Professional Documents
Culture Documents
The scope of HRM is, indeed, very vast and wide. It includes all activities starting
from manpower planning till employee leaves the organisation. Accordingly, the
scope of HRM consists of acquisition, development, maintenance/retention, and
control of human resources in the organisation. In this report, I will be focussing on
the performance appraisal function.
PERFORMANCE APPRAISAL
MEANING AND DEFINITION
Performance Appraisal is the systematic evaluation of the performance of employees
and to understand the abilities of a person for further growth and development. It is
also referred as merit rating, employee rating, and service rating.
In the words of Sexton Adams Performance appraisal is a method for management
to make fair and impartial analyses of the value of employees to the organisation.
Performance appraisal is the process of evaluation of employees abilities. The main
objective of the performance appraisal should be towards improvement in efficiency
and effectiveness. Performance evaluation or performance appraisal is the process of
assessing the performance and progress of employees on a given job and his
potential for future progress. It helps to have comparative worth of employees.
3) Organizational
maintenance
Improve Communication
4) Documentation
Determine whether HR programmes like selection,
training, transfers have been effective or not
and motivation, and, when necessary, a guide to the adjustments for performance
improvement.
Promotions: Performance appraisal gives management a means of identifying
employees for promotion. Data is collected about employees performance and
the employee is noticed in the work culture. This can help the manager decide
they are aware that their work is recognized and rewarded by the management.
Human resource planning: Appraisal process helps in effective human
resource planning and plan resources. Accurate and current appraisal data
TRADITIONAL METHODS
Ranking Method:
Grading Method:
In this method, certain categories of worth are established in advance and carefully
defined. There can be three categories established for employees: outstanding,
satisfactory and unsatisfactory. There can be more than three grades. Employee
performance is compared with grade definitions. The employee is, then, allocated to
the grade that best describes his or her performance.
Such type of grading is done is Semester pattern of examinations and in the selection
of a candidate in the public service sector. One of the major drawbacks of this
method is that the rater may rate most of the employees on the higher side of their
performance.
Check-List Method:
The basic purpose of utilizing check-list method is to ease the evaluation burden
upon the rater. In this method, a series of statements, i.e., questions with their
answers in yes or no are prepared by the HR department (see Figure 28-2). The
check-list is, then, presented to the rater to tick appropriate answers relevant to the
appraisee. Each question carries a weight-age in relationship to their importance.
When the check-list is completed, it is sent to the HR department to prepare the final
scores for all appraises based on all questions. While preparing questions an attempt
is made to determine the degree of consistency of the rater by asking the same
question twice but in a different manner (see, numbers 3 and 6 in Figure 28-2).
In this method, the rater focuses his or her attention on those key or critical
behaviours that make the difference between performing a job in a noteworthy
manner (effectively or ineffectively). There are three steps involved in appraising
employees using this method.
First, a list of noteworthy (good or bad) on-the-job behaviour of specific incidents is
prepared. Second, a group of experts then assigns weightage or score to these
incidents, depending upon their degree of desirability to perform a job. Third, finally
a check-list indicating incidents that describe workers as good or bad is
constructed. Then, the check-list is given to the rater for evaluating the workers.
The basic idea behind this rating is to apprise the workers who can perform their
jobs effectively in critical situations. This is so because most people work alike in
normal situation. The strength of critical incident method is that it focuses on
behaviours and, thus, judges performance rather than personalities.
Its drawbacks are to regularly write down the critical incidents which become timeconsuming and burdensome for evaluators, i.e., managers. Generally, negative
incidents are positive ones. It is raters inference that determines which incidents are
critical to job performance. Hence, the method is subject to all the limitations
relating to subjective judgments.
The graphic rating scale is one of the most popular and simplest techniques for
appraising performance. It is also known as linear rating scale. In this method, the
printed appraisal form is used to appraise each employee.
The form lists traits (such as quality and reliability) and a range of job performance
characteristics (from unsatisfactory to outstanding) for each trait. The rating is done
on the basis of points on the continuum. The common practice is to follow five
points scale.
The rater rates each appraisee by checking the score that best describes his or her
performance for each trait all assigned values for the traits are then totaled. Figure
28-3 shows a typical graphic rating scale.
Essay Method:
Essay method is the simplest one among various appraisal methods available. In this
method, the rater writes a narrative description on an employees strengths,
weaknesses, past performance, potential and suggestions for improvement. Its
positive point is that it is simple in use. It does not require complex formats and
extensive/specific training to complete it.
However, essay method, like other methods, is not free from drawbacks. In the
absence of any prescribed structure, the essays are likely to vary widely in terms of
length and content. And, of course, the quality of appraisal depends more upon
raters writing skill than the appraisers actual level of performance.
Moreover, because the essays are descriptive, the method provides only qualitative
information about the employee. In the absence of quantitative data, the evaluation
suffers from subjectivity problem. Nonetheless, the essay method is a good start and
is beneficial also if used in conjunction with other appraisal methods.
Confidential Report:
In other words, stripped to its essentials, MBO requires the manager to goals with
each employee and then periodically discuss his or her progress toward these goals.
In fact, MBO is not only a method of performance evaluation. It is viewed by the
Practicing managers and pedagogues as a philosophy of managerial practice because
it is a method by which managers and subordinates plan, organise, communicate,
control and debate.
An MBO programme consists of four main steps: goal setting, performance
standard, comparison, and periodic review. In goal-setting, goals are set which each
individual, s to attain. The superior and subordinate jointly establish these goals. The
goals refer to the desired outcome to be achieved by each individual employee.
In performance standards, the standards are set for the employees as per the
previously arranged time period. When the employees start performing their jobs,
they come to know what is to be done, what has been done, and what remains to be
done.
In the third step the actual level of goals attained are compared with the goals agreed
upon. This enables the evaluator to find out the reasons variation between the actual
and standard performance of the employees. Such a comparison helps devise
training needs for increasing employees performance it can also explore the
conditions having their bearings on employees performance but over which the
employees have no control.
Finally, in the periodic review step, corrective measure is initiated when actual
performance deviates from the slandered established in the first step-goal-setting
stage. Consistent with the MBO philosophy periodic progress reviews are conducted
in a constructive rather than punitive manner.
The purpose of conducting reviews is not to degrade the performer but to aid in
his/her future performance. From a motivational point of view, this would be
representative of McGregors theories.
Figure 28.4 present the MBO method of performance appraisal presently used by an
engineering giant i.e., Larsen and Turbro Limited.
Limitation of MBO:
MBO is not a panacea, cure for all organisational problems.
As with other methods, it also suffers from some limitations as catalogued below:
(i) Setting Un-measurable Objectives:
One of the problems MBO suffers from is unclear and un-measurable objectives set
for attainment. An objective such as will do a better job of training is useless as it
is un-measurable. Instead, well have four subordinates promoted during the year is
a clear and measurable objective.
(ii) Time-consuming:
The activities involved in an MBO programme such as setting goals, measuring
progress, and providing feedback can take a great deal of time.
(iii) Tug of War:
Setting objectives with the subordinates sometimes turns into a tug of war in the
sense that the manager pushes for higher quotas and the subordinates push for lower
ones. As such, goals so set are likely to be unrealistic.
(iv) Lack of Trust:
MBO is likely to be ineffective in an environment where management has little trust
in its employees. Or say, management makes decisions autocratically and relies
heavily on external controls.
3. Reallocating Incidents:
Various critical incidents are reallocated dimensions by another group of people who
also know the job in question. Various critical incidents so reallocated to original
dimensions are clustered into various categories, with each cluster showing similar
critical incidents. Those critical incidents are retained which meet 50 to 80% of
agreement with the cluster as classified in step 2.
4. Scaling Incidents:
The same second group as in step 3 rates the behaviour described in each incident in
terms of effectiveness or ineffectiveness on the appropriate dimension by using
seven to nine points scale. Then, average effectiveness ratings for each incident are
determined to decide which incidents will be included in the final anchored scales.
5. Developing Final BARS Instrument:
A subset of the incidents (usually six or seven per cluster) is used as a behavioural
anchor for the final performance dimensions. Finally, a BARS instrument with
vertical scales is drawn to be used for performance appraisal, as in Figure 27-5.
How BARS is developed can be exemplified with an example of grocery checkout
clerks working in a large grocery chain.
A number of critical incidents involved in checking out of grocery can be clustered
into seven performance dimensions:
1. Knowledge and Judgment
2. Conscientiousness
3. Skill in Human Relations
The research on BARS indicates that it too suffers from distortions inherent in most
rating scales. The research study concluded that it is clear that research on BARS to
date does not support the high promise regarding scale independence In short, while
BARS may outperform conventional rating techniques, it is clear that they are not a
panacea for obtaining high inter rater reliability
Assessment Centres:
and observations and, based on it, they give their assessment about the assesee. At
the end of the process, feedback in terms of strengths and weaknesses is also
provided to the assesees.
The distinct advantages the assessment centres provide include more accurate
evaluation, minimum biasedness, right selection and promotion of executives, and
so on. Nonetheless, the technique of assessment centres is also plagued by certain
limitations and problems. The technique is relatively costly and time consuming,
causes suffocation to the solid performers, discourages to the poor performers
(rejected), breeds unhealthy competition among the assessees, and bears adverse
effects on those not selected for assessment.
Yet another method used to appraise the employees performance is 360 degree
appraisal. This method was first developed and formally used by General Electric
Company of USA in 1992. Then, it travelled to other countries including India. In
India, companies like Reliance Industries, Wipro Corporation, Infosys Technologies,
Thermax, Thomas Cook etc., have been using this method for appraising the
performance of their employees. This feedback based method is generally used for
ascertaining training and development requirements, rather than for pay increases.
Under 360 degree appraisal, performance information such as employees skills,
abilities and behaviours, is collected all around an employee, i.e., from his/her
supervisors, subordinates, peers and even customers and clients.
Role Analysis:
The role analysis method involves two parties, viz., the focal role and the role set
members. The focal role is the ratee. That is, he is a manager whose performance is
appraised. The role set members are the raters. That is, they are the managers who
come in close contact with the focal role while he is doing his job. The role set
members will judge the performance of the focal role. As per their judgements, the
focal role will make changes in his performance.
Human Resource Accounting HRA measures the cost and contribution of human
resources in the organisation. The cost includes the cost of recruitment, selection,
induction, training, salaries and other facilities, etc. Contribution is the money value
of the service of the employees. This service is measured by labour productivity. If
the contribution is more than the cost, then the employee performance is positive
and vice-versa.
Psychological appraisal is done to find out the conceptual skills, human skills,
technical skills, etc. of the employee. It is done by different methods, such as indepth interviews, psychological tests, consultations and discussions with the
employees, superiors, subordinates and others, who are working with the employee.
5. Paper Work
Some supervisors complain that performance appraisal is pointless paper work.
They complain because many times, performance appraisal reports are found only in
the files. It does not serve any practical purpose. In other words, the performance
appraisal reports are not used by some organisations. They are conducted just as a
formality or for the name sake.
6. Fear of Spoiling Relations
Performance appraisal may also affect superior-subordinate relations. An appraisal
makes the superior more of a judge than a coach. So, the subordinate may have a
feeling of suspicion and mistrust, about the superior.
7. Evaluate performance not person
The rater should evaluate the performance, i.e. output, new ideas, extraordinary
efforts, etc. and not the person. In reality, the person is evaluated and not his
performance. It should be noted that failure is an event and a not a person.
8. Horn Effect
Sometimes the raters may evaluate on the basis of one negative quality. This results
in overall lower rating of the particular employee.
9. Spillover Effect
In this case, the present performance appraisal is greatly influenced by past
performance. A person who has not done a good job in the past is considered
(assumed) to be bad for doing present work.
Abstract
This research study is conducted on one of the core activities of the human resource
department. Irrespective of whether a particular company is small or big in size,
companies do have a proper appraisal process in place. Wherever there are enough
employees to do appraisal, this activity is followed in that company.
Other than salary hike, performance appraisal has several objectives. It is also equally
important that it is a periodic, transparent, motivating, effective, and an unbiased
activity. It should not be a cause of disharmony amongst employees.
In this research study, what all best practices are observed in industry with respect to
performance appraisal are studied carefully. This is done so to improvise the appraisal
procedure followed at one of the major IT companies in India- L&T Infotech. Like most
big companies, L&T Infotech also has a well thought appraisal process to evaluate more
than 14,000 employees. To investigate any shortcomings, if any and further what all
new steps could be incorporated into the current appraisal process, a thorough
understanding of what other IT majors do, was crucial.
During the initial phase of the study, assimilation of L&T Infotechs appraisal process
was very important. This helped in giving the very first glimpse of how IT companies
evaluate employees. Based on this, the rest of the study was carried out by strictly
keeping in mind what practices are observed in L&T Infotech and what improvements it
needs.
To have a fair idea of the best practices followed at various companies, a few select
companies from both IT and Non-IT sector were considered.
INTRODUCTION
The history of performance appraisal is quite brief. Its roots in the early 20th century
can be traced to Taylor's pioneering Time and Motion studies. But this is not very
helpful, for the same may be said about almost everything in the field of modern human
resources management.
As a distinct and formal management procedure used in the evaluation of work
performance, appraisal really dates from the time of the Second World War - not more
than 60 years ago.
The human inclination to judge can create serious motivational, ethical and legal
problems in the workplace. Without a structured appraisal system, there is little chance
of ensuring that the judgements made will be lawful, fair, defensible and accurate. In
many organizations - but not all - appraisal results are used, either directly or indirectly,
to help determine reward outcomes. That is, the appraisal results are used to identify the
better performing employees who should get the majority of available merit pay
increases, bonuses, and promotions. By the same token, appraisal results are used to
identify the poorer performers who may require some form of counselling, or in
extreme cases, demotion, dismissal or decreases in pay.
Problem statement:
A research study conducted to examine the appraisal system followed in various IT and
Non-IT organisations.
Hypothesis:
An appraisal process if,
Research Methodology:
Research design
Exploratory design- Experience survey method
In exploratory research design any specific problem can be studied. Here, it is to study
the effectiveness of appraisal procedure followed in various organisations. To do so, the
Experience survey method of exploratory research design is adopted. According to this
method, people who have practical experience in the problem under study are
considered as respondents. These respondents are then interviewed by an investigator.
This gives the respondents the opportunity to give some thought and suggest possible
solutions to it. In this way they contribute effectively to the research. A questionnaire
was given to every respondent in this research. It is provided in the annexure for ready
reference. After filling it, respondents had to discuss it point wise, answering all queries
thus initiated.
SOURCES OF DATA
Primary
The primary data was collected with the help of a questionnaire. Also after getting the
questionnaire filled, the respondents were asked to explain once again the appraisal
procedure in detail. The key point is that data thus collected is unique to this research,
and does not form basis of any other study. The data however is nearer to perfect if not
accurate.
Secondary
The secondary data is collected from reference books, online books, newspapers,
magazines, and the internet.
Sampling plan
Universe of population
Sampling frame
Sr. IT Companies
Sr
No
No. Companies
1.
Accenture
1.
Non- IT
TATA Teleservices
Ltd
2.
Infosys
2.
Vodafone Essar
3.
Persistent Systems
3.
Ericsson
4.
Reliance
Ltd.
4.
Patni Computers
Communication
5.
Cognizant
5.
Reliance Industries
6.
Technology Solutions
6.
Satyam
more.
7.
TCS
8.
WIPRO
9.
Mphasis
Company
10. IBM
11. HP
7.
an EDS
General Mills
Sampling techniques
The technique used here is non-probability sampling as the researcher has chosen
the companies to be included in the study.
The questionnaire was designed in order to collect data relevant to the problem.
The questionnaire in all has 15 questions. Out of the total number of questions, 8
are open - ended and 7 are close - ended. Further, Q1 to Q3 provide companys
basic information and Q4 to Q14 provide information on the topic. Q15 was
specially added to obtain comments of the respondents.
Limitations
LITERATURE SURVEY
objectives :
Regularly discuss the performance related to committed work in order to identify actions
that can improve it.
Identify areas of performance concerns and initate remedial actions.
Provide a foundation for planning future development.
This commitment setting should meet the S-M-A-R-T criteria. It has to be within the
framework mentioned below.
Project appraisal
Task appraisal
Annual appraisal
In the above appraisings, project manager is the defualt reviewer for an appraisee. Also
appraiser can be the reviewer.
ACCENTURE
Appraisal process:
Has international presence with around 40,000 employees striving for delivering high
performance.
INFOSYS
Appraisal process:
PATNI COMPUTERS
Appraisal process:
Has international presence with around 14,000 employees.
Appraisal is conducted annually, by 2 or 3 appraisers per employee.
The appraisal process is a combination of 360 degree and MBO.
Every employee is eligible for this process on completion of one year of service.
WIPRO
Appraisal process:
Has international presence with around 90,000 employees.
Appraisal is conducted annually, by 4 to 6 appraisers per employee.
The appraisal process is a combination of forced ranking, weighted checklist
and paired comparison.
IBM
Appraisal process:
Has international presence with around 80,000 employees.
Appraisal is conducted annually, by 2 or 3 appraisers per employee.
The appraisal process is a combination of 360 degree.
Every employee is eligible for this process on completion of one year of service.
Employee is evaluated based on observation from Project manager and Peoples
manager.
Every employee is eligible for this process on completion of one year of service.
Employee is evaluated based on behaviour, ability to utilize resources efficiently,
feedback from others and likewise.
HEWLETT PACKARD
Appraisal process:
Has international presence with around 8,000 employees only in Bangalore office.
Every employee is evaluated on data against KPIs and feedback from Supervisor and Function
Head
GENERAL MILLS INDIA PVT LTD
Appraisal process:
Has international presence and around 300+ employees in Mumbai office.
Appraisal is conducted annually, by 2 or 3 appraiser per employee.
The appraisal process is carried using a customized software My Performance Tool. It has
partly 360 degree.
Every employee is eligible for appraisal as soon as they join.
DATA ANALYSIS
Based on data interpretation, following is the data analysis. A comparison between practices at
different companies is made here for easy understanding. However only those areas which have
scope for improvement are considered for this analysis.
Following is a colour code table depicting scope for improvement:
2 to 3
2 or 3
2 or 3
4 to 6
2 or 3
2 or 3
1 or 2
BARS +
FD
FD
FD
Highly
Complex
MBO+
customiz
Combinatio
360
degree
of many
appraisers do
appraising
Forced
Distribution
(FD)
method
methods
S-M-A-RGoal Setting
S-M-A-RS-M-A-R-T
BSC
North-
S-M-A-R-
star
MBOKRA
Allotting
Yes
Yes
Yes
Yes
Yes
Yes
weightage to
KRAs
Equivalent
practices
to
L&T
Is
Scope
Improvement
No change required
The reasons for choosing these companies for comparative analysis are:
for
Of total 11 companies studied, these six companies have a competent appraisal process
from which something new can be adapted.
With respect to areas of improvement required in L&T Infotechs process which are:
Change in number of appraisers.
Change in appraisal method followed. Change in goal setting technique.
Percentage wise, how many performance appraisals are conducted yearly is shown
below:
11
Bar- chart showing measures adopted to tackle the shortcomings in the PAS followed in
every company:
NON IT ORGANISATIOS
RECOMMENDATIONS
At L&T InfoTech, objective is not broken down into KRAs and also KPI concept is not
observed. This leads to people concentrating on many tasks at the same time leading to
poor performance. It would be much better if KRA KPI concept is implemented. Also
employees should be made to participate actively into this entire activity.
Appraisal method
Instead of having only forced distribution, there are three ways in which appraisal
method can be changed.
Appraisers
Like Wipro, having more number of appraisers will help reduce appraisers biasing. The
more appraisers contribute, the more accurate the evaluation will be.
Also colleagues or peers need to be included as any employee spends maximum time
with his colleagues in the office than with his superiors. So their opinion is also
important from evaluation point of view.
Goal Setting
Balanced score card considers four perspectives while setting goals for an employee.
Having individual employees goals in line with companys goals or objectives would
enhance the working of the organisation as a whole.
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Here, the organizational objective constitutes to a total of 100%. This is broken down
into three different KRAs such that, KRA1 has maximum weightage of 80%, followed
by KRA 2 and KRA3 having equal weightage of 10% each. So when all 3 KRAs are
completed, that will complete the objective 100%.
IN THE NEWS
CONCLUSION
L&T InfoTech has been using Pragati for a long time now. However they are making
certain changes in it. Therefore it was important to understand the industry best
practices first. And then what changes can be incorporated to make it an effective
system. During this study, it was observed that if the appraisal process is not transparent
then, it becomes one of the causes for lack of motivation amongst employees. This
further may also lead to disharmony in the organization. Whether it was the information
technology companies or others, the bar chart for the same showed this very result.
Primarily the reason for this upsets is because every employee wants to be recognised
for the work he does. And if he feels that evaluation is an internal activity of
management then this leads to unrest in his mind and so he starts losing interest in the
job role.
12
Appraisers bias is yet another issue associated with appraising. It is hard to have an
unbiased system. However, companies like Persistent, Infosys, Satyam, HP have
managed to incorporate such practices within their system that, biasing is reduced to a
minimum level. It is even more important that a company has an exclusive appraisal
system just according to its needs, similar to what is observed at Satyam or Infosys.
Right from goal setting, an employee is made to participate in almost all activities.
Having just one method to determine the entire performance of an employee seems an
unfair practice. From immediate implementation point of view, it is better to have a
combination of various methods.
The appraisal process surely has scope for improvement. And when all the aspects are
modified, it will turn out into an effective appraisal system.
BIBLIOGRAPHY
Books:
Personnel Management by
Websites:
www.citehr.com
http://books.google.co.in
http://www.yourarticlelibrary.com/performance-appraisal/performance-appraisalmethods-traditional-and-modern-methods-with-example/35492/
http://businesstoday.intoday.in/
http://appraisals.naukrihub.com
www.lntinfotech.com
http://studyvalue.com/_management_sciences/_hrm/limitations_of_performance_apprai
sal_36.html#.Vhoryfmqqko
http://kalyan-city.blogspot.in/2011/05/modern-methods-of-performance-appraisal.html
Business Week
Business Today
ANNEXURE
Questionnaire
Kindly fill the following questionnaire with appropriate choices in the boxes provided.
The information provided by you will be strictly used for academic purpose only.
Does your organization have international presence and / or offices outside India?
a) Yes b) No
Performance Appraisal
4) In the box below, please mention the eligibility criteria for an employee to be
considered for performance appraisal:
a) Annually
a) 1
b) 2-3
c) 4-6
d) more than 6
a)
Balance Scorecard
b)
Weighted checklist
c)
Management
By
Objectives
d)
(MBO)
e)
15
Since how many years are you following the above mentioned method?
Goal setting
II] Are organizational goals broken down into KRAs so that they can be
cascaded to lower levels?
Sr No
Shortcomings (More than one can be chosen) Put mark in respective rows
Appraisers bias
Implementation issues
16
Other (Specify)
Sr
Measures taken (More than one can be chosen)
No
Measurable Performance Parameters
Appraiser Training
Multiple Feedback
Review Mechanism
Transparency
Normalizing
Others (Specify)
14) Does the HR dept. use the appraisal data thus obtained, for other
developmental decisions like job rotation, job enrichment, training & development
etc?
THANK YOU!
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