You are on page 1of 65

Kaleidoscope in HR WHY I HAVE SELECTED

THIS

TOPIC.

The Economic Times Monday 17 April 2006.

WHAT DOES INDIA INC WANT? SENIOR EXECS SPEAK OUT. Empowerment, Clarity In Organisations Vision Matter Most To Employees
Hey India Inc, if surging employee attrition is bothering you, filling employee morale is becoming an issue, and hiring people is giving you sleepless nights, then wake up and listen to what job-hopping highflying executives in Corporate India are demanding. For top-rung executives, clearly, empowerment and clarity in the organisations vision is what matters the most --- while 62% of Indias top executives want their organization to clarify its vision, 31% want more empowerment. However, for the middle and junior management, rewarding performance on a frequent basis appears to play an important role.
What matters to your top management 33% 25% 15% 14% 5%

More empowerment

Proactive role of HR

Clarity organisation's vision

Reward performance

A survey carried out by the executives search firm, Executives Access, reveals this and provides many more insights into what Indian executives are looking for in their career. HR is no longer a non-core function and in the ongoing talent war, it will play a critical role in employee engagement and retention. Look at what just happened at InfosysT V Monandas Pai traded his CFO job for the position of HR head, something virtually

Training & development

Kaleidoscope in HR inconceivable a few years ago. Progressive companies are now walking up to the importance of the HR function. According to the survey one in every four respondents across the country wants his/her company to let HR play a proactive role. Understandably, in the alreadyconscious IT and Ites sector, this proposition got a high 25% vote. But even executives in the FMCG and hospitality sectors voted in a similar range21-25% --- showing that the criticality of the HR function is being felt far beyond the technology sector. This is also a wake up call to the manufacturing sector, which has seen top talent fleeing to the service sector. Lagging far behind the service sector in employee engagement, a high 37% in the manufacturing sector want their companies to empower HR and make it play a proactive role. The maximum overall executives votes33% however go to giving clarity to the companys vision. Employees want their companies to deliver what they promise and walk the talk. Clearly, employees want their companies to constantly communicate and update them on its vision and goals. There is a very serious disconnect. One in every three employees is not clear or cannot relate to his/her companys vision, says Ronesh Puri, managing director, Executive Access. Rewarding performance is the third most critical area of concern for employees. And guess what --- this is being felt most acutely in the media sector. Around 30% of respondents in the sector --- almost double the national average of 15% --- want their companies to focus a lot more on performance reward. As expected, performance reward got the highest marks in Bangalore, Indias Silicon Valley, where the presence of a large number of IT companies and MNCs has raised awareness levels among executives about reward and compensation. 21% of executives survey in Bangalore want companies to focus on performance rewards to retain top talent. What also came out loud and clear in the survey is a strong gender bias on the empowerment issue. While for male executives, empowerment is an area of concern with 17% voting for it, only 2% of women executives found it important enough in making their career decisions. Perhaps, the fact that top management in India Inc is still a male bastion has something to do with this, since empowerment as an issue becomes important in the top echelons.

Kaleidoscope in HR

WHY?

The reason why I have taken this topic is clearly visible in the above article. HR in our companies is still in a nascent stage and needs to grow in every direction and should act as the core competence for the organisation. In this article the need for modern HR is clearly seen. One of the solutions to the above said problems which I felt is PERFORMANCE APPRAISAL, which should be conducted effectively and efficiently to completely eliminate such problems.

Kaleidoscope in HR

OBJECTIVES
A) Primary Objectives

OF

STUDY

1) To study the performance appraisal system in different organization. 2) To study the transformation of performance appraisal form traditional to modern. 3) To get an insight into the relative importance of performance appraisal in organization. 4) To study the effectiveness of performance appraisal system in different organization. 5) To study the practical application of performance appraisal. 6) To compare appraisal system of different organization and find out the most common parameters for appraisal. 7) How can companies use performance appraisal as an effective tool to achieve organisational effectiveness and efficiency. B) Secondary Objectives. 1) To observe the work environment in organization. 2) To get experience and expertise in making projects. 3) To enhance my communication skills. 4) To increase my confidence.

Kaleidoscope in HR

LIMITATIONS

OF

STUDY

1) To get contacts of HR Mangers for interviews was difficult. 2) Getting the views and opinion of the interviewee (HR Manager) was a difficult task.

Kaleidoscope in HR

OVERVIEW Performance appraisals are a systematic way of evaluating the standard of an employees performance. Steps for developing a systematic performance appraisal .1. Identify key performance criteria Development of key performance criteria should be based on a comprehensive job description and undertaken in consultation with employees. 2. Develop appraisal measures In order to obtain accurate and valid performance appraisals, appraisal measures should be tailored to the specific job or job family (i.e., groups of similar jobs). An evaluation of factors in the work environment which help or hinder performance is also recommended. This ensures that realistic expectations are set for employees performance, and is also likely to increase the perceived fairness and acceptability of performance appraisals. 3. Collect performance information from different sources Traditionally, it has been the sole responsibility of managers / supervisors to assess performance. However, other organisational members (e.g., clients, coworkers, subordinates) can be a valuable source of information as they are likely to have exposure to different aspects of an employees performance. Collecting information from multiple sources can increase the accuracy of performance evaluation (i.e., reduce bias), and increase employees perceptions of fairness. 4. Conduct an appraisal interview The two central purposes of the appraisal interview are to:

Kaleidoscope in HR 1. Reflect on past performances to identify major achievements, areas for further improvement, and barriers / facilitators to effective performance 2. Identify goals and strategies for future work practice. The appraisal interview should be a constructive, two-way exchange between the supervisor and employee, with preparation for the interview done by both parties beforehand. 5. Evaluate the appraisal process The performance appraisal process should undergo regular review and improvement. For example, focus groups or surveys could be conducted to gauge employees perceptions of the appraisal process. A successful performance appraisal process should demonstrate a change in both the ratings of employees performance and aspects of the work environment that impact upon work performance. Best practice in performance appraisal In essence, best practice in performance appraisals involves: Integrating performance appraisal into a formal goal setting system Basing appraisals on accurate and current job descriptions Offering adequate support and assistance to employees to improve their performance (e.g., professional development opportunities) Ensuring that appraisers have adequate knowledge and direct experience of the employees performance Conducting appraisals on a regular basis. Findings on Performance Appraisal of the following companies are analysed 1) 4004 Incorporated 2) HPCL 3) Titan 4) Godrej 5) UTI Mutual Funds 6) Reliance BPO

Kaleidoscope in HR 7) Nicholas Piramal

MEANING

AND

DEFINITION

OF

PERFORMANCE APPRAISAL

erformance appraisal is a formal system that evaluates the quality of a employees performance. An appraisal should not be viewed as an end in itself, but rather as an

important process within a broader performance management system that links: Organisational objectives Day-to-day performance Professional development Rewards and incentives In simple terms, appraisal may be understood as the assessment of an individuals performance in a systematic way, the performance being measured against such factors as job knowledge, quality, and quantity of output, initiative, leadership abilities, supervision, dependability, cooperation, judgment, versatility, health, and the like. Assessment should not be confined to past performance alone. Potentials of the employee for future performance must also be assessed. A formal definition of performance appraisal is: It is the systematic evaluation of the individual with respect to his or her performance on the job and his or her potential for development. A more comprehensive definition is: Performance appraisal is a formal, structured system of measuring and evaluating an employees job related behaviors and outcomes to discover how and why the employee is presently performing on the job and how the employee can perform more effectively in the future so that the employee, organization, and society all benefit.

Kaleidoscope in HR

TRADITIONAL PERFORMANCE APPRAISAL


T he 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. During the First World War, appraisals concept was adopted by US army which was in the form of merit rating. It was man-to-man rating system for evaluation of military personnel. From the army this concept entered the business field and was restricted to hourly-paid workers. During 1920s, relational wage structures for hourly- paid workers were adopted in industrial units and each worker was used to be rated in comparison to other for determining wages rates. This system was called merit rating. The process was firmly linked to material outcomes. If an employee's performance was found to be less than ideal, a cut in pay would follow. On the other hand, if their performance was better than the supervisor expected, a pay rise was in order. Little consideration, if any, was given to the developmental possibilities of appraisal. If was felt that a cut in pay, or a rise, should provide the only required impetus for an employee to either improve or continue to perform well. Sometimes this basic system succeeded in getting the results that were intended; but more often than not, it failed. For example, early motivational researchers were aware that different people with roughly equal work abilities could be paid the same amount of money and yet have quite different levels of motivation and performance. These observations were confirmed in empirical studies. Pay rates were important, yes; but they were not the only element that had an impact on employee performance. It was found that other issues, such as morale and self-esteem, could also have a major influence. As a result, the traditional emphasis on reward outcomes was progressively rejected. In the 1950s in the United States, the potential usefulness of appraisal as tool for motivation and development was gradually recognized. The general model of performance appraisal, as it is known today, began from that time.

MODERN APPRAISAL
P 9

Kaleidoscope in HR
erformance 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 semi-annual), in which the work performance of the subordinate is examined and discussed, with a view to identifying weaknesses and strengths as well as opportunities for improvement and skills development. In many organizations - but not all - appraisal results are used, either directly or indirectly, to help determine reward outcomes. That is, the appraisal results are used to identify the better performing employees who should get the majority of available merit pay increases, bonuses, and promotions. By the same token, appraisal results are used to identify the poorer performers who may require some form of counseling, or in extreme cases, demotion, dismissal or decreases in pay. (Organizations need to be aware of laws in their country that might restrict their capacity to dismiss employees or decrease pay.) Whether this is an appropriate use of performance appraisal - the assignment and justification of rewards and penalties - is a very uncertain and contentious matter.

OBJECTIVES

OF

PERFORMANCE APPRAISAL
Salary Increase

Performance appraisal plays a role in making decision about salary increase. Normally salary increase of an employee depends upon on how he is performing his job. There is continuous evaluation of his performance either formally or informally. This may disclose how well an employee is performing and how much he should be compensated by way of salary increase. Promotion Performance appraisal plays significant role where promotion is based on merit and seniority. Performance appraisal discloses how an employee is working in his present job and what are his strong and weak points. In the light of these, it can be decided whether he can be promoted to the next higher position.

10

Kaleidoscope in HR
Training and Development Performance appraisal tries to identify the strengths and weakness of an employee on his present job. This information can be used for devising training and development programmes appropriate for overcoming weaknesses of employees. Feedback Performance appraisal provides feedback to employees about their performance. A person works better when he knows how he is working. This works in two ways, firstly, the person gets feedback about his performance. Secondly, when the person gets feedback about his performance, he can relate his work to the orgaisational objectives. Pressure on Employees Performance appraisal puts a sort of pressure on employees for better performance. If the employees are conscious that they are being appraised in respect of certain factors and their future largely depends on such appraisal. Others

a) Identifying systemic factors that are barriers to, or facilitators of, effective performance.
b) To confirm the services of probationary employees upon their completing the probationary period satisfactorily. c) To improve communication. Performance appraisal provides a format for dialogue between the superior and the subordinate, and improves understanding of personal goals and concerns. This can also have the effect of increasing the trust between the rater and the ratee. d) To determine whether HR programmes such as selection, training, and transfer have been effective or not.

HOW
T

TO

CONDUCT

PERFORMANCE APPRAISAL PROCESS

11

Kaleidoscope in HR
he following five-step approach to conducting a systematic performance appraisal is recommended: 1) Identify key performance criteria 2) Develop appraisal measures 3) Collect performance information from different sources 4) Conduct an appraisal interview 5) Evaluate the appraisal process.

STEP 1: IDENTIFY KEY PERFORMANCE CRITERIA


Perhaps one of the most challenging aspects of setting up a performance appraisal is deciding what to assess. In essence, four key dimensions of performance should be considered in a performance appraisal. KEY DIMENSIONS
OF

PERFORMANCE Knowledge, skills, and abilities relevant to performance Specific actions conducted and / or tasks performed Outputs, quantifiable results, measurable outcomes and achievements, objectives attained

Competencies Behaviours Results / outcomes

Organisational citizenship behaviours

Actions that are over and above usual job responsibilities

To ensure that the performance criteria are relevant to work practice and acceptable to appraisers and employees: i) Base the performance criteria on an up-to-date job description ii) Develop criteria in consultation with appraisers and employees. i) Base the performance criteria on an up-to-date job description: Clear and explicit links between performance appraisal and a job description will ensure the relevance of the appraisal. If a detailed job description is not available or is out-of-date, it is strongly recommended that an accurate job description be developed prior to conducting a performance appraisal. ii) Develop criteria in consultation with appraisers and employee:

12

Kaleidoscope in HR
Linking performance appraisals with job descriptions can help to focus the appraisal process on the key competencies, behaviours and outcomes associated with a particular role or position. It can also be useful to consult with employees to: Ensure that key aspects of a role / position are represented in the job description, for example: Conduct assessments Plan interventions Manage cases Liaise with and refer to other providers Keep up-to-date service records and case notes Write reports Develop a clear understanding of the relative importance of various competencies, Behaviours and outcomes Identify how these key competencies, behaviours and outcomes can be fairly and accurately assessed. Employees are more likely to accept and be satisfied with the appraisal system if they participate in the development of appraisal criteria and measures, and in the process of conducting appraisals. Strategies for facilitating employees participation include: Engagement in formal meetings or informal discussions with supervisors to seek input and / or feedback on appraisal measures and criteria Representation on groups / committees involved in the design and implementation of performance appraisals Inclusion of self appraisals in the appraisal process Providing opportunities for employees to contribute to the performance appraisal of coworkers and managers / supervisors.

13

Kaleidoscope in HR
It is also important that employees perceive the appraisal system to be equitable and fair.

STEP 2: DEVELOP APPRAISAL MEASURES


Once clear and specific performance criteria have been developed, the next step is to decide how to assess employees performance. It is recommended that a structured and systematic approach is taken to assessing performance. Problems that arise when an unstructured blank sheet approach is used include: Increased chance of appraiser errors (i.e., reduced accuracy) Knowledge, skills and abilities most critical to job performance may be overlooked (i.e., feedback may have limited impact on performance effectiveness) Reduced consistency between appraisers (i.e., evaluations may reflect differences between appraisers rather than actual differences in a employees performance) Perceptions of subjectivity in evaluations, which may in turn, reduce employees satisfaction with, and acceptance of appraisals. There are three important considerations in the design of appraisal measures: i) Generic versus individually tailored measures ii) Objective versus subjective assessments iii) Assessing the impact of the work environment on performance. i) Generic versus individually tailored measures Many workplaces use a generic rating form for all employees irrespective of their role or position within the organisation. Although this approach can save time and minimise cost, the accuracy and relevance of appraisals may be significantly diminished. The one size fits all approach of generic measures may overlook important performance criteria that are relevant to particular jobs, and may also include criteria that are irrelevant to others. Where time and other resources permit, it is more appropriate to construct appraisal formats tailored to specific jobs or families of jobs. If the development of job-

14

Kaleidoscope in HR
specific (i.e., individually tailored) appraisal formats is beyond the resource capacity of the organisation, an alternative would be to develop two groups of criteria: 1) Core competencies that have applicability to the performance appraisal of all employees within the organisation 2) Additional competencies applicable only to some jobs and included in the performance appraisal if relevant. ii) Objective versus subjective assessments A basic distinction between different types of appraisal measures concerns the use of objective or subjective criteria. Objective assessments of work performance Objective measures of job performance involve counts of various work-related behaviours. Some common objective job performance measures include Absenteeism (number of days absent) Accidents (number of accidents) Incidents at work (number of incidents / assaults / altercations) Lateness (days late) Meeting deadlines.

Objective measures can be relatively quick and easy to obtain (given good organisational record-keeping). However, it can be unwise to place too much emphasis on these types of objective measures. An exclusive focus on results / outcomes may mask factors that impact on employees performance that are beyond their control (e.g., client workload).

Subjective assessments of work performance


Subjective measures rely on the judgment of an appraiser (self, coworkers, or supervisor). Subjective assessments are commonly used in performance appraisals and often involve the use of rating scales. Subjective assessments are more likely to provide accurate performance appraisals when:

15

Kaleidoscope in HR
The behaviours and outcomes being assessed are stated in clear behavioural terms The employee understands the measures (e.g., rating scales) being used to evaluate their performance, and agree that the measures are fair and accurate (i.e., measures what it is supposed to) Measurement is as brief as possible whilst addressing essential behaviours and outcomes (frustration with long and unwieldy questionnaires may introduce error in responses). iii) Assessing the impact of the work environment on performance The goal of a performance appraisal is to support and improve employees performance and effectiveness. Therefore, it makes sense for an appraisal to include an assessment of factors in the work environment that help or hinder a employees capacity to perform effectively. Explicit assessment of environmental factors is also likely to increase the perceived fairness and acceptability of performance appraisals. For example, an employees capacity to provide effective treatment interventions is influenced by factors such as: Access to private, soundproofed, adequately sized rooms for counselling Availability of validated, user-friendly assessment tools Availability of reliable and approachable management / administration.

STEP 3: COLLECT PERFORMANCE INFORMATION

FROM

DIFFERENT SOURCES

Once the appraisal measures are developed, the next step involves collection of accurate performance information. A common trap is to begin noting observations of employees just before conducting appraisals. This is likely to give an inaccurate picture of a employees performance. Ideally, employees performance should be observed in a systematic way over time (e.g., in a diary). This method ensures the accuracy of information about their performances.

16

Kaleidoscope in HR
Many employees in the organisation operate with a relatively high degree of autonomy. This combined with the heavy workload of most managers / supervisors, may limit opportunities to conduct regular observation of employees performance. In addition, perceptions of ongoing monitoring may foster a sense of surveillance which can damage staff morale. A more suitable approach may be to keep critical incident reports that note specific examples of both excellent and unsatisfactory performances. Supervisors can also encourage employees to keep track of their own performance records such as emails or letters that commend them on their achievements. Traditionally, it has been the sole responsibility of managers / supervisors to assess performance. However, other organisational members can be a valuable source of information as they are likely to have exposure to different aspects of a employees performance. This approach is known as 360-degree feedback. For instance, coworkers can provide valuable information on teamwork skills, and subordinates can provide useful information on leadership style. There are many advantages to obtaining feedback on performance from sources other than supervisors or managers. Key benefits include: Accuracy and reduced bias (incorrect information from one source can be corrected from another) Increased likelihood that employees will perceive the performance appraisal system to be a fair and accurate reflection of their performance (compared to relying on supervisor ratings alone). If time and resources are limited, it is recommended that supervisor appraisals be conducted in conjunction with self-assessment. Including self-assessments as part of the appraisal process is likely to enhance employees commitment to, and satisfaction with, the appraisal process. It also provides employees with an opportunity to identify barriers and facilitators to effective performance in their work environment. Five different sources of performance appraisal information are considered here: i) Manager / supervisor appraisals ii) Self appraisals iii) Coworker appraisals iv) Subordinate appraisals

17

Kaleidoscope in HR
v) Client appraisals.

i) Manager / supervisor appraisals: Managers / supervisors play a central role in the appraisal process, and should always be included as one of the main appraisers. In essence, managers and supervisors have two roles in performance appraisal: 1. Judge: assessing performance 2. Coach: providing constructive feedback and identifying areas for improvement. Performing both roles simultaneously can be difficult. Employees may be reluctant to admit areas for improvement if performance assessment is linked with desired outcomes such as pay, promotion or opportunities to work in desired areas. One solution is to separate the judge and coach roles by conducting separate appraisal meetings. ii) Self-appraisals: The process of evaluating ones own performance can help to increase employees commitment to the appraisal process, perceptions of appraisal fairness, and satisfaction with the appraisal process. Self-appraisal can also be useful for identifying areas for development. Not surprisingly, self-appraisals are usually biased towards leniency. Strategies to increase the accuracy of self appraisals include: a. Using clear definitions of performance criteria linked to specific, observable behaviours b. Informing employees that their ratings will be checked and compared to other sources of c. appraisal (i.e., for accuracy) d. Ensuring employees receive regular feedback on their performance. It is recommended that self appraisals are used for professional development purposes, rather than for making administrative decisions (i.e., pay increases, promotion). iii) Coworker appraisals: Coworkers can provide valuable feedback on performance, particularly where teamwork occurs. Coworkers are often aware of different aspects of a employees

18

Kaleidoscope in HR
performance that managers /supervisors may not have the opportunity to observe. In addition, as there is usually more than one coworker who rates a workers performance, their evaluations tend to be more reliable. Coworker evaluations, however, may be biased towards those individuals most well liked in an organisation (i.e., friendship bias). Furthermore, coworker appraisals may have a negative impact on teamwork and cooperation if employees are competing with one another for organizational incentives and rewards. It is recommended that coworker appraisals are used for professional development rather than administrative decisions. iv) Subordinate appraisals: Subordinates are a valuable source of information regarding particular aspects of a supervisor or leaders performance such as communication, team building or delegation. Subordinates can provide feedback to help managers / supervisors develop their skills in these areas. The focus should be on aspects of managerial performance that subordinates are able to comment upon. This source of appraisal may only be appropriate in larger organisations where there are sufficient subordinates to allow anonymity. iv) Client appraisals: Clients may also offer a different perspective on a employees performance, particularly for jobs that require a high degree of interaction with people. For example, client appraisals can be a valuable source of feedback regarding the quality of service provision (e.g., the quality of interaction, degree of empathy, level of support, degree of professionalism). Organisations often have performance contracts that specify goals and deliverables for client outcomes. Whilst it is important that organisational goals and deliverables are reflected in the appraisal criteria for individuals and teams, it is recommended that particular care be taken if incorporating client outcomes. Relying on client outcomes as an indicator of performance can have undesirable effects due to the complex and sensitive nature of work. A range of factors may influence client outcomes, many of which are outside the control of an individual employee. It is rare for a successful (or otherwise) outcome to be the sole result of one persons efforts. This makes client outcomes a poor reflection of the quality of treatment

19

Kaleidoscope in HR
provided by the employee. For example, good employee performance will not always bring about client improvements, and client relapses may not be due to poor employee performance. In addition to considering client outcomes, it may also be beneficial to focus on employees skills and abilities in providing services per se (i.e., independent of client outcomes).

Strategies to support appraisers and enhance appraisal accuracy


Rating another persons performance is not an easy task, particularly with complex jobs or performance criteria. Strategies to support appraisers and increase the likelihood of accurate assessments include: Providing practical training in rating techniques, which includes opportunities to practice appraising performance and providing feedback Limiting the assessment to performance criteria that an appraiser has observed / experienced in regard to the employee Providing structured assessment tools with clear explanations regarding the criteria to be assessed, and performance standards.

STEP 4: CONDUCT

AN

APPRAISAL INTERVIEW

The next step in a performance appraisal is to conduct the appraisal interview. The two central purposes of the appraisal interview are to: Reflect on past performance to identify major achievements, areas that require further development, and barriers / facilitators to effective performance Identify goals and strategies for future work practice.

As discussed below, supervisors and managers can use a range of strategies to ensure that the appraisal interview is positive, constructive and of greatest benefit for employees effectiveness.

Before the interview


Help employees to become familiar and comfortable with talking about their performance by engaging in regular, informal communication on work progress, potential obstacles and issues, possible solutions and assistance

20

Kaleidoscope in HR
Encourage employees to prepare employees should be encouraged to review their own performance before the interview Do your own preparation plan ahead. Draft a list of the issues that you want to address with the employee (i.e., strengths and weaknesses of performance, strategies to improve performance). Give specific examples of the employees performances that you want to highlight. During the interview Encourage employee participation start by inviting the employee to share their views about their performance Begin with positive feedback to put the employee at ease Make it a two-way discussion Set goals mutually ensure employees participate in determining specific, challenging but attainable goals for future work performance Ensure that there is a clear agreement on performance objectives and the evaluation criteria for the next year Keep written records of the appraisal interview on which both parties have signed off.

After the interview


Coach employees regularly provide frequent feedback to help employees improve their performance Assess progress towards goals frequently periodic reviewing of progress towards goals helps keep behaviour on track and enhances commitment to effective performance. Relate rewards to performance by linking appraisal results to employment decisions such as promotions and salaries, employees are more likely to prepare for, participate in, and be satisfied with the appraisal system.

21

Kaleidoscope in HR

STEP 5: EVALUATE

THE

APPRAISAL PROCESS

As with any organisational system, the performance appraisal process should undergo regular review and improvement. For example, the process of performance appraisal could be evaluated by conducting focus groups or surveys with employees to gauge their satisfaction with the appraisal process (and suggestions for improvements). It may also be useful to monitor the types of issues raised by supervisors and employees over time. A successful performance appraisal process should demonstrate a change in both the ratings of employees performance (i.e., ideally performance ratings should improve, or at least remain at a satisfactorily stable level over time) and the work environment (i.e., evidence that significant barriers to work practice are being addressed by the organisation).

METHODS OF

PERFORMANCE APPRAISAL

Past-oriented methods 1) Rating Scales:

The rating scale method offers a high degree of structure for appraisals. Each employee trait or characteristic is rated on a bipolar scale that usually has several points ranging from poor to excellent (or some similar arrangement). The traits assessed on these scales include employee attributes such as cooperation, communications ability, initiative, punctuality and technical (work skills) competence. The nature and scope of the traits selected for inclusion is limited only by the imagination of the scales designer, or by the organizations need to know. The one major provision in selecting traits is that they should be in some way relevant to the appraisees job.

22

Kaleidoscope in HR

Advantages The greatest advantage of rating scales is that they are structured and standardised. This allows ratings to be easily compared and contrasted - even for entire workforces. Each employee is subjected to the same basic appraisal process and rating criteria, with the same range of responses. This encourages equality in treatment for all appraisees and imposes standard measures of performance across all parts of the organization. Rating scale methods are easy to use and understand. The concept of the rating scale makes obvious sense; both appraisers and appraisees have an intuitive appreciation for the simple and efficient logic of the bipolar scale. The result is widespread acceptance and popularity for this approach. Disadvantages Trait Relevance Are the selected rating-scale traits clearly relevant to the jobs of all the appraisees? It is inevitable that with a standardised and fixed system of appraisal that certain traits will have a greater relevance in some jobs than in others. For example, the trait initiative might not be very important in a job that is tightly defined and rigidly structured. In such cases, a low appraisal rating for initiative may not mean that an employee lacks initiative. Rather, it may reflect that fact that an employee has few opportunities to use and display that particular trait. The relevance of rating scales is therefore said to be context-sensitive. Job and workplace circumstances must be taken into account. Systemic Disadvantage Rating scales, and the traits they purport to measure, generally attempt to encapsulate all the relevant indicators of employee performance. There is an assumption that all the true and best indicators of performance are included, and all false and irrelevant indicators are excluded. This is an assumption very difficult to prove in practice. It is possible that an employees performance may depend on factors that have not been included in the selected traits. Such

23

Kaleidoscope in HR employees may end up with ratings that do not truly or fairly reflect their effort or value to the organization. Employees in this class are systemically disadvantaged by the rating scale method. Perceptual Errors This includes various well-known problems of selective perception (such as the horns and halos effect) as well as problems of perceived meaning. Selective perception is the human tendency to make private and highly subjective assessments of what a person is really like, and then seek evidence to support that view (while ignoring or downplaying evidence that might contradict it). This is a common and normal psychological phenomenon. All human beings are affected by it. In other words, we see in others what we want to see in them. An example is the supervisor who believes that an employee is inherently good (halo effect) and so ignores evidence that might suggest otherwise. Instead of correcting the slackening employee, the supervisor covers for them and may even offer excuses for their declining performance. On the other hand, a supervisor may have formed the impression that an employee is bad (horns effect). The supervisor becomes unreasonably harsh in their assessment of the employee, and always ready to criticize and undermine them. The horns and halo effect is rarely seen in its extreme and obvious forms. But in its more subtle manifestations, it can be a significant threat to the effectiveness and credibility of performance appraisal. Perceived Meaning Problems of perceived meaning occur when appraisers do not share the same opinion about the meaning of the selected traits and the language used on the rating scales. For example, to one appraiser, an employee may demonstrate the trait of initiative by reporting work problems to a supervisor. To another appraiser, this might suggest an excessive dependence on supervisory assistance - and thus a lack of initiative. As well, the language and terms used to construct a scale - such as Performance exceeds expectations or Below average skill - may mean different things to different appraisers.

24

Kaleidoscope in HR

Rating Errors The problem here is not so much errors in perception as errors in appraiser judgement and motive. Unlike perceptual errors, these errors may be (at times) deliberate. The most common rating error is central tendency. Busy appraisers, or those wary of confrontations and repercussions, may be tempted to dole out too many passive, middle-ofthe-road ratings (e.g., satisfactory or adequate), regardless of the actual performance of a subordinate. Thus the spread of ratings tends to clump excessively around the middle of the scale. This problem is worsened in organizations where the appraisal process does not enjoy strong management support, or where the appraisers do not feel confident with the task of appraisal.
2) Check-list 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. The rater concerned has to tick appropriate answers relevant to the appraisees. When the check-list is completed, it is sent to HR department for further processing. Various questions in the check list may have either equal weightage or more weightage may be given to those questions which are more important. The HR department then calculates the total scores which show the appraisal result of an employee. Advantages economy, ease of administration, limited training required, standardization. Disadvantages Raters biases, use of improper weights by HR Dept, does not allow rater to give relative ratings. 3) Force Choice Method: A series of statements arranged in the blocks of two or more are given and the rater indicates which statement is true or false. The rater is forced to make a choice. HR department does actual assessment. Advantages Absence of personal biases because of forced choice. Disadvantages Statements may not be correctly framed.

25

Kaleidoscope in HR
4) Force Distribution Method: One of the problems faced in large organizations is relative assessment tendencies of raters. Some are too lenient and others too severe. This method overcomes that problem. It forces every one to do a comparative rating of all the employees on a predetermined distribution pattern of good to bad. Say 10% employees in Excellent Grade, 20% in Good Grade, 40% in Average Grade, 20% in Below Average Grade and 10% in Unsatisfied grade. The real problem of this method occurs in organizations where there is a tendency to pack certain key departments with all good employees and some other departments with discards and laggards. Relatively good employees of key departments get poor rating and relatively poor employees of laggards departments get good rating. 5) Critical Incident Method: In this method, only critical incidents and behavior associated with these incidents are taken for evaluation. This method involves three steps. A test of noteworthy on the job behavior is prepared. A group of experts then assigns scale values to them depending on the degree of desirability for the job. Finally, a checklist of incidents which define good and bad employees is prepared. useful in critical situation. Disadvantages --- a) Negative incidents are, generally, more noticeable than positive ones. b) The recording of incidents is a core to the superior and may be put off and easily forgotten. c) Overly close supervision may result. Advantages ---This method is very useful for discovering potential of employees who can be

6) Essay Method: In the essay method approach, the appraiser prepares a written statement about the employee being appraised. The statement usually concentrates on describing specific strengths and weaknesses in job performance. It also suggests courses of action to remedy the identified problem areas. The statement may be written and edited by the appraiser alone, or it be composed in collaboration with the appraisee. Advantages The essay method is far less structured and confining than the rating scale method. It permits the appraiser to examine almost any relevant issue or attribute of performance. This contrasts

26

Kaleidoscope in HR
sharply with methods where the appraisal criteria are rigidly defined. Appraisers may place whatever degree of emphasis on issues or attributes that they feel appropriate. Thus the process is open-ended and very flexible. The appraiser is not locked into an appraisal system the limits expression or assumes that employee traits can be neatly dissected and scaled. Disadvantages Essay methods are time-consuming and difficult to administer. Appraisers often find the essay technique more demanding than methods such as rating scales. The techniques greatest advantage - freedom of expression - is also its greatest handicap. The varying writing skills of appraisers can upset and distort the whole process. The process is subjective and, in consequence, it is difficult to compare and contrast the results of individuals or to draw any broad conclusions about organizational needs 7) Grading: In this method, certain categories of abilities of performance are defined well in advance and person are put in particular category depending on their traits and characteristics. Such categories may be definitional like outstanding, good, average, poor, very poor or may be in terms of letter like A, B, C, D etc with A indicating the best and D indicating the worst. This method, however, suffers from one basic limitation that the rater may rate most of the employees at higher grades. 8) Performance Tests & Observations: This is based on the test of knowledge or skills. The tests may be written or an actual presentation of skills. Tests must be reliable and validated to be useful. Advantage Tests only measure potential and not attitude. Actual performance is more a function of attitude of person than potential. Disadvantages Some times costs of test development or administration are high. 9) Confidential Reports: Though popular with government departments, its application in industry is not ruled out. Here the report is given in the form of Annual Confidentiality Report (ACR). The system is highly secretive and confidential. Feedback to the assessee is given only in case of an adverse entry. Disadvantage is that it is highly prone to biases and recency effect

27

Kaleidoscope in HR
and ratings can be manipulated because the evaluations are linked to future rewards like promotions, good postings, etc. 10) Comparative Evaluation Method (Ranking & Paired Comparisons): These are collection of different methods that compare performance with that of other co-workers. The usual techniques used may be ranking methods and paired comparison method.

Ranking Method: Superior ranks his worker based on merit, from best to worst. However how best and why best are not elaborated in this method. It is easy to administer.

Paired Comparison Method: In this method each employee is paired with every other employee in the same cadre and then comparative rating done in pairs so formed. The number of comparisons may be calculated with the help of a formula N x (N-1) / 2. The method is too tedious for large departments and often such exact details are not available with rater.

A) Future-Oriented Methods

1) MBO (Appraisal By Results) : The use of management objectives was first widely advocated in the 1950s by the noted management theorist Peter Drucker. MBO (management by objectives) methods of performance appraisal are results-oriented. That is, they seek to measure employee performance by examining the extent to which predetermined work objectives have been met. Usually the objectives are established jointly by the supervisor and subordinate. Once an objective is agreed, the employee is usually expected to self-audit; that is, to identify the skills needed to achieve the objective. Typically they do not rely on others to locate and specify their strengths and weaknesses. They are expected to monitor their own development and progress.

28

Kaleidoscope in HR
Advantages The MBO approach overcomes some of the problems that arise as a result of assuming that the employee traits needed for job success can be reliably identified and measured. Instead of assuming traits, the MBO method concentrates on actual outcomes. If the employee meets or exceeds the set objectives, then he or she has demonstrated an acceptable level of job performance. Employees are judged according to real outcomes, and not on their potential for success, or on someones subjective opinion of their abilities. The guiding principle of the MBO approach is that direct results can be observed, whereas the traits and attributes of employees (which may or may not contribute to performance) must be guessed at or inferred. The MBO method recognizes the fact that it is difficult to neatly dissect all the complex and varied elements that go to make up employee performance. MBO advocates claim that the performance of employees cannot be broken up into so many constituent parts - as one might take apart an engine to study it. But put all the parts together and the performance may be directly observed and measured. Disadvantages MBO methods of performance appraisal can give employees a satisfying sense of autonomy and achievement. But on the downside, they can lead to unrealistic expectations about what can and cannot be reasonably accomplished. Supervisors and subordinates must have very good reality checking skills to use MBO appraisal methods. They will need these skills during the initial stage of objective setting, and for the purposes of self-auditing and self-monitoring. Unfortunately, research studies have shown repeatedly that human beings tend to lack the skills needed to do their own reality checking. Nor are these skills easily conveyed by training. Reality itself is an intensely personal experience, prone to all forms of perceptual bias. One of the strengths of the MBO method is the clarity of purpose that flows from a set of wellarticulated objectives. But this can be a source of weakness also. It has become very apparent that the modern organization must be flexible to survive. Objectives, by their very nature, tend to impose a certain rigidity. Of course, the obvious answer is to make the objectives more fluid and yielding. But the penalty for fluidity is loss of clarity. Variable objectives may cause employee confusion. It is also possible that fluid objectives may be distorted to disguise or justify failures in performance.

29

Kaleidoscope in HR
2) Assessment Center Method: This technique was first developed in USA and UK in 1943. An assessment centre is a central location where managers may come together to have their participation in job related exercises evaluated by trained observers. It is more focused on observation of behaviours across a series of select exercises or work samples. Assesses are requested to participate in in-basket exercises, work groups, computer simulations, role playing and other similar activities which require same attributes for successful performance in actual job. Advantages Well-conducted assessment centre can achieve better forecasts of future performance and progress than other methods of appraisals. Also reliability, content validity and predictive ability are said to be high in Assessment Centres. The tests also make sure that the wrong people are not hired or promoted. Finally, it clearly defines the criteria for selection and promotion. Disadvantages Concentrates on future performance potential. No assessment of past performance. Costs of employees travelling and lodging, psychologists. Ratings strongly influenced by assessees inter-personal skills. Solid performers may feel suffocated in simulated situations. 3) 360o Appraisal: It is a technique in which performance data/feedback/rating is collected from all sections of people employee interacts in the course of his job like immediate supervisors, team members, customers, peers, subordinates and self with different weightage to each group of raters. This technique has been found to be extremely useful and effective. It is especially useful to measure inter-personal skills, customer satisfaction and team building skills. One of the biggest advantages of this system is that assesssees cannot afford to neglect any constituency and has to show all-round performance. However, on the negative side, receiving feedback from multiple sources can be intimidating, threatening, expensive and time consuming. 4) Psychological Appraisals: These appraisals are more directed to assess employees potential for future performance rather than the past one. It is done in the form of in-depth interviews, psychological tests, and discussion with supervisors and review of other evaluations. It is more focused on employees emotional, intellectual, and motivational and other personal characteristics affecting his performance. This approach is slow and costly and

30

Kaleidoscope in HR
may be useful for bright young members who may have considerable potential. However quality of these appraisals largely depends upon the skills of psychologists who perform the evaluation.

ESSENTIALS

FOR A

SUCCESSFUL PERFORMANCE APPRAISAL SYSTEM

Basing appraisals on accurate and current job descriptions Ensuring that appraisers have adequate knowledge and direct experience of the employees performance Providing ratings via aggregated anonymous feedback when multiple sources of information are used Incorporating performance appraisals into a formal goal setting system Offering adequate support and assistance to employees such as professional development opportunities in order to improve their performance Conducting appraisals on a regular basis (at least two times a year) rather than annually. If resource constraints do not permit frequent formal appraisals, consider conducting one formal appraisal annually, with a review of progress in the midyear and ongoing review in regular supervision meetings USING PERFORMANCE APPRAISAL DEVELOPMENT CHALLENGES Regular performance appraisals provide a useful opportunity to conduct a check-up on various workforce development issues that may impact on employees effectiveness and well being. Performance appraisals can be used to: Recognise, reward and support effective performance Develop and reward effective teamwork Identify and manage issues likely to impact on retention ADDRESS WORKFORCE

TO

31

Kaleidoscope in HR Monitor and support employees well being. Recognise, reward and support effective performance Ensuring employees receive adequate rewards and recognition is a key workforce development issue for the performance. Performance appraisals provide a good opportunity to formally recognise employees achievements and contributions to the organisation, and to ensure a clear link is maintained between performance and rewards. The appraisal interview can also be used as a vehicle to demonstrate supervisory and organisational support for employees by discussing barriers and supports to effective performance, and strategies to address problems or difficulties. Develop and reward effective teamwork The appraisal interview is also a useful vehicle for recognising and rewarding employees contributions to various teams in the organisation, especially if appraisal information is gained from team members. An appraisal of the team as a whole can also be a useful strategy to recognise and reward team performance, and to identify strategies to improve team functioning. Identify and manage issues likely to impact on retention Open and constructive performance appraisals can be useful to identify issues that are likely to impact on employees willingness to stay with the organisation in the longer-term. Key factors associated with retention include salary and remuneration, professional development opportunities, and work-related demands and stress. The appraisal interview provides a good opportunity for a check-up regarding employees satisfaction with their working conditions and environment, and a discussion of strategies to address any problems or issues. Monitor and support employees well being Performance appraisal interviews are a good opportunity to discuss employees health and well being in the workplace, particularly in regard to factors that contribute to feelings of stress and experiences that promote satisfaction with their work.

32

Kaleidoscope in HR

PROFILE OF COMPANIES VISITED

33

Kaleidoscope in HR

1) 4004 INCORPORATED
It is a multinational company of the famous US brand Steve and Barrys. This brand is in to sportswear, handbags, jeans, T-shirts, jackets etc. This company performance operation of recruitment and selection of employees and sends them to the main company in the US. It also transports material to the parent company in the US. It has also got the award for the best sportswear in the US. Number of employees: 150

2) HINDUSTAN PETROLEUM CORPORATION LIMITED


HPCL was incorporated as Standard Vacuum Refining Co Of India Ltd in 1952. The name was changed to ESSO standard refining co of India ltd in 1962. In 74, ESSO was merged with India and the name changed to HPCL. Also ESSO undertaken were nationalized in 74, and vested in HPCL. Caltex was nationalised and merged with HPCL in 76 followed by Kosangas in 1979 the government has a 51% equity stake in HPCL.HPCL is India 2nd largest ingenerated oil company with 21% share in the countrys crude refining capacity. The company has 40%of Indias lube base oil capacity. Making it largest in this segment. It is a major player in lubricants with 18% market shares. HPCL operates toe major refiners one at Mumbai (west coast ) with a capacity of 5.5mn tones and the other at Visaka with a capacity of 45mn tones.The Visaka refiners is being expanded to 75mn tones . a 3mn tones refines is being operated as a joint venture with the Indian rayon industries ltd . hr capacity of this project is being expanded to 9mn tones . HPCL is also in the process of setting up joint ventures for upstream and down stream integration. Number of employees: 500

3) TITAN
The significance of the name TITAN connotes the association of the Tata Group in the form of Tata Industries and the Tamil Nadu Industrial Development Corporation. It thus signifies the joint venture between the Tata Group and TIDCO. The Manufacturers of India's leading watch brand and India's only national jewellery brand - using design,

34

Kaleidoscope in HR technology and people for unchallenged market leadership. Joint Venture between India's most respected business organization - the Tata Group and the Tamil Naidu Industrial Development Corporation (TIDCO). World's sixth largest manufacturer brand of watches and India's leading producer of watches under the Titan and Sonata brand names. Product portfolio includes watches, clocks, accessories and jewellery, in both contemporary and traditional designs. Exports watches to about 32 countries around the world with manufacturing facilities in Hosur, Dehradun, Goa and manufactures precious jewellery under the Tanishq brand name, making it India's only national jewellery brand. Exports Tanishq jewellery to Europe, U.S.A., Middle East and Australia. Extensive domestic distribution network, amongst the world's largest retail chain of exclusive retail showrooms called 'The World of Titan' with 197 showrooms and multibrand outlets named Time Zones with 118 outlets for watches. Titan watches crossed 70 Million customers- an endorsement of customer delight. The Tanishq Jewellery Division has 50 Tanishq boutiques. Number of employees: Approximately 3500

4) GODREJ
Godrej Industries Limited is, through its chemicals division, India's leading manufacturer of oleo chemicals and makes more than a hundred chemicals for use in over two dozen industries. The chemicals division has built a strong manufacturing base capable of delivering international quality products at competitive prices, and has implemented integrated systems which ensure quick delivery of products at competitive costs. The division has a modern factory in the Indian state of Gujarat, where vegetable oils are converted into fatty acids, glycerine, fatty alcohols, alpha olefins and alpha olefin sulphonates. The plant has an installed capacity of 30,000 tonnes per annum for making natural fatty alcohols from feedstock such as palm stearine and palm kernel oil, both renewable, vegetable-based raw materials. The company operates a second plant at Vikhroli in suburban Mumbai. Products from this division are exported to developed and developing countries. The chemical division's export turnover in 2001-02 was more than Rs 100 crore, and it received export awards from Chemexcil in 1998-99, 1999-00 and 2000-01.

35

Kaleidoscope in HR Number of employees: 1000 - 1100

5) UTI MUTUAL FUNDS


UTI Mutual Fund is managed by UTI Asset Management Company Private Limited (Estb: Jan 14, 2003) who has been appointed by the UTI Trustee Company Private Limited for managing the schemes of UTI Mutual Fund and the schemes transferred / migrated from UTI Mutual Fund. State-of-the-art systems and communications are in place to ensure a seamless flow across the various activities undertaken by UTI AMC. UTI Mutual Fund has a track record of managing a variety of schemes catering to the needs of every class of citizenry. It has a nationwide network consisting 68 UTI Financial Centres (UFCs) and UTI International offices in London, Dubai and Bahrain. With a view to reach to common investors at district level, 4 satellite offices have also been opened in select towns and districts. It has a well-qualified, professional fund management team, who have been highly empowered to manage funds with greater efficiency and accountability in the sole interest of unit holders. The fund managers are also ably supported with a strong in-house equity research department. To ensure better management of funds, a risk management department is also in operation. Number of employees: Approximately 1300

6) RELIANCE BPO
Capable to handle 64000 calls per hour with 24 X 7 X 365 operations. Installed capacity of 3800 seats. Current operations from 3 sites (2 at Mumbai and 1 at Chennai) with expansion plans to open offices in other cities of India. National Headquarters located at Dhirubhai Ambani Knowledge City; an office complex spread across nearly 140 acres of land at Navi Mumbai, which has offices of Reliance group companies. In House fully equipped training centers (along with fully functional library) with capacity to train up to 400 people at any given time. Recreation areas, equipped with indoor games and other facilities available at every floor. In addition, there is a well-equipped gymnasium in the premises. Access to three food courts providing a variety of vegetarian cuisine on a 24 X 7 X 365 basis.

36

Kaleidoscope in HR Number of employees: More than 6000. 7) NICOLAS PARIMAL Nicholas Piramal India Limited is one of India's largest companies with an unmatched record of managing JVs/Alliances/Partnerships, and a proven commitment to IPR. With strong brand management and sales capabilities, a US FDA site-approved plant for on-andoff patent APIs and Intermediates, Basic Research, Process Innovation, Custom Chemical Synthesis, Formulations R&D, NDDS, and a world-class, accredited Clinical Research Organisation, NPIL is poised to emerge as India's pharma powerhouse. NPIL has emerged among the leaders in Indian pharma with a unique mix of inorganic and organic growth fuelled through a strategy of acquisitions, brand building and focused selling, and manufacturing. The company has one of the widest product portfolios in India, spanning nine key therapeutic areas, including the Cardio-vascular, Neuro-psychiatry, Oncology, Diabetes Management, Respiratory, Anti-infectives, Gastro-intestinals, Dermatology and NSAIDS. The company was formed when the Piramal Group acquired Nicholas Laboratories, a small formulations company in 1988 from Sara Lee. Managed by a team of highly proficient industry professionals, NPIL's key strengths come from its strong brand building, selling and distribution, manufacturing and alliance/partnership management skills. The last, especially, are quite unique in the Indian context - few Indian Pharmaceutical have exhibited such a strong and consistent record in successfully and ethically managing JVs/Alliances and Partnerships as NPIL has. NPIL is the flagship company of the Rs. 2500 crore (US $ 550 million) Piramal Enterprises (PEL), one of India's largest diversified business houses. Number of employees: 350

37

Kaleidoscope in HR

FINDINGS OF COMPANIES VISITED

38

Kaleidoscope in HR

LIST 1) 4004 Incorporated 2) HPCL 3) Titan 4) Godrej 5) UTI Mutual Funds 6) Reliance BPO 7) Nicholas Piramal

OF

COMPANIES VISITED

For the purpose of convenience a number represents each company

39

Kaleidoscope in HR

HOW
TABLE

DO THESE COMPANIES DEFINE

PERFORMANCE APPRAISAL?

1 Company Options A B C D E F G 1 2 3 4 5 6 7

A) A regular activity conducted periodically to rate an employee. B) An activity to identify the developmental need of the employee. C) An activity to keep a check on the performance of employees. D) A system to help employees identify his own strengths and weakness with respect to his job. E) An instrument to control employees behaviour through rewards, punishment and threats. F) A system to assist a variety of personnel decisions by generating data about each employee periodically. G) A means to improve communication between the superior and subordinate.

1) 4004 Incorporated: This company considers appraisal just a regular activity to rate an employee and to control the behavior through a carrot and stick approach. 40

Kaleidoscope in HR 2) HPCL: Appraisal in this company is based in the premise that it is an activity carried out periodically to rate an employee coupled with the fact that it is also a system where in employees need to make an introspection to find out their strengths and weakness. Performance appraisal also facilitates in making various personnel decisions like identifying the areas for training 3) Titan and 4) Godrej 7) Nicholas Piramal: They see performance appraisal as that of HPCL but it also includes regular activity to keep a check on the performance of the employees and to facilitate communication between the supervisor and subordinates. 4) UTI Mutual Funds: For them appraisal is an periodic activity to identify the development need of the employees and to facilitate communication between the supervisors and subordinates. 6) Reliance BPO : They consider appraisal as a regular activity to check on the performance of the employees and to facilitate communication between the supervisors and subordinates.

41

Kaleidoscope in HR

OBJECTIVES Table 2

OF

PERFORMANCE APPRAISAL

Company Options A B C D

A) To make decisions regarding salary increase. B) To identify the training and developmental needs of the employees C) To make decisions regarding transfers or promotions. D) To facilitate communication between the superior and his subordinates.
1) 4004 Incorporated: They have appraisal system based on making decisions

regarding salary increase (yearly) and identifying training needs (regularly).


2) HPCL: The purpose of appraisal system in this organization is to identify the

training needs and also for affecting transfer and promotion. 3) Titan & 5) UTI Mutual Funds: The aim of their objective is to make decision regarding salary increase, transfers or promotions and facilitate communication between the superior and his subordinates. 4) Godrej: The appraisal system serves the purpose of to identify the training needs and also to facilitate communication between the superior and his subordinates. It also considers it a process to achieve the overall performance of employees would directly link with the Business Results

42

Kaleidoscope in HR 6) Reliance BPO: Gives equal weightage to the objectives of making decision regarding salary increase (Customer Service Representatives) and transfers or promotions (Executive) 7) Nicholas Piramal : The objective of performance appraisal in the company is for salary increase, training and development, transfers or promotions and facilitate communication between the superior and subordinates.

43

Kaleidoscope in HR FOR
WHICH CLASS OF

EMPLOYEES

Table 3

Company
1 2 3 4 5 6 7

Class of Employee
Executive and supervisory staff, new employees Management and Non- management Executive, clerical and supervisory staff All white collar jobs Executive, clerical, supervisory staff, new employees. Executive and Customer Service Representative. Band 1 to 7

The above table shows the classification of appraisal for different classes of employees. Most of the organizations have different appraisal systems for every class of employees. This is because the factor on which a person is rated differs as per the nature of the job. For example, a manager is rated on factors like the ability to take decisions, ability to delegate work, leadership qualities, communication skills etc. whereas an officer or worker is rated on different parameters like job knowledge, accuracy and neatness of job, reliability, team spirit etc. Most of the companies have appraisal system one for the executives level and the other for the middle level and lower level management. Many organizations have a separate appraisal for the new employees who are on probation. This is mainly to make decision regarding confirming them. Almost all the companies have their appraisals half-yearly and/or yearly. 4) Godrej: This company has appraisal for all white collar jobs which includes Executive, supervisory staff, managerial staff and it is held quarterly.

44

Kaleidoscope in HR 6) Reliance BPO: It has yearly appraisal for Executive staff for promotions and transfers and for CSRs its monthly for incentives and salary increase. 7) Nicholas Piramal: This company has a totally different type of classification for performance appraisal. There is a different appraisal system for Band 1 to 3 employees and Band 4 to 7 where Band 1 is the lowest and Band 7 the highest.

45

Kaleidoscope in HR

HOW

IS APPRAISAL DONE?

Pie chart 1

43% 57% 0%

Formal Informal combination

The above Pie chart 1 shows that a majority of the organizations have a formal method of appraisal. Formal method refers to method where appraisal is carried out in a more systematic manner and after a specific period of time (once a year or twice a year). The main aim here is employee evaluation. Informal method of appraisal is followed whenever the appraiser feels the need to communicate something to the appraisee. It is a non-formal discussion between the appraiser and the appraisee. This can be simply for the reason of acknowledging outstanding performances of the appraisee during the daily course. Formal method of appraisal is followed by 57% of the organizations. 43% of the organisations follow a combination of both formal and informal method of appraisal. The reason for this could be: In an informal method, the appraisee is likely to be more open and would discuss his problem in a candid way, in a formal method of appraisal, the appraisee might come under pressure during the appraisal process. He is also likely to be unsatisfied if only a formal appraisal process appraises him. However it is not feasible to appraise a person only on an informal basis, as this would not show the true position of the employees competency over a period of time. 0% respondents follow only informal appraisal

46

Kaleidoscope in HR APPRAISAL METHODS Table 4 Company 1 2 3 4 5 6 7 Methods of appraisal Checklist and interview and discussions Rating, Checklist and interview and discussions Rating, critical incidents, MBO, 360o appraisal. Rating, interview and discussions, 360o appraisal. Rating Rating, force distribution method. Critical incident, confidential, interview or discussion

Table 4 gives the various methods applied by organisation in their appraisal system. By observing this table we can easily note that the Rating method is the most popular method in the organizations. It is also seen that most of the companies have interviews and discussion as part of their appraisal system. This is because form the organisational view point it helps to understand the employee in a better manner and covers up the drawback and mistakes (if any) in the appraisal system. It also helps the organisation to communicate its goals, views, feedback, and opinion to the employees. From the employees viewpoint if there are any thing that the employee feels dissatisfying, he can communicate to the appraiser. He can also understand his goals, responsibilities and his current performance. 3) Titan & 4) Godrej: These two companies are somewhat different form the rest as they have 360o appraisal as part of their appraisal system that they conduct on a yearly basis. Titan has recently changed its rating scale from 5 level to 3 level. 6) Reliance BPO: This company follows the method of force distribution method i.e., the 5-point scale. It divides the employees into as 1.2 BASES
OF

Below expectation ,3 Average performance, 4-5 Above expectati

APPRAISAL

47

Kaleidoscope in HR Table 5 Company 1 2 3 4 5 6 7 Traits Results Job Behaviour Combination

1) 4004 Incorporated 2) HPCL 5) UTI Mutual funds 6) Reliance BPO : An employee of these companies is appraised on 3 parameters i.e., the qualities he possesses, the results he achieves and also his behaviour during the course of achieving these results. 3) Titan: Result combined with the process of achieving those results i.e., job behaviour is the foundation of the appraisal system in this company. 4) Godrej: Here the emphasis is on the results that are achieved by the employees From the above table we can infer that nowadays companies are focusing more on overall performance of the employee i.e., Traits, Job Behaviour and Results. The Attitude of the employees at the work place plays an important role in the overall development of the organisation.

48

Kaleidoscope in HR GOAL
SETTING A PART OF TABLE

APPRAISAL

6 Company 1 2 3 4 5 6 7

Yes

No

This is the most important aspect for any organisation as here the goal of the company is communicated to the employees and they understand what is their role or part in achievement of the goals. Here all the companies use performance appraisal to set goal for the employees. This shows the importance appraisal in any company. 1) 4004 Incorporated: This company first sets yearly goals and then breaks it down to monthly basis. The head of the department sets the goal. 2) HPCL: This company has half yearly goal setting by the top management. 3) Titan: Here the process of MBO is followed in this company. First the Top management decides the goal of the company then they are broken down for different departments and then to employees. 4) Godrej & 5) UTI Mutual Funds: This company has yearly goal setting by the immediate supervisor. 6) Reliance BPO: Here the managerial staff decides the goals annually and for each employee it is decided monthly. 7) Nicholas Piramal: Goal setting is done at the beginning of every financial year. The Head of the Department or immediate supervisor usually does it.

PROBLEMS

IN

APPRAISAL

49

Kaleidoscope in HR Table 7 Company Administrative problems Tedious task Time-consuming Casual approach of the Appraiser Implementation problems Untrained Appraisers Resistance from appraisees. Assessment problems Bias attitude of the appraiser Difference of opinion between the appraiser and the appraisee

The main problem in many companies is the difference of opinion between the appraiser and the appraisee. This is solved by interviews and discussion. The second main problem in appraisal is that it is time consuming in nature (HPCL, Titan, Godrej, Reliance BPO, Nicholas Piramal). A lot of time is taken for the appraisal process, starting form training the appraisers regarding the use of appraisal, followed by target setting for the year, follower by review of performance, then finding out the facilities and the hindering factors, then the discussion and finally make the decision. Lack of training is also a major problem faced by companies like HPCL, Titan, and Godrej. Appraisers need to be trained properly for the use of the appraisal system. Very often, companies have appraisal forms, which are supposed to be self-

50

Kaleidoscope in HR explanatory. However, this could lead to incorrect interpretation, which poses a problem that could go unnoticed. Due untrained appraisers, the objective of the Appraisal system is likely to go haywire. There are also other problems like tedious task faced by UTI Mutual Funds Nicholas Piramal and bias attitude of the appraiser in 4004 Incorporated, HPCL and Reliance BPO.

LINK

WITH

INCENTIVE

AND

REWARDS

51

Kaleidoscope in HR Table 8 Company 1 2 3 4 5 6 7

Yes

No

29%

yes no
71%

1) 4004 Incorporated 2) HPCL: These companies do not have their appraisal linked with the incentives. (28%) 5) Titan 4) Godrej 5) UTL Mutual Funds 6) Reliance BPO 7) Nicholas Piramal: These companies follow the concept of performance related pay. (72%) Appraisal can be a motivating factor when it is linked with increased pay packets. Financial incentives pay an important role in inducing employees to perform better. That is the reason a majority of organisations has incentives linked with appraisal. Performance related pay allows good performance to receive material recognition for their good performance. The appraisal is likely to be taken more seriously when the employees are directly affected by it.

52

Kaleidoscope in HR ATTITUDE
OF THE EMPLOYEES TOWARDS PERFORMANCE APPRAISAL

a) Do employees work hard to get a better appraisal Company 1 2 3 4 5 6 7 All Some Very few None

1) 4004 Incorporated 3) Titan 5) UTI Mutual Funds 6) Reliance BPO 7) Nicholas Piramal: All employees from these companies work towards getting a better appraisal. 2) HPCL 4) Godrej: Some employees work hard to get better appraisal. b) Do employees talk freely about their developmental need during the counseling session

Company 1 2 3 4 5 6 7

All

Some

Very few

None

1) 4004 Incorporated 3) Titan 5) UTI Mutual Funds 6) Reliance BPO: The respondents felt that almost all of their employees talk freely about their developmental needs. 2) HPCL 4) Godrej & 7) Nicolas Piramal: Only some employees speak about their developmental need.

53

Kaleidoscope in HR

SALIENT

FEATURES OF

FINDINGS

Every organization, irrespective of its size, has an appraisal system for its employees. This implies the performance appraisal has become an indispensable activity in any organization. Most of the companies have separate appraisal system for each level of employees. These appraisal systems differ on the factors on which a person is rated and the nature of duties handled by him. Even when a same appraisal system exists in different organisations, the probability of its success is not the same. This can be attributed to the following factors: implementation problems, organizational climate, and commitment from top management. In most of the companies it is seen that the employees are not satisfied with the way they are appraised or they havent been appraised properly. For this matter, almost all the companies have interview and discussion. The frequency of appraisal in all organisations is yearly. Where appraisal is based on Key Result Areas, a mid-term review is also undertaken. This data is then compiled and the final appraisal is conducted at the end of the year. In most of the cases the immediate supervisors is the appraiser but some times it is also the HR department or the HOD. All organizations have goal setting as part of appraisal. The performance is evaluated against these targets. On an average 85% of the employees in an organization are motivated by performance appraisal. Most of the companies use the data that is maintained for every employee to compare the performance over a period of time. Some companies also use this data for making decision regarding job rotation, succession planning. Very few companies make use of this data for retrenchment as proof of poor performance. A good deal of respondents felt that appraisal is likely to be more successful when it is linked with financial and semi-financial incentives like promotion,

54

Kaleidoscope in HR bonus, increments. This increases the commitment from the parties concerned the appraisal and the appraisee. 360o degree feedback system is not very popular in the Indian companies. Among the companies under study, this system has been implemented in TITTAN and GODREJ. This system can be adopted and is successful only in the presence of an open organisational climate. Most of the companies have a separate appraisal system for the new employees, who are on probation. This basically to confirm them. In most of the companies the current (new) performance appraisal was stared in the year 2000-01. But in Nicholas Piramal it was stared in financial year 200506. Almost all the companies are satisfied with the current performance appraisal system and do not require any changes. But in Nicholas Piramal they would like to provide more training to appraisers, weightage to few traits of employee need to be rewarded, if possible appraisal form should be standardised. In most of the organizations training is provided for the appraisal system one to two weeks before the appraisal and also when new or revised Performance appraisal system is introduced. UTI Mutual Funds does not provide any such training. Performance appraisal is surly a good indicator (about 80%) for the training and developmental need of the employees. No monitoring is done to find out any loopholes in the performance appraisal system and if it exists, it is on informal basis (feedback every year). Awareness sessions about the performance appraisal (objectives and importance) are conducted in a few organization. It is normally done for new employees.

CONCLUSIONS

AND

SUGGESTIONS

55

Kaleidoscope in HR Performance appraisal should not be perceived just as a regular

activity but its importance should be recognized and communicated down the line to all the employees. better. New mechanisms should be evolved to educe the time factor The frequency of training program for the appraiser should be The awareness sessions for the employees/appraisees should be involved in the procedure of appraisal. Introducing online-appraisal can do this. increased and these sessions should be made interactive. made more interactive and the views and opinion of the appraisees regarding appraisal should be given due consideration. Assistance should be sought from specialists for framing a proper appraisal system that suits the organisation climate. Constant monitoring of the appraisal system should be done through discussions, suggestions, interactions. Combining the different methods of appraisal can minimize the element of biasness in an appraisal. Like the Rating method combined with There should be a review of job analysis, job design and work It should bring more clarity to the goal and vision of the It should provide more empowerment to the employees. New methods of appraisal should be adopted so that both appraiser The employees who have excellent performance should be used as a Employees should be given feedback regarding their appraisal. This Financial and non-financial incentives should be linked to the environment based on the performance appraisal. organisation.

and the appraisee take interest in the appraisal process. mentor for other employees which would motivate others to perform better. will help them to improve on their weak areas. annual appraisal system so that employees would be motivated to perform

56

Kaleidoscope in HR assessment center method would give an evidence of poor/unfavorable or outstanding behaviour of the appraisee, if any. Use of modern appraisal techniques like 360o appraisal, assessment More transparency should be brought about in the appraisal system. The appraisal system should cover all employees in the organisation Recognizing the good performers i.e., appraisees who have centers which are more effective.

both white collar and blue-collar jobs. accomplished the targets for the year can help in getting more commitment from the employees. Information regarding the performance of the employees should be Some of the performance appraisals should be conducted by the top kept in proper manner. management so that they can understand the employees and their needs, behaviour better and to find out the loopholes. Performance appraisal should be effectively link to the performance Our companies still follow the traditional methods of appraisal management system of the organisation. that should be transformed into the modern one.

57

Kaleidoscope in HR

BIBLIOGRAPHY

Human Resource And Personnel Management - Aswathappa Human Resource Management Human Resource Management - Mamoria - Pande

WEBLIOGRAPHY
www. performance-appraisal.com www.humanresource.about.com

58

Kaleidoscope in HR

ANNEXURE
59

Kaleidoscope in HR

Questionnaire for Performance Appraisal Name of the company: Name of Hr manager: No of employees: Range of products:
1) According to you what is performance appraisal system? ( )A regular activity conducted periodically to rate an employee. ( )An activity to identify the developmental need of the employee. ( )An activity to keep a check on the performance of employees. ( )A system to help employees identify his own strengths and weakness with respect to his job. ( )An instrument to control employees behaviour through rewards, punishment and threats. ( )A system to assist a variety of personnel decisions by generating data about each employee periodically. ( )A means to improve communication between the superior and subordinate. 2) What is the objective of the performance appraisal system in your organisation? ( )To make decisions regarding salary increase. ( )To identify the training and developmental needs of the employees ( )To make decisions regarding transfers or promotions. ( )To facilitate communication between the superior and his subordinates. Any other (Please specify)

3) Do you have a separate Appraisal system for each class of employees? If yes, what is the classification? ( ) Executives ( ) Clerical jobs ( )Secretarial jobs. ( ) Supervisory staff ( ) New employees (Or any other classification, please specify)

60

Kaleidoscope in HR

4) How frequently is PA done in the organization? (Please type y for selecting a box) Frequency of Appraisal Class of employees Executives Supervisory Clerical jobs Managerial staff Daily Weekly Monthly Quaterly Half yearly Yearly

5). How is Appraisal done?

)Formal

) Informal

)Combination of these

6). Who appraises?

( (

)Immediate Supervisor ) Subordinates

( (

) Rating Committee ) HR Department (

( ) Peers ) HOD

7). Which method do you follow in these? ( )Rating method ( )Interview or discussion ( )Force choice description ( ) MBO ( )Checklist method ( )Human asset accounting ( )Critical Incidents Method ( )360 degree appraisal ( )Confidential Method ( )Psychological Appraisals (Any other, please specify)

8) On what basis do you appraise an employee?

( ) Traits ( ) Job behaviour

( (

) Results ) A combination of these. (Please specify)

9) Is goal setting a part of your PA system?

( )Yes

) No

If yes, when is it normally done? 61

Kaleidoscope in HR

At the beginning of:

( ) every year ( ( ) every day

) every week ( ) every month ( ) HR manager

Who does it. ( If other specify

)Supervisors ( )HOD

( )Top Management

10) Is Performance Appraisal a motivating factor for employees?

( (

)For all employees. ) For very few employees.

( (

) For some employees. ) For none of the employees.

11) Does an Appraisal keep notes on the major achievements and failures of his/her appraise?

) Yes (

) No

If no, what are the reasons? required.

) It is difficult to keep records or ( ) It is not

12) When was the current Performance Appraisal system introduced in the organization?

13) Has there been a change in the Performance Appraisal system in your organization over a period of time?, If yes, what are the changes?

14) What is the attitude of employees towards a Performance Appraisal System? Do employees consider PA just a regular activity to rate them. if yes , how many? ( ) All ( ) Some ( )Very few ( ) None Do employees work hard to get a better appraisal. If yes, how many? ( ) All ( ) Some ( )Very few ( ) None Do employees talk freely about their developmental need during the counseling session? ( ) All ( ) Some ( )Very few ( ) None 15) According to you, Performance Appraisal is a ------% correct indicator of an employees developmental/ training needs?

62

Kaleidoscope in HR

) 100%

) 75%

) 50% (

( (

) 25% )No

16) Is Self-Appraisal a part of your system? ( ) Yes If yes, for which cadre of employees? ( )Executives level Management If other specify,

) Top

17) Is discussion or interaction between the Appraiser and the Appraisee a part of the system? ( ) Yes ( ) No If yes for which cadre of employees?(please specify) 18) Do you face any of the following problems with the Performance Appraisal System in your organization? Administrative problems. ( ) Tedious task ( ) Time-consuming process. ( ) Casual approach of the Appraisor. ( ) Other Implementation problems. (

) Untrained Appraisers ( ) Resistance from appraisees. ( ) Other ( ) Bias attitude of the appraiser ( ) Difference of opinion between the
appraisor and the appraisee ( ) Other

Assessment problems.

Which of these do you think is a serious problem? 19) Do you give training to the appraises for the use of the Performance Appraisal system? ( ) Yes ( ) No If yes when are they held normally 20) Are any sessions held to make the employees aware of the PA system, its objectives & its importance in career development? ( ) Yes ( ) No If yes, when are they normally held?

63

Kaleidoscope in HR 21) Is the Performance Appraisal System in your organization linked to he incentives or the reward system? ( ) Yes ( ) No If yes, how is it linked? 22) How do you use the Performance Appraisal data that is maintained for every employee? ( ) To compare his performance over a period of time. ( ) During retrenchment (as a proof performance) ( ) There is no use of the data maintained after a certain period of time. 23) Is there a constant monitoring to find out any loopholes in the PA system or do you take the feedback from the employee regarding the Appraisal system? If yes, how is it done? 24) Do you have a separate committee to review the Performance Appraisal results? ( ) Yes ( ) No 25) Do you think the system of Performance Appraisal has been successful in your organization and is able to achieve the required objectives in your organization? ( ) Yes ( ) No What changes do you suggest in the system?

A SMALL MESSAGE
64

Kaleidoscope in HR

Dont Cry Because It Is Over Now Laugh Because It Happened

65

You might also like