A STUDY ON METHODS OF

PERFORMANCE
APPRAISAL IN STEEL INDUSTRIES
For the partial fulfillment of WBUT
BBA (H)

SUBMITED BY:

SUPERVISED BY:

SUMANA ROY

SOUGATA MUKHARJEE

BBA (H), NCMT, DURGAPUR

Roll No. 14905012065
Reg. No. 121492010286

A division of NSHM Academy

l

Arrah l Shibhtala l Via Muchipara l

PIN 713212

West Bengal

India

1 | Page

Phone: +91343253813-15
www.nshm.com

Fascimile: +91343 2534025 l

Department of Management Studies

This is to Certify that the Study Paper entitled is STUDY ON

ROLL AND

METHODS OF PERFORMANCE APPRISAL

IN

STEEL INDUSTRIES a bonfire work carried out by SUMANA

ROY

holding W.B.U.T. roll number as 14905012065 and

registration number as 121492010286 is a student of NSHM

College of Management and Technology, Durgapur, in
fulfillment for the award of Degree of Bachelor in Business
Administration (BBA) under West Bengal University of
Technology.
This Study Paper has been approved as it satisfies the
academic requirement in respect of project work prescribed for
the BBA (H) degree.
She has adhered to the guidelines chalked out during our
consultation while preparing this study paper.
The study paper has been found highly satisfactory.
I wish her all the best in future.

SOUMEN CHATTERJEE

SOUGATA

MUKHERJE

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HOD OF MANAGEMENT STUDIES

STUDY

PAPER GUIDE
________________________
________________________

Declaration Of originality
DECLARATION
I SUMANA ROY student of NSHM College of Management &

Technology, Durgapur BBA (H) 3rd year, BATCH 2012, roll no.14905012065 under WBUT hereby declare that the project
entitled

STUDY

ON

METHODS

OF

PERFORMANCE

APPRISAL IN STEEL INDUSTRIES. Is an original work and

same has not been submitted to any other institution for the
award of my any other degree.

SUMANA ROY

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Sr. No.

TITLE

PAGE
NUMBER

INTRODUCTION

5-22

LITERATURE REVIEW

23-26

NEED OF THE STUDY

27-28

SCOPE OF THE STUDY

29

OBJECTIVE OF THE STUDY

30

RESEARCH METHODOLOGY

31-33

FINDING & ANALYSIS

34-46

CONCLUSION

47-48

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BIBLIOGRAPHY

49

1 .INTRODUCTION
In

the business world investment is made in machinery,

equipment and services. Quite

naturally time and money is spent ensuring that they provide what their suppliers claim. In
other words the performance is constantly appraised against the results expected. When it
comes to one of the most expensive resources companies invest in, namely people, the job
appraising performance against results is often carried out with the same objectivity .Each
individual has a role to play and management has to ensure that the individuals objectives
translate into overall corporate objectives of the company. Performance Management
includes the performance appraisal process which in turn helps identifying the training needs
and provides a direction for career and succession planning.

Understanding Performance Management

What is Performance?
Performance is synonymous with behavior ; it is what people actually do. Performance
includes those actions that are relevant to the organizational growth and can be measured
in terms of each individuals proficiency (level of contribution). Effectiveness Performance.
1. PERFORMANCE MANAGEMENT
2. PERFORMANCE MANAGEMENT DETERMINE
3.

LINKED TOCORPORATE GOALS

DETERMINE INDIVIDUALOBJECTIVES LINKED TOCORPORATE

GOALSPERFORMANCE APPRAISAL
4. LINKEDINCREMENTS/ PERFORMANCE APPRAISALENSURE
RESPONSIBILITY ANDACCOUNTABILITY
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5.

ENSURE RESPONSIBILITY ANDACCOUNTABILITY PERFORMANCE

INCENTIVES/REWARDS
6. PERFORMANCE LINKEDINCREMENTS/
INCENTIVES/REWARDSCORPORATE GOALS CORPORATE GOALS
refers to the evaluation of results of performance that is beyond the influence or control of the
individual

How is Performance managed?

Good performance by the employees creates a culture of excellence, which benefits the
organization in the long run. The activity includes evaluation of jobs and people both,
managing gender bias, career planning, and devising methods of employee satisfaction etc.
the efforts are to make to generate the individuals
the

aspirations

with the

objectives of

organization.

Organization has to clear the way of career advancements for talented and hard working
people. Fear of any kind from the minds of the employees should be removed so that they
give best to their organization. Allow free flow of information.

Communication network

should be designed in such a way no one should be allowed to become a hurdle.

This enables the managers to take correct decisions and that too quickly
Why Performance Appraisal?
Todays working climate demands a great deal of commitment and effort from employees,
who in turn naturally expect a great deal more from their employers. Performance appraisal is
designed to maximize effectiveness by bringing participation to more individual level in that
it provides a forum for consultation about standards of work, potential, aspirations and
concerns. It is an opportunity for employees to have significantly greater influence upon the
quality of their working lives.
In these times of emphasis on quality, there is a natural equation: better quality goods and
services from employees who enjoy better quality goods and services from their employers.
Performance appraisal must be seen as an intrinsic part of a managers responsibility and not
an unwelcome and time-consuming addition to them. It is about improving performance and
ultimate effectiveness.

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Performance appraisal is a systematic means of ensuring that managers and their staff meet
regularly to discuss post and present performance issues and to agree what future is
appropriate on both sides. This meeting should be based on clear and mutual understanding
of the job in question and the standards and outcomes, which are a part of it.
In normal circumstances, employees should be appraised by their immediate managers on
one to one basis. Often the distinction between performance and appraising is not made.
Assessment concerns itself only with the past and the present. The staff is being appraised
when they are encouraged to look ahead to improve effectiveness, utilize strengths, redress
weaknesses and examine how potentials and aspirations should match up .It should also be
understood that pushing a previously prepared report across and desk cursorily inviting
comments, and expecting it to be neatly signed by the employee is not appraisal - this is
merely a form filling exercise which achieves little in terms of giving staff any positive
guidance and motivation.

THE APPRAISAL OF PERFORMANCE SHOULD BE GEARED TO:

Improving the ability of the jobholder;
Identifying obstacles which are restricting performance
Agreeing a plan of action, that will lead to improved performance. It is widely accepted that
the most important
individuals

factor in organization

effectiveness is the effectiveness of the

who make up the organization.

If every individual in the organization becomes more effective, then the organization itself
will become more effective. The task of reviewing situations and improving individual
performance must therefore be a key task for all managers.
For appraisal to be effective, which means producing results for the company, each manager
has to develop and apply the skills of appraisal These are -Setting standards on the
performance required, which will contribute to the achievement of specific objectives
Monitoring performance in a cost effective manner, to ensure that previously agreed
performance standards are actually being achieved on an ongoing basis.
Analyzing any differences between the actual performance and the required performance to
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establish the real cause of a shortfall rather than assume the fault to be in the job holder.
Interviewing having a discussion with the jobholder to verify the true cause of a short fall, a
developing a plan of action, which will provide the performance, required Appraisal can then
become a way of life, not concerned simply with the regulation of rewards and the
identification of potential, but concerned with improving the performance of the company.
The benefits of appraisal in these terms are immediate and accrue to the appraising manager,
the subordinate manager/employee, and to the company as a whol
INTRODUCTION OF STEEL INDUSTRY
Steel is crucial to the development of any modern economy and is considered to be the
backbone of human civilisation. The level of per capita consumption of steel is treated as an
important index of the level of socioeconomic development and living standards of the
people in any country. It is a product of a large and technologically complex industry having
strong forward and backward linkages in terms of material flows and income generation.
Steel industry was in the vanguard in the liberalisation of the industrial Sector and has made
rapid strides since then. The new Greenfield plants represent the latest in technology. Output
has increased, the industry has moved up in the value chain and exports have risen
consequent to a greater integration with the global economy. The new plants have also
brought about a greater regional dispersion easing the domestic supply position notably in the
western region. At the same time, the domestic steel industry faces new challenges. Some of
these relate to the trade barriers in developed markets and certain structural problems of the
domestic industry notably due to the high cost of Commission of new projects. The domestic
demand too has not improved to significant levels. The litmus test of the steel industry will be
to surmount these difficulties and remain globally competitive.
MAJOR PLAYERS OF STEEL IN INDIA
PUBLIC SECTOR
1. STEEL AUTHORITY OF INDIA LIMITED (SAIL)
Steel Authority of India Limited (SAIL) is a company registered under the Indian Companies
Act, 1956 and is an enterprise of the Government of India. It has five integrated steel plants at
Bhilai (Chattisgarh), Rourkela (Orissa), Durgapur (West Bengal), Bokaro (Jharkhand) and
Burnpur (West Bengal). SAIL has three special and alloy steel plants viz. Alloy Steels Plant
at Durgapur (West Bengal), Salem Steel Plant at Salem (Tamilnadu) and Visvesvaraya Iron &
8 | Page

Steel Plant at Bhadravati (Karnataka). In addition, a Ferro Alloy producing plant Maharashtra
Elektrosmelt Ltd. At Chandrapur, is a subsidiary of SAIL. SAIL has Research &
Development Centre for Iron & Steel (RDCIS), Centre for Engineering & Technology (CET),
SAIL Safety Organisation (SSO) and Management Training Institute (MTI) all located at
Ranchi; Central Coal Supply Organisation (CCSO) at Dhanbad; Raw Materials Division
(RMD), Environment
Management Division (EMD) and Growth Division (GD) at Kolkata. The Central Marketing
Organisation (CMO), with its head quarters at Kolkata, coordinates the country-wide
marketing and distribution network.
2. RASHTRIYA ISPAT NIGAM LTD. (RINL)
RINL, the corporate entity of Visakhapatnmam Steel Plant (VSP) is the first shore based
integrated steel plant located at Visakhapatnam in Andhra Pradesh. The plant was
commissioned in August 1992 with a capacity to produce 3 million tonne per annum (mtpa)
of liquid steel. The plant has been built to match international standards in design
and engineering with state-of- the- art technology incorporating extensive energy saving and
pollution control measures. Right from the year of its integrated operation, VSP established
its presence both in the domestic and international markets with its superior quality of
products. The company has been awarded all the three International
standards certificates, namely, ISO 9001:2000, ISO 14001: 1996 and OHSAS 18001: 1999.
RINL was accorded the prestigious Mini Ratna status by the Ministry of Steel, Govt. of
India in the year 2006 and the company is gearing up to complete the ambitious expansion
works to increase the capacity to 6.3 mtpa by 2009. RINL has prepared a road map to expand
the plants capacity up to 16 mtpa in phases.
3. HINDUSTAN STEELWORKS CONSTRUCTION LTD.(HSCL)
HSCL was incorporated in June 1964 with the primary objective of creating in the Public
Sector an organization capable of undertaking complete construction of modern integrated
Steel Plants. HSCL had done the construction work of Bokaro Steel Plant, Vizag Steel Plant
and Salem Steel Plant from the inception till commissioning and was
associated with the expansion and modernisation of Bhilai Steel Plant, Durgapur Steel Plant,
IISCO (Burnpur) and also Bhadravati Steel Plant. With the tapering of construction
9 | Page

activities in Steel Plants, the company intensified its activities in other sectors like Power,
Coal, Oil and Gas. Besides this, HSCL diversified in Infrastructure Sectors like
Roads/Highways, Bridges, Dams, Underground Communication and Transport system and
Industrial and Township Complexes involving high degree of planning, coordination
and modern sophisticated techniques. The company has developed its expertise in the areas of
Piling, Soil investigation, Massive foundation work, High rise structures, Structural
fabrication and Erection, Refractory, Technological structures and Pipelines, Equipment
erection, Instrumentation including testing and commissioning. The
company has also specialised in carrying out Capital repairs and Rebuilding work including
hot repairs of Coke Ovens and Blast Furnaces and other allied areas of Integrated Steel
Plants.

4. MECON LTD.
MECON is one of the leading multi-disciplinary design, engineering, consultancy and
contracting organization in the field of iron & steel, chemicals, refineries & petrochemicals,
power, roads & highways, railways, water management, ports & harbours, gas & oil,
pipelines, non ferrous, mining, general engineering, environmental
engineering and other related/ diversified areas with extensive overseas experience. MECON,
an ISO: 9001- 2000 accredited company, registered with World Bank (WB),
Asian Development Bank (ADB), European Bank for Reconstruction and Development
(EBRD), African Development Bank (AFDB), and United Nations Industrial
Development Organisation (UNIDO), has wide exposure and infrastructure for carrying out
engineering, consultancy and project management services for mega projects
encompassing architecture & town planning, civil works, structural works, electric, air
conditioning & refrigeration, instrumentation, utilities, material handling & storage,
computerization etc. MECON has collaboration agreements with leading firms from the
USA, Germany, France, Italy, Russia, etc. in various fields. The authorized share capital of
the company is Rs. 10,400 lakh (previous year Rs. 4,100 lakh) against which the paid up

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capital is Rs. 10,313.84 lakh (previous year Rs. 4,013.84 lakh). All the shares are held by the
Government of India.

PRIVATE SECTOR
The private sector of the Steel Industry is currently playing an important and dominant role in
production and growth of steel industry in the country. Private sector steel players
have contributed nearly 67% of total steel production of 38.08 million tonnes to the country
during the period April-December, 2007. The private sector units consist of both
major steel producers on one hand and relatively smaller and medium units such as Sponge
iron plants, Mini Blast Furnace units, Electric Arc Furnaces, Induction Furnaces,
Rerolling Mills, Cold-rolling Mills and Coating units on the other. They not only play an
important role in production of primary and secondary steel, but also contribute substantial
value addition in terms of quality, innovation and cost effective.
1. TATA STEEL LTD.
Tata Steel has an integrated steel plant, with an annual crude steel making capacity of 5
million tonnes located at Jamshedpur, Jharkhand. Tata Steel has completed the first
six months of fiscal 2007-08 with impressive increase in its hot metal production. The hot
metal production at 2.76 million tonnes is 4.6%more compared to the corresponding
period of the previous year. The crude steel production during the period was 2.43 million
tonnes which is marginally lower than the production of 2.45 million tonnes
last year. The saleable steel production was at a lower level during the period April
September, 2007 (2.34 million tonnes) compared to the corresponding period of last year
(2.36 million tonnes). Tata Steel is continuing with its programme of expansion of steel
making capacity by 1.8 million tonnes to reach a rated capacity of 6.8 million
tonnes. The Project is reported to be moving ahead of schedule and is likely to be
commissioned by May 2008 against the original schedule of June 2008. The Company
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has planned to take the capacity to 10 million tonnes by the fiscal year 2010. Tata Steels
Greenfield projects in Orissa and Chattisgarh are progressing on schedule with
placement of equipment order for Kalinganagar Project in Orissa and commencement of the
land acquisition process. Jharkhand Project is awaiting announcement of Relief &
Rehabilitation policy of the State Government.
2. ESSAR STEEL LTD. (ESL)
Essar Steel Holdings Ltd. (ESHL) is a global producer of steel with a footprint covering
India, Canada, USA, the Middle East and Asia. It is a fully integrated flat carbon steel
manufacturerfrom iron ore to ready-to-market products. ESHL has a current global
capacity of 8 million tonnes per annum (MTPA). With its aggressive expansion plans in India
and other parts of Asia and North America, its capacity is likely to go up to 25 MTPA by
2012. Its products find wide acceptance in highly discerning consumer sectors, such as
automotive, white goods, construction, engineering and shipbuilding. Essar Steel Ltd., the
Indian Company of Essar Steel Holdings Limited, is the largest steel producer in
western India, with a current capacity of 4.6 MTPA at Hazira, Gujarat, and plans to increase
this to 8.5 MTPA. The Indian operations also include an 8 MTPA beneficiation plant at
Bailadilla, Chattisgarh which has worlds largest slurry pipeline of 267 km to transport
beneficiated Iron Slurry to the pellet plant, and an 8 MTPA pellet complex at
Visakhapatnam. The Essar Steel Complex at Hazira in Gujarat, India, houses the worlds
largest gas-based single location sponge iron plant, with a capacity of 4.6 MTPA. The
complex also houses the steel plant and the 1.4 MTPA cold rolling complex. The steel
complex has a complete infrastructure setup, including a captive port, lime plant and
oxygen plant. Essar Steel produces highly customized valueadded products catering to a
variety of product segments and is Indias largest exporter of flat products, selling close
to half of its production to the highly demanding US and European markets, and to the
growing markets of South East Asia and the Middle East. The companys products
conform to quality specifications of international quality certification agencies, like ABS,
API, TUV Rhine Land and Lloyds Register. Essar Steel is the first Indian steel company

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to receive an ISO 9001 and ISO 14001 certification for environment management practices.
Essar Steel utilizes Hot Briquetted Iron-Direct Reduced Iron (HBIDRI) technology supplied
by Midrex Technology, USA along with four 150 tonnes DC electric arc furnaces imported
from Clecim, France. The Hazira unit of Essar Steel is equipped with 5.5 million tonnes per
annum (MTPA) hot briquetted iron plant, 4.6 MTPA electric are furnace, 4.6 MTPA
continuous caster, 3.6 MTPA hot strip mill and 1.4 MTPA Cold Rolling Mill. During the year
2007-08, Essar was awarded costs ISO/TS
16949 and OHSAS 18000 certification.
3. JINDAL STEEL & POWER LTD. (JSPL)
Jindal Steel & Power Limited is one of the fast growing major steel units in the country. The
Raigarh plant of JSPL has a present capacity of 1.37 million tonne per annum (MTPA)
sponge iron plant, 2.40 MTPA Steel Melting Shop (SMS), 1.0 MTPA plant Mill, 2.30 sinter
plant, 0.8 MTPA coke oven and a 330 Mega Watt captive power plant. During the year 200607, the company produced 1.19 million tonnes of sponge iron, 0.8
million tonnes of various steel products, 0.57 million tones of hot metal and 0.21 million
tonnes of rolled products. The performance of JSPL during April-October 2007-08 was 0.68
million

tonnes

of

sponge

iron,

0.72

million

tonnes

of

steel

products

(slabs/blooms/billets/rounds), 0.68 million tones of hot metal, 0.27 million tonnes of rolled
products and 0.11 million tonnes of plates.

MARKET SHARE OF LEADING PLAYERS IN IRON AND STEEL INDUSTRY

COMPANY

SAIL
TISCO
RNIL
ESSAR, ISPAT, JSWL
OTHERS

PRODUCTION

OF MARKET SHARE

STEEL

(IN

(IN MILLION TONNES)

13.5
5.2
3.5
8.4
14.5

TERMS)
32 %
11 %
8%
19 %
30 %

PERCENTAGE

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TOTAL

45.1

100 %

Therefore, it can rightly be concluded that the liberalization of industrial policy and other
initiatives taken by the Government have given a definite impetus for entry, participation and
growth of both private and public sector in the steel industry.

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METHODS OF PERFORMANCE APPRAISAL:

With the evolution and development of the appraisal system, a number of methods or
techniques of performance appraisal have been developed. The importance s among them
are presented.

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Traditional Methods:
Graphic Rating Scales:
Graphic rating scales compare individual performance to an absolute standard. In this
method, judgments about performance are recorded on a scale. This is the oldest and widely
used technique .This method is also known as linear rating scale or simple rating scale. The
appraisers are supplied with printed forms, one for each employee. These forms contain a
number of objectives, behavior and trait based qualities and characters to be rated like quality
and volume of work, job knowledge, dependability, initiative, attitude etc.
Rating scales are of two types:
1.Continuous rating scale
2.Discontinuous Scale
In Continuous order like 0, 1,2,3,4 and 5 and in discontinuous scale, the appraiser assigns the
points to each degree .performance regarding each character is known by the points given by
the rater. The points given by the rater to each character are added up to find out the overall
performance. Employees are ranked on the basis of total points assigned to each one of them.
Ranking Method:
Under this method, the employees are ranked from best to worst on some characteristics. The
rater first finds the employee with the highest performance and the employees with the lowest
performance in that particular job category and rates the former as the best and latter as the
poorest. Then the rater selects the next highest and next lowest and so on, until he rates all the
employees in that group.
Paired Comparison Method:
This method is relatively simple .under this method, the appraiser ranks the employees with
all other employees in the group, one at time.
Paired comparison does not force distribution of employees in each department. For instance,
if a department has two outstanding employees and six average employees and paired
comparison is correctly utilized, then those employees will get a much higher percentage of
positive comparison than the other six. Paired comparison method could be employed fairly
easily where the number of employees is less.

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Forced Distribution Method:

The rater may be his employees at the higher or at the lower end scale under the earlier
methods. Forced distribution method is developed to prevent the raters from rating too high
or too low. Under this method, the rater after assigning the points to the performance of each
employee has to distribute his ratings in a pattern to conform to normal frequency
distribution.
Thus, similar to the ranking technique, forced distribution require the raters to spread their
employees evaluations in a prescribed distribution. This method eliminates central tendency
and leniency biases. However, in this method, employees are placed in certain ranked within
the categories.
CHECKLIST METHODS:
The checklist is a simple rating technique in which the supervisor is given a list of statement
or words and asked to check statement representing the characteristics and performance of
each employee. There are three types of checklist methods.
I) Simple checklist method:
The checklist consists of large number of statement concerning employee behavior. The rater
checks to indicate if the behavior of an employee is positive or negative to each statement
may appear to be virtually identical in describing the employee. The words or statement may
have different meaning to different raters.
II) Weighted Checklist:
The weighted checklist method involves weighted different items in the Checklist, having a
series of statement about an individual, to indicate that some are important than others. The
rater is expected to look into the questions relating to the employee s behavior, the attached
rating scale (or simply positive/ negative statement where such a scale is not provided) and
tick those traits that closely describe the employee behavior.
III) Forced Choice Method:
This method was developed at the close of World War II. Under this method, a large number
of statements in groups are prepared. Each group consists of four descriptive statements
concerning employee behavior. Two statements are most descriptive and two are least
descriptive of each tetrad. Sometimes, there may be five statement in each group out of which
one would be neutral. The actual weight age of the statement are kept secret.

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Critical Incident Method:

Employees are rated discontinuously, i.e., once in a year or six months under the earlier
methods. The performance rated may not reflect real and overall performance as the rater
would be serious about appraisal. Hence, a continuous appraisal methodize, the critical
incident method has been developed .under this method, the supervisor continuous records
the critical incidents of the employee performance or behavior relating to all characteristics in
a specially designed. The supervisor rates the performance of his subordinates on
his subordinates on the basis of notes taken by him. Since the critical incident method does
not necessarily have to be separate rating system, it can be fruitfully employed as
documentation of the reasons why an employee was rated in a certain way.
Essay or Free Form Appraisal:
This method requires then manager to write a short essay describing each employee s
performance during the rating period. This format emphasizes evaluation of overall
performance, based on strengths/weaknesses of employee performance rather than specific
job dimensions. By asking supervisors to enumerate specific examples of employee behavior,
the essay technique minimizes supervisory bias and the halo effect.
Group Appraisal:
Under this method, an employee is appraised by a group of appraisers. This group consists of
the immediate supervisor of the employee to other supervisors who have close contact with
the employee s work, manager or head of the department and consultants. The head of the
department or manager may be the chairman of the group and the immediate supervisor may
act as the coordinator for the group activities. This group uses any one or multiple techniques
discussed earlier.
Confidential Reports: possessing the employees performance confidentially is a traditional
method of performance appraisal. Under this method, the supervisor appraises the
performance of his subordinates based on his observation, judgment and intuitions. The
supervisor keeps his judgment and report confidentially. In other words, the superior does not
allow the employee to know the report and his performance. The superior keep his judgment
and report confidentially. In other words, the superior does not allow the employee to know
the report and his performance.

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Modern Methods:
Behaviorally Anchored Rating Scales:
The Behaviorally Anchored Rating Scales (BARS) method combines elements of the
traditional rating scales and critical incident methods. Using BARS, jobs behaviors from
critical incidents - effective and ineffective behaviors are described more objectively. The
method employs individual who are familiar with a particular job to identify its major
components. They then rank and validate specific behavior for each of the respondents.
Assessment Center:
This method of appraising was first applied in the German Army in1930.Later, business and
industrial houses started using this method. This is not a technique of performance appraisal
by itself. In fact, it is a system or organization, where assessment of several individual is done
by various experts by using various techniques. These techniques include the methods in
addition to in basket, role playing, and case studies ,stimulation in sight, transactional
analysis etc.,
Human Resource Accounting:
Human Resource Accounting deals with cost of and contribution of human resource to the
organization. Cost of the employee includes cost of manpower planning, recruitment,
selection, induction, placement, training, development, wages and benefits. Employee
contribution is the money value of employee service which can be measured by labor
productivity or value added by human resource.
Management by Objectives:
Management by Objectives (MBO) is a process whereby the superior and subordinate
managers of an organization jointly its common goals, define each individuals ajor areas of
responsibility in terms of results expected of him and use these measures of guides for
operating the unit and assessing the contribution of its members. Thus, MBO focuses
attention on participative set goals that are tangible, verifiable and measurable. The emphasis
is on what must be accomplished rather than how it is to be accomplished.
The subordinate and superior jointly determine goals to be during the appraisal period and
what level of performance is necessary for the subordinate to satisfactory achieve specific
goals.
During the appraisal period, the superior and subordinate update and alter goals as necessary
due to changes in the business environment.
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Both superior and subordinates jointly discuss whether the subordinate achieved the goals or
not. If not, they should identify the reasons for strike/lock-out, market change etc.

Behaviors Observation Scales (BOS):

The appraiser, under this method, measures how frequently each of the behavior has been
observed
.Appraiser plays the role of observer rather than a judge and provides the feedback to the
appraise continuously.
i)Maintain objectivity
ii)Differentiate good performers from poor performers
iii)Provides feedback and
iv)Identify training needs better than those chosen by other methods.
Psychological Appraisal:
Psychological appraisals are conducted to assess the employees potential. Psychological
appraisals consist of:
a)In depth interviews
b)Psychological tests
c)Consultations and discussions with the employees,
d)Discussions with the superior, subordinates and peers, and
e)Reviews of other evaluations.
The Psychological appraisal results are useful for decision making about I) employee
placement, II) Career-planning and development, and III) Training and development.
VI. Result Method:
Organizations of the contemporary periods evaluate employee performance based on
accomplishments they achieve rather than behavioral factors/traits. Employee
accomplishments include sales turnover, number of units produced, and number of customers
served, number of complaints settled and the like. Productivity Measures:
Under the productivity measures of performance appraisal, employees are appraised based on
the ratio of output they turned out to the input they used. Examples sales to employee salary
and benefits, number of clients served per day etc. These measures are not free from
limitations as measurement of all kinds of output as well as all kinds of input would be
difficult.
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STEPS OF APPROACH TO CONDUCTING A PERFORMANCE APPRAISAL:

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Regular performance appraisals provide a useful opportunity to conduct a check-up on

various workforce development issues that may impact on workers effectiveness and
wellbeing.
Performance appraisals can be used to:
Recognize, reward and support effective performance
Develop and reward effective teamwork
Identify and manage issues likely to impact on retention
Monitor and support workers wellbeing.

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2. Literature Review

I. Rationale
Performance appraisals are one of the most important requirements for successful business
and human resource policy ( Kressler , 2003). Rewarding and promoting effective
performance in organizations, as well as identifying ineffective performers for developmental
programs or other personnel actions, are essential to effective to human resource management
(Pulakos, 2003). The ability to conduct performance appraisals relies on the ability to assess
an employees performance in a fair and accurate manner. Evaluating employee performance
is a difficult task.
Once the supervisor understands the nature of the job and the sources of information, the
information needs to be collected in a systematic way, provided as feedback, and integrated
into the organizations performance management process for use in making compensation,
job placement, and training decisions and assignments (London, 2003).
After a review of literature, a performance appraisal model will be described in detail. The
model discussed is an example of a performance appraisal system that can be implemented in
a large institution of higher education, within the Student Affairs division. The model can be
applied to tope level, middle-level and lower level employees. Evaluation instruments
(forms) are provided to assist you with implementation the appraisal system.
II. Introduction
Performance evaluations have been conducted since the times of Aristotle (Landy,Zedeck,
Cleveland, 1983). The earliest formal employee performance evaluation program is thought
to have originated in the United States military establishment shortly after the birth of the
republic (Lopez, 1968). The measurement of an employees performance allows for rational
administrative decisions at the individual employee level. It also provides for the raw data for
the evaluation of the effectiveness of such personnel- system components and processes as
recruiting policies, training programs, selection rules, promotional strategies, and reward
allocations (Landy, Zedeck, Cleveland, 1983). In addition, it provides the foundation for
23 | P a g e

behaviorally based employee counseling. In the counseling setting, performance information

provides the vehicle for increasing satisfaction, commitment, and motivation of the
employee. Performance measurement allows the organization to tell the employee something
about their rates of growth, their competencies, and their potentials. There is little
disagreement that if well done, performance measurements and feedback can play a valuable
role in effecting the grand compromise between the needs of the individual and the needs of
the organization (Landy, Zedeck, Cleveland, 1983).
III. Purpose
Performance appraisals should focus on three objectives: performance, not personalities;
valid, concrete, relevant issues, rather than subjective emotions and feelings; reaching
agreement on what the employee is going to improve in his performance and what you are
going to do (McKirchy, 1998). Both the supervisor and employee should recognize that a
strong relationship exists between training and performance evaluation (Barr, 1993). Each
employee should be allowed to participate in periodic sessions to review performance and
clarify expectations. Both the supervisor and the employee should recognize these sessions as
constructive occasions for two-way communication. Sessions should be scheduled ahead of
time in a comfortable setting and should include opportunities for self-assessment as well as
supervisor feedback. These sessions will be particularly important for new employees who
will benefit from early identification of performance problems. Once these observations have
been shared, the supervisor and employee should develop a mutual understanding about areas
for improvement, problems that need to be corrected, and additional responsibilities that
might be undertaken. When the goals are identified, a plan for their achievement should be
developed. The plan may call for resources or support from other staff members in order to
meet desired outcomes. In some cases, the plan might involve additional training. The
supervisor should keep in contact with the employee to assure the training experiences are
producing desired impact (Barr, 1993). A portion of the process should be devoted to an
examination of potential opportunities to pursue advancement of acceptance of more complex
responsibilities. The employee development goals should be recognized as legitimate, and
plans should be made to reach the goals through developmental experiences or education
(Barr, 1993). Encouraging development is not only a supervisor's professional responsibility,
but it also motivates an employee to pursue additional commitments. In addition, the pursuit
of these objectives will also improve the prospect that current employees will be qualified as
candidates when positions become available. This approach not only motivates current
24 | P a g e

performance but also assists the recruitment of current employees as qualified candidates for
future positions (Barr, 1993). How to arrive? Reasons why need to be done Benefits of
productive performance appraisals. - Employee learns of his or her own strengths in addition
to weaknesses. - New goals and objectives are agreed upon. - Employee is an active
participant in the evaluation process. - The relationship between supervisor and employees is
taken to an adult-to-adult level. - Work teams may be restructured for maximum efficiency. Employee renews his or her interest in being a part of the organization now and in the future.
- Training needs are identified. - Time is devoted to discussing quality of work without regard
to money issues. - Supervisor becomes more comfortable in reviewing the performance of
employees. - Employees feel that they are taken seriously as individuals and that the
supervisor is truly concerned about their needs and goals. (Randi, Toler, Sachs, 1992).
IV. Pitfalls to Avoid
When conducting performance appraisals on any level, it is important to keep in mind the
common pitfalls to avoid.
These pitfalls may include but are not limited to:
1. Bias/Prejudice. Race, religion, education, family background, age, and/or sex.
2. Trait assessment. Too much attention to characteristics that have nothing to do with the job
and are difficult to measure.
3. Over-emphasis on favorable or unfavorable performance of one or two tasks which could
lead to an unbalanced evaluation of the overall contribution.
4. Relying on impressions rather than facts.
5. Holding the employee responsible for the impact of factors beyond his/her control.
6. Failure to provide each employee with an opportunity for advance preparation (Maddux,
1993).
V. Legal Implications
Any performance appraisal system used to make employment decisions about a member of a
protected class (i.e. Based on age, race, religion, gender, or national origin) must be a valid
system (an accurate measure of performance associated with job requirements). Otherwise, it
25 | P a g e

can be challenged in the courts based on Title VII of the 1964 Civil Rights Act, the Civil
Rights Act of 1991 and the Age Discrimination in Employment Act of 1975 (London, 2003).
Uniform Guidelines on Employee Selection 1978 is the controlling federal law in the area of
performance appraisals. The Equal Employment Opportunity Commission (EEOC) requires
that any measurement used to differentiate between employees must be valid and fairly
administered. The Americans with Disabilities Act (ADA) suggests that performance
appraisals for people with disabilities for people with disabilities will not be conducted any
differently than those for other employees. Another important aspect to consider is the
employees right to privacy. Employees must have complete access to their personnel files,
but others should have controlled access. The records should be accurate, relevant, and
current.
VI. Rewards
Effective reward systems are often hard to establish when creating performance appraisals.
The question of how specific the reward, when the reward should be given, and how to
reward group efforts can be a tricky subject to master.
Our advice on this is to keep it simple. It is important to have an established reward system.
However, rewards can be as simple as more autonomy on the job, praise for progress,
additional professional development funding, and vacation time.
The important aspect to remember when establishing reward systems is to be consistent. If
two employees are being evaluated in the same way, their reward opportunities should reflect
their evaluation outcomes

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3. NEED OF THE STUDY

This study helps building progress towards organizational goals.
To help the superior to have a proper understanding about their subordinates.
To ensure organizational effectiveness through correcting the employee for standard
and improved
performance and suggesting the changes in employee behavior.
It provides information about the performance ranks.
To provide information this helps to counsel the subordinates.
To facilitate fair and equitable compensation based on performance.
IMPORTANCE OF THE STUDY
Performance appraisals provide employees and managers with opportunities todiscuss

areas

in which employees excel and those in which employees need improvement. Performance
appraisals should be conducted on a regular basis, and they need not be directly attached to
promotion opportunities.
Personal Attention
During a performance appraisal review, a supervisor and an employee discuss the employee's
strengths and weaknesses. This gives the employee individual face time with the supervisor
and a chance to address personal concerns.
Feedback
Employees need to know when their job duties are being fulfilled and when there are issues
with their work performance. Managers should schedule this communication on a regular
basis.
Career Path
Performance appraisals allow employees and supervisors to discuss goals that must be met
to advance within the company. This can include identifying skills that must be acquired,
areas in which one must improve, and educational courses that must be completed.
27 | P a g e

Employee Accountability
When employees know there will be regularly scheduled evaluations, they realize that they
are accountable for their job performance.

Communicate Divisional and Company Goals

Besides communicating employees' individual goals, employee appraisals provide the
opportunity for managers to explain organizational goals and the ways in which employees
can participate in the achievement of those goals.

4. SCOPE OF THE STUDY

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 The management can identify the employees opinion of the existing performance
appraisal system.
The study can be used to make the present appraisal system more effective and
satisfied among employees.
It could be used to identify training and development needs for the individual and
the organization as a whole.
It is a systematic procedure of collecting information in order toanalyze and verify a
phenomenon. The collection of information has been done through two majorsources:

5. OBJECTIVE OF THE STUDY

1. To examine why an appraisal system is important.
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2. To study the effectiveness of the existing performance appraisal system in a particular

industry.
3.

On the basis of what industry increase salary and provide training to itsemployees.
And what is basis of promotion in industry.

4. To understand more and more about role of employee and become clear about his
functions.
5. To understand employees own strengths and weaknesses with respect to his role and
functions.
6. To analyze the role played by performance appraisal system in increasing the
mutuality between employee and his superiors.
What opportunities are provided by the performance appraisal system to theemployees
self reflection and individual goal setting

for

6. RESEARCH METHODOLOGY

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The formidable problem that follows the task of defining the research problem is
the preparation the design of the research project, popularly known as the research design.
Decisions regarding what, where, when, how much, by what means concerning an inquiry or
a research study constitute a research design. A research design is the arrangement of
conditions for collection and analysis data in a manner that aims to combine relevance to the
research purpose with economy in procedure. In fact, the research design is the conceptual
structure within which research is conducted; it constitutes the blueprint for the collection,
measurement and analysis of data. As such the design includes outline of what the researcher
will do from writing the hypothesis and its operational implications the final analysis of data.
Therefore, this study outline following designing decisions:(i) What is the study about?
The study comprises critical analysis of various functions, methods and scope of performanc
e appraisal in different companies prevailing in steel industry.

(ii) Why is the study being made?

The main purpose of study is to help in understanding various functions, role andimportance
of performance appraisal system and identify the developmental needs of employees in steel
industry. It also focus on the impact of performance appraisal
systemon industrial relations and help in finding out various tools for bridging thecommunica
tion gap between employees and supervisors.
(iii) What type of data is required?
Data comprising the impact of performance appraisal system on steel industry is
requiredfor the study. Therefore, journal articles and news article from leading businessmaga
zines and news papers did the needful.
(iv) Where can the required data be found?
Since data is secondary therefore most of the review was done with help of internet, journals,
newspaper articles and various books .
(v) What periods of time will the study include?
This study is the result of 2 3 months of research.
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(vi) What techniques of data collection will be used?

To accomplish the objectives of the study secondary data is used.
(vii) How will the data be analyzed?
Data is analyzed on the basis of journal, newspaper articles and the core knowledge gained on
performance appraisal system from few books and steel industry. A complete review has been
done on role of performance appraisal system on steel industry and its impact in gaining
competitive advantages. Therefore, for this purpose role of performance appraisal has been
studied in few companies prevailing in the steel industry.
(vii) In what style will the report be prepared?
Report is distributed in Chapters completing all the requirements of the research.

TRENDS IN PERFORMANCE APPRAISAL SYSTEM

Performance appraisal in its traditional from known as ACR-Annual Confidential Report is
often misused than used. Performance appraisal has now been recognized as a HRD
function. In the last decade many organizations have reviewed and changed their managerial
appraisal systems.
1) There is a trend away from the composite appraisals with multiple objectives (e.g. perfor
mance planning, development rewards and promotions)to separate systems for different
systems for different clusters of objectives.
2) There is a move away from isolated appraisal system to the business linked one .
3) There is shift away from closed confidential type to open dialogue and discussions based
system.
4) There is a movement quantitative (pseudo objective) to qualitative (interactive,improveme
nt and process oriented) system.
5) There is a movement away from boss assessed feedback to 360-degrees feedback involvin
g customers, peers, team members, subordinates etc. in addition to supervisors.

32 | P a g e

6) There is also a trend away from elaborate systems to simple ones.7) There is a shift from st
andard systems to flexible and group specific ones.8)There is a movement from result
oriented systems to process oriented system.
9) There is a movement from the assessment of individual performance to thedevelopment of
team performance.
10) There is also a movement from complacency to experimentation through continuous
research change.

Example:

7. FINDING & ANALYSIS

The main objective of this study is to analyse the role of performance appraisal and system
implementation in Steel Industry. Since the research is empirical in nature thats why
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following aspects of various organization structure and design of particular industry have
been covered.
ORGANIZATION STRUCTURE AND DESIGN
Jindal brothers
Jindal Brothers is a young, dynamic organization and is going strong on the stock market.
1- The company is well aware of the dynamic environment of software, it is operating
and in order to keep it with the pace of the environment it believes in constant up
gradation of courses. Organization structure and design of the company is such that it
supports this change.
2-

Jindal Brothers has a matrix kind of a structure wherein it takes the form of
combination of structures. Matrix structures are adopted became there is more than
one factor around which the structure can be built.

3-

This matrix structure at Jindal Brothers improves the quality of decision-making

where interest conflicts arise and direct contacts replaces bureaucracy

4- . This increases the motivation of the managers and development of wider

involvement in strategies. Although at times the company faces high risk of dilution
of priorities became e people do not know who is responsible for what.
5- An organization is a network of authority, responsibility and relationships. Different
organization structure consists of different type of relationships.

Performance Appraisal at Jindal Brothers

While on the job, performance reviews of every employee are done every quarter. The
reviews are done with a view to helping the individual excel at his/her workplace. In case
there are any training requirements, these are noted and acted upon in the coming quarter.
Also, the goals and objectives for the employee are re-visited for

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The performance appraisal mechanism is carried out at Jindal Brothers for promotional
purposes.
These are done so as to motivate the employee and improve his performance level. The
method is as follows:
a) Establishment of performance standards with the employees
b) The goals are set mutually as per measurable standards.
c) The actual performance is hence measured.
d) After measuring of the actual performance, the same is compared with the standards
set
e) The appraisal is then discussed with the employees.
f) And finally, if need arises corrective action is initiated. For this purpose the corrective
action is actually identified through brainstorming exercises initiated by the
departmental heads at all the Jindal Brothers. It is then measured as a tool to evaluate
the past performances of the employees.
Some of the methods used at Jindal Brothers are:
1. Key Performance Index
2. 360 Degree Feedback
3. Paired Comparisons
4. Behaviorally Anchored Rating Scale
1. KPI-Key Performance Index
It is based on the performance level of the employee generally classified on the basis of:

Targets achieved

Ratings through students feedback forms

Punctuality and regularity

Day to day performance

This is given after every module at the centers.

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Thus we can observe that the appraisal system is not a biased one but based on performance
and productivity basis. All the respective heads of the employee together with the senior
persons at the center brainstorm and then give the promotion.

2. 360 Degree Feedback

This feedback system involves the participation of:

Coworkers

40%

Subordinates

- 20%

Superior

- 40%

Thus the feedback given by these members at Jindal Brothers is considered under a holistic
view and then the employee is given a performance appraisal. This evaluation method
involves 40% feedback from the coworkers which says that the employee should not only
maintain good rapport with the senior or junior but majorly with the coworkers also.
3. Paired Comparisons
The evaluator compares all possible pairs of subordinates on their overall ability to do the
job. Due to the subjectivity of evaluating overall performance some managers me e a number
of different job related dimensions when comparing.
4. Behaviorally Anchored Rating Scale (BARS)
It is a sophisticated method of evaluating the employee based on the employee behavior. It is
a numerical scale that is anchored by the seniors of the organization at various centers. This is
highly confidential and the information is sent in sealed envelopes and opened only at the
time of the final evaluation. There is no further discussion regarding this scaling, thus it is not
given enough weightage.

Steel Authority of India Ltd

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Basically there are two types of performance appraisal done on the basis of post of the
SAILs employee. They are:
1. Executive performance appraisal system
2. Non-executive performance appraisal system

Executive Performance Appraisal System :This system is for performance appraisal for executives of the level E-0 to E-4 . The various
steps involved are:
A)

Self Appraisal Performance Review & Planning :

I. Appraisee write his view over the actual achievement for the Key performance
area / Task and Target assigned to him for the year.
II. Comments on fulfillment of KPA / Task and Target are written by the Reporting
Officer , taking account of time frame also.
III. Special Jobs other than tasks given and normal routine work are written by
appraisee.

B)

Performance Review Discussion :

I. Both appraisee and reporting officer sit together.
II. Comment over Strengths and weaknesses and areas for development are written
which is undersigned by both .

III. Appraisee can help the reporting officer by giving examples which shows his strength
or weakness. He also tell what training he want to undergo .

C)

Performance Assessment :

37 | P a g e

I. Rating between 1 to5 are given to the appraisee by the Reporting Officer and
Reviewing Officer individually on the basis of Performance Factors and
Potential Factors.
Performance Factors :Quantity of output
Quality of output
Cost control
Job Knowledge and Skill
Team spirit and Lateral
Coordination
Discipline
Development & Quality of assessing subordinates
Special Relevant factor
Potential Factors : Communication
Initiative
Commitment and sense of Responsibility
Problem Analysis and Decision making
Planning and Organizing
Management of Human resources
II. Different weightage are given to each factor
III. Final scores are calculated by multiplying rating and weightage .By adding these
Total Factor Score is calculated.
IV. Comments on Overall Performance And Potential are written by both Reporting
and Reviewing Officers individually.

D)

Suggestions for Job Rotation and Job Enrichment

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I. Both reporting and reviewing officers write their suggestions whether the appraisee
should be transferred to other department. Either a good employee is transferred so
that he can acquire knowledge of all the departments, or a worst performing
employee is transferred so as to improve his performance.
II. In some exceptional case Head of department give his comments on overall
performance & potential of the employee.
E)

Final Assessment
I. Total Factor Score by both Reporting and Reviewing officers is written and average is
calculated.
II. Final Grading between O / A / B / C is given .
III. If Final Grade is C , indicate whether to promote or not to promote the appraisee.
IV. If not to promote give reasons.
V. Meeting with non-promotable appraisee.

VI.
Non Executive Performance Appraisal System
I.

Rating are given by both Reporting and Reviewing officers on the basis of performance of
the appraisee depending upon factors:
Performance on the Job
Job Knowledge & skill
Multi-skill Utilization
Conduct & behavior
Punctuality & availability on job
Innovativeness
Cost & Quality Consciousness
Initiative & Capacity to assume higher responsibility
Housekeeping & safety consciousness

II. Weightage are given to various factors .

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III.

Scores out of 100 are calculated by multiplying rating with weightage .

IV. O / A / B / C / C- Grades are given according to scores and attendance of the appraisee.
V. If grade is C- , then appraisee is interviewed by the Head of Department.

Key Observation (s) at SAIL

In the present performance appraisal system of SAIL we found the following loop
holes: If the appraisee has good terms with the reviewing officer and does not have a smooth
relationship with the reporting officer, in such case the reporting officer is sometimes forced
by the reviewing officer to give better score to the appraisee.

SURVEY FINDINGS
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In this section, basic data for the number companies constituting steel in industry is presented
on various attributes of performance appraisal.
Frequency and frequency percent scores were computed for each company and thus it
enlighten the following points : Promotions were and known to most of the top and senior management while middle
and lower management were a bit not clear about it. This could be attributed to the
fact that senior and top management were more involved in decision making and
policy formulation than are the middle and lower management.

At the lower levels of the organization, performance can be quantified, and the
managers are made accountable at the higher echelons the tasks are too complex and
therefore cannot be assessed on the basis of quantified performance

Most of the managers feel that the mechanism for potential appraisal is not adequate.

The industry believed that self appraisal is the best for managers and above.

To improve interpersonal communication and behavior assessment by peers and

subordinates is essential.
The performance of the employees is not regularly monitor and the required feedback
is provided to the subordinates from time to time. The appraisals are conducted at
fixed intervals. The industry believes in using appraisal for rewarding and increments.

It would not be wrong to say that interpersonal relations and personal biases (i.e.
liking and disliking) influence the appraisals in the industry.

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CONTRIBUTION OF COUNTRIES TO GLOBAL STEEL INDUSTRY

The countries like China, Japan, India and South Korea are in the top of the above in steel
production in Asian countries. China accounts for one third of total production i.e. 419m
ton, Japan accounts for 9% i.e. 118 m ton, India accounts for 53m ton and South Korea is
accounted for 49m ton, which all totally becomes more than 50% of global production. Apart
from this USA, BRAZIL, UK accounts for the major chunk of the whole growth.
Country Wise Crude Steel Production

COUNTRY

CRUDE STEEL PRODUCTION

China
Japan
United States
Russia
South Korea
Germany
Brazil
India
Italy

(mtpa)
272.5
112.7
98.9
65.6
47.5
46.4
32.9
32.6
28.8

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STEEL INDUSTRY IN INDIA

Steel has been the key material with which the world has reached to a developed position. All
the engineering machines, mechanical tools and most importantly building and construction
structures like bars, rods, channels, wires, angles etc are made of steel for its feature being
hard and adaptable. Earlier when the alloy of steel was not discovered, iron was used for the
said purposes but iron is usually prone to rust and is not so strong. Steel is a highly wanted
alloy over the world. All the countries need steel for the infrastructural development and
overall growth. Steel has a variety of grades i.e. above 2000 but is mainly categorized in
divisions steel flat and steel long, depending on the shape of steel manufactured. Steel flat
includes steel products in flat, plate, sheet or strip shapes. The plate shaped steel products are
usually 10 to 200 mm and thin rolled strip products are of 1 to 10 mm in dimension. Steel flat
is mostly used in construction, shipbuilding, pipes and boiler applications. Steel long
Category includes steel products in long, bar or rod shape like reinforced rods made of
sponge iron. The steel long products are required to produce concrete, blocks, bars, tools,
gears and engineering products. After independence, successive governments placed great
emphasis on the development of an Indian steel industry. In Financial Year 1991, the six
major plants, of which five were in the public sector, produced 10 million tons. The rest of
India steel production, 4.7 million tons, came from 180 small plants, almost all of which were
in the private sector. India's Steel production more than doubled during the 1980s but still did
not meet the demand in the mid-1990s, the government was seeking private-sector
investment in new steel plants.
Production was projected to increase substantially as the result of plans to set up a 1 million
ton steel plant and three pig-iron plants totalling 600,000 tons capacity in West
Bengal, with Chinese technical assistance and financial investment. The commissioning of
Tata Iron & Steel Company's production unit at Jamshedpur, Bihar in 1911-12
heralded the beginning of modern steel industry in India. At the time of Independence in 1947
India's steel production was only 1.25 Mt of crude steel. Following independence
and the commencement of five year plans, the Government of India decided to set up four
integrated steel plants at Rourkela, Durgapur, Bhilai and Bokaro. The Bokaro plant
was commissioned in 1972. The most recent addition is a 3 Mt integrated steel plant with
modern technology at Visakhapatnam. Steel Authority of India (SAIL) accounts for
43 | P a g e

over 40% of India's crude steel production. SAIL comprises of nine plants, including five
integrated and four special steel plants. Of these one was nationalized and two were
acquired; several were set up in collaboration with foreign companies. SAIL also owns mines
and subsidiary companies.

TRENDS IN PERFORMANCE APPRAISAL SYSTEM

Performance appraisal in its traditional from known as ACR-Annual Confidential Report is
often misused than used. Performance appraisal has now been recognized as a HRD function.
In the last decade many organizations have reviewed and changed their managerial appraisal
systems.

1)

There is a trend away from the composite appraisals with multiple objectives (e.g.
performance planning, development rewards and promotions)to separate systems for
different systems for different clusters of objectives.

2)

There is a move away from isolated appraisal system to the business linked one .

3)

There is shift away from closed confidential type to open dialogue and discussions
based system.

44 | P a g e

4)

There is a movement quantitative (pseudo objective) to qualitative (interactive,

improvement and process oriented) system.

5)

There is a movement away from boss assessed feedback to 360-degrees feedback

involving customers, peers, team members, subordinates etc. in addition to supervisors.

6)

There is also a trend away from elaborate systems to simple ones.

7)

There is a shift from standard systems to flexible and group specific ones.

8)

There is a movement from result oriented systems to process oriented system.

9)

There is a movement from the assessment of individual performance to the

development of team performance.

10) There is also a movement from complacency to experimentation through continuous

research change.
Performance appraisal refers to the assessment of an employees actual performance,
behavior on jobs, and his or her potential for future performance. Appraisal has several
objectives but the main purposes are to assess training needs, to effect promotions, and to
give pay increases.
Appraisal of performance proceeds in a set pattern. The steps involved are defining
appraisal objectives, establishing job expectations, designing the appraisal programme,
conducting performance interview, and using appraisal data for different HR activities.
Two important contemporary techniques of performance appraisal include 360 appraisal and
goal setting approach to appraisal also known as Managing by Objectives.
However, performance appraisal system also serves to be the backbone of any industry in the
corporate world and since the project report focuses on the role played by performance
appraisal in industrial establishment so review of research is done by also analyzing
following secondary data.
The data source: Secondary Data.
The research approach: Survey Method.
The research instrument: Journals , Books , Newspaper Articles.
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8. CONCLUSIONS
1) This industry proves that a major amount of work towards developing an effective
and efficient performance appraisal system has not been accomplished to the fullest.
2) It seems that the industry is genuinely interested in improving the efficiency
andutility of performance appraisal system to succeed in todays dynamic
environment;
3) Systems of innovative HRM practices have large effects on production
workers performance, while changes in individual employment practices have little
or no effect.
Outward Orientation Performance Appraisal System
The appraisal system should be more sensitive and responsive to current competitive
environment. This is possible through making the industry :
Quality conscious in products and services to match international standards.
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Customer oriented (internally as well as externally)

Cost effective
Technology oriented
Focused towards collaboration and teamwork
People oriented
Focused towards performance standards
Focused towards values and culture that would help un bottle hidden talent .In achieving the
above, the PA system have a catalytic role to play.

PERIODIC PERFORMANCE REVIEW AND PLANNING:

There should be some aspect in the PA forms, which deals with the effect of Internal
Influences, organizational influences and external influences on performance of employee to
make the PA system more sensitive to changes.
Increase awareness of company goals in order to integrate company and individual
expectations.
Conducting training workshops for appraisers to remove biases and errors in appraisal.
Increasing transparency and open communication and minimizing confidentiality
in performance review discussions .The work done towards modifying and developing
performance appraisal systems, time to time should be continued.
Integrating TQM into Performance Appraisal
Individual rewards should be declined with the PA system. The focus should shift to team
rewards. To recognize individual excellence, the team rewards. To recognize individual

47 | P a g e

excellence, the team should recommend rewards to tone up motivation levels in the entire
team.
Continuous feedback and transparency in every system
Focus on customer delight, both internal and external
Linkage with Rewards
Good performers should be recognized and rewarded, whereas weak performers need to be
encouraged to become better performers. PA systems when liked with individual rewards and
promotions create more problems than they help in motivating people. They encourage fewer
employees and discourage more. They do not develop the team spirit but rather enhance
interpersonal comparisons and power politics. The focus should be shifted from rewarding
the performance of few to development of performance of many. However there is also a
need for recognition and rewarding good work. Alternative systems of rewarding with
multiple reward/recognition mechanism are needed. But these systems should be separated
from other systems (like career planning).

9. BIBLIOGRAPHY

BOOKS
Human resource management

Aswathappa Human resource management

V. S. Rao Human resource management

Gary desslerPersonnel management - C.B.mamoriaEvaluating management training and

development - B.R.virmani premila sethStrategic human resource management

Srinivas.R.Kandula
. Performance Management, Concepts, Practices and Strategies for Organisation success
by S. K. Bhatia, Deep & Deep Publications Pvt. Ltd, 2008.
. Human Resource Management. By S. Seetharaman & B. Venkateswara Prasad, Scitech
Publication, 2007.
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. Kothari, C.R., Research Methodology - Methods & Techniques , New Delhi, New
Age international (P) Ltd., Publishers, Second Edition,2004.
. Statistical Methods for Management, By P.N. Arora & S.Arora New Delhi, Sultan
Chand & Sons Publishers, 2005.

Internet
www.performance-appraisal.com
www.hrwale.com/performance./performance-appraisal-methods
http://www.whatishumanresource.com/traditional-methods-of-performance-appraisal
http://www.openlearningworld.com/books/Performance
http://www.citehr.com/206533-performance-appraisal-methods-organizational-goals.html
http://en.wikipedia.org/wiki/Performance_appraisal

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