

should

not,

however,

be

considered

the

supervisors

only

communication tool. Open lines of communication throughout the year


help to make effective working relationships.
Each employee is entitled to a thoughtful and careful appraisal. Its
success depends on the supervisors willingness to complete a
constructive and objective assessment,

and on the employees

willingness to respond to constructive criticism and to work with


supervisor to overcome performance barriers. A performance appraisal
is a review and discussion of an employees performance of assigned
duties and responsibilities. The appraisal is based on results obtained
by the employee in their job, not on the employees personality
characteristics. Personality should be considered only when it relates
to performance of assigned duties and responsibilities.

Why appraise performance?


Periodic review helps supervisors gain a better understanding of each
employees abilities with the goal to help train and develop skills and
strengths. It provides a chance to evaluate job progress, stimulate
interest and improve job performance by recognizing productive work
and by pointing out areas of growth and development. It provides a
feedback mechanism that might otherwise be overlooked.

Types of Performance Appraisal

Formal annual performance appraisals

Informal one-to-one review discussions

Counseling meetings

Observation on the job

Skill or job related tests

Assignment or task followed by review, including secondments

Assessment centers, including observed group exercises tests


presentations etc

Survey of opinion of others who have dealings with the individual

Psychometric tests and other behavioral assessments

Graphology

Conducting a performance appraisal


The discussion at a formal appraisal interview should focus on:
Behaviour and outcomes
9

Issues and problems


Constructive development to improve the appraisees motivation,
growth and performance.
Common performance appraisal formats include:
1. Global ratings: A one-dimensional rating that uses a raters overall
estimate of performance without distinguishing between critical job
dimensions
2. Trait based scales A multidimensional approach used to measure
performance. Some commonly used traits are loyalty, dependability,
cooperation, initiative and self-confidence.
3. Effectiveness-based systems: A system based on objective
results, representing the measurement of an employees contribution,
not an employees activities or behaviours. Management by Objective
is a popular example of this kind of performance appraisal format.
BARS
Behaviorally anchored Rating Scales, better known as Bars format
deals with measurable behaviors, not personality, provides raters and
rates with clear statements of performance goals, and is based on a
specific, through job analysis.
Using BARS raters focus on specific rate behaviours. These behaviors
are compared to specific examples that provide concrete benchmarks
for making appraisal judgments.
Similar to graphic rating scale, but has behavior anchors
1. List critical incidents

10

2. Cluster these into dimensions


3. Critical incidents retranslated to dimensions
4. Critical incidents rated on 9 point scale
5. Critical incidents worded as expressions
Rating Scales
The rating scale method offers a high degree of structure for
appraisals. Each employee trait or characteristics is rated on a bipolar
scale that usually has several points ranging from poor to excellent.
The traits assessed on these scales include employee attributes such
as cooperation, communications ability, initiative, punctuality and
technical competence. The nature and scope of the traits selected for
inclusion is limited only by the imagination of the scales designer, of
by the organizations need to know.
The one major provision in selecting traits is that they should be in
some way relevant to the appraisees job. The traits selected by some
organization have been unwise and have resulted in legal action on the
grounds of discrimination.
Results Method (MBO Method)
The use of management objectives was first widely advocated in the
1950s by the noted management theorist Peter Ducker.
MBO methods of performance appraisal are results-oriented. That is,
they seek to measure employee performance by examining the extent
to which predetermined work objectives have been met.
Once an objective is agreed, the employee is usually expected to selfaudit; that is, to identify the skills needed to achieve the objective.
Typically they do not rely on others to locate and specify their

11

strengths and weaknesses. They are expected to monitor their own


development and progress.
Graphic rating scales = rating scale (e.g., 5 points)
Forced choice system (to reduce leniency) Rater decides between
two responses. Both look positive, but only one discriminates good
performance from poor.
The key phases of an effective performance appraisal system
Effective performance appraisal system has 4 phases:
Planning
Managing
Reviewing
Rewarding Performance
It is a continuous cycle, with employees and managers working
together to establish key objectives, monitor progress towards these
objectives, assess results and provide recognition for achievements.
1. Performance Planning
In an effective organization, work is planned out in advance.
Planning means setting performance expectations and goals for
group and individuals to channel their efforts towards achieving
organizational

objectives.

Getting

employees

involved

in

the

planning process will help them understand the goals of the


organization, what needs to be done, why it needs to be done, and
how well it should be done.

12

The regulatory requirements for planning employees performance


include

establishing

the

elements

and

standards

of

their

performance appraisal plans. Performance elements and standards


should be measurable, understandable, verifiable, equitable and
achievable.

Through

critical

elements,

employees

are

held

accountable as individuals for work assignments or responsibilities.


Employees performance plans should be flexible so that they can
be

adjusted

for

changing

program

objectives

and

work

requirements.
The key processes of planning phase are:
a) Establishing team- individual objectives
Business unit objectives are normally set through the business
strategy, planning and budgeting processes for the year. Individual/
team objectives may be set throughEstablishing improvements over previous years.
External bodies that set targets and standards to be
achieved.
Benchmarking- internal setting of standards and targets
compared with the best in the field.
b) Describing the job roles of an individual
A good mechanism used for this purpose is the language of key
accountabilities.

key

accountability

is

simply

an

area

of

responsibility for which the job holder is expected to produce


results. Defining job roles should also competencies required.

13

c) Objective setting
These highlights, for the team and the individual, the clarity of
understanding of their jobs, and provide a focus to their actions and
behaviours in the coming period. The setting up of objectives is the
management

process,

which

ensures

that

every

individual

employee knows what role they need to play, and what results they
need to maximize their contribution to the overall business.

d) Development Planning
Each jobholder, regardless of current levels of performance, can
achieve

better

results

if

personal

performance

improvement

objectives are built in to planning process. This focuses on how they


achieve their objectives, what they can do themselves to develop
better performance and any support that is available from the
organization to help them.
2. Managing Performance
In

an

effective

organization,

assignments

monitored

continually.

Monitoring

measuring

performance

and

well

providing

and
means

ongoing

projects

are

consistently
feedback

to

employees and work groups on their progress towards reaching


their goals. Regulatory requirements for monitoring performance
include conducing progress reviews with employees where their
performance is compared against their elements and standards.
Ongoing monitoring provides the opportunity to check how well

14

employees are meeting predetermined standards and to make


changes to unrealistic or problematic standards. In addition, by
monitoring continually, unacceptable performance can be identified
at any time during the appraisal period and assistance provided to
address such performance rather than wait until the end of the
period when summary rating levels are assigned. This is an ongoing
process

of

working

towards

the

performance

expectations

established in the planning phase. Managing performance involves


several activities.
a) Coaching this involves working with an individual on a
specific task of activity that forms part of their job, in a
planned manner so that their knowledge, competence and
skills are improved. Essential ingredients of good coaching
areIt is a learning process, not a teaching process.
The individuals are responsible for planning and achieving the
task, but are supported, counseled and monitored by their
managers throughout the learning process.
Feedback should be specific, timely and focused on a positive
achievements as well as the need to improve some aspects of
performance.
b) Counseling
This is necessary when, for whatever reasons, performance
has not reached upto expectations and the manager needs to
take a formal and planned approach in order to help the
jobholder

overcome

the

obstacles.

Certain

things

are

important for effective counseling sessions. The sessions

15

should be a two-way communication and focus should be on


positive issues and not negative issues.
c) On going process reviews
Effective

counseling is

an important part of managing

performance. It is essential to integrate the process with


ones normal business planning activities. If the individual
teams are critical to success then they need to monitored on
a regular basis.
d) Self monitoring
An effective performance management process has to be a
partnership
organizations

between
get

manager

flatter

and

and

encourage

employees.
self

As

managed

processes, it is essential for all individuals to own the


performance management process, it should not be left solely
to the manager to maintain the process. The individual job
holder is a key stakeholder in performance management and
should be encouraged to recognize the benefit of actively
managing taking responsibility for their own performance.
Performance review
Performance review provides the opportunity to step back
from day to day activities, assess performance trends and
plan for the future.

16

a) Formal review
The formal review is both the beginning and end point of the
annual process. Formal review describes an event, often
annual, in which the manager and job holder forms an agreed
view on the job holders performance in the preceding year.
This part is synonymous with performance appraisal. From
time to time, organizations find it useful to summarize
employees performance. This can be helpful for looking at
and comparing performance over time or among various
employees. Organizations need to know who best performers
are.
Within the context of performance appraisal requirements,
rating means evaluating employees or group performance
against

the

elements

and

standards

in

an

employees

performance plan and assigning a summary rating of record


the rating of record is assigned accorded to procedures
included in the organizations appraisal period. The rating of
record has a bearing on various other personnel actions, such
as granting within-grade pay increases and determining
additional retention service credit in a reduction in force.
b) Individual self review
An individual jobholder should be partner in the performance
management. They certainly will have an opinion about how
well they have done. Therefore, they should be encouraged to
participate

fully

understanding

in

the

reviewing
factors

that

their
have

achievements,
led

to

and

successful

17

performance in some aspects of their job problem in other


areas.
c) Peer group and upward appraisal
This is breaking of the top down approach, the concept of
360 degree feedback which means getting feedback from
manager, subordinates and peers.

3. Rewarding performance
In an effective organization, rewards are used well. Rewarding
means recognizing employees, individually and as members of
groups, for their performance and acknowledging their contributions
to the agencys mission. A basic principle of effective management
is that all behaviour is controlled by its consequences. Those
consequences can and should be both formal and informal and both
positive and negative. Good performance is recognized without
waiting

for

nominations

for

formal

awards

to

be

solicited.

Recognition is an ongoing, natural part of day-to-day experience. A


lot of actions that reward good performance like saying thank
you dont require a specific regulatory authority. Nonetheless,
awards regulations provide a broad range of forms that more formal
rewards can take, such as cash, time off, and many non-monetary
items. The regulations also cover a variety of contributions that can
be rewarded, from suggestions to group accomplishments.
Reward is an important part of the feedback loop in performance
management. However, it is not necessarily concerned only with
money. A reward only has a positive affect on individual if it is

18

valued

by

them

Appropriate

to

the

effort

put

in

and

the

achievement.
Developing people
In an affective organization, employee development needs are
evaluated and addressed. Developing in this instance means
increasing

the

assignments
responsibility,

capacity

that

to

perform

introduce

improving

work

new

through

skills

processes,

or
or

training,
higher
other

giving

level

of

methods.

Providing employees with training and developmental opportunities


encourages good performance, strengthens job related skills and
competencies, and helps employees keep up with changes in the
work place, such as the introduction of new technology.
Carrying out the processes of performance management provides
an excellent opportunity to identify developmental needs. During
planning and monitoring of work, deficiencies in performance
become evident and can be addressed. Areas for improving good
performance also stand out, and action can be taken to help
successful employees improve even further. Managing performance
effectively
In effective organizations, managers and employees have been
practicing good performance management naturally all their lives,
executing each key component process well. Goals are set and work
is planned routinely. Progress toward those goals is measured and
employees get feedback. High standards are set, but care is also
taken to develop the skills needed to reach them. Formal and
informal rewards are used to recognize the behaviour and results
that accomplish the mission. All components processes working

19

together and supporting each other achieve natural, effective


performance management.

20

PMS in NTPC
The various features of HR department
o Values and leadership behaviour
o Respect and recognition
o Learning development and personal growth
o Resources to get the job done
NTPC follows the KRA method of the Performance Appraisal for the
junior staff members, in which the members are appraised on the
basis of their performance in the key result areas as set by the
management in advance. NTPC do not take into consideration the say
of the employees in deciding the KRAs. Although there are various
suggestion schemes of which the employees can take advantage of, for
deciding the KRAs for themselves. For the managers, the Performance
appraisal system is the MBO technique, where the top management
sets the targets by taking into consideration the employees. The
special features of the PA system in NTPC.
o Performance

against

goal/targets/

objectives

rated

in

the

appraisal form on a scale of 0 to 20.


o Annual system of Performance Appraisal.
o Customers/

stakeholders

viewpoints

are

also

taken

into

consideration for the various traits which are taken into


consideration for the performance Appraisal in NTPC
1. Work output
2. Work quality
3. Job knowledge

21

4. Attendance
5. Discipline
6. Cooperation and dependability
The rating of each factor mentioned above is on a 4 points scale and,
based on the scores, workers are appraised as poor, adequate, good
and excellent categories accordingly, PA traits for the Managerial staff
are:o Planning skills
o Organizing abilities
o Decision making
o Leadership
o Subordinate development
o Interpersonal competencies
o Innovation
o Conceptual skills
Employees who show performance in other activities which are not
covered by the PA, if get noticed by the management, get recognition
in the form of special awards in the various functions held by the
company, like annual day, festival celebration, etc. Moreover NTPC also
have the monthly newsletter, in which the employees get recognition
by mentioning of their performance in that.
The performance is also linked to the pay there and the employee has
opportunity to get the reward. The rewarding system is based on
individual performance and not the group performance. Soft and hard
skills training organized by the head office, every year. The various
type of training provided to these employees.

22

PMS in NDPL
NDPL follows the 180 degree method of the Performance Appraisal, in
which the employees are appraised by their seniors. NDPL also has the
annual appraisal system. The special features of the PA system in
NDPL are:
o Performance appraisal by the superiors.
o Annual system of Performance Appraisal.
o Customers/

stakeholders

viewpoints

are

also

taken

into

consideration
o For the performance appraisal of the employees.
The

various

traits

which are

taken

into consideration for

the

performance appraisal in NDPL are:


1. Work quality
2. Job knowledge
3. Attendance
4. Discipline
5. Cooperation and dependability
The rating of each factor mentioned above is on a 4 point scale and,
based on the scores, workers are appraised as poor, adequate, good
and excellent categories accordingly. The performance is not linked to
the pay there and only some bonus is given in case the profit in a
particular year is higher than the targets. The rewarding system is
based on individual performance and not the group performance.

23

PMS in Alstom
Alstom also follows the KRA method of the Performance Appraisal for
the staff member in which the members are appraised based on their
performance in the key result areas as set by the management in
advance. Alstom also do not take into consideration the say of the
employees in deciding the KRAs. It has the annual appraisal method,
in which the two types of evaluations are done- one is for the search of
the necessary qualities which is considered indispensable due to their
importance for the company, which are as follows:
o Team work
o Interest shown
o Accuracy
o Quality
The other desirable traits or attributes which are sought by the
employees

are

like

communication

skills,

manners,

discipline,

grooming, standards and values, etc. For the managers also the, the
Performance Appraisal KRA technique, where the targets areas are
distinguished by the top management and the results are sought from
managers. Special features of the PA system in Alstom are:
o Performance against goals/ targets/ objectives rated.
o Annual system of Performance Appraisal
o The self-appraisal is also considered along with the appraisal by
the superiors.
o Rewarding system for the individual performance only and not
for the group performance.

24

o Customers/

stakeholders

viewpoints

are

also

taken

into

consideration for the performance appraisal of the employees.


The rating of each factor mentioned above is on a 4 point scale and,
based on the scores, workers are appraised as poor, adequate, good
and excellent categories accordingly.

25

PMS in Jindal Steel


The appraisal followed at Jindals is based on a model termed as The
Development and Performance Management Model. The model lays
down great emphasis on the four parameters that are required for the
successful appraisal of an employee and the success working of the
organization. These parameters are:
Performance Planning
Feedback and Coaching
Assessment Review
Review and Recognition
These parameters help in understanding how the organization is
committed in the development of the employees. However, the present
appraisal system is divided into 3 stages where at every stage, a
different process is followed. Within each process different tools are
used to ensure greater transparency.
The stages are explained as follows:

26

Stages

Processes

Tools used

Components

Stage I

Setting targets

Target setting

-KPTs

Form

-Action

steps

-Success
Criterion

Stage II

Continuous

90 D review

KPT

Monitoring of

High points of

Performance

performance
-low point of

performance
Stage III

Annual review

Annual Score

-KPT

Card

-BEP

Key Performance Targets (KPT)


It refers to a set of individual targets that supports the organizational
goals to be accomplished in the year. Each KPT needs to clear success
criteria spelt out in order to gauge achievement of the KPT at the time
of review period.
These KPTs should be SMART, i.e.
S: Specific
M: Measurable
A: Achievable
R: Relevant
T: Trackable
Behavioural Expressions of Performance(BEP)
It refers to the skills and abilities described in behavioural terms that
are coachable, observable, measurable and critical to successful

27

individual or company performance. Broadly, it has been classified as


energy, empowerment, knowledge and execution.
The performance of the employees or the KPTs are measured through
a rating scale that has a tight definition. This scale is for everyone to
follow in exactly the same way as it is mentioned. The scores are on a
1-4 rating scale where each numeric indicates a particular performance
level namely:
1. Indicates that employee didnt meet any expectation.
2. Indicates that employees meet most of the expectation.
3. Indicates that the employees have consistently met all the
expectation.
4. Indicates the exceeding expectation.

28

PMS in BHEL
MAP(Moving Ahead through Performance) is the name of the
Performance Management System at BHEL, effective 2002-03.
MAP aims at creating alignment of employee goals with those of the
company,

and

enables

employees

to

effectively

manage

performance- for himself and his team. People are put at the centre
of the system, helps in MAP covers grades E1-E7 of the Executive
Cadre.
Appraisee

Feedback and
coaching

KRAs
URR Template Stretch Tool

Routine
Responsibilities

Appraiser

Competencies

Performance and
Development Planning
Mid Year Review
Review

Normalization

Final Review

Final Score

Final Performance Rating

Feedback and Coaching

29

The process of continuous feedback and Coaching is an inherent and


critical part of a sound appraisal process.
The Mid Year and final reviews are specifically focused on Feedback
and Coaching and hence require the Appraisee and the Appraiser to
have a formal feedback session.
For Feedback and Coaching to be truly effective, it should be provided
and received on an on-going basis. When used effectively, it is a
powerful means of positively impacting performance.
Feedback

and

Coaching

helps

an

appraiser

in

both

obtaining

information and providing inputs on how an Appraisee is performing


and whether or not he/she is headed in the right direction. It is also an
opportunity for the Appraisee to solicit resources and help that may be
required for enhancing his/her performance.

Feedback can be of various kinds:o Positive feedback


o Corrective Feedback
o Feedback focused on identifying obstacles to performance
o Feedback for the purpose of sharing information

Unit/ Business Sector Draft Budget (end February)

30

Normalization &
Score

Off line Performance


Planning
March-Mid April

May
Final Review &
Feedback

Appraiser

April

Off line Performance


Planning
Mid
AprilEnd
April

Appraisee

Mid Year Review

September-October

The Performance & Development Planning phase of MAP is initiated in


March, upon the finalization of the draft budget of BHEL. Unit Business
objectives and development initiatives will be derived from this and
cascaded to each respective business sector, unit, department,
product,

groups

and

sections.

The

targets

finalized

for

your

department will serve as the starting point for managers to do their


Performance Planning.
The appraisee will be assigned a URR based on the role that s/he
performs. This template will provide the Appraisee the relevant KRAs
and Routine Responsibilities. The Appraisee will use the built in
flexibility to develop the Performance Plan suited to his/her situation.
Creating Performance Plan
1 Select KRAs

31

Based on the URR assigned, the Appraisee will have a set on Essential
KRAs and in addition, can select other relevant ones from the list of
flexible KRAs.
Essential KRAs are predetermined and compulsory for the performance
of the role.
Flexible KRAs are suggested as relevant for a role but are not
compulsory. The Appraisee selects the appropriate KRAs.
The total number of Essential and Flexible KRAs put together cannot
exceed 12. Incase the required number of KRAs in the Flexible list
cannot be accommodated within the flexible section; the Appraisee will
use the Optional section to add the same in his/ her Performance &
Development Plan.
Optional KRA section compromises of KRAs that can be added by the
Appraisee if they have not been captured in either of the above two
categories and maybe required in a specific location or Performance
Period. As stated above, they also include KRAs that cannot be
accommodated because of the limit of 12 Essential plus Flexible KRAs.
These must be included in the Appraisees plan. A maximum of 3 such
KRAs can be added.
Set Targets and Action Plans for KRAs
For each KRA:
A specific target must be defined by the Appraisee that quantifies of
verifies the extent of achievement in a given time frame.
The

Target

thus

defined

should

correspond

to

Rating3-Meet

expectations on the 5-point Rating Scale.


The required level of achievement for each of the remaining 4 ratings
on the scale (1, 2,3,4) must also be defined using the target against
the Rating 3 as the central point. This will prevent subjectivity while
evaluating the Appraisees performance at the end of the year.

32

Level on Scale
Level 1
Level 2
Level 3
Level 4
Level 5

Description on Scale
Significantly Below Expectations
Moderately Below Expectations
Meets Expectations
Moderately Above Expectations
Significantly Above Expectations

PMS in RITES

(1)

The company has introduced the "Performance Appraisal

System" as one of the vital aspects of Human Resources Development


for all the employees of the Company to enable them to:
o Clearly understand their roles in the organisation;
o Perform effectively in the role against well defined objectives;
o Develop their skills, knowledge and capabilities both to their and
the organisation's advantage and
o Seek and achieve a growth of their career in the ogranisation.
(2)

Different formats to be maintained for each year of service

have been devised for the various categories of employees depending


upon the nature of duties they are required to perform. In the case of
senior officers of the level of GMs and above the format prescribed by
the Department of Public Enterprises is used.

In the case of

Deputationists the formats prescribed by their parent department is


followed.

33

(3)

Process of Appraisal : The appraisal process for employees

in grade Rs.8000-13500(CDA)/8600-14600(IDA) and above consists


of:
The appraisee laying down his own objectives for the appraisal period
in consultation with his immediate boss;
o A review of the achievement of the objectives at the point of mid
term by the appraiser and appraisee jointly;
o A final review of the achievement of the objectives again jointly
by the appraiser and appraisee and an evaluation thereof by the
appraiser;
o An evaluation of the appraisee by the appraiser in regard to
certain critical attributes required for an effective performance
of the job;
o An overall evaluation of the performance and potential of the
appraisee by the appraiser and a review by the Reviewing officer
and the MD/Director/ED/GGM/GM;
o An identification of the needs of training and development of the
appraisee.
For the other employees the appraisal format generally provides
for a self-appraisal statement and an evaluation of their performance
and attributes by the appraiser and review by an officer at the next
higher level.
(1)

Guidelines for Appraisal: The following guidelines help in

filling up the Appraisal Formats:


(i)

The formats containing the objective of laying down

the targets by the Appraisee for the next appraisal period, training and
development needs, and evaluation of results achieved during the

34

appraisal period has to be filled by the Appraisee himself first before


the Appraiser records his comments.
(ii)

In laying down objectives for achievement during the

appraisal period, there should be free and frank discussion between


the Appraiser and Appraisee and well defined and achievable targets
should be arrived it within the capabilities of the Appraisee.
(iii)

The objectives should be specific, measurable and

significant and relate to those of the organisation qualitatives could


also be laid down like improvement of inter-personal relationship,
development of subordinates etc.
(iv) Review of achievement of objectives should be openly
discussed and its evaluation made taking into account the various
facilitating and constraining circumstances involved in the performance
of the job during the appraisal period.
(v)

All evaluations by the Appraiser/Reporting officer

should be based on his personal knowledge and information of the


performance on the job by the employee during the period and
judicious assessment of the same.
(vi)

Evaluation should never be based on individual

incidents of either effectiveness or ineffectiveness of the employee


which are not typical.
(vii) It

should

at

all

times

be

remembered

that

Performance Appraisal is a sacred act, which has great relevance and


significance both for the employee appraised and the organisation and
therefore, deserves to be assigned all the efforts and time that the
Appraiser/Reporting

officer

can

devote

within

his

overall

responsibilities.

35

(2)

Period of Reporting : Performance Appraisal should be

recorded annually for the all regular employees of the Company


(including those serving on deputation terms) for each year ending on
31st of March.
Communication of adverse entries:
(i)

All adverse entries made in the appraisal formats of the

employee both in performance and other qualities and potential, as


finally accepted by the Reviewing/Countersigning authority should be
communicated to the employee concerned promptly.
(ii)

Representation of the employee against such adverse

comments will be considered by an authority next higher to the


Reviewing/Countersigning authority and a decision taken on the
confirmation or deletion of the adverse comments for a final decision.

36

Findings
While

comparing

the

Performance

Appraisal

system

in

these

enterprises, particularly during interaction with the HR Department


personnel, various factors came to light. These revelations are as
follows:
The biggest problem that came to light is the lack of faith in the
system. The employees do not have trust in the Appraisal System of
the company they are serving in. They take exercise to be mere
formality and sheer wastage of time, and believe that it always comes
up with biases. Such dissatisfaction among employees makes this
exercise a futile one. To enumerate some:
Lack of clarity about the Appraisal process
It was also found that most of the employees did not have clarity
about the appraisal process-be it the weightage assigned or the
analysis afterwards. How much weightage do the attributes like soft
skills have or the discipline, or quality, or house keeping have and how
much weightage do the organizing abilities, or planning skills, or
subordinate development, etc. carry. Moreover, they also have a
feeling that some of their activities that deserve attention and
recognition dont get noticed. Hence, such things make employees lose
faith in the Performance Appraisal System itself.
Time Consuming Process
The employees find the Performance Appraisal System to be more a
postmortem of their performance, in which many of the activities dont
noticed. Moreover the performance appraisal process itself takes a

37

long time due to its complex nature that the employees lose interest in
its outcomes. This unwanted delay on the part of management results
in dissatisfaction of the employees.
No reward for the group performance
In these companies Group Performance is not rewarded, which I think
is one of the major obstacles for not encouraging group cohesiveness
and team dynamics. Instead it encourages individuals to make efforts
to come to limelight themselves.
Mutual beneficiary societies
Instances were also found that the employees go for the policy of you
scratch my back, I scratch your back, by dividing among themselves,
the points in such a way that everyone gets equal points. Hence the
very purpose of Performance Appraisal gets defeated.
Noninvolvement of employees in deciding KRAs
Most of the organizations have the Performance Appraisal based on the
performance in the Key Result Areas, but the employees do not have
the option to decide their own KRAs. Hence, their full involvement is
not possible, which further results in demotivation of the employees.
The findings of this study also showed that majority of Indian
enterprises are following the conventional, non-participative and closed
system of PA termed as Conventional System. Most of the companies
claimed that they were using their PA system for the development of
employees but not all these companies could sustain their claims

38

because, PA practices (like Mutual goal-setting, mid-term review of


goals,

interview

for

feedback

and

counseling,

related

to

the

development of employees were not found to be the integral part of


the PA system. The most eloquently stated controversy in the PA
literature with regard to the conflict between the coaching and control
functions of PA was also perceived as a problem.
The gap between the stated objectives of PA and the actual objectives
has also been reported, which needed to be explored further on the
basis of the findings of exploratory study and the review of literature
on the subject, the hypothesis was framed that the Participative
approach is more effective system of PA than the Conventional one.

39

Recommendation

for

the

modifications

in

the

Performance Appraisal System


The problem areas identified and particularly during interaction with
the

HR

department

personnel,

various

suggestions

have

been

recommended for the improvement in the existing systems.


A workshop on Appraisal process clarity
Since it was found that most of the employees didnt have clarity
about the appraisal process, there was a need for bringing clarity of
the

Performance

Appraisal

System

being

followed

there-be

it

weightage assigned or the analysis afterwards or how much weightage


do the attributes like soft skills have or the discipline, or quality, or
house keeping have and how much weightage do the organizing
abilities, or planning skills, or subordinate development, etc. carry.
Minimizing the time
Since the performance appraisal process itself takes a long time due to
its complex nature that makes the employees lose interest in its
outcomes, it is recommended to reduce the time factor of the PMS.
Reward for the group performance
The top management needs to identify several group activities, which
can easily be rewarded on the team basis in order to bring in the
benefits of the group dynamics.

40

Emphasis on self appraisal


Since one of the expectations from the new PA is to have greater
emphasis on self-appraisal as it will act as the platform for the
employees to speak out what achieved in the period, it is highly
recommended to have a self-appraisal also of the employees, which
shall act as a satisfaction tool for the employees.
Method of Performance Appraisal
Management by Objective of Performance Appraisal is better one as
compared to the 180-degree appraisal or 360 degree appraisal or KRA
method. And if the company adopts the policy of the KRA method then
it should give the employees the liberty to set their own KRAs so as to
ensure their commitment to the activities they perform.
Continuing the Appraisal by customers
As in all the companies, there was a practice of taking the appraisal by
the customers also, it is recommended to continue this policy, as the
customers can be better judge of the services of the employees.
Link of performance with pay
The performance must be linked to pay to motivate the employees
continuously.

Linking

performance

with

pay

will

ensure

the

commitment of the employees.

41

Snapshot of PA System in Public Sector companies


Features
Performance

MMTC
Tasks, abilities

NTPC
KRA

RITES
Tasks, abilities

BHEL
KRA and URR

Dimensions
Approach
Feedback

Non-participative
Is
given
for

MBO based
On
for

Non-participative
On
for
poor

MBO
Positive/

Process

outstanding

performance

performance

Corrective

Assessment

poor performance
Self-Appraisal

Self-Appraisal

Self

Process

assessment

assessment

superior.
by

Sr.

&

by

Review
and

II

the

superior,

review

by

review by Sr. G.

superior,

review

for

all

poor

by

assessment

by

two

superiors. Review

II
by

Appraisal

stage

process

immediate

by HOD

II

outstanding

superior

Intended

reports.
Developmental

Developmental

Developmental

Developmental

uses of PA

promotions,

promotions,

promotions,

promotions,

transfers

Scale

&

transfers

&

transfers

&

transfers

placement

placement

placement

placement

training

training

training

training
5

Snapshot of PA System in Private sector companies

42

&

Salient

Jindal

features

Steel

System

KPT

Approach

BEP
90 Deg.

180

Participative

(N.P)

(P)
Formal & in
writing

Feedback

NDPL

and

Alstom

Food

Ranbaxy

specialties

Lab.

KRA

Ltd.
KPA

KPA

N.P

system
Participative

system
Participative

Poor,

Poor,

Formal & in

Formal & in

adequate,

adequate,

writing

writing

Good

Good
Excellent
Annual

KPA

KRA
deg

based

based

Practices

360 degree

Excellent
Individual

linkages

feedback

rewards

no

Self-Appraisal

identified

spelt out in

with

integrated

rewards for

Soft/technical

jointly,

the

other

with

group

assessment

beginning of

Human

Balance

performance

done

the

yr.

Resource

Scorecard

& PMS not

annually for

Review

of

systems

approach

connected

pay,

KPA

to pay

promotions

after

& manpower

months and

planning.

used

are

KPA

are

done
six
for

pay,
promotions,
training
Scale

&

counseling
4

Conclusion

43

An

effective

appraisal

program

in

any

organization

provides

management rational bases for determining who should be rewarded


by promotion or in annual ceremony or in the company newsletter.
It permits each employee to be considered on the same basis as any
on else. Thus hopefully, fewer charges of favoritism are made and
better performers are selected for rewards. It also helps in motivating
the subordinates to work harder and contribute more in order to win a
favourable rating.
It also helps in facilitating long range Personnel planning, as it
becomes easier to determine who should be promoted now, and who
should be ready for the training and likewise provide training to them.
Further development initiatives can be more easily customer tailored
to meet the needs of the individual, while managers who need special
training can be identified. The above mentioned features of the
Appraisal system, helps an organization to make an evaluation of an
overall effectiveness of its program for the organization as a whole.
Finally it also contributes in continuous understanding of nature,
mentality and behaviour of the people as a whole, which is learning for
everybody.

Questionnaire

44

I am a student of PGDM (HRDP) YWCA, Delhi. As a part of my course


curriculum, I am required to do a project in partial fulfillment for my
degree. I am doing my research of Performance Appraisal system,
concept method and its implication on the organization.
The objective of this questionnaire is to study entire process of
performance management
Name: ______________________________
Designation:__________________________
Organization:_________________________

1. What are the various designations in the company?

45

2. Which type of Performance Appraisal system is practiced in the


company?
180 degree
360 degree
Self-appraisal
MBO methods

3. Frequency of times when PA is done:


1. Annually
2. Quarterly
3. Six month

4. What are the various dimensions of PA taken by the company for


the performance appraisal of the employees?
1. Attendance
2. Disciplines
3. Job knowledge
4. Outputs

46

5. What are the various dimensions of PA taken by the company for


the performance appraisal of the managerial staff?
Planning skills
Organizing ability
Decision making
Leadership
Conceptual knowledge
Innovation
Development

6. What are the different hard and soft skills training given by the
company to the employee?

7. What is the attitude of your top management towards PA system in


your organization?
Very important
Important
Indifferent
Unimportant
Very important

47

8. How clearly are the objectives of the PA system communicated to


the employees?
Very clearly
Clearly
Indifferent
Unclearly

9. How satisfied are you with the outcomes of PA in your organization


Very much satisfied?
Somewhat
Indifferent
Unsatisfied

10. What is the time frame for assessment, mentoring the training
effectiveness?
One month
Three months
Six months
Year
More than a year

48

11. Whether the company has taken into consideration and the
confidence of the employees for formulating the PA system for them?

12. What are the different problem being faced by the HR manager in
execution of the PA system in the company?

13. Is there any provision for retraining of employees in case of the


performance is below certain level?

14. Whether the performance is linked to pay?

49

15. Is there any rewarding system for the group performance or it is


only for the Individual performance?

16. What are the various rewards institutionalized by the company for
the performance given by the employee in different other tasks?

17. What is the recent development in the performance appraisal


system?

Thank you for your support.

50

Bibliography
Latham, G.P., Yukl,G.A,1984, A review of the research on the
application

of

goal

setting

in

organization,

Academy

of

Management Journal, pp.824-854


Drucker P, 1977, Management by Objectives and Self-control in
People and Performance, William Heinmann Ltd, London.
McGregor, D, 1957, An un-necessary look at performance
appraisal, Harvard Business Review, pp. 89-94
Garner,

W.R.,

1960,

Rating

scales

discriminability

and

information transmission Psychological Review, pp. 343-356


V.

LaxmiPathy,

1983,

Performance

Appraisal

in

Public

Enterprises pp. 37-89


Bhide, V. Prakash, 1978, Impact of Leadership style on HRD
climate and role efficacy pp. 127- 142
Usha Krishnan, 1996, Performance Appraisal in Public Sector
Enterprises PhD Thesis, FMS, University of Delhi

51