HRM

A STUDY ON THE PERFORMANCE APPRAISAL SYSTEM IN L&T ECC DIVISION
A PROJECT REPORT In partial fulfillment of the req uirement for the award of the degree Of
MASTER OF BUSINESS ADMINISTRATION

BY
S.KARTHIGA (REG.NO.35080234)
Under the Guidance of
Dr.N.SANTHOSH KUMAR (Asst. Professor S.G)
SRM UNIVERSITY SCHOOL OF MANAGEMENT KATTANKULATHUR 603203 MAY 2010
SRM School of Management
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ACKNOWLEDGEMENT
I wish to place sincere and special thanks to the Management of SRM SCHOOL OF MANAGEMENT and our beloved DEAN for having offered this type of program as a part of the curriculum I am highly indebt to my guide Dr. N. SANTHOSH KUMAR, for rendering valuable help in completing this training report successfully It is my immense pleasure to extend my sincere thanks to all the members of the DEPARTMENT OF MANAGEMENT for providing their valuable support and guidance. My sincere gratitude to Mrs K.Meena Priya for providing me with an opportunity to work with L&T ECC, Human Resource department at Chennai, as a company project guide who has provided me with the necessary information and his valuable suggestion and comments on bringing out this report in the best possible way.
S.KARTHIGA
DECLARATION
2 SRM School of Management
I, S.Karthiga, declare that the project report entitled , A Study on the Performance Appraisal System in Larsen & Toubro Limited ECC Division is carried out by myself under the supervision of Dr. N. Santhosh Kumar, School of Management Studies, SRM University, Kattankulathur is the result of the original work done by us.
Date:
Signature of the Student
CERTIFICATE
This is to certify that the project entitled A STUDY ON THE PERFORMANCE APPRAISAL SYSTEM IN LARSEN & TOUBRO LIMITED ECC DIVISION is a bonafide work done and submitted by S.Karthiga. In fulfillment of the requirements for the project in Masters Of Business Administration To SRM University, Kattankulathur, Tamilnadu, during the period 2008 2010.
Submitted to SRM UNIVERSITY
Faculty Incharge
LIST OF TABLES
S.NO 1 2 3 4 Cadre * Appraiser 5 6 7 Descriptive Statistics 8 9 10 11 12 13 14 15 16 17 18 19 20 Experience * Job Rotation
PARTICULARS Cadre * Satisfaction To Present PAS Experience * Satisfaction To Present PAS Cadre * Developmental Needs Are Expressible Cadre * Frank Discussion
PAGE NO. 40 41 43 44 46 47 48 50 51 52
Cadre * Percentage Of Biasing
Description Of The Present Job Performance Level
53 Satisfaction To Present PAS Job Satisfaction Self Development Performance Level Improvement Job Rotation Percentage Of Biasing Effect Of Negative Feedback Appraiser HRDs T&D Activities Significance Of PAS 60 61 62 57 58 59 54 55 56
LIST OF CHARTS
S.NO
PARTICULARS Cadre * Satisfaction To Present PAS
PAGE NO. 40 41 43 45 46 47 49 50 51 52
1 Experience * Satisfaction To Present PAS 2 3 4 Cadre * Appraiser 5 6 7 Descriptive Statistics 8 9 10 11 12 13 14 Performance Level Improvement 15 16 17 Effect Of Negative Feedback 18 19 20 Appraiser HRDs T&D Activities Significance Of PAS 60 61 63 Job Rotation Percentage Of Biasing 57 58 59 Description Of The Present Job Performance Level 53 Satisfaction To Present PAS Job Satisfaction Self Development 54 55 56 Experience * Job Rotation Cadre * Percentage Of Biasing Cadre * Developmental Needs Are Expressible Cadre * Frank Discussion
Introduction
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Executive Summary
Analysis And Interpretation

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Acknowledgement
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Recommendations And Suggestions
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Conclusion
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Bibliography
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Findings And Inferences
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Appendix
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Research Methodology
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Contents
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Company Profile
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Industry Profile
1. INTRODUCTION
Human Resource Management is developed as a part of management. In simple sense, Human Resource Management means employing people, developing their resources ,utilizing, maintaining and remunerating their services in tune with the job and organizational requirements with a view to contribute to the goals of the organization , individual and the society (Mamoria ,1999) In this process, the performance Appraisal plays a major part in ensuring organizational effectiveness through correcting employees for the desired standard and improved performance, and suggesting the change in employees behavior.
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A recent development in Human Resource Management indicates that the Performance Appraisal is the basis for employee development. Performance Appraisal indicates the gap between the level of desired performance and the level of actual performance. This gap should be bridged through human resource development techniques like training, executive development etc.
Definition:
The overall objective of Performance Appraisal is to improve the efficiency of an enterprise by attempting to mobilize the best possible efforts from individuals employed in it. Such appraisal achieves four objectives including the salary reviews, the development and training of individuals, planning job rotation and assistance promotions. - CUMMINGS
Performance appraisal deals with the assessment of the extent of the employees achievement in attaining the stipulated tasks, activities or results. Individual performance is the product of ability to perform a particular job, motivation and organization support. - RAO, 1990 PERFORMANCE DOMAINS IN ORGANIZATIONS Performance domains are those that lend themselves to evaluation of outputs. The following are considered performance domains in organizations: Mission Process Mission critical sub system Individual In all the above, the criteria for achievement can be listed and the outputs evaluated. 23 SRM School of Management
The translation of an organization Vision into individual activities and work plan is as follows: Vision/Mission Strategy Goals Work Plan Roles
Outcomes (KRAs)
Activities & Tasks
Outputs Results (Qualitative) Targets (Quantitative)
Tasks Weekly/monthly/ quarterly
Decisions Responsibility/ authority
KEY ELEMENTS IN PMS:
FLOW CHART
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1.1 MEANING OF PERFORMANCE 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 semiannual), in which the work performance of the subordinate is examined and discussed, with a view to identifying weakness and strengths as well as opportunities for improvement and skills development. Performance appraisal is the systematic description of an employees job relevant strengths and weaknesses in the work-spot, normally including both the quantitative and qualitative aspects of performance. It is a continuous process in every large scale organization.
1.2 PERFORMANCE APPRAISAL PROCESS

1. Objectives of performance appraisal should be established before hand. 25 SRM School of Management
2. Standards of performance appraisal should also be established and communicated to the Appraisees. 3. Selection of suitable appraiser should be made. 4. Collection of information by rater regarding the job and job-holder is to be carried out. 5. Method of performance appraisal is to be selected. 6. Actual performance is to be measured. 7. Actual performance must be compared with the standards. 8. Follow-up action.
NEED FOR PERFORMANCE APPRAISAL

9 To identify training needs of the employee. 9 To make the employee realize where he stands and to improve in areas where improvement is required. 9 To utilize the manpower more effectively. 9 To improve the efficiency and productivity of the organization. 9 To motivate employees to perform better. 9 To maximize the use of human potentials. 9 To make the performance base/parameters of the company known to the employees. 9 As a tool for counseling and guidance.
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9 For future job assignments. 9 It helps the appraisers to prevent grievances and to take disciplinary measures.
PURPOSE OF PERFORMANCE APPRAISAL

The purpose of performance appraisal is to identify the issues, eliminate any potential problems, and to set new goals for achieving high performance. Helps to create and maintain a satisfactory level of performance among the employees of the organization. This system helps the superiors to have a proper understanding about their subordinates and to facilitate fair and equitable compensation based on the performance. This system contributes to the employee growth and development through training, self and management development programs. This system is a future oriented activity showing employees where things have gone wrong, how to set everything in order and deliver results using their potential in a proper way.
1.3 METHODS OF PERFORMANCE APPRAISAL

With the development of the appraisal system, a number of methods or techniques of performance appraisal have been developed.
1.3.1 TRADITIONAL METHODS Graphics Rating Scales:

Graphic rating scales compare individual performance to an absolute standard. In this method, judgments about performance are recorded on a scale. This method is also known as linear rating scale or simple rating scale. The appraisers are supplied with printed forms, one for each employee. These forms contain a number of objectives, behavior and trait-based qualities and characters to be rated like quality and volume of work, job knowledge, dependability, initiative attitude etc. in the case of workers and analytical ability creative ability, initiative, leadership qualities, emotional stability in case of managerial personnel. These forms contain rating of scales. Rating scales are of two types namely Continuous rating scales and discontinuous rating scales.
Ranking Method:
Under this method, the employees are ranked from best to worst on some characteristics. The rater first finds the employee with the highest performance and the employees with the lowest performance in that particular job category and rates the former as the best and the later as the poorest. Then the rater selects the next highest and next lowest and so on until he rates all the employees in that group. Ranking can be relatively easy and inexpensive, but its reliability and validity may be open to doubt.
Paired Comparison Method:

This method is relatively simple. Under this method, the appraiser ranks the employees by comparing one employee with all other employee in a group, one at a time.
Forced Distribution Method:

The rater may rate his employees at the higher or lower end of the scale under the earlier methods. Forced distribution method is developed to prevent the raters from rating too high or too low. Under this method, the rater after assigning the points to the performance of each employee has to distribute his ratings in a pattern to conform to normal frequency distribution.
Checklist Methods:
The checklist is a simple rating technique in which the supervisor is given with a list of statements or words and asked to check statements representing the characteristics and performance of each employee. There are three types of checklist methods, namely simple checklist method, weighted checklist method and force choice method.
Essay or Free Form Appraisal:

This method requires the manager to write a short essay describing each employees performance during the rating period. This format emphasizes evaluation of overall performance based on strength/weakness of employee performance rather than specific job dimensions.
Group Appraisal:
Under this method, an employee is appraised by a group of appraisers. The group consists of the immediate supervisor of the employee, other supervisors who have a close contact with employees work, manager or head of the department and consultants.
Confidential Reports:
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Assessing the employees performance confidentially is a traditional method of performance appraisal. Under this method, the superior appraises the performance of his subordinates based on his observations, judgments and intuitions and finally prepares report on it. This method is mostly followed in public sector organizations.
1.3.2 MODERN METHODS Behaviorally Anchored Rating Scales:

BARS method combines elements of the traditional rating scales and critical incident methods. Using BARS, job behaviors from critical incident-effective and ineffective behaviors are described more objectively. The method employs individuals who are familiar with a particular job to identify its major components. Then they rank and validate specific behavior for each of the components.
Human Resource Accounting:

Human Resource Accounting deals with cost of and contribution of human resources to the organization. Cost of the employee includes cost of manpower planning, recruitment, selection, induction, orientation, placement, training and development wages, benefits etc. Contribution of the employees (i.e) employee services can be measured by labor productivity or value added by the human resources.
Management by Objectives:
Management by objectives is a process whereby the superior and subordinate managers of an organization jointly identify its common goals, define each individuals major areas of responsibility
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in terms of results expected of him and use these measures of guides for operating the unit and assessing the contribution of its members. Thus, MBO focuses attention on participative management and set goals that are tangible, verifiable and measurable.
Psychological Appraisal:
Psychological Appraisals are conducted to assess the employees potential. Psychological appraisals consist of in depth interviews, psychological tests, consultation and discussion with the employees, discussion with the superiors, subordinates and peers and reviews of other evaluation. Evaluation is conducted in the areas of employees intellectual abilities, emotional stability, motivational responses, reasoning and analytical abilities, and interpretation and judgment skills, social ability. The psychological appraisal results are used for decision about employees placement, career planning and development and training and development.
1.4 CRITERIA & TYPES OF PERFORMANCE APPRAISAL CRITERIAS:

The criteria for designing appropriate appraisal processes also leads to an understanding of the type of appraisal process to be selected:
Focus
Depending on the focus, the appraisal can be either Task focused or Development focused. However, since organizations exist for achieving certain goals, the task focused cannot be dispensed with. Hence most organizations combine both and carry out a Holistic appraisal.
Confidentiality
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Depending on the extent of confidentiality required by the system (which may sometimes be requisite of appraisal being conducted with the sole requisite of differentiating and retaining only good performers, or when the sharing of the process, goals and evaluation methods may affect the conduct of further appraisals), the appraisal process can be either Confidential or Open.
Periodicity
Depending on the industry, periodicity can be Quarterly, Bi-annual or annual. In high-skilled industries where there demand is high and supply is low, organizations would prefer to have shorter appraisal cycles with the intent of using reward systems to retain employees. It is also a way to keep up with the industry standards with respect to compensation.
TYPES: Line Manager Appraisal:

It is a mechanism to link individual goals and strategic direction. It focuses on objectives and targets. It can combine regular informal review of performance with formal appraisal to agreed timescales. It may also include rating scales for comparison purposes.
Self-Appraisal:
It is often used as preparation for the line manager/subordinate appraisal. Individuals take the lead in reviewing their own performance. It encourages individuals to think about their performance and development needs in a focused way. The combination of involvement and responsibility generates commitment to personality taking action.
Upward Appraisal:
It is appropriate in multi-level or source appraisal settings. It may take place in the context of the subordinates appraisal.
Peer Appraisal:
Individuals nominate their own appraiser. It allows choice of peers who are respected for relevant knowledge of professional specialization. It is relevant in situation where there may be no immediate manager in a position to appraise.
Team review and appraisal:

Its main feature is establishing team success and areas for improvement. It aids the teambuilding and objective-setting process. It encourages open and constructive comment among the team.
Competency-based Appraisal:
It sets targets for the roles as specific objectives or other measurable objectives. It focuses on behavioral descriptions of the standards expected in fulfilling the role. It is a development plan specifying training, development and support towards achieving targets and competencies. It is a system of periodic review leading to annual appraisal of performance against targets and achievement of competences.
360-degree feedback:
Its focus is on the development of skills and competences which will improve organizational performance. Appraisees may include either direct or other managers, subordinates, peers or customers. Feedback is collected systematically through formally constructed questionnaires. It can include self-assessment for comparison with the views of others. It is essentially based on ratings which more often than not are aggregated to represent an average score.
1.5 COMMON APPRAISAL ERRORS: Contrast Effect:
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Tendency of a rater to evaluate people in comparison with other individuals rather than against the standards for the job.
First Impression Error:

Tendency of a rater to make an initial positive or negative judgment of an employee and allow that first impression to color or distort the later information.
Halo/Horns Effect:
Inappropriate generalizations from one aspect of an individuals performance to all areas of that persons performance. Halo error occurs when a rater assigns ratings for several dimensions of performance on the basis of an overall general impression of the ratee.
Similar-To-Me Effect:
The tendency of individuals to rate people who resemble themselves more highly than they rate others. This is also known as the Personal bias rating error.
Central Tendency:
The inclination to rate people in the middle scale even when their performance clearly warrants a substantially higher or lower rating. This type of average rating fails to discriminate between subordinates.
Negative And Positive Skew:

The tendency of rating of all individuals as higher as or lower than their performance warrants. This is also known as Leniency or Harshness error.
Attribution Bias:
The tendency to attribute performance failings to factors under the control of the individual and performance successes to external causes.
Recency Effect:
The tendency of minor events that have happened recently to have more influence on the rating than major events of many months ago. Good performance towards the end of an appraisal period may dominate the indifferent performance during the beginning of the appraisal period or the vice versa.
Stereotyping:
The tendency to generalize across groups and ignore individual differences. This is attributing almost instantly, instinctively and without conscious control.
1.6 KEY ELEMENTS OF THE APPRAISAL PROCESS

The key elements of the appraisal process are ) Administration ) Assessment ) Feedback ADMINISTRATION PROCESS The important factors influencing effective administration are timeliness and rigour. The appraisal process needs to be initiated on time, administered within the time frame and results (increments, rewards etc) awarded on time. The process itself must be carried out with a lot of rigour and energy, such that it motivates employees to participate with the same energy and spirit. 35 SRM School of Management
ASSESSMENT PROCESS
The assessment goals should focus on strengths, use a long term perspective, should build on successive appraisal outcomes and serve as a tool for career growth. The assessment outcomes are a clear understanding of extent of performance of the employee, his achievement of goals, training requirements and agreed objectives for the next review period. The assessment discussion should: Focus on the employee accomplishments. Point out areas for improvement. Address questions about the year to come Focus on competencies required for future roles Work on defining a path forward Provide examples to support statements
It is important for the assessor to be: Authentic with the intent to communicate actual performance Empathetic and supportive Be direct and not beat around the bush, but avoid being blunt and harmful Be equal, be human Talk to and not talk down Able to deliver feedback about both good and bad performance without branding the person as good or bad. FEEDBACK PROCESS 36 SRM School of Management
There is enough material available in books, articles and on the internet about ways of giving effective feedback. However, the key points to remember about the process itself are that: It has to be scheduled with enough time for a complete discussion It should leave doors open for further discussion if required It should encourage a component of mutuality of exchange It should provide scope to record the feedback meaningfully but objectively It should deal with any residues that the employee is carrying It should reinforce the faith the employee has on the system
BENEFITS OF PERFORMANCE APPRAISAL

Appraisal offers a valuable opportunity to focus on work activities and goals, to identify and correct existing problems, and to encourage better future performance. Thus the performance of the whole organization is enhanced. Performance appraisal provides motivation through achievement, feedback and by agreeing helpful aims and targets. Performance appraisal can have a profound effect on levels of employee motivation and satisfaction - for better as well as for worse. The existence of an appraisal program indicates to an employee that the organization is genuinely interested in their individual performance and development. Performance appraisal helps in improving the performance level of the employees by identifying the training and development needs of the employee and helps in career planning 37 SRM School of Management
and development. Performance appraisal can provide a regular and efficient training needs audit for the entire organization. Performance appraisal helps the organization to meet the external challenge and it provides equal employment opportunity among the employees. Encourages teamwork, team spirit, open communication and empowers employees to take decisions without fear of failing.
NEGATIVE ASPECTS OF PERFORMANCE APPRAISAL

Negative ratings, subjectivity, favoritism and politics may affect the relationship among the employees. Improper feedback from the concerned employee decreases the effectiveness of the performance appraisal system and the relationship between the superiors and subordinates may become weak. The flow of information in the organization will be affected due to communication gap. Fear, hesitation and ineffective communication can be the few causes of this gap. Evaluating the performance is a long term process which leads to time consumption. The problem with subjective measure has the opportunity for bias.
1.7 THE APPRAISAL FORM
The Appraisal form is an instrument to measure and record performance details, record training requirements, outline aspirations, record plans for career growth and record objectives for the next assessment period. 38 SRM School of Management
With such a big list of things that the appraisal form aspires to be, it is not surprising that HR managers have a difficult time in deciding what goes into the appraisal form. It is no wonder then, that appraisal becomes a 10 page document that is often a difficult task to design, cumbersome process to administer, long and winded for employees to write and impossible to read through completely for all employees in a short period of time before the increments are due. However, it is still true that the appraisal form has to capture all the above. To enable this, there are few possible ways in which this can be managed. In the section measuring performance, link it clearly to the goals set and outcomes defined in the previous appraisal. Any other achievement or activity that took a lot of time and effort will need to be in a separate section. The training needs section should be specific to the KRAs achievement for the next review period. There needs to be one section where the employees write their feedback in a free-flow form. There needs to be one section where the supervisor gives his comments, rates the employee for his performance and gives his recommendations. Though aspirations would be captured in the form and discussed during the appraisal, the outcomes of career planning can be recorded separately and written as a Personal Development Plan (PDP). This would de-clutter the appraisal form to a larger extent. The form should not be cluttered with meaningless or complicated instructions. In fact, it is wise to remember that the form is for the employees to fill and it should be as simple and inviting to the employee as possible. It is more important to have a relevant form that is interesting to fill, rather than having a detailed form that captures ALL information that it cannot process.
1.8 LITERATURE REVIEW 1. PHILOSOPHY OF PERFORMANCE APPRAISAL PROCESS

The articulated statement of philosophy of each organization would indicate the organizations conception of PMS, a description of how it would be affected, and a justification of why it has been designed that way. Philosophy statements of the system communicate its goals and action plans and provide an opportunity to tie-in the appraisal system with that of other systems. Some of the philosophy statements can be based on the following intents/premises: Look at phenomena of performance do not classify the employee as good or bad based on his performance. Serve as a minor for the person to see his performance. Help grow the person by giving him feedback about the effectiveness of his actions. Help the person understand where he stands wrt the organization framework and goals of the organization. Support the person in finding path forward by defining a career path.
Define the appraisal process as a constant feedback process end year is the putting together of the series fine tuning. Link into Business. Why organizations need to appraise their employees? The reasons why organizations need to appraise their employees are obvious, but to reiterate: It aligns goals of organizations with that of the employee at every level strategy, objectives and action plans It helps set up an environment of openness and dialogue. It helps understand employees, their aspirations, motivating factors and their concerns at work or about their growth. It helps organization design reward systems and award increments. It provides the employee direction, perspective and a feedback of his own competence. It serves as a barometer to the organization for its own leadership. 40 SRM School of Management
2. ETH HICAL DIL LEMMAS S IN PERF FORMAN NCE APPR RAISAL

Jo ournal P Publisher IS SSN Is ssue D DOI P Pages Subject Colle ection NAL OF BU USINESS ET THICS JOURN Springe er Netherlan nds 0167-4544 (Print) 1573-0697 1 (Online) Volume e 3, Number r 4/ Novemb ber, 1984 10.1007 7/BF003817 756 327-333 Human nities, Social l Sciences an nd Law
Abstract: : As s the interes st in the qu uality of wo ork life gro ows, it beco omes increas singly appar rent that certain pra actices withi in this arena a require crit tical scrutiny y. This pape er is an exam mination of one o such area, perf formance app praisal (PA) ). We exami ine some of f the main co onceptual issues in PA, and we sketch som me key, pra actical dilem mmas that may m arise in the use of PA. P We con nclude that one can morally ju ustify the use u of PA un nder certain n condition, and we sug ggest possib ble solutions s to key ethical dil lemmas that are faced by y the manage er and the em mployee. 2. CONST TRUCTION N INDUSTR RY IN INDI IA: The Indian n constructio on industry, an integral part p of the economy e and d a conduit for f a substan ntial part of its dev velopment in nvestment, is poised for r growth on n account of f industrializ zation, urban nization, economic developmen nt and peopl le's rising ex xpectations for f improved d quality of living. l Cons struction constitutes 40% to 50% 5 of Ind dia's capital expenditure e on projec cts in vario ous sectors such as highways, , roads, railw ways, energy y, airports, ir rrigation etc. . The Indian n constructio on industry, an integral part p of the economy e and d a conduit for f a substan ntial part of its dev velopment in nvestment, is poised for r growth on n account of f industrializ zation, urban nization, economic developmen nt and peopl le's rising ex xpectations for f improved d quality of living. l Cons struction 5 of Ind dia's capital expenditure e on projec cts in vario ous sectors such as constitutes 40% to 50% highways, , roads, railw ways, energy y, airports, ir rrigation etc 41 chool of Manag agement SRM Sc
Estimates indicate that annual infrastructure investments are projected to rise from US $ 17.14 bn. in 1995 - 96 to US $ 30.57 bn. to US $ 51.42 bn. in 2005 - 06 at 1995 - 96 prices. Today, India is one of the six fastest growing economies of the world and Asia's biggest Infrastructure Investment opportunity. CONSTRUCTION INDUSTRY BOOMING OPPORTUNITIES IN INDIA:

COMMONWEALTH GAMES - 2010 IN NEW DELHI ROADS RAILWAYS AIRPORTS SPECIAL ECONOMIC ZONES ((SEZS) URBAN IFRASTRUCTURE - TOWNSHIP / MALLS / OFFICE BUILDINGS ETC. POWER SAGAR MALA
FDI IN CONSTRUCTION SECTOR IN INDIA The Govt. of India has permitted FDI up to 100% for development of integrated townships in India last year. India is now the second most favoured destination for FDI, behind China. Beside these, there are projects coming up to develop Special Bio-Technology Parks and IT Parks.
3. COMPANY PROFILE HISTORY

Larsen & Toubro Limited (L&T) is India's largest engineering and construction conglomerate with additional interests in Electricals, Electronics and IT. A strong customer-focus approach and constant quest for top-class quality have enabled L&T to attain and sustain leadership
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position over 6 decades. L&T enjoys a premiere brand image in India and its international presence is on the rise, with a global spread of over 30 offices and joint ventures with world leaders.
L&T has an international presence, with a global spread of offices. A thrust on international business has seen overseas earnings grow significantly. It continues to grow its overseas manufacturing footprint, with facilities in China and the Gulf region. The company's businesses are supported by a wide marketing and distribution network, and have established a reputation for strong customer support. It believes that progress must be achieved in harmony with the environment. A commitment to community welfare and environmental protection are an integral part of the corporate vision. HISTORY: The evolution of L&T into the country's largest engineering and construction organization is among the more remarkable success stories in Indian industry. L&T was founded in Bombay (Mumbai) in 1938 by two Danish engineers, Henning Holck-Larsen(4.7.1907 - 27.7.2003) and Soren Kristian Toubro(27.02.1906 4.3.1982). Both of them were strongly committed to developing India's engineering capabilities to meet the demands of industry.Beginning with the import of machinery from Europe, L&T rapidly took on engineering and construction assignments of increasing sophistication. Today, the company sets global engineering benchmarks in terms of scale and complexity.
BOARD OF DIRECTORS
Chairman & Managing Director Whole-time Director & President (Machinery & Industrial Products) Whole-Time Director & Chief Financial officer Whole-Time Director & President 43
- Mr A.M. NAIK
- Mr J.P.NAYAK - Mr Y.M.DEOSTHALEE - Mr .K. VENKATARAMAN SRM School of Management
Whole-Time Director & President (Electrical & Electronics) Whole-Time Director & President (Construction) Whole-Time Director & Senior Executive Vice President(Heavy Engineering)
VISION
- Mr R.R.MUKHIJA
- Mr K.V. RANGASWAMI
- Mr M.V.KOTWAL
The L&T vision reflects the collective goal of the company. It was drafted through a large scale interactive process which engaged employees at every level, worldwide. L&T shall be a professionally managed Indian multinational, committed to total customer satisfaction and enhancing shareholder value. L&T ITES shall be an innovative, entrepreneurial and an empowered team constantly creating value and attaining global benchmarks. L&T shall foster a culture of caring, trust and continuous learning while meeting expectations of the employees, stakeholders and society. GLOBAL PRESENCE: L&T has a global presence. A thrust on international business over the years has seen overseas revenues growing steadily. The company has manufacturing facilities in India, China, Oman and Saudi Arabia. It has a global supply network with offices in 10 locations worldwide, including Houston, London, Milan, Shanghai, Seoul. Customers include global majors in over 30 countries. 2006 ECC's Work Culture 44
Work culture emphasizes : Freedom to experiment Continuous learning and training Transparency Quality in all aspects of work Rewards based on performance and potential
ABOUT L&T ECC ECC today is organized in to four Operating Companies to allow for more in-depth technology and business development as well as to focus attention on domestic and international project execution. Each Operating Company is further split into different Business Units (BUs) to take care of the specific needs of various customers. The Operating Companies (OC) includes:
o o o o
Buildings & Factories Operating Company (B&F OC) Infrastructure (Infra OC) Metallurgical, Material Handling & Water (MMH &W OC) Electrical & Gulf Projects (E&GP OC)
ELECTRICAL & GULF PROJECTS OPERATING COMPANY (E&GP OC) The Electrical & Gulf Projects OC (E&GP OC) offers design and construction services for all types of industrial and project electrification works as well as for power transmission and distribution
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projects in the domestic markets. It also extends comprehensive services for construction of buildings and urban Infrastructure projects in the Gulf Markets. In the area of power transmission & distribution, E&GP OC has established a strong presence with a high reputation for execution of prestigious projects in the Gulf Region. A. Electrical Projects (Domestic Business) 9 Electrical, Instrumentation & Communication (EI&C) Sector 9 Transmission Line & Railway Construction(TLRC) Sector B. Gulf-Projects(International-Business) 9 Power Transmission & Distribution Sector (PT&D) 9 Buildings & Urban Infrastructure Sector (B&UI)
ELECTRICAL PROJECTS (DOMESTIC BUSINESS) ELECTRICAL, INSTRUMENTATION & COMMUNICATION (EI & C) SECTOR Electrical Instrumentation & Communication (EI&C) Sector provides turnkey & individual package based solutions in the electrical infrastructure space. EI&C also provides comprehensive services in the field of substations (upto 765kV), project electrification & instrumentation. Wide experience coupled with superior project management skills ensure quality services to customer on a Sustainable basis. Complete activities of the EI&C Sector are carried out through two business units: To focus on customized solutions; the sector operates as two Business units (BU) namely HV Substation Business Unit and Industrial Electrification Business Unit. TRANSMISSION LINES & RAILWAY CONSTRUCTION
Transmission-Lines
Turnkey construction of EHV transmission lines is a major area of operation for ECC. With ISO and OHSAS certified tower-manufacturing facilities in Pondicherry and Pithampur, ECCs transmission line construction works have gone beyond Indian boundaries. Services offered include:
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Design and testing of transmission line towers up to 400kV single and multi circuits Manufacture of transmission line towers Sourcing, selection, inspection and supply of all line materials like conductors, insulators, and hardware Construction of lines up to 765kV including survey, foundation, erection, stringing, testing and commissioning Other Fields
Railway Construction
As a part of Transmission Lines and Railway Construction Sector, ECC undertakes all types of Railway Construction works involving Design, Supply, Erection, Testing and Commissioning of Overhead equipment & Traction Sub-station, Signaling & Telecommunication systems, Supply & Installation of Permanent way including associated embankment formation, construction of Minor Bridges / Culvers, Supply of Permanent Way materials, Laying of Track, etc. Clients include Central Organization for Railway Electrification (CORE), Allahabad, RVNL, various Construction Departments of Indian Railways / Zonal Railways / Divisional Railways, Private Siding Owners etc. GULF-PROJECTS (INTERNATIONAL-BUSINESS) POWER TRANSMISSION & DISTRIBUTION SECTOR
L&T is one of the earliest Indian companies to venture in to the Gulf markets and over the years, it has gained significant market presence in the PT&D Sector. It has played a significant role in the power evacuation, power transmission and distribution projects across the GCC countries. Having executed some of the prestigious projects in this area, it has garnered customer goodwill across the Gulf countries. Projects are executed on EPC basis for the HV Substation/ Transmission Line with complete In-house Design, Engineering, Procurement and Construction including Civil & MEP services.
BUILDINGS & URBAN INFRASTRUCTURE SECTOR Buildings & Urban Infrastructure Sector of L&T in the Gulf Region provides integrated construction services for the construction of: Residential Segment Institutional & Commercial Segment Township Infrastructure Segment
47
Transportation Infrastructure Segment

L&T is proud to be one among the Global leaders in the region creating Global landmarks and meeting the international quality standards of its clients and customers.
3.1 OBJECTIVES OF THE STUDY Primary Objective:

To identify the real opinion of L&T ECC Group officers and staffs regarding the effectiveness of the present Performance Appraisal system in their organization.
Secondary Objectives:
To examine the employee level of acceptance towards various factors necessary for appraising the employees. To identify the satisfaction level of employees towards performance appraisal system. To suggest necessary modifications in the system of approach to improve and enhance the current appraisal system.
3.2 NEED FOR THE STUDY

Performance appraisal is the important tool to assess the performance of the employees in the organization starting from small scale to large scale organizations. Inefficient performance appraisal system will directly or indirectly affect the functioning of the organizations objectives. Hence this project was carried out to study the performance appraisal system of L&T ECC Groups to find its effectiveness which is considered to be very vital for the success or decline of any organizations.
3.3 SCOPE OF THE STUDY
48
The present study is limited to E&GP operations in L&T ECC. It can be extended to other companies of the ECC operations. The study on the performance appraisal system would help the company in making its performance appraisal procedures more effective and efficient thereby making the employees more productive.
3.4 LIMITATIONS OF THE STUDY

On account of time constraints, many respondents couldnt be reached. Respondents were not from all cadres, so the result of the research cannot be generalized to the entire group. The research is subjected only to the study and analysis on the effectiveness of the existing Performance Appraisal system, designing of Performance appraisal process is not dealt. The primary data was collected with the help of structured questionnaire technique. Therefore the study is bounded by the limitation of this technique.
3.5 HR IN L&T ECC
49
ECC recognizes that people are the real source of competitive advantage. It is through people that ECC delivers total customer satisfaction. These values are reflected in our Human Resources practices which have earned national recognition several times. ECC-ites go through a process of continuous learning, assisted by training programs. Apart from on-the-job training and technical training, over 100 programs on general management and behavioral topics are conducted each year. Interactive CD-ROM based programmes have enabled employees learn at their pace. ECC has always believed in experimentation with and implementation of new ideas. HR practices such as collaborative performance appraisal, career & succession planning, team rewards have been institutionalized. ECC Division has an ongoing organization development programs, which is one of the longest sustaining OD efforts in India. Awards for L&T HR Practices

Asia Pacific HR Conclave Award for the company with Most Innovative HR practices National award for Best HRD Practices from Indian Society for Training and Development
National Award for Outstanding Work in Human Resource Management from National HRD
Network
Award for Outstanding Human Resources Development from Confederation of Engineering Industry
Integration of Information Technology with HR in ECC Division has been recognized by the National HRD Network
HR Policy The basic principles of ECC's Human Resources policies include 50 SRM School of Management
Recruitment based solely on merit by following well-defined and systematic selection procedures without discrimination
Sustain motivated and quality work force through appropriate and fair performance evaluation, reward and recognition systems
Identify training needs within the Organization and design and implement those need based training programmes resulting in continuous up gradation of knowledge, skills and attitudes of the employees
Maintain a quality Human Resource Management System to meet the international standards as per ISO 9001. Plan, design, train, equip and motivate the department staff to meet this standard of expectation.
TRAINING
ECC's Human Resources Department believes that Quality is the hallmark of any successful venture. Quality Training and Development of Human Resources is realized through: Identifying training needs within the Organization and designing and implementing those need based training programs to bring about continuous up gradation of knowledge, skills and employee attitudes The following brief highlights ECC's training methodology for the comprehensive development of its 7000-odd employees.
1. Training Plan Companies succeed in today's free market economy, only because their employees perform to their fullest potential. Alive to this home truth, ECC draws up an annual training calendar, highlighting the training activities for the year. Inputs to formulate this training plan are taken from the performance review form, by interacting with ECC's Regional Offices and the higher echelons of the 51 SRM School of Management
management on the present and future requirements of the construction industry. It also includes detailed discussions with the faculty. ECC's training plan includes civil, mechanical, electrical, finance related and behavioural programs, covering a wide cross-section of employees, as follows:
A week long Supervisory Development Program and a 10 day Executive Development Program are designed to provide an exposure to functional management and behavioral skills to the site based engineers.
Development of managerial staff is through intensive two-week long programs providing exposure to holistic understanding of the business, Strategic Planning, Customer Relationship, Enhancing Shareholder Value, Financial Management.
For middle management, there is an exclusive nine-day program, designed in collaboration with Administrative Staff College of India, Hyderabad.
For top level management, there is an arrangement with Management Development Institute, Gurgaon to conduct development programs at Company's Management Development Center, Lonavla
Sustained effort in training has led to creation of highly skilled and motivated employees ready to take on higher roles and responsibilities in the company. 2. Employee involvement in Training Line executives and managers involve themselves as faculty for most of the Inhouse Programs. 90% of in house program are conducted by them. As line mangers have better understanding of the nature of business and the unique problem associates with the company/industry, they are able to design and deliver effective training sessions keeping the company's and participant's need in mind. It has been experienced that the concept of "Learning Organization" is getting effectively rooted in ECC through the above process.
52
3.6 PERFORMANCE APPRAISAL IN L&T ECC (E&GP) OPERATIONS

The process followed in L&T for performance appraisal is review by immediate supervisor. There are around 36 cadres and 40 business units in E&GP OC. CADRE & NO OF EMPLOYEES IN EACH CADRE S.NO CADRE_ S.NO CADRE_ DESCRIPTION 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 SR.VP M4-B M4-A M3-C M3-B M3-A M2-C M2-B M2-A M1-C M1-B M1-A O-3 O-2 CA-1 A-1 O-1 S-2 # EMP 1 5 4 15 25 31 48 64 80 77 146 184 4 295 2 1 479 193 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 DESCRIPTION SR.EXEC.SECRETARY EX.SECR. SECR-A SECR-B SR.TO/CO-2 SR.TO/CO-1 TO/CO ST/SC TS/CS TA/CA DRIVER-II DRIVER-I JR.TA/CA SR.TECHN. TECHN. CONTRACT TRAINEE DET # EMP 1 5 1 1 1 10 33 62 58 82 1 2 56 13 15 135 29 172
53
19
S-1
253
38
GET
129
BUSINESS UNIT DESCRIPTION AND JOB TYPE

S.No S.No
Technica BUSINESS_UNIT_DESCR IPTION l _Service
BUSINESS_UNIT_ DESCRIPTION 1 SR.VPs OF FICE (E&GP) 2 GULF-COMMON 3 4 E&GP- HR TRANS. LINES & RLY. CONSTN. 5 ELECTRICAL,INSTN.&C OMM. 6 INDUSTRIAL ELECTRIFICATION 7 8 GULF-INFRA RAILWAY CONSTRUCTION 9 10 11 12 TRANSMISSION LINES 13 14 GULF (PT&D) 15 INTERNATIONAL GULF (B&UI) GULF-RESOURCES SUB STATIONS ELECTRICAL (FAA)
Technical _Service 19 Technical 20 Service Service 21 22 Technical 23 Technical 24 Technical Technical 25 26 Technical Service Technical Service 27 28 29 30 Technical Technical 31 32 Technical Service 54 33
ELECTRICAL (QUALITY) EDRC (TRANSMISSION LINES) GULF- PROCUREMENT
Technical
Technical Technical
GULF - FAA
Service
GULF - QUALITY ELECTRICAL (RESOURCES) EDRC (SUB STATIONS) ELECTRICAL (PROCUREMENT) ELECTRICAL (P&M) ELECTRICAL (EHS) GULF-RMCI-DUBAI EDRC (INDUSTRIAL ELEC.) GULF - P&M ELECTRICAL (RISK.MGMT.) GULF-HR
Technical
Service Technical
Technical Technical Service Technical
Technical Technical
Service Service
SERVICES 16 17 E&GP (IS) ELECTRICAL (CIVIL.ENGG.) 18 EDRC (ELECT,INST&COMM.) Technical Technical Service 34 35 GULF - IS EDRC (RAILWAY CONSTRUCTION) Service Technical
HIERARCHY HR DEPARTMENT IN E&GP OC

VICE PRESIDENT HR EMPLOYEE SYSTEMS CARE OVERSEA S DOMESTI C
TRAINING & DEVELOPMENT AND RECRUITMENT
REGIONAL OPERATIONS
TRAINING & RECRUITMEN Regional offices are at DEVELOPME T Factories are at 1. Hyderabad 1. Kanchipuram 2. Kolkata 3. Ahmadabad 4. Chennai 5. Bangalore 6. Delhi 2. Pondicherry
FACTORY OPERATIONS
THREE LEVELS PERFORMANCE APPRAISAL

SELFAPPRAISAL IMMEDIATE SUPERVISOR UNIT HEAD + HR
SKELETON OF PERFORMANCE APPRAISAL PROCESS

Submission of Self-appraisal Form Review by Supervisor Discussion with Supervisor+ Business unit Head + HR
APPRAISAL STAGE
STAGE 1 Review by site / project manager 55 Recommendation SRM School of Management
STAGE 2 Review by Region head a Moderate View G meeting is conducted STAGE 3 Review by Business unit Head STAGE 4 Review with the core committee Note: Discussion and moderation are there in stages 2 to 4.
ORGANIZATIONAL HIERARCHY OF L&T ECC (E&GP) OC

L&T ECC E&GP OC
ENGINEERING & CONSTRUCTION
TRANSMISSION LINES &
INTERNATIONAL OPERATIONS OMAN QATAR
IE
SUB TL RC
ABUDABI Region s 17 Region s 17 Sites 1n Region s 17 Sites 1n
Regions 17 Sites 1n
Regions 17 Sites 1n Regions 17 Sites 1n
Sites 1...n
IE SUB TL RC
- Industrial Electrification - Substations - Transmission Lines - Railway Construction
APPRAISAL PROCESS IN E&GP OC

SELF APPRAISAL IMMEDIATE SUPERIOR PROJECT MANAGER REGIONAL PM / SECTOR PM
Attributes
Professional competence & Qualification Customer Relations Planning & Timely completion Innovation & Creativity Leadership & Initiative 56 Communication SRM School of Management
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BUSINESS UNIT HEAD CORE COMMITTE E
4. RESEARCH METHODOLOGY
Research Methodology is a way to systematically solve the research problem. It may be understood as a science of studying how research is done scientifically. It contains the study of the various steps that are generally adopted by a researcher in studying his research problem along with logic behind them.
4.1 RESEARCH DESIGN:
57
A research design is purely and simply the framework or plan of a study that guides the collection and analysis of data. Generally a research design is a blue print of the research that is to be followed in completing the study.
Research design type: Descriptive Research It is the research design that describes the
characteristics of any individual or relevant groups.
4.2 SAMPLING DESIGN:

Population: One Operating Company E&GP in L&T ECC Ltd. Sampling Unit: Individual Employees in the organization. Sample Size: Sample size was restricted to 50 respondents. Sampling Method: Stratified proportionate random sampling. Nature Of Data: Primary data as well as secondary data Method Of Data Collection: Primary data was collected by the Questionnaire survey, Interview with the personnel of the company. Secondary data was collected with the help of the company records, annual reports, magazines, company websites etc.
4.3 TOOLS USED FOR ANALYSIS:

The analysis is done using SPSS Inc Statistical Package. The tools for the statistical analysis consisted of:
Cross Tabulation: Cross tabulation results in tables that reflect the joint distribution of
two or more variables with a limited number of categories or distinct values. It is a merging of the frequency distribution of two or more variables in a single table. 58 SRM School of Management
Mean: The mean or average value is the most commonly used measure of central tendency.
It is used to estimate the mean when data have been collected using an interval or ratio scale. The data should display some central tendency, with most of the responses distributed around the mean.
Percentage Analysis: The percentage analysis is to obtain the number of responses or a

relative occurrence associated with the different values of the variable and is expressed in percentages.
5. ANALYSIS AND INTERPRETATION 5.1 CROSS TABULATIONS: Table 1 showing the cross tabulated values between the Designation & the level of satisfaction towards the present PAS.
59
Cadre * Satisfaction to pr resent PAS Cr rosstabulation n Count Satisfaction to o present PAS Highly Satisfied 4 3 11 Neither Satisfied nor D Dissatisfied 2 1 4
Cadre
Manager Officer Secreta ary
Satisfied S 12
Dissatisfied 1 1 3
Total 19 15 16
10
8
Total
30
50
TABLE 1
Bar cha art 1

Cadre * Satisfaction S
12 10 8 6 4 2 0 Highly H sa atisfied Satisfied Neither Dissati isfied
Manager Officer Secretary
INFEREN NCE: Am mong the Managers M abo out 63.15% of o them are satisfied, 21 1% of them are highly satisfied, s 5.3% of them t are dis ssatisfied wi ith the curre ent performa ance apprais sal system. Among the Officer 66.7% of them are sat tisfied, 20% of them are e highly satis sfied and 6.7 7% of them are a dissatisfi fied with
60
SRM Sc chool of Manag agement
the current PAS. Among the Secretary level employees 50% of them are satisfied, 6.25% are highly satisfied and 18.7% are dissatisfied with the current PAS. Thus with regard to the satisfaction towards the current Performance appraisal system, majority of the respondents (i.e) about 60% of them are satisfied, 16% of them are highly satisfied, 14% of them are neither satisfied nor dissatisfied, 10% of them are dissatisfied.
Table 2 showing the cross tabulated values between the Experience & the level of Satisfaction towards the present PAS.
Experience * Satisfaction to present PAS Crosstabulation Count Satisfaction to present PAS Highly Satisfied 2 6 8 Neither satisfied nor dissatisfied 1 6 7 4 5
Experience
Less than 3 years 6 - 10 years 11 years and above
Satisfied 9 8 13 30
Dissatisfied 1
Total 12 9 29 50
Total
TABLE 2
Bar chart 2
61
Experience * Satisfaction n
14 12 10 8 6 4 2 0 highly satisfied d satisfied neither dissatisfied
Less than 3 years 6-10 years 11 years and above
NCE: INFEREN Am mong the re espondents whose w exper rience is les ss than 3 ye ears, about 16.7 1 % of th hem are highly sat tisfied, 75% of them are e satisfied, 8.3% 8 of them m are dissati isfied with th he current appraisal a system. Among A the re espondents whose w experi ience is 6 10 years, about 88.9 % of o them are satisfied s and 11.1 % of them m are neithe er satisfied nor n dissatisf fied with th he current system. s Am mong the responden nts whose ex xperience is above 11 ye ears, 20.7% of o them are highly satisf fied, 44.8% of them are satisfi fied and 13. .8% of them m are dissa atisfied and 20.7% of them are neither n satisf fied nor dissatisfie ed with the current performance appr raisal system m. Th his implies th hat majority y of the respo ondents who o are satisfie ed with the current c Perfo ormance appraisal systems are with the exp perience of 11 1 years and d above.
Table 3 showing g the cro oss tabulat ted values s between n the Cad dres & whether w developm mental nee eds are met t in the pre esent PAS.
62 SRM Sc chool of Manag agement
Cadr re * Developm mental needs are a expressible Crosstabula ation Count Deve elopmental nee eds are expres ssible Strongly agree 5 3 Agree Neither agree N n disagree nor 4 2 Disagree 3 2 Total 21 19 10
Cadre
9
12 7
3
11
Total
28
50
TABLE 3
Bar chart 3
Cad dre * Development needs
12 1 1 10 8 6 4 2 0 Strong gly agree Agre ee Neith her Disag gree
Man nager Offic cer Secretary
INFEREN NCE: Ab bout 23.9% of o the Mana agers,15.8 % of the Offic cers, 30% of f Secretaries, strongly ag gree that their deve elopmental needs n are ex xpressible in the current performanc ce appraisal system. Abo out 42.8 % of the e Managers, 63.15% of o the Offic cers , 70% of the Se ecretaries ju ust agree th hat their developm mental needs are express sible in the current per rformance appraisal a sys stem. 14.3% % of the Managers s, 10.5% of f the Office ers are in the t opinion n that their developmen ntal needs are not expressibl le in the curr rent PAS. 63 SRM Sc chool of Manag agement
With regard to the criteria that, whether the developmental needs of the respondents are expressible in the performance appraisal system, about 22% of them strongly agree,56% of them agree, 12% of them neither agree nor disagree, and 10% of them disagree. This implies that approximately one half of the respondents agree that their developmental needs are expressible.
Table 4 showing the cross tabulated values between the Cadres & Whether the current PAS provides a frank discussion between the appraiser and the appraise.
Cadre * Frank Discussion Crosstabulation Count Frank Discussion Strongly agree 4 4 6 Agree 9 10 9 Neither agree nor disagree 2 1 3 Disagree 2 Total 17 15 18
Cadre
Total
14
28
50
TABLE 4
Bar chart 4
64
C Cadre * Fran nk discussio on
10 8 6 4 2 0 Stron ngly agre ee Agr ree Neither Dis sagree

M Manager O Officer S Secretary
NCE: INFEREN Ab bout 23.5% of o the Managers, 26.7% of the Offic cers ,33.3% of o the Secret taries strong gly agree that a fran nk discussio on exits dur ring the curr rent perform mance apprai isal system. About 53% % of the Managers s, 66.7% of the t Officers, , 50% of the e Secretaries s, agree that a frank disc cussion exits s. About 11.8% of the Manager rs totally dis sagree to this s context. his implies th hat although h large perce entage of the e respondent ts agrees tha at a frank dis scussion Th is carried d out betwee en the appr raiser and th he appraise during the current per rformance appraisal a system, majority m of the Officers s disagree. They expec ct a better exchange of views dur ring the appraisal process. p
d values be etween the e Cadres & by who om the Table 5 showing the cross tabulated appraisal process should s be done. d
65
Cadre * Appraiser Cro osstabulation Count Appraiser Immediate Superior 7 5 5 Head Of the e Department t 6 3 All the abo ove 6 1 12 6 Total 19 20 11
Cadre
Total
17
2 24
50
TABLE 5
Bar chart 5
Cadre * App praiser 12 10 8 6 4 2 0 Imm mediate superior HOD A above All
INFER RENC E:
Manage er Officer Secreta ary
About t of
37% the
agers,25 Mana % o of the
Officers, 45.5% 4 of th he Secretarie es, prefer the eir immediat te superiors to be their appraiser. 31.5% of the Manag gers, 15% of f the Officer rs, prefer the eir HODs to o be their app praiser. 31.5 5% of the Ma anagers, 60% of th he Engineers s, 54.5% of the Senior Officers, O pre efer that app praisal is don ne by all(Im mmediate superior, HOD, H Projec ct manager, Team Leade er). This implies that about t 48% of the e respondents,(i.e) appro oximately one half of th he them at the apprai isal process is carried out o by all to whom they y are accoun ntable. Also 34% of prefer tha them prefe fer their Imm mediate super riors to appr raise them.
66
& Wheth Table 6 showing the t cross tabulated t v values of Experience E her job rota ation is d to identif fy the employees potential in new n areas. practiced
TAB BLE 6
Bar Cha art 6

Experience E * job rotatio on
25 20 15 10 5 0 Yes No o
Less than 3 years 6 - 10 years y 11 year rs and above
INFEREN NCE: Co onsidering th he job rotatio on factor, ab bout 66.7% of o the respon ndents with an a experienc ce of 6
10 years s, and 17.2 % of the res spondents with w an exper rience of 11 years and above a are of opinion that there potentials in n new areas are identifie ed. But 100% % of the res spondents wi ith an exper rience of 67 chool of Manag agement SRM Sc
less than 3 years, 33.3% of the respondents with an experience of 6 10 years, and 82.8% of the respondents with an experience of 11 years and above feel that job rotation is not practiced to identify their potentials in new areas. This implies that majority of the respondents with the experience of 6 10 years are given the opportunity to bring out their knowledge, skills, and ability through job rotation, while majority of the respondents with an experience of less than 3 years, and greater than 11 years are not provided with the job rotation facilities.
Table 7 showing the cross tabulated values of Cadres & Percentage of biasing in the current performance appraisal process.
Cadre * Percentage of biasing Crosstabulation Count Percentage of biasing 0% Cadre Manager Officer Secretary 4 4 1 % - 50 % 12 11 8 51 % - 99 % 4 1 6 Total 16 16 18
Total
31
11
50
TABLE 7
Bar chart 7
68
Cadre * Percentage P of Biasing

12 10 8 6 4 2 0 0% 1% - 50% 5 51% - 99%
NCE: INFEREN Ab bout 25% of f the Officers s, 22.3% of the Secretar ries are of op pinion that th here is no bi iasing in the curren nt performan nce appraisa al system. While W 75% of the Man nagers, 68.7 7% of the Officers, O 44.5% of f the Secreta aries, feel th hat there ar re traces of biasing(< 50% 5 ). And d about 25% % of the Managers s, 6.25% of the Officers s, 33.4% of the Secretar ries feel bia asing is obvi ious (> 50% %) in the current pe erformance appraisal a sys stem. Th his implies th hat majority of the Mana agers feel th here is nil bia asing, while majority of f officers are of opin nion that som me degree of biasing is prevalent, p an nd majority of o the Secret taries strong gly agree that favori itism is obvi ious in the cu urrent perfor rmance appr raisal system m.
5.2 DES SCRIPTIV VES - MEA AN

69 chool of Manag agement SRM Sc
Table 8 showing the descriptive statistics of the factors that are necessary for appraising the employees.
Descriptive Statistics N Qualification Initiative Quality of work Plan of Work Innovation Relation with Customers & subordinates Speed Leadership Qualities Communication Valid N (listwise) 50 50 50 50 50 50 50 50 50 50 Minimum 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 Maximum 3.00 3.00 2.00 3.00 3.00 3.00 3.00 3.00 3.00 Mean 1.2200 1.4200 1.0600 1.3600 1.6600 1.7800 1.7400 1.6400 1.5800 Std. Deviation .50669 .60911 .23990 .52528 .62629 .70826 .66425 .66271 .73095
TABLE 8
From the Mean values exhibited in the above table, we can infer that the respondents are in the opinion that the above criteria are necessary for appraising the employees. The order of their preference is as given below: 1 2 3 4 5 6 7 8 9 Quality of work Qualification Plan of the work Initiative Communication Leadership Qualities Innovation Speed Customer relations 94% 82% 66%
Quality of work
Bar chart 8
Order of Preference
64% 56% 46% 42% 38% 38%
Qualification Plan of work Initiative Communication Leadership Innovation Speed Customer Relations
5.3 PERCENTAGE ANALYSIS:

Frequency Table 70 SRM School of Management
Table 9 showing th he percentage of resp ponse for th he Descrip ption of the e present jo ob:
TABLE 9
Bar cha art 9 repr resenting the t percen ntage of re esponses for the De escription of the present job:
D Description of the prese ent job

50 40
30
20
Percent
10 0 Challenging Interesting Normal
D Description of the e present job
INFEREN NCE:
71
W regard to With o the descrip ption of the present p job 48% 4 of the respondents r feel their job b nature is interest ting, 34% of f them feel it t is normal, and 18% of f them feel it t is challeng ging. Majorit ty of the responden nts feel that their t job is quite q interest ting.
Table 10 1 showin ng the pe ercentage of respon nse for th he self-description of the performa ance level in the com mpany:
TABLE 10
Bar cha art 10 repr resenting th he percent tage of responses for r the self-d description n of the performa ance level in the com mpany:
P Performance e level
70 60 50 40 30 20
Perc ent
10 0 Good Fair Nee eds Improvement
Pe erformance level
72
INFEREN NCE: Ab bout 66% of f the respond dents feel tha at their level of performa ance is good d,12% of them m feel it is fair, and d 22% of the em feel they y need some improvement. This imp plies that few w of the resp pondents wish to re ender even be etter perform mance than what w they giv ve-in presen ntly.
Table 11 1 showing g the perc centage of f response for the le evel of sa atisfaction to the present Performanc P ce appraisa al system:
TABLE 11 1
Bar cha art 11 repr resenting th he percentage of resp ponses for r the level of satisfac ction to the prese ent Perform mance appr raisal syste em:
Satisfactio on to pres sent PAS

70 60 50 40 30 20 Percent 10 0 Highly Satisfie ed Neith her satisfied no o Satisfied Dissatisfied
Sa atisfaction to t present PAS P

BAR CHART C 11
73
INFEREN NCE: W With regard to the leve el of satisfa action to th he present appraisal a sy ystem, 16% of the responden nts are highl ly satisfied, 60% of them are satisf fied, 14% of f them are neutral, n and 10% of them are dissatisfied. . This impli ies that majo ority of the respondents are satisfied with the current PAS.
Table 12 2 showing the percen ntage of res sponse for r the additio onal job sa atisfaction, , which the curre ent appraisal system provides: p
TAB BLE 12
Bar cha art 12 re epresenting g the perc centage of response es for the e addition nal job satisfacti ion, which h the curren nt appraisa al system provides :
Jo ob Satisfa action
120 100 80 60 40 20 0 Yes No
Percent t
Jo ob Satisfact tion
74
INFEREN NCE: Ab bove table sh hows that majority m of th he responden nts (i.e) abou ut 96% of the em get some e degree of additio onal job satis sfaction from m the curren nt appraisal system. On nly 4% of th hem disagree e to this fact. From m this we can n infer that the t current appraisal a sys stem is effec ctive in prov viding the ad dditional job satisfa action to the employees.
Table 13 3 showing g the perce entage of response r for the fact t that the current ap ppraisal system facilitates f self s development:
TA ABLE 13
Bar cha art 13 representing the percen ntage of re esponse fo or the fact t that the current appraisal system fa acilitates se elf develop pment:
75
S Deve Self elopment

100
80
60
40
Percent
20 0 Yes No
S Developm Self ment
INFEREN NCE: W regard to With o the self development, d , about 86% % of the resp pondents ag gree that the current appraisal system assis sts in their developmen d t. Only 14% % of them di isagree to th his fact. This shows that the cu urrent apprai isal system is i appreciabl ly effective and a facilitate es the self de evelopment.
Table 14 4 showing the percen ntage of res sponse for the organi izational in nitiatives ta aken to improve the low pe erformance e level of the t employ yees.
P Performan nce level Improvem ment

70 60 50 40 30 20
TABLE 14
B Bar
char rt
14 of
re epresenting g resp ponse fo or
the the
percentage
nal initia atives tak ken to organization

Percent
10 0 By advic ce By Trainin ng By Rules & Re egulatio
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improve the low pe erformance e level of the employ yees.
INFEREN NCE: To o improve the t low per rformance of o the empl loyees, the organization provides various training programs p wh hich the majority of the respondents s(i.e) 64% have h opted. About A 28% of them feel that the t organizat tion gives counseling or r some advices to impro ove the perf formance lev vel. And 8% of the em feel that necessary n ru ules and regu ulations are framed to he elp the empl loyees devel lop their performan nce level.
Table 15 1 showing g the perc centage of f response e from the e responde ents wheth her job rotation is practiced to identify their po otential in new n areas.
TABL LE 15
Bar cha art 15 repr resenting th he percent tage of res sponse from m the resp pondents whether job rotat tion is prac cticed to id dentify their potential in new are eas.
77
Jo ob Rotatio on
100 80
60
40
Percent
20 0 Yes No
Jo ob Rotation
INFEREN NCE: Ab bout 78% of f the respond dents are of opinion that t job rotation n is not prac cticed. Only y 22% of them agre ee that job rotation is pr racticed to identify their r potentials in new area as. This implies that majority of o the respon ndents are de evoid of job b rotation pra actices, there eby they are e unable to bring b out their versa atile potentia als.
Table 16 showing g the perce entage of response r for the leve fo el of biasin ng in the current appraisal system.
TABLE 16
Bar cha art 16 repr resenting the t percent tage of res sponse for the level of biasing g in the current appraisal a sy ystem.
P Percentage e of biasin ng
70 60 50 40 30 20
Percent
10 0 0% 1 % - 50 % 51 5 % - 99 %
Pe ercentage of biasing b
INFEREN NCE: W regard to With o the biasing g factor, abo out 62% of the respond dents feel that certain de egree of biasing(< 50%) is prevalent in the e current app praisal system m, while 22% % of them fe eel that there e is high level of biasing( b > 50%), and 16% of them m feel that th here is no biasing b in th he current appraisal a system. Fr rom this we can infer th hat majority of the respo ondents agre ee that favori itism or subj jectivity exits in th he current app praisal syste em.
Table 17 7 showing the percen ntage of res sponse for the effect of negativ ve feed
Back
TABLE 17
Bar cha art 17 rep presenting the perce entage of response for the ef ffect of ne egative Feedback k:
79
E Effect of Negative N feed bac ck

70 60 50 40 30 20
Percen 10 t
0 Frustration n He elps to correct you y Triggers T to work k hard
Effect of Neg gative feed back
INFEREN NCE: Ab bout 62% of f the respon ndents feel th hat the nega ative feedba ack helps to correct them mselves, 34% of th hem feel tha at negative feedback fe trig ggers them to work even n more effic ciently, while 4% of them feel it leads to frustration. This implies that on the e whole the respondents view the negative n feedback with w a positi ive outlook, and they con nsider them as an opport tunity to imp prove and de evelop.
Table 18 8 showing the percen ntage of res sponse for choosing the t apprais ser:
TABLE 18
Bar chart 18 repre esenting th he percenta age of respo onse for ch hoosing the e r: appraiser
A Appraiser r
50 40 30 20
Percent
10 0 Immediate Superior All the above e H Head Of the De epartme
A Appraiser
INFEREN NCE: Ab bout 14% of f the respond dents prefer r that the app praisal proce ess is carried d out by the eir Head Of the De epartment, while w 34% of f them prefe er their imm mediate super riors to be th heir appraise ers. And 48% of th hem prefer that t the appr raisal proces ss is carried d out by all including th he HOD, Im mmediate superior, peers etc. This T implies s that majo ority of the respondents s are interested to hav ve many s than confin ning to a sing gle person. appraisers
Table 19 9 showing the percen ntage of re esponse for r the level of satisfac ction towa ards the HRDs Training T an nd Develop pment activ vities:
TABLE 19
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Bar cha art 19 rep presenting the percen ntage of re esponse fo or the leve el of satisfaction towards the HRDs s Training and Devel lopment ac ctivities:
HRD's T& &D Activitie es
70 60 50 40 30 20
Percent
10 0 Highly Satisfied Neither satisfied no Satisfied Dissa atisfied
HRD's T&D Activities A
INFEREN NCE: Co onsidering th he Human Resource R De epartments Training & Developme ent activities, about 66% of th he responde ents are satisfied, 16% of them are e highly sat tisfied, while e 10% of th hem are neutral an nd 8% of the em are dissa atisfied. This s implies tha at majority of o the respon ndents feel th he HRD is doing well w regardin ng the Trainin ng & Develo opment activ vities.
Table 20 2 showing g the perc centage of f response for the significanc s ce of the current c performa ance appra aisal system m:
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TABLE 20
Bar chart 20 representing the percentage of response for the significance of the current performance appraisal system:
Significance of PAS
40
30
20
Percent
0 Promotion Identification of Training needs All the above Identification of Employee potential
10
Significance of PAS INFERENCE: About 34% of the respondents feel that the current appraisal system is carried out to identify the employees potential, 32% of them feel that it is to identify the training needs, 12% of them feel that it is to provide promotions, and 22% of them feel that it is to serve all the above purposes.
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6. FINDINGS AND INFERENCES

The current appraisal system is effective to a high degree, and majority of the employees are satisfied with the appraisal system. Identification of training and development needs through appraisal process is found to be good. HR departments activities towards the performance enhancement of the employees are appreciably great. During the appraisal process a frank discussion is carried out between the appraiser and the apraisee. Majority of the employees prefer the appraisal system to be carried out by the group consisting of immediate superiors, HOD/Manager, peers etc. Almost all the respondents prefer the criteria like Quality of work, qualification and plan of work etc are found to be effective in the appraisal system process to evaluate their performance. The company takes initiative to improve the low performance of the employees mainly through training programs. Job rotation is not emphasized well in the current performance appraisal process. Majority of the employees insist to adapt 360 degree appraisal system. The current performance appraisal system does not provide scope for communicating overall business goals. No periodic orientation of programs on performance appraisal is conducted.
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7. RECOMMENDATIONS AND SUGGESTIONS

Individual Performance objectives can be set during the beginning of every year. There can be a monthly review of individual/team objectives. Online Appraisal system can be adapted to make the process faster and more effective. Appraisal process can be carried out by obtaining the performance feedback of the employees from all including immediate superiors, HOD and peers. Performance Appraisal system should be made more transparent. The company can gradually adapt to 360 degree feedback for the appraisal process to be even more effective. Constant attention, continuous effort to take corrective measures can be emphasized in the appraisal system. HRM/HRD/personnel department can consider the results of Performance Appraisal System for career planning and development of the employees. Orientation programs can be organized before conducting Performance Appraisal System. Time limit can be scheduled for each and every step involved in the performance appraisal process. There should be a performance feedback session, so that the employees can be more effective in their future work. Superiors can be even more unbiased, employees can work thoroughly on self appraisal and these can be continued in future for the continuous improvement of the organization.
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8. CONCLUSION
A Larsen and Tubro group company is well diversified at many locations. They are succeeding from their existence because of the efforts and contribution of the management and the employees towards the organization.
ECC strongly believes that to be in business, up gradation of employees' knowledge and skills are essential. Hence investment in Human Resources is one of the top priorities of the Management. From this study it is concluded that the effectiveness of the current performance Appraisal system in the organization is high. The organization feels that appraisal system is a motivating tool to the employees and follows it in order to get the maximum output from the employees. Though there is a very small amount of dissatisfaction shown towards the appraisal system, it can be completely eradicated by making some innovative modifications. All these efforts and hard work of the management as well as each an every employee is the secret behind the success of the enterprise.
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A STUDY ON PERFORMANCE APPRAISAL SYSTEM OF L&T ECC E&GP.

QUESTIONNAIRE Dear Respondents, Your sincere feedback through this questionnaire will be beneficial to improve the Performance Appraisal System at L&T ECC. And your kind Cooperation will help me complete my project in time. I GENERAL INFORMATION 1. Name (optional): 2. Gender 3. Age : a) Male [ ] : a) Below 25 years [ ] d) 46 55 years [ ] 4. Cadre: b) Female [ ] b) 26 35 years [ ] e) Above 55 years [ ] c) Secretary level [ ] c) 36 -45 years [ ]
a) Managerial level [ ] b) Officer level [ ]
5. Designation: ----------------------------------6. Experience : a) Less than 3 years [ ] c) 6 10 years [ ] b) 3- 5 years [ ] d) 11 years and above [ ]
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II STUDY RELATED INFORMATION 1. How do you describe your present job? a) Challenging [ ] b) Interesting [ ] c) Normal [ ]
2. Describe your performance level in your company: a) Good [ ] b) Fair [ ] c) Needs improvement [ ]
3. a) Are you satisfied with the present appraisal system followed in your organization? a) Highly Satisfied [ ] d) Dissatisfied [ ] b) Give Reason 4. a) What in your opinion should be the time period of conducting continuous Appraisal? a) Quarterly [ ] b) Any specific reason 5. a) Does the performance appraisal gives an additional job satisfaction to you? a) Yes [ ] b) No [ ] b) If yes, at what level it gives an additional job satisfaction:a) Very high level [ ] d) Low level [ ] b) High level [ ] e) Very low level [ ] a) Yes [ ] b) No [ ] b) If yes, at what level the performance system is helpful for your self-development? a) Very high level [ ] d) Low level [ ] b) High level [ ] e) Very Low level [ ] c) Moderate level [ ] c) Moderate [ ] b) Half Yearly [ ] c) Yearly [ ] b) Satisfied [ ] c) Neither satisfied nor dissatisfied [ ] e) Highly Dissatisfied [ ]
6. a) Does the performance appraisal system facilitate to increase your self development?
88
7. a) What is your opinion on being rated in the following attributes for your performance appraisal? Attributes Strongly Agree a. b. c. d. e. f. g. h. i. Professional Qualification Customer relations Planning completion Innovation & Creativity Leadership Initiative Communication Speed Quality of work [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] monitoring & timely [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] competence & [ ] [ ] Agree Disagree Strongly Disagree [ ] [ ]
Neither
[ ]
b) What other Attributes do you think are necessary for evaluating Performance appraisal? 89 SRM School of Management
8. Current Appraisal system provides a frank discussion between you and the appraiser a) Strongly Agree [ ] d) Disagree [ ] b) Agree [ ] c) Neither Agree nor Disagree [ ] e) Strongly Disagree [ ]
9. Current Appraisal system allows you to express your developmental needs a) Strongly Agree [ d) Disagree [ ] ] b) Agree [ e) Strongly Disagree [ ] ] c) Neither Agree nor Disagree [ ]
10. At low performance level, how does your organization improve the performance level of the employee? a) By advice [ ] c) By de-promotion [ ] a) Yes [ ] b) By training [ ] d) by rules & regulations [ ] b) No [ ]
11. Is Job Rotation practiced in order to identify your potential in new areas of the job?
12. What percentage of biasing is there in the current performance appraisal system? a) 0% [ ] b) 1% - 50% [ ] c) 51% - 99% [ ] d) 100% [ ]
13.a) What is the effect of Negative feedback on your performance? a) Frustration [ ] b) Triggers to work hard [ ] c) Helps you to correct yourself [ ] b) If any other, Specify 14. Appraisal should be done by; a) Immediate Superior[ ] c) Project manager [ ] e) All the above [ ] b)Team Leader[ ] d) Head of the Department [ ]
90
15. According to you, Performance Appraisal in your organization is for; a) Promotion [ ] c) Transfer [ ] e) All the above [ ] 16. What would be your key objectives for the next 6 months? a. b. c. 17. Explain the Agenda (your plan) for meeting your desired objectives. b) Identification of the employees potential [ ] d) Identification of Training needs [ ]
18. Training and Development activities by HRD is a) Highly satisfied [ ] d) Dissatisfied [ ] b) Satisfied [ ] c) Neither satisfied nor dissatisfied [ ] e) Highly Dissatisfied [ ]
19. What is your opinion, if the organization adapts 360 degree appraisal?
20.
Give
your
suggestions
to
improve
the
performance
appraisal
system
of
your
organization.
91
THANK YOU!!!
92

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A STUDY ON THE PERFORMANCE APPRAISAL SYSTEM IN L&T ECC DIVISION

MASTER OF BUSINESS ADMINISTRATION

Dr.N.SANTHOSH KUMAR (Asst. Professor S.G)

SRM UNIVERSITY SCHOOL OF MANAGEMENT KATTANKULATHUR 603203 MAY 2010

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Signature of the Student

Submitted to SRM UNIVERSITY

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S.NO 1 2 3 4 Cadre * Appraiser 5 6 7 Descriptive Statistics 8 9 10 11 12 13 14 15 16 17 18 19 20 Experience * Job Rotation

Cadre * Percentage Of Biasing

Description Of The Present Job Performance Level

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PARTICULARS Cadre * Satisfaction To Present PAS

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Analysis And Interpretation

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Recommendations And Suggestions

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Findings And Inferences

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Activities & Tasks

Outputs Results (Qualitative) Targets (Quantitative)

Tasks Weekly/monthly/ quarterly

Decisions Responsibility/ authority

KEY ELEMENTS IN PMS:

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1.1 MEANING OF PERFORMANCE APPRAISAL

1.2 PERFORMANCE APPRAISAL PROCESS

NEED FOR PERFORMANCE APPRAISAL

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PURPOSE OF PERFORMANCE APPRAISAL

1.3 METHODS OF PERFORMANCE APPRAISAL

1.3.1 TRADITIONAL METHODS Graphics Rating Scales:

Paired Comparison Method:

Forced Distribution Method:

Essay or Free Form Appraisal:

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1.3.2 MODERN METHODS Behaviorally Anchored Rating Scales:

Human Resource Accounting:

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1.4 CRITERIA & TYPES OF PERFORMANCE APPRAISAL CRITERIAS:

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TYPES: Line Manager Appraisal:

Team review and appraisal:

1.5 COMMON APPRAISAL ERRORS: Contrast Effect:

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First Impression Error:

Negative And Positive Skew:

1.6 KEY ELEMENTS OF THE APPRAISAL PROCESS

BENEFITS OF PERFORMANCE APPRAISAL

NEGATIVE ASPECTS OF PERFORMANCE APPRAISAL

1.7 THE APPRAISAL FORM

1.8 LITERATURE REVIEW 1. PHILOSOPHY OF PERFORMANCE APPRAISAL PROCESS