Project report on

Performance Appraisal of Procter and

Gamble
MASTER OF COMMERCE
Management
SEMESTER I
(2012-13)

In the subject of

Human resource Management

Submitted by:

Dharani Kamath
Seat no: 108

CERTIFICATE
This is to certify that the project entitled Performance Appraisal of Procter and
Gamble submitted by Dharani Kamath Roll No. student of M.Com. (Part-I) Management
(University of Mumbai) Semester I examination has not been submitted for any other
examination and does not form a part of any other course undergone by the candidate. It is
further certified that he has completed all required phases of the project. This is original to
the best of pout knowledge and has been accepted for the Internal Assessment.

Internal Examiner

External Examiner

Co-ordinator

Principal
COLLEGE SEAL

DECLARATION BY THE STUDENT

I, Dharani Kamath student of M.Com. Part-I Management Roll No. 108 hereby declare
that the project for the Paper Human Rsource management titled, Performance
Appraisal of Procter and Gamble submitted by me to University of Mumbai, Semester
I examination during the academic year 2012-2013, is based on actual work carried by me
under the guidance and supervision of Mrs Sandhya Prashar.

I further state that this work is original and not submitted anywhere else for any
examination.

Signature of student

ACKNOWLEDGEMENT

At the beginning, I would like to thank GOD for his shower of blessing. The desire of
completing this project was given by my guide Prof Mrs Sandhya Prashar I am very much
thankful to her for the guidance, support and for sparing her precious time from a busy
schedule.

I would fail in my duty if I dont thank my parents who are pillars of my life. Finally I
would express my gratitude to all those who directly and indirectly helped me in completing
this project.

INDEX
Serial No

Chapter Name

Chapter 1.
Introduction
Introduction
Definition
Formal v/s informal
Different views
About the report
Chapter layout

Chapter 2.
Profile of Procter and Gamble

Chapter 3.
Theoretical view of Performance Appraisal

Chapter 4.
Analysis and interpretation

Chapter 5.
Conclusion
Bibliography
Annexures

Page no.

CHAPTER 1
INTRODUCTION
Performance Appraisal is an objective assessment of an individuals performance against
well defined benchmarks. It is the assessment of an individuals performance in a systematic
way. It is one of the fundamental functions of any organization.

DEFINITIONS:

According to Douglas, Performance appraisal is a method of acquiring and

processing the information needed to improve an individual employees performance

and accomplishments.
According to Newstrom, Performance appraisal is the process of evaluating the
performance of employees, sharing that information with them and searching for
ways to improve their performance.

The history can be dated back to the 20th century and then to the second world war when the
merit rating was used for the first time. An employer evaluating their employees is a very
old

concept.

It

is

an

indispensable

part

of

performance

measurement.

Performance appraisal is necessary to measure the performance of the employees and the
organization to check the progress towards the desired goals and aims.
Performance management refers to the process of appraising performances, giving feedback
to the employees, and offering rewards or punishments to them. It does not have any relation
on the employees personality characteristics. It helps to identify areas for performance
enhancement and to help promote professional growth. It helps an organization to determine
whether the employees performance is aligning with the organizational goal.

People differ in their abilities and their aptitudes. There is always some difference between
the quality and quantity of the same work on the same job being done by two different
people. Performance appraisals of Employees are necessary to understand each employees
abilities, competencies and relative merit and worth for the organization. Performance
appraisal rates the employees in terms of their performance.

FORMAL V/S INFORMAL

There are different views whether employees should be appraised formally or informally.
Formal appraisals usually occur at a specified time periods:
Half yearly
Annually
Informal appraisals can occur whenever the need arises.

Many organizations encourage a mixture of both formal and informal appraisals. The formal
appraisal is most often used as primary evaluation. However, the informal appraisal is very
helpful for more performance feedback. It should be taken care that informal appraisals do
not take place of formal appraisals.

Over the years, effective performance management has been proven to improve employee
loyalty, morale and general productivity. Due mainly to the highly competitive business
environment today, there is the need for firms to boost the morale and loyalty of their
employees in order to stand the heat of competition. Because of the high cost of selection,
recruitment, training and developing new employees, it is imperative for firms to motivate
and retain their high performing employees.

Performance appraisal includes various aspects of individual employees such as job

performance and productivity in relation to certain pre-established criteria and

organizational objectives, organizational citizenship behavior accomplishments; potential for

future improvement, strengths and weaknesses, etc. this will help to improve the employeremployee relationship which is very essential for the smooth working of any organization.

Performance appraisals are employed to determine who needs what training, and who will
be promoted, demoted, retained, or fired. Hence performance appraisal should be the top
priority of any organization.

ABOUT THE REPORT

TITLE OF THE STUDY:

The present study is titled as A PROJECT REPORT ON PERFORMANCE APPRAISAL

OF PROCTER AND GAMBLE

OBJECTIVES OF THE STUDY:

To gain in-depth knowledge about performance appraisal.

To study importance and benefits of performance appraisal in general.
To study the role of performance appraisal in organization.

RESEARCH METHODOLOGY:
To define any research problem and give a suitable solution for any research, a sound
research plan is inevitable. Research methodology underlines the various steps involved by

the researcher in systematically solving the problem with the objective of determining
various facts.

Method of data collection:

For completing this project Secondary data collection data method as well as primary
data collection method was used.

Secondary data collection:

I collected my secondary data from various Human resource management books and from
the various websites of the company under study.

Primary data collection:

In this project the primary data collection was mainly through the questionnaires to
employees. I met the respondents personally. & requested them to answer my questions for
the requirement of my study

CHAPTER LAYOUT
CHAPTER 1:
Information of the project and introduction of the title.

CHAPTER 2:
Profile of The Procter & Gamble Company (P&G).

CHAPTER 3:
Theoretical view of Performance Appraisal.

CHAPTER 4:
Analysis on Performance Appraisal with reference to Procter & Gamble Company (P&G).

CHAPTER 5:
Summary of the study.

CHAPTER 2
PROFILE OF THE COMPANY

The Procter & Gamble Company (P&G) boasts a boatload of top household brands. The
world's largest maker of consumer packaged goods divides its business into two global units:
Beauty and Grooming and Household Care. The company also makes pet food and water
filters. About two dozen of P&G's brands are billion-dollar sellers, including Always, Braun,

Crest, Fusion, Gillette, Head & Shoulders, Mach3, Olay, Oral-B, Pantene, and Wella in the
beauty, grooming, health care, and snacks & pet care segments, as well as Bounty,
Charmin, Dawn, Downy, Duracell, Gain, Iams, Pampers, and Tide in the fabric & home care
and baby & family care segments. P&G's hundreds of brands are available in more than 180
countries.

Procter & Gamble Co. (P&G) is an American company based in Cincinnati, Ohio that
manufactures a wide range of consumer goods. In India Proctor & Gamble has two
subsidiaries: P&G Hygiene and Health Care Ltd. and P&G Home Products Ltd. P&G
Hygiene and Health Care Limited is one of India's fastest growing Fast Moving Consumer
Goods Companies with a turnover of more than Rs. 500 crores. It has in its portfolio famous
brands like Vicks & Whisper. P&G Home Products Limited deals in Fabric Care segment
and Hair Care segment. It has in its kitty global brands such as Ariel and Tide in the Fabric
Care segment, and Head & Shoulders, Pantene, and Rejoice in the Hair Care segment.

Procter & Gamble's relationship with India started in 1951 when Vicks Product Inc. India, a
branch of Vicks Product Inc. USA entered Indian market. In 1964, a public limited company,
Richardson Hindustan Limited (RHL) was formed which obtained an Industrial License to
undertake manufacture of Menthol and de mentholised peppermint oil and VICKS range of
products such as Vicks VapoRub, Vicks Cough Drops and Vicks Inhaler. In May 1967, RHL
introduced Clearsil, then America's number one pimple cream in Indian market. In 1979,
RHL launches Vicks Action 500 and in 1984 it set up an Ayurvedic Research Laboratory to
address
the common ailments of the people such as cough and cold.

In October 1985, RHL became an affiliate of The Procter & Gamble Company, USA and its
name was changed to Procter & Gamble India. In 1989, Procter & Gamble India launched
Whisper - the breakthrough technology sanitary napkin. In 1991, P&G India launched Ariel

detergent. In 1992, The Procter & Gamble Company, US increased its stake in Procter &
Gamble India to 51% and then to 65%. In 1993, Procter & Gamble India divested the
Detergents business to Procter & Gamble Home Products and started marketing Old Spice
Brand of products. In 1999 Procter & Gamble India Limited changed the name of the
Company to Procter & Gamble Hygiene and Health Care Limited.

P&G Home Products Limited was incorporated as 100% subsidiary of The Procter &
Gamble Company, USA in 1993 and it launched launches Ariel Super Soaker. In the same
year Procter & Gamble India divested the Detergents business to Procter & Gamble Home
Products. In 1995, Procter & Gamble Home Products entered the Haircare Category with the
launch of Pantene Pro-V shampoo. In 1997 Procter & Gamble Home Products launches
Head & Shoulders shampoo. In 2000, Procter & Gamble Home Products introduced Tide
Detergent Powder - the largest selling detergent in the world. In 2003, Procter & Gamble
Home Products Limited launched Pampers - world's number one selling diaper brand.

Today, Proctor & Gamble is the second largest FMCG Company in India after Hindustan
Lever Limited.

History

Procter & Gamble was started by brothers-in-law William Procter and James Gamble, a
candle maker and a soap maker, respectively, in 1837 in Cincinnati. Two decades later, the
company would reach $1 million in sales. The Civil War further boosted the company's
fortunes, when the Union Army awarded two contracts to P&G to supply soldiers with soap

and candles. It was an unwitting way to build brand loyalty -- after the war was over,
returning soldiers continued to buy P&G products.

Procter & Gamble headquarters in Downtown Cincinnati , Ohio.The company moved into
other countries, both in terms of manufacturing and product sales, becoming an international
corporation with its 1930 acquisition of the Thomas hedley company , based in Newcastle
upon tyne, England. Procter & Gamble maintained a strong link to the North East of
England after this acquisition. Numerous new products and brand names were introduced
over time, and Procter & Gamble began branching out into new areas. The company
introduced tide laundry detergent in 1946 and prell shampoo in 1947. In 1955, Procter &
Gamble began selling the first toothpaste to contain fluoride, known as crest .Branching out
once again in 1957; the company purchased charmin Paper Mills and began manufacturing
toilet paper and other paper products.

P&G scored another coup in brand building with the launch of Ivory soap in the 1890s. In
the years after, P&G would go on to invent and produce some of the most common products
in American homes. In 1911, Crisco was introduced. In 1946, it was the detergent Tide.
Pampers, the disposable diapers that changed the industry, debuted in 1961. The list of
successful products goes on and on.

Popular Brands:
26 of P&G's brands have more than a billion dollars in net annual sales, according to the
2011 Annual Report and Procter and Gamble corporate news room.

Leadership Brands

Ace is a brand of laundry detergent/liquid available in numerous forms and scents.

Always is a brand of feminine care products.

Ariel is a brand of laundry detergent/liquid available in numerous forms and scents.

Bold is a brand of laundry detergent /liquid.

Bounce is a brand of laundry products sold in the United States and Canada.

Bounty is a brand of paper towel sold in the United States and Canada.

Braun is a small-appliances manufacturer specializing in electric shavers, epilators,

hair care appliances and blenders.

Cascade is a brand of dishwashing products.

Charmin is a brand of toilet paper sold in the United States, Canada, and Mexico.

Covergirl is a brand of women's cosmetics.

Cest oral b is a brand of toothpaste and teeth-whitening products.

Dash is a brand of laundry detergent liquid.

Dawn/fairy is a brand of dishwashing detergent.

Dolce and Gabbana is an Italian fashion house.

Downy/Lenor is a brand of fabric softener.

Duracell is a brand of batteries and flashlights.

Eukanuba is a brand of pet food.

Febreze/Ambi pur is a brand of air fresheners.

Fixodent is a brand of air denture adhesives.

Fusion is a brand of mens wet shaves razors.

Gain is a brand of laundry detergent, fabric softeners and liquid dish soap.

Gillete is a brand of safety razor and male grooming products.

Head and shoulder is a brand of anti-dandruff shampoo and conditioners.

Herbal essence is a brand of shampoo and conditioners.

Hugo boss is a brand of fine fragrances.

Iams is a brand of pet food.

Luvs is a brand of baby diapers.

Mach3 is a brand of safety razor and male grooming products.

Max Factor is a brand of women's cosmetics.

Mister Clean is a brand of multi-purpose cleaner sold in the United States and Great
Britain.

Olay is a brand of women's skin care products.

Old Spice is a brand of men's grooming products.

Oral B is a brand of toothbrush, and oral care products.

Pampers is a brand of disposable diaper and other baby care products.

Pantene is a brand of hair care products (conditioners/styling aids).

Prestora/blue is a brand of safety razor and male grooming products.

Prilosec is an over-the-counter drug.

A puff is a brand of facial care..

Rejoice/Pert is a brand of hair care products (conditioners/styling aids).

Safeguard is a brand of soaps.

Secret is a female anti-perspirant brand.

SK-II is a brand of women's and men's skin care products.

Swiffer is a brand of house-cleaning products.

Tampax is a brand of feminine care products.

Tide is a brand of laundry detergent.

Venus is a brand female hair-removal products.

Vicks is an over the counter medication.

Wella is a brand name of hair care products (shampoo, conditioner, styling, hair
color).

Most of these brandsincluding Bounty, Crest and Tideare global products available on
several continents. Procter & Gamble products are available in North America, Latin
America, Europe, the Middle East, Africa, Asia, Australia and New Zealand.

PRODUCTION

The P&G production logo used from early 1985 to 2007 Procter & Gamble produced and
sponsored the first radio soap operas in the 1930s (Procter & Gamble's being known for
detergentssoapswas the genesis of the term "soap opera"). When the medium switched
to television in the 1950s and 1960s, most of the new serials were sponsored and produced
by the company. The serial The Young And The Restless is currently broadcast on CBS and
is still partially sponsored by Procter & Gamble. When As The World Turns left the air on
September 17, 2010, The Young And The Restless became the only soap left that is partially
sponsored by Procter & Gamble.

Procter & Gamble produced and sponsored the first radio soap operas in the 1930s (Procter
& Gamble's being known for detergentssoapswas the genesis of the term "soap opera")
When the medium switched to television in the 1950s and 1960s, most of the new serials
were sponsored and produced by the company. The serial The Young And The Restless is
currently broadcast on CBS and is still partially sponsored by Procter & Gamble. When As
The World Turns left left the air on September 17, 2010, The Young And The Restless ,
became the only soap left that is partially sponsored by Procter & Gamble.

Procter & Gamble also was the first company to produce and sponsor a prime-time show, a
1965 spinoff of the daytime soap opera As the World Turns called Our Private World In
1979; PGP produced Shirley, a prime-time NBC series starring Shirley Jones which lasted

thirteen episodes. They also produced TBS' first original comedy series, Down To Earth,
which ran from 1984 to 1987 (110 episodes were produced). They also distributed the
syndicated comedy series Throb. Procter & Gamble Productions originally co-produced
Dawsons Creek with Sony Pictures Television but withdrew before the series premiere due
to early press reviews. It also produced the 1991 TV movie A Triumph of the Heart: The
Ricky Bell Story, which was co-produced by The Landsburgs.

In addition to self-produced items, Procter & Gamble also supports many Spanish-language
novellas through advertising on networks such as Univision, Telemundo,Telefutura, and
Azteca America. Procter & Gamble was one of the first mainstream advertisers on Spanishlanguage TV during the mid-1980s. In 2000, the company's self care Being Girl website was
launched. In 2008, P&G expanded into music sponsorship when it joined Island Def Jam to
create Tag Records, named after a body spray that P&G acquired from Gillette. In April
2010, after the cancellation of As the World Turns, PGP announced they were officially
phasing out of the soap industry, and expanding into more family appropriate programming.
Procter & Gamble also gave a $100,000 contract to the winners of Cycle 1 through 3 of
Canadas Next Top Model, wherein Andrea Muizelaar, Rebecca Hardy and Meaghan Waller
won the prize.

VISION

vision

meaning

must
for

be

the

p eo pl e . M ai nl y,

to

realistic

in

nature

c o m p a n y.

It

must

the

workers

and
be

must

have

convincing

to

some
the

a n d members of the company. If

employees of P&G do not think vision is credible then they cant work to full
potential. If the vision of P&G is to inspire and motivate the workforce in the company then
it must be attractive. Vision should be like this that more and more People want to be part of

the company. The vision is not for the present, it is mainly for the future. In this
respect, the image of the leader seeing off into the distance to create a vision may A
vision is not where you are now, it's where you want to be in the future

The products made by P&G touch the life of about 1.75 billion customer every day. For
example they use various visions for their different products. For products they say rough
feels good because they have got shiny hair and nice smile or keep our homes fresh and
clean or b most common and famous line enjoy a great cup of tea, satisfying meal or
healthy snack.

P&G always try to make a healthier future for customer. P & G t r i e s t o m a k e

c o n s u m e r s f e e l g o o d , g i v e t h e i m p r e s s i o n o f b e i n g g o o d a n d more out
of life with their products and services. P&G will always try to increase new ideas of
undertaking company with the goal of increasing-up the range of organization and will try to
reduce other outside environmental impact.

Chapter 3
Theoretical view
Meaning of Performance Appraisal
Performance Appraisal is the systematic evaluation of the performance of employees and to
understand the abilities of a person for further growth and development. Performance
appraisal is generally done in systematic ways which are as follows:

1. The supervisors measure the pay of employees and compare it with targets and plans.
2. The supervisor analyses the factors behind work performances of employees.

The employers are in position to guide the employees for a better performance. In other
words, Performance performance is the assessment of an individuals performance in a
systematic way, the performance being measured such factors as job knowledge, quality and
quantity of output, initiative, leadership abilities, supervision, dependability, co-operation,
judgement, versatility, health, and the like. Assessmant should not be confined to past
performance alone. Potentials of the employee for future performance should also be
assessed.

The other terms used for performance appraisal are: performance rating, employee
assessment, employee performance review, personnel appraisal, performance evaluation and
also merit rating. Performance appraisal is closely related to job analysis.

Need of performance appraisals:

There

are

many

opinions

on

doing

performance

appraisals

and

unfortunately the reasons dont always support a productive work

setting. Some organizations do performance appraisals because they
feel obligated to do them.

Some organizations do performance

appraisals to make sure they have a piece of paper in the employees file.
But successful organizations understand the importance of incorporating
performance appraisals into their performance management strategy.

Objectives of Performance Appraisal:

To effect promotions based on competence and performance.

To confirm the services of probationary employees upon their

completing their probationary period satisfactorily.

To assess the training and development needs of employees.

To decide upon a pay rise where (as in unorganized sector) regular

pay scales have not been fixed.

To let the employees know where they stand in so far as their

performance is concerned and to assist them with consistive
criticism and guidance for the purpose of their development.

To improve communication. Performance appraisal provides a

format for dialogue between the superior and the subordinate, and
improves understanding of personal goals and concerns. This can
have the effect of increasing the trust between the rater and the
ratee.

Finally the performance appraisal can be used to determine

whether HR programmes such as selection, training and transfers
have been effective or not.

Mainly performance appraisal serves four objectives:

General Application

Specific Purpose

Developmental uses

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
Organisational

HR planning

Maintenance/Objectives
Determining

organization

training

needs
Evaluation

of

organizational

goal

achievement
Information for goal identification
Evaluation of HR systems
Reinforcement

of

organizational

developmental needs
Documentation

Criteria for validation research

Documentation for HR decisions
Helping to meet legal requirements.

Performance Appraisal and Competitive Advantage:

Performance appraisal offers competitive advantage to a firm by

improving performance, helping make correct decisions, ensuring legal
compliance, minimizing job dissatisfaction and employee turnover and
ensuring consistency between organizational strategy and behavior.

Improving

performance:

An

effective

appraisal

system

can

contribute to competitive advantage by improving employee job

performance on two ways
by directing employee behavior towards organizational goals and
by monitoring that behavior to ensure that the goals are met.

Make Correct Decisions: Appraisal is a critical input in making

decisions on such issues as pay raise, promotion, transfer, training,
discharges and completion of probationary periods. Right decision
on each of these can contribute to competitive strength of a firm. If
promotion, for example, is made on performance, the promote feels
motivated to enhance his or performance.

Minimizing Job Dissatisfaction and Turnover: Employees tend to

become emotional and frustrated if they perceive that the ratings
they get are unfair and inaccurate. Such employees find that the
efforts

they

had

put

in

became

futile

and

obviously

get

demotivated. Hence ratings should be accurate. An organization

having satisfied and motivated employees will have an edge over
its competitors.

Ensuring legal compliance:

Promotions made on basis of factors

other than performance might land up a firm in a legal battle, thus

diverting its focus on non productive areas. Companies can
minimize costly performance-related litigation by using appraisal
systems that give fair and accurate ratings.

CAREER PLANNING:
Career planning is a corporate organizational issue. After appraisals, it is always found out
that most employees are working in departments they have little or no flair for. This
generally affects their individual as well as general corporate performance.

Performance appraisal results help in planning and repositioning employees career. It

should be noted that performance appraisal is a very important aspect of organization future

growth and positioning as such it should be carried out with all seriousness and sincerity.
The Human resources person should be able to advice all supervisors and managers before
every appraisal exercise to avoid getting a biased result, which will ultimately affect the
general productivity of the firm.

BENEFITS TO THE ORGANIZATION

Create, execute and analyze an automated, effortless and efficient performance appraisal
process. At-a-glance goal-setting to align individual goals to the organization's vision.

BENEFITS TO HR:
Flexibility to choose from KRA, competence or Balance Scorecard method based
performance management systems. Track deviations in performance at a macro level and
plan course Correction Save HR time by executing a paperless appraisal process:

Benefits to Employees and Managers

Ensures confidentiality of the appraisal process

File appraisal forms and get review results online

Keep track of career growth for better planning

Get easy access to KRAs to keep performance on track

PROCESS OF ESTABLISHING PERFORMANCE STANDARDS:

The first step in the process of performance appraisal is the setting up of the standards which
will be used to as the base to compare the actual performance of the employees. This step
requires setting the criteria to judge the performance of the employees as successful or
unsuccessful and the degrees of their contribution to the organizational goals and objectives.
The standards set should be clear, easily understandable and in measurable terms. In case the
performance of the employee cannot be measured, great care should be taken to describe the
standards.

COMMUNICATING THE STANDARDS:

Once set, it is the responsibility of the management to communicate the standards to all the
employees of the organization. The employees should be informed and the standards should
be clearly explained to them.

This will help them to understand their roles and to know what exactly is expected from
them. The standards should also be communicated to the appraisers or the evaluators and if
required, the standards can also be modified at this stage itself according to the relevant
feedback from the employees or the evaluators.

MEASURING THE ACTUAL PERFORMANCE

The most difficult part of the Performance appraisal process is measuring the actual
performance of the employees that is the work done by the employees during the specified
period of time. It is a continuous process which involves monitoring the performance
throughout the year. This stage requires the careful selection of the appropriate techniques of
measurement, taking care that personal bias does not affect the outcome of the process and
providing assistance rather than interfering in an employees work.

COMPARING THE ACTUAL WITH THE DESIRED PERFORMANCE:

The actual performance is compared with the desired or the standard performance. The
comparison tells the deviations in the performance of the employees from the standards set.
The result can show the actual performance being more than the desired performance or, the
actual performance being less than the desired performance depicting a negative deviation in
the organizational performance. It includes recalling, evaluating and analysis of data related
to the employees performance.

DISCUSSING RESULTS
The result of the appraisal is communicated and discussed with the employees on one-to-one
basis. The focus of this discussion is on communication and listening. The results, the
problems and the possible solutions are discussed with the aim of problem solving and
reaching consensus. The feedback should be given with a positive attitude as this can have
an effect on the employees future performance. The purpose of the meeting should be to
solve the problems faced and motivate the employees to perform better.

DECISION MAKING
The last step of the process is to take decisions which can be taken either to improve the
performance of the employees, take the required corrective actions, or the related HR
decisions like rewards, promotions, demotions, transfers etc.

METHODS OF PERFORMANCE APPRAISAL

Traditional Methods of Performance Appraisal

Essay appraisal method: This traditional form of appraisal, also

known as Free form method. It involves a description of the
performance of an employee by his superior. The description is an
evaluation of the performance of any individual based on the facts
and often includes examples and evidences to support the
information. A major drawback of the method is the inseparability
of

the

bias

of

the

evaluator.

Straight ranking method: This is one of the oldest and simplest

techniques of performance appraisal. In this method, the appraiser
ranks the employees from the best to the poorest on the basis of
their overall performance. It is quite useful for a comparative
evaluation.

Paired comparison: A better technique of comparison than the

straight ranking method, this method compares each employee with

all others in the group, one at a time. After all the comparisons on the
basis of the overall comparisons, the employees are given the final

rankings.
Critical incident method: In this method of performance appraisal
the evaluator rates the emp loyee on the basis of critical events and
how the employee behaved during those incidents. It includes both

negative and positive points. The drawback of this method is that the
supervisor has to note down the critical incidents and the employee
behavior as and when they occur.

Field review method: In this method, a senior member of the HR

department or a training officer discusses and interviews the
supervisors to evaluate and rate their respective subordinates. A major
drawback of this method is that it is a very time consuming method.
But this method helps to reduce the superiors personal bias.

Checklist method: The rate is given a checklist of the descriptions of

the behavior of the employees on job. The checklist contains a list of
statements on the basis of which the rater describes the on the job
performance of the employees.

Graphic Rating Scale: In this method, an employees quality and

quantity of work is assessed in a graphic scale indicating different
degrees of a particular trait. The factors taken into consideration
include both the personal characteristics and characteristics related to
the on the job performance of the employees. For example a trait like
Job Knowledge may be judged on the range of average, above
average, outstanding or unsatisfactory.

Modern methods of performance appraisals

Assessment centers

An assessment centre typically involves the use of methods

like social/informal events, tests and exercises, assignments

being given to a group of employees to assess their
competencies to take higher responsibilities in the future.
Generally, employees are given an assignment similar to the
job they would be expected to perform if promoted. The
trained evaluators observe and evaluate employees as they
perform the assigned jobs and are evaluated on job related
characteristics.
The major competencies that are judged in assessment
centers
planning

are
and

interpersonal
organizing

skills,

intellectual

capabilities,

capability,

motivation,

career

orientation etc. assessment centers are also an effective way

to determine the training and development needs of the
targeted employees.

Behaviorally Anchored Rating Scales (BARS) is a relatively new technique

which combines the graphic rating scale and critical incidents method. It consists
of predetermined critical areas of job performance or sets of behavioral statements
describing important job performance qualities as good or bad (for e.g.: the
qualities like inter personal relationships, adaptability and reliability, job

knowledge etc). These statements are developed from critical incidents.

In this method, an employees actual job behavior is judged against the desired
behavior by recording and comparing the behavior with BARS. Developing and
practicing

BARS

requires

expert

knowledge.

Humanresourceaccountingmethods:
Human resources are valuable assets for every organization. Human resource
accounting method tries to find the relative worth of these assets in the terms
of money. In this method the Performance appraisal of the employees is
judged in terms of cost and contribution of the employees.

The cost of employees include all the expenses incurred on them like their
compensation, recruitment and selection costs, induction and training costs etc

whereas their contribution includes the total value added (in monetary terms). The
difference between the cost and the contribution will be the performance of the
employees. Ideally, the contribution of the employees should be greater than the cost
incurred on them.

360 degree feedback

360 degree feedback, also known as 'multi-rater feedback', is the most
comprehensive appraisal where the feedback about the employees
performance comes from all the sources that come in contact with the
employee

on

his

job.

360 degree respondents for an employee can be his/her peers, managers (i.e.
superior), subordinates, team members, customers, suppliers/ vendors anyone who comes into contact with the employee and can provide valuable
insights and information or feedback regarding the "on-the-job" performance
of the employee.
360 degree feedback has four components:
1. Self appraisal
2. Superiors appraisal
3. Subordinates appraisal
4. Peer appraisal

MBO

The concept of Management by Objectives (MBO) was first given by Peter

Drucker in 1954. It can be defined as a process whereby the employees and
the superiors come together to identify common goals, the employees set their
goals to be achieved, the standards to be taken as the criteria for measurement
of their performance and contribution and deciding the course of action to be
followed.
The essence of MBO is participative goal setting, choosing course of actions
and decision making. An important part of the MBO is the measurement and
the comparison of the employees actual performance with the standards set.
Ideally, when employees themselves have been involved with the goal setting
and the choosing the course of action to be followed by them, they are more
likely
to fulfill their responsibilities.

Benefits of Appraisal

Perhaps the most significant benefit of appraisal is that, in the rush and bustle of daily
working life, it offers a rare chance for a supervisor and subordinate to have "time out" for a
one-on-one discussion of important work issues that might not otherwise be addressed.

Almost universally, where performance appraisal is conducted properly, both supervisors

and subordinates have reported the experience as beneficial and positive. Appraisal offers a
valuable opportunity to focus on work activities and goals, to identify and correct existing
problems, and to encourage better future performance. Thus the performance of the whole
organization is enhanced.

For many employees, an "official" appraisal interview may be the only time they get to have
exclusive, uninterrupted access to their supervisor. Said one employee of a large
organization after his first formal performance appraisal, "In twenty years of work, that's the
first time anyone has ever bothered to sit down and tell me how I'm doing." The value of this
intense and purposeful interaction between a supervisors and subordinate should not be
underestimated.

Motivation and Satisfaction

Performance appraisal can have a profound effect on levels of employee motivation
and satisfaction - for better as well as for worse. Performance appraisal provides
employees with recognition for their work efforts. The power of social recognition as
an incentive has been long noted. In fact, there is evidence that human beings will
even prefer negative recognition in preference to no recognition at all.

If nothing else, the existence of an appraisal program indicates to an employee that

the organization is genuinely interested in their individual performance and
development. This alone can have a positive influence on the individual's sense of
worth, commitment and belonging. The strength and prevalence of this natural
human desire for individual recognition should not be overlooked. Absenteeism and
turnover rates in some organizations might be greatly reduced if more attention were
paid to it. Regular performance appraisal, at least, is a good start.

Training and Development

Performance appraisal offers an excellent opportunity - perhaps the best that will
ever occur - for a supervisor and subordinate to recognize and agree upon individual
training and development needs. During the discussion of an employee's work
performance, the presence or absence of work skills can become very obvious even to those who habitually reject the idea of training for them.

Performance appraisal can make the need for training more pressing and relevant by
linking it clearly to performance outcomes and future career aspirations. From the
point of view of the organization as a whole, consolidated appraisal data can form a
picture of the overall demand for training. This data may be analyzed by variables
such as gender, department, etc. In this respect, performance appraisal can provide a
regular and efficient training needs audit for the entire organization.

Recruitment and Induction

Appraisal data can be used to monitor the success of the organization's recruitment
and induction practices. For example, how well are the employees performing who
were hired in the past two years? Appraisal data can also be used to monitor the
effectiveness of changes in recruitment strategies. By following the yearly data
related to new hires (and given sufficient numbers on which to base the analysis) it is
possible to assess whether the general quality of the workforce is improving, staying
steady, or declining.

Employee Evaluation
Though often understated or even denied, evaluation is a legitimate and major
objective of performance appraisal. But the need to evaluate (i.e., to judge) is also an

ongoing source of tension, since evaluative and developmental priorities appear to

frequently clash. Yet at its most basic level, performance appraisal is the process of
examining and evaluating the performance of an individual.
Though organizations have a clear right - some would say a duty - to conduct such
evaluations of performance, many still recoil from the idea. To them, the explicit
process of judgment can be dehumanizing and demoralizing and a source of anxiety
and distress to employees. It is been said by some that appraisal cannot serve the
needs of evaluation and development at the same time; it must be one or the other.
But there may be an acceptable middle ground, where the need to evaluate
employees objectively, and the need to encourage and develop them, can be
balanced.

Pitfalls of performance appraisal:

Performance appraisals are probably the one aspect of a job that employees, supervisors and
managers universally dread. There are, however, ways to improve the process and outcome
by avoiding common pitfalls. Some pitfalls of performance appraisals include supervisor
bias, rushed and ill-prepared evaluations and lack of communication in the appraisal
process.

The Problem of Recency Bias:

A performance appraisal evaluates an employee's work and habits over a set period
of time -- 12 full months for an annual appraisal -- yet some supervisors and
managers consider, or remember, only the employee's most recent work. Human
resource professionals refer to this pitfall as recency error or recency bias. To

prevent recency error, give employees feedback throughout the year and
consistently document informal feedback and commendations, as well as
disciplinary warnings and corrective action.

The performance appraisal is just one aspect of fostering a productive work

environment; however some managers tend to overlook the importance of yearround feedback because the primary focus is on the annual or periodic evaluation.
It's the year-round feedback that helps you compile information that will help you
prepare for your employee's performance appraisal.

Poor Preparation
Supervisors must prepare well in advance for the formal appraisal meeting with an
employee. A performance appraisal can directly impact an employee's career,
lifestyle and job satisfaction; therefore supervisors must spend the time and effort to
prepare a well thought out and accurate review.

Preparing for the appraisal meeting includes reviewing the employee's job
description, personnel file and anything else related to the employee's work history
and performance. Supervisors who do not adequately prepare for performance
appraisals are doing a disservice to employees and the employer if problems
subsequently persist and stellar achievements fail to be rewarded.

Communication Problems

A common pitfall of performance appraisals is lack of supervisor-employee

communication, especially if both parties are nervous or uneasy during the process.
A supervisor who is uncomfortable giving feedback in a positive and constructive
manner may need additional training to improve her communication and leadership
skills. A supervisor must know how to encourage two-way communication during
the appraisal meeting or risk turning a potentially productive experience into one that
leaves the employee frustrated and unappreciated.

Challenges of Performance Appraisal

An organization comes across various problems and challenges Of Performance Appraisal in

order to make a performance appraisal system effective and successful. The main
Performance Appraisal challenges involved in the performance appraisal process are:

Determining the evaluation criteria

Identification of the appraisal criteria is one of the biggest problems faced by the top
management. The performance data to be considered for evaluation should be
carefully selected. For the purpose of evaluation, the criteria selected should be in
quantifiable or measurable terms

Create a rating instrument

The purpose of the Performance appraisal process is to judge the performance of the
employees rather than the employee. The focus of the system should be on the
development of the employees of the organization.

Lack of competence
Top management should choose the raters or the evaluators carefully. They should
have the required expertise and the knowledge to decide the criteria accurately. They
should have the experience and the necessary training to carry out the appraisal
process objectively.

Errors in rating and evaluation

Many errors based on the personal bias like stereotyping, halo effect (i.e. one trait
influencing the evaluators rating for all other traits) etc. may creep in the appraisal
process. Therefore the rater should exercise objectivity and fairness in evaluating and
rating the performance of the employees.

Resistance
The appraisal process may face resistance from the employees and the trade unions
for the fear of negative ratings. Therefore, the employees should be communicated
and clearly explained the purpose as well the process of appraisal. The standards
should be clearly communicated and every employee should be made aware that
what exactly is expected from him/her.

POST PERFORMANCE INTERVIEW:

The performance appraisal of an employee should be supplemented by an interview which

serve as a feedback to him .It is called performance interview or post- appraisal interview. It
is the most critical part of the entire appraisal process .It is also the most fruitful part of it.

For this, the post- appraisal interview should be arranged soon after the appraisal process is
over as the interview will be less effective if the time gap between the two is more.
The participants in this interview are the concerned employee and his supervisor. The
purpose of such interview is to give details of the appraisal made and also to motivate and
guide the employee for self- improvement and self-development.

This interview should be arranged soon after the completion of appraisal work so that the
feedback supplied to the employee will be fresh and also useful to him. If such interview is
not arranged the appraisal will serve only administrative purpose but the more important
purpose of self- improvement of the employee will be neglected. This suggests the
importance of post appraisal interview hitch need to be conducted in a proper atmosphere
and also in the sprite of cooperation and understanding. It should not be a mere
formality.

Chapter 4
Analysis and Interpretation

Procter and Gamble Company give utmost importance to performance

appraisal. They think that even if performance appraisal is a time
consuming process it should be implemented. They are of this opinion
because this enhances the employee-employer relationship in the
organization to a great extent and helps in the retention of the
employees.

The company involves all the employees in appraisal process of the

organization. The company adopts 360 degree performance appraisal
system. This involves self appraisal, appraisal of peers, superiors
appraisal and subordinates appraisal. The appraisal process takes place
half yearly.

ANALYSIS ACCORDING TO QUESTIONNAIRE:

Tenure in the organization

75% of the employees have been in the organization have been working
for more than 5 years. 20% of the employees have been working for
around 3 to 5 years while only 5% people worked for less than 3 years.

Working Environment

65% of the employees think that the working environment of the

company is excellent while 25% think that its satisfactory whereas 10%
find it dissatisfactory.

Satisfaction with Management Policies:

80% of the employees are satisfied with the companys management

policies whereas 20% are not satisfied.

Genuinity of Appraisals:

80% of the employees responded positively with regards to genuinity of

appraisals while 20% thin that appraisals are not genuine.

Duration of Appraisals:

Appraisals are conducted semiannually/ half- yearly in the organization.

Involvement of employees in appraisal process:

All the employees agree that they are involved in the appraisal process in
the organization.

Right of appraising superiors:

80% of the employees agree that they are given the right to appraise
their superiors while 20% do not agree.

Bias in appraisals:

90% of the employees do not think that their superiors are biased
towards them in appraisals while 10% think otherwise.

Method of appraisal:

90% employees think that 360 degree appraisal method which the
company adopts is appropriate while 10% do not think so.

Contribution to the organizational success:

90%

employees

think

that

they

are

able

to

contribute

to

the

organizational success through their participation in the performance

appraisal.

Post performance interviews:

The organization conducts post performance interviews which the

employees agree is beneficial to them.

Findings:

It is found that majority of employees have been working in the

organization for more than 5 years and fair amount for 3-5 years as
they think that the working environment there is excellent.

It is found that majority of employees are satisfied with the

companys management policies. The others find it dissatisfactory

because the policies are not communicated to them clearly and

hence they find the working environment also dissatisfactory.

The majority employees agree that the appraisals are genuinely

conducted in the organization. The others who do not agree think
so because the standards of performance appraisal i.e its criteria is
not communicated clearly. Hence they do not know their exact
roles and expectation from the company.

The appraisals are conducted once in every six months in the

organization.

The company adopts 360 degree performance appraisal in the

organization. Hence all the employees are involved in the appraisal
process.

Majority employees are of the view that the 360 degree appraisal is
the appropriate method of appraising as the chances of favoritism
are less in this method. The remaining employees think that this
method is not wholly fool proof.

Most of the employees are satisfied as they think they are able to
contribute to the organizational success in some way or other
through

their

participation

in

the

appraisal

process

in

the

organization. The others disagree because they think the appraisals

which they do are not valued or considered.

The

post

performance

interviews

are

conducted

to

employees the suggestion to improve his or her performance.

guide

Chapter 5
Conclusion

Performance Appraisal is implemented so that the employees identify themselves with the
job and organization and this leads to improved motivation and enhanced task performance.
Participation in the appraisal process leads to reduced conflicts and stress, more commitment
to goals, better acceptance of results, and improved communication. It is not difficult to
explain why participation in the appraisal process motivates. It is almost a matter of
commonsense that human beings will take greater pride and pleasure in their work if they
are allowed participatory freedom in appraising their superiors and peers and will assure
them that are considered as assets in the organization.

Recommendations:

Management policies should be clearly communicated to the employees. The

policies should not clash with the plans of the company as it might cause role

confusion to the employees.

The performance standards should be clear to the employees. In this way they will
perform better in the anticipation of the further appraisals. This will be beneficial for
both employees and company in the long run.

After the standards are communicated the factors on which the employees will be
rated should also be clearly stated to the employees. This will prevent them from

being apprehensive of the raters.

The employees must be convinced that their decisions are valuable and they are also

an important part of the company.

The raters should also be given sufficient training.
Lastly in post performance interviews along with suggestions, the employees should
also be made aware why they were appraised so. This will make the employees feel
secured in the organization.

BIBLIOGRAPHY:
The concepts were referred from:

Human Resource Management-Text And Cases

By K ASWATHAPPA.

Human Resource management

By P SUBBA RAO.

WEBILIOGRAPHY

www.hrm guide.com
www.hr-topics.com
www.spendloversearch.org.

ANNEXURES
QUESTIONNAIRE

How long have you been working in the organization?

Less than 3 years
3-5 years
More than 5 years

How do you rate the working environment of the organization?

Excellent
Satisfactory
Dissatisfactory

Are you satisfied with the management policy of the company?

Yes
No

Do you think your appraisals are done genuinely?

Yes
No

What is the duration of appraisals in your company?

Quarterly
Half yearly

Annually

Are you involved in the appraisal process in the organization?

Yes
No

Are you provided with the right of appraising your superiors?

Yes
No

Do you think the superiors are biased towards you while appraising your
performance?
Yes
No

Do you the 360 degree appraisal method adopted by your company appropriate?
Yes
No

Do you think that you are able to contribute to the organizational success through
your participation in the performance process?
Yes
No

Are post performance interviews conducted in the organization?

Yes
No