A Project Report On A STUDY TO UNDERSTAND PERFORMANCE APPRAISAL AT PEPSICO

2012-13 PGP-GBM

Submitted byManish Kumar Lodha PGP-GBM IInd Sem.

Submitted toMrs. Swati Shome Professor

XCELLON INSTITUTE SCHOOL OF BUSINESS 22/23, Shrimali Society, Opp. Navrangpura Police Station, Navrangpura, Ahmedabad-380009
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ACKNOWLEDGEMENT
No task can be achieved alone. It took many special people to facilitate and support it. Hence, I would like to acknowledge all for their valuable support and convey my humble gratitude. I would like to thank Mrs. Swati Shome ( Professor, Xcellon Institute School of Business ,AHMEDABAD.) without whose direction and guidance with constructive comments and

encouragement throughout the interview. Without him the interview would not have been made possible. Mrs. Shome valuable advice, remarks and discipline insured that I was constantly on my feet. I am very thankful to him for his support, knowledge about practical experience, which I got from him.
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Manish Kumar Lodha

CONTENTS:Chapter No.
1. 2. 3. 4. 5. 6. 7. Introduction Human Resource Management Performance Appraisal Performance Appraisal at Pepsi International Performance Appraisal challenges Recommendation and Suggestion Bibliographys 5-7 8-8 9-13 14-14 15-16 17-17 18-18

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Introduction of PepsiCo

PepsiCo entered India in 1989 and in a short period of 20 years has grown into the largest and one of the fastest growing food & beverage business in the country. PepsiCo Indias growth has been guided by PepsiCos global vision of Performance with Purpose. This means that while businesses maximize shareholder value, they have a responsibility to all the stakeholders including the communities in which they operate, the consumers they serve and the environment whose resources they use. Large investor: One of the largest US multinational investors in the country with an investment of over $1 billion, PepsiCo India provides direct and indirect employment to over 1,50,000 people across the country. Its beverage and snack food business is supported by 36 beverage bottling plants, (13 company and 23 franchisee owned) and
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three food plants. PepsiCo Indias diverse portfolio includes iconic brands like Pepsi, Lays, Kurkure, Tropicana 100%, Gatorade, Quaker and young but immensely popular and fast growing brands such as Nimbooz and Aliva. No.1 food & beverage business in India: PepsiCo India has not only grown to become the countrys largest food and beverage business but has also become a powerful and consistent driver of PepsiCos global growth. Over the last two years, India's beverage and foods businesses have been the largest volume growth contributors to PepsiCo across the globe. PepsiCo India has been frequently recognized for its industry-leading human resource practices, indovations, corporate values, and talent, and was one of the five top marketers of the country in 2009. A third of PepsiCo India's portfolio today comprises healthier products: PepsiCos portfolio reflects its commitment to nourish consumers with a diverse range of fun and healthy products, making the healthful choice an easier choice. As PepsiCo grows, the portfolio transformation will continue with a systematic plan to reduce added sugar, sodium and saturated fats in its products. Today, the portfolio includes several healthier treats like Quaker Oats, Tropicana juices, rehydrator Gatorade, Pepsi Max and Cheetos Whoosh. PepsiCo was the first in India to introduce the use of healthier oils for its snacks -Lays Potato chips, Kurkure and Cheetos. Model partnership with over 22,000 farmers: PepsiCo has pioneered and established a model of partnership with farmers and
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now works with over 22,000 happy farmers across ten states. More than 45% of these are small and marginal farmers with a land holding of one acre or less. PepsiCo Indias farming program has improved their livelihoods and incomes by providing assured buy back of their produce at pre-agreed prices thus insulating them from open market price fluctuations. PepsiCo provides 360 degree support to the farmer through quality seeds, extension services, disease control packages, bank loans, weather insurance, and latest technological practices. Global leader in water conservation: In 2009, PepsiCo India achieved a significant milestone, by becoming the first business in the PepsiCo system to achieve Positive Water Balance (PWB). This means that it replenishes more water than it consumes in its manufacturing operations. This has been validated by Deloitte Consulting. PepsiCo is leading a pioneering initiative to replace transplanting of paddy with direct seeding technology which has helped reduce water consumption in paddy cultivation by over 30% and has also cut down GHG emissions by 75%. In 2010, PepsiCo India saved 10.1 billion litres of water through various initiatives. For water related environment initiatives, PepsiCo India has received numerous awards such as CII National award for water management, Water Digest award for water practices and Golden Peacock award for water conservation among others. Care for the environment: Following its success in water

conservation, the company is now focused on reducing its carbon footprint. Nearly 30% of its energy is today generated from renewable
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sources such as rice husk boilers and wind turbines. Initiatives such as agriculture waste boilers in our plants, installation of wind turbines, reduction of use of chemicals, reduction in weight of packaging and film used in product packaging, reduction in weight of metal crowns/polypropylene caps for plastic bottles, conversion of potato waste into bio gas help reduce load on the environment. PepsiCo India also partners NGOs and local administrations in three states of India to recycle household solid waste in an endeavor to keep cities clean. Its award-winning "waste to wealth" recycling program reaches 450,000 families. Exemplary employment practices: PepsiCo India believes in providing employment and growth opportunities to local talent. Its College of Leadership, ensures early identification of talent, and employees focused development through critical experiences. PepsiCo strongly believes in Winning with Diversity and Inclusion. PepsiCo has been offering employment to women employees at the same employment terms and equal growth opportunities as men. Today women comprise more than 25% of the companys leadership team in India. PepsiCo India currently employs over 100 differentlyabled people and has won the prestigious Hellen Keller award from the National Centre for Promotion of Employment for Disabled People (NCPEDP).

Introduction of Human Resource 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. HRM can also be performed by line managers. HRM 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 includes

(1) Conducting job analyses, (2) Planning personnel needs, and recruitment, (3) Selecting the right people for the job, (4) Orienting and training, (5) Determining and managing wages and salaries, (6) Providing benefits and incentives, (7) Appraising performance, (8) Resolving disputes,

Performance Appraisal
Performance appraisal is the process of obtaining, analyzing and recording information about the relative worth of an employee. The focus of the performance appraisal is measuring and improving the actual performance of the employee and also the future potential of the employee. Its aim is to measure what an employee does. People differ in their abilities and their aptitudes. There is always some difference between the quality and quantity of the same work on the same job being done by two different people. Performance appraisals of Employees are necessary to understand each employees abilities, competencies and relative merit and worth for the organization. Performance appraisal rates the employees in terms of their performance. Aprominent personality in the field of Human resources,

"performance appraisal is the systematic, periodic and an impartial rating of an employees excellence in the matters pertaining to his present job and his potential for a better job." Performance appraisal is a systematic way of reviewing and assessing the performance of an employee during a given period of time and planning for his future. It is a powerful tool to calibrate, refine and reward the performance of the employee. It helps to analyze his achievements and evaluate his contribution towards the achievements of the overall organizational goals.

Objectives of Performance appraisal:

To review the performance of the employees over a given period of time.

To judge the gap between the actual and the desired performance.

To help the management in exercising organizational control. Helps to strengthen the relationship and communication between superior subordinates and management employees.

To diagnose the strengths and weaknesses of the individuals so as to identify the training and development needs of the future.

To provide feedback to the employees regarding their past performance.

Provide information to assist in the other personal decisions in the organization.

Provide clarity of the expectations and responsibilities of the functions to be performed by the employees.

To judge the effectiveness of the other human resource functions of the organization such as recruitment, selection, training and development.

To reduce the grievances of the employees.

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Importance of Performance Appraisal

1. Performance

Feedback

Most employees are very interested in knowing how well they are doing at present and how they can do better in a future. They want this information to improve their performance in order to get promotions and merit pay. Proper performance feedback can improve the employee's future performance. It also gives him satisfaction and motivation.

2. Employee Training and Development Decisions

Performance Appraisal information is used to find out whether an employee requires additional training and development. Deficiencies in performance may be due to inadequate knowledge or skills. For e.g. A professor may improve his efficiency by attending workshops or seminars about his subject. Performance appraisal helps a manager to find out whether he needs additional training for improving his current job performance. Similarly, if the performance appraisal results show that he can perform well in a higher position, then he is given training for the higher level position.

3. Validation of Selection Process

Performance appraisal is a means of validating both internal (promotions and transfers) and external (hiring new employees from outside) sources. Organisations spend a lot of time and money for recruiting and selecting employees. Various tools used in the selection
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process are application blanks, interviews, psychological tests, etc. These tools are used to predict (guess) the candidate's performance on the job. A proper performance appraisal finds out the validity of the various selection tools and so the company can follow suitable steps for selecting employees in future.

4. Promotions
Performance appraisal is a way of finding out which employee should be given a promotion. Past appraisals, together with other background data, will enable management to select proper persons for promotion.

5. Transfers
Performance appraisal is also useful for taking transfer decisions. Transfers often involve changes in job responsibilities, and it is important to find out the employees who can take these responsibilities. Such identification of employees who can be transferred is possible through the performance appraisal.

6. Layoff Decisions
Performance appraisal is a good way of taking layoff decisions. Employees may be asked to lay off, if the need arises. The weakest performers are the first to be laid off. If there is no performance appraisal, then there are chances that the best men in the department may be laid off.

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7.

Compensation Decisions

Performance appraisal can be used to compensate the employees by increasing their pay and other incentives. This is truer in the case of managerial jobs and also in the case of employees in non-unionized organisations. The better performances are rewarded with merit pay.

8. Human Resource Planning (HRP)

The appraisal process helps in human resource planning (HRP). Accurate and current appraisal data regarding certain employees helps the management in talking decisions for future employment. Without the knowledge of who is capable of being promoted, demoted, transferred, laid off or terminated, management cannot make employment plans for the future.

9. Career Development
Performance appraisal also enables managers to coach and counsel employees in their career development.

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Performance Appraisal at Pepsi International

Pepsi international with operations in over 150 countries, has devised a common performance appraisal system that focuses on motivating managers to achieve and maintain high standards of performance. Administrative consistency is achieved through the use of a performance appraisal system of five feedback mechanisms - instant feedback, coaching, accountability based performance appraisals, development feedback, and a human resource plan. The common system provides guidelines for performance appraisal, yet allows for example, the first step of instant feedback is based on the principle that any idea about any aspect of the business or about an individuals performance is raised appropriately and discussed in a sensitive manner. The instant feedback message can be delivered in any culture; the important thing is not how it is done but that it is done. The purpose of instant feedback is

always to improve business performance, not to criticise cultural styles. Using this system, PCI tries to balance the cultural and administrative imperatives of successful managing the performance of a diverse workforce.

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Performance Appraisal challenges

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

Create a rating instrument

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

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

Errors in rating and evaluation

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

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objectivity and fairness in evaluating and rating the performance of the employees.

Resistance
The appraisal process may face resistance from the employees and the trade unions for the fear of negative ratings. Therefore, the employees should be communicated and clearly explained the purpose as well the process of appraisal. The standards should be clearly

communicated and every employee should be made aware that what exactly is expected from him/her.

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Recommendation and Suggestion

1They should develop such system in their HR department that no ethical issues can be raised 2The employees should participate in all the activities of the department. 3They should choose plan in such a way that when there is a need of recruitment the proper candidate must be available. 4The factor of favouritism must be eliminated from the department of HR. 5They should hold meetings of the HR employees more frequently for eliminating any misunderstanding. 6Paper work must be reduced, computerized work

should be more 7There should be on-line information of all the employees regarding all the activities performed by them like performance, communication skills, quality of work, over time devoted by each employee, etc 8By adopting MBO method, Employees compete against each other and dont help others.

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Bibliography
www.pepsico.com www.managementparadise.com www.citehr.com K. Ashwathapa, Human Resource Management, Tata McGraw-hills publishing company ltd., 3rd edition. Chhabra T.N, Human Resource Management: Concepts and issues,Dhanpat Rai & co.,5th edition(2005)

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