PREFACE

The research project provides an opportunity to a student to demonstrate application of his/her knowledge, skill and competencies required during the technical session. It also helps the student to devote his/her skill to analyze the problem to suggest alternative solutions, to evaluate them and to provide feasible recommendations on the provided data. The project is on the topic A Study on Performance Appraisal System

Although I have tried my level best to prepare this report an error free report. Every effort has been made to offer the most authenticate position with accuracy.

TABLE OF CONTENTS

Topics

Page no.

Introduction Objective of the study Research methodology Collection of data Performance appraisal system Global trends in performance appraisal system Methods of performance appraisal Performance appraisal at different levels Performance appraisal in Dabur India Ltd Findings Conclusion Limitations Bibliography

10-18 18-19 20-23 24-25 26-56 57-58 59-61 62-65 66-67 68-75 76-77 78-79 80-81

INTRODUCTION TO TOPIC
Its roots in the early 20th century can be traced to Taylor's pioneering Time and Motion studies. But this is not very helpful, for the same may be said about almost everything in the field of modern human resources management. As a distinct and formal management procedure used in the evaluation of work performance, appraisal really dates from the time of the Second World War -not more than 60 years ago. Yet in a broader sense, the practice of appraisal is a very ancient art. In the scale of things historical, it might well lay claim to being the world's second oldest profession! There is, says Dulewicz (1989), "... a basic human tendency to make judgements about those one is working with, as well as about oneself." Appraisal, it seems, is both inevitable and universal. In the absence of a carefully structured system of appraisal, people will tend to judge the work performance of others, including subordinates, naturally, informally and arbitrarily. The human inclination to judge can create serious motivational, ethical and legal problems in the workplace. Without a structured appraisal system, there is little
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chance of ensuring that the judgements made will be lawful, fair, defensible and accurate. Performance appraisal systems began as simple methods of income justification. That is, appraisal was used to decide whether or not the salary or wage of an individual employee was justified. The process was firmly linked to material outcomes. If an employee's performance was found to be less than ideal, a cut in pay would follow. On the other hand, if their performance was better than the supervisor expected, a pay rise was in order. Little consideration, if any, was given to the developmental possibilities of appraisal. If was felt that a cut in pay, or a rise, should provide the only required impetus for an employee to either improve or continue to perform well. Sometimes this basic system succeeded in getting the results that were intended; but more often than not, it failed. For example, early motivational researchers were aware that different people with roughly equal work abilities could be paid the same amount of money and yet have quite different levels of motivation and performance. These observations were confirmed in empirical studies. Pay rates were important, yes; but they were not the only element that had an impact on employee

performance. It was found that other issues, such as morale and self-esteem, could also have a major influence. As a result, the traditional emphasis on reward outcomes was progressively rejected. In the 1950s in the United States, the potential usefulness of appraisal as tool for motivation and development was gradually recognized. The general model of performance appraisal, as it is known today, began from that time.

Modern Appraisal
Performance appraisal may be defined as a structured formal interaction between a subordinate and supervisor, that usually takes the form of a periodic interview (annual or in which the work performance of the subordinate is examined and discussed, with a view to identifying weaknesses and strengths as well as opportunities for improvement and skills development. In many organizations -but not all -appraisal results are used, either directly or indirectly, to help determine reward outcomes. That is, the appraisal results are used to identify the better performing employees who should get the majority of available merit pay increases, bonuses and promotions. By the same token, appraisal results are used to identify the poorer performers who may require some form of counseling, or in extreme cases, demotion,

dismissal or decreases in pay. (Organizations need to be aware of laws in their country that might restrict their capacity to dismiss employees or decrease pay.) Whether this is an appropriate use of performance appraisal -the assignment and justification of rewards and penalties -is a very uncertain and contentious matter.

Controversy
Few issues in management stir up more controversy than performance appraisal. There are many reputable sources -researchers, management commentators, and psychometricians -who have expressed doubts about the validity and reliability of the performance appraisal process. Some have even suggested that the process is so inherently flawed that it may be impossible to perfect it (see Derven, 1990, for example). At the other extreme, there are many strong advocates of performance appraisal. Some view it as potentially "... the most crucial aspect of organizational life" (Lawrie, 1990). Between these two extremes lie various schools of belief. While all endorse the use of performance appraisal, there are many different opinions on how and when to apply it, There are those, for instance, who believe that performance appraisal has many important employee development uses, but scorn any attempt to link the process

to reward outcomes -such as pay rises and promotions. This group believes that the linkage to reward outcomes reduces or eliminates the developmental value of appraisals. Rather than an opportunity for constructive review and

encouragement, the reward- linked process is perceived as judgmental, punitive and harrowing. For example, how many people would gladly admit their work problems if, at the same time, they knew that their next pay rise or a much-wanted promotion was riding on an appraisal result? Very likely, in that situation, many people would deny or downplay their weaknesses.

Nor is the desire to distort or deny the truth confined to the person being appraised. Many appraisers feel uncomfortable with the combined role of judge and executioner. Such reluctance is not difficult to understand. Appraisers often know their appraises well, and are typically in a direct subordinate-supervisor relationship. They work together on a daily basis and may, at times, mix socially. Suggesting that a subordinate needs to brush up on certain work skills is one thing; giving an appraisal result that has the direct effect of negating a promotion is another. The result can be resentment and serious morale damage, leading to workplace disruption, soured relationships and productivity declines.

On the other hand, there is a strong rival argument which claims that performance appraisal must unequivocally be linked to reward outcomes. The advocates of this approach say that organizations must have a process by which rewards -which are not an unlimited resource -may be openly and fairly distributed to those most deserving on the basis of merit, effort and results. There is a critical need for remunerative justice in organizations. Performance appraisal -whatever its practical flaws -is the only process available to help achieve fair, decent and consistent reward outcomes. It has also been claimed that appraisees themselves are inclined to believe that appraisal results should be linked directly to reward outcomes -and are suspicious and disappointed when told this is not the case. Rather than feeling relieved; appraises may suspect that they are not being told the whole truth, or that the appraisal process is a sham and waste of time.

The Link to Rewards

Recent research (Bannister & Balkin, 1990) has reported that appraisees seem to have greater acceptance of the appraisal process, and feel more satisfied with it, when the process is directly linked to rewards. Such findings are a serious challenge to those who feel that appraisal results and reward outcomes must be strictly isolated from each other. There is also a group who argues that the
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evaluation of employees for reward purposes, and frank communication with them about their performance, are part of the basic responsibilities of management. The practice of not discussing reward issues while appraising performance is, say critics, based on inconsistent and muddled ideas of motivation. In many organizations, this inconsistency is aggravated by the practice of having separate wage and salary reviews, in which merit rises and bonuses are decided arbitrarily, and often secretly, by supervisors and managers. There are basically three purposes to which performance appraisal can be put. First, it can be used as a basis for reward allocation. Decision as to who gets salary increase, promotion, and other rewards are determined by their performance evaluation. Second, these appraisals can be used for identifying areas where development efforts are needed. The performance appraisal is a major tool for identifying deficiencies in individuals. Finally it can be used as a criterion against which selection devices and development programs are validated. As a key input into management's reward and punishment decision, performance appraisals can motivate or de-motivate employees. Three different approaches exist for doing appraisals. Employees can be appraised against 1. Absolute standards
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2. 3.

Relative standards Objectives

PERFORMANCE MANAGEMENT

Since organizations exits to achieve goals, the degree of success that individual employees have in reaching their individual goals is important in determining organization effectiveness. Performance system is fundamentally, a feed back process, which requires sustained commitment. The cost of failure to provide such feedback may result in a loss of key professional employees, the continued poor performance of employees who are not meeting performance standards and a loss of commitment by employees, in sum, the myth that the employee knows what. They are doing without adequate feedback from management can be an expensive fantasy.

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THE PERFORMANCE MANAGEMENT CYCLE

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OBJECTIVE OF THE STUDY

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OBJECTIVE OF THE STUDY This project aims at studying the system of performance appraisal and its effectiveness in an organization. Performance appraisal is the most significant and indispensable tool for the management as it provide useful information for decision making in area of promotion and compensation reviews. Thus broad objectives of the study include: To study the system of performance appraisal To know the extent of effectiveness of the appraisal system To know the importance of performance appraisal

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RESEARCH

METHODOLOGY

RESEARCH METHODOLOGY DEFINITION OF RESEARCH A systematic search for knowledge

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 Movement from known to unknown. Research in common refers to search for knowledge. One can also define research as a Scientific and systematic research for pertinent information on specific topics. It is a way to systematically solve the research problem. In it we study various steps that are generally adopted by a researcher in studying his research problem along with the logic behind them. It is important for the researcher not only to understand the research methods and techniques but also the methodology. RESEARCH OBJECTIVE The purpose of research is to discover answers to question through the application of scientific procedure. The main aim of research is to find out the truth which is hidden and which has not been discovered as yet. Though each research study has its own specific purpose, we may think of research objectives as falling into a number of following broad groupings: 1. To gain familiarity with a phenomenon or to achieve new insight into it (studies with this object in view are termed as exploratory or formulative research studies).

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2.

To portray accurately the characteristics of a particular individual, situation or a group (studies with this object in view are known as descriptive research studies)

3.

To determine the frequency with which something occurs or with which it is associated with something else (studies with this object in view are known as diagnostic research studies)

4.

To test a hypothesis of a causal relationship between variables (such studies are known as hypothesis- testing research studies).

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RESEARCH PROCESS

Formulating research problem

Steps of
Extensive literature survey.

Research
Developing hypothesis.

Survey.

Process

Preparing research design

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Data mining sample design.

Collecting the data.

Analysis of data.

Hypothesis testing.

Generalization & interpretation.

Report writing.

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COLLECTION OF DATA

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COLLECTION OF DATA There are several ways of collecting the appropriate data, which differ considerably in context of money costs, time and other resources at the disposal of the researcher. Primary data Primary

data is collected for the first time and can be collected either through experiment or through survey. Secondary data Secondary

data means data that are already available i.e., they refer to the data, which have already been collected and analyzed by someone else. When the researcher utilizes secondary data, then he has to look into various sources from where he can obtain them. Secondary data may either be published data or unpublished data. Usually published data are available in, (a) Books, magazines, and newspaper (b) Reports and publications of various associations connected with business and industry, bank stock exchange
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(c) Public record, and statistics, historical documents and other sources of published information like website of company. (Data is collected primarily from Secondary sources)

CONCEPT OF PERFORMANCE

APPRAISAL

PERFORMANCE APPRAISAL

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Since organization exist to achieve goals, the degree of success that individual employees have in reaching their individuals goals is important in determining organizational effectiveness. The assessment of how successful employees have been at meeting their individual goals, therefore, becomes a critical part of HRM. This leads us to the topic of performance appraisal. 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.

Performance appraisals are widely used in the society. The history of performance appraisal can be dated back to the 20th century and then to the second world war when the merit rating was used for the first time. An employer evaluating their employees is a very old concept. Performance appraisals are an indispensable part of performance measurement.

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Meaning of performance appraisal Performance appraisal is a method of evaluating the behavior of employees in the work spot, normally including both the qualitative and quantitative aspects of job performance. Performance here refers to the degree of accomplishment of the tasks that make up an individuals job. It indicates how well an individual is fulfilling the job demands. Often the term is confused with efforts, which means energy expanded and used in a wrong direction. Performance is always measured in terms of results. For example: A student may exert a great deal of efforts while preparing for the examinations but manages to get a poor grade. In this case the effort expanded is high but performance is low. Performance appraisal is the systematic evaluation of the individual with respect to his performance on the job and his potential for development.
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What is performance appraisal? Identification: This means determining what areas of work the manager should be examining when measuring performance that affects organizational success. Measurement: Entails making managerial judgments of how good or bad employee performance was. Management: Appraisal should be more than a post-mortem examination of past events, criticizing or praising workers for their performance in the preceding year. Instead, it must make a future oriented view of what workers can do to realize their potential.

Characteristics of performance appraisal

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 Performance appraisal is a process involving three steps: a. setting work standards. b. assessing employees actual performance relative to these standards. c. offering feed back to the employee so that he

can eliminate deficiencies

Performance appraisal tries to find out how well an employee is on job and tries to establish a plan for further improvement.

Performance appraisal is carried out periodically, according to a definite plan. It is not a one shot deal.

Performance appraisal is a future oriented activity showing employees where things gone wrong, how to set everything in order, and deliver results using their potential in a proper way.

Performance appraisal is not job evaluation. It refers to how well someone is doing an assigned job. While job evaluation is how much a job is worth to the organization.

THE APPRAISAL PROCESS

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Establishing performance standard

Communicate performance expectations to employee

Measure actual performance

Compare actual performance with standards

Discuss the appraisal with the employees.

Initiate the corrective action

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Description of the steps involved in performance appraisal

1. 2. 3. 4. 5.

Establishing Performance Standard Communicate Performance expectations to employees Measure actual performance Compare actual performance with standards Discussion with the employees and identification development programs to bridge the gap.

6.

Initiate action

The appraisal process begins with the establishment of performance standards. These should have evolved out of job analysis and the job description discussed under human resource planning. These performance standards should also be clear and objective enough to be understood and measured. Too often, these standards are articulated in some such phrase as "a full day's work" or "a good job". Communication only takes place when the transference has taken place and has been received and understood by the subordinate. Therefore feedback is necessary from the subordinate to the manager. Satisfactory feedback censures
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that the information communicated by the manager has been received and understood in the way it was intended.

The third step in the appraisal in the measurement of performance. To determine what actual performance. To determine what actual performance is, it is necessary to acquire information about it. We should be concerned with how we measure and what we measure.

What we measure is probably more critical to the evaluation process than how we measure, since the selection of the wrong criteria can result in serious dysfunctional consequences. And what we measure determines, to a great extent, what people in the organization will attempt to excel at.

One of the most challenging tasks facing managers is to present an. accurate appraisal to the subordinate and then have the subordinate accept the appraisal in a constructive manner. Appraising performance touches on one of the most emotionally charged activities the assessment of another individual's contribution and ability. The impression that subordinates receive about their assessment has a strong impact on their self-esteem and, very important, on their subsequent performance. The final step in the appraisal is the

initiation of corrective action when necessary. Corrective action can, be of two types. One is immediate and deals predominantly with symptoms. The other is
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basic and delves into causes. Immediate corrective action often described as "putting out fires," whereas basic corrective action gets to the source of deviation and seeks to adjust the difference permanently.

Immediate action corrects something right now and gets things back on track.

THE IMPORTANCE OF APPRAISING PERFORMANCE In general the appraisal systems serve following purposes: Compensation decisions: It can serve as a basis for pay raises. Managers need performance appraisal to identify employees who are performing at or above expected levels. Promotion decisions: It can serve a useful basis for job change or promotion. The person doing their best receives the promotion. It helps in minimizing the feelings of frustration of those who are not promoted. Training and development programmes: It can serve as a guide for formulating a suitable training and development program.

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 Feed back: Performance appraisal enables the employee to know how well he is doing on the job Personal development: Performance appraisal can help to reveal the causes of good and poor performance.

REQUIREMENTS SYSTEM. Reliability

FOR

THE

PERFORMANCE

MANAGEMENT

The

foremost requirement of a sound system is reliability. In this contact it refers to consistency of judgment. For any given employee, appraisals made by raters working independently of one another should agree closely. But raters with different perspective (e.g. supervisors, peers, subordinates) may see the same individuals job performance very differently. To provide reliable data, each rater

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must have an adequate opportunity to observe what the employee has done and the condition under which he or she has done it. By making appraisal system relevant, sensitive and reliable we assume the resulting judgments are valid as well. Acceptability In

practice, acceptability is the most important requirement of all, for it is true that human resources program must have the support of. those who will use them. Unfortunately, many organizations do not put much effort into garnering the front end support and participation of those who will use the appraisal system. Ultimately it is management's responsibility to define as clearly as possible the type and level of job behavior desired of employees. It is important to enlist the active support and cooperation of subordinates by making explicit what aspects of job performance they will be evaluated on.

Practicality This implies that appraisal instruments are easy for managers and employees to understand and to use. For years, personnel specialists have searched for the 'Perfect; appraisal method as if it were some kind of miraculous cure for many pitfalls that plague organizations.
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Such a method does not exist. In tomorrows world of work far more emphasis needs to be placed on process issues. Factors such as timing and frequency are no less important. In sum performance appraisal is a dialogue involving people and data. Both technical and human issues are involved. Neither can be overemphasized at the expense of the other.

PERFORMANCE CAN BE EVALUATED BY

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The most fundamental requirement for any rater is that he or she has an adequate opportunity to observe the rates job performance over a reasonable period of time. This suggests several possible raters. Performance can be evaluated by The supervisor Peers Subordinates Self-appraisal Supervisor Generally appraisal is done by this person. He is probably the most familiar with the individual's performance and in most jobs has had the best opportunity to observe actual job performance. Further more, the immediate supervisor is probably best able to relate the individual's performing to department and organizational objectives. In some jobs such as outside sales, law enforcement and teaching, the immediate supervisor may observe a subordinate's actual job performance rarely (and indirectly thru written reports). Here judgment of peers play important role. However, there is a danger of potential bias.
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Peers Peer appraisal may be reliable if the work group is stable over a reasonably long duration of time and performs task that need interaction. This is mostly used in military rather in business organizations. Subordinates Appraisal

by subordinates can be useful input to the immediate development. Subordinates know first hand the extent to which the supervisor actually delegates, how well he communicates, the type of leadership he has and the extent to which he or she plans and orgasms. Self appraisal On one

hand it improves the rate's motivation and moral, on the other it tends to be more lenient, less variable and biased. The evidence on the accuracy of self assessment is fairly complex. In industry it is seen that feed back/ input is taken from various sources -Peers, subordinates, superiors etc. Some companies have gone step ahead in taking feedback from the customers and integrating it into the performance management process.

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36

Self appraisal is an important part of the Performance appraisal process where the employee himself gives the feedback or his views and points regarding his performance. Usually this is done with the help of a self appraisal form where the employee rates himself on various parameters, tells about his training needs, if any, talks about his accomplishments, strengths, weaknesses, problems faced etc. TIPS FOR SELF APPRAISAL

Truthful Always be truthful and honest while telling your accomplishments or failures. Dont exaggerate your strengths and dont hide your weaknesses. Dont make personal judgments for anybody.

Its always better to prepare yourself before the self appraisal. Objectivity Objectivity is important in self appraisal. Dont exaggerate or downplay your achievements or failures. Be specific and concise in your statements and if possible support them with examples or references or evidences with dates. For example: "I responded to all queries within 48 hours" is better than just saying "My customer service was good." Positive attitude
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Preparation for Performance Review

Preparation for Performance Review is done as follows The performance review meeting should not be strictly formal nor should it be completely informal in nature. Ideally, the review meeting should be structured, semi formal meeting which needs prior preparation by the appraiser as well as the employee.

Following are some points that need to be prepared before the review
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meeting of Performance appraisal: Inform the concerned employees the date, time and place for the review meeting well in advance. Review and be prepared with each and every employees
o o o o o o

Job description Performance standards Planned performance goal Performance measures collected throughout the time period The critical incidents details Past appraisals of the employees.

Other things to be remembered

Be ready with all the important dates Give the employee a copy of the appraisal form The appraiser needs to completely understand the standards for the employees at same level to maintain the consistency in the process.

Prepare what to say and how to say it calmly.

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The feedback should be prepared in quantifiable measures where ever possible.

The appraiser should be familiar with the performance review form and the details

The employee and the appraiser both should be prepared to discuss and figure out the future goals and training needs

They should be mentally prepared for constructive feedback Collect as many evidences to support your point as possible like the monthly, quarterly progress reports.

PERFORMANCE REVIEW MEETING Performance Review Meeting Today, performance review meetings are regarded as

conversation with a purpose. They are considered extremely important for the development and health of the organization. The purpose of the performance review meetings is to reach mutually agreed conclusions about the development of the individual and his performance and if applicable, any areas for improvement, including how such improvements are to be achieved.

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The purpose of performance and development reviews is to enable the employees to engage in a dialogue and get the support of the manager about the individuals performance and development. They should be more like free- flowing, open meetings in which views are exchanged so that agreed conclusions can be reached.

The three key elements of performance review meetings are: 1. Feedback - Providing information on how a person has been doing. 2. Measurement assessing results against agreed targets and standards. 3. Exchange of views - Ensuring that the discussion involves a full, free and frank exchange of views about what has been achieved, what needs to be done to achieve more and what employees think about their work the way they are managed and their aspirations. Performance appraisal review is the meeting when the employee can be motivated to perform better in future or reinforce his desirable behavior. Review discussion meetings ideally should include the following:

Review of progress on tasks and activities in relation to the employees performance plan,
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The developmental initiatives taken by the employee himself and those planned by the management for the employee.

Identification of variances in terms of delays, requisite quality and shortfall in help planned for the employee, if any

Analyzing the causes of the delay, the problems faced and the solutions adopted.

Preparation of action steps for solving identified problems and contingency plans for anticipated problems.

Periodic review meetings become meaningful only when they help pause, reflect, take stock and strategize in an otherwise active relationship. How to Complete Performance Appraisal Form Performance appraisal form provides the basis for the performance review, providing the feedback to the employees and the final rating of the employee. It also facilitates various other HR decisions and career development plans and decisions of the employees. Therefore, performance appraisal from should be filled with utmost care and objectivity.

The Performance appraisal form should be filled by the immediate

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supervisor or manager of the employee in order to ensure that the appraiser if fully acquainted with the performance, responsibilities, targets and standards of the employee. All the instructions and guidelines on the appraisal form should be read and followed carefully.

Be prepared with all the details of the performance, the standards, job description and the past appraisals of the employee.

Clear and unambiguous description of the employee performance should be given in terms of average, above average, good and excellent performance.

The focus should be on the employees behavior throughout the year and not just his recent performance.

Quantify the ratings, wherever possible, to ensure easy comparability. Substantiate and support your rating, and attach all the necessary documents (if required).

Apart from the defined performance objectives and results, discuss the related issues as well covering all the aspects of the performance.

When filling the appraisal form, be honest and objective.

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Analysis for Improving Performance

o Any performance review process is incomplete without the feedback to the employees. The feedback could be given in the review discussion. Review discussions are semi formal, scheduled, periodic interactions usually bimonthly or quarterly between a manager and his employee. The basic purpose of the review discussion is to analyze the performance of the employee in the past to improve the performance of the employee in future.

A review discussion is an opportunity to coach, mentor, learn and understand. The manager encourages his/her employees to critically reflect over progress made on the Performance appraisal plan and to develop creative, yet feasible alternatives for problem areas.

The manager uses this opportunity to:

Review the performance of the each employee individually.

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Discuss the problems faced by the employees during the course of action.

The solutions tried, and the degree of success achieved in solving the problems faced.

Revisit with the employee, his/ her annual plan for the remaining time period and develop revised action plans, if necessary.

Review discussions reassure the employees that each one of them has structured opportunities for one to one interaction with the manager once every two or three months during the year. These opportunities are important as they provide an important chance for performance monitoring or development mentoring. The aim of the performance review discussions is to share perceptions, solve the problem faced during the course of the action, decide on the new goals jointly and provide a feedback to the employee for the past performance i.e. to look at his strengths and weaknesses and also help to chart out a career plan for the employee. The focus of these performance review discussions should not bet o judge the employees past performance; rather it should be to motivate the employee to improve his future performance and reinforce his good behavior. Active Performance Appraisal Conversation

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Active Performance Appraisal Conversation Active conversation plays an important part in the performance review meeting. The appraiser should ensure that the meeting has a two way conversation and that the employee should get a fair chance to speak. The "manner" of giving the feedback of the performance of the employee is very important. The conversation should have an optimistic and motivating tone.

Some important points that should be taken care of in the active performance appraisal conversation are:

1. Make

it

two-way

conversation. An

effective performance

appraisal review requires an interactive discussion with an open agenda. Try to formulate questions that seek the employees ideas and input. This will help the employee feel you value his or her opinions. Give the employee a fair chance to put forward his ideas; let him speak.

2. Be a good listener. Remember to be an active listener and to pick up on

your employees verbal and nonverbal cues. Listen to his ideas and
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problems.

3. Address whats important to the employee. Since job satisfaction is the

most important factor affecting an employees attitude (and therefore his or her level of performance and value to your company), an effective review should delve into areas that include issues most important to that employee.
4. Lead with the positive. Its important to reaffirm the employees

strengths at the beginning of the review. Since job security is the number one concern of most people, the performance review is a good time to tell an employee how much you value their contributions to your business.
5. Dont be confrontational. Its important not to criticize the employee in

general terms. The goal is to evaluate job performance and not the person. A performance review that turns into a gripe session misses the

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opportunity to raise employee morale.

6. Positive reinforcement emphasizing what has been done well so that it

will be done even better in the future and making only constructive criticisms (i.e. those that point the to way to improvement).
7. Exchange of views - Ensuring that the discussion involves a full, free and

frank exchange of views about what has been achieved, what needs be done to achieve more and what the appraiser think about their work the way they are managed and their aspirations.
8. Agreement - jointly coming to an understanding about what has to be

done by both parties to improve performance, knowledge and skills and overcome any work problems raised during the discussion

Performance Appraisal Feedback Performance appraisal process is incomplete without the feedback given to the employee about his appraisal and his performance. But the way of giving as well as receiving the feedback differs from person to person and their way of handling and their outlook
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towards the issue.

According to a popular saying:

"A SUCCESSFUL MAN IS ONE WHO CAN LAY A FIRM FOUNDATION WITH THE BRICKS OTHERS HAVE

THROWN AT HIM."

Therefore, On the part of the person receiving the feedback, the following points are important to be taken care of:
o

The employee should have a positive attitude towards the feedback process

He should listen to the suggestions of the appraiser calmly and try to incorporate them in his plans.

o o o o

He should not hesitate to ask for the help of his superiors. Should have a co-operative attitude during the feedback meeting. Dont judge the appraiser as a person. Should take the feedback objectively
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Should not judge the appraiser as a person on the basis of the feedback.

On the part of the appraiser or the manager / person giving the feedback, the following points are to be taken care of:
o

The appraiser should make the receiver feel comfortable during the feedback meeting.

The appraiser should make it a two way conversation i.e. let the employee speak.

o o

Listen to the employee and note his points, suggestions, problems etc. The appraiser should not adopt a confrontational approach towards the meeting. The goal is not to criticize the employee.

Provide a constructive feedback to the employee i.e. in a way which will motivate him to perform better.

o o o o

Have a positive attitude towards the process Try to understand the reasons of his failure. Be fair and objective Prepare yourself for what to say and how to say. Make the appraisal feedback meeting useful and productive for the organization and the employee.
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PERFORMANCE CONSULTING: MOVING BEYOND TRAINING Organizations are growing in size, becoming complex and the importance of trained and developed workforce is also increasing. One of the major objectives and benefits of the performance appraisal is that it helps in identifying the training needs of the employee and reducing the gap between the actual and the desired performance of the employees. ButPerformance appraisal also facilitates the other decisions like: Compensation and rewards Performance Feedback Manpower planning Performance improvement Promotions and transfers HR Documentation

To meet the increasing competition and the challenging organizational goal, the human resource departments of the organisations throughout the world are moving away from the traditional and the theoretical training methods.
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The organisations are focusing on "Performance Consulting"i.e. the practical aspects of the employee training and what the employees should do to achieve the organizational goals. Therefore, to improve the effectiveness and the performance, the conventional role of the trainers have changed to "performance or HR consultants".

Performance consulting refers to the actual transfer of the new skills, competencies acquired through the training to the job, focusing on the employees performance needs i.e. the needs to improve the performance.

The responsibilities and roles of performance consultant are:

To attain a balance between the needs of the organization and the employees.

Create synergy and teamwork. Identifying and solving the problems faced by the employees. Assessing and measuring the actual performance of the employees. Identifying and improving the internal and external factors affecting the performance of the employees.

Motivate and support the employees.

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Review and feedback of the performance, facilitating performance improvement

From the above functions and the role of the performance consultants, they have become valued partners to the top level management of the organizations in successfully achieving the organizational goals.

Writing Performance Appraisals

Writing performance appraisal involves creating a document which has the summary of the every employees performance over a period of time and a snapshot of their observed strengths and weaknesses, and the raters feedback that can be used for other purposes.

Writing Performance appraisal depend significantly on the writers various abilities and a combination of other factors. A rater or a manager needs :

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 An objective rating method to assess an employees performance, behavior, and skills and knowledge. All the relevant data related to the employees performance, the standards, his job description. To observe and accurately recall the employees behavior throughout the time period of the appraisal.

Appraisal as Employee Motivation Mechanism Keeping in mind the growing attrition rates and the employee dissatisfaction among the employees, the HR professionals are approaching and using the performance appraisal as a fuel to motivate employees. The latest trend being followed by the HR professionals is to use the performance appraisal and review process as a motivating mechanism. Various surveys and studies have testified the relationship between
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performance, pay and motivation.

Other than the traditional goal of accessing the performance of the employees, Performance appraisals and reviews can be used as a tool to reinforce the desired behaviour and competent performance of the employees.

One of the most motivating factors for the employees, in the appraisal processes is to receive a fair an accurate assessment of their performance. Inaccurate evaluation is one reason because of which most employees dread going through performance appraisals. An employee always expects his appraiser to recognize and appreciate his achievements, support him to overcome the problems and failures.

The discrepancies and the inaccuracies in the performance review can demotivate the employees, even if there has been an increase in the salary. Such inaccuracies can kill the innovating and risk taking enthusiasm and spirit in the employees. Similarly, inaccurate reviews with no hike in compensation can increase the attrition rate in the organisation, forcing the employees to look out for other options.
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An employee prefers an accurate performance review with no increase in the salary over inaccurate performance review with an increase in salary.

Employees, who receive both accuracy and a pay increase during their performance review, are likely to be the most motivated. Therefore, performance appraisal (review and its consequence in the form of compensation adjustments) has the potential of motivating employees and increasing their job satisfaction.

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Training for appraisers Every organization conducts performance for assessing the performance of the employees and the organization. But if not conducted properly, they can give a false impression about the performance of the employees and affect the overall
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Feedback techniques (providing constructive feedback) How to deal with non-performers and people who refuse to cooperate

Post review actions

The training can be given by conducting special workshops by professional HR consultants or qualified and experienced HR professionals of human resource management. The venue for the purpose can be a suitable seminar hall, training room, conference hall, boardroom, or at some place away from the workplace like some hotel etc.

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59

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Also take note of the skills, knowledge and competencies and behaviors of the employees that help the organization to achieve its goals.

If possible, collect the feedback about the performance of the employees through multi-point feedback and self-assessments.

Financial measures like the return on investment, the market share, the profit generated by the performance of the team should also be considered.

For an organisation to be an effective organisation and to achieve its goals, it is very important to monitor or measure its and its employee performance on a regular basis. Effective monitoring and measuring also includes providing timely feedback and reviews to employees for their work and performance according to the pre-determined goals and standards and solving the problems faced. Timely recognition of the accomplishments also motivates the employees and help to improve the performance. Measuring the performance of the employees based only on one or some factors can provide with inaccurate results and leave a bad impression on the employees as well as the organization. For example: By measuring only the activities in employees performance, an organization might rate most of

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its employees as outstanding, even when the organization as a whole might have failed to meet its goals and objectives. Therefore, a balanced set of measures (commonly known as balanced scorecard) should be used for measuring the performance of the employee.

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Global Trends In Performance Appraisal Program

Global Trends In Performance Appraisal Program

Current Global Trends In Performance Appraisal Program The performance appraisal process has become the heart of the human resource management system in the organisations. Performance appraisal defines and measures the performance of the employees and the organisation as a whole. It is a tool for accessing the performance of the organisation.

The important issues and points concerning performance appraisal in the present world are: The focus of the performance appraisals is turning towards
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career development relying on the dialogues and discussions with the superiors. Performance measuring, rating and review systems have become more detailed, structured and person specific than before.

Performance related pay is being incorporated in the strategies used by the organisations. Trend towards a 360-degree feedback system The problems in the implementation of the performance appraisal processes are being anticipated and efforts are being made to overcome them. In India, the performance appraisal processes are faced with a lot of obstacles, the most prominent being the lack of quantifiable indicators of the performance.

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Methods of Performance

Appraisal

Methods of Performance Appraisal

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360 degree feedback, also known as 'multi-rater feedback', is the most comprehensive appraisal where the feedback about the employees performance comes from all the sources that come in contact with the employee on his job. Organizations are increasingly using feedback from various sources such as peer input, customer feedback, and input from superiors. Different forms with different formats are being used to obtain the information regarding the employee performance.

Group appraisal: An employee is appraised by the group of appraisers. This group consists of the immediate supervisor of the employee, other supervisors who have close contact with the employees work, manager and the consultant. Ranking Method: ranking of the employees in a work group is done against that of the other employee. The relative position of each employee is expressed in terms of his numerical rank. Rank and Yank Strategy: Also known as the "Up or out policy", the rank and yank strategy refers to the performance appraisal model in which bestto-worst ranking methods are used to identify and separate the poor

66

performers from the good performers. Then the action plans and the improvement opportunities of the poor performers are discussed and they are given to improve their performance in a given time period, after which the appropriate HR decisions are taken. Some of the organizations following this strategy are Ford, Microsoft and Sun Microsoft.

Management by objectives: MBO requires the management to set specific, measurable goals with each employee and then periodically discuss the latters progress towards these goals Graphic rating scale: A printed form is used to evaluate the performance of an employee. A variety of traits may be used in these types of rating devices, the most common being the quantity and quality of work. Checklists and weighted checklists: It represents in its simplest form, a set of objectives or descriptive statements about the employee and his behavior. Some of the sample questions are : Is the employee really interested in the task assigned? Yes/No
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 Is he respected by his colleagues? Does he respect his superiors?

Yes/NO

Yes/No

Performance Appraisal For Employees at Different Levels

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Performance Appraisal For Employees at Different Levels Performance appraisal is important for employees at all levels throughout the organization. The parameters, the characteristics and the standards for evaluation may be different, but the fundamentals of performance appraisal are the same. But as the level of the employees increases, performance appraisal is more effectively used as the tools of managing performance.

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Criteria for measuring performance at different levels: The criteria for measuring performance changes as the levels of the employees and their roles and responsibilities change.

few

examples

for

each

level

are

described

below:

For top level management

Degree of organizational growth and expansion Extent of achievement of organizational goals Contribution towards the society Profitability and return on capital employed

For middle level managers

Performance of the departments or teams Co-ordination with other departments

Optimal use of resources Costs Vs. revenues for a given period of time
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The communication with superiors and subordinates

For front line supervisors

Quantity of actual output against the targets Quality of output against the targets Number of accidents in a given period

Rate of employee absenteeism Two things to be noted and evaluated for the purpose of

appraisals are:

Performance in accomplishing goals, and Performance as managers

Performance in accomplishing goals

Managers are responsible for the performance of their teams as a whole. Performance in accomplishing goals would mean to look at the completion or achievement of the goals set for a team of employees which is being assigned to or working under a particular manager. The best measuring criteria for a manager are hi goals, his plans of course of action to achieve them and the extent of achievement of the goals.
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Performance of managers Appraising the performance of managers is very important, but at the same time, it is one of the most difficult tasks in the organization. It is difficult because most of the managerial work cannot be quantified i.e. it is qualitative in nature like leading his/her team, guiding The responsibilities of managers include a series of activities which are concerned with planning, organizing, directing, leading, motivating and controlling. Managers can be rated on the above parameters or characteristics .

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PERFORMANCE APPRAISAL SYSTEM IN DABUR

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Dabur Milestones to success Dabur India Ltd. made its beginnings with a small pharmacy, but has continued to learn and grow to a commanding status in the industry. The Company has gone a long way in popularizing and making easily available a whole range of products based on the traditional science of Ayurveda. And it has set very high standards in developing products and processes that meet stringent quality norms. As it grows even further, Dabur will continue to mark up on major milestones along the way, setting the road for others to follow. 1884 - Established by Dr. S K Burman at Kolkata 1896 - First production unit established at Garhia 1919 - First R&D unit established Early 1900s Production of Ayurvedic medicines

Dabur identifies nature-based Ayurvedic medicines as its area of specialisation. It is the first Company to provide health care through scientifically tested and automated production of formulations based on our traditional science. 1930 - Automation and upgradation of Ayurvedic products manufacturing initiated 1936 - Dabur (Dr. S K Burman) Pvt. Ltd. Incorporated 1940 - Personal care through Ayurveda Dabur introduces Indian consumers to personal care through Ayurveda, with the launch of Dabur Amla Hair Oil. So popular is the product that it
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becomes the largest selling hair oil brand in India. 1949 Launched Dabur Chyawanprash in tin pack

Widening the popularity and usage of traditional Ayurvedic products continues. The ancient restorative Chyawanprash is launched in packaged form, and becomes the first branded Chyawanprash in India. 1957 Computerisation of operations initiated 1970 Entered Oral Care & Digestives segment

Addressing rural markets where homemade oral care is more popular than multinational brands, Dabur introduces Lal Dant Manjan. With this a conveniently packaged herbal toothpowder is made available at affordable costs to the masses. 1972 - Shifts base to Delhi from Calcutta 1978-Launches Hajmola tablet

Dabur continues to make innovative products based on traditional formulations that can provide holistic care in our daily life. An Ayurvedic medicine used as a digestive aid is branded and launched as the popular Hajmola tablet. 1979 - Dabur Research Foundation set up 1979 - Commercial production starts at Sahibabad, the most modern herbal medicines plant at that time

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1984 - Dabur completes 100 years 1988 - Launches pharmaceutical medicines 1989 Care with fun

The Ayurvedic digestive formulation is converted into a children's fun product with the launch of Hajmola Candy. In an innovative move, a curative product is converted to a confectionary item for wider usage. 1994 - Comes out with first public issue 1994 - Enters oncology segment 1994 Leadership in health care

Dabur establishes its leadership in health care as one of only two companies worldwide to launch the anti-cancer drug Intaxel (Paclitaxel). Dabur Research Foundation develops an eco-friendly process to extract the drug from its plant source 1996 - Enters foods business with the launch of Real Fruit Juice 1996-Real blitzkrieg

Dabur captures the imagination of young Indian consumers with the launch of Real Fruit Juices - a new concept in the Indian foods market. The first local brand of 100% pure natural fruit juices made to international standards, Real becomes the fastest growing and largest selling brand in the country. 1998 - Burman family hands over management of the company to professionals
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2000

The

1,000

crore

mark

Dabur establishes its market leadership status by staging a turnover of Rs.1,000 crores. Across a span of over 100 years, Dabur has grown from a small beginning based on traditional health care. To a commanding position amongst an august league of large corporate businesses. 2001 Super specialty drugs

With the setting up of Dabur Oncology's sterile cytotoxic facility, the Company gains entry into the highly specialised area of cancer therapy. The state-of-the-art plant and laboratory in the UK have approval from the MCA of UK. They follow FDA guidelines for production of drugs specifically for European and American markets. 2002 - Dabur record sales of Rs 1163.19 crore on a net profit of Rs 64.4 crore 2003 - Dabur demerges Pharmaceuticals business Maintaining global standards As a reflection of its constant efforts at achieving superior quality standards, Dabur became the first Ayurvedic products company to get ISO 9002 cetificate Science for nature Reinforcing its commitment to nature and its conservation, Dabur Nepal, a subsidiary of Dabur India, has set up fully automated greenhouses in Nepal. This scientific landmark helps to produce saplings of rare medicinal plants that are under threat of extinction due to ecological degradation. 2005 - Dabur aquires Balsara

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2006 - Dabur announces bonus after 12 years 2006 - Dabur crosses $2 bin market cap, adopts US GAAP. 2007 - Celebrating 10 years of Real Dabur Foods unveiled the new packaging and design for Real at the completion of 10 years of the brand. The new refined modern look depicts the natural goodness of the juice from freshly plucked fruits. 2008 - Foray into organised retail Dabur India announced its foray into the organised retail business through a wholly-owned subsidiary, H&B Stores Ltd. Dabur will invest Rs 140 crores by 2010 to establish its presence in the retail market in India with a chain of stores on the Health & Beauty format. 2008 - Dabur Foods Merged With Dabur India Dabur India decides to merge its wholly-owned subsidiary Dabur Foods Limited with itself to extract synergies and unlock operational efficiencies. The integration will also help Dabur sharpen focus on the high growth business of foods and beverages, and enter newer product categories in this space.

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Performance Appraisal system in Dabur a. Outstanding -If the performance evaluated by the management turns out to be outstanding. If the employee performs in such a way as to collect 3 consecutive outstanding performance into his/her credit) he / she gets promoted. b. Excellent -If the performance evaluated by the management turns out to be excellent. If the employee performs in such a way as to collect 3 consecutive excellent performance into his/her credit, he/she gets promoted. c. Good -If the performance evaluated by the management turns out to be good. The management sends the employee to the training programme to improve his/.her skill to perform form. d. Below average -If the performance evaluated by the management turns out
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to be below average. And, if the employee collects 3 below average to his/her credit, then he/she dismissed

Duration of Appraisal System The time constraints enables the employee to show or project his/her capabilities in term of performance as per the duration allowed. In Dabur India Limited, the performance appraisal system is carried out annually. Feedback The companies provide the annual feedback to its employees and thus, in term bring out the highlights of the self assessment programme. This enables the better communication between the management and employees thus, helps in promoting

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the business future.

FINDINGS

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FINDINGS

360 degree performance appraisal method is used in the study. It is found more efficient because it helps to keep a track of the changes others perceptions about the employees and the biggest advantage of 360 feedback
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to

participants

is

increased

self-awareness.

Performance appraisal is the strength of performance management, which in turn effects the organizational performance. It helps to identify and overcome the problems faced by the employees in their work. Performance appraisal is like a double edged sword for an organisation. Although it has many benefits for the organisation, various studies have also revealed that performance appraisals have the equal probability of having a bad impact on the organizational as well as the employee performance. Performance appraisal processes can create a sense of insecurity in the working environment and can become an obstacle in achieving the required changes in the attitudes and the performance of the employees. The element of bias in the appraisals . can also worsen the situation.

Therefore, performance appraisals can affect the organizational performance both positively and negatively, and should be dealt with care and expert knowledge and experience.

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CONCLUSIONS

84

Conclusions It is concluded that performance appraisal serve a very important role. Firstly, it can be used as a basis for reward allocations. Decisions as to salary increases, promotions, and other rewards are determined by their performance evaluation. Second, these appraisals can be used for identifying areas where development efforts are needed. Management needs to spot those individuals who have specific skill or knowledge deficiencies. The performance appraisal is a major tool for identifying these deficiencies. Finally, the performance appraisal can be used as a criterion against which selection devices and development programs are validated.

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Limitations

86

Limitations The performance appraisal improves the work performance and employee satisfaction, it also demotivates employees leaving a bad impression on the good employees. Most of the employees do not approve of continuous performance monitoring and performance appraisals, and also consider it as a burdensome activity. Performance appraisals and other tools which involve feedback and target management should be adapted to the employees individual needs and characteristics. Otherwise, there is a risk of harming the good employees without being able to help the less good."

Performance appraisal processes can create a sense of insecurity in the working environment and can become an obstacle in achieving the required changes in the attitudes and the performance of the employees. The element of bias in the appraisals can also worsen the situation.

Therefore, performance appraisals can affect the organizational performance both positively and negatively, and should be dealt with care and expert knowledge and experience.

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Bibliography

88

BIBLOGRAPHY

1)

Flippo Edwin B., Personnel management, Edition sixth, Tata Mc Graw Hills, 1984

2)

Gupta, C.B., Human Resource Management, Edition Fifth(Reprint),Sultan Chand and Sons, New Delhi 2001

3)

Rao, P. Subba, Essentials of Human Resource Management and Industrial Relations; Edition Second, Himalaya Publishing House, New Delhi 2001

4)

Rao,V.S. Human Resource Management Edition Second, Excel Books, New Delhi 2000

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A STUDY ON PERFORMANCE APPRAISAL

A STUDY ON PERFORMANCE APPRAISAL WITH SPECIAL REFERENCE DABUR.

QUESTIONNAIRE

SECTION ASOCIO DEMOGRAPHIC FACTORS:

1) Name ( optional ): 2)Sex : Male Female 3)Age : Upto 20 years 20 30 years 30 40 years above 40 years 4) Marital status : Married Unmarried 5) Educational qualification : SSLC HSC Diploma UG PG

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6)Department : Production HR R&D Accounts Others 7)Year of service : Upto 2 years 2 -6 years 6 -10 years above 10 years 8) Monthly Income: (in Rs.) Below 10,000 10,000 -15,000 15,000 20,000 above 20,000

SA- STRONGLY AGREE, A AGREE, NN NEITHER AGREE NOR DISAGREE, DA DISAGREE, SDA STRONGLY DISAGREE

9) Performance appraisal system is needed in organization 10) Satisfied with the existing performance appraisal system. 11) The performance of the organization is assessed by self, superior or consultant. 12) The performance appraisal helps to win co-operation and team work. 13) The performance appraisal is helpful in reducing grievance among the employees. 14) The performance appraisal is helpful for improving personnel skill. 15) Training programmers are effective for individual and organization development. 16) The performance ratings were done periodically.

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17) The performance appraisal system helps to identify the strength and weakness of the employee. 18) The performance rating is helpful for the management to provide employee counseling. 19) Promotion is purely based on performance appraisal. 20) Management fixes salary through the performance rating. 21) Performance rating helps to fix increment. 22) Transfer, demotion, suspension and dismissal is based on performance appraisal. 23) The desired target of the organization is achieved through the performance appraisal. 24) Performance appraisal increases employee motivation. 25) Appraisal system keeps on the major achievement and failure or success of work. 26) Have a separate committee to review the performance appraisal result. 27) Suggestions if any

THANK YOU VERY MUCH FOR YOUR SUPPORT

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