Chapter 1

Introduction:

Performance management system is the systematic approach to measure the performance of

employees. It is a process through which the organization aligns their mission, goals and
objectives with available resources, systems and set the priorities.

The execution administration framework is a constant procedure of characterizing and

conveying the activity parts and duties, execution desires, goals and set their needs between
boss (administrator) and subordinates (workers). It incorporates association, office and
representative shared objective and targets which are lined up with frameworks and assets. It
is the channel of providing clarity about goals and also to improve the business processes
through various methods and mechanism.

The competency, skills and knowledge gaps are also identified through this process which
can be improved by providing guidance, trainings, coaching and mentoring to employees or
teams at different levels and designations. It optimizes the results through a roper channel and
process which reduces the conflicts and grievances among teams or employees. Because each
individual is clear about the expectations from his/ her role and put their efforts to meet
performance standards.

Purpose of Performance Management System:

Managing employee’s performance is the key objective of establishing systematic

Performance Management system in an organization. These process servers’ six main
purposes in the company-

Strategic

Performance managed system is a tool which should be align with overall organization goal
followed through department goal and individual goals.In other words, the organizational
strategic goals should be linked with each activity performed by every department or
employee.

Administrative

Performance management system is also set the deciding factor of employee’s promotion,
demotion, salary increment, transfer and terminations. It enables to identify the performers,
non-performers or under performer employees in an organization. It merits the competency
and skill level of employees. Hence, it clearly defines the administrative role as well and
supports the management decisions.

Communication
It is the effective communication channel to inform employees about their goals, job
responsibilities, key deliverables and performance standards. Further, it is also a structure
method to indicate the key areas of improvement required by the employee in order to
improvise his performance. In other words, it provides the platform to learn and train on
skills, and knowledge for better performance and results.

Developmental

It is the structure method of communicating the positive feedbacks, improvement areas, and
development plans. The manager can use various methods like training, mentoring, coaching
etc. and them their team members to perform better.

Organizational Maintenance

Performance management system is the yardstick of measuring employee, department and

organization achievements and evaluating the performance gaps through various tools and
techniques. Hence, it maintains the health of the organization and its performance standards.

Documentation

The performance management reviews, feedback and forms should be documented and
maintained periodically by every organization. It would enable them to look forward, set new
targets, design developmental needs, design training and learning program, and career
progression of employee and for department. Hence, it helps in driving the organizational
needs to desirable objectives.

Objective of Performance Management System:

To enable the employees towards achievement of superior standards of work performance.

To help the employees in identifying the knowledge and skills required for performing the
job efficiently as this would drive their focus towards performing the right task in the right
way.

Boosting the performance of the employees by encouraging employee empowerment,

motivation and implementation of an effective reward mechanism.

Promoting a two way system of communication between the supervisors and the employees
for clarifying expectations about the roles and accountabilities, communicating the functional
and organizational goals, providing a regular and a transparent feedback for improving
employee performance and continuous coaching.

Identifying the barriers to effective performance and resolving those barriers through constant
monitoring, coaching and development interventions.
Creating a basis for several administrative decisions strategic planning, succession planning,
promotions and performance based payment.

Promoting personal growth and advancement in the career of the employees by helping them
in acquiring the desired knowledge and skills.

Functions of Performance Management System:

1.Clarity of organisational goals

The managers need to clearly and precisely lay down the organizational goals, objectives and
ensure that these are well informed to the employees and other employees and make them to
realize what the organization expects from them. The organizational goals need to be
translated into individual, team and departmental/ divisional goals.

2. Evaluation

The individual, team, department/ divisional performance need to be evaluated on

continuous basis. The organization should develop an evaluation system and process, which
is designed and developed on scientific lines.

3. Cooperation but not control

The managers should nurture the practice of getting work done through the system of
obtaining employees consensus rather than through control or coercion.

4. Self-management teams

The management needs to encourage the individual and teams for self-management of their
performance. This procedure creates in the employees a sense of responsibility and develops
a spirit to work with commitment and evaluate his or her strengths and weaknesses from time
to time and plan for reducing the performance gaps.

5. Leadership development

The managers need to identify such of the employees who have leadership potential and
apart from sincerity and honesty to ensure better and effective two-way communication
between the managers and the employees.

6. System of feedback

The organization must have a strong feedback system of managers, individuals, and teams
performance. It should be monitored continuously and generate feedback loops for better
performance management.

In this project two food manufacturing organizations, one a global organization (PepsiCo
Frito-Lays) and the other an Indian organization (Lijjat Papad) have been chosen and their
history, importance, organizational profile and performance management system has been
analyzed.

The food manufacturing organization derives from agriculture industry, and is divided into
two segments. Those two segments are production and distribution of edible goods. The
industry is much more focused on technology and mechanical manipulation of raw foods to
create more value added food products than the agricultural industry. Under these industries,
it includes companies that ship food to retail outlets, restaurants or directly to consumers.

Due to the increase in food manufacturing organizations, the industries have attracted and
increased the number of consumers buying and consuming at a very high frequency.

Chapter 2

CRITICAL REVIEW OF ARTICLE PERFORMANCE MANAGEMENT SYSTEM

EFFECTIVENESS AND ITS PREDICTORS :AN ANALYTICAL EVIDENCE:
Dr.JayalaxmiSamal- Associate professor (HR) ,BIITM, Bhubaneswar

Introduction:

Performance management system is a people-and process-centric approach which aims at

improving individual, team and organizational performance.

The objective of the current research is to explore the independent impact of PMS
components and BSC on PMS effectiveness. Further, it is also intended to study the
combined impact of PMS components and BSC on PMS effectiveness. A total of 313
employees were selected from four different commercial banks of Bhubaneswar, Odisha. The
validity of the questionnaire was tested using Exploratory Factor Analysis (EFA). Further,
Multiple Regression Analysis was used to examine the predictors of PMS effectiveness. The
findings revealed that performance appraisal, performance review, feedback, and strategic
congruence are the most influencing factor. The purpose of these studies is to study the
impact of PMS component factors and balanced scorecard factor on PMS effectiveness at the
same time, to study the combined effect of balanced scorecard factor and PMS component
factors on PMS effectiveness
The study aims to assess both the individual and collective impacts of the factors like : PMS
components on PMS effectiveness, BSC on PMS effectiveness and the combined impact of
PMS components and BSC on PMS effectiveness. The present study has used a quantitative
research design which basically focuses on the measurements of objectives and the analysis
of numerical data collected through questionnaires or surveys. A structured questionnaire has
been developed as a measurement instrument to capture the views of the bank employees on
the performance management system. The data analysis of this study has shown that out of all
the variables under PMS components- performance appraisal, performance review, and
feedback are the most influencing variables in both Public and Private Sector Banks.

The regression model of the relationship between PMS effectiveness (dependent variable)
with PMS component and balanced scorecard (independent variable) disclosed a significant
R square value in case of both public sector and private sector banks. Therefore it is
concluded that in both categories of banks, PMS components and balance scorecard factors
strongly influence the PMS effectiveness.

Summary of the Article:

PMS effectiveness is the dependent variable and this is the variable of primary interest. PMS
components and balanced scorecard are the two independent variables for this study. The
above said variables were identified from the extensive review of literature related to PMS,
balanced scorecard and PMS effectiveness. The factors for balanced scorecard variables were
derived from the original Kaplan and Norton model. The factors under PMS components
were taken from various contemporary research works. However, only the most common
components of PMS are included in the model. The hypothesis of the study broadly covers all
the stated factors of PMS components. The relationship between these variables was studied
by using the proposed hypothesis.
The study hypothesized the relationship between a set of independent and dependent
variables. As manifested in the review of literature PMS components and balanced scorecard
are the independent variables and PMS effectiveness is
the dependent variable. In order to achieve the research objectives, the researcher has
categorized the hypothesis into three parts.

To derive the factor structure of performance management system, balanced scorecard and
PMS effectiveness in the context of commercial banks, principal component analysis (PCA)
is used. PCA has also been used to reduce a larger set of variables to a smaller set of variables
that explain the important dimensions of variability and to summarise observed variability by
a smaller number of components.

In order to identify the significant predictors of PMS components, balanced scorecard and
PMS effectiveness; multiple regression analysis was carried out for each factor under PMS
components, balanced scorecard and PMS effectiveness for both public sector and private
sector banks. Three multiple regression analyses were run i.e., PMS components
(independent variable) and PMS effectiveness (dependent variable), balanced scorecard
(independent variable) and PMS effectiveness (dependent variable), and balanced scorecard
and PMS components (independent variable) and PMS effectiveness (dependent variable). At
the outset, the above mentioned multiple regressions were run to test the proposed
hypothesis.

This study found that performance management system components has an impact over the
performance management system effectiveness also concluded that considering the current
study combining PMS component factors and balanced scorecard factors have an impact on
PMS effectiveness. In this study three hypotheses were formulated among which first and
third hypotheses were accepted by rejecting the second hypothesis

Critique:

This study focused on analysing all the variables under PMS components performance
appraisal, performance review, and feedback are the most influencing variables in both Public
and Private Sector Banks. PMS in public sector banks PSBs are typically rudimentary and
lack credibility whereas the PMS in many of the private sector banks are highly sophisticated
in nature as they
use balanced scorecard and 360 degree feedback mechanism. PSB’s also failed to maintain
proper documentation of the employees’ performance track record and thus promote
employees’ through interview which is more subjective in nature. As a result of this, it is
quite difficult to differentiate between performers and non-performers. Hence following a
sensitive performance management system which covers themes like successful conventional
performance management system; fewer targets; inclusive group incentive; on time
completion of the task of target setting, performance evaluation, appraisal, and feedback and
fewer prerequisites would be better for effective implementation of PMS.

Knowledge of the organization’s mission, vision and strategic goals; knowledge of the job in
question; job analysis for detailed information about the tasks, duties and responsibilities
related to the job; and a job description.Which can provide the criteria for performance
measurement.Considering the significance of HRM practices in the banking sector.The
research findings must have suggested more ways to overcome the above mentioned
drawbacks that are associated with public sector banks PSB’s for the implementation of
effective performance management system .

Review of literature of this study managed to provide relevant studies and research papers
associated with various elements for PMS effectiveness,performance management for
banking business management,Balanced scorecard and various other aspects of PMS. The
review of literature pertaining to PMS, BSC and PMS effectiveness, the researcher did not
find any
evidence from the literature that combined the above stated constructs the present study still
managed to address this gap by assessing both the individual and collective impacts of the
factors like: PMS components on PMS effectiveness, BSC on PMS effectiveness and the
combined impact of PMS components and BSC on PMS.
This study used a quantitative research design which is considerably quite effective in
analysing the dependent variable of this study( i.e.) performance management system
effectiveness .The tool used for data analysis is principal component analysis (PCA) used to
reduce a larger set of variables to a smaller set of variables that explain the important
dimensions of variability and to summarise observed variability by a smaller number of
components Considering analysis of components in depth and in a detailed manner supports
effective data analysis and helps provide deeper insights into the subject matter. Results of
principal component analysis (PCA) still managed to suggest better ways including: Formal
performance review meetings, mid-term review, constructive criticism and timely
information, objectivity, fair and transparent and Growth and development oriented
performance appraisal system (PAS)

Proper usage of performance review information, performance review outcomes should have
been incorporated in the study which can directly fed into other HR subsystems, leads to
better customer service, promotes leadership and interpersonal skills, appropriate weightage
to all performance dimensions etc. Multiple Regression Analysis is carried out led to quite
effective hypothesis testing two independent variables of this study. PMS components and
balanced scorecard one of which is shown to be accepted (PMS components) and the other
one was rejected (balanced scorecard) considering the performance effectiveness which has
led to the considerable conclusions drawn from this research.

Conclusion:

This study conducted on “PERFORMANCE MANAGEMENT SYSTEM EFFECTIVENESS

AND ITS PREDICTORS” helped to identify better ways and means for accounting
performance management system effectiveness and suggested Unlike the other sectors, public
and private sector banks have their customized performance management system. Merely
having a PM
system would not fulfil the purpose. The real beauty of the system lies in its
properimplementation. Hence, as an initial step to bridge the gap between formulation and
implementation of PMS, the banks need to create awareness among the employees about its
significance for organizational and individual success. The banks also need to stress on
increasing employees’ involvement in formulating an innovative strategy for PMS
effectiveness which would further support organizational effectiveness. Finally, policymakers
need to come up with effective strategy in order to strengthen the outcomes of PMS are some
of the inferences that can be drawn from the present study.

The study is conducted on performance management system effectiveness and its predictors
is considerably systematic in manner by accurate formulation of hypothesis,data analysis,
review of literature and hypothesis testing. The research conclusions and results lead to
suggestion different means of accounting for effective PMS. It concluded that both categories
of banks, PMS components and balance scorecard factors strongly influence the PMS
effectiveness.

The study is significant in identifying factors influencing performance management system

and its effectiveness its accuracy makes it more relevant in assessing performance
management system and its applicability in work organizations. The study with its clear
vision of its areas of research has implications for further research or discussion in the field.

Chapter 3

LIJJAT PAPAD:
ORIGIN:

It is one of the India’s oldest co-operatives supporting women, is an organization

manufacturing various products, like papads, masalas, wheat flour, chapatis, detergent
powder, detergent cake and liquid detergent. The word “Lijjat” means tasty in Guajarati.
Lijjat was the name of a child of seven Gujarati women in Mumbai, who wanted to start a
venture to create a sustainable livelihood using the only skill she had, cooking. The venture
started in 1950s.

HISTORY:

The women borrowed a rupees of 80, from ChhaganlalKaramsi Parekh (also known as
Chaganbapa), a member of the Servants of India Society and a Social worker. They started
the work by taking over a loss-making papad venture and bought the necessary ingredients
and the basic infrastructure required to manufacture papads. And, the outcome resulted in
building up a historic company established and run by women for the empowerment of
determined and dedicated women.

On 15th March 1959, a bunch of women gathered on the terrace and started with the
production of 4 packets of papads. They started selling the papads to a known merchant in
Bhuleshwar, a popular market in Mumbai. Like any other start-up, they faced trial and
tribulation. Their policy was self-reliance and no monetary help was to be sought. Hence,
they started their work on commercial footing. Initially, women were making 2 different
qualities of papads, to sell the inferior one at cheaper rate. Chaganbapa became their guide,
and advised them to make standard papads and not to compromise on quality. He emphasized
on the importance of running it as a business enterprise and maintaining proper accounts.

1st CEO:

Present CEO:

GROWTH:

Lijjat expanded as a cooperative system. Initially, even younger girls could join the
organization, later 18 years was fixed as the minimum age of entry. Within 3 months, there
were 25 women in the organization. Soon, the women bought some equipment’s (utensils,
cupboards, stoves, cot and so on) necessary for the business. In the first year, women had to
stop production for 4 months due to rains, which would prevent them from drying the papads
and the organization’s annual sale were 6196 rupees.

During the next year, they effectively solved the problem occurring during rainy season by
buying a cot and stove. The organization got considerably publicity through word of mouth
and articles on regional newspapers. During the second year, 100 to 150 women were
employed and by third year it grew up to 300 members. Due to the lack of place to work,
which could not accommodate the members and ingredients, the kneaded flour was
distributed among the members, who would take it home and make papads. Later the papads,
were brought back for weighing and packaging.

In 1962, the name “Lijjat” was chosen by the group for its products. The organization was
named ShriMahilaGrihaUdyogLijjatPapad. In 1962-63, the annual sales increase to rupees
182000. On July 1966, Lijjat registered under the Societies Registration Act, 1860. In the
same month, Khadi development and Village Industries Commission (KVIC), a statutory
body set up by the Government of India for the development of rural industries, formally
recognized Lijjat as a unit