A STUDY ON PERFORMANCE APPRAISAL SYSTEM IN STANLEY MATERIAL

AND METALLURGICAL PIPE AND TUBE MANUFACTURING INDUSTRY AT

COIMBATORE

CHAPTER I

INTRODUCTION
HUMAN RESOURCES MANAGEMENT:
Human Resource Management (HRM) is the function within an organization that
focuses on recruitment of, management of, and providing direction for the people who work in
the organization. Human Resource Management can also be performed by line managers.
Human Resource Management is the organizational function that deals with issues
related to people such as compensation, hiring, performance management, organization
development, safety, wellness, benefits, employee motivation, communication, administration,
and training.
Human resource management (HRM) is the strategic and coherent approach to
the management of an organization's most valued assets - the people working there who
individually and collectively contribute to the achievement of the objectives of the business. The
terms "human resource management" and "human resources" (HR) have largely replaced the
term "personnel management" as a description of the processes involved in managing people in
organizations. In simple words, HRM means employing people, developing their capacities,
utilizing, maintaining and compensating their services in tune with the job and organizational
requirement.
HUMAN RESOURCES DEVELOPMENT:
Human Resource Development (HRD) is the framework for helping employees
develops their personal and organizational skills, knowledge, and abilities. Human Resource
Development includes such opportunities as employee training, employee career development,
performance management and development, coaching, mentoring, succession planning, key
employee identification, tuition assistance, and organization development.
The focus of all aspects of Human Resource Development is on developing the
most superior workforce so that the organization and individual employees can accomplish their
work goals in service to customers.
 Human Resource Development can be formal such as in classroom training, a college
course, or an organizational planned change effort. Or, Human Resource Development can be
informal as in employee coaching by a manager. Healthy organizations believe in Human
Resource Development and cover all of these bases.
PERFORMANCE APPRAISAL SYSTEM:
Performance appraisal refers to all the formal procedures used to evaluate an individual,
his contributions and potential. In other words, it is to plan and measure the performance of an
individual in terms of the requirement of the job or it is a process of finding out how effective the
organization has been at hiring and placing an employee.
Performance appraisal is a formal system of review and evaluation of individual or team
task performance. While evaluation of team performance is critical when teams exist in an
organization, the focus of performance appraisal in most firms remains on the individual
employees. Regardless of the emphasis, an effective appraisal evaluates accomplishments and
initiates plans for development, goals and objectives.

CONCEPT OF PERFORMANCE APPRAISAL SYSTEM

INTRODUCTION:
Appraising the performance of individuals, groups and organizations is a common
practice of al l societies. While in some instances these appraisal processes are structured and
formally sanctioned, in other instances they are an informal and integral part of daily activities.
Thus, teachers evaluate the performance of students, bankers evaluate the performance of
creditors, parents evaluate the behavior of their children, and all of us, consciously or
unconsciously evaluate our "own actions from time to time. In social interactions, performance is
conducted in a systematic and planned manner to achieve widespread popularity in recent years.

MEANING:
Performance appraisal is a method of evaluating the behavior of employees in the work
spot, normally including both the quantitative and qualitative aspects of hob performance.
Performance here refers to the degree of accomplishment of the tasks that make up an
individual's job. It indicates how well an individual is fulfilling the job demands. Often the term
is confused with effort, but performance is always measured in terms of results and not efforts.
Some of the important features of performance appraisal given, they are:

 Performance appraisal is the systematic description of an employee's job- relevant strengths

and weaknesses.
 The basic purpose is to find out how well the employee is performing the job and establish a
plan of improvement.
 Appraisals are arranged periodically according to a definite plan.
 Performance appraisal is not job evaluation. Performance appraisal refers to how well
someone is doing the assigned job. Job evaluation determines how much a job is worth to
the organization and, therefore, what range of pay should be assigned to the job.

USE OF PERFORMANCE APPRAISAL:

 Performance appraisal is helpful in assessing a firms human resources data must be
available that describe the promobility and potential of all employees.
 A well designed appraisal system provides a profile of the organization's human
resource strengths and weaknesses to support this effort.
 Performance evaluation ratings may be helpful in predicting the performance of job
applicants.
 Performance appraisal will point out employee specific needs for training and
development.
 Performance appraisal is useful in career planning and development.
 Performance appraisal results provide a basis for rational decisions regarding
compensation programmers.
 Performance appraisal data are also frequently used for decisions in several areas of
internal employee relations, including promotion, demotion, termination, lay-off. And
transfer.

 Performance appraisal is useful in assessment of employee potential.

 Performance appraisal can be used to determine whether HR programmes such as

selection, training, and transfers have been effective or not.
OBJECTIVES OF PERFORMANCE APPRAISAL:
Performance appraisal aims at attaining the different objectives, they are
 To create and maintain a satisfactory level of performance.
 To contribute to the employee growth and development through training, self and
management development programmers.
 To help the superiors to have a proper understanding about their subordinates
 To facilitate fair and equitable compensation based on performance.
 To facilitate for testing and validating selection tests, interview techniques through
comparing their scores with performance appraisal ranks.
 To provide information for making decisions regarding lay off, retrenchment etc.
 To ensure organizational effectiveness through correcting employee for standard and
improved performance, and suggesting the change in employee behavior.

APPRAISAL PROCESS:
Each step in the process is crucial and is arranged logically. Many organizations make
every effort to approximate the ideal process, resulting in first-rate appraisal systems.
Unfortunately, many others fail to consider one or more of the steps and, therefore have less-
effective appraisal system.

Objectives of

Performance appraisal

Establish job

Expectations

Design an appraisal

Programme
1. Objectives of Appraisal:
Objectives of appraisal include effecting promotions and transfers, assessing training
needs, awarding pay increases, and the like. The emphasis in all these is to correct the problems.
2.Establish job expectations:
The second step in the appraisal process is to establish job expectations. This includes
informing the employee what is expected of him or her on the job.
3. Design appraisal programme:
Designing an appraisal programme posses several questions which need answers. They
are (i) Formal versus informal appraisal; (ii) Whose performance is to be assessed? (iii) Who are
the raters? (iv)What problems are encountered? (v) How to solve the problems? (vi) What should
be evaluated? (vi i ) When to evaluate? (vi ii ) What methods of appraisal are to be used?
4. Performance Interview:
Performance interview is another step in the appraisal process. Once appraisal has been
made of employees, the raters should discuss and review the performance with the rates, so that
they will receive feedback about where they stand in the eyes of superiors.

5. Use of Appraisal data:

The final step in the evaluation process is the use of evaluation data. The data and
information generated through performance evaluation must be used by the HR department.

METHODS OF PERFORMANCE APPRAISAL:

With the evaluation and development of appraisal system, a number of methods or

techniques of performance appraisal have been developed.The important among them.

Traditional Methods

1) Graphic Rating Scales:

Graphic rating scales compare individual performance to an absolute standard. In this

method, judgments about performance are recorded on a scale. This is the oldest and widely used
technique. This method is also known as linear rating scale or simple rating scale. The appraisers
are supplied with printed forms, one for each employee.

These forms contain a number of objectives, behavior and trait - based Qualities and
characters to be rated like quality and volume of work, job knowledge, dependability, initiative,
attitude etc., in the case of workers and analytical ability, creative ability, initiative, leadership
qualities, emotional stability in the case of managerial personne

l. These forms contain rating of scales. Rating scales are of two types, viz., continuous
rating scale and discontinuous rating scales. In continuous order like o, 1, 2, 3, 4 and 5 and in
discontinuous scale the appraiser assigns the point to each degree. The points given by the rater
know performance regarding each character. The points given by the rater to each character are
added up to find out the overall performance. Employees are ranked on the basis of total points
assigned to each one of them.
One reason for the popularity of the rating scales is its simplicity, which permits many
employees to be quickly evaluated. Such scales have relatively low
Design cost and high in case of administration. They can easily pinpoint significant dimensions
of the job. The major drawback to these scales is their subjectivity and low reliability. Another
limitation is that the descriptive words often used in such lies may have different meanings to
different raters.

2) Ranking Method:

Under this method the employees are ranked from best to worst on some
characteristics. The rater first finds the employee with the highest performance and the
employees with the lowest performance in that particular job category and rates the former as the
best and the later as the poorest.

Then the rater selects the next highest and next lowest and so on until he rates all
the employees in that group. Ranking can be relatively easy and inexpensive, but its reliability
and validity may be open to doubt. It may be affected by rater bias or varying performance
standards.

Ranking also means that somebody would always be in the backbench. It is possible
that the low ranked individual in one group may turnout to be superstar in another group. One
important limitation of the ranking method is that size of the different between individuals is not
well defined. For instance, there may be little difference between those ranks third and fourth.

3) Paired Comparison Method:

This method is relatively simple. Under this method, the appraiser ranks the employees by
comparing one employee with all other employees in the group, one at a time. As illustrated,
this method results in each employee being given a positive comparison total and a certain %age
total positive evaluation.

4) Forced Distribution Method:

The rater may rate his employees at the higher or at the lower end of the scale under the
earlier methods. Forced distribution method is developed to prevent the raters from rating too
high or too low. Under this method, the rater after assigning the points to the performance of
each employee has to distribute his ratings in a pattern to conform to normal frequency
distribution.

Thus, similar to the ranking technique, forced distribution requires the raters (supervisors)
to spread their employee evaluation in a prescribed distribution. This method eliminates central
tendency and leniency biases. However, in this method employees are placed in certain ranked
categories but not ranked within the categories.

Quite often work groups do not reflect a normal distribution or individual performance.
This method is based on the questionable assumption, as group of employees will have the same
distribution of excellent, average and poor performers.

If one department has all outstanding employees, the supervisor would find it extremely
difficult to decide who should be placed in the lower categories. Difficulties can also arise when
the raters most explain to the employee why he was placed in one grouping and others were
placed in higher groupings.

5) Checklist Methods:

The Checklist is a simple rating technique in which the supervisor is given a list of
statement or words and asked to check statements representing the characteristics and
performance of each employee. There are three types of checklist methods, viz, simple checklist,
weighted checklist and forced choice method.

6) Critical Incident Method:

Employees are rated discontinuously, i.e., once in a year or six months under the earlier
methods. The performance rated may not reflect real and overall performance, as the rater would
be serious about appraisal method, i.e., critical incident method has been developed.
 Under this method, the supervisor continuously records the critical incidents of the
employee performance or behavior relating to all characteristics (both positive and negative) in a
specially designed notebook. The supervisor rates the performance of his subordinates on the
basis of notes taken by him.
Since the critical incident method does not necessarily have to be a separate rating
system, it can be fruitfully employed as documentation of the reasons why an employee was
rated in a certain way.
The critical incident method has the advantage of being objective because the rater
considers the records of performance rather than the subjective points of opinion.

7) Essay or Free From Appraisal:

This method requires the manager to write a short essay describing each employee's
performance during the rating period. This format emphasizes evaluation of overall
performance, based on strengths weakness of employee performance, rather than specific job
dimensions. By asking supervisors to enumerate specific examples of employee behavior, the
essay technique minimizes supervisory bias and halo effect.

8) Group Appraisal:
Under this method, an employee is appraised by a group of appraisers. This group
consists of the immediate supervisor of the employee, to other supervisors who have close
contact with employee's work, manager or head of the department and consultants
The head of the department or manager may be the chairman of the group and the immediate
supervisor may act as the coordinator for the group activities. This group uses any one or
multiple techniques discussed earlier. The immediate supervisor enlightens others members
about the job characters, demands, standards of performance etc.
Then the group appraises the performance of the employee, compares the actual performance
with standards, find out the deviations, discusses the reasons therefore, suggests ways for
improvement of performance, prepares action plans, studies the need for change in job analysis
and standards and recommends change, it necessary. This method is widely used for purpose of
promotion, demotion and retrenchment appraisal.

9) Confidential Report:
 Assessing the employee's performance confidentially is a traditional method of
performance appraisal. Under this method, superior appraises the performance of his
subordinates based on his observations, judgments and institutions. The superior keeps his
judgment and report confidentially. In other words the superior does not allowed the employee
to know the report and his performance. Superior writes the report about his subordinates,
strengths. Weakness, intelligence, attitude to work, sincerity, commitment, punctuality,
attendance, conduct, character, friendliness, etc,
Though confidential report is a traditional method, most of the public sector organizations
still follow this method in appraising the employee's performance. This method suffers from a
number of limitations.
MODERN METHODS
1) Behaviorally Anchored Rating Scales (BARS):
The Behaviorally Anchored Rating Scales (BARS) method combines elements of the
traditional rating scales and critical incidents methods. Using BARS, job behaviors from critical
incidents - effective and ineffective behaviors are described more objectively. The method
employs individuals who are familiar with a particular job to identify its major components.
They then rank and validate specific behaviors for each of the components. BARS
require considerable employee participation; its acceptance by both supervisors and their
subordinates may be greater. Proponents of BARS also claim that such a system differentiates
among behavior, performance and results, and consequently is able to provide a basis for setting
developmental goals for the employee.
Because it is job - specific and identities observable and measurable behavior, it is more
reliable and valid method for performance appraisal.
2) Assessment Centre:
This method of appraising was first applied in German Army in 1930. Later business and
industrial houses started using this method. This is not a technique of performance appraisal by
itself. In fact it is a system or organization, where assessment is done by several individuals and
also by various experts by using various techniques.
In this approach individual from various departments are brought together to spend two or three
days working on an individual or a group assignment similar too the ones they'd be handling
when promoted. All assess get an equal opportunity to show their talents and capabilities and
secure promotion based on merit. An assessment model is shown below.
Human Resource Accounting deals with cost of and contribution of human resource to
the organization. Cost of the employee includes cost of manpower planning, recruitment,
selection, induction, placement, training, development, wages and benefits etc. employee
contribution is the money value of employee service which can be measured by labour
productivity or value added by human resources.
3) Management by objectives:

Although the concept or management by objectives was advanced by Peter F.Duckers

way back in 1954, it was described only recently as 'large range' in performance appraisal.
Refinements brought out by George Odione, Valentines, Humble and others have enriched the
concept and made it more acceptable all over the globe as an MBO in their work settings. Some
of the companies which implemented MBO reported excellent results, others disappointments,
and many in decisions. Started briefly, MBO is a process whereby the superiors and subordinate
managers of an organization j oi nt l y identify its common goals, define each individual's major
areas of responsibility in terms of results excepted of him, and use these measures of guides for
operating the unit and assessing the contribution of its members. Generally, the unit and
assessing the contribution of its members.
■ The subordinate and superior jointly determine goals to be accomplished during the
appraisal period and what level of performance is necessary for the subordinate to
satisfactory achieve specific goals.
■ During the appraisal period the superior and subordinate update and later goals as
necessary due to changes in the business environment.

4) Psychological Appraisal:

Psychological appraisal are conducted to asses the employee potential, Psychological

appraisal consist of
 In - depth interviews
 Psychological tests
 Consultations and discussions with the employee
 Discussions with the superior's sub-ordinates and peers
  (e) Reviews of others evaluations.

5) Counseling:

After the performance of the employee is appraised, the superior should inform
the employee about the level of his performance, the reason for the same, need for and
the methods of improving the performance. The superior should counsel the employee
about his performance and the methods of improving it.
Counseling is a planned, systematic intervention in the life of an individual who
is capable of choosing the goal and the direction of his development. Thus, the
purpose of counseling is to help the employee aware of his own performance, his
strengths and weakness, opportunities availabilities available for performance
counseling can be done in the form of performance interview by the superior.
THE POST APPRAISAL INTERVIEW:
The post appraisal interview has been considered by most of the organizations, as well as
employees, as the most essential part of appraisal system. This interview provides the employee
the feedback information, and an opportunity to appraiser to explain the employee his rating, the
traits and behavior he has taken into consideration for appraisal etc.
It also gives the opportunity to employee to explain his views about the rates, standards
or goals, rating scale, internal and external environment causes for low level of performance, his
resources responsible for performance etc. further it helps both the parties to review standards,
set new standards based on the reality factors, and helps the appraiser to offer his suggestions,
help, guide and coach the employee for his advancement. Thus, the post appraisal interview is
designed to achieve the following objectives.
 To help employees do a better job by clarifying what is expected of them;
 To plan opportunities for development and growth;
 To strengthen the superior -subordinate working relationship by developing a mutual
agreement of goals;
 To provide an opportunity for employees to experience themselves on
performance related issues.
Relating Performance Appraisal to Rewarding:
Management should recognize and performance. The forms of recognizing and rewarding
performance include: (a) Private and public praise, (b) Written commendation, (c) published
commendation, (d) increased autonomy, (e) change in job title, (f) Status symbols like office
space, furnishings, (g) performance bonuses, (h) salary increases, (i) promotion in grade, or
increase in responsibilities and (j) various forms of supplementary compensation. Managers
should match the rewards both with performance and with the perception and needs of the
employee.

6) Managerial Appraisal:

It is relatively easy to appraise the performance of technical or operative employees

compared to managerial personnel. This is because; the performance of operative employees can
be measured quantitatively, whereas the performance of managers cannot be determined
quantitative terms. Harold Koontz has developed a concept of managerial functions, viz.,
planning, organizing, leading motivating, staffing and controlling. Performing a number of or
series of activities can perform each of these functions. For example, performing staffing
functions requires performing a series of activities like analyzing jobs of his department,
planning for human resources, deciding upon internal and external recruitment. Thus each
function and sub functions of manager are elaborated into a series of activities. The checklist
contain the questions in these areas is prepared with a five degree rating scale, i.e., externally
poor performance, neither poor nor fair performance and externally fair performance. Thus this
technique measures the performance of managers in managing organizational environment.

IMPORTANCE OF PERFORMANCE APPRAISAL:

For many organizations the primary goal of an appraisal system is to improve

individual and organizational performance. There may be other goals, however. In fact,
performance appraisal data are potentially valuable for virtually every human resource
functional area

SYSTEM OF PERFORMANCE APPRAISAL:

PERFORMANCE APPRAISAL IS A NINE-STEP PROCESS:

 Establish performance standards.
  Communicate standards/expectations to employee.
 Measure actual performance due to the environment influences.
 Adjust the actual performance due to the environmental influences.
 Compare the adjusted performance what that of others and previous.
 Compare the actual performance with standards and find out deviations, if any.
 Communicate the actual performance to the employee concerned.
 Suggest changes in job analysis and standard, if necessary.
 Follow-up performance appraisal report.

At the first stage, performance standards are established based on the job description
and job specification. The standard should be clear, objective and incorporate all the factors.
The second stage is to inform these standards to all the employees including appraisers.
The third stage is following the instructions given for appraisal, measurement of
employee performance by the appraisers through observations, interviews, records and reports.

Fourth stage is finding out the influence of various internal and external factors on
actual performance. The influence of these factors may be either inducing or hindering the
employee performance. The measured performance may be adjusted according to the influence
of external and internal factors. The performance derived at this stage may be taken actual
performance.

Fifth stage is comparing the actual performance with that of other employees and
pervious performance of the employee and others. This given an idea where the employee to the
influence of external and internal factors. The performance derived at this stage may be taken
actual performance.

Sixth stage is comparing the actual performance with the standards and finding out
deviations. Deviations may be positive or negative. If employee's performance is more than
standards, it is positive deviation and vice-versa is negative deviation.
 Seventh stage is communicating, the actual performance of the employee and other
employees doing the same job and discuss with him about the reasons for the positive or
negative deviations from the pre-set standards as the case may be.

Eighth stage is suggestions necessary changes in standards in standards, job analysis, and
internal and external environment.

Ninth stage is follow-up of performance appraisal report. This stage includes guiding,
counseling, coaching and directing the employee or making arrangements for training and
development of the employee in order to ensure improved performance. If actual performance
is very poor and beyond the scope of improvement it is necessary to take steps for
demotion or retrenchment or any other suitable measure.

PROBLEMS IN PERFORMANCE APPRAISAL:

 Performance appraisal has come under a heavy barrage of criticism. The list of the
problems that have been associated with performance appraisal are as follows:
 A potential weakness of traditional appraisal methods is that they lack objectivity.
 A huge challenge that impedes an effective performance evaluation is the bias, which can
be either positive or negative.
 Sometimes halo error occurs when a manager generalizes one positive performance
feature or incident to all aspect of employee performance.
 Leniency: - Giving an undeserved high performance appraisal rating to an employee.
 Strictness: - Being unduly critical of an employee's work performance.

ESTABLISHMENT OF PERFORMANCE APPRAISAL CRITERIA:

The most common appraisal criteria are traits, behaviors, competencies, goal
achievement, and improvement potential. The main objective of establishment of performance
criteria is to identify the aspects of a person's performance that an organization should evaluate.

• Traits: -
 Certain employee traits such as attitude, appearance, and initiative are the basis for
some evaluations.

• Behaviors: -
When an individual's task outcome is difficult to determine, organizations may
evaluate the person's task related behavior or competencies. If certain behaviors result in
desired outcomes, there is merit in using them in the evaluation process.

• Competencies: -
This includes a broad range of knowledge, skills, traits, and behaviors that may be
technical in nature, relate to interpersonal skills or be business oriented.

• Goal achievement: -
If organizations consider ends more important than means, goal achievement
outcomes become an appropriate factor to evaluate.
• Improvement potential: -
When organizations evaluate their employees performance, many of the criteria used
focus on the past. From a performance management view point the problem is that you cannot
change the past. Unless a firm takes further steps, the evaluation data become merely historical
documents. Therefore firms should emphasize the future, including the behaviors and outcomes
needed to develop the employee, and in the process achieve the firm's goals. This involves an
assessment of the employee's potential.

CHARACTERISTICS OF AN EFFECTIVE APPRAISAL SYSTEM:

The basic purpose of a performance appraisal system is to improve performance of individuals,
teams, and the entire organization. The system may also serve to assist in the making of
administrative decisions concerning pay increases, transfers, or terminations. In addition, the
appraisal system must be legally defensible. Organizations should seek an accurate assessment of
performance that permits the development of a plan to improve individual and group performance.
The following factors assist in accomplishing these purposes;
• Job related criteria: -
Job relatedness is perhaps the most basic criteria in employee performance appraisal. More
specifically, evaluation criteria should be determined through job analysis.
• Performance expectations: -
Managers and sub-ordinates must agree on performance expectations in advance of the appraisal
period. On the other hand, if employees clearly understand the expectations, they can evaluate their
own performance and may timely adjustments as they perform their jobs without having to wait
for the formal evaluation review.
• Standardization: -
Firm should use the same evaluation instrument for all employees in the same job
category- who work for the same supervisor. Supervisors should also conduct appraisals
covering similar periods for these employees. Regularly scheduled feedback sessions and
appraisal interviews for all employees are essential.
 Trained appraisers: -
The individual or individuals who observe at least a representative sample of job
performance normally have the responsibility for evaluating employee performance. This person
is often the employee's immediate supervisor. Training should be given to these appraisers to
ensure accuracy and consistency. A training module posted on the internet or company intranet may
serve to provide information for managers as needed.
• Continuous open communication: -
Most employees have a strong need to know how well they are performing. A good
appraisal system provides highly desired feedback on a continuing basis. There should be few
surprises in the performance review.
• Performance reviews: -
A performance review allows them to detect any errors or omissions in the appraisal,
or an employee may simply disagree with the evaluation and want to challenge it. Constant
employee performance documentation is vitally important for accurate performance appraisal.
• Due process: -
Ensuring due process is vital. If the company does not have a formal grievance procedure, it
should develop one to provide a employees an opportunity to appeal appraisal results that they
consider inaccurate or unfair. They must have a procedure for pursuing their grievances and
having them addressed objectively.
Appraisal Process Followed In Delta Paper Mills:
In delta paper mills they are following one of traditional method of performance
appraisal, that is critical incident method. But it is not helpful for the employees, because it is
older method.
Critical Incident Technique:

This, too, is a type of appraisal for the employee alone. Here, the employee's best and
worst incidents of behavior are analyzed annually. These events are the ones that are the most
critical in appraising the employee.

NEED FOR THE STUDY

Appraising the performance of individuals, groups and organizations is a common practice of all
societies. While in some instances these appraisal processes are structured and formally
sanctioned, in other instances they are an informal and integral part of daily activities.
Consciously of unconsciously evaluate our own actions from time to time. In social interactions,
performance is conducted a systematic and planned manner to achieve widespread popularity in
recent years.
Performance appraisal is essential to understand and improve the employee's
performance through HRD. In fact, performance appraisal is the basis fore HRD. It was viewed
performance appraisal was useful to decide upon employee promotion / transfer salary
determination and the like. But the recent developments in human resources management
indicate that performance appraisal is the basis for employee development. Performance
appraisal indicates the level of desired performance level, level of actual performance and the
gap between these two. This gap should be bridged through human resources development
techniques like training executive development etc.
According to the past survey it was noticed that the performance appraisal system
in this company was not up to the mark. Hence there would be scope for giving few suggestions
as per my knowledge to improve the performance appraisal system which was quite essential for
the better performance of the employees.
IMPORTANCE OF THE STUDY
Performance appraisals provide employees and managers with opportunities to discuss areas in
which employees excel and those in which employees need improvement. Performance
appraisals should be conducted on a regular basis, and they need not be directly attached to
promotion opportunities.

Personal Attention
During a performance appraisal review, a supervisor and an employee discuss the employee's
strengths and weaknesses. This gives the employee individual face time with the supervisor and
a chance to address personal concerns.
Feedback
Employees need to know when their job duties are being fulfilled and when there are issues with
their work performance. Managers should schedule this communication on a regular basis.
Career Path
Performance appraisals allow employees and supervisors to discuss goals that must be met to
advance within the company. This can include identifying skills that must be acquired, areas in
which one must improve, and educational courses that must be completed.

Employee Accountability
When employees know there will be regularly scheduled evaluations, they realize that they are
accountable for their job performance.
Communicate Divisional and Company Goals
Besides communicating employees' individual goals, employee appraisals provide the
opportunity for managers to explain organizational goals and the ways in which employees can
participate in the achievement of those goals.
OBJECTIVES OF THE STUDY
PRIMARY OBJECTIVE
 To study the performance appraisal of employees at STANLEY MATERIAL AND
METALLURGICAL PIPE AND TUBE MANUFACTURING INDUSTRY AT
COIMBATORE
SECONDARY OBJECTIVE
 To study the purpose of performance appraisal conducted at STANLEY MATERIAL
AND METALLURGICAL PIPE AND TUBE MANUFACTURING INDUSTRY
  To understand the opinion of employees towards performance appraisal at STANLEY
MATERIAL AND METALLURGICAL PIPE AND TUBE MANUFACTURING
INDUSTRY
 To identify the effect of performance appraisal on individual and organizational
development.
 To understand the existing relationship between management and employees.
 To identify ways to improve the existing performance appraisal system
SCOPE OF THE STUDY
 The management can identify the employee’s opinion of the existing performance
appraisal system.
 The study can be used to make the present appraisal system more effective and satisfied
among employees.
 It could be used to identify training and development needs for the individual and the
organization as a whole.

LIMITATIONS OF THE STUDY

 The period of study is only for about 2 months, which is a major constraint.
 The perception bias or attitude of the respondents may also act as hurdles to the study.
 The study is only confined to performance appraisal.
 The study cannot be oriented with all HRM practices followed by STANLEY
MATERIAL AND METALLURGICAL PIPE AND TUBE MANUFACTURING
INDUSTRY
 Some of the questionnaires were incomplete.
 The result of the study are subject to bias and prejudices of the respondents
 Unwillingness and inability of the respondent to provide true information

CHAPTER II
 REVIEW OF LITERATURE
REVIEW OF LITERATURE
1. A performance appraisal is conducted on an annual basis for existing employees whereas
for trainee and new recruits it is done on quarterly basis in many organizations. Here
author studies about the multidimensional nature of job where the nurse manager gives
rating to different job of nursing process. Thus, Employees who have relatively less
competition or lenient appraisers have higher appraisal than to equally competent
employee (Rajput, et al, 2015).
2. The survey was made on educational institution of Takoradi, Ghana, where author study
was focused on employee/staff perceptions on performance appraisal method, biases or
error related to the approach. Perception influence people’s judgment and attitudes
towards particular thing, therefore the staff might hold different opinions about the
performance appraisal system in the organization. The research on this concept was
analyzed, using different method such as descriptive statistics and the results of the study
says that employees are affected by the Performance appraisal system and are affected by
major error (Boachie-Mensah, et al, 2014).
3. Samuel Obino Mokaya, Jacqueline Lovega Musau, Juma Wagoki and Kabare
Karanja (2013), studied on “Effects of Organizational Work Conditions on Employee
Job Satisfaction in the”, and assessed on the effects of organizational work conditions,
remuneration and promotion systems on employee job satisfaction .a study found that the
employees are satisfied with the conducive working conditions, satisfactory remuneration
package, and a fair, equitable and satisfactory promotion system. The study suggested
that management should provide equal opportunities for training and development to its
employees to help improve their capacities for effective help improve their capacities for
effective delivery and satisfaction. Also management should form committee to oversee
promotion other than relying on manager’s decision alone, regularly review employees’
salaries and benefits to ensure that they are commensurate to their skills and work
experience, comparable to the general industry practices which would boost employees
morale.
1. Bindu Anto Ollukkaran and Rupa Gunaseelan (2012) in their study on “A Study on
the Impact of Work Environment on Employee Performance” examined on the work
 environment factors which have an influence on employee performance. The study found
that training facilities, monetary package, impact of rewards and recognitions, safe
working conditions, job security influences the employee performance. Also study
suggested that management should consul employees before decision making, encourage
their employees to experiment new methods and try out creative ideas, organise more
training development programs for improving the performance of employees
2. . Anitha R. (2011), in her study entitled, “A study on job satisfaction of paper mill
employees with special reference to Udumalpet and Palani Taluk”, reflected that only
44% of the employees are satisfied with the working conditions, 31% of them with the
welfare facilities, 44% of them with the accident compensation, and 42% of them are
satisfied with the rewards provided and 52% of them are satisfied with the grievance
handling procedure. The organization may give importance to certain factors such as
Canteen, rest room facilities, rewards, recognition and promotion policy so that
satisfaction of the employees may be improved further.
3. Mosammod Mahamuda Parvin and M. M. Nurul Kabir (2011) in their study on
“Factors affecting employee job satisfaction of Pharmaceutical Sector” evaluated job
satisfaction of employees in different pharmaceutical companies. It focuses on the
relative importance of job satisfaction factors and their impacts on the overall job
satisfaction of employees. It also investigates the impacts of pharmaceutical type, work
experience, age, and sex differences on the attitudes toward job Satisfaction. The result
shows that salary, efficiency in work, fringe supervision, and co-worker relation are the
most important factors contributing to job satisfaction.
4. Abdulla et al. (2011) examines the relationship between job satisfaction and
environmental and demographic factors and found environmental factors (such as salary,
promotion and supervision) better predictors of job satisfaction as compared to 75
demographic factors (such as sex, age and education level as well as other factors related
to their work experience, such as job level, shift work, and years of experience).
5. Lai (2011) argue that an efficient compensation system result in organizational growth
and expansion and exhibit a positive relationship between employee satisfaction and job-
based wages, skill-based pay and performance-based pay. The study concludes that the
intrinsic factors of motivation, including recognition, work, career opportunities,
 professional growth, responsibility, good feeling about the organization that has a
significant correlation with job satisfaction, while hygiene (external) factors have no
significant relationship with job satisfaction of employees satisfaction.
6. H.C. Shiva Prasad(2010) in this research paper authers have done work to dheck the
performance of indian software professionals (SPs) Data were collected from 441
software and senior software engineers from eight Indian software firms. The team
leaders assessed the performance of software and senior software engineers on 16 items.
The exploratory and confirmatory factor analyses of scores on 16 items of the instrument
suggest six dimensions of performance. They are work-efficiency, personal
resourcefulness, inter- and intra-personal sensitivity, productivity orientation, timeliness,
and business intelligence.

7. Hanif and Kamal (2009), argues that if companies makes favorable strategies and rules
for the employees related to pay scales, policy development, staff input, and the work
environment, may lead to employee engagement, satisfaction and increased employee
loyalty with the organization because satisfied employees are more likely to be
welcoming and attentive which attracts customers and the employees not satisfied with
the job can lead to customer unhappiness.
8. Shirvastava Arunima and Purang Pooja (2009) in their study entitled, “Employee
Perceptions of Job Satisfaction: Comparative Study on Indian Banks”, examined the job
satisfaction level of a public sector and private sector bank employees in India. Ttest and
qualitative analysis is used to stud the differences in employee attitudes. The results of
the study indicated that the means of the public and private banks were significantly
different from each other. It was found that private sector bank employees perceive
greater satisfaction with pay, social and growth aspects of job as compared to public
sector bank employees. On the other hand, public sector bank employees have expressed
greater satisfaction with job security as compared to private sector bank employees.
9. Srivastava A. K. (2008), in the study on “Effect of Perceived Work Environment on
Employees’ Job Behaviour and Organizational Effectiveness”, examined the effect of
two constituents of work environment (i.e. physical and psychosocial on employees’ job
satisfaction and performance, and organizational effectiveness of 360 technical
 supervisors and operating core personnel. The analyses revealed that participants who
perceived their work environment as to be adequate and favourable scored comparatively
higher on the measures of job satisfaction, performance, and perceived organizational
effectiveness. The two constituents of work environment were also found causing
significant variance in employees’ job behaviour and their perception of organizational
effectiveness.
10. Selvamani and Rani (2008), opined that Dairy Co-operatives and Development of Rural
Women in the Era of Globalisation, identified relation between dairy cooperatives and
women. According to their study highlighted women participation, problem faced by
dairy co-operatives for development of rural women in the globalization environment. In
order to survive and sustain in the new economic era of liberalization dairy co-operatives
require both financial assistance and technical assistance from central and state
governments, state and national level co-operative organizations, incase the co-operatives
need to serve in the new economic era of globalization.
11. Narcisse and Harcourt (2008) in their article titled, “Employee fairness perceptions of
performance appraisal: a Saint Lucian case study” identified the essential factors which
influence employees’ fairness perceptions of their performance appraisals, and determine
the applicability of these factors to the experiences of employees in a Saint Lucian public
service organization. Fairness perceptions are of three main types. First, distributive
justice refers to the perceived fairness of an actual appraisal rating. Second, procedural
justice refers to the perceived fairness of procedures used to determine the appraisal
rating. Third, interactional justice refers to the perceived fairness of the rater’s
interpersonal treatment of the ratee during the appraisal process.
12. Sanwong (2008) in his article entitled, “The Development of a 360- Degree Performance
Appraisal System: A University Case Study”, examined the functioning of an innovative
360-degree performance appraisal system among a sample of 75 employees at a Thai
university. The data for the system came from supervisors, colleagues, clients and junior
staff as well as from the employees themselves. The validity of the system was examined
on two occasions. While all employees were satisfied with the system, support and
clerical staff in the university were more satisfied than academic staff. A number of
 suggestions were made for improving the 'working' of such a system in a university
environment.
13. Wilson and Jones (2008) in their article titled “Reducing job irrelevant bias in
performance appraisals: compliance and beyond” state that job-irrelevant discrimination
seems as ubiquitous as the performance appraisals in which it is commonly detected. This
paper explores both compliance-based and more proactive approaches that deal with the
various possible sources of discrimination in performance appraisal ratings. The
suggestions lead to a code of practice for performance management in firms across
cultures and national boundaries.
14. Doleh and Weir (2007) Jamal Abu-Doleh and David Weir, “Dimensions of
performance appraisal systems in Jordanian private and public organizations”, Int.
J. of Human Resource Management, Vol. 18, No.1, 2007, pp.75–84 52 in their article
titled “Dimensions of performance appraisal systems in Jordanian private and public
organizations” explore the attitudes of human resource managers working in the
Jordanian private and public organizations towards the functions of their performance
appraisal systems, and to the ways in which performance appraisal systems are
implemented. A self-completion questionnaire was the main data collection method used
in this study
15. Kuvaas (2006) in his article titled “Performance appraisal satisfaction and employee
outcomes: mediating and moderating roles of work motivation” explored alternative
relationships between performance appraisal satisfaction and employee outcomes in the
form of self-reported work performance, affective organizational commitment and
turnover intention. A cross-sectional survey of 593 employees from 64 Norwegian
savings banks showed that performance appraisal satisfaction was directly related to
affective commitment and turnover intention. The relationship between performance
appraisal satisfaction and work performance, however, was both mediated and moderated
by employees’ intrinsic work motivation. The form of the moderation revealed a negative
relationship for employees with low intrinsic motivation and a positive relationship for
those with high intrinsic motivation. Implications for practice and directions for future
research are discussed
16. Rafikul Islam(July 8-10, 2005) has discussed In this article scholars have discussed that
to evaluate the performance of organization that it is meeting its goals or not, it is
important to evaluate the performance of employees of the organization and for this
evaluation effective performance appraisal system should be maintained. They have
mentioned two main objectives of this study first is to give rewards to those employees
who have performed good in achieving organizational goals and second is to identify
those objectives which are not met and make an action plan to ensure that they will
achieved in future. In this paper AHP (analytic hierarchy process) to evaluate employee
performance. The criteria is used for appraisal is: quantity/quality of the work,
planning/organization, initiative/commitment, teamwork/cooperation, communication
and external factors
17. The Performance appraisal approach is formal and structured system of measuring as
well as evaluating an employee’s job related behaviors and output for the same and to
study how and why the employee is currently performing on the job and how he can
perform his job more effectively in the near future. (Deepa. E, et al,2004).
18. The result through regression analysis shows that employees think appraisal rating as
manipulated because of rater’s personal bias which indirectly reduces job satisfaction and
high turnover (Poon, et al, 2004).
19. T. R. Manoharan (2002) has written In this article authors have discussed that they have
noticed that in many organizations appraisal systems are: (a) not relevant to
organizational objectives, (b) subject to personal bias, and (c) are often influenced more
heavily by personality than by performance. To eliminate these negative things there is a
attempt with a computer based tool called Data Envelopment Analysis (DEA) which is
used in the working place to evaluate the performance of employees
20. The author (Deepa. E, et al 2004) summarizes on the performance appraisal
system/method as a whole, their framework and its relationship with different job related
concepts as well as issues related to Performance appraisal such as how Performance
appraisal (PA) is related to job satisfaction, organization citizenship behavior etc
21. The article of the author (Roberts, et al, 2002) summarizes about the foundation for
participation of employee including its intrinsic motivational value, present available
information. The role of goal setting and feedback of performance appraisal for
 enhancing participation effectiveness is outlined. The factors that resulted in lack of
effectiveness of participation includes lack of training of employee, absence of rater
accountability strategies, and organizational and supervisors resistance to honest
subordinate feedback (Roberts, et al, 2002).
22. A performance appraisal system is a wide concept and as a Performance Management it
has become a part of more strategic approach towards HR activities and as a result has it
has begun to focus more on motivational and social appraisal. As a result of this, the
research on the subject has moved beyond the limited and accuracy of performance
ratings . The organization’s outcome that is its success and failure is determined by
Performance appraisal, thus this system is considered to be an important work
performance in any organization. (Fletcher, et al, 2001
23. Rose (2001) studied that job satisfaction is a complex concept and can be divided into
intrinsic and extrinsic satisfaction Intrinsic satisfaction is associated with the content 77
of one’s job, such as autonomy, degree of responsibility, variety of skills, supervision etc.
In general, intrinsic sources of satisfaction comprise the qualitative attributes of a job. On
the other hand, extrinsic satisfaction is associated with one’s work environment (working
conditions), such as working hours, safety, promotion opportunities, tangible rewards and
other bonuses. It is necessary, therefore, to adopt a more detailed measurement of
satisfaction, where both intrinsic and extrinsic characteristics are taken into account. Mrs.
24. Heena Rawal (1999), studied the profitability of five District Milk Producers’
Cooperative Union Ltd. of Gujarat state. She studied costing and pricing practice of milk
co-operative of Gujarat state. They found that the profitability increase by reducing the
cost or increasing the total sales. The cooperative has not adopted a proper costing system
and cost-volume profit method to control cost. Cost centre has not been identified by any
of the co-operative dairy.
25. Armstrong and Baron (1998), report has set out criteria for performance measurement.
Performance measures should provide a sound basis for feedback and actions, be
comprehensive and precise, be verifiable, focused on measurable outputs, be relevant to
objectives and be related to strategic goals and measures that are organizationally,
significant and drive business performance.
26. Schermerhorn (1993) defines job satisfaction as an affective or emotional response
towards various aspects of an employee’s work. The author emphasizes that likely causes
of job satisfaction include status, supervision, co-worker relationships, job content,
remuneration and extrinsic rewards, promotion and physical conditions of the work
environment, as well as organisational structure.
27. Research conducted by Vitell and Davis (1990) which involved employees in a
management information system environment, found a statistically significant
relationship between job satisfaction and the dimension of work itself. Results from other
studies conducted indicate that a dimension such as the work itself can result in either job
satisfaction or dissatisfaction (Oshagbemi, 1997; Ruthankoon & Ogunlana, 2003).
28. D. S. Thakur (1975), studied the progress of selected milk co-operatives in Gujarat and
analysed their impact on the economic conditions of the farmers in general and weaker
sections in particular. The study covered four milk unions. Twenty four villages were
selected randomly in the study area. Data were collected through a survey method and
concluded that landless labour earned as much as 20 to 30 percent of their total income
from dairying
29. . Maslow’s (1954) traditionalist views of job satisfaction were based on his five-tier
model of human needs. At the lowest tier, basic life sustaining needs such as water, food,
and shelter were identified. The next level consisted of physical and financial security,
while the third tier included needs of social acceptance, belonging, and love. The fourth
tier incorporated self-esteem needs and recognition by one’s peers and at the top of the
pyramid was reserved for self-actualization needs such as personal autonomy and self-
direction. According to Maslow, the needs of an individual exist in a logical order and
that the basic lower level needs must be satisfied before those at higher levels.
 CHAPTER III

RESEARCH METHODOLOGY

METHODLOGY OF THE STUDY

After the objective of the study has clearly stated, the next step in formal research project
is to determine the source from which the data is required to be collected. The data collection is
an interesting aspect of the study achieving data effectively the information consists of two types
of data. The diagram is as follows:
RESEARCH DESIGN:
A Research design is the arrangement of conditions for collection and analysis of data in a
manner that aims to combine relevance to the Research purpose with economy in 18 procedures.
In fact the Research design is the conceptual structure within which Research is conducted: it
constitutes the blueprint for the collection measurement and analysis of data. It must be able to
define clearly what he wants to measure and must find adequate methods for measuring it along
with a clearly cut definition of population he wants to study.
Since the aim is to obtain complete and accurate information in the said studies, the procedure to
be used must be carefully planned. The research design must make enough provision for
protection against bias and must maximize reliability with due concern for the economical
completion of the research study.
Descriptive research is adopted for this study. It includes surveys and fact finding enquires of
different kinds. The major purpose of descriptive research is description of the state of affairs as
it exists at present. The main characteristic of this method is that the researcher has no control
over the variables. He can only report what has happened or what is happened.
SAMPLING DESIGN
A sample design is a definite plan for obtaining a sample from the sampling frame, it refers to
the technique or procedure the researcher would adopt in selecting some sampling units from
which inferences about the population is drawn.
POPULATION
A decision has to be taken concerning a sampling unit before selecting sample. The population
for this study includes the employees from three branches of STANLEY MATERIAL AND
METALLURGICAL PIPE AND TUBE MANUFACTURING INDUSTRY
SAMPLE SIZE
The total populations of STANLEY MATERIAL AND METALLURGICAL PIPE AND
TUBE MANUFACTURING INDUSTRY AT COIMBATORE are 100.
All 100 employees were undertaken for the study. In this study the population and sample are
equal.
DATA COLLECTION
The task of data collection begins after a research problem has been defined and research design
/ plan chalked out. While deciding about the method of data collection to be used for the study,
the researcher should keep in mind two types of data viz
 Primary and
 Secondary
PRIMARY DATA
The primary data are those which are collected afresh and for the first time and thus happen to be
original in character. The tool used for collecting primary data is a structured questionnaire.
SECONDARY DATA
The secondary data on the other hand are those which have already been collected by someone
else and which have already been passed through the statistical process. The secondary data has
been collected from the company records, journals. The secondary data collected for this
research was obtained from journals, magazines, company reports and websites
STATISTICAL TOOLS
 Chi – square test
 Percentage analysis
 Weighted average ranking method

A STUDY ON PERFORMANCE APPRAISAL SYSTEM IN STANLEY MATERIAL

AND METALLURGICAL PIPE AND TUBE MANUFACTURING INDUSTRY AT
COIMBATORE
QUESTIONNAIRES
1. Name
2. Gender
a) Male
b) Female

3. Age group:
a) 20 – 30
b) 31 – 40
c) 41 – 50
d) 51 – 60

4. Marital status
a) Married
b) Unmarried

5. Qualification
a) Primary
b) Higher Secondary
c) Graduate
d) Post Graduate

6. Salary of the respondent

a) Below 10000
b) 10000-20000
c) 20000-30000
d) 30000-40000
e) Above 50000

7. Experience:
 a) Less than 3 years
b) 4-8 Years
c) 9 – 15 Years
d) More than 15 Years

8. How many times dose performance appraisal takes place in your organization?
a) Once a year
b) Twice a year
c) No specific time

9. What is the reason for conducting performance appraisal in your organization?

a) to identify motivating methods
b) to decide monetary benefits
c) identifying barriers of performance
d) all of the above

10. When is the performance appraisal conducted?

a) During working hours
b) during non-working hours

11. Who conducts performance appraisal?

a) Superior
b) Peers
c) Everyone
d) Outsider

12. Are you informed the reason for conducting performance appraisal programs?
a) Always
b) Sometimes
c) Never
13. Do you feel that performance appraisal encourages you to put in more effort in reaching your
goals?
a) Strongly agree
b) Agree
c) Neutral
d) Disagree
e) Strongly disagree

14. Is Performance Appraisal helps in the assessment of individual potential?

a) Strongly agree
b) Agree
c) Neutral
d) Disagree
e) Strongly disagree

15.Does the performance appraisal system followed in the organization is rational and fair?
a) Strongly agree
b) Agree
c) Neutral
d) Disagree
e) Strongly disagree

16.Whether the Job expectations are informed and the superiors set the tasks?
a) Strongly agree
b) Agree
c) Neutral
d) Disagree
e) Strongly disagree
16. Does the performance Appraisal followed in the organization helps to assess
the training and development needs of employee?
a) Strongly agree
b) Agree
c) Neutral
d) Disagree
e) Strongly disagree

17.Does the Performance appraisal in the organization helps to recognize the

competence and potential of an individual?
a) Strongly agree
b) Agree
c) Neutral
d) Disagree
e) Strongly disagree

18. Whether the employees happy with the assessment of Performance followed in the
organization?
a) Strongly agree
b) Agree
c) Neutral
d) Disagree
e) Strongly disagree

19.Does the employees appraised fairly according to the company’s policies?

a) Strongly agree
b) Agree
c) Neutral
 d) Disagree
e) Strongly disagree

20.Does the Advises and suggestions are given to the employees during the appraisal
process?
a) Strongly agree
b) Agree
c) Neutral
d) Disagree
e) Strongly disagree

21. How do the employees accept the appraisal feedback?

a) Strongly agree
b) Agree
c) Neutral
d) Disagree
e) Strongly disagree

22. Who should be the appraiser?

a) Superior
b) Subordinate
c) HOD
d) Peer group

23.How often should an employee be assessed?

a) Once in 3months
b) Once in 6months
c) Once in a year
24. How the performance appraisal followed in the organization?
a) Motivate
b) Denominative

25. What types of errors / problems have impact on performance rating in

the organization?
a) Influence
b) Biased
c) Subjectivity
d) Status Effect
e) Attitude
f) Personal Grudge

25. Whether the Feedback on performance communicated after assessment of the Performance?
a) Yes
b) No

26.In general, how effective has your organization performance appraisal system in improving
overall performance
a) Highly ineffective
b) Ineffective
c) Moderate
d) Effective
e) Highly effective