Project report on performance appraisal

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I. Contents of getting project report on performance appraisal

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Introduction
1.1 Introduction and Background:
The Bachelor of Business Administration (BBA) was introduced by University of Liberal
ArtsBangladesh with an objective to supply an adequate number of highly trained and
educated graduates to the economy. As the BBA program is the integrated, theoretical and
practical method of teaching major disciplines in the proceeding years of their courses.
To undergo project program each participant has to prepare a report on the particular topic
related with the organization. Based on my practical experience as well as theoretical
knowledge, I have accomplished the project report regarding Performance Appraisal of
Employees of Social Investment Bank Ltd.
Performance Appraisal process must be done in any organization in an effective manner under
proper management, so HR division must be involved here directly because HRD deals with
the viewpoint of personal development, work satisfaction of workers and involvement in the
organization.
1.2 Rational:
Performance appraisal is one of the key functions of human resource management. To achieve
the target goals of the organization, human resources manager has to be very cautious about
the performance of the manpower of the organization. In SIBL, performance is appraised on

daily basis in the field level and other cases on specific periodic basis. It helps supervisors
gain a better understanding of each employees abilities with the goal to help train and
develop skills and strengths. It provides a chance to evaluate job progress, stimulate interest
and improve job performance by recognizing productive work and by pointing out areas of
growth and development. It provides a feedback mechanism that might otherwise be
overlooked. So, performance appraisal is a continuous process.
1.3 Scope of the study:
As a student of Human Resource Management, as a potential human resource manager, it is
very much necessary for me to know about the performance appraisal system in a bank. I
have been assigned in Social Investment Bank Ltd. in Mirpur Branch and thus paved me the
way to get myself familiarized with the official environment in Bank for the first time. The
area of concentration of this report is confined in investigating different aspect of
performance appraisals as well as problems and prospects and by the way endeavor is made to
give recommendation for handling the problem.
1.4 Objectives:
1.4.1 Broad objective: The Broad objective of the report is to learn about the performance
appraisal process of Social Investment Bank Bangladesh Ltd.
1.4.2 Specific Objectives:
This term paper has been prepared for fulfilling the following specific objectives:

To enlarge the dimension of knowledge regarding performance appraisal.

To identify the difference between theory (what we have learned from the text) and
practice (what is really happened).

To mention the problems that the employees & the managers face with the process.

To identify the strengths and weakness of the performance process.

2.0 Methodology
In order to make the report more meaningful and presentable two sources of data and
information have been used widely.
2.1 Sources of data: There are 2 kinds of Data.
2.1.1 Primary Data:
Observe the environment behavior, facts. Action, record and present condition of the
program.

Case study.

Have conversation with my supervisor and regular employees of the bank.

Make questionnaire to get relevant information.

Direct experiment and group discussion there.

Personal interview through face-to-face and telephone.

2.1.2 Secondary data:

Since advantage in computers and technology, I got data through browsing websites, features
books, different HR books and compliments of senior ranked officials of SIBL in different
magazines, portfolios, History.
2.2 Methods of collecting data: For collecting data I used following methods:

Make questionnaire
Such as:
Sex: male [] Female []
Do you prefer to give add for job mostly on line? [Yes] [No]

Interviews face to face.

Direct experiment

Focus group interviews.

Observing critical incidents

Mail, web search, and through Telephone

2.3 Limitations:
I have faced some limitations during preparing report due to the confidentiality of documents
and resources of SIBL as mentioned below:

Time constraints on part of the practicing experts who was otherwise very willing to
help.

Non-availability of data in a systematic way.

I was not able to visit all branches of SIBL.

Lack of elaborate discussion with the high ranked officials due to their busyness.
2.4 Factors and variables covered:
There are some factors and variables, which need to be covered in performance appraisal
process. These are:
1. Time, table and schedule.
2. Investment and return.
3. Educational qualification.
4. Extra curriculum
5. Language proficiency.
6. Technical capability.
7. Employees confidence level.
8. Experience.
2.5 Tools and Analysis: To prepare this report I took the help of following tools and
analytical process

Rating scale for appraising employees.

MS Word, Excel for data processing

Different manual & Journals
Web site.
Interview.
3.0 Performance Appraisal
3.1 Basic Concept:
In HRM, performance appraisal is use to evaluate employees current and past performance
relative to his performance standard. Its effect may result in increased pay, a promotion or
assistance in personal development areas through training. Evaluating the performance may
take the form of a five-minute discussion between employees and their supervisor, or a more
elaborate, several week processes involving many specific steps. Performance appraisal also
assumes that the employee understood his performance standard and the required areas of
improvement. His supervisor provides the employee with the feedback, development and
incentives required to help the person eliminate performance deficiencies .The aim should be
to improve performance.
3.2 Why Performance Appraisals
HR departments use the informal gathered through performance appraisals to evaluate the
success of recruitment, selection, orientation, placement, training, and other activities.
Although informal and ongoing appraisals on a day-to-day basis are necessary to a smooth
operation, these methods are insufficient for the HR departments needs. Formal appraisals
are needed to help managers with placement, pay, and other HR decisions. In a study of 324
organizations in southern California, for example, 94 percent had a formal appraisal system.
This survey research revealed that the major uses of appraisals were for compensation (74.9
percent), performance improvement (48.4 percent), feedback (40.4 percent), placementrelated decisions (40.1 percent), and documentation (30.2 percent).In appendix part Figure1describes these and other uses.

3.3 Uses of Performance Appraisals

Performance improvement: Performance feedback allows the employee, the

manager, and personnel specialists to intervene with appropriate actions to improve
performance.

Compensation adjustments: Performance evaluations help decision makers

determine who should receive pay raises. Many firms grant part or all of their pay
increases and bonuses on the basis of merit, which is determined mostly through
performance appraisals.

Placement decisions: Promotions, transfers, and demotions are usually based on past
or anticipated performance. Often promotions are a reward for past performance.

Development needs Training and: Poor performance may indicate a need for
retraining. Likewise, good performance may indicate untapped potential that should be
developed.
Career planning and development: Performance feedback guides career decisions
about specific career paths one should investigate.
Staffing process deficiencies: Good or bad performance implies strengths or
weaknesses in the personnel departments staffing procedures.
Informational inaccuracies: Poor performance may indicate errors in job analysis
information, human resource plans, or other parts of the personnel management
information system. Reliance on inaccurate information may have led to inappropriate
hiring, training, or counseling decisions.
Job-design errors: Poor performance may be a symptom of ill-conceived job designs.
Appraisals help diagnose these errors.
Equal employment opportunity: Accurate performance appraisals that actually
measure job-related performance ensure that internal placement decisions are not
discriminatory.
External challenges: Sometimes performance is influenced by factors outside the
work environment, such as family, financial, health, or other personal matters. If these
factors are uncovered through appraisals, the human resource department may be able to
provide assistance.
Feedback to human resources: Good or bad performance throughout the organization
indicates how well the human resource function is performing.
3.4 Methods of Performance appraisal:
In this section we will look at specific ways in which HRM can actually establish
performance standards and devise, instruments that can be used to measure and appraise an
employees performance. Three different approaches exist for doing appraisals. Employees
can be appraised against (1) absolute standards, (2) relative standards, or (3) objectives. No
one approach is always best; each has its strengths and weaknesses.
3.4.1 Absolute Standards
Our first group of appraisal methods uses absolute standards. This means that employees
are compared to a standard; and their evaluation is independent of any other employee in a
work group. Included in this group are the following methods-, the essay appraisal, the critical
incident appraisal, the checklist, the adjective rating scale, forced choice and behaviorally
anchored rating scales. Lets look at each of these, focusing on their strengths and weaknesses
1. Essay Appraisal: The Essay Appraisal probably the simplest method of appraisal is to
have the appraiser write a narrative describing an employees strengths, weaknesses, past
performance, potential, and suggestions for improvement. The strength of the essay
appraisal lies in its simplicity. It requires no complex forms or extensive training to

complete. The essay appraisal is also valuable in providing specific information, much of
which can be easily by the employee.
However, inherent in this method are several weaknesses. Because the essays are
unstructured, they are likely to vary widely in terms of length and content. This method also
provides only qualitative data. HRM decisions generally improve when useful quantitative
data is obtained because it enables employees to be compared and ranked more objectively.
2. Critical Incident Appraisal: The Critical incident appraisal focuses the raters attention on
those critical or key behaviors that make the difference between doing a job effectively and
doing it ineffectively. The appraiser writes down anecdotes describing what the employee did
that was especially effective or ineffective. For example, a police sergeant might write the
following critical incident about one of her officers: Brought order to a volatile situation by
calmly discussing options with an armed suspect during a hostage situation which resulted in
all hostages being released, and the suspect being apprehended without injury to any
individual. Note that with this approach to appraisal, specific behaviors are cited, not vaguely
defined individual traits. A behavior-based appraisal such as this should be more valid than
trait-based appraisals because it is clearly more job related. It is one thing to say that an
employee is aggressive, imaginative, or relaxed, but that does not tell us anything about
how well the job is being done. Critical incidents, with their focus on behaviors, judge
performance rather than personalities.
The strength of the critical incident method is that it looks at behaviors. Its drawbacks are
basically that- appraisers are required to regularly write these incidents down, and doing this
on a daily or weekly basis for all employees is time-consuming and burdensome for
supervisors.
3. Checklist appraisal: In the checklist appraisal, the evaluator uses a list of behavioral
descriptions and checks off those behaviors that apply to the employee.
Once the checklist is complete, it is usually evaluated by the HRM staff, not the appraiser
completing the checklist. Therefore the rater does not actually evaluate the employees
performance; he or she merely records it. An analyst in HRM then scores the checklist, often
weighing the factors in relationship to their importance to that specific job. The final
evaluation can then be returned to the appraiser for discussion with the employee, or someone
from HRM can provide the feedback to the employee.
The checklist appraisal reduces some bias in the evaluation process since the rater and the
scorer are different: However, the rater usually can pick up the positive and negative
connections in each itemso bias can still be introduced. From a cost standpoint, too, this

appraisal method may be inefficient if there are a number of job categories for which an
individualized checklist of items must be prepared.
4. The Behaviorally Anchored Rating Scales: The Behaviorally Anchored Rating
Scales (BARS) combine major elements from the critical incident and adjective rating scale
approaches. The appraiser rates the employees based on items along a continuum, but the
points are examples of actual behavior on the given job rather than general descriptions or
traits. Behaviorally anchored rating scales specify definite, observable, and measurable job
behavior.
Possibly its major advantage stems from the dimensions generated, rather than from any
particular superiority of behavior over trait anchors. The process of developing the behavioral
scales is valuable for clarifying to both the employee and the rater which behaviors represent
good performance and which dont. Unfortunately, it, too, suffers from the distortions
inherent in most rating methods.
3.4.2 Relative Standards
In the second general category of appraisal methods, individuals are compared against other
individuals. These methods are relative standards rather than absolute measuring devices.
The most popular of the relative methods are group order ranking, individual ranking, and
paired comparison.
1. Group Order Ranking: Group order ranking requires the evaluator to place employees
into a particular classification, such as top 20 percent. This method, for instance, is often
used in recommending students to graduate schools. Evaluators are asked to rank the student
in the top 5 percent, the next 5 percent, the next 15 percent, and so forth. But when used by
appraisers to evaluate employees, raters deal with all their employees in their area. So, for
example, if a rater has twenty employees, only four can be in the top fifth; and, of course, four
also must be relegated to the bottom fifth.
The advantage of this group ordering is that it prevents raters from inflating their evaluations
so everyone looks good or from forcing the evaluations so everyone is rated near the average
outcomes that are not unusual with the adjective rating scale. The main disadvantages
surface, however, when the number of employees being compared is small.
2. Individual Ranking: The individual ranking method requires the evaluator merely to list
the employees in order from highest to lowest. In this process, only one employee can be
rated best.' If the evaluator is required to appraise thirty individuals, this method assumes
that the difference between the first and second employee is the same as that between the
twenty-first and the twenty-second. Even though some of these employees may be closely

grouped, this method typically allows for no ties. In terms of advantages and disadvantages,
the individual ranking method carries the same pluses and minuses as group order ranking.
For example, individual ranking may be more manageable in a department of six employees
than in one where a supervisor must evaluate the 19 employees that report to her.
3. Paired Comparison: The paired comparison method is calculated by taking the total of
[N(N 1)1/2 comparisons. A score is obtained for each employee by simply counting the
number of pairs in which the individual is the preferred member. It ranks each individual in
relationship to all others on a one-on-one basis. If ten employees are being evaluated, the first
person is compared, one by one, with each of the other nine, and the number of times this
person is preferred in any of the nine pairs is tabulated. Each of the remaining nine persons, in
turn, is compared in the same way, and a ranking is formed by the greatest number of
preferred victories. This method ensures that each employee is compared against every
other, but the method can become unwieldy when large numbers of employees are being
compared.
3.4.3 Objectives
The third approach to appraisal makes use of objectives. Employees are evaluated on how
well they accomplished a specific set of objectives that have been determined to be critical in
the successful completion of their job. This approach is frequently referred to as management
by objectives (MBO). Management by objectives is a process that converts organizational
.objectives into individual objectives. It consists of four steps: (1) goal setting, (2) action planning, (3) self-control, and (4) periodic reviews.
(1) Goal setting: In goal setting, the organizations overall objectives are used as guidelines
from which departmental and individual objectives are set. At the individual level, the
supervisor and employee jointly identify those goals that are critical to fulfilling the
requirements of the job as determined by job analysis? These goals are agreed on and then
become the standards by which the employees suits will be evaluated.
(2) Action planning: In action planning, the means are determined for achieving the ends
established. In goal setting; that is, realistic plans are developed to attain the object. This step
includes identifying the activities necessary to accomplish the objective, establishing the
critical relationship between these activities, estimating the time requirements for each
activity, and determining the resources required to complete each activity.
(3) Self-control: Self-control refers to the systematic monitoring and measuring of performanceideally, by having the employee review his or her own performance. Inherent in
allowing employees to control their own performance is a positive image of human nature.

The MBO philosophy is built on the assumption that employees can be responsible, can
exercise self-direction, and do not require external controls and threats of punishment to
motivate them to work toward their objectives.
(4) Periodic reviews: Finally, with periodic progress reviews, corrective action is initiated
when behavior deviates from the standards established in the goal-setting phase. Again,
consistent with the MBO philosophy, these supervisor-employee reviews are conducted in a
constructive rather than punitive manner. Reviews are not meant to degrade the employee but
to aid in future performance. These reviews should take place at least two or three times a
year. What will these objectives look like? It is important that they be tangible, verifiable, and
measurable. This means that, wherever possible, we should avoid qualitative objectives and
substitute quantifiable statements. For example, a quantitative objective might be to cut, each
day, 3,500 yards of cable to standard five-foot lengths, with a maximum scrap of 50 yards, or
to prepare, process, and transfer to the treasurers office, all accounts payable vouchers
within three working days from the receipt of the invoice.
Advantages: MBOs advantages lie in its results-oriented emphasis. It assists the planning
and control functions and provides motivation, as well as being an approach to performance
appraisal. Thats because employees know exactly what is expected of them and how they
will be evaluated. Moreover, employees understand that their evaluation will be based on the
success -in achieving mutually agreed on objectives. Finally, its expected that employees
should have a greater commitment to the objectives they have participated in developing than
to those unilaterally set by their boss.
Disadvantage: The major disadvantage of MBO is that it is unlikely to be effective in an
environment where management has little trust in its employees. This type of environment
could be one where management makes decisions autocratically and relies heavily on external
controls to direct employee behavior. The amount of time needed to implement and maintain
an MBO process may also cause problems. Many activities must occur to set it up, such as
meetings between supervisors and employees to set and monitor objectives. These meetings
can be very time-consuming. Additionally, it may be difficult to measure whether the MBO
activities are being carried out properly. The difficulty involved in properly appraising the
supervisors efforts and performance as they carry out their MBO activities may cause it to
fail.
3.5 Steps of performance appraisal:
There are several steps regarding the performance appraisal process. One of the standard
appraisal processes is shown below:

However, customize appraisal system is used in the job sector depending on HR policy of the
company. For example, educational intuitions evaluate their employees performance
involving the consent of the students sometimes. In other service sectors dealing with
customers or reaching the requisite target can be the dominating factor for appraising/grading
employees. However, in the challenging jobs like sales and marketing or developing projects,
the standard of appraisal can be different from the other employees of the organization. In the
form of the report namely Annual Confidential Report (ACR) the employee comes to know
about his performance in the respective job followed by increment, promotion, bonus or
permanent appointment offer in the company.
==================

III. Performance appraisal methods

1. Essay Method
In this method the rater writes down the employee
description in detail within a number of broad categories
like, overall impression of performance, promoteability
of employee, existing capabilities and qualifications of
performing jobs, strengths and weaknesses and training
needs of the employee. Advantage It is extremely
useful in filing information gaps about the employees
that often occur in a better-structured checklist.
Disadvantages It its highly dependent upon the writing
skills of rater and most of them are not good writers.
They may get confused success depends on the memory
power of raters.

2. Behaviorally Anchored Rating Scales

statements of effective and ineffective behaviors

determine the points. They are said to be
behaviorally anchored. The rater is supposed to
say, which behavior describes the employee
performance. Advantages helps overcome rating
errors. Disadvantages Suffers from distortions
inherent in most rating techniques.

3. Rating Scale
Rating scales consists of several numerical scales
representing job related performance criterions such as
dependability, initiative, output, attendance, attitude etc.
Each scales ranges from excellent to poor. The total
numerical scores are computed and final conclusions are
derived. Advantages Adaptability, easy to use, low cost,
every type of job can be evaluated, large number of
employees covered, no formal training required.
Disadvantages Raters biases

4. Checklist method
Under this method, checklist of statements of traits of
employee in the form of Yes or No based questions is
prepared. Here the rater only does the reporting or
checking and HR department does the actual evaluation.
Advantages economy, ease of administration, limited
training required, standardization. Disadvantages Raters
biases, use of improper weighs by HR, does not allow
rater to give relative ratings

5.Ranking Method
The ranking system requires the rater to rank his
subordinates on overall performance. This consists in
simply putting a man in a rank order. Under this method,
the ranking of an employee in a work group is done
against that of another employee. The relative position of
each employee is tested in terms of his numerical rank. It
may also be done by ranking a person on his job
performance against another member of the competitive
group.
Advantages of Ranking Method
Employees are ranked according to their
performance levels.
It is easier to rank the best and the worst
employee.
Limitations of Ranking Method
The whole man is compared with another
whole man in this method. In practice, it is very difficult
to compare individuals possessing various individual
traits.
This method speaks only of the position where an
employee stands in his group. It does not test anything
about how much better or how much worse an employee
is when compared to another employee.
When a large number of employees are working,
ranking of individuals become a difficult issue.
There is no systematic procedure for ranking
individuals in the organization. The ranking system does
not eliminate the possibility of snap judgements.

6. Critical Incidents Method

The approach is focused on certain critical behaviors of

employee that makes all the difference in the
performance. Supervisors as and when they occur record
such incidents. Advantages Evaluations are based on
actual job behaviors, ratings are supported by
descriptions, feedback is easy, reduces recency biases,
chances of subordinate improvement are high.
Disadvantages Negative incidents can be prioritized,
forgetting incidents, overly close supervision; feedback
may be too much and may appear to be punishment.

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