SUMMER TRAINING REPORT

ON
EFFECTIVENESS OF
PERFORMANCE APPRAISAL
SYSTEM IN ESCORTS AGRI-
POWERTRAC LTD,
FARIDABAD
SUBMITTED IN THE PARTIAL FULFILLMENT OF THE DEGREE
OF BACHELOR OF BUSINESS ADMINISTRATION (2006-
2009).
SUBMITTED TO:
SUBMITTED
BY:
CONTROLLER OF EXAMINATION Nupur Singh
M.D. UNIVERSITY,
2405
Sr. No.

Particulars

Chapter -1

INTRODUCTION OF THE

TOPIC

Man power planning

Objectives of HRM
Scope of HRM
Role of HRM
Managerial function of HRM
Team Effectiveness
Objectives of the study

Chapter-2

COMPANY PROFILE

History of Insurance

Insurance sector in India

Important Milestone
History of ICICI Insurance
Different Plans of ICICI

Vision and mission

Research methodology

Methods of data collection

Primary data
Secondary data

Chapter-3

ANALYSIS AND
INTERPRETATION
Surveys of customers
Limitations of the study

Chapter-4
CONCLUSIONS AND
RECOMMENDATION
Annexure
Bibliography

ACKNOWLEDGEMENT

This project report prepared by me is a result of the joint effort of several helping hands of the Personnel

Department of Escorts Ltd., Farmtrac Division, Faridabad. The knowledge of our theoretical studies is absolutely

incomplete without its proper implementation and application in the diversified corporate world of today. I have been

really opportunistic to be a part of the Escort Group during my summer training, which is one of the leading business

houses in today’s scenario.

An undertaking of study like this is never an outcome of efforts put in by a single person, rather it bears imprint

of number of persons who directly or indirectly helped me in completing the study.

At the outset I would like to extend my sincere gratitude to Mr. K. S. Yadav, (Head of Personnel Department,

Farmtrac Division) for providing the opportunity to carry out the research & for providing guidance during the preparation

of the report whenever needed.

I would like to thank Mr. VISHAL SINGH Personnel Manager-I.R. for providing the basic knowledge on

personnel management, project topic & the methodology to be used for preparing the report. I am also thankful to Mr. S.P

Tyagi, (HR Manager), for sharing his knowledge. Last but not the least, I am thankful to the MS. SURBHI
KAPOORlecturer who has provided me the necessary guidance and shared her experiences
without which it was not possible for me to complete this project.
I am once again, thankful to members of ESCORTS Group for their co-operation.

Last but not the least, I am thankful to the MS. SURBHI KAPOORlecturer who has
provided me the necessary guidance and shared her experiences without which it
was not possible for me to complete this project.

I am once again, thankful to members of ESCORTS Group for their co-operation.

(NUPUR SINGH)

PREFACE
The study conducted in Farmtrac division of Escorts was aimed at finding out the
effectiveness of performance appraisal system and to give suggestions to improve
the system.

For the purpose of collection of the information the mode of communication of

survey adopted was the collection of primary data through questionnaire with
personal interview of the junior managers.

I have measured the effectiveness of performance appraisal system on the

basis of certain aspects. These are:-

How regularly appraisal is done.

Is appraisal system has the scope for communicating top management

objectives.

Is appraisal system also helpful in explaining what is expected from the

employee?

Is appraisal system focuses on individual development for better results. To what
extent appraiser helps appraisee to plan performance in advance. Are appraisal
system helps employees to plan their performance well in advance.

Is counseling helps in communicating the support needed by the

employees from their superiors.

True feedback is there or not. And if it is there then whether it helps in

getting insights into employees’ weaknesses and strengths.

Whether management is serious for the appraisal outcomes and follow-up

with the training needs identifies during performance appraisal

 Is counseling helps in communicating the support needed by the

employees from their superiors.
 True feedback is there or not. And if it is there then whether it helps in
getting insights into employees’ weaknesses and strengths.
 Whether management is serious for the appraisal outcomes and follow-up
with the training needs identifies during performance appraisal.
CHAPTER-1
INTRODUCTION TO THE
“ESCORTS LIMITED
(FARMTRAC)”

CHAPTER-2
REVIEW OF
LITERATURE

PERFORMANCE APPRAISAL

People differ in their ability and aptitudes. These differences are natural to a grate extent and cannot be

eliminated even by giving the same basic education and training to them. There will be some differences in the quality and

quantity of work done by different employees even on the same job. Therefore, it is necessary for management to know

these differences so that the employees having better abilities may be rewarded and the wrong placements of employee

may be rectified through transfers. The individual employee may also like to know the level of his performance in

comparison to his fellow employees so that he may improve upon it. Thus there is grate need to have suitable performance

appraisal system to measure the relative merit of each employee.

The basic purpose of performance appraisal is to facilitate orderly determination of an employee’s worth to the

organization of which he is a part. However, a fair determination of the worth of an employee can take place only by

appraising numerous factors some of which are highly objective, as for instance, attendance, while others are highly

subjective, as for instance, attitude and personality.

PERFORMANCE APPRAISAL
Performance appraisal means systematic evaluation of the personality and
performance of each employee by his supervisor or some other person trained in
the techniques of merit rating. “Performance appraisal includes all formal
procedures

used to evaluate personalities and contributions and potentials of group members in

a working organization. It is a continuous process to secure information necessary
for making correct and objective decisions on employees.”

Performance appraisal is the systematic evaluation of the individual with respect to

his performance on the job and his potential for development. Performance
appraisal is concerned with determine the differences among the employees
working in the organization.

PURPOSES OF PERFORMANCE APPRAISAL

1)Promotions:- promotion is the most important objective of performance

appraisal. It is to the common interests of both the management and employees to

promote employees into positions where they can most effectively utilize their
abilities. It is mismanagement to promote employees into positions where they
cannot perform effectively at the time in question. A properly developed and
administered performance appraisal system can aid in determining whether
individuals should be considered for promotion or not. The system should rate the
individual for the present job and his potentialities for the higher job. A person
performing his job well does not necessarily mean that he is fit for promotion.

2)Human resource planning: - Performance appraisal generates significant,

relevant and useful information about the promo ability and potential of employees.
This information is used to assess the organization’s internal supply of human
resources and availability of managerial personnel for succession planning.

Recruitment and selection: - Evaluation made in performance appraisal can

be used to find out the particular areas of knowledge, skills and experience which
successful performer’s posses. This information can be used to review effectiveness
of recruitment and selection procedures and practices so that right type of
candidates can be selected.

4)Training and development: - Performance appraisal helps in identifying

development needs of employees. This information can be used to advise suitable

training and development programmes to enable employees to overcome their
weaknesses and improve their strengths.

5)Compensation: - Information gathered through performance appraisal

provides inputs for making decisions concerning salary administration,

financial incentives, appreciations, additional responsibilities etc.

PERFORMANCE APPRAISAL PROCESS

Establishing performance standards

Communicating the standards to employees

Evaluating actual performance

Comparing actual performance with standards

Discussing the appraisal results with the employees

Taking corrective action, if necessary

METHODS OF PERFORMANCE APPRAISAL

Written essay

Critical incidents

Checklist

Graphic rating scale

Behaviorally anchored rating scales (BARS)

•

Group order ranking

Individual or straight ranking

Paired comparison

MBO (result oriented appraisal method)

Group appraisal of subordinates

Peers appraising the colleague

Subordinates appraising the boss

360 degree feedback method

Assessment centers method

ERRORS IN PERFORMANCE APPRAISAL

Leniency or severity error

Central tendency

Halo effect/error

Similarity error
•

Contrast error

Shifting standards

Influence of recent events

Tendency to give high rating

Length of service bias

Personal bias

HOW TO MINIMISE ERRORS

Clearly defined performance dimensions and standards

Performance appraisal only for providing feedback

Combination of methods for appraising performance

Continuous feedback

Many appraisers rating backed up with examples

Appraisal of subordinates on the same performance dimensions

•
Appraiser with ability to appraise

Training of appraisers

PERFORMANCE APPRAISAL IN ESCORTS LIMITED

PREFORMANCE APPRAISAL

In today’s competitive environment it is essential to harness individual aspiration

and potential and gear them suitably to meet business objectives. To make this
happen, both you and the organization would like to know how you have been
performing and your potential for growth.

THE OBJECTIVES OF PERFORMANCE APPRAISAL

To be developmental in nature where individuals grow with the organization.

To integrate individual performance and contributions to larger

organizational goals and needs.

To open greater communication between superior and subordinate.

To ensure a realistic link between performance, recognition and reward.

To provide core data for human resource development / organizational

development efforts.

To encourage innovativeness through unique contribution.

To focus on employee contribution and not on efforts.

APPRAISAL CYCLE

The appraisal cycle for DGM and above is 1st June to 30th June. Increments /
promotions are effective from 1st July every year.

The appraisal cycle for employees in grades M2 to M8 grade become effective from
1st Jan. each year and from M8 to DGM from 1st April. Consequently, the appraisal
period in respect of such employees after promotion is of 15 month for the first year
i.e. the next review would be on 1st April or 1st July, as the case may be, of the
following year.

APPRAISAL OF EMPLOYEES ON DEPUTATION

In case the employees are working on deputation in a different company/division of

Escorts, the parent company division shall carry out employees’ appraisal. This is
not applicable to employees in the categories of DGM and above and their cases will
continue to be processed as usual from the chairman / vice chairman’s office as is
being done at present.

APPRAISAL OF TRAINEES. (All categories)

Only trainees who have been regularized (confirmed on or before 30th

September) shall be eligible for performance appraisal for that block of appraisal

period. Trainees regularized there shall be eligible for confirmation appraisal

according to the rules laid there under.

CONFIRMATION APPRAISAL

Trainees on completion of the training period and employees on completion of

probation period shall be appraised for regularization / confirmations. During
confirmation / regularization, incumbents are evaluated for:-

1. Group performance

2. Personal performance

3. Supervision and leadership qualities

4. Developmental needs

Employees are covered for superannuating only after confirmation but with effect

from their date of joining.

MANAGERIAL PERFORMANCE APPRAISAL PROCESS

OBJECTIVE:
To identify and categorize employees of managerial cadre, in three distinct
contributory levels based on performance review against last year’s KRAs and
assessment of competencies.

HOW TO FILL APPRAISAL FORM:

The managerial appraisal form consists of the following sections.

Section A:

Review of goals achieved against KRA’s

Section B:

Feedback on managerial competencies.

Section C:

Development Needs

Section A: Review of goals achieved against KRAs

This section consists of 70 points. In this section appraisee is required to fill details
of KRAs, objectives and achievements and assign weightages against each KRA,
agreed in the beginning of the review period. Appraiser is required to capture
his/her observations and score each KRA.

Section B: Feedback on managerial competencies

This section consists of 30 points. In this section appraiser is required to give

feedback on the listed managerial competencies indicating the performance factor
that best describes the appraisee, substantiating it with actual events/behaviour.

Section C: Development needs

In this section the appraiser is required to fill in the strengths/areas of

improvements relevant to appraisee in carrying out his current job or higher
responsibilities.

REVIEW PROCESS:

The review discussion should take place on a one-to-one basis in an uninterrupted

manner and it is expected that typically such a meeting would last for about 60 to
120 minutes. This discussion would be based on performance plan documents
(KRA’s) agreed last year. Sequence of the process would be as described below:-

Step 1: Appraiser to gather adequate data on the appraisee’s performance against

predefined KRAs.
Step2: Appraiser to schedule a meeting for performance review with the appraisee.

Step3: Appraiser to give feedback to appraisee based on his observations with

emphasis on performance aspects where appraisee can improve. Appraiser should
avoid loaded / judgmental terms that may lead to emotional setbacks.

Step4: Towards conclusion, the appraiser should complete the form. This would
form the summary of discussions that took place between appraisee and appraiser.

Step5: The performance against KRAs is to be quantified and scored out of a

maximum of 70 points. In addition, the appraiser needs to give score against
competencies defined out a maximum of 30 points. Thus each appraisee will have a
total score received out a maximum of 100 points.

Important

Since the subject under discussion is highly sensitive, the details of the

discussions should remain confidential between the two.

Step6: The completed format with total score assigned based on the review may be

forwarded to the reviewer for his concurrence.

Step7: Reviewer to review appraisals of all manager’s in his/her area to ensure that
a

fair process has taken place and no biases have crept into the assessment.

Step8: Thereafter, the data is to be collected at DMG / Department level for each
area. If the strength is less, appropriate aggregation at Divisional / Functional level
may be done. For example, in R&D center, aggregation may be done at a divisional
level. All managers’ have to be ranked from top to bottom on a

relative basis to arrive at the final ratings at this level as defined below. Concerned
HR manager would help the DGM / MANCOM member in finalizing the ratings.

Step9: HR would summarize the data for whole of AMG and present before business

head for his concurrence before issuing letters to individuals.

PERFOMANCE RATING:

The three performance rating categories and expected distribution pattern, as

a percentage is as under.

Rating Category

%age Distribution
Description

Cat-1

20%

top 20 percentile

Cat-2

70%

next 70 percentile

Cat-3

10%

bottom 10 percentile

SYNOPSIS
CHAPTER-3

OBJECTIVES OF THE STUDY

The objectives of doing work on the performance appraisal in the escorts ltd
company

are as follows:
1. To study the effectiveness of appraisal system in the escorts ltd company.
2. To study the performance appraisal process of Junior Managers in the escorts ltd

company.

3. To study, whether the system is helpful for both the employer (to communicate
the
organizations plans, expectations, etc.) and employees (to express the training &
development needs).

4. To study the employees view points on their performance appraisal.

LIMITATIONS OF THE STUDY

With the proper due care this study has been conducted but it consists of some of
its

limitations also which are as follows:

1. Sample size was small i.e. 40Junior Managers.
2. The time limit is also one of the major constraints in conducting study.
3. Biases may creep in the information given by the respondents.
4. Main root of this research study was questionnaire & interview, which has its own

limitations, for example we can’t measure the reliability, enthusiasm dissonance

etc

SCOPE OF THE STUDY

I have chosen the topic“PERFORMANCE APPRAISAL in Escorts LTD”.

Keeping in mind the company nature of work, with a hope that the company is

benefited from its findings by modifying its existing performance appraisal rules if

felt necessary.

The study has immensely helped in understanding the various steps of the process of

performance appraisal as well as the various process of the motivation. I had the

privilege to gain practical experience by working in the Escorts Ltd.

RESEARCH

METHODOLOGY

RESEARCH
METHODOLOGY
RESEARCH METHODOLOGY
 The research methodology is a way to solve the research problem in a systematic manner. It depends upon the

various steps like objectives of the study, how the data is collected, how much is the sample size required and the

limitations of the study. Properly conducted study is a valuable tool for the top management in

making some decisions. Good study reduces the uncertainty. Effective research

methodology leads to good research.

RESEARCH DESIGN

Research design is the arrangement of the condition for collection and analysis of
data in the manner that aims to combine relevant to the research purpose with the
economy in the procedure.

Research design of the study is Exploratory Research Design

Exploratory research design’s major emphasis is on the discovery of ideas and

insights. In this research problem is transformed into one with more precise
meaning.

Methods of explorative research design -:

1. Depth Interviews
2. case study
3. surveys

Sample Size for the study was 50 employees and managers

COLLECTION OF DATA

The data collection is mainly of two types:

1) primary data

2) secondary data

Primary Data was collected by conducting

(a) Questionnaire and

b). By conducting personnel interview of the managers

Different methods of collecting primary data

1.Questionnaire Method :A questionnaire is means of elicting the

feeling, beliefs, experience, perception & attitude of sample of the individual.

As a data collecting instruments. It could be:-

a) Structured

b) Unstructured

2. Interviews: Finally, for the purpose of additional information all the

respondents were personally interviewed. In addition, classification and

To know about the performance appraisal, the QUESTIONNAIRE, INTERVIEW

method has been used.

I have prepared a list of questions regarding recruitment process of Escorts Agri –
Powertrac Ltd., Faridabad and distributed it to the respondents.

This questionnaire has 17 questions, which are aimed to achieve the objectives of
the

study. All the questions are close ended with two to five options.

For the purpose of analysis, various tables and charts were prepared with numbers

and percentages of the employees in different choices.

Along with primary data collected through questionnaire-interview, I also have used
secondary data, which include theory part from some books and the performance
appraisal process in Escorts from its own policies.

Sample size for the study was 40 Junior Managers.

Secondary Datawas collected from websites, company reports, company manuals
and management books

CHAPTER-4
DATA
COLLECTION AND
ANALYSIS

TABLE 1

Awareness of performance appraisal system in employees

YES
NO
From above it is clear that all the employees of the escorts ltd. are aware of appraisal
system
TABLE 2

BY WHOM APPRAISAL IS DONE

Thus, we can say that mostly performance appraisal is done by Immidiate superio

Table 3

Objectives of performance appraisa

P H
PITN
AO
PH- Pay Hikes, P- Promotion
ITN- Identify training needs, AO- Any Other
Therefore it can be concluded that according to employees the main objective of
appraisal system is to increase their pay and to increase their promotion

TABLE 4

Methods of performance appraisal

Methods of performance appraisal
SA
360
MBO
AO
SA- superior appraises, 360- 360 degree, AO- any other
Maximum number of employees agrees with the method of superior appraisal.
As a tool for performance appraisal of employees

TABLE 5

Understanding of appraisal objectives

Understanding of appraisal objectives

SA
ANDSD
Majority of employees agree that the objectives of performance appraisal
are clear to them.
Understanding of management objectives
. Maximum number of employees agrees with the fact that Appraisal system has
scope for communicating top

Understanding of management objectives

. Maximum number of employees agrees with the fact that Appraisal system has
scope for communicating top
SA
ANDSD
management objectives with employee

Clear understanding of the expectations

Therefore maximum number of employees strongly agrees that appraisal system
provides an opportunity to them to have a clear understanding of what is expected
from them.

TABLE 6

Effectiveness of counseling

Counseling provides opportunity for communicating the

support needed
SA
ANDSD

From above we can conclude that many employees agrees that counseling provides

an opportunity to communicate the support employee need with their superior to

perform their job well

Counseling provides opportunity for discussion on the
expectations, achievements and the area of improvement
required
SA
ANDSD

Maximum number of employees agrees that counseling provides opportunity for

discussion between them & their appraiser on the expectations, achievements and the

area of improvement required

TABLE 7

Feedback helps to get insight into weaknesses & strengths

Clear understanding of job
SA
ANDSD
48% of employees agree that appraisal system gives the clear understanding of job &
factors affecting their performance to appraiser & appraisee.
Insight into weaknesses & strengths

Maximum number of employees agrees with the fact that feedback helps them to get

insight into their weakness and strengths

FINDING OF THE

STUDY

Findings of the Study

Finding of the study on the basis of collection and analysis of the

data are as follows-:

1) All the employees at junior manager level in the company have the
awareness

of the performance appraisal system.

2) Most of the employees say that their immediate superior does their
appraisal, 60% of the respondents says this. Performance appraisal is
done annually in Escorts. In actual MBO method of performance appraisal
is used but 70% of the respondents said that their immediate superior
does the appraisal. Only 26% of the employees said that the method of
performance appraisal in Escorts is MBO.

3) 80% of the employees have the clear understanding of the objectives of

the performance appraisal. 80% of the employees were strongly
agree/agree with the statement “objectives of performance appraisal are
clear to you”.

4) 30% of the respondents said that the pay hikes (annual increments) is
the main objective of performance appraisal. While other 30%
respondents said the objective of performance appraisal is promotion.
22% said that the identification of training needs is the main objective.
But in actual all of these three and many more the objectives of the
appraisal.

5) The immediate superiors do appraisal in Escorts. Assessment centers

are also

used in Escorts but for promotions only

Appraisal system in the company has the grate scope for communicating
top management objectives to the employees. 84% of the respondents
were strongly agree/agree that appraisal system helps in understanding
top management objectives.

7) 90% of the respondents were strongly agree/agree with the statement,

which state that appraisal system provides an opportunity for
understanding what is expected from the employees.

8) Counseling part of the appraisal system is good enough in Escorts. 94%

of the respondents were strongly agree/agree with the statement which
states that counseling provides an opportunity to communicate the
support needed from superior to perform the job well.
9) Most of the respondents were satisfied with the counseling done by the
superiors. They said that counseling facilitates discussion between
appraiser and appraisee, by which appraisee come to know about their
areas where they need improvements, what is expected from them, what
is their job all about and what factors affect their performance.

10) 86% of the respondents were satisfied with the feedback given to
them and they also accepted that true feedback helps to get insight into
their weaknesses and strengths.

CHAPTER-5

CONCLUSION AND
SUGGESTION
CONCLUSIONS

Based on the analysis, through the observation

process, through the questionnaire

responses, following in the conclusions of the study:-

The employees are up to some extent is satisfied with

the existing

performance appraisal system process.

Performance appraisal system in escorts ltd is

highlighting employee

needs and opportunities for personal growth and

development.
•

Promoting understanding between the supervisor and

his subordinates.

Counseling facilitates discussion between appraiser

and appraisee, by

which

appraisee come to know about their areas where they

need
improvements, what is expected from them, what is
their job all about and
what factors affect their performance.

It has identified training and development needs and

to evaluate

effectiveness of training and development

programmes.
•

This has encouraged the innovativeness of employees

through unique

contribution.

To conclude we can say that performance appraisal

system in Escorts Limited is an
effective method. Most of the employees are satisfied
with the appraisal process and
the criteria of the appraisal. Counseling associated
with the appraisal is the most
motivating factor for the employees to give their best.

SUGGESTIONS

The purpose of performance appraisal is to reward the

employees, give them

recognition, and help them in career growth.

The production managers or the personnel managers

should interact more directly with their subordinates
and try to know their needs, their problems and help
or suggest them to overcome those difficulties.

The feedback process should be made more sound and

effective so that the
employees could know the areas where their
performance is low so that they
could make it better in the future.

Special training sessions should be organized besides

regular training

programmes for low performance areas.

There should be more transparency in awarding marks

to the employees. It
should be effectively based on the merit and
performance of the employees
and not on the basis of any personal contacts, blood
relation or any affection.

A small committee should be found that will keep a

close watch on the whole

exercise and make ensure that it should be a fair

process

ANNEXURE

QUESTIONNAIRE

Q.1 Are you aware of the employees appraisal system

in Escorts Limited system.

a) Yes

b) No

Q.2 Who does the appraisal?

a) HOD

b) Immediate supervisor

c)Any other, specify…

Q3. What are the objectives of performance appraisal

in Escorts Limited?

a) Pay hikes

b) Promotion
c) Identify training need

d) Any other, specify…

Q4. What methods of performance appraisal are used?

a) Superior appraises the employee.

b) 360 Degree

c) MBO
c) MBO

Strongly

Agree

Agree neutral
Strongly

Disagree

Any other,

specify

Q5. Are objectives of

performance appraisal
clear to all employees

Q6.Do you think that

appraisal

system

has scope

for communicating top management

objectives to the

employees.?

Q7.According to you

does

appraisal system provides an opportunity to you to

have a clear understanding

of what is expected from you.

Q8. Is Counseling an
affective measure to get
a boost from the
superiors?
Q9.Does Counseling provides

opportunity

for

discussion between you & your appraisal on the

area

of

improvement

required?

Q10. Is appraisal system giving the clear

understanding of job and factors affecting your
performance to appraiser and appraisee?

Q11. Does Feedback helps you to get insight into your

weaknesses & strengths?